Impressions of China

Peter Turchin

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I just came back from a trip to China, during which I and two friends traveled along the section of the Silk Route that passes through PRC. We started in Luoyang, then went to Xian, made three stops in the Gansu corridor, and finally reached Turpan and Urumqi in Xinjiang. Our main interest was geographical, historical and archaeological. I’ve written extensively about the northwestern frontier of China, and the role of the nomads in state-building, for example, in War and Peace and War. And I wanted to see both the landscapes, the archaeological sites, and historical museums (which turned out to be excellent — very well organized and highly informative). So the trip was a great success.

Historical museum in Luoyang, built on a typically gigantic scale. All photographs in this post are by P. Turchin

But an additional, and somewhat unexpected outcome of this trip was my much better understanding of the modern China. The previous time I was in China in 2004. Although there were already signs of impending change, the overall impression I got then was of China as a third-world country. Riding a bus through the Yangtze River Valley, we saw peasants using water buffalo for field work. And most towns and cities (including Beijing) we visited then looked “scruffy.” Here’s a picture I took back in 2004:

China 15 years ago

It was stunning to see how much the country changed in the last 15 years — really, a very short period of time, especially in the historical perspective. For me it was particularly interesting to see the transformation of China in light of periodic predictions one sees in the mass media about how China is about to collapse (imperial collapse being one of two of my main directions of research). For examples of such predictions see here, here, and here. I’ve been skeptical about these forecasts, and the ones made in early 2000s that China would collapse in 5, at most 10 years have completely missed the mark, of course. And what I saw this year, as well as changes over the previous 15 years, makes me even more convinced that such predictions are driven more by wishful thinking than serious science. Granted, what follows is based on personal impressions, not on a systematic study, so take it with a grain of salt.

The most visible sign of China’s transformation is the spectacular improvement in the quantity and quality of the infrastructure. While our infrastructure in the United States decays, China has been building high-speed railways, highways, and apartments.

View from the airplane approaching Beijing airport

Everything is done on a gigantic scale, which reflects the cultural predispositions of the Chinese going back at least two millennia. Everything works (e.g., trains arrive on time — something that the British, pioneers in building railways, cannot deliver any more).

A high-speed train arrives at a station. Our travel from Luoyang to Urumqi was entirely ground-based: mostly by high-speed train, with some segments by van.

Less visible to a traveler, but equally real, is a dramatic improvement in the quality of life for the ordinary people. I went to the same hutong (traditional neighborhood) in Beijing that I visited 15 years ago. The, it was “scruffy” — a dilapidated slum inhabited by poor people. The change in 15 years was remarkable. Note, in particular, the air conditioners in the metal cages:

One of the non-touristy hutongs

There has been a wholesale replacement of old and dilapidated housing, with people moving into apartments in high-rise apartment blocks. There are costs, of course. Personally, I much prefer living in a low-story individual house in the countryside. And the Chinese ironically refer to their apartments as “bird cages.” But these apartments are large (between 90 and 140 square meters; by comparison, when I grew up in the Soviet Union, and apartment of 50 square meters was considered to be large). Furthermore, it is quite likely that the move to the high-rise apartment building is a phase that will eventually be succeeded by the backward movement to the countryside, as it happened in America and, more recently, Russia. Given how rapidly things change in China, the next phase may not be too far ahead.

The rapid change of living standards is illustrated by biological (lots of tall young Chinese) and cultural change. Back in the 1980s, when a young man wanted to marry, he needed to demonstrate his material success by being able to buy for his wife a bicycle, a sewing machine, and a watch. Today the symbols of success are a car, an apartment, and jewelry.

Back in 2004 the streets of Beijing were dominated by myriads of bicyclers. Today, you hardly see any bicycles — they’ve been replaced by cars and electric scooters.

The Chinese themselves are highly aware of how rapidly their material well-being increased. This is, probably, why the levels of trust in government in China are the highest in the world.

At the same time, there is no question that China is a police state and many political freedoms are limited or lacking. As the most visible reminder, I couldn’t access Google, Wikipedia, or Amazon while in China. You need your passport not only for travel and hotels, but also to get into a museum.

However, there is no oppressive feeling engendered by large numbers of heavily armed police or soldiers (as one experiences in, for example, Mexico). In fact, I haven’t seen armed police anywhere, except for Xinjiang. We toured Tienanmen Square on June 5, precisely 30 years after the famous Tank Man event at the end of the 1989 Tienanmen Square protests. Yet there was no unusual activity by the police. This is what the area in front of Mao’s Mausoleum looked like:

Population is controlled and regulated, but not as much by the police, as by “public security volunteers” wearing red armbands. Another way of regulating population is that queuing up is typically enforced by metal guardrails.

In closing, while I haven’t done a formal structural-demographic analysis of China, my informal impression, based on what I’ve seen, suggests that China is a long way from a collapse.

 

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steven t johnson

The shift in politics and government to “China Dream” leaves no place for Uighurs and Tibetans, which means a new form of nationality problem and potential for violent conflict have formed.

The even increasing move towards permitting the privately wealthy to control the large majority of investment decisions means a self-inflicted destabilization, as restricting growth to what is profitable undermines the rather flawed (in my opinion) substitute for the iron rice bowl.

There are already numerous incidents of popular resistance in the form of strikes and mass demonstrations, far more than in more controlled societies like the US and most European states.

The desire to become the machinery for enforcing the rule of the wealthy is expressed in foreign policy as support for the siege of North Korea. The PRC tries to ride the fine line of creating chaos, while still trying to undermine the northern state. This kind of have-it-both-ways policy is very complex, which means in the course of time it will blow up.

The independence of Taiwan, the formal independence of Singapore, the SARs of Hong Kong and Macau are all openings to powerful political forces that can undermine the state for their own sake. And, though it is definitely not a popular view, the SEZs are in many respects a prettified form of the old concessions, minus blatant political extra-territorial concessions. But they are economic extra-territorial concessions so far as I can see.

Lastly, the attempt to suppress all factional struggle within the highest ranks of the CP has led to the accession of Xi to a formal position of quasi-emperor that is a kind of political stasis. Rigid structures like this don’t cope well with change. Even more significant, a key stage in Xi’s rise was the resort to outside influence to help him take down Bo, the most significant political challenger. (A key “witness” against Bo had been in the hands of foreign diplomats/intelligence agencies.)

Lastly, military policy is increasingly centered upon US-style force projection, relying on high tech weaponry, in pursuit of…well, actually it is not genuinely obvious what precisely they think they are doing.

I agree that purely endogenous factors, narrowly defined, belie any suggestion of collapse. But it seems to me there are significant vulnerabilities leaving the PRC far more open to defeat, another form of collapse, albeit one that seems to be omitted. Nonetheless, though saying “bourgeoisie” seems to be as passe as talking about the fall of Rome, the PRC has a bourgeoisie that wants to overthrow the government, and even if much of it is centered in Taiwan and Singapore they have their concessions already penetrating the country.

Jakob

Great Post and trip!

I wanted to ask you what do you think about china’s digital social credit system?

Is it evidence of a growing police state and corruption or is it applied cultural evolution, forcing general trust for strangers because less such cultural norms exist in China compared to the west?

Rich Howard

Peter, I was in China, Beijing, Changsha and Guangzhou in Jan 2005. Then back in 2012 to Lanzhuo and Guangzhou. We adopted our two girls and stayed 2 weeks both times.
I like to make friends and know enough Chinese to do it. Both times we had good honest discussions and tours by friends we made in a matter of hours. Not hard to do when you venture to local parks and just start talking to locals… and look English.
My feeling both times is that Chinese life is similar to America in 1950s. Very optimistic, safe, homogeneous and friendly. But, only if you are middle class, not gay, not political. Basically not questioning the accepted social order. Felt very much like I imagine US felt prior to 1965ish. Lots to like, but lots to deny in hindsight. Are there larger forces that will propell them to follow a social path like others even though remaining a Authoritarian state?
I have to say too that our friends had freedom and democracy on all their minds and expressed both admiration and fear of the US at the same time. This was before Trump and internet lockdown. But people everywhere understand what freedom, peace and their own gov hypocracy is. And they all want to know people from other nations share the same goals.

JDR

“And they all want to know people from other nations share the same goals.”

Speaking as an Asian, this very untrue. It’s an American conceit.

Rich Howard

Yes. Maybe so. I am caucasian.
What are you asserting is wrong?

JDR

That we all want the same thing. (i.e. “freedom and democracy” and “freedom, peace”). Not everyone wants those things. They’re white things.

The Chinese want to restore their status as the Middle Kingdom, the Islamic world want to restore their own religious hegemony (i.e. the Umayyad and Abassid Caliphates) and everyone else wants to power. Freedom peace and democracy are just Western conceits.

Rich Howard

Political aspirants, yes. People you meet in parks, no.
There is always a significant number of individuals wanting to capture power. But they are a small fraction of any society. Of these, an even smaller fraction are truly dangerous.
But, the pursuit of power capture guarantees a pattern of increasing ruthless leaders until the system resets. Peter’s models trace and proxy this process very well. The refinement of ruthless leaders is my assertion as is my interest in personal traits.
But, like bullies on a playground, they are always a fraction of society. Like the rest of the kids, we really just want our own freedom, safety and fun.
This applies to all humans regardless of race or culture or time. All societies have evil among them while the vast majority are not. It’s not a conceit, its biology.
My confidence however is a conceit. 🙂

JDR

@Rich Howard

‘Political aspirants, yes. People you meet in parks, no.’

You’re thinking as an individual, which is a Western conceit. I’m not talking about individuals but groups; nations. I think you would agree that the PRC’s leadership are filled with power hungry people, and yet they have a lot of support from their citizens.

Why? Because they see themselves as extensions of the power structure. That’s why military parades and displays of patriotism are celebrated in China. The Chinese see themselves as a group with a common power and destiny (not as discreet individuals who just want ‘freedom, peace and democracy’).

Can you imagine similar military parades or shows of patriotism in the US? The media and Democrats would scream and shout. And that’s because Americans and Chinese have very different values and mindsets. The former is concerned about individual ‘rights’ (i.e. freedom, peace and democracy), while the latter is concerned about collective destiny (power, continuity and national interests).

‘This applies to all humans regardless of race or culture or time.’

Again, Western conceit. There are no universal values. The only universal value is tribalism and group self-interest.

‘All societies have evil among them while the vast majority are not.’

What you call evil in your society may be good in a different society, and what you call good may be called evil in a different time and place.

Rich Howard

Just to clarify, I am talking about basic biological needs such as safety, health, yes tribal identity, autonomy, reproduction. And yes, these are universal. They are universal among all animals and are what motivate behaviors. The connection to these fundamental mechanisms is not always readily apparent, but that is mostly because… we speak. Language is complex, imprecise, not universally shared and… we are biologically predisposed to listen hard to it. This means, the real mechanisms that drive our behaviors is going to be well hidden behind words. But, rest assured, those mechanisms are universal.
It is why you will find that, despite words, most complete strangers can be trusted. Why you quickly find shared needs: safety, food, autonomy. These things are universal. They are biological.
For anyone curious, learn what academics have discovered about our bodies and brains. How the human brain develops from birth to adult. What mechanisms exist and how and when they express. When these mechanisms evolved and where they exist in our brains. How we try to express through language organization these very innate and universal urges. You will begin to see what are truly fundamental drivers for us and how our attempts to structure our lives and our societies are mostly attempts to satisfy those urges. Our philosophies are created from biology not the other way around.

This all may sound to naive or pollyanna. It is not. Our neurobiology is inadequate when confronted with many threats of modern life. We struggle and we act out in violence at both spatial (large societies, diversity exposure) and time scales (climate change, speed of life). It is expected that we will not be good at meeting these threats. In other words, it is more likely we will fail than meet these types of challenges. By failure I mean real violence and death.
But there is another immediate challenge we face today, again. That is how a small fraction of us will naturally have actual antisocial neurobiology: lack of empathetic processing, attachment damage, exposure to violence. These folks will as a matter of biology not sociology, not be able to share others’ interests. What we call pro social neuro mechanisms simply do not process. As a result, a whole host of compensating survival mechanisms grow so that these folks can be expected to both not care for others but also be better at power capture. When our brains grow in an environment an individual perceives as lacking in care, whether true or not, trust is not developed as a survival mechanism. In its place grow more focused fear, strategizing and zero sum thinking. These become strategies for life. These are natural and expected human development responses, although tragic.

So today, as in every day and as in everywhere, there are a small but significant amount of these people who see life as nothing more than acquisition, control and capture. They are, for reasons Peter’s models do a very good job at identifying, either held at bay or reign supreme. Others call it the struggle between labor and capital. Others call it authoritarianism, oligarchy, fascism. For others it is simply personal abuse. But all of these can and should be understood as having a biological basis that attempts to express itself in a too complex, foreign world and tragically for them, but fortunately not reality, a hostile world.
China is no different in this fundamental biological process. Power capture is a process that is made more and more absolute over time. The process looks to me about a few decades in length and ends with the basically the worst of the worst reigning supreme. The US is perhaps there now. But in China, Xi is more of an authoritarian than his predecessors and he’ll be there for life. Much as Trump hopes to do.

This is all very predictable using Peter’s models. It is understandable knowing human development. It is verifiable with historical evidence. And it is depressing.

JDR

@Rich Howard

I noticed you left out talks of peace and democracy in your latest comment.

” I am talking about basic biological needs such as safety, health, yes tribal identity, autonomy, reproduction. And yes, these are universal.”

The need for them is universal. How different human groups respond to them is not. China, for example, responded to political turmoil through centralization and state planning (read: Shang Yang and the Chinese legalists). The early Islamics responded through a type of theological anarchism that later evolved into pure theocracy. And Greco-Roman-Euroepan civilizations responded through rule of law (i.e. Common Law and the Greco-Roman traditions).

Again, same needs. Different responses. These different responses affected human evolution, which in turn explains why different groups create different societies. There is no human biology. There are, however, different human biologies (i.e. variations in general intelligence, predisposition to violence, time preference and political tendencies).

And if you won’t believe me then here are two articles on genopolitics: https://www.pewresearch.org/fact-tank/2013/12/09/study-on-twins-suggests-our-political-beliefs-may-be-hard-wired/ and https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4038932/

Now think about the fact that political views are passed down genetically and apply that to the political crisis all over the world. What does that tell you? I don’t know about you but it tells me that there are no such things as universal moral values.

“It is why you will find that, despite words, most complete strangers can be trusted. Why you quickly find shared needs: safety, food, autonomy. These things are universal. They are biological.”

Empirically false.

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Notice that African countries are always at the bottom whereas Asian (even some of the poor ones) and North-Western European countries are at the top.

“Much as Trump hopes to do.”

Two things:

1. Compared to other leaders, Trump is not actually a real ‘authoritarian.’ I’m Filipino, and I think you know who our President is. His approval numbers also jumped up when extrajudicial killings of drug dealers happened.

Think on that, fam. Is a leader really authoritarian if his own people demand authoritarianism. The Chinese want authoritarianism (check out the PRC’s approval numbers) and the same is true for other so-called strong men. I think you’re over-estimating the appeal of liberal democracy to the peoples of the world.

2. A lot of non-Western peoples actually like Trump (If I were American, I would have voted for him or someone further to the right). (https://www.pewresearch.org/fact-tank/2017/11/03/opinions-in-asian-countries-on-trump-trip/ft_17-11-03_trumpasia_confidence/)

“This is all very predictable using Peter’s models.”

Models are like trading set ups. You use them when they make you money and you ditch them when they fail. So far, Peter’s model has great promise but there’s no such thing as a perfect model.

“And it is depressing.”

I disagree. It’s encouraging, and the reason why we disagree is because you’re a Westerner and I’m an Asian.

Rich

By democracy I mean leadership beholden to its charges not the other way around. Yes, it is a universal need that people not be subject to arbitrary dictates by leadership. I call this democracy, but of course only in the ideal.

“Same needs and different responses” There are shared features of org structures that try to address the same universal human needs. Ones that veer into control are not meeting their charges needs. They are addressing the elites leaders’ needs. Authoritarian orgs go by many names. Democratic orgs go by many names. That the vast numbers of non elite want stability, safety, and freedom is universal. That a smaller non empathizing group want control is universal. What system best keeps them in check is up for grabs. But only those that do keep them in check are by definition meeting their charges needs.

Don’t get hung up on terms of who is saying them. I use the term Decmocracy and yes, it’s an American conceit, but it is not mine.

As for the research, I am not denying there is a profound biological basis for everyone’s politics, as well as love or hate or fear or trust. Of course there is. However, any racial genetic difference is inconsequential to these much older and fundamental biological, genetic, processes.

al loomis

we have been visiting china every year since 1990, and the frequently put assertion that collapse is imminent has never crossed our minds. i believe it is simply political propaganda, gordon chang has made a living at it for many fruitless years.
the future is not certain for anyone, environmental disaster contends with nuclear war for pride of place in bad dreams nowadays. but china is about to become the clear leader in science and technology, and if they are undemocratic no matter- the west has never been democratic either.
their active pursuit of green energy is best in the world, from a very low base of course, and would shame the usa if shame were possible in such a degenerate society. trump??
i note the reference to to masses of armed police in mexico- usa coppers leave them for dead, and with less excuse.
you don’t need arcane science to note that the management of china over the last 30 years has out-stripped anything in the west, possibly anything in history. h. sap. has unlimited talent to screw things up, but for now, china is the best, of our ape and angel mixture.

[…] Impressions Of China by Peter Turchin – Impressions from a trip to China fifteen years since the author’s last trip. Material progress has been amazing and the population trusts the government. However China is a police state even if the machinery of oppression is not too overt. […]

Eva Basilion

How was the air? I hear it’s hard to breathe in many of the cities. I think this is one of the reasons people think China may be on its last legs.

al loomis

there was an iron foundry in down-town shanghai, on our first visit in 1990. gone now, they often have blue sky, nowadays. room for improvement still, but the metro is clean, quiet and better than anything in usa. most of the money earned from being the work-shop of the west is being plowed back into infrastructure and public services.
all the big cities are much improved, beijing has an environmental aspect that is difficult to fix- they are down-wind of the loess fields and air will be dusty until the re-planting programs are much further advanced. the government is well-aware that public health is affected by air and water, and are driving green energy and re-afforestation in consequence.

Ross Hartshorn

So, I am thinking of the “fathers and sons cycles” from some of your books. One explanation I’ve heard for the failure of the Tiananmen protests in 1989 to trigger any larger-scale upheaval, is that the late 60’s Cultural Revolution upheaval was still in too many people’s minds, and they didn’t want to go through that again.

Another parallel I think of is Indonesia in 1998; a somewhat similar system lasted for decades, wherein people basically agreed not to advocate for political change so long as the economic situation continued to improve. Once there was a downturn, support collapsed. I don’t think we have seen China’s current system weather a serious economic downturn yet; the Fiscal Crisis did not seem to be nearly as serious inside China.

So, it will be interesting to see what happens when there is finally a serious economic downturn inside China (which, eventually, there always is in any country). I avoid making any predictions, though, because (as others have rightly pointed out), Americans are not able to objectively evaluate China’s system owing to cultural and political baggage we carry (similar to American attitudes towards Japan in the early 90’s). But the real test of any system is how it deals with serious reversals, and I don’t think China has had one in some time. Which is a great accomplishment in itself, but not one that will last forever. In fact, if the U.S. and China proceed to a full-blown trade war, it could be coming soon (for both of us).

Dick Burkhart

China has begun a slow down, not a collapse. But remember that the suburbanizatoin of the US was based on cheap oil. That’s no longer in the cards. So I wouldn’t expect anything on that scale in China.

al loomis

can replace cheap oil with cheap electricity, and sunshine is the ultimate decentralized power supply. but the politiburo may decide to lock people in cities, to maintain maxinum food production space.

Eva Basilion

The most disturbing trend in China, as I see it — a trend that I have been following closely now for quite some time, is the abandonment of children that is occurring as parents travel long distances for work. I do not think this bodes well for China. At all.

Peter, are you aware of this?

https://www.abc.net.au/news/2016-09-06/millions-of-chinas-children-left-behind/7816010

https://www.youtube.com/watch?v=gG9YHMcLK2Q

Richard

So they’ll grow up to be more self-reliant.

Eva Basilion

I suspect this is unchartered territory. I don’t think this level of willful mass neglect of children by their own parents (both mother and father) has ever occurred in human history.

Ramsi Woodcock

You are absolutely right that reports of China’s demise are wishful thinking, as I’ve occasionally tried to document here: https://zephyranth.pw/?s=chinese+nile . The trouble is a misplaced sense of moral superiority, as rather poignantly reflected in some of the comments to your post. It may take a Suez or Tsushima before this changes.

Jeff Hartnett

I agree with a lot of Rich’s carefully considered beliefs and assertions. One caught my eye that I have an issue with — “our philosophies are created from biology and not the other way around.”
Definition of philosophy: “(1) all learning exclusive of technical precepts and practical arts (2) search for a general understanding of values and reality by chiefly speculative rather than observational means.” Philosophy as distinct from biological facts and bodily and psychological needs and desires.

2 million people in Hong Kong protesting because of the statement of one person — wow. They want to continue to be a distinct group separate from China.

Peter van den Engel

I believe you are right assuming economic failing in China will not happen.
There are two very simple reasons for that: first the monetary industry in China is not the same debt equation as in the west: money is assigned to objective goals; somewhat like the credits Elon Musk receives by exeption in the west;/ and their economic evolution is far more predictable, because it already happened in the west, so it contains far less debt risk and whenever necessary it can be remitted in mutual consensus, because it is a group culture.

This same matrial evolution in the west was far more based on individual responsibillity and speculation on the unknown, which prooved itself in boom and bust cycles.
It has constructed our memory/ but disregards the cycle is completed. Robotisation does the same thing all over again: it does not lead to new products.

Many houses in Beijing do have a wifi connection/ but no sanetary so they depend on local bath houses. Chinese people are patient and there material future is predictable.
What moral values concerns, that belongs to the next level knowledge evolution, but so goes the west.

Mike Waller

There is an underlying irony to Trump’s claim that China is “raping” the US by stealing intellectual property, predatory pricing and wholesale copyright infringements. Such methods were very influential in enabling the US to outstripped Europe. Although trade secrets were then acquired in the craniums of skilled immigrants, the effects were much the same. Indeed poor old Charles Dickens scarcely got a cent for his published works in America as they were all brought out in pirated editions. The only way he could make money was to go on extensive speaking tours.

Where I think the present situation is exceptional is the way in which what really has been a great leap forward for China has been achieved by absorbing into its economy the massive economic surpluses achieved by the Western powers because of their technological ascendance. First, they induced greedy entrepreneurs to take advantage of China’s comparatively low wage economy by shifting their manufacturing there; and then they took full advantage of what was in fact a massive act of technological transfer.

In the short run few in the West were that concerned because they were suddenly presented with a whole range of consumer products at fire sale prices. I can remember seeing in one of our supermarkets a set comprising a toaster, a kettle and a coffee machine at an all in price of under £20 (say $28). Unfortunately it was like the famous free lunch – too good to be true. With the export of the technology went the export of the jobs and in the case of the US what had been a great creditor nation became a massive debtor.

Where I see great trouble coming is that this economic relationship between China and the West is inherently unstable. For all the current boom in the US, the West is running out of both money and jobs. This will result in a progressively worsening living standard for the ordinary Joes and Josephines and increasing resentment on their part, principally direct at traditional politicians with their devotion to economic globalisation. So far that has yielded Trump and Brexit. The trouble is that China’s continued economic expansion seems to be predicated on the West having bottomless pockets something which it is now all too clear they have not got. For all the Keynesian arguments against doing so, the ordinary Westerner will increasingly sees protectionism as his or her best defence whilst turning a blind eye to the result loss of the cheap goods that underpin his or her current standard of living. The prognosis is therefore worsening standards of living in the West and, as the trade dries up, in China as well. Quite how that conundrum is to be resolved I am unclear.

Richard

As China gets richer, they are and will be able to sustain their economic growth themselves. Plus, Africa will rise too.

Peter van den Engel

JDR
Japanese currency value never dropped back to what it was in seventies, so the market cannot reassert itselve, when in the meanwhile real estate prices and cost of living have also inflated and remain so.
Next to that ofcourse also the role of the picture and movie camera has changed (disappeared) and hifi installations are not fashionable anymore and monitors went to Samsung.
The lost decade is forever. This has nothing to do with overinvestments and debt, but with a balance shift.

Chinese debt is under its own controle and not under international scruteny, so it cannot go bancrupt. Nor can Japan which has the highest international state debt percentage of gdp.
Every exporting country wants a proper value return for its products, so they could not care less about central bank backed illusionary debt levels.

JDR

“when in the meanwhile real estate prices and cost of living have also inflated and remain so.”

>Implying China’s cost of living and real estate sector are not in trouble.

What do you think will happen when China’s rapidly aging and below replacement level population comes home to roost?

Let me guess. You’re one of those guys who think debt doesn’t matter?

I’m not going to argue with your latest points. I’ve said everything I needed to say at this point. I even posted a map of China’s debt by region. And now, I’m tired.

I will however make this parting shot. Debt – whether under the control of an authoritarian state capitalist regime or an international capitalistic oligarchy – is still debt. Who controls it is irrelevant. What matters i how it’s paid or liquidated.

I’m not going to convince you, but perhaps the other readers here will. So I suggest that everyone here, including Peter have a look at the brilliant analysis of Michael Pettis on China’s debt: https://carnegieendowment.org/chinafinancialmarkets/77178

steven t johnson

*not* creating chaos (as inducing total collapse of North Korea) rather than a (probably imaginary) simple regime change.

Ricardo Duchesne

This is indirectly related to this theme, or certainly to other threads here about the “axial age”: this article argues that the differences between the West and the rest were already evident in the Axial Age, contrary to the efforts of those who believe this was an age in which “humanity” conceived common values, or philosophical-religious ideas similar in quality: https://www.eurocanadian.ca/2019/05/european-idea-of-progress-supersedes-axial-age-part-one.html

Vladimir Dinets

I first visited China in 1993 (hitchhiked around all provinces except one). It is, of course, amazing how the country has changed since. Will it collapse? I don’t think looking at economic indicators is the right approach to this question. What we should look at is the political system. In the last few years it has changed dramatically, and few in the West have noticed the change. China under Xi is Stalinist even more than the Soviet Union has ever been: a country where almost everyone is an informant, nobody is safe, and the higher you look, the more paranoia you see. Such Orwellian systems are scary, but unstable in the long term: their ruling mafias’ monopoly on power invariably leads to ever-increasing corruption and incompetence, until the whole society turns into a rotting cesspool. There is no way China can escape this fate; it has missed all the opportunities to do so. The more important question is, how much damage will it do to the world before collapsing? How many more puppet dictatorships will it prop up? How many more idiotic wars will it start? How many more Western politicians will it corrupt with its bribes? So far it’s been less effective than Russia in screwing up the world, but it certainly has greater potential.

JDR

“China is a long way from a collapse.”

Agreed, but based on the data, I think that China will likely follow the path of Japan and South Korea; that is to say collapsing birthrates, a relatively stagnant economy and a mentality of turning inwards. Remember that China’s growth model is more or less the same as the Korean and Japanese models, so it’s not out of the question to assume that it will follow the same trajectory.

Geopolitically, I think that China will revert to its historical role as the super power of Asia but I doubt if it can be more than that. As the US and Europe descends into turmoil, I think that the Chinese (and other East Asian countries) will revert back to their pre-modern isolationist policies.

What do you think, Peter?

JDR

China’s expansion is very similar to that of Japan back in the 80’s and 90’s. There was a time when people were saying that the Japanese would own Manhattan, and then the Lost Decade happened and now look at Japan today. There’s no doubt that it’s still very wealthy but it’s more or less uninterested in global affairs.

I believe that China will follow the same process. Its demographics is already rapidly aging (much like the rest of the developed world), and it’s investment driven economic model will not last (again, look at Japan’s Lost Decade). Also, China’s OROB is nothing new. Past Chinese dynasties have expanded Westward and Southward, and then political or demographic stress forces them to turn inwards. The Tang, Song and Han dynasties all did it, and they all shrank back in the end. The PRC’s OROB will most likely follow a similar destiny.

And that’s not just speculation either. The Chinese are investing a lot of capital in Africa and Asia, that’s true, but they are also facing a lot of backlash. (https://www.theatlantic.com/international/archive/2011/09/in-africa-an-election-reveals-skepticism-of-chinese-involvement/245832/) and (http://www.sixthtone.com/news/1076/why-anti-chinese-sentiment-africa-rise).

Speaking from personal experience, Chinese investments are always suspect. For example, there’s an ongoing train project in my town and around 11 Chinese companies expressed interest in the contract, but when the government drew the line on workers and assurances, all 11 companies backed out. Similar events are happening all over the world.

Finally, it’s worth mentioning that the US is China’s largest trading partner (http://www.worldstopexports.com/chinas-top-import-partners/), whereas the US’ largest partners are Canada and Mexico. When the US stops trading with China then the latter will be forced to retool its economy for domestic consumption (Japan’s Lost Decade was essentially the transfer of capital from corporations to the household sector), and once that’s done, China will turn increasingly inward.

And of course, let us not forget that the various Chinese dynasties throughout history were very xenophobic towards ‘gwai lo’ and ‘fan quai.’ It happened before, It will most likely happen again.

This isn’t to say that China is in a bad place or that the West is the best. I just think that based on data, China will go back to isolationism, which was its default setting throughout most of its history.

Ross Hartshorn

While the examples of Japan and South Korea are surely informative, one big difference (besides size) is their security situation. Both Japan and South Korea had the option (almost a requirement) of letting the U.S. worry about their larger security situation. They didn’t need to step forward to become a world superpower, or empire, because there was already one that was maintaining the status quo (which they were doing well in).

China, on the other hand, probably (quite correctly) believes they cannot rely on the U.S. to defend them militarily, or even protect the status quo economically as far as they are concerned. If they want to secure natural resources, they have to go abroad to do it in some cases, and unlike Japan and South Korea they may need to have their own military to protect the flow of those resources from sub-Saharan Africa, Middle East, or wherever. This is not something Japan or South Korea ever really seriously considered (post-WW2).

Now, prior to WW2, Japan was in precisely that situation, and it was a big factor in their drive to dominate their neighbors. Modern Japan and South Korea are, again, surely good comparisons, but in one respect, pre-WW2 Japan might be a better one.

Peter van den Engel

Japan lost its position because of international speculation on their currency, the jen (so called swap trading) which led to value inflation and as a result the bust of their exports.. China won’t let this happen, because they are sealed off from international speculation and pegged to the dollar value.

In relation to resources, they are honestly buying them or investing in local infrastructure. There lies the pinch. Because that is exactly what local elites in sub sahara Africa locking away about 150 billion to offshore via London city are not doing. This might lead to s property loss of these areas, where the local elites are responsible for themselces.
So, crisis in Africa and a political one in London England. No way the military can play any resolving role in that.

JDR

Peter van den Engel

“Japan lost its position because of international speculation on their currency, the jen (so called swap trading) which led to value inflation and as a result the bust of their exports.”

Factually false. Speculative and currency-based crisis only last for a short while. The real economy will eventually reassert itself.

Japan’s lost decade lasted for decade and is still ongoing. China’s economic model which is also based on over-investment will follow the same pattern. Check out local debt by region:

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What will happen is that most of this debt – which is concentrated in state run enterprises will be liquidated in one way or another, and the capital will be diverted to the household sector (i.e. domestic consumption), which in turn will cause a slow down. It’s either that or full bankruptcy.

Pieter Verhoeven

China has proven highly interventionist. Issues like municipal debt will be extinguished by additional rounds of federal credit.

The major issue with the Japanese economy was a speculative credit bubble creating a high level of private sector debt servitude to private finance, which continues to this day and has had parallels in the GFC. The impetus behind the explosion in bank credit, which fuelled the 80’s bonanza, was elite political infighting between the war and postwar generation of politicians. The bubble was considered a tool for market liberalisation, which had little popular support. No one stops a politician who creates an artificial boom. Especially not when backed by the IMF’s policy of trade liberalisation. Japan was just the testing grounds for all the coming interventions.

Read “Princes of the Yen” by Richard Werner. It’s quite an eye opener.

Also read “Can We Avoid Another Financial Crisis?” by Steve Keen, which details the financial origins of the business cycle.

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