Economist Andy Xie is now writing at Caing.com, the successor to Caijing On-Line, and his first two columns are, as always, well worth reading in full. They explicate the bear case on China accessibly, in concrete terms and with careful logic. If the author betrays a rooting interest, it’s not for or against China, but against policies whose effects may be devastating for the Chinese, and, at a minimum, dangerous for everyone else.
Xie’s side-observations are sometimes as interesting as his main themes. I didn’t know, for instance, that both Russia and India were experiencing double-digit inflation well in excess of nominal growth rates. His next-decade economic forecast for the U.S. and the Eurozone is summed up in one word: “terrible.” Yet the most eye-catching takeaway from his first two pieces at Caing.com – “Trapped Inside a Property Bubble” and “Pumped with Cash – And Ready to Crash?” – is his designation of 2012 as a target year for the Chinese bubble to burst amidst another global financial crisis:
2012 is building up to be another crisis year. Governments and central banks did not handle the last crisis well. They did not reform a global financial system plagued by incentive misalignment and wild speculation. All the money governments and central banks released is turning into global inflation. And they resorted to bailing out speculators, laying the foundation for another crisis.
The focus of the Chinese problem, in Xie’s view, is property speculation, the same property bubble that has made for those striking videos of empty, never-occupied skyscrapers and never-alive ghost towns, but which, more important, is also pricing China’s large, but proportionally small middle class out of the housing market, and spreading inflationary pressures on wages while also turning potentially productive citizens into compulsive speculators.
It’s mere coincidence if Xie seems to be reading from a Mayan calendar. He bases his prediction on rough but reasonable calculations derived from historical precedents and real-time observations, not on ancient prophecy. As Xie explains, the conditions that made China’s decade-long growth spurt possible have disappeared, and are unlikely to return. Even as China has lost its status as “lowest of the low-cost producers,” the country remains heavily export-dependent, yet prospects for a worldwide resurgence in export markets are dim at best. Like other economists, Xie expects near-zero growth in the Eurozone and Japan, and low growth in the U.S., with no prospect for other countries to take up the slack, especially since many of them are almost as export-dependent as China, if not more so.
China seems, however, to be far from having adjusted psychologically or politically to this new reality. Rather than undertake a re-adjustment of expectations, and face attendant political strains, China has been taking a path of least social and political resistance, in a manner that will strike some familiar chords for Americans:
The biggest risk to China’s economy is the desire to maintain past economic growth rates by maximizing investments in property – an unproductive asset. It supports short-term growth by sacrificing long-term growth as capital’s average productivity declines over time.
Local government performance in China is measured according to GDP and fiscal revenue. Property development can achieve high numbers for both quickly. This is why property’s share in China’s capital allocation is rapidly rising as prices appreciate and volumes increase. This is a politically driven bubble — and it’s already massive. Unless the trend is reversed by reforming incentives for local governments, China’s property bubble could mushroom in two years from what’s now a dangerous level.
Xie is building on his own past work here – he is one of the world’s proven experts on economic bubbles, especially of the Asian variety – but you don’t need to be an economist or China expert to follow him: The inflation of the Chinese property bubble amounts to “mal-investment” on as gigantic a scale as you would expect from the non-transparent, un-free, deeply corrupt public administration of an economy encompassing the lives and fortunes of over 1 billion people. The supposed advantages of authoritariansm, so impressive to New York Times columnists and some American presidents, can come at an unimaginably steep price.
Observers of the world scene – including JE Dyer in recent posts at the Optimistic Conservative’s Blog and elsewhere, or people like the international diplomats cited in Sunday’s Washington Post – have good reason to view China as a great power on the rise, a potential peer competitor to the U.S. It’s tempting to look at the financial crisis that Xie sketches, or at China’s well-documented and widely discussed demographic and resource issues, and assume that the challenge to American status is taking care of itself, but it would be imprudent to assume that a bad decade for China will permanently simplify our strategic lives. Indeed, the prospect of China’s weakness may turn out to be more dangerous than the prospect of Chinese ascendancy – even before we begin to consider the direct effects of a Chinese implosion on our own immediate interests.
The stridency of Chinese diplomats reacting to U.S.-Taiwan arms deals may reflect new self-confidence – or it may foreshadow a more bellicose, even desperate reaction to increasing pressures at home, amidst historically new, decisively frustrated expectations. Countries quietly confident that their hour is coming can afford to be patient. Countries sensing that their hour is passing – Germany 1914, Japan 1941, to note two of the more famous examples – often become more aggressive.
Comments 29
China’s property bubble bursting is a very plausible scenario, I gather more a matter of when, rather than if…
Personally, I think it unlikely that China will “undertake a re-adjustment of expectations, and face attendant political strains”. Especially as a Communist totalitarian regime does not allow contrarian feedback, from anyone.
I also think that 2012 will be just about when the Iranian acquisition of nuclear capability begins to have an immediate impact on world events. The most likely possibility being the Iranian seizure of the Strait of Hormuz. Resultant military confrontation between the US and Iran aside, the financial impact of that would be massive and certainly affect China’s economic health. Might some event like that even precipitate the Chinese property bubble bursting?
I agree that all of this is not an endorsement of Mayan predictions, which is not to say that the Mayans were wrong, just that Mayan predictions remain to be proven. And that Xie’s concerns are factual and the consequences he points to are predictable.
Long term predictions are always problematic as many intervening events can effect outcomes. Which brings to mind two quotes:
“All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; and Third, it is accepted as self-evident.” Arthur Schopenhauer
“When you’re one step ahead of the crowd, you’re a genius.
When you’re two steps ahead, you’re a crackpot.” — Rabbi Shlomo Riskin
February 1st, 2010 at 10:41 am
Hi Geoffrey.
As usual, you have interesting things to say.
Iran seizing the Straits of Hormuz in 2012 makes it sound like you’re more than a step ahead.
February 1st, 2010 at 10:46 am
The Trigger for our current economic status was the abrupt cessation of the Japanesse 0% lending program in the Summer of 2007. This was due to the devaluation of Chinese currency,an unanticipated result.(Japanesse Currency was worth more so loaning it out at 0% to be repaid in devalued Dollars was no longer possible) This was a typical “Bankruptcy” Scenario. As long as Cheap money is avaiable,Bankruptcy is forestalled.
Our official policy towards China is to keep the status quo,(1)Buy Chinese Goods,(2)Make American goods in China for World Export,(3)China continues to purchase our debt.
Does Andy recommend any changes in our China policies or is he recommending any sort of tactics that might shield us from a Chinese Black Hole in 2012?
February 1st, 2010 at 10:54 am
Rex Caruthers wrote:
Not his job! Or not his main concern anyway. Though he was educated in the U.S. and spent a lot of time here, he’s now back in Asia. In previous articles (and implicitly in these two), he’s been highly critical of Fed policy, which he expects to be late in combating inflationary pressures (more likely to show up first and most disruptively as spot inflation rather than in the CPI) and to help precipitate a double dip recession and a decade of economic stagnation – thus his “terrible” diagnosis. At the point that politics starts becoming economics by other means, he tends to keep his own counsel.
Maybe a second financial crisis in an election year will give the world’s major economies a chance to do what your friend Mr Hudson thinks we should have done last time: The Great Jubilee Write-Down. Maybe we need big financial players like China in a weaker position to defend their interests during the great sorting out of winners and losers in such a process.
February 1st, 2010 at 11:35 am
@ fuster:
No reasonably sane Iranian leadership would consider seizing the Strait as it would precipitate war. We would have to militarily intervene and if Iran used nukes we would respond in kind.
The problem fuster is twofold; we are dealing with fanatical religious zealots and anyone can miscalculate. Hitler invading Russia, Japan attacking Pearl Harbor in spite of Yamamoto’s warnings that it would only “awaken a sleeping giant” are but a few examples.
Iran’s nuclear capabilities will be a temptation for Iran’s leadership to engage in behavior it would otherwise not countenance and that temptation might lead them to a serious miscalculation; i.e. seizing the Strait in order to punish the West and inflate their ’street cred’ with other Muslim nations.
The miscalculation would arise in a failure to appreciate what seizing the strait would do, as it would economically punish the West beyond our capacity to endure and necessitate a US military response to open the Strait. If, in reaction to our military response, Iran used its nukes, a nuclear conflagration would result. Even Obama would have to respond with nukes if the Iranians attacked a US carrier battle group with nukes.
How likely is this scenario? In a sane world, not at all. But this is a world that produces Hitler’s, Stalin’s, Saddam Hussein’s and Ahmadinejad’s…
WWI started over far less provocation than a seizure of the Strait would present.
February 1st, 2010 at 12:07 pm
@ Geoffrey Britain:
Geoffrey, postulating an attempt by Iran to seize the strait is one bit of odd, suggesting that they would somehow be able to succeed is outrageously out there, saying that they might be ready, willing and able by 2012 is flat out fantasy.
No matter how weird they might be, or however fanatical, we have these big bits of metal in the way.
Talk to Our Lady of the Chokepoints about this.
February 1st, 2010 at 12:15 pm
@ fuster:
Iran doesn’t need to seize the Straits. Under certain scenarios, it might attempt something much easier: to deny use. Even threatening to deny easy access, something within or not far beyond current capacities, is almost as good as MAD. Today’s unfolding as my book-link day – so I’ll refer you again to Seven Deadly Scenarios. Go find it at a bookstore if you don’t want to read the whole thing, and read the preface which includes the “bonus” scenario on Iran and the Straits.
@ Geoffrey Britain:
BTW, welcome to Zombie Contentions-land, GB. It’s always good to see one of the strongest voices from the other Contentions, aka “Non-Zombie Contentions,” in these parts.
February 1st, 2010 at 12:30 pm
Hello GB,
You’ve been waiting patiently for the Iranian Threat to Western civilization to develop into a major event once Iran has the Nuke such as Nuking a US City,or Israel,or both.
My own threat to Western Civilization perspective has been the effect of an American Government Bankruptcy on the One Superpower World. We are currently Bankrupt in the sense that the 6 Trillion Dollars we owe other nations will never be paid,in terms of today’s currency evaluation. However,like many bankrupticies,the day of reckoning can be postponed. Some define “True” Bankruptcy as marking the day that the process can’t be postponed.
Andy is arguing that China may be in a similiar crisis that we are;and their economic demise would certainly affect ours.
We can’t be a very Super Superpower without some positive cash flow. I have been patiently waiting for someone to explain to me how we are going to maintain our position as the Top Dog,while Trillions are entering the Debit side of the Balance Sheet?
February 1st, 2010 at 12:43 pm
@ CK MacLeod:
Yes, Tsar. They could try to obstruct. They might even have some short-lived success with obstruction.
Apart from that …. Geoffrey is dancing a fanciful two-step.
February 1st, 2010 at 1:00 pm
one of the strongest voices from the other Contentions, aka “Non-Zombie Contentions,” in these parts.
From NZ Contentions,Today:
No. Not That.
David Hazony – 02.01.2010 – 8:54 AM
There are times when I am deeply grateful that CONTENTIONS stopped hosting comments. I do not think I could handle the people who would respond to this post.
No Comments,no interest.
February 1st, 2010 at 1:20 pm
@ Rex Caruthers:
On the one hand, it’s hard not to sympathize, but if Mr. Hazony had been posting here, he could have un-ticked a little box on the editing screen, and comments would have been disallowed for his post, protecting his sensibilities quite efficiently. I strongly suspect that the Contentions set-up, which was based on WordPress, I believe, had the same option, or could easily have been set up to include it.
February 1st, 2010 at 1:30 pm
@ fuster:
As CK points out, denying use of the Strait essentially amounts to seizing control of the Strait. I was perhaps remiss in not making that possibility clearer and as far as our ‘bits of metal go’, there would be great reluctance by the Pentagon to send our sailors into harms way when religious fanatics have nukes.
Iran doesn’t even have to use its nukes to maintain control, just by communicating their willingness to do whatever it takes to maintain control of ‘their’ Strait would give us pause. They might mistakenly judge that we would not step across the nuclear line they would draw in the sand and if the negative economic impact were not so certain, they would be right.
I’m not saying this will happen, I’m saying that if the Iranian nuclear capability ‘goes to their heads’ this is the most likely scenario that will unfold as the result of Iranian miscalculation. I wish it were fantasy but you may be sure that at least some in the Pentagon sure don’t think so…
February 1st, 2010 at 1:33 pm
@ CK MacLeod:
Thanks for the welcome and compliment CK. I find your voice to be one of the most knowledgeable, far more than I.
February 1st, 2010 at 1:36 pm
@ Geoffrey Britain:
Geoffrey, I appreciate the clarification. This sounds much less fantastic.
I still would ask you to re-think the part about Iran having nukes that they could brandish by 2012… Might that not be you giving them more credit than they’re due?
February 1st, 2010 at 1:46 pm
The inflation of the Chinese property bubble amounts to “mal-investment” on as gigantic a scale as you would expect from the non-transparent, un-free, deeply corrupt public administration of an economy encompassing the lives and fortunes of over 1 billion people.
And how is this property Bubble fundamentally different than the Japanesse version popping two decades ago,or ours,popping in 2008?
February 1st, 2010 at 2:33 pm
@ Rex Caruthers:
“You’ve been waiting patiently for the Iranian Threat to Western civilization to develop into a major event once Iran has the Nuke such as Nuking a US City,or Israel,or both.”
Patiently waiting? I pray that I’m wrong. I simply believe it to be logically inevitable given the circumstances; The Russian and Chinese consistent blocking of effective UN sanctions being imposed upon rogue nations. Those rogue nations continued commitment to the sponsorship of terrorism. Russia’s promotion of nuclear proliferation, demonstrated by its facilitating Iran and Venezuela’s pursuit of nuclear weapons, both of which are oil rich nations with no economic need of nuclear power. The lack of will within the West to confront rogue nations pursuit of WMD’s. The utter vulnerability of our society to attack. The consistent, many decades long Saudi funding of Wahhabism with its emphasis upon the Koranic injunction to ‘pacify’ the world, etc, etc.
Given all these factual geo-political factors it’s wishful, ‘magical’ thinking to assert that somehow, someway, it will all turn out well. Which is what we all hope will happen.
“My own threat to Western Civilization perspective has been the effect of an American Government Bankruptcy on the One Superpower World…We can’t be a very Super Superpower without some positive cash flow. I have been patiently waiting for someone to explain to me how we are going to maintain our position as the Top Dog,while Trillions are entering the Debit side of the Balance Sheet?”
Ironically, I can offer just how we can do it. Obviously conditional upon our keeping at bay the threat of nuclear terrorism.
Materials, energy and labor are the foundational factors in the production of wealth. The cheaper the cost of those factors and the greater the productivity, the greater the accumulation of wealth. We are 20 to 50 years away from an incredible increase in productivity and wealth. One that shall make the industrial revolution pale in comparison.
Here are just a few of the incredible advances that current research indicates await our children’s children; Essentially perfect health for almost our entire lifetime. The elimination of genetic diseases from the human genome. Resulting in greatly reduced health care costs, as a healthy population’s health care needs are much less.
Essentially ‘free’ and unlimited energy. We will crack nuclear ‘fusion’, its the power source for the stars, so we know it can be done because it already exists, we just have to figure it out. Plus, nuclear fusion is utterly ‘clean’. See: Scientists want to mine moon energy
Unlimited mineral resources with no environmental impact.
See Asteroid mining
Cheapest imaginable labor with robotics powered by A.I.
See A Robot that conducts its own Research
All of this supports the prediction that greatly increased productivity and world-wide wealth await us. That dramatic increase in wealth will be a paradigm-changing event. Leading to an economic revolution; the creation of a public trust fund. One that can be used to greatly reduce taxation and poverty.
A brave new world indeed, if only we can refrain from destroying ourselves. It’s not technology or even economic collapse we truly have to fear but rather the same old story; man’s inhumanity to man.
February 1st, 2010 at 2:41 pm
@ fuster:
“I still would ask you to re-think the part about Iran having nukes that they could brandish by 2012… Might that not be you giving them more credit than they’re due?”
Perhaps I do give more credit than is due. I have learned however that to underestimate a foe is generally more dangerous than to overestimate their capabilities. The fact that the Iranian have consistently expanded and accelerated their program over the past years does not bode well for our having much time left. Reportedly, the Iranians may be ready to announce that they have reached a significantly closer step in producing ‘weapons grade’ uranium. An announcement set for Feb.11th, their revolutions anniversary. If so, that means they are much closer than previously thought.
February 1st, 2010 at 2:57 pm
@ Rex Caruthers:
Who’s to say that they’re different at all on the most fundamental level? The difference might be that the Chinese have managed to raise, and seem on the verge of squandering, vast wealth in a very short period, rising from a very low level to what Xie estimates is a potential, though endangered steady state around at 50% average per capita of Japan. If Xie is correct, as compared to Japanese industrial policy and American Keynesianism, Chinese state capitalism appears to be showing itself even more intensively and monomaniacally bent on its own destruction – setting aside other material and cultural differences. The more totalitarian the polity, the more nearly total the mistakes, but they’re similar errors, and, if you step far enough away, become more and difficult to distinguish from each other.
February 1st, 2010 at 3:04 pm
@ Geoffrey Britain:
Geoffrey, I think that we’re getting closer. We’re in agreement about what they might wish to do about controlling their neighborhood and we agree that, unchecked, they’re likely to make the attempt.
February 1st, 2010 at 3:46 pm
@ CK MacLeod:
“If Xie is correct, as compared to Japanese industrial policy and American Keynesianism, Chinese state capitalism appears to be showing itself even more intensively and monomaniacally bent on its own destruction – setting aside other material and cultural differences. The more totalitarian the polity, the more nearly total the mistakes”
That is a very interesting hypothesis and, if correct, the implications are profound. Is it your contention CK that China’s totalitarian system is perhaps blind or at least unable to prevent its own economic self-destruction? Or is it a case of either instead of or in combination with, an inherent flaw within Communism’s interaction with Capitalism?
February 1st, 2010 at 5:46 pm
@Rex and CKM: Why did Hazony write about it if he preferred to wish away public sentiment on the subject? Anyway I will indulge myself with the following. What Hazony refers to is literally artistic inhumanity or more precisely non-humanity, but also, arguably, fortuitous artistic incompetence. Had genuine humanity been introduced the effect could have been far more lacerating. I have a peculiar and perverse personal knowledge of this because the pretty American granddaughter of two of the most centrally situated German Nazis you can possibly imagine once innocently teased me in a public restaurant by showing me her perfect set of teeth. There isn’t one chance in a million that she intended on any level to torture me although the pornographic effect surely requires no elucidation. Sometimes it’s better when artists are simply too stupid to borrow from everyday life.
February 1st, 2010 at 6:20 pm
@ Geoffrey Britain:
I haven’t really thought through and researched all of the implications, so am going to wing it here, but I think we can agree that there is clearly an inherent contradiction between authoritarianism and free enterprise. According to China boosters, that’s always been the argument for expanding trade and subordinating human rights concerns: expanded economic rights would naturally breed a taste for freedom and an understanding of the necessity of competition, transparency, innovation, freedom of speech and conscience, etc., eventually transformnig the political realm. But the CP doesn’t want to relinquish power, and fears the centrifugal forces in Chinese society that have in the not too distant past torn the country to pieces and made it vulnerable to foreign domination. Since the Tiananmen Massacre, it’s offered rapid economic and also social development as proof that it retains the Mandate of Heaven – and that people are better off working with the state as is rather than trying to oppose or radically reform it.
It’s also offered major opportunities for self-enrichment via speculation and graft. In addition to the property bubble that Xie describes, it’s also pumped liquidity into the system via “business loans” made for political rather than economic reasons – in effect, hush money and direct disbursements that would show up on their books as non-performing loans… assuming that the books are even being kept… Meanwhile, the CP attitude seems to be alive and well in the Chinese civil service, where the National Bureau of Statistics routinely revises down the economic numbers from the provinces, but to some extent is also engaging in politically driven guesswork. (“I am proud to be a statistical brick in the building of the republic!” goes one slogan.)
Since there are few to no democratic safety valves, any crackdown on corruption and any major re-orientation of the system mean a power struggle. Since the CP and the Army are up to their necks in business – and graft – you’d need an old-fashioned purge or, if that’s no longer possible given the ways power and money are distributed, a civil war to sort things out thoroughly enough – not good for business. Instead, they’re following a familiar 3rd World path of least resistance – check out Xie’s description of the emerging Chinese oligarchy – but on a super-gigantic scale, waiting for economic reality or other external events to make their decisions for them. They’re just like us, in that regard, except at a lower level of economic and political development, and with fewer paths out of a crisis from within the system as it currently exists.
February 1st, 2010 at 6:58 pm
China is riding a bubble that makes Japan look puny, and their books probably Enron look like George Bailey’s savings and loan by comparison. When you have the repressive military (PLA) running the thing, you often have troubles. Add to that it’s self inflicted demographic disaster, and they have troubles down the road.
February 2nd, 2010 at 5:31 am
Geoffrey Britain wrote:
I default to the position that there is nothing about Americans that is all that much different from other people except that our political system is based on the concept of staying out of the way and allowing each individual to maximize their potential, by whatever method they define it. This has the unintended consequences of allowing those ideas and products (etc.) that provide the most value to the most people the opportunity to shine through. And it has the side benefit of attracting to our shores people with dreams who want to add to that value.
The Chinese CP cannot trust their people anymore than the progressive left in this country does. People like Thomas Friedman look at the efficiency of decision making in China and confuse it with the actual quality of the decisions being made. What they fail to realize is that this efficiency will allow the mistakes they make as central planners to become evident more quickly than they might otherwise have done. The thesis would be that communist capitalism is like a firework which burns brightly and consumes itself in minutes as opposed to a tendered fire that provides warmth, comfort, a means to cook, etc. and provides multiple sources of value to many people over a long period of time.
Friedman is not the first empty suit leftist who thinks more of his capabilities than the rest of his fellow citizens which is a trait shared by his fellow totalitarians through history. When he sells his home and moves into a 2000 sq ft house in the suburbs and actually leads his life in the way he wants everyone else to live, I will pay attention to him. Otherwise, he is just a dying relic of a media apparatus that no longer serves its customers and is quickly becoming irrelevant. And as long as this country shall endure as the founders intended, we will continue to best those who think they can dictate progress and results to the masses by the force of law – or guns and tanks.
February 2nd, 2010 at 6:07 am
I didn’t detect any polemics in Xie’s interesting articles. I didn’t get the impression that he thinks China would fare much better economically in the short to medium term if the CP disappeared tomorrow. And I infer that he thinks their policy-makers are in denial (or at least systemically constrained) just as ours may be. The big difference is that the chances of real unrest are greater there if the foundation cracks.
February 2nd, 2010 at 9:17 am
@ Seth Halpern:
I think you have it mostly right. Xie isn’t a polemicist, he’s an analyst – though I also suspect his freedom of movement might be, shall we say, somewhat constrained if he started calling for the destruction of the CP. He keeps his mind open to policy alternatives, but seems to think that the economic cake is already baked, or anyway has been put in the oven.
February 2nd, 2010 at 11:53 am
Great post, CKM, and sorry I didn’t get to it earlier. Lot going on.
I do want to note that I don’t actually see China as a peer competitor in the sense I think you’re using. I think China wants to be a peer competitor, and seeks to rack up evidence of being considered in that light, but I don’t think history is neutral as to what kinds of nations and polities can become hegemons of the known world. Nations that expend great effort on suppressing the freedom and initiative of their middle and working classes don’t ultimately cut it.
This isn’t cultural, necessarily; what it is, necessarily, however, is political. China’s political system can forcibly create blocs, which would then alarm the neighborhood and provoke counteralliances and confrontation. The dynamic of the Soviet Union is informative, but not only because of Communism. Competing blocs are simply a very common geopolitical condition, with the threatening blocs typically coming together among the more politically repressive nations, and prompting reactions from the less repressive.
China’s potential to successfully establish regional leadership by controlling resources and intimidating neighbors isn’t a basis for global hegemony. It is a basis for generating confrontation and crisis, if there is no brake exerted by another power on the ambitions of a handful of nations liks China.
The most important thing to keep in mind is that there is no alternative to US leadership that will leave the world in the same condition, with the only change being the name of the Big Dog. There’s no other USA. If our hegemony effectively slips to non-functioning status, the situation of the nations will shift to blocs — blocs jockeying for resources, and for control of territory and chokepoints, with an escalating level of harshness.
So while I do see China as an aspiring peer competitor, I don’t see China as an actual peer competitor in the same game. In any situation in which China is a true peer competitor — we’re talking about a different game, and the objective of the game isn’t to guarantee what Americans prize.
February 2nd, 2010 at 3:19 pm
@ J.E. Dyer:
I note your distinction regarding China’s peer competitor-ness, and I’ll see if I can find a better way to distinguish your views from the kind of thing we hear from others – like from this guy. If I understand your last paragraph correctly, you’re also considering at least the possibility that we might, with a lot of bad luck, someday meet them as “peers” on the way down… It might not be hegemon vs hegemon, at that point, just big country vs big country on the global playground.
February 2nd, 2010 at 4:10 pm
Well, yeah, and we could meet China as an effective peer in some regional situations right now. Peerdom is always situational anyway.
But I do reject the premise implied in Mr. Jacques’ title, that China being populated and wealthy means China is fated to become the world’s ruler. China can’t impose rule on anyone but a few of her neighbors, and there are few things on which most nations are more agreed than the proposition that Chinese rule would be bad, and should not be accepted.
This is, again, a matter of the inherent quality of the political system, united with a style of foreign relations that has never gone through a period of Western-type modernization or self-reflection. It’s not that the Chinese are caricatures of evil; they’re just people, and their cultural baggage is hardly worse than that of others. But with the political system they have, and the history they come from over the last century, they are simply known to repress their own people, to alarm and intimidate other nations, to seek exclusionary control of resources and territory, and to NOT be honest brokers, but to be ruthlessly partisan, in geopolitics. This is the light in which China’s neighbors see her.
Now, if China’s people were to achieve, through their own demands and struggle, a change in their governance from Beijing, that would be another story. There’s no telling how far China could go, with greater individual liberty and a core set of truly guaranteed rights. But historically, oligarchic nations with repressive domestic policies don’t establish broad-scale hegemonies — because hegemonies like the Pax Americana, the Pax Britannica, and the early Roman Empire require the voluntary acquiescence of other peoples. China’s appeal can’t win that from anyone much above the level of Sudan or Zimbabwe.
February 2nd, 2010 at 4:59 pm
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