This is a follow-up to Will China collapse? (5 August 2008).
- “Get ready for lower Chinese growth“, Michael Pettis, op-ed in the Financial Times, 29 July 2009
- ”The spend is nigh“, Economist, 30 July 2009 — “The second article in our series on global rebalancing asks whether China can reduce its trade surplus by consuming more.”
- “China’s economic policy: A ‘Great Wall’ or Capuan complacency?“, Arthur Kroeber, Financial Times, 11 August 2009 — See excerpt below.
- Excerpt from The Coming Collapse of China, Gordon G. Chang — See excerpt below.
Quote of the decade about China
Secondly, a revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another. — Mao tse-tung, “”Report on an Investigation of the Peasant Movement in Hunan”, March 1927
(3) China’s spirit is not a Great Wall
“China’s economic policy: A ‘Great Wall’ or Capuan complacency?“, Arthur Kroeber, Financial Times, 11 August 2009 — Excerpt:
The Romans bounced back from calamity because they had a resilient set of alliances based on well-developed political and economic ties and a constitutional system that enabled a broad array of talent to come forward and express itself. No error lasted too long unchecked.
… China’s ability to maintain economic growth of around 8% despite the global shock took many by surprise. But this ability has nothing to do with systemic advantages, a distinct “China model” of growth, or skill in macroeconomic management.
… China’s present economic vitality results from a Great Wall all right – a Great Wall of borrowed cash. There is nothing remarkable or spiritual about an economy growing at 8 per cent when credit is allowed to expand by 34%.
The fact becomes even less remarkable when we recognise that nominal GDP (the appropriate comparator for nominal credit growth) grew just 3.8% in the first half. In other words, 10 dollars of new loans were required to generate just one dollar of economic growth.
In fact China’s first-half growth shows one thing and one thing only: the existence of a powerful state with the ability to commandeer its citizens’ wealth and plough it into more buildings, bridges and roads, with no regard for the return those investments will bring.
(4) Excerpt from The Coming Collapse of China, Gordon G. Chang (2001)
There are plenty of Chinese this evening, but nothing is horrible and no one is sad. If anything, some are a bit too merry. The crowd, numbering in the hundreds, is boisterous as free-flowing liquor enlivens the revelers on the rooftop terrace of Shanghai’s historic Peace Hotel. The city around them is sparkling, floodlit in clashing colors against a pitch black sky, and the Huangpu River just below is bustling with commerce even at this late hour.
On the roof this perfect evening the wealthy and the famous mingle with Shanghainese on the make; pride, arrogance, and envy all on display. Personalities in black tie chat with gentlemen in long gray robes, and women in floor-length gowns mix with friends in tight-fitting qi pao split almost to the waist.
Guests have traveled across China and halfway around the world to be on display this evening in the radiant city that is Shanghai. But now the guests take their seats and the table chatter slowly dies. They look at the figure standing before them this Saturday evening in October 1999, just days after the fiftieth anniversary of the People’s Republic. The ornate ballroom at the top of the Peace Hotel is finally quiet.
The tall American woman is particularly striking; she’s in her finest revolutionary red. Her gown, covered in hundreds of Mao buttons of red and gold, is a fashion statement, however, not a political one, because she’s here to have fun. She takes a look around the room before starting. “The Revolution has become a dinner party,” says Maggie Farley, and the crowd cheers.
Yes, the revolution has become a dinner party. The People’s Republic today is not gentle, temperate, or kind, but it is not revolutionary either. The country and the party that leads it are now both old in their ways. The zeal that carried Mao from near defeat to total victory has been spent, lost in all the campaigns and programs that have gone wrong. Here, in the city where the Chinese Communist Party was born, there is nothing that is revolutionary. Nothing, that is, except the opponents of the current regime. They are weak today, but that will change.
The Chinese now want something different, as they did at the end of the Qing Dynasty and at the fall of the Kuomintang. The people are no longer poor and blank. They know what they want. The Chinese will take what they want one day, and that day will be soon.
The truth is that Party cadres will have only themselves to blame when that time comes. They have, over more than five decades, failed. Their republic is corrupt, repressive, and brutal. Its sheet of paper is no longer unblemished. China, for all its recent progress, is still poor. Chinese history has a pattern: governments like the current one fall.
About Gordon G. Chang
He has no special expertise about China. From his Wikipedia entry:
He is a lawyer and author, best known for his book The Coming Collapse of China (2001) in which he argued that the hidden non-performing loans of the “Big Four” Chinese State banks would likely bring down China’s financial system and its communist government and China would collapse in 2006. In Nuclear Showdown: North Korea Takes On the World (2006) Chang suggests that North Korea is most likely to target Japan, not South Korea. Chang suggests that North Korean nuclear ambitions could be forestalled if there was concerted multi-national diplomacy, with some “limits to patience” backed up by threat of an all-out Korean war.
For links to his articles and speeches see his website.
Other posts about China on the FM site
- Power shifts from West to East: the end of the post-WWII regime in the news, 20 December 2007
- What you probably do not know about China’s food crisis, 21 April 2008
- China becomes a super-power (geopolitical analysis need not be war-mongering), 9 July 2008
- Words to fear in the 21st century: Lǎo hǔ, lǎo hǔ, Lǎo hǔ, 14 July 2008
- A different perspective on the US and China, seen by an American living in Russia, 23 March 2009
- China – the mysterious other pole of the world economy, 22 July 2009
- Another big step for China on its road to becoming a great power, 27 July 2009
- Will China collapse?, 5 August 2009
Originally published at Fabius Maximus and reproduced here with the author’s permission.