Several months ago in this Atlantic story, I explained what some economists thought was the biggest danger in the Chinese government's response to the world business collapse. Obviously the Chinese government had to do something to offset the tens of millions of layoffs happening all at once. Its predicament was in a way like America's at the start of the Great Depression: having had an abnormally large share of the world's manufacturing jobs and export earnings when times were good, it had more of them to lose when demand crashed. But China's situation was worse, because it is so much poorer than America was, and because exports represented a bigger share of its employment base.

Continue reading this post by James Fallows at his blog here.

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