Monday, September 17, 2012

On Mark Kitto's "Why I am leaving China"

Among China watchers and China expats, the latest stir has been caused by Mark Kitto’s article for Prospect magazine, entitled “You will never be Chinese: Why I am leaving the country I loved”. This outpouring of frustration and disillusionment has pushed other expats to go public with the reasons why they have left or are about to leave China, and prompted much debate.

The article in question is certainly heart-felt and well written. The author is a Brit who has spent 16 years in China, and founded the "That's Beijing" magazine. I can sympathize with some of his reasons for wanting to leave, and some of what he says about modern China is undeniably true. I will probably write more about this in another post. What I want to emphasize today is this: where I stop taking Kitto seriously is when he prophesizes the Chinese government’s violent downfall, or in any case an imminent violent upheaval in China.

According to Kitto, this will happen because of the property market bubble bursting, perhaps in conjunction with an “outburst of ethnic or labour discontent”. Outsiders have been making prophecies about the collapse of China’s government and system for a long time. In 2001 a book came out entitled “The coming collapse of China”. The writer was Gordon G. Chang, an author and lawyer who worked for years as a consultant in Shanghai, and is considered an "expert" on China. He argued in his book that many factors, but especially the hidden non-performing loans of China’s state banks, were going to bring the Chinese system to a crash and cause the Chinese government to lose its power. Chang even had the ill-fated idea of predicting exactly in which year the Chinese government would collapse: 2006. It is now 2012, and China is looking as confident and as growing as ever, with the same old people still in power.

Then it was the non-performing loans which were supposed to bring China down, now it is the housing bubble. Commentators seem to have a tendency to read too much into economic problems which are certainly real, but probably not as catastrophic as they are made out to be. The Chinese property bubble has by most measures begun to deflate in late 2011. Then again, this has led to declining economic growth in 2012, but we are really quite far from anything which could threaten the system as a whole. As for ethnic and labour unrest, well…ethnic unrest concerns only the minorities, who are less than 10% of the population, and it seems to be able to make the Han populace rally around its government like nothing else. As for labour unrest, it has existed for years, without seriously shaking the system.

It is impossible to predict the future of course, and I do not claim to know what it holds in store for China. I am however skeptical about any outsider who comes along and predicts the downfall of the Chinese government based on this, that or the other. The people who lead China may be many things, but stupid they are not. If they have been able to stay in power while China went from being a centrally planned economy to a free market one, they can probably survive quite a while longer. You may disapprove of their methods, but in some ways they clearly know what they are doing. Ridiculing them as hopelessly out of touch and unable to lead is tempting, but does it really hold much ground?

In the last decades the Chinese state’s management of the economy has clearly been wiser than that of many Western states, where we have seen some real bubbles burst in the last few years (Gordon G. Chang was obviously too busy looking at non-performing loans in China to notice the much more pressing problem of sub-prime mortgages back in the US). Of course allowing the people to vote for a new leader is an excellent way to assuage their discontent, something which for now is not available in China. It is likely that the Chinese system will have to change in the long run. How this will happen is anyone's guess, and I don't think Mark Kitto's catastrophic forecasts are really any more reliable than anyone else's.


FOARP said...

I too think talk of collapse is over-blown.

China's leaders aren't stupid, and have tools for supressing dissent which are not available to even the majority of dictatorships. Yes, at some point China will suffer an economic crisis, but economic crises are like bad weather - you can make an assessment of the likelihood of something happening, but no certain predictions. It may be that this causes dissent against the government. It may be this leads to a political reform in one way or another, but these are mere possibilities.

FOARP said...

Actually though, whilst for a long time I've been saying "I'll believe the idea of a slowdown in economic growth when I see it", this seems pretty convincing:

But it's a long, long way from this kind of slowdown (which, after all, probably still means growth next year of ~7%) to an economic crisis that threatens the CCP's rule.