In the previous 2 posts I identified two desperate needs for China--they need for America to recover quickly and they need their citizens to replace export earning by consumer spending. It must be galling for the Chinese government to realise their fate is in the hands of the Yanks and their own consumers--they've been sober and conservative in their management of China's macro-economy and just got swamped in the tidal wave. But because they are autocratic and cruel, and more concerned with self-preservation than their country's future, I can't muster up much sympathy for them.
But even if both their desperate needs are satisfied (and I do think the American economy will recover quickly), China is still due for what is essentially the same disruptive period that happens in the transition to developed economies that has afflicted all of their predecessors, from the UK to South Korea, and most definitely including the U.S., which had several break points. And here is where Chinese leadership is failing China.
China has other desperate needs. The stimulus they are injecting into the economy is failing to address them. They need clean energy generation far more than the worried West--Chinese people are dying every day due to air and water pollution, and it is saving up trouble for the future to ignore it now. China is introducing a national healthcare scheme--if they don't fix their pollution problems, this scheme will be overwhelmed just dealing with the effects of pollution.
The demography of China is going to start working against them quite soon, as the one child per family rule works through the population figures like a pig through a snake, and China incredibly starts to look like Japan. Preferential abortion to insure that that one child was male will exacerbate this issue starting now. Increasing unemployment makes the idea of bringing surplus males into the military a fairly sane option. Having a larger military will create pressure to justify its existence. And war is not good for developing countries. It slows down useful development and creates a warped sense of priorities.
The consensus shared between Chinese citizens regarding the central government is entirely an economic transaction. We let you rule if we can better our lot dramatically. If the Chinese government does not keep its end of the bargain, this consensus will disappear. I think this will happen over the next 5 years, and considerable turmoil will be the result.
Comments