The China Pessimists Speak Out

City Journal, a conservative urban affairs journal published by the Manhattan Institute has been slowly expanding its scope, and this month runs an interesting article titled “The Empire of Lies: The twenty-first century will not belong to China”.

Here’s the teaser:

The Western press is full of stories these days on China’s arrival as a superpower, some even heralding, or warning, that the future may belong to her. Western political and business delegations stream into Beijing, confident of China’s economy, which continues to grow rapidly. Investment pours in. Crowning China’s new status, Beijing will host the 2008 Summer Olympics.

But China’s success is, at least in part, a mirage. True, 200 million of her subjects, fortunate to be working for an expanding global market, increasingly enjoy a middle-class standard of living. The remaining 1 billion, however, remain among the poorest and most exploited people in the world, lacking even minimal rights and public services. Popular discontent simmers, especially in the countryside, where it often flares into violent confrontation with Communist Party authorities. China’s economic “miracle” is rotting from within.

The piece goes on to lay out all the hidden instabilities hidden underneath the great roaring engine that is the Chinese economy - environmental degradation, demographic imbalance due to the one-child policy, rural AIDS, etc. It even questions the validity of Chinese economic statistics (a very reasonable bone that  I must admit is rarely raised in the mainstream press), suggesting that if growth is closer to 8 percent its not any different from what Japan or South Korea or Taiwan achieved during their take-off phase, and thus hardly counts as a “miracle”.

Having just returned from my fourth trip to China in seven years, I can’t claim to be an expert on China. But one thing I do know is cities, and I know over-capacity when I see it. Row on row of apartment blocks with no people or cars buzzing around them. Airports with entire sections idled. Bridges to nowhere. Roads empty of cars.

Unfortunately, there’s a lot of this in today’s China, especially around Shanghai, where I spent this last trip. Money is so cheap, and demand forecasts are so rosy, everyone is building everything as fast as they can before a correction takes place. Growth hurtles along at an 11 percent annual rate (unlike the City Journal author, I think the government has an incentive to understate real growth if anything to calm the speculative fires) but consumer spending isn’t keeping up.

Something’s got to give.

Comments

[tricia wang]

Whenever I read extreme doom and gloom reports/opinions on China, I can't help but think about how writers may be projecting their own anxieties about the US's economic position.
From the article in the Manhattan Institue Piece -what its title (The Empire of Lies: The twenty-first century will not belong to China”) implies, is that The Twenty-first century will CONTINUE to belong to the the US/West."

[David Scott Lewis]

The City Journal article is an excellent piece, perhaps biased in tone, but not in fact (although some of the "facts" seem to be a stretch). The only "fact" that seems implausible is the RMB 600 charge to see a doctor. 600 fen seems more reasonable, i.e., 6 yuan, although there's likely an upfront fee for further diagnosis and treatment.

Tricia claims that the article is saying the the 21st century will continue to belong to the U.S./West. Well, that claim is never made or implied. Being critical of China does not necessarily (and does not likely) mean that one is claiming superiority of the West. Tricia, the two do not go hand-in-hand. If I'm critical of SAP, does this necessarily mean that I think that Oracle is great? I don't think so. Tricia, you're way too emotional about this; you're lacking objectivity.

As an expat living in China (for over three years now), I couldn't find anything significantly wrong with the article. I may disagree, however, that Chinese want democracy. More freedom(s), yes. But democracy? I don't see this as a high priority item on anyone's agenda.

Like I said in my opening, the problem with the City Journal piece might be more with its tone; it does have a pessimistic bias. But, like I said, it's hard to dispute the facts.

It really boils down to faith (or lack thereof) in the current government. I, quite frankly, have a lot of faith in Hu Jintao and especially in Wen Jiabao: I'd vote for a Hu/Wen ticket over a Bush/Cheney ticket -- and I'm a Republican!! ;-)

But this country (China) is truly a mess. And because it's a mess, it's really hard to predict where things will go. One should also look at things on a relative basis and on a regional basis. From this perspective, China will gain relative to the States, the E.U., Japan and India (India is a joke; shows why democracy may not be a good thing after all).

Bottom line: China's future is unpredictable and the only thing that China's government can try to do is to improve things bit-by-bit. And I believe they are doing this. After 2012 (i.e., after the Hu/Wen team leaves office), who knows. But for the next several years, China will continue on a path of progress and toward progress. I have faith in the Chinese and China -- and especially in Hu and Wen. But I have to admit, I hope I don't have to eat my words; yet, I said this in 2000 (regarding Bush) -- and I've had to eat my words.