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China Reflections   (April 7, 2007)

Unsurprisingly, my April 4 entry China's House of Cards drew an interesting variety of reader responses.

Keen observer S.S. saw the U.S. in the "house of cards":
When I saw that house of cards, my FIRST thought was that every one of those cards are also currently being played in the United States economic game.
Frequent contributor (and ace blogger) Fred Roper had a similar reaction:

Wait, are we talking about China or the United States?

Long-time correspondent S.B. commented on exports and the ties between the U.S. and China:

Here's the problem with China: they built an economy dependent on exports. So if they can't buy their own stuff now, how in the world can they do it after income is reduced when the US slowdown accelerates?

When you rely on exports to grow your business, you have to always be the cheapest. You will lose your customer when the next guy becomes cheaper.

Second, when you rely on exports and your own people cannot buy your goods, how will you ever grow your own economy?

My brother, who is very smart, has a pro-China argument that I haven't been able to explain away: China is not getting any money now for the stuff they sell us. Basically they are getting dollars which are ultimately worth less in the future. They print yuan for every dollar they get. So they can just keep printing yuan and keep the factories busy even if the US stops buying. Let China's banks continue to buy the goods! I hope this makes sense.

China needs to raise the wages. As Richard Duncan says, the solution is a global minimum wage.

I firmly believe that China is also seeing the US consumer slowdown, which started here about 6 months ago. We know Christmas retail was down. They have got to know! So how are they adapting? Are they scared out of their wits? Have the banks accelerated business bailout?
Long-time contributor Martin notes the rising social unrest in China:

How many "riots" did they have last year? 75,000? I took a lot of Chinese history classes at university and although I no longer remember the order of the dynasties, I still remember lots of names of "rebellions" and "incidents" and other uprisings. I studied Chinese, and lived in Taiwan for a while, where I sometimes witnessed miniature riots when people cut in line at the movie theater.

That culture is the foundation for the house of cards, so to me the risks of real upheaval are genuine.

My wife brought up her favorite point of contention with Chinese society -- the one child policy and how it encourages selfishness. I suppose she has met some very selfish "only children" and is worried about a whole society made up of such folks.

Anyway, I am not convinced that the future of China is completely smooth sailing
At Martin's suggestion, I did a search to confirm the "75,000 riots last year" and discovered an interesting interview with Ronald Aronica and Mtetwa Ramdoo, Authors of "The World is Flat? - A Critical Analysis". Here is an excerpt:

Life in rural communities in China, India and elsewhere is tough. Are we to displace a non-money economy with formerly self-sufficient peoples moving to the mega-cities to live in slums? In the recent PBS documentary, China From the Inside, rural people dislocated due to the damming of rivers were given new high density housing. But as one of them exclaimed, we have no jobs and cannot raise our food anymore. Relocation from dam areas, like the Three Gorges, is causing huge social upheaval (75,000 riots in China in 2005).

Thousands of families are divided throughout China as parents spend most of the year in large cities making a living, while their children remain in rural villages with grandma tending to all the chores and to the fields. In other cases, women are left in the villages to raise children while husbands go off alone to the cities to work.

Expectant mothers still abort female fetuses or abandon newborn girls because of the long-held view that women are not as valuable to the culture as men. China is the only nation in the world where the suicide rate for women is higher than that for men. Of course, relocated peasants cannot afford the laces on the brand-named shoes they manufacture in sweatshops. But then, again, they do get to see their children four days out of the year! So yes, they are “out of poverty” according to the $2.00 a day rule, but at what cost?
Knowledgeable reader Greg contributed this first-hand experience of the cash leaving China for "safe havens" in North America such as Los Angeles and the west coast of Canada:

One other problem you didn't mention in China's House of Cards, but I think it's a big one, is the flight of China's best and brightest, or maybe that's crookedest and best connected, to foreign safe havens, along with millions if not billions of dollars in ill-gotten gains, er, profits, which thereby flowed out of China.

My Dad sold his house in West Vancouver to an investor from Shanghai - for about a 20% premium on the market back in January 2006, so I know a bit about that from personal experience.
New reader Kevin offered a wide-ranging historical perspective, suggesting China is beginning a "Golden Age":

The most important thing one has to grasp when comes to the current development of China is to understand what "Golden Ages" of histories are all about. "Golden ages" of civilizations are essentially movements of collective social consciousness. Think back on the Golden Ages of Greece, Rome, and that of the Renaissance. Were those times of great upheavals, rampant warfares, wide spread social injustices, corruptions, poverties, ..etc. Yes! But what makes those times "Golden Ages" golden were the collective upsurges in social consciousness to do better and better.

Despite or perhaps inspite of the problems, people of those societies and their immediate subsequent generations at those times decided to rise above their physical limitations and accomplished what we later called the "Golden Ages" of their respective civilizations. When contrasted with the "Dark Ages" just a few years back, Europe & the Europeans at the time of the Renaissance simply would not be denied, and as a result we are all are reaping the benefits of it today.

China of today, after almost 500 years of humiliations at the hands of the global colonial powers and after over 100 years of internal bloody revolutions and strifes has now finally decided to "wake up". This "awakening" is one of the spirit. It is the same spirit that Jim Rogers first felt and saw years ago when he visited China; it is the same spirit that many of the leading Western business leaders understood, and the same spirit that I felt when I lived there from 2002-2005.

Once unleashed, the spirit of the "Great Awakening" (or here in the West called the "Spirit of the Renaissance") can not be easily dispersed, if at all. History making is taking place and it will take its due course. Surely there would be many trials and tribulations; but as Jim Rogers said, the next time when you see China is in trouble, it's time to bet the farm and buy everything there; then wait for a few years and retire rich and wealthy (Rogers, Hot Commodities 2004).

Pax Anglo-Americana is surely not done yet; in fact, we have just gotten started (All truth be told, the spirits of the Greco-Roman empires and Imperium Brittanica has metamorphosized and got incorporated into the current Pax Americana order, or as they say, "it's a New World Order, baby!". Sino Conferation is just about to start. Will the two future super powers live in peace, co-creating a truly global prosperous planet as we take to the stars or will we descend into fiery competition and self-destructive warfare? Only time will tell; but what an interesting time we live in!
Indeed. Thank you, readers, for such a diversity of observations.

I'd like to add one factor which is rarely if ever discussed: the quasi-religious nature of belief in China's rise to superpower status. Those who hold fast to this belief quite often, it seems, also vehemently believe in the penumbra of that faith, i.e. that the U.S. is in permanent decline. Indeed, most believers in China's inexorable and deserved rise to (or recovery of) great-power status take keen delight in any evidence (blowback) that the U.S. is faltering under the burdens of "Empire."

This "religion" is reminiscent of the similarly quasi-religious "faith" in the goodness and rightness of the Soviet Union exhibited by leftists during the '30s, '40s, '50s and '60s, right up to the publication of Aleksandr Solzhenitsyn's epic account of political repression and mass murder, The Gulag Archipelago: 1918-1956 (I recommend all three volumes: The Gulag Archipelago 2 and Gulag Archipelago 3)

In those by-gone days, those who either secretly or openly loathed the U.S. sought a "another model" or a "counterweight," and any criticism of their belief in the USSR was treated as absolute heresy. Now the same phenomenon can be found on the subject of China. This inability to brook healthy skepticism is a sign of deep insecurity, in an individual or an entire group or culture.

Another quasi-religion can be found on the opposite end of the ideological spectrum, for there are those who fervently believe China is not just acting on its own behalf but is actively undermining the U.S. in order to dominate Asia and the Pacific.

I am agnostic and therefore opposed to all rabidly hostile-to-skepticism fanaticism. Believe anything you want about China's "rightful role" or "return to greatness," just as you are free to hold a quasi-religious faith that the U.S. is destined to decline, go to war with China, etc.

I see China and the U.S. through a less ideological, less faith-based lens. The U.S. and China are inter-related to the point that some analysts call the duo "Chimerica." Each has immense problems, immense promise, great histories and great ambitions. What happens to each and to "Chimerica" will depend on the policies and decisions made by their leaders and then endorsed or rejected by their citizenry.

But if you respond as a "true believer" by striking out at any "heretical" questioning of your particular dogma, then don't expect to be taken seriously--here or any where else.

End-note: I was struck that no one disputed or even mentioned my Marxist-inspired critique of China's political contradictions. Is Marxism so discredited that a Marxist critique of an avowedly Communist government draws no notice? Does no one read "Theses on Feuerbach" or any of "Capital" anymore? Such a critique of China's political and economic structure is difficult to dismiss out of hand--unless of course, it's against your "religion."

For more on this subject and a wide array of other topics, please visit my weblog.


copyright © 2007 Charles Hugh Smith. All rights reserved in all media.

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