As you may have heard from your one crazy uncle at Thanksgiving, the Chinese are coming to take America’s position as number one.  Their economy is a freight train, their military is five times the size of ours, and they own almost all of America’s debt. Seems like the Chinese are looking for a shot at the title of “Top Country”. But with a housing bubble that rivals America’s in the early 2000s and rampant inflation, the Chinese economic freight train is headed for a cliff.

You might be sitting there behind your computer screen thinking, “If China isn’t such a big problem, why is everyone freaking out?” Well Americans are afraid of China because we still think that we’re in the Cold War. Even though we beat the Soviets we, as Americans, never lost the idea that we are fighting against some great evil. Now with the USSR gone, we need someone to fill the power vacuum and China fits the bill perfectly as the next “Evil Empire”. They’re Communist, they have a rapidly expanding economy, they are forcefully trying to impose their influence on Southeast Asia, and there’s more than one billion of them.

But that one billion strong workforce is not as much of a threat as it once was. Throughout the last few decades, China’s population and workforce was massive, unstoppable and growing. But now, these very same people are getting older. This means that what was once a titanic and efficient workforce is now one really big retirement home with a smaller population of young people.

This missing population of young people has been caused by China’s now infamous single child policy. Because each family can only have one child, and China has a historic male preference, many families choose to abort their female children in favor of having a boy. The full effect of this has not been seen yet but in the coming years will become more evident as children of the single child policy reach maturity. It is predicted that by 2030, there will be four men to every woman leaving 75% of the population unmarried and without children. This means an exponentially declining population and workforce that will cripple the Chinese economy.

But the biggest threat to the Chinese economy isn’t their demographic problems, it’s their state-encouraged housing bubble. Because of the Communist government’s policy of restrictive investment controls, the people are only  allowed to invest in the stock market, which is always in a state of flux and tends to be very unreliable. This leaves only one option for investment: real estate. The Chinese are buying up housing faster than the state owned construction companies can build them but unlike most apartments, these are all empty. They buy up apartments and wait for the prices to go up then sell them for a profit. This is technically illegal but there is nothing the government can do about it.

This is a problem because with all of the real estate prices going up, a very large bubble is forming and, as we americans have experienced firsthand, a housing bubble can cause extreme economic chaos. Most of the people who are investing in real estate make up the middle class of China and many of whom have entrusted their entire bank account into this bubble. If it pops, that money is gone taking China’s middle class with it.

All this is happening while the United States is climbing its way out of the recession. After our own housing market crash and the ensuing economic crisis, we have finally started to bounce back, not to the strength that it was before the crash, but its getting there. The key now is to keep allowing businesses to grow and create jobs to get America back on track.

While China may be rising in the economic hierarchy, their hold on the title of dominant superpower is far from their grasp, if not impossible. Their constant saber-rattling and their seemingly unstoppable economy has risen on unstable footing that is about to collapse. So your crazy uncle can sleep easy knowing that the good ol’ US of A is still number one while “The People’s Republic of China” is nothing but a paper tiger.