China’s current economic contraction is proving the “Thomas Friedmans of the world” wrong, Charles Krauthammer said tonight.
“You get the Tom Friedmans of the world … who come back and rhapsodically speak about a command economy and the shiny new bullet trains,” Krauthammer joked on Thursday’s Special Report. But China “completely overbuilt, their infrastructure is essentially a weak one. But they have spent enormous amounts of money.”
“And the model, that was supposed to be the model that would supersede the liberal democratic capitalist model, it looks as if it’s not working that well,” Krauthammer continued. ”In the short run, yes, it’s obviously going to hurt our markets. And the Chinese have applied a certain short-term stimulus. With this hunger for raw materials, and the spike in the price of them, and now that its demand is down, there’s a collapse of the raw material prices.”
He said there’s an upside to China’s downside: “In the longer run, is it not in our interests that our chief rival in the world expanding as we speak – in the South China Sea and developing an enormous military and a sophisticated one – is actually may not be the locomotive that we have been afraid of? I look at this as good news in the short run and lousy news in the short run.”