Tuesday, August 4, 2015

When will China fail?

First posted on Asia Times, Chatham House Rules.
Funny thing about the prognosticators that predict impending doom for China is that the more wide off the mark they are, the more popular and credible in the mainstream they become. There is this guy who wrote a book predicting the collapse of China about 15 years ago. During that period, China’s economy practically quadrupled. Yet this wild swing and miss, rather than impairing his reputation, seem to enhance his quals and he still writes columns and gets quoted in the major publications. He is living proof that negative statements about China sell in the popular media.
Charlatans aside, honest mistakes in assessing China are most often made by looking at China from a western frame of reference. Some time ago, some China watchers predicted that when China reaches certain per cap income, China will become a democracy. Well, China has exceeded those threshold income and has not given any indications that it is about  to become a democracy (with a capital D). If anything with the continuation of the anti-corruption drive, China is less likely to become a democracy.
I would argue that becoming a democracy is no panacea. Democracy with a big D has not helped the Philippines economically and one can argue that Taiwan’s experiment into a democratic form of government has hindered than helped getting itself out of the economic and social doldrums. Despite one party rule, China’s economy has grown faster than any in history and, according to Pew Research, has the highest percent of population happy with their livelihood and optimistic about their future than any other country in the world.
Perhaps China’s experiment with a stock market with Chinese characteristics is looking a bit shaky lately. I believe what's needed is more transparency on audited financial records of listed companies and investor education so that the punters will begin to appreciate that playing the market like a casino has serious downside. If we can TARP ourselves out of the financial crisis of 2008, I am confident that China will find ways to weather the market volatility.
I am not sure where religion figures in this discussion. Ever since Deng opened China to economic reform, the state control of religion has steadily loosened. The most evident are the flourishing Buddhist temples. Some enterprising monks and their backers, frequently from Taiwan and Hong Kong looking for express checkout to the Western Heaven, are refurbishing temple complexes and turning them into profitable tourist attractions. A western observer may missed this trend being overly focused on the Christian churches, which after all represents only a minor portion of the population.
I agree with you in that I don’t see any imminent collapse, economic or political. If the anti-corruption drive should falter, then I would start to worry.

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