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The economic crisis and China’s role » The Peking Duck

The economic crisis and China’s role

I’m having a debate with a commenter/blogger about that topic over here. Very interesting, especially considering the great pains to which China is going to make sure the US gets 100 percent of the blame. And let me add, I believe the US deserves the lion’s share of the blame. But when you keep repeating it ad nauseum and reflexively, people begin to wonder what the motivation is. To those who say, “But it’s true!” I would respond with an analogy: It’s also true, for example, that Hillary Clinton is a white woman, but to add a parenthetical phrase about that every time her name comes up would be bizarre. “Today Hillary Clinton, who is a white woman, met with so and so…” That’s what the Chinese media are doing across the board with the economic crisis. “Washing machine manufacturers in Dongguan are losing their jobs due to the global recession, which the US caused.” “The crisis, which was caused by greedy bankers on Wall Street, may go on for years.” Again, it’s factually not inaccurate, but journalistically absurd. It’s called overkill.

Back to the debate – check it out and you can leave your comments there.

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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: 70 Comments

zhao: isn’t China always mentioned with words like “dictatorship”, “communist”, “planned economy” in western media?

No. In fact it rarely is. Go through google news stories one by one and tally how many of those terms are used on any given day in each article. You’ll find that contrary to your claim that the Western media “always” uses those terms, it actually does so quite rarely.

Dror, my only issue with your analysis is your faith-based belief in America despite evidence that the country is economically hamstrung for years if not generations to come. I am more pessimistic than you, but there’s no way for now to say who is right.

May 27, 2009 @ 1:09 pm | Comment

Richard, please note that I am not saying that America is in great shape. I am only comparing it to alternative world powers. China, with all due respect, is not in the same category. The only thing going for it is that it incorporates a lot of very poor people into a single economic weight that carries substantial geopolitical weight. There’s nothing wrong with that, and I hope that Chinese people will one day enjoy the prosperity and freedoms enjoyed by their fellows in the west. Until that day, it’s important to keep things in perspective.

I am not basing my argument on faith. I am just looking at history as well as on the things I see around me every day. China’s model is not viable. It’s one big bluff, propagated by the CCP and perpetuated by starry-eyed “experts” in the west.

May 27, 2009 @ 1:47 pm | Comment

the ironic part is these are proven to be good things.

Kinda like pre-emptive war, lutefisk and papilloma, ain’t that right, Zhao?

May 27, 2009 @ 1:49 pm | Comment

Yeah, the alleged non-viability of China’s economic model is an interesting topic. So much of it seems built on sand and/or hype. And yet…

That’s a good topic for a massive post of its own if I can summon up the energy. Incredibly complex topic with so many divergent viewpoints by so many intelligent people (like you and me, of course). The “And yet…” argument is key. It’s not all smoke and mirrors.

May 27, 2009 @ 2:11 pm | Comment

“The American Achilles Heel? Taxes.”

PB, your wish for more tax will be granted. VAT is being seriously considered.

US have lived beyond its means for some years, from Fed, to state to individual level. The reality is that US needs to cut its denfense spending and manage its security with China and other countries. US can choose to do it now, or is forced to do it later.

Unfortunately, the reality has not dawned on US people yet. Defense spending is a still a sacred cow that is equated to patriotism. In my view, this is just nationalism run amuck.

May 27, 2009 @ 10:39 pm | Comment

[China] sought to INTERVENE and CONTROL capital flows and support its export industries (I wonder if the people making these decisions and those benefiting are the same….if so is this greed?) and SUPPRESSING the economic livelihoods of its rural population (this has changed now I acknowledge).

I think you get this totally wrong, which is a common misconception. Agricultural products have MUCH higher domestic labor cost built in than export manufacturing products. Artificially keeping RMB down benefits rural agricultural labor force much more than urban manufacturing labor force. If USD:CNY was at 5 in 2005/2006, exporters would performed unevenly with lower-end manufacturing suffered but higher-end manufacturing might actually benefit; domestic farmers, competed with international farmers, would suffer a great deal. A strong RMB actually will be a net positive to the overall goal of Chinese manufacturing — moving up the value ladder. As consumers, they all would benefit. BTW, ecodelta, CH is Switzerland, not China. China is CN, or CHN.

China would be in this so-called “dollar trap” so long as:

1. There is no running bull market of agricultural products, YET. (which is why RMB appreciated largely during a period of agri-bull).
2. Agri-products are priced in USD.
3. An uncomfortably large (to the Chinese decision makers) portion of the Chinese labor force is still in agriculture. Currently it’s at 40%-ish. Their livelihood relies heavily on the equivalent yuan prices of agri-products in the international markets. If the yuan prices are too low, they will suffer.

So for now you watch closely on some agri proxies, when they move up, CNY will move up. In a few years, maybe during the next generation of the leadership, the condition #3 will be gone, then CNY’s ascendant will be fast and furious.

May 27, 2009 @ 11:45 pm | Comment

The USSR was around for many years. It sent people to space. It won Olympic medals. It had some of the world’s best scientists and academics (China still doesn’t, btw). It’s influence spread from the Pacific to the Atlantic. One morning, it was gone.

In USSR, people lined up for hours just to get some low quality bread, and in China today you can enjoy your own personal banquet at 3 am even in a mid-tier city… Gosh how brain dead one needs to be to compare China and USSR? To me the most apt comparason is the USA in 1900 — the energy, the optimism, and even the dirty environment. Yeah, just so that you know, between 1900 and 1930, the US won fewer natural science Nobel Prizes than even Switzerland. You can argue it was a combination of Nobel Prize being a Europe-centric award, and the US being scientifically trailing Europe — which fits well today in China’s case too. Speaking of which, neither did USSR win many Nobel Prizes and they sent a satellite to space first!

May 28, 2009 @ 12:18 am | Comment

JXie,

You are right- China is certainly not the USSR. But it’s not the US either- and the year isn’t 1900. It’s 2009, and the world has changed quite a bit. Countries develop within a particular historical-geopolitical context for better or worse, not according to some ahistorical “development model”.

To the great dismay of Western elites, China has recently been beating them at their own game in the industrialization/grand projects departments. But unfortunately for China, this game (based on cheap energy and wanton environmental destruction) is about to go out of style. It’s like showing up for a party when the last few beers are being tapped from the keg.

If I were the Chinese leadership, I’d pour all R&D money into a time machine. Then they could send some intrepid people back to the late 1800s and get China’s “modernization” going then. In that case, China would have dominated the 20th century and been as energy inefficient and gluttonous as desired (basically usurping the American role). They could have built an empire of smokestacks and steel tracks. Every family with two Cherys and a garage in the burbs of Zhengzhou. They could have got Mies Van der Rohe to design the CCTV building.

Alas, back here in reality, I just don’t think that’s going to happen. But why waste time with 20th Century envy? China should be trying hard as hell to leapfrog the rest of us, not rebuild Cleveland with a Chinese name. The big question is whether China’s current political constraints will allow that sort of systemic creativity to truly flourish. I have no idea.

May 28, 2009 @ 12:55 am | Comment

@JXie: China is not the USSR (although it is the only living remainder of Stalin’s succesful foreign policy). The point of that post was to give an example of an empire with a non-viable development model that was and then wasn’t. As for people enjoying a ‘personal banquet at 3 am even’… this may be true in MANY places in China, but it is still far from true in MOST of them.

May 28, 2009 @ 3:12 am | Comment

“the only living remainder of Stalin’s succesful foreign policy”

This might be a weird definition of ‘successful’, but North Korea is still very much in existence.

@JXie, Dror – The USSR was an artificial creation of the Tsars masquerading as a state. It was essentially just the Russian empire in communist drag. China is not nearly so much an artificial creation as that, and does not nearly require so much in the way of artificial nation-building (and, by the way, that’s what all that medal-winning and space-exploring were motivated by). This is not to say that China is not a country in which a high level of nation-building is still going on, just not to the extent that it was in the Soviet Union.

Were a catastrophe to strike China tomorrow, well, we already know the answer to this as China has been struck by economic and political catastrophes repeatedly starting in the beginning of the last century if not earlier, what occurred was warlordism followed by civil war followed by dictatorship. However, unlike the USSR the option of forming independent nations does not exist for the vast majority of the Chinese population, living as they do in indistinct provinces of roughly equal size and population. The exceptions to this are geographically distinct areas (Hainan, Manchuria, Mongolia), ethnically distinct areas (Tibet, Xinjiang) and economic/logistical centres (Shanghai). Even were all of these areas to become independent of ‘China proper’ (i.e., the area of the map which you would see marked ‘China’ on a map from WWII) more than 80% of the population would still live in rump China. China therefore cannot disappear from existence, only the flag and the mode of governance would change – as much as CCP-boosters try to claim otherwise, there is nothing ‘Chinese’ about communist dicatatorship, or about red flags with golden stars.

I guess I should add that I do not expect any such thing to happen in the next 20 years, but had a European commenter been asked how he saw the future of that strong, powerful, confident, mercurial state of the last century – Germany – then, looking forward from 1909, he could hardly have foreseen its collapse in the first world war, its re-birth, second collapse, division, and final reunification.

I will put this as plainly as I can: China is not America of 1900, which was already a rich country and politically mature. Instead it is a curious cross between the Russian Empire and Imperial Germany – still poor and backward in many areas, but growing and arming apace, politically immature and given to grandstanding, still seeking its ‘place in the sun’, still complaining of having been historically wronged and exploited. However, unlike Imperial Germany (but like Tsarist Russia), China is still not a nation which produces talent. China is yet to produce chemists to match Haber, engineers to match Daimler, manufacturers to match Krupp, philosophers to match Nietzsche, composers and playwrights to match Wagner, physicists to match Weizsäcker. To be more precise, it has produced such men, but so far they have not had the opportunity to reach their potential in China, and have either had their talents wasted or have gone overseas. However, China most certainly will produce such men in future, and such men will mould the new China.

I will say this once again: whilst it is natural for Chinese people with experience of the United States to compare it to that strong and confident country, China is not America and never will be. In every aspect that China’s future may be similar to the US’s past, it is also greatly different, and equally as similar to other countries the comparison with which many will find less than flattering. China is China, with all the good and bad that will flow from that.

May 28, 2009 @ 6:58 am | Comment

“China most certainly will produce such men in future, and such men will mould the new China.”

I guess I should add, that China will also produce women equal to those men, and those women will hopefully be allowed to play an equal part.

May 28, 2009 @ 7:02 am | Comment

@FOARP: I have to point out that China, in its current borders, is definitely a creation of modern times. A re-creation at best.

True, there seems to be a stronger cultural link between its different parts, but if you take out the areas you mentioned – Hainan, Manchuria, Mongolia, Tibet, Xinjiang, Shanghai – China loses control of more territory than Russia lost after the USSR collapsed, both in absolute terms and in relation to its own size. You can also add Guangdong and Sichuan two that list – two provinces with a distinct language and history – and you’re not left with too much. I agree with you that China is not likely to fall apart, but I do think that the chance of that happening is higher than most people realize. It was never as unified as it is today and it’s not hard to imagine that it won’t be so unified 20 years down the line.

May 28, 2009 @ 9:29 am | Comment

“I agree with you that China is not likely to fall apart, but I do think that the chance of that happening is higher than most people realize.”

Agree. I think more and more chinese also gradually realize that point. Most people who want CCP to be kicked out of power have not really thought through about the consequences.

If China can develop on the current path for another ten to twenty years, China chould become more homogeneized, union have more chance to preserve, and it is more likely to have a peaceful and smooth transition to the eventual democratic society.

May 28, 2009 @ 11:46 am | Comment

From European perspective CH seems like a living fossil. All old empires that existed here, composed of several peoples united more or less by force, ideology, religion or cultural affinity are gone.

Gone is the Roman Empire, the Holy Roman Empire, The Austro-Hungarian Empire, The Turkish Empire, The soviet empire, etc. What remains are national states (more or less national in some cases) Most of them now form part of the EU, joined on their own free will. An unruly and disparate union, but union nonetheless.

What CH is today is more or less what was the territory of the Manchu empire. Whatever the CCP said, not all parts belong to CH on their own will. And the arguments, and methods, that CCP uses to keep them within is not much different from what those old empires here used in its time.

Must recognize that some CCP methods are more sophisticated.. but others are equally physical and/or culturally brutal.

Would the history of CH be better if it where divided in different countries? Hard to said. On one side I consider that the geographic layout tend to favor a dominant entity to control the area. It is almost like an Island delimited not completely by the sea, but also by strong geographical barriers. And isolated from other major cultures. Sometimes even mentally self isolated.

No having a hierarchical/centralized regime could have prevented some of the vagaries of former emperors and in current CCP policies, which had brought a good share of pain and avoided progress in current CH geographical area.
But if it would be better is hard to say. We all know the consequences of the national states war in Europe. The continent practically imploded itself. Europe lost world dominance as result of WWI and practically self destroyed itself in WWII.

The CH perspective of Europe? Maybe a living fossil, a bunch of unruly states unable to form a centralized, effective government structure more bent in promoting common and not particular state interest; and standardized rules, customs and common language.
All former feudal independent states in CH are long gone.
Chu, Han, Zhao, Wei, Qi, Yan and others do not longer exist.
But CH also lost of preeminent position in the world and collapsed from within, with dire consequences for the population.

May 28, 2009 @ 12:23 pm | Comment

@ecodelta: Fantastic point. It is indeed the last standing empire, but the International Left is too busy ‘protecting the weak’ to notice.

May 30, 2009 @ 8:45 am | Comment

Great website here. Check out my China instablog and give me feedback on it:
http://seekingalpha.com/user/183929/instablog

June 2, 2009 @ 1:10 pm | Comment

Thanks Mike – my friend Dror will totally love that post! I have mixed feelings about the question of whether or not China has a middle class. It definitely has one, but it is not like the middle class we know in the West. But that’s a whole post in itself.

June 2, 2009 @ 1:17 pm | Comment

I’d really like to get to the bottom of this supposed “middle class” in China. How big is it really? Is its size greatly inflated by bogus CCP stats?

“…can the world expect a China that resembles the consumer-driven United States? Unlikely, says Dr. Ming Wan, Director of Global Affairs at George Mason University. He argues that, “The Chinese government says that it wants to boost consumer spending to reduce its dependence on exports and has made some efforts. But fundamentally, the Chinese government still follows an export-led strategy. China will not follow America’s consumption-driven growth model. It is similar to Japan and Germany in that all three are saving countries.”

June 2, 2009 @ 1:43 pm | Comment

@Mike: the fact that Japanese save more than Americans does not mean that their economy does not rely heavily on local consumption. It does.

June 2, 2009 @ 2:07 pm | Comment

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