China's Economic Future: Navigating Perilous Waters

Nobel economist Paul Krugman warns that China is on the brink of a severe economic crisis, as its current measures to stave off the crisis have reached their limits. Despite being a communist country, China's leaders are reluctant to provide welfare and consumer aid, hindering their ability to address deflation, massive debt, falling growth, and rising unemployment. Krugman argues that China needs to embrace a larger stimulus program and allow its citizens more spending independence. Failure to do so could lead to a political crisis as the legitimacy of the government, which is based on past economic growth, comes into question.