The China Hype

When I was growing up Japan was going to be the world’s next superpower.  In my father’s time the Communist bloc filled that role.  Every generation sees our decline mirrored in the next most powerful force on the horizon.  Even now when for the first time in our history we tower unchallenged over every other military, economic, or political force on the planet, we still engage in this perverse fantasy.  We’ve found a new target for this unique American mania; our fascination with our own imminent end.  Many are telling us now that we are at the beginning of the China Century.

I’m not betting on it.

There is reason to be impressed with China’s progress.  In a single generation the country has gone from Communist-imposed penury to a Capitalist-influenced economic boom.  China has become our single largest annual buyer of treasury debt and our second largest trade partner.  All the while China’s authoritarian government has resisted pressure to grant greater liberty to their citizens, maintaining a rigid, though steadily eroding control on information and expression.

By some projections Chinese GDP is expected to match the US as soon as 2020.  Ties between our two countries have grown so deep that leaders of the two countries are slow to criticize one another, allowing the Chinese to continue their internal repression and cyber-spying with hardly a word from us.

Some have speculated that China’s unique model of authoritarian capitalism is emerging as an attractive rival to western liberal economics.  With carefully managed economic progress China has been able to suppress any movement toward broader political participation, stifling dissent with either handcuffs or cash.  History tells us this can’t last.

First, the power of China should be placed in perspective.  If, and that is a large if, China manages to match US GDP by 2020, it would still be earning about 1/5 our GDP per capita.  It would also require them to maintain double-digit economic growth for the entire remainder of this decade, an unheard-of achievement.  Even accomplishing that staggering goal would give the Chinese an average personal income of around $9,000, about 80th in the world – roughly even with Azerbaijan and barely half of Taiwan.  Currently China ranks 98th in GDP per capita, just behind Albania.

Continued expansion of the Chinese economy is a big if.  They have a serious lack of natural resources, particularly access to cleaner forms of energy and no economic transparency.  Available farmland is shrinking fast and critical growing and grazing areas in the north have been so badly overused that they are turning to desert.

These expansion projections also assume that current data on the Chinese economy provided by the repressive Chinese Communist Party is reliable.  If we have learned anything from our own bubbles it is that speculative economic expansion cannot be supported long without transparency.  We have also learned that people will lie for money if they can and you can’t fool the markets forever.

Through the fog of Chinese media manipulation stories are emerging of empty cities and neglected, centrally planned developments.  There are shadows of serious problems looming for this supposed giant.

Sustaining growth means continuing to ride the increasingly unruly tiger of political unrest.  In the West we hear nothing more than inklings of dissent from the impoverished and unrepresented masses in the countryside.  One could conclude there is no meaningful political resistance, but if so, why the strict censorship and repression?

One good, strong bubble collapse, which is almost inevitable in any fast-growing economy, could place the entire edifice in danger.  The country’s leadership in 1989 easily defeated the burgeoning pro-democracy movement that brought down dictatorships all over the globe.  They simply sent in the tanks and mowed them down, problem solved.  It was a success that has bred a future disaster.

The Communist Party has effectively gutted the forces that could have led the country toward the Western-style liberal democracy embraced by so many of their neighbors.  But they are not going to be able to hold more than a billion people out of the political process forever.  What has developed among the Chinese masses instead of the democracy movement is an extreme nationalism akin to Fascism.

It is likely in time that China will mature into a strong, relatively prosperous, free nation.  If they ever do, then they will be a rival to us in terms of economics, but not politics.  Like Europe, which possesses a larger GDP than ours, a mature China with a vibrant middle class and broad political participation will not likely be a major source of political friction.  But there is a long, dangerous road to be traveled before we see that day.

Our most serious foreign policy challenge of the coming century might be what to do when the Chinese political bubble bursts.  There is little sign of a political culture developing that could support representative government of any flavor.  We may find ourselves soon facing a stark, yet all too familiar dilemma.  Prop up an unpopular dictatorship we’ve come to depend on or accept the immergence of a hostile dictatorship we can’t tolerate.

If there is going to be a China Century it probably won’t be this one.


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