Ah. OK.

1) aquifer depletion/excessive water usage is a political problem. Here in the U.S. the "water rights" to various sources are coming under increasing scrutiny because the wastefulness of the farmers who get the water. They waste what they're paying substantially below market rates. Let the market determine the price of water and water wastage will become a thing of the past.

Reading the eoearth.org article I'm struck by how clearly the problem is political. The cost of deep drilling and deep pumping is such that only tax money could cause deep wells to be drilled across an area large enough to much impact a large aquifer. The article doesn't go into the funding of deep wells but that's the clear implication.

The solution is to start cutting government support, let marginal operations go under and make it clear that the policy's not going to change.

Whether the Chinese are up to the job is another question but the Chinese leadership does seem to have grasped at least some of the value of the free market.

2) and 3) and the corrupt nature of the Chinese judiciary are serious concerns and no argument about it. All amenable to solution if the Chinese have the will.

4) Nothing you can do about rising labor costs and nothing should be done about rising labor costs. In fact, it's that explicit proof of the rising level of Chinese prosperity.

5) Toxicologists have an expression so I hear - the dose is the poison. The rate, and the rate of increase, of inflation are what's critical. Slowly enough and the price of money stays reasonable. Too quickly and the economy's knocked on its ass. History suggests that's a pretty tough balancing act to manage.

6) The result of rising expectations that attend a rising economy.

7) Decoupling would put the Chinese government in the position of trying to defend the value of the yaun or allowing its value to be dictated by the market while maintaining the peg puts most of the burden of maintaining the value of the yuan on the U.S. As long as the value of the dollar doesn't change precipitously the Chinese government gets the benefit of the stability, and credibility, of the dollar at least for relatively short-term uses.

My concern about China lies in the transition from authoritarian rule to a more representative rule. I know no one's been talking about that but I believe as the Chinese economy expands - and it will as long as the Chinese leadership doesn't revert to communist, central planning - the Chinese people will find themselves with more and more control of their lives with the single exception of control of the government. As time goes on that exception will become harder to bear and result in a greater demand for representation.

At some point a watershed event will have to occur; either China will move clearly toward or away from representative government. That's my big concern with regard to China - that the leadership will choose the easy, obvious and disastrous course of trying to reenact Tienamen Square.

China's aquifier problem isn't political since the sole party is the state. It's a matter of not having enough water. If this goes as expected then within a few years they will need to important enough additional food from abroad to feed 120 million people for a year. They are already tapping the deep aquifers and they will be running out of them soon. Then inflation, food costs and likely social unrest will all occur. Not to mention the foreign currency drain this will cause.

Dan, if the state's the sole decider about matters related to water use then the problem is exclusively political.

Politics doesn't go away in an authoritarian state. Politics is the only thing that matters in an authoritarian state.

Fact is, I was guessing that the government was the sole decider about water-use matters but I wasn't out on a long, thin branch. Even here in the U.S. government interference causes massive amounts of water to be squandered due to political considerations. In an authoritarian regime what else is there but political considerations?

My guess is though that the Chinese government won't turn to the solution that's worked so incredibly well raising the Chinese standard of living far beyond the wildest imaginings of any communist and even farther beyond the imagining of older Chinese. That solution is, of course, the free market.

Privatizing water extraction would allow reality to reassert itself and funnel the water to the most economically reasonable use not the most politically expedient use.

But I very much doubt the Chinese leadership is farsighted enough to grasp that truth and there's a good deal of irony in that belief.

Remember researchers hope their work will help develop drought-resistant crops for use by farmers, as drought is a recurring problem.   They now have drought simulators in the U S,  China and India.  There looking at two more being make in the U S soon.

I read something that said China's debt problem was close to ours if you add up state, federal and local government. Our aggregate number is 93% of US GDP while China is around 80% of GDP.

The result of all that infrastructure spending for make work jobs the past few years.

China is a house of cards.

Arpad, no matter how you slice it there is no way higher food costs are not negative.