Beware of Artificial Prosperity in China

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

I believe the 21st century will belong to China because most centuries have belonged to China.”


— Niall Ferguson

After this year’s highly successful FreedomFest, my wife and I flew to China for several speaking engagements and an opportunity to access the second-biggest economy in the world (unless you count the European Union (EU) as one country, which would make China third, behind the United States and Europe).

My wife and I first visited Hong Kong, which is still booming, with ongoing new construction. The talk of the town is a large apartment overlooking Hong Kong that is selling for $1 billion in HK dollars! Sounds like the top of a market to me.


If the flights to Hong Kong and Shanghai are any indicator, the Chinese economy is slowing. Both flights were far from full. We saw lots of empty buildings in Shanghai, an indication of over-building. We then visited Shanghai to attend and to speak at the Austrian economics seminar hosted by Li and Ken Schooland. Ken is the author of one of my favorite books, “The Adventures of Jonathan Gullible” (available on here).

Li is Chinese and confirmed that I am one of the most well-known economists in China, due to the translation of several of my works. Not that the Chinese government is paying attention to my policy recommendations! I talked about Austrian economics being the best school to address the challenges of the 21st century, with its emphasis on stable monetary policies and austerity (balanced budgets).

The Austrian economists have warned repeatedly that China’s economic growth is part genuine and part artificial. It is growing rapidly from a low level by adopting Western technology, making capital investments and seeking a new consumer society. But the Bank of China also is engaging in easy-money policies (the money supply has been growing at a 30% rate), which suggests overheating and an eventual bust.

Note: C-SPAN Book TV interviewed me about my bestseller, “The Making of Modern Economics,” to show at 1 p.m. Eastern time this Sunday on C-SPAN 2. For more information, go to To order a copy (priced at only $29.95, plus $5 for postage and handling), call Eagle Publishing at 1-800/211-7661 and mention code ECONP3.


You Blew It: The Crime of the Century

The Great Leap Forward confirms Mao Zedong as “one of history’s greatest monsters.”
— London’s Sunday Times

One of the most popular books in Hong Kong right now is historian Frank Dikötter’s “Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958-1962,” available here.

The book sets the record straight about the so-called “Great Leap Forward” campaign of Mao in 1958-1962. It should be called the “The Road to Serfdom”… just as the official name of China under communism should be called “The Anti-People’s Republic of China.”

Dikötter begins his devastating history as follows:


“Between 1958 and 1962, China descended into hell. Mao Zedong threw his country into a frenzy with the Great Leap Forward, an attempt to catch up to and overtake Britain in less than 15 years. The experiment ended in the greatest catastrophe the country had ever known, destroying tens of millions of lives.”

Dikötter’s book is a riveting, magnificently detailed chronicle of an era in Chinese history that is much speculated about but never before fully documented because access to Communist Party archives has long been restricted to all but the most trusted historians. A new archive law has opened up thousands of central and provincial documents that “fundamentally change the way one can study the Maoist era.”

Dikötter makes clear, as nobody has before, that far from being the program that would lift the country among the world’s superpowers and prove the power of Communism, as Mao imagined, the Great Leap Forward transformed the country in the other direction. It became the site not only of “one of the most deadly mass killings of human history,” at least 45 million people were worked, starved or beaten to death — but also was the site of “the greatest demolition of real estate in human history,” as up to one-third of all housing was turned into rubble. The experiment was a catastrophe for the natural world, as the land was savaged in a maniacal pursuit of steel and other industrial accomplishments.

In a powerful meshing of exhaustive research in Chinese archives and narrative drive, Dikötter, for the first time, links up what happened in the corridors of power — the vicious backstabbing and bullying tactics that took place among party leaders — with the everyday experiences of ordinary people, giving voice to the dead and disenfranchised. Dikötter’s magisterial account recasts the history of the People’s Republic of China.

Yours for peace, prosperity, and liberty, AEIOU,

Mark Skousen


Mark Skousen
Newsletter and trading services
Personal website
P.S. My book “Economics on Trial” is up for Freedom Book of the Month for July. To vote, go to

Upcoming Appearance

• Today’s challenging market conditions require even more knowledge than ever for investors and traders like you to keep pace with the latest market intelligence to safeguard your portfolio and to profit from opportunities that only may be available for short periods of time. Join me at this year’s MoneyShow San Francisco, August 24-26, at the San Francisco Marriott Marquis to hear recommendations and advice about how best to profit in 2012 and beyond! Register FREE today by clicking here, by going to or by calling 1-800/970-4355 and mentioning priority code 027882.

share on:

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops