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Projecting such trend lines well into the future is a mistake. When you have a huge economy such as ours, you will have smaller rates of increase, which makes the 8.2% rate for the last quarter so impressive. With an economy of about one-ninth of the US, China can have growth rates of 7%, but they will not be able to sustain them.

The same crowd that predicts the coming dominance of China in the world economy, was also the one in the nineties that projected a Japanese century. China's corrupt and antiquated banking system, its political system, and other factors do not bode well for the Chinese economy. Mark my words.

Their growth obviously isn't sustainable at the current pace. Someday they'll have to fix up their financial system so they can finally float their currency with confidence. Only then should we consider China a true potential peer competitor. For the time being, though, it's becoming an integral part of the global supply chain.

The same crowd that predicts the coming dominance of China in the world economy, was also the one in the nineties that projected a Japanese century. China's corrupt and antiquated banking system, its political system, and other factors do not bode well for the Chinese economy. Mark my words.

Japan's GDP could not overtake America's in the early 1990s but came close to doing so: $5 tril. vs. $6 tril. The reason Japan couldn't do so was because its population (125 mil.) is less than half of America's (290 mil.). Had Japan had a population as big as America's, it would have been able to overtake the U.S. The bigger a country's population, the greater its GDP potential generally, because the more workers a country has, the more output it can produce. Unlike Japan's GDP potential, China's GDP is not limited by population size. On a purchasing-power parity basis, China's GDP is already about $6.5 tril. Just within the next two decades, China's GDP will exceed America's. It's true China's banking system is unhealthy. But so is Japan's and that didn't stop Japan from having a $5 tril. GDP in the early 1990s or still have about a $5 tril. GDP today. And despite its banking problems, China does have money to spare to loan to America by the purchase of US Treasury bonds.

In regard to China's political system, foreign investors agree that China's one-party government is a hell of a lot more effective and efficient in enacting crucial economic reforms than any other Third World republic's usually gridlock-plagued legislature. This is the reason foreign investors pour $50 bil. into China every year, while Third World republics can't seem to get their act together and mostly seem to require IMF bailouts.