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| China-Japan-Koreas | |
| The Party's Over: China's Endgame | |
| 2010-04-15 | |
How did this notion of Chinese supremacy gain hold? The answer is nothing more profound than statistical extrapolation. China was destitute when Deng Xiaoping grabbed power in December 1978. Since then, the country has averaged, according to official statistics, a spectacular annual growth of 9.9 percent. This rate, if carried forward, gives China the world's largest economy in a few decades—2027, to be exact, according to a now-famous Goldman Sachs estimate.
And as a result of its manufacturing strength, the Chinese central government accumulated foreign currency reserves that have been aptly called “the greatest fortune ever assembled'—$2.399 trillion, at last count. No country has a bigger stash. And no wonder analysts believe that China, having grown so large so quickly, has now acquired unstoppable momentum. But the analysts and the conventional wisdom they peddle are wrong. China's economic model, which allowed the Chinese to take maximum advantage of boom times, is particularly ill suited to current global conditions. About 38 percent of the country's economy is attributable to exports—some say the figure is higher—but global demand at this moment is slumping. (Last March, the normally optimistic World Bank said the global economy would contract in 2009 for the first time since World War II and that global trade would decline the most it had in eighty years.) Globalization, which looked like an inevitable trend in early 2008, is now obviously going into reverse as economies are delinking from each other. So China is now held hostage to events far beyond the country's borders. As we saw in the Great Depression, the exporting countries had the hardest time adjusting to deteriorating economic conditions. That is proving to be the case now as well. China's exports fell 16.0 percent last year, and forecasts show a weak export sector for at least the remainder of this year. As a result of declining exports and other factors, Beijing presided over the world's fastest slowing economy. China's economy, in fact, grew by about 15 percent in 2007, but fell to negative growth at the end of 2008. | |
| Posted by:tipper |
| #8 Globalization, which looked like an inevitable trend in early 2008, is now obviously going into reverse as economies are delinking from each other. This is incredibly wrong and just plain foolish. Economies are not delinking, nor will they. Hell, the writer goes on to use the Great Depression as an example of the difficulties exporting nations face, but doesn't recognize why they face it. Because import and export economies are linked, silly. They were a hundred years ago and will be a hundred years from now. What's going to prevent China from becoming the dominant economic superpower is poor governance, an aging population and competition from cheaper labor markets. |
| Posted by: Mike N. 2010-04-15 20:29 |
| #7 China's entire history 100 years before Mao was civil war and being beaten up by imperialists. That's the way the Chinese see their history. A perception strongly reinforced by a very nationalistic narrative indoctrinated into all Chinese by the educational system and government propaganda. China is a totalitarian regime and such regimes don't survive social and economic disruption well. The CCP is probably safe as long as the good times roll, but look out if there is a real estate crash, a bigger and 'better' GFC MKII, raging inflation, etc. |
| Posted by: phil_b 2010-04-15 19:45 |
| #6 China's entire history 100 years before Mao was civil war and being beaten up by imperialists. Or the Manchus who beat up the Ming, or the Ming who beat up the Yuan/Mongols, who beat up the Sung, who...well you get the idea..all the way back to the Han and Shang. It's the other old Chinese cycle: chaos and regionalism, centralization, entropy-decay-corruption of the center, disintegration-decentralization. It's only been going on for a couple thousand years. What modern tech does is speed up the time line. The problems Beijing faces are the growing economic rift between the Han and non-Han in the outer regions attenuated by the Han's historical racism and ability to handle a real serious recession coupled with classical wide spread corruption that is the bellwether of other failed dynasties. They're riding the proverbial tiger, though they've shown remarkable pragmatism in adopting the changes they have. What has yet to be seen is at what point their [the Party] need to control overpowers the natural tendency of effectiveness to be correlated to the lowest level of responsibility which works against centralization. We're seeing that failure in the Beltway today. |
| Posted by: Procopius2k 2010-04-15 17:08 |
| #5 Westerners are seeing the country through their own distorted lens. To Chinese, the CCP is kind of troublesome but they're delivering the goods in spades. You have to realize that before 1992 China was poor. I mean, basket case poor. The CCP has made China into a powerful nation and the people don't mind the repression all that much, as long as it keeps the feared chaos at bay. China's entire history 100 years before Mao was civil war and being beaten up by imperialists. Nobody seems to understand this, even people who should know better. I'm no panda hugger but the commies have done a bang-up job ever since Deng Xiaoping hijacked the People's Revolution onto the capitalist road. |
| Posted by: gromky 2010-04-15 15:13 |
| #4 What a bunch of BS. They confuse discontent with thieving local officials with discontent with the central government in Beijing. No doubt that's true, gromky, and is an important insight in terms of evolution vs. revolution on the political side of things. But on the economic side, the question is whether those straight-line extrapolations upon which all of China bases their hopes are realistic. If not, as I contend based on my very limited understanding of economics (and a philosophical fondness for asymptotic curves), life will become a bit more interesting for all of China a good deal sooner than planned, even without a political revolution. |
| Posted by: trailing wife 2010-04-15 14:43 |
| #3 What a bunch of BS. They confuse discontent with thieving local officials with discontent with the central government in Beijing. Actually, the central government is typically viewed as a savior, as every Chinese has the right to go to Beijing and petition the government for grievances. The CCP is responsible for the greatest period of prosperity in the 5,000 year history of China. They went from dirt-poor (literally - no Xbox and cable TV for the peasants in 1992) to modern nation in less than 20 years. Well, parts of China are fully modern, anyway. Think about what would have happened to the USA in 1845 if aliens with cell phones and computers landed and started investing in factories everywhere. By 1863 there'd be a "modern" alien-influenced state built right next to the saloons and cathouses. Chinese are proud of China, and the CCP is the reason for it. Chinese greatly fear chaos and the CCP is the lesser of two evils. There is an unspoken deal: "keep the prosperity coming and we won't complain too much." |
| Posted by: gromky 2010-04-15 12:24 |
| #2 Yes. |
| Posted by: ed 2010-04-15 12:22 |
| #1 In 1978, the state produced virtually all the nationÂ’s gross domestic product. Today, that figure has dropped to a third. Does this mean The U.S. under Obama is more socialist than Communist China? Al |
| Posted by: Frozen Al 2010-04-15 11:37 |