China is hopeless, if you are trying to decipher economic trends. On one side, it is very interventionist and does all sorts of monetary madness. Their banking system has enormous amounts (according to rumours, of course) of bad loans. They should crash, eventually.
The question is, are they MORE or LESS interventionist than other economies (most specifically Europe and the US). Because capital always goes where it is treated best. Economic activitiy and trade will expand most where people interfere the least. And this is where it gets interesting.
China just became the world leader in international trade, ahead of the US. I can’t really figure out what this means. Maybe they are just trading things to and forth for the heck of it. Maybe its all some sort of ponzi-economics. I would suspect that trade figures for Japan during the 80′s were pretty amazing as well (but did they surpass the US?).
But we all know that the dollar is built on a few distinct pillars. Domination in trade. Largest (presumed) gold reserves world wide. Free capital markets. If China beats the US on enough of these criteria, they will surpass.
I still can’t figure it out. Not yet, at least.