One of China’s leading economists, Yu Yongding, a former president of the China Society of World Economics and a former member of the Monetary Policy Committee of the People’s Bank of China, published an article on Nov. 12 in China Daily, which painted a somber picture of the prospects of the Western financial system, pointing to the widening gap between “the real economy and the financial economy,” drawing particular attention to the derivatives bubble.
Yu wrote: “The bubbles in international financial markets are also arousing significant concern…. The gap between the real economy and the financial economy has widened significantly. This disconnection between the real and financial economies has become a major source of instability in the world economy…. Historically, the virtual and real economy used to move in tandem, with international finance supporting trade and investment. That is no longer the case today.”
