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Hacked By AdGhosT

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Hard Landing and the China Paradox » The Peking Duck

Hard Landing and the China Paradox

It’s not possible to look over Nouriel “Dr. Doom” Roubini’s new report on China’s economy [PDF; must use proxy in China] without feeling kind of sick. This is the doomsayer who correctly predicted the current global mess more than two years ago. He is predicting a very rough road for China moving forward, with no real end in sight.

Despite it’s being completely depressing, the report is well worth a read. It reinforces an observation I’ve been making recently, that everywhere you look there’s a dogged, cult-like insistence that the Chinese economy is safe and will grow by 8 percent in 2009, no matter what kind of statistical evidence you put in front of the “experts” explaining this is simply impossible based mainly on the catastrophic world demand for exports.

To achieve 8 percent growth, China would need to step up domestic consumption exponentially. Widespread poverty combined with a tendency to save at least 30 percent of earned income — mindsets and situations that will take years if not generations to change — makes this literally impossible.

Referring to this insistent denial of reality as “the 8 percent mantra,” Roubini says some private-sector analysts (which I suspect includes himself) see growth of less than 6 percent, and some as low as 4 percent.

For a country that has been growing at an average of 10% for the last decade (and as high as 13% in 2007 down to 9% in 2008) and that needs a growth close to 10% to move millions of poor rural farmers to the modern urban manufacturing sector every year, a growth rate of 5% would be the equivalent of a hard landing, and even 6% would be extremely weak. And the deceleration of growth in the last six months has been severe.

We’re pretty much there, in a hard landing. The big question, for me at least, is, What does that mean? What are the ramifications? About six months ago, Roubini predicted China would be hit so hard it would literally “fall apart.” As far as I can tell, it hasn’t happened and won’t happen anytime soon. The economy has been battered here for a long time now, and through a skillful blend of propaganda and a lowering of expectations, the government has managed to hold things pretty well together. I do expect things to get uglier and uglier, but not to fall apart. I’m still not certain how we measure how hard we’re landing.

This reflexive recitation of The 8 Percent Mantra, this official denial of reality, verges on the surreal. On the one hand, China is making louder and more aggressive claims that its economy is doing far better than that of the US, Europe and Japan. This is now stated as a given in the Chinese media, where the notion of “the US-originated global financial crisis” is being drummed into everyone’s heads, along with the notion that China is about to bounce back. Not only bounce back, but soon to stand head and shoulders with the other three (Europe, the US and Japan), and thus deserves a larger say in the affairs of the world. And I’m watching this insistence become ever more aggressive, bordering on provocative.

That may be deserved; if China is indeed this rich and successful, it does deserve more of a global say. But then the other reality butts in, dramatized in an excellent story a few days ago that had the China twittersphere all abuzz, and rightly so. The article is aptly titled Rich China, Poor China (and I wish I had blogged it earlier, but excuse, excuse, excuse). In a nutshell:

China the new power holds $2 trillion in foreign reserves, including about $1 trillion in U.S. debt, and increasingly lectures rich nations on economic management. Developing China has tens of millions of rural poor among its 1.3 billion people and falls in the same World Bank per capita income rankings as Cameroon and Guatemala.

The emergence of China as a heavyweight economic player with a relatively poor population has economists scrambling for new definitions, perplexes policymakers in other countries and has some competitors crying foul.

…China has raised eyebrows when it appeared to be demanding more rights as an unquestioned economic power while pleading poverty when asked to shoulder greater obligations.

Most powerful, superpower, Where is China’s reality? How is it possible for one country to be gripped with such wildly divergent contradictions? I’ve been wondering about this for years, and probably always will, and can’t write my thesis about it now. Meanwhile, another blogger has addressed the same issue pretty well and I suggest you check out his conclusions. I loved the quote he pulled up:

Travel to China for a week, and you’ll be able to write a book. Travel to China for a month, and you’ll be able to write an article. Travel to China for a year, and you won’t be able to write anything at all.

As a friend of mine put it recently, “The longer you stay here, the less you know.”

This was going to be a brief post about Roubini’s report, slipped in during a break at work. Don’t ask me how it morphed into the current meandering mess. Bottom-line points: Huge disconnect between what China sees vs. the world’s financial gurus (the ones who had it right about the global crash). Huge disconnect between claims of greatness and claims of poverty. Huge disconnect between where China actually stands today and where the government is telling us it stands (see the Roubini report for numerous detailed examples).

Meanwhile let’s hope for as soft and gentle a landing as possible,and pray that the government is more right than Roubini.

______________

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: 84 Comments

AndyR

What do you mean by “general debate”?

The state counsel document released yesterday has outlined all principles for the new healthcare initiatives. This is pretty much it.

In China, government does not debate.

As for the details, I am sure various ministries and departments already have their detailed regulations and plans. The initiatives cover the whole population of 1.3 billion people, of all villages, townships, counties, cities, mega cities, private and state companies, government entities, everything and everyone in China.

There will be 4 separate ties of healthcare system initially, but by 2020, they will be integrated.

As for the rural villages, people already begin budgeting and planning in terms of clinics, medical equitment and medicine, staff and training and etc. China is the most efficient on that kind of things. By 2011, there will be about 30,000 new village clinics.

The most challenging part of this initiative has to do with the population in 城镇. 城镇 can be a mega rural township, a county seat city, or an emerging township bordering an expanding city. The population in城镇 tend to be very fluid.

OK, now for the new buzz phrase New Rural Society.

This is actually a variation of Hu Jintao’s slogan, the Chinese phrase is 社会主义新农村, or literally the Socialist New Rural Village.

New Rural Society is a positive spin on the old and vexing Sannong Problems (三农问题, 农民农村农业), which are the problems of farmers, the rural governance and the agriculture.

Under the Sannong Problems umbrella, there can be a slew of deeper issues such as rural land ownership, healthcare or village governance and leadership, all tough issues with far reaching consequences.

What’s the big deal and why rural villages are so important, you might ask.

Well, that is because much of China’s problem originates from rural villages. It is the problem of China’s huge population.

China still has a mega sleeping weapon for rural economy and that is the land ownership. People have been talking about it for some times but nobody dare to touch it. Last year there was a test balloon for new policy to allow farmers to lease out land allocated to them. But when the party convened the new policy was not mentioned.

If China is to liberalize the land ownership in rural villages, I don’t know what exactly would happen, but I can promise you this, you will see yet another new China.

If you are really interested in China, listen carefully what Wen Jiabao says. When he says China still has reserve for stimulus, he dose not just mean money but also policy. In China, policy is money and more than money.

April 10, 2009 @ 9:47 pm | Comment

What’s the big deal and why rural villages are so important, you might ask.

Tom, do you post here under another name, Math? Just wondering. That “you might ask” is very, very Math. So is the cult-like fawning over the party and warning the world to get out of the way while China takes off.

This attitude that the CCP can do no wrong and can never fail is kind of droll. I mean, the CCP can be extremely effective at getting certain things done, but then it can be so hopelessly clueless and helpless, not to mention downright awful. If you look at China’s constitution on paper, it is heavenly. Free speech, complete toleration and all sorts of goodies. Unfortunately, what’s on paper is often quite separate from what’s actually practiced. Likewise the new health initiative. It’s a great thing that they’re focusing on healthcare. But to wave a piece of paper around and declare victory as though it’s already happened is foolish. Who knows if they have the resources and the coordination and bureaucratic administration in place to provide all these services? Rural healthcare has been a disaster for years. You can’t just turn it around by writing some legislation, although it’s a good place to start. I wish them luck, but will reserve judgment on the actual practicality of the plan until I see it in action.

Anyway, you sound like a fanatic.

April 10, 2009 @ 10:43 pm | Comment

Tom, Does laowai look retarded as they appears?

April 10, 2009 @ 10:59 pm | Comment

Richard,

About you doubt on China’s ability to carry out rural healthcare.

Do you know how China enforces its One Child policy in rural villages?
Do you know how hard it is?
And don’t forget there are 200 million migrant people in China mostly from these rural villages.

If China can manage to enforce One Child policy in rural villages with reasonable effects, would China also be able to manage rural healthcare system?

China has very strong management capability in rural villages because China used to have commune system. The economic aspect of commune system is gone during the 80s, but the political and management parts are mostly intact. This is why China is able to enforce the One Child policy in rural villages – the most difficult rural policy in China and probably in the world.

I am not sure why you would call me a fanatic. Is it the first time you see somebody articulating on behalf of China for its actions and polices?

But do my arguments make sense?

Does my argument of China’s commune system legacy and China’s ability to enforce One Child policy make sense to you?

Does my previous discussion on Sannong Problems make any sense to you?

How much do you know China’s problems in rural areas, the Sannong Problems?

How much do you know the 200 million strong migrant people?

How much do you know what effects are these migrant people to their families and villages and to future viability of rural China?

April 11, 2009 @ 12:53 am | Comment

China is going to collapse. That’s news

April 11, 2009 @ 1:38 am | Comment

I went to sina.com and there is whole section devoted to the plans and policies for this ambitious healthcare initiative.

Here are some highlights for the rural villages:

29,000 clinics
5,000 second tier medical community centers.
1,370,000 medical staff
Education and Training schools and programs specifically for rural clinic staffing.

All to be done in less than 3 years!

This rural plan is just a small and relatively simple part of the whole healthcare initiative.

Still, problems and issues abound. For instance, there are currently 800,000 uneducated and indigenous “medicine men”, many of them former barefoot doctors, serving rural China. What do you do with these “barefoot doctors” after 2011?

Would the educated staff be more effective than barefoot doctors? Would local peasants trust educated staff from outside or the indigenous barefoot doctors.

April 11, 2009 @ 4:51 am | Comment

Carrying out the 2-child policy or the hukou policy and other policies that do not require vast amounts of expensive equipment and skills attainable only by many years of university study c are not quite the same as implementing rural healthcare. I congratulate China for announcing they will be doing it and I wish my own country would offer universal healthcare for all citizens (America’s shame). I will not congratulate this yet as a done deal, however, because I see too many obstacles to put it all in place rapidly. They could make a similar announcement saying they are going to make rural education in China world-class. I’d applaud it, but reserve my praise because I believe it would take many years to actually do this, again based on infrastructure and personnel needs. I am not saying anything you are claiming is false. Only that it is too early to celebrate it as if it were already done. Period.

Okay, we’ve had our say about the healthcare issue. Time will tell. Anything else about the Rich China-Poor China phenomenon or the painful hard landing China will be going through?

April 11, 2009 @ 10:17 am | Comment

I just did a rough calculation. This healthcare initiative can create 6 million jobs.

There about 2 million medial staff in new clinics – 1.37 million for rural clinics, 0.45 million for urban (poor) clinics, 0.16 million for rural township or county town.

The massive training programs for the 2 million staff will create another 0.2 million jobs. BTW, the training is free with the commitment to work in clinics.

There will be 29,000 rural clinics, 11,000 urban (poor) clinics and 5,000 second tier rural centers. The construction of these facilities will create 1 million jobs.

Non medial and administration staff, 1 million jobs.

The manufacturing of building materials, medial equipment, medicine, office equipment, electric and electronic equipment and transportation, 0.5 million jobs.

So far we have 4.7 million new jobs, just for the new clinic section, there are other sections that I have not yet read, but clinics will create most jobs.

I think overall 6 million new jobs is a conservative estimate. It is over three years, so each year 2 million new jobs.

We know that in China 1 point in additional GDP creates 1 million jobs. So in terms of employment, the healthcare initiative roughly creates 2% GDP for three years.

As far as I can tell, this healthcare initiative alone can pretty much guarantee the “protecting 8% GDP” goal. GDP is just GDP, who cares. What really is important for China now is the employment.

April 11, 2009 @ 11:55 am | Comment

BTW, when Roubini was considering China’s doom,s day scenario, did he have slightest idea that China is about to put forward and carry out this healthcare initiative?

Did he know it is just anthor piece of cake for China to carry out such gigantic project that is equivalent of 2% GDP?

Did he know China can liberalize land ownership in rural areas that can stimulate God knows how many percent of GDP?

If not, what credit he has in predicting China’s future?

Right now knowing what I know, I actually am in a better position then Roubini in predicting China’s GDP.

So forget about Roubini. He knows nothing about China. He is nobody in China.

April 11, 2009 @ 12:51 pm | Comment

Tom, you’re a funny guy.
“So forget about Roubini. He knows nothing about China. He is nobody in China.”

I don’t think anyone knows China too well. This is why nobody should try to manage it single-handedly. It will only lead to additional chaos and suffering. I hope that one day soon, China could join its neighbors – Korea, Japan, and others – and become a prosperous country, ruled by democracy with Chinese characteristics.

April 11, 2009 @ 1:23 pm | Comment

@tom

Thanks for all the “details”, but unfortunately all your efforts still amount to what politicians Chinese or otherwise are best at: 吹牛

As Richard says above, it’s all a lot of talk until we see it implemented, hopefully, it will be implemented well, but that remains to be seen.

By the way, it took about 20+ years for the one child policy to be effectively enforced and in some areas they are still having trouble enforcing it, they didn’t do it overnight, let alone 3 years, but you’re right they’ll do all this in three, because as we know, the Chinese government is like a perfectly controlled body with a brilliant brain, every decision at the top is implemented on the ground to perfection…

You are a fanatic because you write like a fanatic, because you keep fighting to make your point after your audience has clearly lost interest, because you believe that just because the Party has put some words to paper that means it shall be done, finally and most importantly, you are a fanatic because from what I read in your writings you “believe” rather than “think”

Anyway, I hope we’re done with this, thanks for the CCP’s health care plan “talking points”, I’ll be crossing my fingers that they get it right, since their last reform of the health care system worked so brilliantly…

April 11, 2009 @ 3:06 pm | Comment

Quote Richard: “That is not a conclusion that a true economist would ever arrive at”

Who decides what a “true economist” can arrive at? What’s your definition of a “true economist”? Are you one?

April 11, 2009 @ 10:48 pm | Comment

Andy,

You need to know China a little better before attacking me.

First of all, have you even been in China? Don’t tell the last time you were in China was during the 80s.

Why do you think the healthcare initiative is just talk?

Which part that I have talked about do you think is not possible?

Do you doubt China can build 45,000 clinics in 3 years?
I know it is a frightening number for most Americans, after it takes 20 plus years for the city of Boston to build a tiny section of highway.
But go to China and look around, in most cities, you need a new map each year because they change and expand so fast. Shanghai used to have 3 new streets each day.

Do you doubt China can train 2 million medial staff in 3 years?
China is churning out at least 2 million college graduates too many right now.

Richard certainly has a point about the difficulty in managing the huge healthcare systems. But that would be the “software” part of the plan and 3 years later. This healthcare initiative is actually a second attempt on China’s healthcare reform. The first attempt is a miserable failure. This attempt will have a lot of problem and may even fail as well.

But that is not the point. The point here is that at least China would have the “hardware” infrastructure ready in 3 years which would be a huge achievement by itself and which will create 6 million jobs that China needs most right now.

BTW, where did you get the imagination that it took China 20+ years to implement One Child policy? China’s management capability in rural villages is actually deteriorating each year not getting better because so many people leaving for migrant work. During the Mao ear of commune system, China has much stronger capability.

April 11, 2009 @ 11:19 pm | Comment

no matter what kind of statistical evidence you put in front of the “experts” explaining this is simply impossible based mainly on the catastrophic world demand for exports.

Nothing is impossible. Let’s say you are 2% short of your growth target, which you must achieve, you can increase your fiscal deficit by 2% of GDP, hire unemployed people to dig holes on the ground and then cover them back up, as a part of your “stimulus” program. Sure afterward your overall fiscal health will be worse. Noubini’s data seems to be very crude and his interpretations of the latest data seem to be mired with his own confirmation bias. Personally 6% growth won’t be bad, if it’s quality growth. If that’s “hard landing”, so be it.

The real question in hand is, can China achieve that without the fiscal deficit going over 3%? If you listen to Wen and the economists report to him, so long as the world trade doesn’t deteriorate further, likely China doesn’t need further stimulus to achieve the 8% growth. Oh, BTW, at this point the fiscal deficit in the US is projected to be some 12%, including the Social Security surplus and not including the states’ deficits. The insistence of being still fiscally disciplined in this environment, speaks volume on the quality of Chinese leadership.

I don’t think you need the Chinese media to tell you that China is holding up pretty well. GM and Mercedes-Benz both achieved some 20% y-t-y sales growth in China in March, compared to 40+% decrease in the US. Divergence is happening as we speak — some of us just refuse to see it.

April 11, 2009 @ 11:33 pm | Comment

Above all fiscal deficit percentages are to GDP.

April 11, 2009 @ 11:43 pm | Comment

Here’s the thing. Even if the Central Government is absolutely correct and their plans are total genius, one of the biggest problems in China as I see it is that the Central Government says one thing and many of the provincial and local governments shrug and go on their merry way. Look at environmental policies and “required” reviews for things like dams. Sure, SOME of these projects are carefully researched and regulated and go through the government’s stated process, but plenty of them don’t. SOME factories follow the rules and don’t pollute to excess, but plenty do not.

I think from what I’ve heard about the Chinese stimulus plan that it sounds great, and the infrastructure improvements (and yeah, the fabulous healthcare plan) are much more the kinds of stimulus I’d like to see in the States, but it’s really foolish to pretend that China is not going to suffer from this downturn and that there is a huge degree of fragility to the economy, e.g., the need to keep millions and millions of people working through growth that is ultimately not sustainable.

April 12, 2009 @ 12:35 am | Comment

Sigh….”that there is NOT a huge degree of fragility…”

I had to wake up way too early today and I’m still undercaffeinated.

April 12, 2009 @ 12:36 am | Comment

JXie is using exactly the right words: Quality growth.

In China, quality growth is much more important than a fixation on 6pc vs. 8pc or whatever other growth rate. What counts is: What does GDP growth consist of, and who benefits from it. With the right kind of growth, 4pc is far from catastrophic. With the wrong kind of growth, 8pc is not enough and too much at the same time.

April 12, 2009 @ 12:36 am | Comment

At the risk of sounding like a representative from CCP propaganda department, let me share with you some hidden weapon and asset that few Westerns have slightest clue.

Do you remember the SARS crisis in China in 2003?

Remember all health experts in the world worrying and predicting China’s doom?
Remember because China had 100 million migrant population at the time that made it seemingly impossible to contain the spread of disease?

Remember the same Wen Jiabao busy touring China and telling the world China can defeat SARS but no one in the world would listen?

And what happened to the SARS that should have destroyed China?

Nothing, nada, zip.

Do you know what China did to defeat SARS?

Very simple. China just remobilized old “socialist” command and control system, organized resource and put medical checkpoints in every village and neighborhood nation wide.

In 2-3 months, the SARS was defeated, piece of a cake, next please.

Now a quiz for you:

Why do you think China was able to mobilize resource and set up checkpoints allover China in a metter of days?

Here are multiple choices you can choose:
1) Because China has a democracy and people can argue and debate.
2) Because the US and the world have sent one million medical staff.
3) Because China used to have commune system so it was just a matter of remobilize the old system.

The answer is of course is 3.

In China, we call this kind of capability the “Socialist Advantage”.

If you really want to understand China, especially China’s crisis management capability, pay very close attention to this “Socialist Advantage”.

Socialist Advantage is what keeps China alive when crisis hits China.
Socialist Advantage is the hidden weapon that defeats China Collapse prediction every time.

So what exactly is this Socialist Advantage?
Well, this can be a very complicated long story, but in a nutshell, it has a lot to do with Chairman Mao.

This current healthcare initiative is actually another case of Socialist Advantage at work. The central government pulls all the resource in case study and research of the healthcare needs and problems, in piloting solutions, in setting agenda and goals, in device policies and plans, in overall budgeting and in directing the actual implementation.

The healthcare initiative involves 14 ministries in government of all levels, central, provincial and local, all the way to villages and neighborhood committees. This is Socialist Advantage in full display.

So, in the time of crisis in China, forget about Roubini, remember Socialist Advantage and remember Chairman Mao.

April 12, 2009 @ 3:05 am | Comment

“Socialist Advantage”.

Small correction. Totalitarian advantages.

It has its advantages but also big disadvantages.

Remember the great leap forward? The cultural revolution? The colectivization?

What about wasting time since 1949 till 198x? Where would be China now if the had started earlier? At what human cost? Very very very much lower.

One of math teachers used that argument when I was school. The URSS was to bury the decadentcapitalistic societies……

April 12, 2009 @ 6:51 am | Comment

If US is not going any longer to overconsume, if EU is not going to consume, where is CH overcapacity going to be exported?

Other provinces, developing markets, etc.

And if the overcapacity is not going to be exported, from where are the millions jobs CH needs be produced?

Even if the entire export sector vaporized it would be 48 out of 800 million jobs lost. Not as bad as some people wish it was. Many of these jobs were extremely low pay, heavily polluting and inefficient industries (33% of “China’s” co2). The destruction of American demand is a godsend to the whole world, Americans especially. Now if only Americans would prefer healthier/cleaner stuff, that would be great for everyone.

Hard times ahead.

But not as hard as some would like, and not as hard as it will be for America. China will just go from 3rd world poverty to 3rd world poverty (albeit a bit cleaner). America will experience some serious withdrawal symptoms, but it’s probably for the better (10-20 years later of course).

There are a lot of political ramifications for China, too, neighboring countries aren’t so keen on China-containment any longer. Japan, Korea, Taiwan, and Australia are all shifting closer.

China is also getting lots of raw materials for a low price right now when most other economies are paralyzed.

What would happen if there was not such legitimacy need?

This is a pretty open ended question. Silly, really, because if China wasn’t poor that means that there never was a Japanese/European/American invasion. Don’t think there was any chance of that.

@PB

Good post.

@Richard

At issue in the Rich China, Poor China section of my post is the way they schizophrenically claim either devastating poverty or staggering wealth,

I don’t think you should be so surprised, Rich. America claims China is rich when they want China to shoulder the burden of the problems industrialized countries have created for the world, and they say China is poor when they want people to take short positions or to feel better about themselves. By comparison, the CCP has actually been much more “moderate” or “stable”, predicting in 2006 or so that the economy would grow 8% over the next 5 years. Surprising how Communist propaganda wings can be more informative than “free” news corporations.

Unfortunately, it is simply too tied to the developed countries now mired in recession.

This is a myth. Again, 4-5% of China’s growth is exports to Europe/America, another good 1-2% to Japan. About 3% of employment is in exports. China has major problems but this isn’t the main one. Most of China’s “exports” is just foreign companies exporting stuff assembled with cheap Chinese labor. It’s Japan, Taiwan, Korea that are taking the brunt of this “export” meltdown as you can see (-10 to -6% growth, though I believe these are overly pessimistic).

Roubini has a better track record and I think he’s quite smart.

I also predicted the financial meltdown, but that doesn’t make me an expert 😉

The problem with that public relations approach is they are also puffing their chest and proclaiming riches and power simultaneously.

Rarely. When it happens on occasion, the “Western media” jumps all over it to fuel the “China scare” mongering. Same thing happened to Japan, other shifty and dangerous “yellow people”.

Want to show a climate change negotiator why China is “too poor” to stop building ten coal power plants a minute? Fly them to rural Henan. What a deal! 🙂

The various provinces of China in themselves are analogous to whole countries by population. Henan has 14 million more people than Germany if I’m not mistaken.

@Conscience

the flood of laudatory reportage of Western media

LOL. You must be from a different planet.

@Dror

Korea, Japan, and others – and become a prosperous country, ruled by democracy with Chinese characteristics.

You mean a puppet state whose ruling party is funded by the U.S? That’s unlikely to happen.

You do know that the LDP received huge funds from the United States from the 50s and on, right? And that the U.S encouraged Japan to militarize and deny WW2 atrocities?

Maybe when China is a “democracy” it can find WMD in Central Asia.

April 12, 2009 @ 7:48 am | Comment

Tom, you are a dangerous guy. I was here during SARS. You are either completely ignorant or plain lying. Seriously, it has to be one or the other. And who ever said SARS was going to destroy China? You are a propagandist, fact-free.

Thomas, I get to decide. It’s my site, sorry. Ownership has its privileges.

Jxie, I’ve always said China’s financial discipline might serve it well in coming out of this crisis better than most of the big powers. I still think it will. I have always said this seems to be “the place to be” during the crisis, and I’ve taken some heat for it. So don;t make the mistake that I am negative on China and its opportunities ahead. Its just that I see a hard anding being very painful for a while, maybe a year or two. The Chinese people are impatient and they had their plans, and they will not be pleased at the interruption and the broken dreams. That said, they’ve also known a lot more hardship than the US, are probably more flexible and more willing to chi ku than Americans.

Lisa, everything that you said.

April 12, 2009 @ 7:54 am | Comment

How about the socialist advantage that allowed hospitals to refuse treatment to those who cannot pay? How about the socialist advantage that allowed the dismantling of what little in terms of universal health care that China had to begin with, to be replaced by a profit driven laissez-faire medical industry where the hippocratic oath and the basic human values of the medical profession means nothing?

April 12, 2009 @ 7:55 am | Comment

Small correction. Totalitarian advantages.

It has its advantages but also big disadvantages.

Remember the great leap forward? The cultural revolution? The colectivization?

What about wasting time since 1949 till 198x? Where would be China now if the had started earlier? At what human cost? Very very very much lower.

Definitely true, but it’s not unlikely that America would have nuked China by now if not for the alliance with Russia (that arguably sped up China’s nuclearization).

When debating these theoreticals you have to understand cause and effect. America simply had zero sympathy for China (as evidenced by the paucity of American aid to the Nationalist) during the late Qing, Civil War, Japanese Invasion, or during the Communist Era. They have zero sympathy now. They happily vaporized 200,000 faceless “non-whites” in Japan and would have had no qualms about doing the same 10,000 times over in China. If and only if they could get away with it.

Part of the reason why China took the development path it did was because of a combination of insanity provoked by human misery and because of pragmatism. If China did not have nukes Asia would have been strangled by Euro-American imperialism.

So a better way to pose the question would be “what would have happened if America gave China more than 1/50th the aid it sent to Europe?” (via Lend-Lease, Marshall Plan, etc) I’d say we’d all be living in a much, much better world by now.

The myth of American generosity towards Republican China explained here:

http://www.republicanchina.org/American_Aid.html

American complicity and connivance in helping the LDP in their cover-up of war crimes and revisionism, as well as violent ultra-nationalist attacks against Japanese moderates and leftists:

http://www.users.bigpond.com/battleforAustralia/JapWarCrimes/Denying_truth.html

If anything, there is a “poor America” excuse going around. America is so mighty and the worlds pre-eminent super power but they can’t spare 1% of GDP for the environment or the world’s poor.

April 12, 2009 @ 8:26 am | Comment

And who ever said SARS was going to destroy China?

Well, nanhe and his ilk… they’re not exactly a fringe minority either, PNAC and Blue Team are not fringe but more a sizable minority.

The UN, however, did estimate that China would have around 10 million infected with AIDS by now. Which is overestimated by quite a lot; 89 page called “HIV/AIDS: China’s Titanic Peril”

http://premium.europe.cnn.com/2002/WORLD/asiapcf/east/06/28/china.aids/index.html

The UN had good intentions, but Ivan and other “netizens” and “china bloggers” used the report to gloat and predict an immediate collapse of China (and Hong Kong 10 years after the handover).

The true figure is closer to 1.5 million according to foreign experts.

Do you see how dangerous it can get for the Chinese people when expat laymen such as nanhe, N_a_S, Lindel, or Ivan start to use reports of grave significance for nationalist and anti-Chinese dick-waving?

A lack of transparency over epidemics for the sake of CCP “face” will naturally result.

April 12, 2009 @ 8:35 am | Comment

The link you quoted in the last part of this post can be found here:

http://markschinablog.blogspot.com/2009/04/conundrum-that-is-china.html

April 12, 2009 @ 8:48 am | Comment

This is getting way out of hand.

Ferin, UNAIDS revised its AIDS prediction numbers for China years ago. No one ever said SARS was going to destroy China, or if they did they were nuts.

Ferin, once more you’ve highjacked a thread. See me in my office.

April 12, 2009 @ 9:02 am | Comment

Makes – thanks for pointing that out – it was a typo, I’ve added the link.

April 12, 2009 @ 9:19 am | Comment

yourfriend

Come to think about it, if it wasn’t for all those doomsday prediction for China, where would the CCP gets the motivation to invalidate those predictions? Or even pinpoints their internal problems. I say China needs more doomsday prediction from the international community, the prospect of instability and eventually losing power is the best motivation for CCP to get their jobs done.

If everyone around the world would say that export led growth would eventually come to end for China, then this financial crisis originating from USA would not have affect Chinese export industry so much. Chinese elite was getting too comfortable making money using disadvantaged rural migrant as low cost labor to drive profit growth. Had they restructured their economic model earlier during the boom time, the situation would have been a lot better now. I think this is one area the majority of the international community did not bitch too much about.

Hell, CCP thrives on doomsday prediction. The day when foreigner stop making doomsday prediction against China, it is the day China will go down the drain. It is easier for other people to find out your mistake than for yourself to find out.

April 12, 2009 @ 9:50 am | Comment

@yourfriend: “…a puppet state whose ruling party is funded by the US….”

1. There’s no shame in receiving assistance and support or in learning from your mistakes with the encouragement of others. What counts is the bottom line, and the bottom line is that China’s GDP per capita is on par with El Salvador, Bhutan, and Angola.

2. Japan and Korea are not the only ones that received assistance. Western Europe was rebuilt with American money.

3. Speaking of puppet states – do you have any idea what role Stalin and the USSR played in establishing modern China (both the Nationalist and Communist versions of it)? They did not only provide money and guns, but they practically appointed most of the senior leaders, and those leaders took orders from soviet agents. Give me a break.

April 12, 2009 @ 10:29 am | Comment

@yourfriend: I just read your second post. I think this type of attitude is pathetic. Now you are blaming America for not forcing China to receive its financial support??!

You seem to live in an interesting world, one where China’s every good decision is a source of pride, and every bad one is always someone else’s fault.

Also, as @Fobtacular pointed out, the CPP’s ability to manage expectations is exactly what has kept them in power. That fact that they can make their citizens (and some of the commenters here…) so proud that their country did not fall apart due to a viral disease is a fine example of how this works.

April 12, 2009 @ 10:41 am | Comment

Dror, I’ve had to rescind Ferin’s posting privileges again. I can’t tolerate the way every conversation gets turned into an angry discussion of how bad America is. (And I complain about how bad America is all the time, where it’s relevant.)

April 12, 2009 @ 11:03 am | Comment

Your post is NOT the mess. One cannot discuss these issues without meandering. I think you are onto something. Not sure just what, but something….

April 12, 2009 @ 12:23 pm | Comment

Quote Richard: “I get to decide. It’s my site, sorry.”

Indeed. I was naive and immature to assume that an economist could participate in a serious economic discussion on your site. In case anyone is still reading this and happens to be interested, he can continue reading here:

http://miscellaneous-economic-ramblings.blogspot.com/2009/04/does-china-need-to-grow-at-10.html

April 13, 2009 @ 3:24 am | Comment

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