There’s a long and detailed article titled The China Sickness in the July/August edition of Commentary (not my favorite magazine).

Written by Arthur Waldron, a China specialist trained at Harvard, the piece starts with a description of a story we all know too well, how the CCP (mis)handled the SARS epidemic, and notes that many Western media were duped into believing the brief period of openness signaled an opportunity for meaningful reform.

This is a metaphor for the article’s theme: Despite the obvious signs that it is a very sick country, the West dons rose-tinted spectacles whenever it looks at China, cheerfully overlooking its horrendous problems, financial, political and social.

Unfortunately, the article can’t be linked, and I can’t quote too much, lest I be hauled off for copyright infringement. But I’ll offer a few excerpts.

Waldron makes astute observations on how the West has fallen for the “China economic miracle” fallacy:

Even today, if you throw a brick on Wall Street you will probably hit someone in a banker’s suit who genuinely believes that China has been growing at a record pace and will continue to do so — indeed, that it is likely to become the motor for Asian and even world development. Over the past twenty years, such people, and their counterparts in Hong Kong and Taiwan, have poured roughly $450 billion in direct investment into China.

What return they will get on this investment remains to be seen, however. Money is made in China by shipping components there to be processed for re-export. With its immense pool of skilled labor, no nonsense about workers’ rights or unions, and a police force willing to crack heads, coastal China is an ideal “platform” for foreign business. Nevertheless, China’s world trade, which today stands at a little over $250 billion per year, is only a little greater as a percentage of world trade than what it was in the 1920’s (though of course much bigger in absolute terms than it was in 1960). Fully half of that figure, moreover, is accounted for by businesses in which foreigners have ownership. While, for Chinese workers, jobs in such processing industries are undoubtedly better than urban unemployment or rural poverty, the sector lacks what economists call backward and forward linkages. The rising tide lifts only the coast…[P]rivate enterprise is everywhere discouraged, and the state sector, which operates largely at a loss and is shrinking in its share of the economy, continues to grow in absolute size in a way that threatens everything else.

He also takes aim at a familiar target, the country’s state-owned enterprises, forced to borrow more and more from the nation’s banks as prices deflate, consumers put off their spending and the SOEs fail to sell their wares:

Failure to sell means that state enterprises lose money; to avoid bankruptcy, the state forces its banks to make irrecoverable loans to its enterprises, which are thus enabled to produce even more things that no one wants to buy. The result, long noted by some specialists, is that China’s banks are in fact insolvent while the state sector continues to waste the precious capital the banks pour into it.

Also examned is the tendency of the Chinese, based on centuries of hardship and tradition, to save and not spend income; the staggering dilemma of China’s vast peasant population, the blatant falsification of economic/production statistics, etc., etc., etc. Nothing really new here in and of itself, but altogether it paints a grim portrait indeed. And Waldron takes a hard look at China’s weird policies re. our friends in North Korea:

Today China provides the food and energy that keep the same loathsome North Korean regime alive. More critically, and more paradoxically, China has long been Pyongyang’s major military ally, and has contributed materially to its nuclear program. Even now, the Chinese seem not to grasp that this program poses a far greater long-term peril to them than it does even to South Korea, not to mention Japan or the United States. Why China would do so much to build up a possible enemy on its own border is again difficult to explain; one can only invoke some sort of feral anti-Western reflex, carried over from the days when, as Mao imagined, the East wind was prevailing over the West wind.

One last quote and I’ll call it a night:

As foreign dangers loom, the fragile bargain that has kept the domestic scene relatively quiet since the massacre of 1989 is beginning to break down. The bargain between regime and people was essentially, “you let us rule and we will make you rich,” and for 25 years China enjoyed a good economic run. But as we have seen, the rosy aggregate figures barely disguise the rot beneath: deflation, banking insolvency, increasing government debt, misallocation of resources, not to mention the lack of a legal system or a legitimate government, pervasive corruption of the rulers, and demoralization of the populace.