So China’s extraordinary years of lending and growth have surely created an economic bubble, but they have created two other bubbles as well. First, a political bubble based in the belief that China’s government techniques can defy the laws of economic gravity and create long-term, stable, above-market rates of growth in the developing world. Second, a geopolitical bubble based on the belief that China’s stellar economic record of the last few decades will continue indefinitely into the future with immense consequences for the international order. That is, the country’s success has encouraged authoritarian regimes and technocrats all over the world to believe that markets can be managed long term, and that market forces can be indefinitely held at bay.My employer deals extensively with Chinese companies, especially trading companies. Many of the financial arrangements in China are murky, at best. If the Chinese economy crashes, the effects are going to be significantly greater than what is happening in Greece.
As an aside, we aren't likely to run out of technocrats any time soon -- the Eastern Seaboard is full of them. If events are in the saddle, we're going to see a lot of these technocrats flailing around, trying to wrest control. Watch carefully.
5 comments:
I think what anyone (including myself) tries to predict about China is most likely wrong, and if right, probably more a matter of dumb luck than insight. It seems that most everything happening there is pretty much without meaningful precedent, if only for differences in speed and scale that add up to qualitative rather than quantitative differences.
But what do I know?
I have a friend who is an archeologist that specializes in China, who as such as spent a lot of time there. One thing he's said that has always stuck with me is that he's never encountered people more thoroughly convinced of their own superiority as a nation or with a greater sense of entitlement to run the world. Which, coming from a Canadian who makes his home in the US, is really saying something indeed.
I have more than a few Chinese colleagues in my line of work, that don't leave me with the same impression, but that is certainly a select group (who importantly, live over here.)
On my more optimistic days, I agree with Meade that this correction could ultimately put the their economy on a sounder and more sustainable basis (albeit with some pain.) On others, I worry about 1.3 billion very nationalist-inclined people feeling that pain too acutely.
I can concur with the sentiment of the power of being "Chinese", having attended a mostly Chinese church for two summers in LA, and having hosted a young man from Hong Kong just prior to HK's return to Chinese sovereignty. I was astounded at how much more being Chinese meant to the HK gentleman than fear of what rule from Beijing could bring. It's really powerful, much stronger than most ethnic identity you see here in the U.S., and there is good and bad to it.
My hope is that they realize--and our politicians ought to be emphasizing this--that a "quorum" of China understands what puts rice in the bowl for them. Key to peace in my opinion is that each side values the other more alive than dead or robbed.
On my more optimistic days, I agree with Meade that this correction could ultimately put the their economy on a sounder and more sustainable basis (albeit with some pain.) On others, I worry about 1.3 billion very nationalist-inclined people feeling that pain too acutely.
Couple that with a still-out-of-whack gender ratio (108/100 male/female, although it was worse 10 years ago) and yeah, you could have a reason to worry.
Probably the single greatest factor in favor of preserving peace is the fact that our economies are effectively integrated. That's not without potential problems, to be sure, but it makes war (hot, cold, or otherwise) a lot more unappealing to both parties. Or at least it should.
Probably the single greatest factor in favor of preserving peace is the fact that our economies are effectively integrated. That's not without potential problems, to be sure, but it makes war (hot, cold, or otherwise) a lot more unappealing to both parties. Or at least it should.
I agree with that — the chances of getting in a shooting war with the Chinese are remote. The issue would be whether they'd be inclined to seek some adventures in their neighborhood. Japan, South Korea, Indonesia and the Philippines are all watching their backs. As an aside, we don't pay nearly enough attention to Indonesia, but that's a separate conversation.
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