Will China Wake Up?

[Ron Scott]

I find it hard not to like the general story: Country comes out of a century+ of terrible crises, industrializes, adopts some capitalistic policies, climbs out of dire poverty, and sits near the top of the heap!

But the industrialization period with its high growth is over (Russia under Khrushchev), and more than a third of the population didn’t participate. There’s no safety net for them either. And while a little capitalism goes a long way, it can’t compete with an iron fisted government. China’s overstimulation of its economy made real estate skyrocket and after the “haves” invested their life savings in it…it tanked. Internal consumption is a pipe dream. So the government simultaneously bets the farm on growing exports forever while launching initiatives like belt-and-road that seem to prematurely announce “we’re the new world leaders” and picks a fight with the US. Bad move.

Now it seems the only road to success is to allow the private sector to operate under more open markets and rule of law. But they’re communists and can’t deal with the notion. So they try to appease their population by doubling down on blaming the US. Unfortunately, Trump gets elected with all his bat-out-of-hell bullshit and declares a trade war.

At this rate, this doesn’t end well for anyone, but mostly for the Chinese people, who have demonstrated their willingness to work hard and get ahead (unlike Russia et al) but have to suffer the anachronism of communist failures in the 21st century.

Where do you think this will end? I am not sure.

[bmjohnson35]

I find it hard not to like the general story: Country comes out of a century+ of terrible crises, industrializes, adopts some capitalistic policies, climbs out of dire poverty, and sits near the top of the heap!

But the industrialization period with its high growth is over (Russia under Khrushchev), and more than a third of the population didn’t participate. There’s no safety net for them either. And while a little capitalism goes a long way, it can’t compete with an iron fisted government. China’s overstimulation of its economy made real estate skyrocket and after the “haves” invested their life savings in it…it tanked. Internal consumption is a pipe dream. So the government simultaneously bets the farm on growing exports forever while launching initiatives like belt-and-road that seem to prematurely announce “we’re the new world leaders” and picks a fight with the US. Bad move.

Now it seems the only road to success is to allow the private sector to operate under more open markets and rule of law. But they’re communists and can’t deal with the notion. So they try to appease their population by doubling down on blaming the US. Unfortunately, Trump gets elected with all his bat-out-of-hell bullshit and declares a trade war.

At this rate, this doesn’t end well for anyone, but mostly for the Chinese people, who have demonstrated their willingness to work hard and get ahead (unlike Russia et al) but have to suffer the anachronism of communist failures in the 21st century.

Where do you think this will end? I am not sure.

I agree with your summary and I would add that they are facing an aging economy and they are also struggling with corruption within their banking systems. I fear that they may just invade Taiwan and who knows what the US or other western countries will do in response.  There is already a lot of disillusionment and pushback from their younger generation and authoritarian governments are dangerous when threatened (internally or externally).

Interestingly, I saw this video a few days ago:  https://youtu.be/mOnZ628-7_E?si=kIOF5oIsyMFYVpyN   He's supposed to be a Chinese Tiktok influencer.  Whether this individual really believes what he says or he's just a Chinese government propaganda puppet, it's hard to disagree with much of what he says about the US. It's always interesting to see the perspective from the other side, even if it has its own agenda. I'm certainly not suggesting that we need a full blown revolution, but we certainly own our share of issues to address.

[Ron Scott]

That’s a fascinating video, and I’m glad they gave Mearsheimer the chance to weigh in. They do have a perspective and communicate it effectively. But I disagree.

Blaming globalization for the woes of the lower middle class underemployed is a recent invention created by the wing-nuts of the Dems and GOP for their media campaigns. The right plays it like a culture war; the left, a class war. ToMAYto ToMAHto. The hardest hit areas of the country in terms of factory job losses—northwestern Mass, the rust belt, Appalachia, the Deep South—were basket cases WAY BEFORE China hit its stride or NAFTA was hailed. And some of these areas, like South Carolina and Pittsburg came back strong AFTER China/NAFTA. Bernie Sanders and Trump just made up campaign stories that promised to “bring back” jobs because they thought it sounded good. Tell that to the South Carolinians who would never trade their current high-end work for a textile mill. Tell that to the TechBros who weren’t even born when the big job losses happened. (And who is going to work in these new factories making silverware and dog toys when we’re kicking all the immigrants out and unemployment is 5% or less here???)

China was brought out of dire poverty and into the modern world by Nixon/Kissenger and those who followed, as a play against the USSR. No oligarchs plotted to kill American labor…because a) they are their consumers (!), and b) it never died. They originally hoped to sell to China but there was no money in it so plan B was to use their cheap labor to fill the gap between what the US consumer could buy and what the US worker could produce. And anyway, business strategy is subservient to government policy, regardless of the left’s attempt to convince us business “captured” the legislature LOL.

I’ll say one thing in defense of globalization critics: The US should NEVER have allowed itself to become dependent on goods and materials REQUIRED to run our security systems and our economy. TMSC should not exist. And the Chinese should not be making the chips that power our dishwashers and cars. For that newbie lapse I’ll blame our horrible 21st century presidents—Bush 2, Obama, Trump 1, and Uncle Joe—for 20 years of smoking dope instead of leading the country. Making sure you can meet your own strategic needs is rule #1. (Imagine if this bunch were in power from the 40s through the 80s when the entire world order was at stake?!)

[bmjohnson35]

Understood, I probably didn't convey my thoughts very well.  I largely agreed with the US issues identified, not necessarily who is at blame for getting us here.  I also found the video interesting.

[G-dog]

Back in 2009 a supposed expect predicted massive civil unrest in China triggered by the huge number of young Chinese men with no young Chinese women to partner with due to their longstanding one child policy.  I am still waiting for the uprising there, for that and other reasons.

[MustacheAndaHalf]

"China’s Population Could Shrink to Half by 2100"
"China’s population began shrinking in 2022, and the latest United Nations report indicates that it could slip to 1.3 billion in 2050 and then plummet to only 770 million in 2100."
https://www.scientificamerican.com/article/chinas-population-could-shrink-to-half-by-2100/

Estimates for U.S. population have more uncertainty, ranging from slightly fewer to slightly more Americans by then.  Over time, China will see greater demographic pressures than the U.S.  And China has greater respect for the elderly, but no social program to assist them with living expenses.  That will create strains.

I think real estate investment isn't entirely the Chinese government's fault.  In China, buying land is a traditional form of investment.  I believe parents are traditionally supposed to buy a home/apartment for their children who are getting married.  The desire to invest heavily in real estate was already there, and then stimulus added fuel to it.  And now overbuilding has become a problem, with property developers paying for current real estate projects from the money coming in for later projects.  That pyramid scheme caught up with them, leaving many people owning unfinished housing.  I don't think that has entirely been resolved, in which case it remains a drag on the economy.

I doubt most young people understand the implications of TSMC shutting down.  Good bye, new cell phones.  Data centers can't get replacement parts, so response times have to degrade.  In the pandemic, new car production stopped in the U.S., for lack of chips (which had been redirected to laptops, after car companies canceled their orders).  Imagine no chips for anything, since so much of those come from TSMC.  I think young people will notice when they can't buy a new phone, and their existing service gets slower or stops.  But probably not until then.

If China and the U.S. go to war, both will lose.  China has overprepared to defend itself, and could succeed at that.  But they can't take over the U.S., so it would become a protracted war.  Maybe people in China would tolerate it and be patriotic as the war unfolded... but once it ends, and their economy collapses... I think they'll get the same thing they did around WWII.  A new government, by force.

Still, China has ordered its military to be prepared to invade Taiwan by 2027.  But they also fired various military leaders around that time, suggesting they have a lot of work to do.

[MustacheAndaHalf]

Forgot to add - most of the manufacturing job losses were not from immigrants or jobs exported overseas, but from automation.  A lot of work is done by robots now, which leaves fewer jobs for humans in those plants.

(Image taken from : https://www.therobotreport.com/7-key-robot-applications-in-automotive-manufacturing/ )

[Ron Scott]

Forgot to add - most of the manufacturing job losses were not from immigrants or jobs exported overseas, but from automation.  A lot of work is done by robots now, which leaves fewer jobs for humans in those plants.

This is an akin to early industrialization, when jobs were lost in agriculture but added to factories.

With all the upheaval in the American workforce, the unemployment rate currently sits below 4.5%. The equivalent unemployment rate is virtually impossible to calculate in China because unemployment among the masses in the undeveloped rural areas are conveniently not counted. The rationale is that they will never be voluntarily unemployed because they “can always go back to farming”. But, yeah, they can’t. And there are more robots in factories than in any country in the world so.

In modern, successful economies the types of jobs available are in a steady state of change, reflecting higher value and greater productivity. So far America is pretty much among the top of the heap.

The concept that we have lost all our jobs to China and that rich “oligarchs” have raped the American  workforce is obviously not true when you look at the unemployment rate—which is near all time lows!

The people who try to convince us there’s been some evil, job-stealing globalization scheme perpetuated by “the elites” are charlatans—on both the left and right in America—who find personal advantage in stirring distrust. Whether it’s the culture wars stoked by the GOP or the class wars stoked by the Democrats—both low-life agitators—they got us hating each other for no discernible reason.

China has a different problem. They need to suppress their own rural poor by force if need be and they need to make the world dependent on their mass production. Otherwise they tank. Good luck.

[bmjohnson35]

Inflation and stagnant wage growth is what I have witnessed during my lifetime in the US.  Market concentration has grown significantly. Access to pensions decreased significantly, especially when 401k's became available. The wealth divide between a small percentage vs. the masses has been significant. People's expectations have also risen. 

The mass automation in China has been a drive toward improved productivity and lower cost, but I have also read that it's also a strategy to mitigate their future demographic challenges.

The pandemic brought to light how interdependent the world is under globalization.  This is an observation, not a criticism of the global economy.

It's very difficult to look back into the past and compare it to the present.  In other words, if I was 18 yrs old today, do I feel I have the same opportunity and/or probability to obtain the level of success I have achieved?  I'm not sure. 

[ChpBstrd]

The OP makes a good point about the tension between the productive class and the regressive government.

For a while in the 2000's it appeared like China was redefining "communism" as engaging in capitalistic business and that some element of democratic policy debate might occur within the existing structures of the communist party. The "democracy is inevitable" thinkers could not foresee China going backward into the bad old days of Maoism.

Xi has largely repressed such hopes. He's rolled back civil liberties, crushed dissent in HK, enacted a surveillance state, and tightened the government's grip on the economy. All while making military preparations to attack Taiwan.

I don't know if Xi represents a backlash to change (caution: a potentially Western lens of social change) or if he's operating against the will of the people with his consolidation of power.

What I do know is anytime I've traveled to a foreign country, my internet-informed impressions of what things were like was incorrect in some important way. This realization makes me pause and reconsider whether I know anything about China, much less think I can predict their future. Plus, the government's repression there and limited cultural/linguistic ties mean it is virtually impossible for me to understand the attitudes of regular Chinese people. How exactly could I receive such information? Even if I traveled there and tried to interview people - in English somehow - they'd be afraid to talk frankly to a foreigner.

So let's start with the assumption that we don't know jack shit, and have very few reliable sources of partial information. The best source might be a book by a Chinese person that has been translated. Not an expat who might have an agenda, but internal literature. It might be possible to read between the lines of fiction to get a better sense of the mentality.