China

Happy Golden Lucky: Is It Over For China?

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He seems like such a nice man.

If you enjoyed Sen. Charles Schumer's (D-New York) anti-Chinese tirade yesterday, you may also like Gordon G. Chang's fascinating prediction of the end of China Inc. in World Affairs. The story is almost wall-to-wall good news, but such is the market for declinist narratives that Chang's book is called The Coming Collapse of China.

This article, however, bears the title "The Party's Over: China's Endgame," and it has the more modest goal of demonstrating that the Communist Party's control is slipping. It's pretty persuasive on that point. Chang says the recession has already begun to undermine the party's essential claim that it knows how to deliver prosperity:

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.

It's the Pak-ah-pu that's really ruining this country.

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.

Beijing stopped the precipitous decline with a $586 billion stimulus program, announced in November 2008. The plan created a "sugar high" as the central government flooded the country with money, but resulting growth will be short-lived. The state's stimulus plan favors large state enterprises over small and midsize private firms, and state financial institutions are diverting credit to state-sponsored infrastructure. The renationalization of the Chinese economy with state cash will eventually lead to stagnation.

But the economy could fail before stagnation eventually sets in.

This mall's got everything except shoppers.

Nobody loves the recession more than I do, but I think Chang may be putting too much emphasis on transitory developments. China's post-Mao, and particularly post-Tiananmen, growth could certainly be screwed up by the ruling party, but it's important to remember that the party didn't create the growth in the first place.

Chang faults Prime Minister Wen Jiabao for not re-orienting the economy toward consumption rather than exports, noting that China's stimulus went mostly toward infrastructure and heavy industry. That sounds like a classic misallocation of resources, but it's nothing that we haven't seen on this side of the Pacific. Although Chang doesn't get into it, the dispute over the alleged undervaluing of China's currency is part of this same argument over the party's reluctance to encourage consumption.

But you know who I'd like to be? The autocrat whose big challenge is to stop preventing my people from buying more stuff that they want to buy, in massive, beautiful shopping malls that didn't even exist when I took office. I think I could solve that problem.

That strain of we-should-have-their-troubles runs through the piece:

As a people, the Chinese are not particularly obedient these days; they incite as many as 127,000 disturbances a year—perhaps more. Whatever the exact number, the political system is obviously having increasing difficulty channeling discontent as the Chinese people, believing in their rights and fearing their leaders less and less, wrestle for control of their future.

Tellingly, the most disgruntled people Chang highlights are not dispossessed kulaks or starving peasants or oppressed cosmopolitans but those universal symbols of socialism in retreat: workers bellyaching about layoffs. Many labor fights have ended violently. Undoubtedly some budding Chuck Schumer in Guangdong is even now lecturing the unemployed about how their problems are all the fault of the Americans and their Beijing lackeys. But the unifying theme is that people are able to stand up to their government:

Fighting The Man in Urumqi.

The Uighur protests that erupted in Xinjiang last July, for instance, were sparked by news—which spread rapidly—of murders at a factory at the other end of the country, in Guangdong province. Worker demonstrations in early 2002 started in the northeast and spread to the center of China in a matter of days as laborers realized they shared common grievances. ("It's the first time we have seen protests occur in the same industry, over the same issues, in different cities in China," says Han Dongfang, a labor activist exiled from the mainland.)

Best of all, the ruling party is busy producing the kind of leaders a free society most needs—mediocrities:

China's system is now weeding out the Mao Zedongs and even the Deng Xiaopings in order to prevent the rise of charismatic leaders, particularly someone like a Chinese Gorbachev. The individuals surviving this vetting, not surprisingly, lack the dynamism and ability of their bloodthirsty but imaginative predecessors. As the current leadership works to keep the lid on, small problems grow into big ones and big ones become gigantic. None of these problems has threatened the existence of the regime because increases in economic output in recent years have masked dislocations. But as the economy begins to contract, these problems may become too big to ignore—and perhaps too big to solve. As a prominent businessman told me last spring—smiling broadly as he sat in his spacious office in a Shanghai skyscraper—"No one fears the government anymore."

Chang takes seriously the possibility of a revolution, and it would be wonderful to see another communist party become extinct. And China could certainly use a cooler looking flag. But the work of accommodating change already seems to be happening:

"Now, no Communist official is loyal to or will sacrifice for the party," said democracy activist Peng Ming, just after he was released by the regime. "When I was in jail, the prison warden and guards were very respectful to me. Even when I criticized them, they would not criticize me back. Why? They said, 'This regime will not last long. Who knows you won't be our next leader? If we mistreat you now, you will come after us when you come to power.'"

All this may signal a weakened or nonexistent Communist Party in the future. Maybe it portends the kind of national reversal Chang hints at (and his book title makes explicit). But keep in mind the truth that unifies all nations: People prefer MTV to leprosy.

Whole piece, courtesy of Arts & Letters Daily.