Friday, November 14, 2014

Wherefore China?

Reports of China’s collapse are wildly premature.

According to journalist Francesco Sisci and to commentator David Goldman, those who are predicting the imminent demise of China are seriously misreading the situation.

We have been seeing a vigorous protest movement in Hong Kong and we assume that the Chinese regime is about to crumble. After all, we believe in mythology and mythology tells us that the masses will inevitably revolt against their oppressors.

Of course, as I have had occasion to mention, China has no tradition of democratic governance or human rights.

Keep in mind, Western journalists were convinced, a quarter century ago that the Tienanmen massacre spelled the end of Deng Xiaoping’s government and the advent of a golden age of Chinese democracy.

Today those predictions do not look very prescient. Many of those who uttered the prophecies have recognized that they were wrong.

Tienanmen notwithstanding, China is alive and well and thriving. It is naïve to imagine that a yearning for democracy has produced an internal contradiction.

Sisci explains it well:

In a nutshell, now is no time for revolution for the Chinese people, who are experiencing a golden age in their history and have had no past experience with democracy to pine for. This does not mean that revolutions or democratic demands are impossible in China. A mix of internal forces and international constraints could change the situation in the next decade. There are two elements which could drive change. The Chinese economy will be roughly as large as that of the US, and this will draw increased attention and fear from other countries because China does not share the political framework of the countries that have dominated the world over the past two centuries – the UK and US. Additionally, a large portion of the Chinese population will enjoy Western middle-class purchasing power, and private enterprises will be required to pay a larger portion of taxes as they will represent a large share of the GDP but as a whole they might have limited control over how their tax money is spent.

Fair enough.

Managing the expansion of the Chinese economy will be a daunting challenge. For now we have no real reason to believe that the Chinese authorities will not be up to the task.

Having linked Sisci’s views, David Goldman adds that the American commentators who are anxiously awaiting China’s implosion would do better to pay more attention to the current state of our own nation. Waiting for your adversary to self-destruct is rarely a winning strategy.

In his words:

China’s economy and political system aren’t going to collapse. China will continue to gain power. We need to worry about our own sorry state of affairs: we couldn’t replicate the 1968 moon shot today. Investment in R&D and basic science is a shadow of what it used to be, and our shrunken military budget is biased towards white elephants like the F-35.  Our “Common Core” curriculum stops with algebra, while 90% of Chinese have a high school degree including at least one course in calculus.

There is a myth in the West that the Chinese only copy but don’t create. The past generation, to be sure, found it more cost-effective to adopt than to reinvent the wheel. That was then. A new generation of young Chinese with first-rate scientific qualifications is entering the market with ambitions to found the next Alibaba.

This is real competition, and we can’t make it go away by closing our eyes and wishing for revolution. We should be having a Sputnik moment right about now–I refer to the national mobilization after Russia beat us into space in 1957. Instead, we crank up the volume and listen to the theme from “Rocky.”

Sobering thoughts, indeed.


Lastango said...

I expect China to collapse economically, but for reasons unrelated to a thirst (or lack thereof) for democracy.

China will collapse because its economy is a mirage, built on unsustainable and unsecured debt, enabled by an engine of pervasive corruption. The Chinese themselves seem to agree; that's why they're buying up hard assets outside China, all over the world, and moving their families abroad. They hope to be long gone, with the money they stole, when the roof falls in.

Ares Olympus said...

I agree with Lastango. Collapse is a deceptive word. And it's all about time-scales, big things have momentum.

If you build a shoddy house, it can still keep standing for years or decades, but if you expect you can just build a new house every 10 years because that worked for the last two houses, you can be always right, if your piggy bank isn't empty yet. But someday this plan will fail.

And physical infrastructure is China's problem. They're building a crazy lot of it at break-neck pace, which looks great on economic growth indicators, but less exciting when you have to look at quality and maintenance costs.

I'll worry about them less if they can clean up their air. Those medical costs are going to explode too!