A Bear in a China Shop?

A bit of sobering analysis regarding China: http://www.atlanticcouncil.org/blogs/new-atlanticist/will-china-s-economic-slowdown-lead-to-a-major-crisis. This piece claims that China's current level of debt has always, historically, led to an economic slowdown, and 50% of the time to an economic collapse.

Underlying this is China's demographic time bomb. China was inevitably going to reach the limit of what it can do on the basis of cheap and plentiful labour. Labour has grown less cheap, and the supply has now been just about fully exploited. The one-child policy has guaranteed population decline. A smooth transition to some other model for prosperity is no simple thing. Japan started to stagnate when they hit the point of demographic decline.

And at the very same moment, I see news from a pair of popular YouTubers based in China that they are moving their main base of operations to Southern California. They say things have just become too difficult and dangerous for them as foreigners in China. There are sudden clampdowns on everything. This must be equally true for the Chinese. 

Putting two and two together, it looks to me as though the Chinese government itself expects public unrest. They are trying to put the lid firmly back on before the boiling point is reached. They are especially trying to restrict the internet and the media—the channels through which any opposition might organize.

This also explains China's recent sabre rattling, in the South China Sea, in trade with Trump, over disuted islands with Japan. Making these sort of waves is not in China's interests. If they can look peaceful and friendly, they keep getting stronger, until they become invincible. If they get hackles up, others may unite against them before they reach this point, while they are still vulnerable. The only reason they would be doing this, therefore, is for internal politics: trying to rally the people around the government by evoking an external enemy.

I suspect China's Communist Pary is haunted by the example of the Soviet Union's collapse. Facing a financial crunch, Gorbachev loosened things up in hopes of maintainin popular support. That didn't work; it did not keep the Communist regime in power. So, logically, the Chinese government is trying the opposite approach.

I suspect that Gorbachev was right, and this will only result in a worse explosion. Gorbachev was able to manage a peaceful transition. That was his triumph. The alternative would have been far worse for everyone. And civil rebellions in China have been known to cost lives in the tens of millions.

I am personally amazed that the Communist regime in China has lasted this long. When I was first in China, in 1992, it already looked to me as though it were on its last legs. That is, nobody took the underlying ideology seriously; everyone was cynical about it, and practicing a kind of passive civil disobedience, ignoring the laws when they could. A system nobody believes in is running on fumes.

My Chinese students a decade later on agreed with my suggestion that the Chinese people would continue to accept the Communist government for as long as the economy kept doing well—as long as everyone is prospering, why rock the boat? But the moment that stopped, the regime had no further legitimacy.

Just about everywhere else, once a certain level of material prosperity has been reached, once there is a strong and independent middle class, totalitarian governments either fall, or transition into democracies. The Chinese government has been doing what it can to prevent this by trying to prevent the development of any independent organizations which might form the basis for a political opposition. This is why they have been eager to crush Falun Gong, and recently the Christian churches, But this may be futile. Large successful businesses also become independent power centres. Wealthy Chinese with homes abroad, of the sort who have been buying up Vancouver, become an independent power centre. This kitten is not going back in the bag.

Tiananmen in its time was already a close run thing. The umbrella rebellion in Hong Kong a little while ago looked as though it might spread. When the Middle East rose in the “Arab Spring,” China saw a concurrent “Jasmine Rebellion.” There is a lot of dry cordwood lying around.

I see a sea of chaos coming.