I thought China was in a bubble before thinking that was cool.

Your humble blogger has been banging on about how China’s weaknesses are significant and its strengths have been badly overestimated. So you would think I’d be happy to read this Edward Wong front-pager for the New York Times:

After the economies of Western nations imploded in late 2008, Chinese leaders began boasting of their nation’s supremacy. Talk spread, not only in China but also across the West, of the advantages of the so-called China model — a vaguely defined combination of authoritarian politics and state-driven capitalism — that was to be the guiding light for this century. But now, with the recent political upheavals, and a growing number of influential voices demanding a resurrection of freer economic policies, it appears that the sense of triumphalism was, at best, premature, and perhaps seriously misguided. Chinese leaders are grappling with a range of uncertainties, from the once-a-decade leadership transition this year that has been marred by a seismic political scandal, to a slowdown of growth in an economy in which deeply entrenched state-owned enterprises and their political patrons have hobbled market forces and private entrepreneurship. “Many economic problems that we face are actually political problems in disguise, such as the nature of the economy, the nature of the ownership system in the country and groups of vested interests,” said Zhang Ming, a political scientist at Renmin University in Beijing. “The problems are so serious that they have to be solved now and can no longer be put off.”

Wong didn’t even delve into the state of China’s big banks, which Bloomberg’s Jonathan Weil examines and concludes that they’re facing a world of hurt, or China’s civil-military conundrum, which I blogged about earlier in the week.

So China is doomed, right? The bubble is gonna pop big time, right?

Well… maybe. Whenever I get too bearish on Beijing, two things drag me back from the brink: 1) China’s sheer size means it can muddle through and still increase its relative power; and 2) it’s possible for China to experience a severe downturn and still recover quite nicely. As I pointed out a few years ago:

[I look] at China and see the parallels with America’s rise to global economic greatness during the late 19th and early 20th centuries. From an outsider’s vantage point, America looked like a machine that could take immigrants and raw materials and spit out manufactured goods at will. By 1890, the U.S. economy was the largest and most productive in the world. As any student of American history knows, however, these were hardly tranquil times for the United States. Immigration begat ethnic tensions in urban areas. The shift from an agrarian to an industrial economy led to fierce and occasionally violent battles between laborers, farmers, and owners of capital. With an immature financial sector, recession and depressions racked the American economy for decades. It is not contradictory for China to amass a larger share of wealth and power while still suffering from severe domestic vulnerabilities.

China-watchers tend to be divided between the Bubblers and the Extrapolators. I’m still more sympathetic to the Bubblers, but if the "China is doomed" meme goes mainstream, I might have to defect.