Once upon a time, a lot of people were panicking that the Soviet economy was going to outgrow the American one.  It didn’t.  It didn’t for three reasons: the Soviet model was terrible and encouraged inefficiency, the Soviets were tied down by numerous expensive military commitments all over the world, and Soviet geography made industrialization more expensive and more difficult to achieve despite it being a country of vast natural wealth.

Now we’re all losing our minds over a rising China.  But China’s got two of the same problems the Soviets did; a horrible economic model and a geographic system that makes industrialization more expensive than it would otherwise be.

Not as bad as traditional communism, but still pretty bad

English: Scatter graph of the People's Republi...
Up is good. (Photo credit: Wikipedia)

China has accomplished one helluva feat – it’s pulled hundreds of millions out of extreme poverty, grown to become the second largest economy in the world, and kept regular GDP growth rates above 10%.

A lot of this has been done through managed privatization and cheap manufacturing.  Taking the shackles of communism off these businesses led to explosive growth, as Chinese discovered the world was willing to pay a lot of money for its cheap goods.  Because most Chinese were in abject poverty, they were willing to take lower wages than their international competitors.  Within China, growth was propelled by mega-infrastructure projects, some of which were decidedly useful, some of which less so. But that time is now ending.

But they’ve still got some rough geography

China’s river systems have always led to high population densities and highly centralized governments to manage them.  But moving the natural resources up in Manchuria and the far west takes a great deal more effort than it takes to move natural resources in the United States.  Remember that while the two are geographically about the same size, China must move its resources to the east coast.  America has always had the benefit of two coasts.

Moreover, large chunks of China are almost uninhabitable.  Only the deserts of the American West are equally rough.  Everywhere else, even in the American West, technology has allowed agriculture to flourish.  At the very least, land there can be used for ranching.

Growing up is hard to do

But now China’s about to enter a more mature phase of economic development.  And here’s where China starts to get angry.  Chinese have been led to believe that explosive growth is a permanent condition.  It’s not.  Anyone with a basic grasp of capitalism understands that booms are followed by busts.  China’s not about to have a proper bust, but it’s about to go through a less than explosive period of growth while it sorts its massive debt problems.  (China has debt?  Whaaaaat?)

Unfilled expectations are a dangerous thing.  China’s government had a much stronger grip on its people before it started to modernize its economy.  The poor and rural are typically easily bullied by strong security services.  But affluent, middle class urbanites are much more likely to tell a cop to fuck off.

Thus the Politburo must find alternatives for these people

Anti-Chen Protest Day 32 - Million Men March
Anything but this. (Photo credit: My Hourglass)

 

Economics is going to stand in the way of keeping the 10% growth rate going forever.  (After all, there reaches a point where nobody wants your shoddy toys anymore).  As that becomes the new norm, and as people start to see wages stagnate, social instability increases.  China’s already dangerously unstable.  Throw the urban middle classes into the mix and suddenly you’ve got a real problem.

Because China has given no indication it intends on reforming the political system to allow plurality, the Politburo must do what dictatorships around the world have always done – distract the people.

Things that make you go boom

So expect an angry Chinese citizenry, pissed off that they’re not getting the deal they were promised, to be channeled towards outsiders.  Japan, Korea, and the United States are the likely targets.  “We’d be rich if only the goddamned (insert foreigner here) would allow it!” will be the rallying cry.

The challenge will be to make the Chinese unite like they’re in a war, but not actually fight a war they’re destined to lose.  (China’s navy isn’t anywhere near America’s, let alone Japan’s).  Moreover, picking a fight with America could well mean a nuclear exchange, something nobody wants.

It’ll get a lot worse before it gets better

The best path forward is political reform.  But China’s government won’t allow that.  So instead it’ll become less and less rational as its people become less and less rational.  It will hope it can distract this crazy away from itself and onto outsiders – a time-tested Chinese formula for rule.

It did buy the Qing dyntasy some time, but didn’t forestall the reckoning.  Sooner or later, China’s government must adapt.  But in the meanwhile, enjoy the show.  Roast some marshmellows over burning foreign embassies.  And watch a great power come to grips with how it’s never going to be a superpower.

 

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