Thinking about China
Chill, guys! China is not a ‘great superpower’ capable of eclipsing America and the West.
The notion that China is going to replace the United States as the sole superpower is possibly the greatest ‘alternative fact’ of our time. And the idea that Donald Trump, for all his trifling flaws and fiery rhetoric, is squandering American leadership and goodwill around the globe is balderdash as well.
China — with its closed financial system, corrupt and feeble military, never-ending greenhouse gas emissions and intense obscurantism — lacks superpower qualities, and hasn’t generated any in its unbridled pursuit of ‘socialism with chinese characteristics.’
China may post impressive, bottom-line numbers, but key stats are regularly omitted when touting China’s economic rise. For example, on a per capita measure, China is pretty fuckin’ poor: $7,572 for the PRC vs $57,600 for the USA. Also, 80 million Chinese still live on less than $2 a day and roughly 40 million urban dwellers are ‘socially marginalized’, lack a social safety net and can barely afford basic housing.
Approximately 60 percent of exports in China come from foreign companies. Foreign firms are responsible for 80 percent of all high-tech exports. And when considering China’s shiny new digital economy, what sinophiles call a ‘leading global force’ — firms like Alibaba, Tencent, Huawei, Didi Chuxing, Qudian, Tudou, etc. — have blatantly stolen intellectual property from frontline players, replicated it locally and then shut out foreign competitors. David Shambaugh has done excellent empirical research on this topic. China Unsensored, hosted by the hilarious and cheeky Chris Chappell, explains how China’s theft is costing foreign firms trillions of dollars here.
Moreover, nearly two fifths of China’s populace can be classified as peasants, and, by its own reckoning (along with the World Bank), the People’s Republic has the sharpest rich-poor divide in the world, a situation the Chinese themselves are deeply unhappy about and a very thorny issue that keeps the autocrats on their tippy toes.
Bad things are incessantly bubbling beneath the surface there: underground organ harvesting, human trafficking, prostitution on an epic scale and endless backbiting and bickering. If the secret police and internet spooks didn’t intervene on an ongoing basis, chaos — or ‘Da Luan’ 打乱 — would ensue. There are literally tens of thousands of “mass incidents” each year in China, such as demonstrations, strikes and online convulsions. Such incidents regularly involve thousands of angry citizens and countless armed police, cyber thugs and Commie trolls. According to China’s Ministry of Public Security, there were 68,000 such incidents in 2016, and that’s Beijing’s official figure for public consumption, which is no doubt fudged.
But back to China’s economy. Indeed, it’s the facts and figures associated with China’s unprecedented boom that are most disturbing. Never has there been such a grand industrial and financial experiment (over $40 trillion of assets in a system with $2 trillion in equity!), and never has the planet and its inhabitants seen such environmentally devastating consequences. The World Bank has labeled China the world’s most polluted nation, laying claim to 16 of the 20 most despoiled cities on Earth (India is also a top contender for grossness). The pollution has consequently spread all over: sulfur dioxide and nitrogen oxides fall as acid rain on Seoul, Tokyo and Honolulu; and according to the Journal of Geophysical Research, toxic traces of Chinese pollution are regularly detected in the US and EU.
The EIU has reported that only 1 percent of China’s 820 million urban residents breathe air deemed safe by the UN, and 600 million Chinese lack access to safe drinking water. Not surprisingly, China’s Ministry of Health now lists cancer as the leading cause of death.
But China’s pollution is something that needs to be experienced to be appreciated. Even in the countryside, air quality and the environment can be beyond gross (with objects just 30 yards away out of focus), and in cities it can be utterly atrocious. VIVISXN, writing from the southern city of Shenzhen (China’s most modern and technologically sophisticated place), is looking at a toxic pall outside the window (in Futian District) that habitually loiters over the city. Locals wear masks on a constant basis and indoor vents are often equipped with scrubbers to eliminate free radicals and micro-particulates.
There are industrial towns in China (especially in the North) where you can hardly see the sun. It’s bonkers. You can literally eat the smog.
Economists and media pundits might crow on about the Communist leviathan’s command economy, but the truth is that China is facing too many intractable problems to supplant American preeminence. For example, state-owned enterprises face severe debt risks; there’s the problem of “zombie companies” and growing NPLs; financial institutions are not competitive at pricing and managing risk; many internet companies are actually Ponzi schemes; and the currency, the Yuan/RMB, is fixed to the dollar at 6.63 with capital controls firmly in place. The dollar remains the world’s reserve currency, obviously.
A basic requirement for China’s moving toward anything approaching a superpower would be its evolution from the “workshop of the world” to a more indigenously innovative economy — with truly inventive products, viable commercial patents, objective rule of law and valuable IP — but that appears untenable.
China’s advancement is fundamentally hindered by its poorly educated citizenry (beyond tier one cities, for instance, no one can even speak basic English), stupid central planning, relentless internet censorship, systemic corruption, and the ongoing political repression of ordinary Chinese people.
Sure, China’s growth rate is robust. But superpowers are not built on dollars and RMB alone. Great Britain wasn’t; neither was the United States. America owes its superpower status to historical and cultural circumstances: it won WWII and the Cold War and has cultivated its status since with everything from military capabilities to soft power. It has nurtured the global order that China has been so dependent on (“the biggest free rider of all”, according to Henry Kissinger), and drives globalization and free trade.
Unlike China, America exports its education, values, innovation, and ideas. It exercises influence – even ‘monopoly power’ – in the domains of technology, the military, the arts and engineering.
Aside from the few Chinese mavericks who make art meaningful on the mainland — Chen Man, Zhang Da, Masha Ma, Shushu/Tong, Ai Wei Wei, etc. (there are a few more, obviously, but you’ve never heard of them) — China’s worldwide cultural appeal and geo-political posturing is basically negligible. Shen Yun is a joke. China’s naval base in Djibouti is geo-strategically trivial. And the one aircraft carrier China bought from Ukraine and retrofitted — the Liaoning 辽宁舰 — is hardly a platform to project power anywhere, much less in the South China Sea. Oh, and the ‘One Belt, One Road’ 一帶一路 project, which represents $1 trillion in NPV liabilities over the next decade, assumes China will be financially solvent enough to supply other countries’ infrastructure needs for an indefinite period. We’re very skeptical, especially given China’s jerry-built banking system — laden with debt — which could crumble anytime now. Moreover, the Asian Infrastructure Investment Bank (AIIB), China’s attempt at displacing the World Bank, has insufficient funds and influence to make meaningful strategic investments abroad.
America possesses an extensive list of favorable attributes China isn’t even aware of. The myth that China ‘will rule the world’ is driven by many false narratives and elitist ninnyhammers — Fareed Zakaria, Martin Jacques, Ian Bremmer, The Economist, The FT, VICE, etc. They argue that America has been hijacked by President Trump and his isolationist ilk and insist that US leadership has entered a retrogressive phase on the world stage. That’s not the case at all. Just look at America’s solidarity with and commitment to multilateral institutions like NATO, the IMF, the World Bank, The WHO, UNICEF, The ADB and other burden-sharing outfits; look at all the reinvigorated bilateral relations and countless coalitions forged to fight terrorism and promote global growth.
People who fawn over China’s ‘undisputed leader’, Xi Jinping, are ignoring many crucial things. He is a powermonger, an absolutist, and a hyper-statist; he wants to concentrate economic and political power in the Politburo and Standing Committee (with him at the top, of course), not in individuals and disruptors who add dynamism and diversity to China’s economy. And his top-down style and procrustean policies do not allow for flexibility and creative problem-solving when the next crisis hits.
As one sinologist put it, “If the Chinese are lucky, Xi will turn out to be an enlightened absolutist, like Singapore’s Lee Kuan Yew. If they are unlucky, he will be just another emperor who fondly dreamt of controlling a fifth of humanity. Worst case, he could turn out to be Mao 2.0.”
Anyway, even in the age of alternative facts and reality distortion fields, the US still rules the roost, and President Trump seems to be killing it in China, where he’s just received a hero’s welcome — not as ‘a barbarian potentate’ but as a bonafide big dog of the US-led world order — complete with a red carpet roll-out, a military honor guard, flag-waving children, commercial contracts galore and his own private tour at the imperial palace. He also just signed $250 billion in deals, pried open the Middle Kingdom’s fund management sector for foreign firms, and put China on notice about supplying the Hermit Kingdom with nucs. Xi whizz! Next stop: Vietnam.
VIVISXN MEDIA – China + Geo-Strategy + International Affairs + 中国