China is sitting on the grandaddy of all real estate bubbles.The government directly and indirectly committed hundreds of billions of dollars to build entire cities of apartments, retail and office space. They sit empty and are depreciating before they are even occupied. There has been no return on the capital.Real estate in urban areas,upon which huge private loans and mortgages are secured, are very overvalued.Capital has been squandered. If that bubble bursts, their economy will tailspin. It could lead to political, social instability, famine and possibly war.
China and Japan are the real powder keg. Japan is now launching the beginnings of a full-blown currency war (out of desperation, more than anything else), while China is exactly as you state. Ordinarily, I don’t buy any “x will start a war” kind of theories, but it wouldn’t shock me at all to find those two at war by year’s end.