Everything you have said about "here" is right – commit a serious crime in China and you are never seen again. Be unproductive, and you do not eat.

I have lived here for close to two years in Shanghai and I have traveled to almost every corner of China, and I too was enamored by their ability to DO — for a short while. It is very refreshing coming from the US and seeing streets be redone in a matter of days and buildings go up in a matter of months. Its refreshing to see murderers sent "away" and the wastrels of society not living off of the "do-ers" tax money.

However, what you (and most people) fail to grasp on your three week or one month or six week trips galavanting around China is that the definitions of serious crime and what leads to the have-nots of this society "not having". A serious crime in the country can be anything from stealing a loaf of bread in some areas to murdering your Neighbor.

The problem is there IS NO JUSTICE SYSTEM. No protection for citizens. Everyone lives in fear, including me as an ex-pat. All the while migrant workers are being executed for stealing Ipods while the richest men in china, and even the middle class small business owners, are receiving and giving kick backs and bribes in the amounts of 100 of millions of RMB every single day. You cannot do business here without getting your hand very, very dirty and that is not capitalism to me.

To that point, I have watched my friend beat to within an inch of his life because he offended the wrong person… and when we called the police they watched while it happened. Moreover, to my point before about murdering neighbors, a man was just release for jail after 15 years when the neighbor he murdered suddenly showed back up for a government hand out only available in their hometown. It was a government sponsored conspiracy in shenzhen against the guy put away because he refused to move his factory.

If you did more than just took pictures and boarded airplanes in China, you would probably see it in a little bit of a different light.

I will thank China for one thing; I have a new found respect for freedom of speech, government, regulations, police officers, and the justice system. Things we take for granted, and more often than not protest against and bitch about, are sorely missed when they are taken away.

As to China's long term future, building infrastructure and planning ahead to encourage growth can certainly produce better results than the bankster kleptocracy clusterfuck that the USA is saddled with. But in the long run it can't triumph over the laws of physics and mathematics. Exponential growth of anything– population, energy use, automobile production, or an economy is physically impossible. At a 8% growth rate, it takes less than a century to leave only one square meter of the earths surface for each human or automobile.

The maximum amount of oil per year that will ever be produced from the earth's finite resource is 85-90 mbd, and that peak likely was reached 2 years ago and has plateaued or is on a downward slope. If China's population were to reach the US standard of auto ownership it would require they use all the worlds' oil supply or that the cars never drive anywhere on all those new roads being built. Perhaps they could serve as residences like they now do in the US for people forced from their homes by foreclosure.

China gets 70% of its total energy supply from coal, and at current rates of growth will reach its maximum peak in terms of energy content within 15 years. Imports from Australia can't begin to fire all the boilers under construction. There is no way that any effort to develop wind and solar can fill the depletion gap and support continued growth in energy production in the time frame available.

Fossil fuel energy is the lifeblood of industrial society and agriculture, and without growth in energy supply China's industrialization has no possibility of continued long term exponential growth no matter what its leaders do.

I agree it's just a correction, and trigerred by goverment force plus background situation, which is a right lead for now. Anybody go there to see and understand what's happenning would realize the points, the key is it's the most powerful growing economic nation right now.

Any markets are always up and down, and my prediction for current China stock market is between 2900-3500 shaking for a while. Let's see how we can profit from it is most important.

If China's leaders want to change something they change it. If they want to build/tear down something they do it. If they want to drill for oil, develop a new mine, raise/lower interest rates, burn coal, change a law, force workers to work for next to nothing – they just do it.

We may not like what they do, but those are the reasons China is not in a bubble and will not be in a bubble.

As many people do today, you have incorrectly mixed political and economic terms. The words Communism, Socialism, Capitalism, Democracy, Fascism, andTotalitarianism are not all points on the same continuum. The first three are economic systems; the latter three are political systems.

You stated the following: "we're the only ones who have decided that democracy is a prerequisite for capitalism. Chinese business people have decided that communism works just fine when it comes to creating wealth. " This is an extremely deceptive statement, which seems to imply that China is practicing capitalism. They are not.

In fact, no one, East or West, has declared democracy and capitalism as two sides of the same coin. There are many other political systems that can combine with a capitalist economic system. The West has simply correctly identified democracy and capitalism as the preferable options.

However, what is completely incompatible in your assertion is that China, an avowed communist state, has adopted capitalism. These two systems cannot coexist. Communism has proven incapable, in the long term, of "creating wealth." Even in this short term where Chinese Communism will create wealth, the wealth is held and controlled by the government. The definition of communism is an economic system where the means of production, and the products thereof, are controlled by the government.

The relativistic use of terms such as "chinese businessman" lead casual observes to soften their view of the Chinese system. Unlike a western businessman, the Chinese businessman does not reap the rewards of his ingenuity, and does not risk his own economic resources. Cultural pressures replace economic incentives. Shame replaces dollars as motivation.

We must remember that the Chinese Communist Dictatorship still, as a tenet of their belief system, actively thwarts the people's impulse to improve their conditions, be it economically, culturally, religiously, or socially. The West does not demand democracy as a standard, but it must demand freedom as a standard.

http://www.grahambanks.com

I'm shorting China as of now and will continue to do so till I see that the infrastructure that China has built (and is still building) has effective utilization (not for exports, but for internal consumption by Chinese).

I'll buy China when HSI hits 15000 or lower…till then, let Keith enjoy his China investments! :)

You have a vested interest in this commentary as you've been blowing the China horn for so long. China is a great story, but there is a bubble there, and just because they #2Ts, it doesnt mean they won't get hit hard. What happens if during the collateral damage, the USD gets hammered (which it may do so anyway for other reasons), their 2Ts won't shine so well. The world economy is still structured like a pack of cards, a small crack somewhere and China may discontinue buying US debt, the US Govt will be unable to print money without causing massive inflation which may spiral out of control eventually. At the end of the day, some small unexpected trigger will cause the next global crisis because the root cause problems of the previous crisis have simply been shoved under the carpet, and it will resurface again very soon.