New Chinese leader will have to tame his own tiger
AS we still try to digest the results of the US elections, it might seem perverse to begin thinking about the regime change in China, but the truth is that what is happening in China will almost certainly have more impact on life in Ireland than the US elections.
While we know the name of China's incoming new president, Xi Jinping, we do not know what he will do to keep China afloat.
It is almost certain that the previous government has been faking the figures and burning the furniture to stay warm, which means that China's economy is in for a very bumpy landing.
China is a Tiger economy of the Celtic variety replete with bogus figures, crooked banks and an overheated property market.
When that market implodes, China and countries such as Australia and Germany which have become players on the Chinese economy will suffer as well.
English-speaking countries such as the US, Ireland and the UK may well be spared the worst effects of this collapse because their reluctance to trade with China will protect them.
Our trade with the world's second-largest economy is pitiful because neither the multinationals that have operations here nor the domestic sector have the patience to build up the sort of links needed to do business there.
UK prime minister David Cameron told the House of Commons recently, more in sadness than anger, that his country still does more trade with Ireland than all four BRIC countries put together.
China's collapse could even help us by pushing down the price of oil and other commodities and freeing up the world's investment capital that is currently being swallowed up almost wholesale by the Chinese.
The main worry for Ireland following a Chinese collapse under Mr Xi could well be the knock-on effects following the sharp contraction that would follow in Germany.
A German economy that was contracting sharply could topple Angela Merkel in next year's elections and usher in an SPD-Green coalition that would not be as well disposed towards Ireland and would stoke up anger among voters with all five bailout nations.
Mr Xi could still avoid the worst problems by learning from Brian Cowen's mistakes. China's worst problems will come from the large state banks, which hold more than half the stock of outstanding loans. Together, the four largest banks employ 1.5 millio people and help make many people inside the elite very wealthy. The banks have to be taken on now by allowing them to impose higher interest rates and improving governance so banks can lend at a profit. Whether Mr Xi is able to change course with two former presidents looking over his shoulder will be one of the great questions of the next year or two.