China: Calamity or Calm? WaPo vs. NYT

For some background perspective, just yesterday “Dr. Doom” Roubini said China is on the verge of “falling apart.” That’s a pay site, but here is a chunk, thanks to another site:

[T]he risk of a hard landing in China is sharply rising; a deceleration in the Chinese growth rate to 7% in 2009 – just a notch above a 6% hard landing – is highly likely and an even worse outcome cannot be ruled out at this point. The global economy is already headed towards a global recession as advanced economies are all in a recession and the U.S. contraction is now dramatically accelerating. The first engine of global growth – the U.S. on the consumption side – has now already shut down. The second engine of global growth – China on the production side – is also on its way to stalling.

Thus, with the two main engines of global growth now in serious trouble a global hard landing is now almost a certainty. And a hard landing in China will have severe effects on growth in emerging market economies in Asia, Africa and Latin America as Chinese demand for raw materials and intermediate inputs has been a major source of economic growth for emerging markets and commodity exporters. The sharp recent fall in commodity prices and the near collapse of the Baltic Freight index are clear signals that Chinese and global demand for commodities and industrial inputs is sharply falling. Thus, global growth – at market prices – will be close to zero in Q3 of 2008, likely negative in Q4 of 2009 and well into negative territory in 2009. So brace yourself for an ugly and protracted global economic contraction in 2009.

John Pomfret of the Washington Post wholeheartedly agrees with the doomsters (and Roubini’s track record is spectacular, there’s no denying that). He also specifically takes issues with the NYT editorial board for its somewhat rosy belief that China can spend its way – and the world’s – out of a recession.

There’s been a lot of talk in recent weeks about how China could ride to the rescue of a global recession, using the latent power of 1.3 billion consumers to power global GDP. Who would have thought that we’d be calling on China to save our bacon? Witness a New York Times editorial on Oct. 26 with the remarkable headline: “As China Goes, So Goes….” What the Times called for, and what others have seconded, is for China to unleash domestic demand, ramp up imports, thereby keeping the global economy afloat.

First, before we get into why this probably won’t happen, let’s pause for a second to reflect on just how amazing it is that we’re asking China to prop us up. Yes, yes, China did yeoman’s work during the Asian financial crisis of 1997. But that was a pretty localized mess. What the Times — and others — are asking China to do is not just be a responsible player in its region (which at the time simply meant not devaluing the yuan). No, what the Times and others want China to do is to step forward and in a flash take over the United States’ position as the engine of global growth. That’s a pretty big demand for a country with a per capita GDP that’s in 109th place on the International Monetary Fund’s World Economic Outlook Database, squarely between Swaziland and Morocco.

As to whether China will take up the challenge: I think not. China would have to restructure its economy if it wanted to significantly grow its domestic demand. But right now China’s economy is facing real problems.

You have to read Pomfret’s entire post to see why he so strongly agrees with Roubini, and why he believes the crisis will make the CCP only more reactionary (as opposed to enlightened, as the NYT editors optimistically hope). After looking over the dismal situation, he comes back to his central thesis, first discussed here back in 2004, i.e., that as long as China’s pig-headed reactionary government is in charge, they will keep blocking their own path to superpower status and will probably never arrive there.

Unlike Pomfret, I’ve predicted China would have yet another soft landing. I’m willing to consider that I may be wrong, unlikely as that may be. The Roubini-Pomfret scenario is too frightening to imagine. If they are right, we are talking about the possibility of civil war. If there were a true financial collapse in China, either that or anarchy are not inconceivable. China’s situation is so, so tenuous, despite the amazing strides it’s made. That’s why so much here is subsidized and the iron rice bowl is still an important crutch, and why the government is going to be the candyman for the unemployed, either simply handing out money or setting up massive infrastruture projects to keep people employed and, most important, pacified.

Which brings me to my last half-baked point. I was speaking with a friend today who is involved with one of those gigantic Chinese manufacturing companies; this one makes concrete. When I expressed my worry that concrete makers would feel the pinch when overseas orders drop off and Chinese businesses stop expanding and building new structures, he said that scenario is simply wrong. “China is about to pour billions and billions of dollars into infrastructure projects to keep the economy going,” my friend reminded me. “This company is planning on a huge expansion of business.” So again, can China spend and build its way out of this? Stranger things have happened, no?

So many tectonic plates rubbing against one another, so many ways this whole thing can go, not just for China but for the world. For now, perhaps out of willful ignorance, I stick with my prediction: a relatively soft landing for China. Pomfret’s one of my heroes and I’ve agreed with him on just about everything in the past. Same with Roubini. But this time, they both had better be wrong. Otherwise, we are all in a lot more trouble than we ever imagined. It won’t be at all pretty, no matter how much we may dislike the CCP and hope for its demise.


Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.

The Discussion: 81 Comments

Not sure I would agree about China’s universities not being able to attract scholars, si. They’ve been I know that in my own field they’ve brought in some of America’s best experts, and I’d be surprised if they weren’t doing the same in other subjects.

Thanks for the snip from the NYT, Lisa. This seems to be the No. 1 topic, by far, among journalists here at the moment. They (or their editors) don’t care about any other stories lately.

November 7, 2008 @ 10:43 pm | Comment


really? long term? tenure? research? could you give some examples? i am not being sarcastic, i am genuinely curious. my knowledge area is mainly hums, and social science depts which i don’t really see translating well to china, if they were invited.

November 7, 2008 @ 10:55 pm | Comment

I agree with you Si, it’s important. I was more thinking about the equivalent of meditating on subjects to find your own answer. I did not meant that before doing so, you would not have to speak and exchange in your entire life.

As you just mentioned, I don’ think the whole Confucian approach advocate simply one single step, being: A superior man is to be realized through self-cultivation.

But taken out of context, it gives this impression.

November 7, 2008 @ 10:59 pm | Comment

In my own industry, I don’t know about tenure or long-term, but I do know they’ve drawn some of the best names (would prefer to tell you by email). But I’m not in the sciences. There, more than in any other area, China is definitely drawing some of the world’s brightest scholars, mainly foreign-born, overseas-educated Chinese. Many articles have been written about China’s huge investment to woo these scholars (quite successfully) to their universities. For the details, just do some searching.

For names and salaries, this article should give you what you want.

November 7, 2008 @ 11:10 pm | Comment

And now the next phase…

As I said before: from blogs to the reality.

Do you people think it’s just a coincidence that such terms are appearing in the mainstream news?

These are strong words, that captivates the intellect and the passions, you don’t use such words lightly, especially when you are the leader of the French Nation.

If you have time, read the article and notice the 2 trends: Economic War and… India as the next market.

And also it’s worth paying attention to the fact that “The last thing the Chinese need now is a rapidly falling dollar. Their inflation is already running at 6.2pc.”

And I maintain my point that Palin has been briefed during the campaign and that she slipped and used the term during one of her speech, like a bad comedian that doesn’t know where to place a punch line and end up spoiling the one-act play. Or like somebody that is too dumb-witted to keep a secret (Shhhh… don’t tell them it’s a surprise for after the elections).

November 8, 2008 @ 12:02 am | Comment

What the pessimists completely ignore is that this is really the first time since the depression that the world has been faced with a situation like this. Only this time, we know so much more than then and (the hope anyway) this time, there seems to be a deeper understanding of the need to avoid a beggar-thy-neighbor approach.

I am not saying this necessarily means everything will be fine, but I am saying that we are essentially in uncharted territory here (and I never ever say that because I virtually always believe history is a great guide) so who really knows?

November 8, 2008 @ 12:37 am | Comment

Of course Dan we are in uncharted territories, who would be stupid enough to say something else than the mass’ mantra? I agree with you Dan, a 100%. What we are witnessing right now is something very different from what our old boring history books taught us.

People are so fragile and worry for nothing nowadays. Don’t worry young boy, I’ve seen it all, it come and goes, believe me. This is just a bump in the ride.

“The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some states, the desperate citizens turned toward nationalist demagogues – the most infamous being Adolf Hitler – setting the stage for World War II in 1939.”

I wonder what’s next… Really… Don’t you?

Well, buckle your seat belt my “old” friend. You ain’t seen nothing yet. Keep puffing your pipe and rocking the chair as the world sinks before your own eyes, it’s very useful for us, the youngsters.

November 8, 2008 @ 2:01 am | Comment

While the Dancing Chickens are in for a real treat on the other thread, the world is still turning… (clapping hands) Dance Chicken, Dance!

And let me announce to you tonight, that we are heading for a serious shit storm.

“We are facing the greatest economic challenge of our lifetime and we are going to have to act swiftly to solve it,” Obama said.

And yes, Obabush, we heard that a month ago. But thanks to you for keeping the flame alive.

This is the start signal ladies and gentleman, this is where we are going. I have no more doubt about it. Not a single doubt.

Fuck, I was really hoping for at least a couple of months of illusions, not 2 days.

Terrifying… Terrifying reality. I am honestly scared right now.

November 8, 2008 @ 4:28 am | Comment

Oab wrote:
“Unless you enjoy speaking to yourself, I don’t see how necessary it is to speak out in order to be able to mature your thoughts. In my opinion, the meaning of this Confucian approach is just the basic adage that says: Draw your own conclusion and do not rely on others to find the truth. By not doing so, you’ll just become part of the mass.”

The problem is that a society where people keep their thoughts to themselves while monkeying the party line is a rather perverted society indeed. Pure cynicism! Presumably the object of self-cultivation (xiu shen) is to create an honest person, a superior man (junzi), not a society of fake human beings who teach their children to lie and be dishonest to get ahead. The Chinese can’t even see how MAD this is! This is the way that the Nazis acted—murdering Jews while knowing (not publicly acknowledged, of course) that the anti-semetic propaganda was all a lie. The Confucian approach to morality is all well-and-good, but it becomes a lie unless one first creates an environment where people can engage in self-cultivation (xiu shen). At a minimum, this means creating an environment where people can speak the truth.

November 8, 2008 @ 5:08 am | Comment

Oab wrote: “I was really hoping for at least a couple of months of illusions, not 2 days.”

Don’t worry. No matter how bad things get, we’ll never, never ever run out of BULLSHIT!

November 8, 2008 @ 5:18 am | Comment

Dan wrote:
“What the pessimists completely ignore is that this is really the first time since the depression that the world has been faced with a situation like this. Only this time, we know so much more than then and (the hope anyway) this time, there seems to be a deeper understanding of the need to avoid a beggar-thy-neighbor approach.”

So you think that the Wall Street Bailout is an example of enlightened, morally-upright, wise governance? BULLSHIT! They’re grabbing as much as they can before the shit hits the fan. The War has just started. The Chinese have targeted US law firms in their anti-corruption crackdown. Do you really believe that only US law firms engage in bribery in China?

Much of the US$700 billion is now being horded by US financial institutions as ammunition to buy up the best financial institutions when the smoke clears.

November 8, 2008 @ 5:39 am | Comment

The Chinese Natural Science Foundation has special grants, about 10,000 US dollars per month, to give overseas Chinese scholars, who can work in China for 1 to 3 months, during the US summer break. Prestigious Universities, such as the Shanghai JiaoTong University, are now offering US $100,000 annual salary to world class scholars. A personal friend of mine who works in Paris has just been offered such a position.

November 8, 2008 @ 9:23 am | Comment

Speaking of prestigious Chinese universities recruiting foreign talent, whatever happened to that handsome, sexy American man, Tim Lies, who is/was a professor at Peking University? He was part time rock star, actor who calls himself “MEGWOMAN”.

November 8, 2008 @ 10:54 am | Comment

I am a chinese school,If you stay in beijing, and want to learn chinese,please call me:15011596274.MR zhou.

If you no time come to school,we can sent teacher to your home.

Of curse,First,you will be have 2 hours of free me,try it.

November 8, 2008 @ 11:22 am | Comment

“…are now offering US $100,000 annual salary to world class scholars.”

The Chinese educational system is not set up for scholarship. Under the Chinese system, the role of “scholars” is to provide the intellectual justification for whatever the government wants to do. It’s a tough environment, but I guess that there are plenty of foreign lackeys who are willing to do that in return for whatever.

November 8, 2008 @ 11:31 am | Comment

“Eagle” wrote: “…am a chinese school,If you stay in beijing, and want to learn chinese,please call me:15011596274.MR zhou.”

Title of a new book: “The Terrified Confucian”.

November 8, 2008 @ 11:39 am | Comment

Hi eagle, and thanks for your contribution to the thread.

Oab, what are you talking about, with that Obabush crap? Please don’t answer. It’s purely a rhetorical question, intended to remind you why almost no one will interact with you here.

November 8, 2008 @ 11:48 am | Comment

“Hi eagle, and thanks for your contribution to the thread.”

LMAO. Love it!! This is too much fun. OK, back to jousting with MW on the Taiwan thread.

November 8, 2008 @ 12:01 pm | Comment


Can I get a “teacher” who’ll spank me if I’m a “bad student”?

November 8, 2008 @ 12:28 pm | Comment

The only thing China could do is to reduce the difference between richman and poor man.Because the people who is rich can not spend all of their money for their demand,but investment.As a poor man whose demand is so much can not have money to in china investment is too much,and demand is poor
what I say is the most important things in China
but Chinses goverment would do nothing useful

November 8, 2008 @ 1:02 pm | Comment

Dude, lots of stuff going on here. Even The Eagles are in Chinese teaching business. Back to the original theme, for alll the pessimistic or optimistic opinions about whether china is going to have a hard landing or soft landing, what’s really missing is the comprehensive data and logical analysis. I’d be interested in knowing if the Chinese economic stimulus package (mainly big-ticket infrastructure projects)will adequately offset the export decline and thereby the economy would be able to absord laid-off workers due to the coming massive factory closedowns. Without the comprehensive data to compare the projected increase in domestic demand and decrease in export, all opinions are just hunches.

November 8, 2008 @ 4:26 pm | Comment

“Can I get a “teacher” who’ll spank me if I’m a “bad student”?”
That will cost you some extra RMB.

November 8, 2008 @ 4:34 pm | Comment

About education, what do you think of this? Huge queues in Shenzhen Job fair.

It seems they are already overflowing with educated persons!!!

How on earth are they going to provide a (reasonable)good job for them?

November 8, 2008 @ 4:39 pm | Comment


I posted something about this 3 weeks ago, but at this time not much people paid attention to it.

It was not a hot topic since everybody was still stuck in the “China will surf the wave” mindset.

November 8, 2008 @ 5:16 pm | Comment

China must be radically reassessed by investors and could be lurching towards a more dramatic economic slowdown than Beijing authorities will admit, a CLSA report says.

The grim assessment from Eric Fishwick, chief economist at CLSA, an Asia specialist private equity firm, argues that it will be impossible for China to achieve anything like the growth rates it is presently projecting for next year.

Even with aggressive government measures, growth in 2009 could plunge to 5.5 per cent, he said.

The super-bearish forecast depends on certain weak signals that may emerge in the fourth quarter of 2008, but comes amid reports from the Chinese electricity sector that suggest the country’s mighty manufacturing engine-room is already sputtering badly.

Anywhere near 5.5% would be a disaster for the government. Can it be that bad? We all hope not, but we shall see.

November 8, 2008 @ 11:09 pm | Comment

Can China attract big time academics?

One of the better known world class scholars working in China now is Andrew Chi-Chih Yao. This guy is a super star, a winner of the Turing Prize, the equivalent of Nobel in Computer Science. Born in Shanghai and raised in Taiwan, Yao held a prestigious chair position at Princeton University before he moved to China to work at Tsinghua University. Here is his website:
Wikipedia also has some information about him:

November 9, 2008 @ 1:03 am | Comment

Check out Shing-Tung Yau’s criticism of Chinese academic corruption.

November 9, 2008 @ 2:41 am | Comment

585 billion stimulus plan, just as expected, CPP hits big and hits hard.

November 9, 2008 @ 10:20 pm | Comment

This is a conspiracy of the United States, but just the beginning of the game is not over yet, I am a person from Tianjin, China!

November 10, 2008 @ 2:50 am | Comment This is my E-mail you can keep the exchange Dennis Young

November 10, 2008 @ 2:53 am | Comment

[…] was coming. None of us knows whether it will work, and as I pointed out last week, there are some very different schools of thought on the topic. From today’s Times: In a sweeping move at a time when major projects are being […]

November 10, 2008 @ 9:35 am | Pingback

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