The paper tiger revealed

In an excellent article, Gordon Chang explains why he is still correct about China’s coming collapse. Indeed, as has been stated here before, the theory behind China’s aggression, its claims to the laughable claims to the entire South China Sea, its continually rising military expenditure, for no apparent reason, its aggression,  instability,   paranoia,  worryingly nationalistic pressunsettling power struggles, more instability , the lowest growth rate in eight years, isolation and generally failing economy are a dangerous combination. It is never a good sign when those wealthy enough to leave the country do. The world is in fact watching not the rise of the Middle Kingdom, but its “long decline“.

Chang argues that the fundamental reason why China has lasted this long is that “the Chinese central government has managed to avoid adhering to many of its obligations made when it joined the WTO in 2001 to open its economy and play by the rules, and the international community maintained a generally tolerant attitude toward this noncompliant behavior”. Thus exports soared, while the home market was protected.

Such is the nonsensical accolades that China is receiving that “Justin Yifu Lin, the World Bank’s chief economist, believes the country can grow for at least two more decades at 8 percent, and the International Monetary Fund predicts China’s economy will surpass America’s in size by 2016″.

Chang ignores these so called “experts” and says that China has grown economically because of “Deng Xiaoping’s transformational ‘reform and opening up’ policies”, ” Deng’s era of change coincided with the end of the Cold War, which brought about the elimination of political barriers to international commerce” and finally Chang says that  ” all of this took place while China was benefiting from its ‘demographic dividend,’ an extraordinary bulge in the workforce”.

Chang thankfully goes on to say that “the Communist Party has turned its back on Deng’s progressive policies”, that “the global boom of the last two decades ended in 2008 when markets around the world crashed. The tumultuous events of that year brought to a close an unusually benign period during which countries attempted to integrate China into the international system and therefore tolerated its mercantilist policies. Now, however, every nation wants to export more and, in an era of protectionism or of managed trade, China will not be able to export its way to prosperity like it did during the Asian financial crisis in the late 1990s” and lastly as has been discussed here before, and as Chang mentions “The Chinese workforce will level off in about 2013, perhaps 2014,according to both Chinese and foreign demographers, but the effect is already being felt as wages rise, a trend that will eventually make the country’s factories uncompetitive”.

He adds that “Money started to leave the country in October, and Beijing’s foreign reserves have been shrinking since September”.

Chang posits the interesting scenario that “we will witness either a crash or, more probably, a Japanese-style multi-decade decline. Either way, economic troubles are occurring just as Chinese society is becoming extremely restless. It is not only that protests have spiked upwards — there were 280,000 “mass incidents” last year according to one count — but that they are also increasingly violent as the recent wave of uprisingsinsurrectionsrampages and bombings suggest”.

He concludes that “social change in China is accelerating. The problem for the country’s ruling party is that, although Chinese people generally do not have revolutionary intentions, their acts of social disruption can have revolutionary implications because they are occurring at an extraordinarily sensitive time”. He adds that “Political scientists, who like to bring order to the inexplicable, say that a host of factors are required for regime collapse and that China is missing the two most important of them: a divided government and a strong opposition.” Yet as he says, the rebels in Cairo or Benghazi were not united, the only thing that united them was the hatred of Mubarak and Gaddafi, and look where they are now.

Is this the beginning of the end of the Chinese moment?

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32 Responses to “The paper tiger revealed”

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