Wednesday, 22 February 2023
When reality knocks
Josef Joffe has an interesting Tablet piece on problems piling up in China.
China’s Future Ain’t What It Used to Be
20 years after the Goldman report, the BRICS are floundering
In January, China’s National Bureau of Statistics made it official: After decades of fabulous GDP growth, the rate is now down to 3%. The culprit is Xi Jinping’s “zero-COVID” policy, plus ruptured supply chains and soaring energy prices. In the post-lockdown recovery, growth will of course bounce back, but not into the enduring double-digit rates prevailing since the 1980s, when China became the envy of the world.
Not unfamiliar developments, but the whole piece is well worth reading as a reminder of powerful and more long-term forces beyond government control.
Beijing’s worst enemy is the steady decline of its working-age population, driven by plummeting birth rates. Also in January, China went past the tipping point, reporting negative population growth for the first time in 60 years—a loss of 850,000 inhabitants. By midcentury, China will be the oldest big economy in the world, with an army of 350 million pensioners who don’t produce but soak up ever more social support resources.
Then we have the familiar political story of how too much government control bears down on the feedback needed to maintain economic dynamism. Nobody is immune.
Since Lenin, Western sages—think George Bernard Shaw or Jean-Paul Sartre—have fallen for what I call “modernitarianism” as the fastest path to development. The state, they believed, was better than the market, delivering both wealth and equality. They kept missing the point. In the clash between power and profit, power wins. Even assuming that Xi’s henchmen had told him the truth about “zero-COVID” as an economy killer, why would a despot care? When reality knocks, control comes first, suppressing real-time feedback. Until very recently, Beijing methodically suppressed the horrifying COVID data.
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9 comments:
"By midcentury, China will be the oldest big economy in the world, with an army of 350 million pensioners who don’t produce but soak up ever more social support resources."
Which is why I fear that the CCP will provoke a conflict with the USA fairly soon, as a last throw of the dice to become the predominant world superpower before their population starts to decline significantly. If the Chinese can provoke the USA into a hot war (which obviously has a significant degree of economic warfare incorporated into it) they stand a decent chance of precipitating an internal collapse of the USA. Both sides would lose from such a conflict, however the Chinese have a) less to lose than the USA, b) more human resources to throw at such a conflict and c) more internal control over their population. If the USA were faced with significant costs to a hot war with China (both human and economic) I could foresee that they would not be able to prosecute such a war for long before the internal conflicts became too great. Think the Vietnam war protests on steroids. And if one of the consequences of a Sino/US war was the loss of the dollars global reserve currency status then then USA would be massively weakened, to China's advantage.
The next 20 years in geopolitics will be extremely dangerous IMO, this will be China's last chance before demography entrenches their future decline. The world got lucky in the 1980s when a failing superpower decided that one last hurrah to try and defeat its enemies was a stupid idea and effectively disbanded itself. Somehow I doubt the Chinese will take the same route as the USSR did. Not least because they have seen how the West treated Russia after it gave up its superpower status. They won't want to face the same fate.
It appears to me, that it's actually becoming progressively harder for an individual nation or people to dominate and hold sway over the world for any length of time. This is because of the mushrooming growth of mobility, communications and consequent ability to change trade locations. It's now so easy for a group to have the ground underneath them cut away by others who have spotted their weakness. China's big weakness is their tendency to bureaucratic dictatorship. They are only ever a few poor decisions away from sharp decline.
Is this article really saying that, for a nation, population decline is a "had thing", in 1066 And All That terms, and therefore immigration is a "good thing"?
Russia is far bigger than China with a much smaller population but seems to be doing fine.
Previous population crash events - World Wars, Black Death - were bad for the victims and ruling classes but the resulting shake-ups were good for the surviving peasants and resulted in unforeseen benefits. Necessity being the Mother of invention.
Sobers - the CCP certainly appears to be sabre-rattling over Taiwan, which could provoke something with the US. Both sides will have their assessments of course, but it isn't easy to guess what they will be. The CCP may see US decline as inevitable anyway and something they can afford to wait for.
Meanwhile the CCP may intend to tackle the age problem by making their citizens work well beyond our retirement age with a few incentives. The retired people I know could easily have worked for much longer. I know I could. China may have its eye on Russian territory too.
Tammly - I agree, the old assumptions about power seem to have become less valid, as if an interconnected world is becoming capable of identifying and isolating poor decisions. It's not easy to pick up the threads of it though.
Doonhamer - I think he is saying that the population of China is ageing much too quickly to be sustainable. This seems to be why we have absurd levels of immigration in the UK, it kicks the ageing population can down the political road.
"Which is why I fear that the CCP will provoke a conflict with the USA fairly soon, as a last throw of the dice to become the predominant world superpower before their population starts to decline significantly"
That's reminiscent of the Kaiser and his circle provoking conflict with Russia as a last throw of the dice to stay the predominant European power before further Russian industrialisation made it impossible.
dearieme - Kaiser Xi has a certain ring to it too.
"The CCP may see US decline as inevitable anyway and something they can afford to wait for."
If they weren't facing demographic decline then yes, they could just sit it out. The US is a hollowed out society, deindustrialised, with a low level civil war going on between right and left, utterly dependent on the dollar being the global reserve currency, which allows it to print and spend with impunity. Give it 50 years and it'll have collapsed under its own internal contradictions. But China doesn't have 50 years to play with. Its population will have nearly halved by then, and aged significantly. If they are going to make a play to be top dog its got to be in the next decade or so.
Anonymous Tammly said...
China's big weakness is their tendency to bureaucratic dictatorship.
Not so sure about that. China has had thousands of years of pratice at being that. True, it missed out on an industrial revolution for a while but there are advantages in being late and learning from other's mistakes. Now the West has caught up a bit and has its very own mandarin class…
djc - yes the West does have its very own mandarin class and that seems to be a core idea behind sustainability - sustain the mandarin class and everything follows from that. Consign democracy to a sideshow.
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