Since Gordan Chang’s 2001 theory about the ‘coming collapse’ of the Chinese economy, from time to time, others have tried to follow in his footsteps to make similar predictions. At the recent World Economic Forum in Davos, we heard the latest iteration and version of the meltdown story, with some ‘doom prophets’ contending that China’s economy is headed towards some form of a crisis or a hard landing. The problem with these dire prophecies about China is that they have dire empirical record—they have been proven wrong, consistently.

The interesting question is: what informs these cataclysmic assessments? It could be that such predictions generate more attention and hype, even if wrong. It has also been suggested that some of these doom prophets have a vested interest in creating a bearish perception of the Chinese economy so as to profit from short-selling activities.

A closer look at recent adverse economic forecasts, however, suggests a more fundamental problem in analysis: flawed assumptions.

… Hoo Tiang Boon, a coordinator, MSc. (Asian Studies) programme, and Assistant Professor with S. Rajaratnam School of International Studies of Nanyang Technological University in Singapore.