China's rise, then China's decline

[Calach Pfeffer]

Everyone warns of China’s rise. But its decline could be even worse.

“It’s frightening to think about,” a prominent scholar said.

TOKYO — Most Western predictions about the future of China’s rise are ominous, ranging from theories about how the country will perfect an authoritarian society to how it will serve as a model for a less free future.

But while reporting in Japan on Wednesday, I heard the most troubling prediction about China yet — and it was actually about the country’s decline.

“If the central government runs out of money, then they’re in trouble,” Akio Takahara, one of Japan’s leading scholars on China, told US-based reporters. “If you talk to the Chinese people, they’ll tell you that this [system of government] cannot last forever. So someday there will be a big change, but they don’t know when, they don’t know how, or what the process will be,” Takahara said.

And, he added, it won’t necessarily be peaceful...

[Calach Pfeffer]

In where I live, there was a period some years back where everything worked. The electricity, the water supply, the roads, the trains.... They weren't perfect but they were consistent and had begun to seem trustworthy.

Now of course there's way too many empty high rises for such a small burg, probably two times too many cars given parking and the roads are only keeping up with the car population because they keep getting rebuilt, the electricity flickers in the winter, but my god, the water, it goes out every other month, seems like, and there's never enough pressure for the number of people on this campus...

It doesn't feel like just a case of "still a developing country". It's more like development mismanaged. So I wonder from time to time if anyone knows how to capitalise on development. Basic development pushed all levels of everything up a few notches, but then what? More and larger basic development? Scale also scales up the weaknesses inherent in how basic the development is, and you maybe get things like bigger, better water supply infrastructure that also breaks down more often. I'm not looking forward to anything similar with the power supply.

But that's it: is there anyone who knows how we level up after having only so recently leveled up the first time?

And I say "we", but...

[Escaped Lunatic]

My experience has been the opposite.  Water and power outages in my village used to be common.  They upgraded the water pipes a few years back and there's only been one or two water outages since then.  Power outages were common - anything from a brief moment to several hours.  One major upgrade fixed most of the power problems and I haven't seen so much as a flicker since a second major upgrade.  Obviously, some areas over-extended their utility grids while others have put in the efforts required to get caught up.

If any central government runs out of cash, that's a bad thing, but it's far from an automatic ending to the government.  Most governments in the world survived the great depression.  If running out of cash was all it took to topple a country, the US would have gone out of business before WWII was over and done it again for each trillion dollars of debt it sank into (currently heading towards 22 trillion).

China has a very large pile of foreign reserves (#1 in the world by a very wide margin) as well as gold, so has a quite well-padded landing cushion for handling economic reversals.  In 2008, the US almost managed to implode its own economy and would have taken much if Europe with it.  In China, that huge financial crisis only resulted in a moderate economic slowdown.

[Calach Pfeffer]

China did have a large foreign reserve... weren't they selling off Treasury bonds a few years back?

I think the thing about running out of money is the implicit claim that no one here's really under very much control at all. They're oppressed, sure. But not governed. Stop paying for social protections, including all those gigantic made up infrastructure projects, and people start reverting.

And if your experience genuinely is the opposite, then those satisfactory local development results won't begin failing under the stress of over extension in the next five years.


Or, what I really think was interesting about that article is not really the possibility of China's failure, but the seeming real current mystery of it's success. How does China continue to "grow"? What are the real contradictions? Was the real growth engine really globalisation and is China far, far to barefaced these days in the screwing of that system, or has it always been screwed that way?

What was the real engine? What's the real trend? Or are Chinese really just that alien that no observer can ever help but be baffled by what is to them normal?

[Escaped Lunatic]

China's reserves were larger, but are still the largest (more than twice the #2 country).

I suspect some of them were used to finance some large infrastructure projects as well as the Belt and Road initiative.

I have a theory about our different utility reliability experiences.  Dongguan is a major production hub.  In town utilities were very reliable even when I first arrived, but out in the village, they were less so.  The village sits among factories.  When clothing was the main production item, a momentary or even hour-long power interruption is just an annoyance. As more and more high tech production comes online, reliable power is much more important.  Also, an overseas investor won't freak out if a clothing factory loses water or power for an hour.  Coming into a cell phone or computer components factory and seeing the basic utilities take an unscheduled break is a lot scarier.  So, the city (and the whole Pearl River Delta) pretty much had to prioritize getting utilities upgraded.

If your town lacks high tech manufacturing, it may not consider extremely high utility reliability to be a top priority.

As for "Belt and Road", someone at the top figured out that the biggest hit to China in 2008 was WalMart buying less stuff from China.  Giving countries with growth potential a leg up as well as some reliable roads and port facilities gives China a wider customer base.  I haven't examined all the details, but I'll wager some of the beneficiary countries are also signing contracts to provide raw material to China.  This, in combination with increased emphasis on domestic consumption further insulates China against fallout from US and European economic downturns.

How China pulls something as massive as it's economy forward?  It's been 40 years since the "Opening" was announced.  If China tried to bring the whole country forward at once, there wouldn't have been enough resources.  Instead, the opening started with Special Economic Zones and carefully paced relaxations of other rules.  When the special zones worked, they expanded.  Infrastructure projects focused on turning places like Dongguan from sleepy little towns into industrial workhorses.  Then, development was slowly expanded from the coastal areas to points farther and farther inland, with road and rail upgrades timed to support these.

Obviously, there's more to it, but this at least gives an idea of how at least some of the larger pieces of the puzzle fit together.

[Calach Pfeffer]

I think I'd understand it better if it seemed the citizenry were on board with the development. If this multi-decade march forward were accomplished by an essentially united mass of the eager and responsive, it'd kind of make sense as a wave.

Now that I write that down, I wonder if I'm not focusing a little too much on the current relative fracturing of the collective. There's a middle class now and some degree of personal individuation. But there wasn't always. The collective used to be much more real. So, yeah, I guess.

But then there's corruption as a lifestyle too, and how and when that came to be. If the middle class makes governing China seem like herding a billion cats, endemic corruption should have made governance into something else, and it should have had some influence on the nature of "development". The corrupt after all are anti-development in effect as much as they might also be members of the collective otherwise.... (that's a weird sentence).

I dunno. I can't immediately square the grasping avarice with the efficacy of material development as a social construction tool. It should all fall apart after some time. and maybe the only reason it hasn't is sheer size. It takes a very long time for the rot to undermine the vastness of China's material resource use.

Which I suppose is the suggestion that the real driver of China's development is simply the tremendous numbers of people there were available to throw down the well.

[Escaped Lunatic]

Naturally, one month after bragging about the stability of my power supply, there was a 5 hour unplanned outage.  I'm told I also missed an outage yesterday.  Not sure how long that one was.