Pomfret's China

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Will China's Miracle Train Derail?

Is China really as stable as we've been led to believe? Recent events make it seem likely that Beijing is going to get kicked in the teeth by the worldwide financial crisis. And the strikes and protests now occurring throughout the country suggest that China's authoritarian political system is in for a real challenge.

For years we've heard the narrative in the United States that China was going to have a smooth ride to superpower status. A report from the Carnegie Endowment for International Peace earlier this year predicted that China would overtake the US economy by 2035. A few weeks ago, the New York Times suggested in an editorial that China's economy might be the one engine that could drag the world out of its current rut. The LA Times, noting that China possesses a world-high $2 trillion in foreign exchange, predicted that at last weekend's economic summit, China would wield "a big stick."

Underlying these narratives was an assumption that China's political system was stable. Political scientists even came up with a new name for China's mixture of a free-wheeling private sector and massive state-run sector all dominated by a one-party state. It was "resilient authoritarianism," with the emphasis on "resilient."

The problem with this assumption is that it took root during the 1990s when China's political system essentially faced no significant tests. Things were a little rocky during the Asian financial crisis of 1997-98. But China pretty much insulated itself from those problems; and the Western economies (whose purchases account for more than 30 percent of China's economy) kept buying.

Well, I'd wager that the real test of a political system is not when all the graphs are pointed skyward; it's when things start to shake a bit. And right now things are shaky in China. As Josh Kurlantzick put it in a smart piece for the New Republic: "While, in the U.S., a financial failure would simply mean another dent in George W. Bush's reputation, in China it could mean the breakdown of the entire political order."

The main reason for China's current troubles is that Western economies -- caught in their own recessions -- aren't buying like they did before. Some 10,000 factories are shuttered in southern China. Factory bosses are jumping over walls and fleeing China and their debts. More than 1 million people have lost their jobs over the last few months in one province of the country alone.

But there are other reasons, too. Many Chinese are fed up with country's endemic corruption and the sense that "social contract" that their now dead leader Deng Xiaoping hashed out for them after he engineered the June 4th crackdown in 1989 -- you all have a fair shot at getting rich as long as you don't challenge the party's authority -- is breaking down.

Protests, some of them violent, are erupting throughout the country. State-run media, which usually ignores these things, has taken to reporting a number of them. To me that signals not that state-run media has suddenly turned professional but that the problem is of such proportions that ignoring it would be more laughable than acknowledging it.
The most recent examples were a taxi strike in the vast western megalopolis of Chongqing and a riot this week in Gansu province.

Now China does have some arrows in its quiver. It has announced a $586 billion stimulus package. It's trying to jack up the property and stock markets. But it has its work cut out for it: in the past year the Shanghai stock market has dropped 70 percent. (More than 100 million people invest in stocks in China. They are not happy.)

Now, for years, we've also been witness to another narrative about China -- encouraged, of course, by the government. It's this: young Chinese kids don't care about politics. I've read countless pieces, invariably employing a worldly-wise Chinese woman as the centerpiece, that quote her and her text-messaging buddies as saying the Chinese version of: "Democracy is so last year. We just live to par-teh."

Democracy may be so last year, but jobs aren't. Now she and her cohort of the urban hip aren't finding work: unemployment among college grads is around 20 percent, according to research by Chinese social scientists. That's bad for stability.

One final thought. The demonstrations of 1989 were primarily sparked by economic troubles. In that case, inflation. China's leadership knows it. As the country limps into 2009 with a weakening growth rate and an economy that is still dependent on the West for a big chunk of its GDP, we should remember that, too.

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Comments (54)

tomsp08 Author Profile Page:

1) Social unrest always increases in an economic downturn, wherever you are.

2) China seems to be on the road towards more accountability, where Party officials have to be accountable to the people below them rather than to the higher officials above them and where corruption will have to be scaled back.

So 1) and 2) combined mean that there will be more unrest in China but that this could also accelerate China's transformation towards a more accountable society, which in general, whether democratic or not, must be a good thing.

manny_fu Author Profile Page:

Will China take the GDP crown from the US in 2035? Nobody has a crystal ball to be able to precisely predict. Given the current condition, it is more likely to happen. I am not trying to suggest that there is no bubble in China. Actually there is tremendous risks mounting, economic and political. If I have to make a call, I'll say that China will like to grow to the top before falling off the cliff. In other words, they will continue on its fast-track for a few decades.

Kaydara Author Profile Page:

To all my jingoistically inclined brother and sisters who worships the three great monkeys – See no evil, hear no evil, and speak no evils - I call on you to incite another great revolution to change our nation.

These bozos running China is not the true disciples of Marxism. They are not the true follower of China’s only modern savor, Chairman Mao!

Lets rise to the calls from the book of red and its demands what any true believer of communist should do – lets raid the rich village of Beijing and Shanghai and siege the Mercedes and their gold Rolexes and platinum Nokias and give to your peasant neighbors. Don’t forget to pull their gold tooth and recap onto yours.

Lets repeat the feat that Chairman Mao did so miraculously in the 40’s to the once corrupt and decadent National Party and its people, and behold the rise of the greatest nation of the world which these rich buffoons are ruining.

Raise! My brothers in arms. It is time again to comply with the truth of socialism. Assist your poor brothers and sisters in need. Let’s redistribute the disproportion of our nation’s wealth again. Down with capitalists and send them to the re-education camps to be re-purified to the virtual of communism. Thanks to Mr. Chaney’s validation of our time proven water torture method, we can trust it to re-convert those greed driven mad capitalistic pigs disguised in the puritanical veil.

anakin1992 Author Profile Page:

"I think many observers (and the Chinese people) gave the Communist Party too much credit for the economic growth that China has achieved. China's present situation is merely the result of a natural recovery after all the years of self-inflicted damage caused by the Mao years "

if you understand a little bit of chinese politics, you would not make such conclusion. in a society, when selling an egg laid by a homegrown chicken, one would be prosecuted. to open up and free up people's mind set from a strict anti-capitalism to an open-heart capitalism is not an easy job by hardware. let me tell you that till today this openness to capitalism is still debated within the CCP. in china, without central government support, one can not do anything literally.

anakin1992 Author Profile Page:


comparing with chinese currency exchange rate, mexico is at its advantage and can you tell me that the sole root cause is because of exchange rate?

anakin1992 Author Profile Page:


further let us say your prediction comes to true, china collapses instantly without trace. then do you think the world can handle it besides the financial tsunami we are facing now? it would be a double whammies.

anakin1992 Author Profile Page:


why do you think 1989 was because of economic troubles?

yes, western countries are not buying as they used to. who get hurt most? a million of ppl lost job in china is totally different concept from that in US or any western country.

it is such strange to hear that if millions lost jobs in china, then china will collapse. where do this conclusion come from? it is totally bull craps.

Raoul2 Author Profile Page:

These comments are hilarious and sad...per usual

Doubter1 Author Profile Page:

Even in a difficult econmic environment, China will be fine. Yes, there will be protests, or even violence - just like recession or depression in America has reliably produced high crime rate, racial tension, rising bigotry, and isolationism. So what?! People in China are smart enough to knnow that in-fighting will not do any good to themselves (history has taught them many times over) despite some Westerners want them to believe it. Ask yourself: why would white people want a non-white people stronger and richer than them? Are they interested in seeing China being prosperous and strong nation OR eliminating a future competitor who has no cultural and genetic linkages to white european peoples?

Doubter1 Author Profile Page:

Gordon Chang (a self-hating ethnic Chinese) published a book in late 90s predicting China collapse - the book has been updating almost yearly and the credibility of the book is of course on the same level of jewish-elders-conspiracy-world-domination BS. I am afraid that Pomfret is so frustrated with success of Beijing Olympics and other Chinese achivements (high growth rate, budget surplus, 2 tril. forex reserv), he is losing his mojo of being a impartial journaist.

cdav531 Author Profile Page:

Hey "Donald2." I've lived here long enough to know when someone is being "polite" and when they're being genuine. I'm not an idiot like you apparently think I am. My assistant brought up all the political stuff in a very offhand way in passing just to tell me how busy she has been. And I think my point is pretty obvious. The CCP seems quite determined to keep university students in line. And what makes you think I'm "excited?" As both an American and as someone who lives in China I certainly don't want to see anything bad happen here. Though your English is pretty good you are obviously Chinese and assume Americans wish ill upon China. That's not the case.

yangz Author Profile Page:

I think that the ideology driven reports like this one will never get China no matter how long they stays there.
I always read some silly articles which make me laughing about western media.
For example, because of the difference in the political systems, western media always praise India and bash china.
I read an article in bloomberg which was saying that India was building a lot of road so it can save it from this economic downturn. Come on, give me a break, if building new road can save it, then China will never get affected at all because China is building a lot more new roads than India. But at the same day, another article was saying China can't escape the downturn.
Let go back the core theme of this article which is thinking something like 1989 can happen again now because of the economic downturn. The situation is so different that something like that will never happen in the near future. You can find out why just by digging a little deeper.
Who were these guys in the 1989? They were China's elite class. They were intellectuals...
Did the farmers take part in 1989? No....
How the elites feel now in China? Very good. They are the main benefactors of the economic growth. So why will they go up against government? If you can talk with elite Chinese, you will find a lot support for the government.

Raoul2 Author Profile Page:

I think Pomfret (citing Kurlantzick) makes a good point: if China's economy tanks, what mechanisms do the country's citizens have for showing their displeasure? Can they change their leadership? Unless China's leaders are endowed with supernatural governing powers, they will -- sooner or later -- mess up badly. As happens in all countries....

It seems hard to describe this situation as "stable". Rather, it is a powerkeg.

depaulconsiglio Author Profile Page:

The Great China. You listen and learn for so long and now all still respect you.
Some however say they do but don't.
Fools as we say in the West shouldn't rush in.
But many do.
Now however we must Stop. Listen. Think. FigureOut. And then Stop Listen Think again and maybe again before we and the World act.On our own behalves though.
You in China are older so take us here in the West with a grain of salt and as we hope that you can bear with us are foolish youth that we learn from your years.

Thank you
and Regards

dePaul Consiglio

generalyuefei Author Profile Page:

God, To Whom we should cry for help?
By General Yue Fei (Free Copyright)

God, To Whom we should cry for help,
in this world that you give all to human?
Could your angels hear our desperate cry?
And mothers shed their bitter tears
for their children were no more in a bang,
Do you know the taste of their pain,
is it salty or spicy as your soil?
For politician greed and media lie
for their own independent faith,
to make all people struggle against,
for thousand years to eternal shoel,
from Greek swords to Hitech bombs,
we day by day nail each other to death,
as our forefathers hanged Christ on cross
of humanity, of gods, of world...
for when shall such drama end?

people in color, in fashion,
in their difference they judge each other,
but when are they gonna strip their cover,
and cut off their skin to show the world,
to prove to You that they are all the same?
just blood and vein, flesh and bones,
that very soil that made them, or
the same monkey as they define?

How many life we must sacrifice
on the world coliseum for our thirst?
How long we have to slave each other
to build our earth a Pharaoh's tomb?
How a few are dare to stand up
and tell the truth about our society?
Merely an animal kingdom of a cannibal world?

Oh civilization, dressed by fashion.
Greedy feeds our stomach and market.
Education's but papercard of vanity.

God, you are locked in church.
And good is shut in the book.
I only see devil now, around me,
sitting and feasting wearing human skin,
and he appears in mirror every morning,
when soup cleaned last night's filthy,
and our bed sheet washed, rape mark's gone,
we compose a fairytale of love
that involves heroes and fair maid virgin,
for our children to remember and tell.

Oh God, are your endurance is forever?
or you are just speechless for our show?
Could devil do any worse than we do?
Could Pope speak for you in this world?
Does anyone hold the power of human repentance?

I wonder, as people passing by,
heading to their bury ground.
On our road, I just see flowers,
trembling for their poor fate,
struggling to bloom, to dream,
desperately hang on their petals,
falling piece by piece, till
their spring dream flows away
in the cold blue stream.

generalyuefei Author Profile Page:


That's why, as a Chinese I worry about food.
When I don't have to, then I go buy a beer.
When I can afford a beer on every weekend,
Then I go to bookstore to buy a poetry book,
a few rocking rolling records...
And I go to high end store to get some killing dress, and shoes...
And I walk on street thinking myself a player
getting life romance with a lady like the novel I read and using the pickup lines that once shined on Victorian stage...
then we can look around the world and march for those who suffer
But all that start with food, if I am hungry, talking about the rest are just fool.

'CCP' whether they want to change or not, changing is coming and no waiting, there are two ways they can react, holding gun guarding for their family and friends to sit on their people who are struggling for food and they will die in shame, the history will forget them like those who made law of segregation, or they still can feel the warmth of their blood, and the beating of their heart, and understand why freedom of speech is symbol of civilization.

Even Tang Dynasty, our ancestors had free speech about their country's improvement, they could write poem to criticize their emperor directly and openly; those records are passed down through Tang 300 poems, if anyone have spare time, google them and read themselves.

One thing is funny, that most of those Chinese corrupted official picked US to immigrate, they brought their people's blood money into US, and US welcomed them, that is just how the world runs, their seeds will ruin US too, in future, when they receive their US passport. I'm glad. At least they let go China, and in near future they can play with big boys league, shooting real propaganda film Hollywood standard, action, passion, drama, blood spilled on the face political shows for the poor common Americans.

I cry, for all the poor Chinese, Americans and people everywhere of the world suffering daily and nightly under these greedy people who are the same only in a different cloth, face and skin.

our faith, they programmed.
our mind, they educated.
our life, they drive with their lies.

And to God I pray, that may we majority realize that we live our life for them, their shows, their tears, their interpretation of Bible, Koran, Freedom, Democracy, their tanks, airplaines, bomb... and we give our blood, our love, our family duty, our faith, our every drop of passion, and every pulse of excitement, and even the last cry.

generalyuefei Author Profile Page:


To be truthful,

---It's Chinese people's hardwork rescued CCP. CCP should be greatful to Chinese people.---

I am not sure CCP realized that Chinese people rescued them, but every time the People's Daily propagates that CCP is the rescuer of China.

If CCP is really grateful to 'their', then they don't have to send army on the Tianmen square, or Lhasa, but they don't allow media have freedom and people have speech right to tell the truth.

Actually there is no CCP, they are a few Chinese who militarily overpower on majority Chinese, most of them are richer than your Wall street executives and your senators, their are sleeping with your politicians in one bed. They hold more capital than your governors. Ain't joking.

Your politician and reporters should tell you the truth, there is no CCP in China. I don't see any. Many Chinese really hope there are many CCP, at least the principal of CCP was about sharing, and socialism, but after Mao gained China, it was simply a Empire, now still the same.

In Qing Dynasty, if anyone criticize his emperor, beheaded; Now if anyone criticize his leadering party especially by posting online material about Democracy, Human Rights, and Liberty will be locked up.

I don't understand is that many Americans are fooled by their media that China is CCP nation, if we really are, then there will not be any corruptions ever in the government system.

Right now, Chinese people just worry about jobs; if it gets worse, people will march on street, that is the only card the current Chinese government is desperately to hold on; even though, lets say the economy develops in a smooth process, btwn 30-50 years, our government will change to democratic system and structure as US' structure, after those old people all die and their fear and greed and embarrassment buried together in their tomb, like Mao's dead body... that's the change that coming.

When everytime I look at our government structure, I think about Dr. Martin Luther King and Obama, how long it takes US (a democratic nation with a biased majority) to change?

50 years.

Donald2 Author Profile Page:

CAVEMAN1: Good points. I cannot not tell the current CCP gvernment is just average, or slightly better than average. But the quick progress is really because of PRC's epic mistakes from 1949 to 1978. It's Chinese people's hardwork rescued CCP. CCP should be greatful to Chinese people. For those readers complaining about westerners like to see China down, my answer is: why shouldn't they like to see China down? and so what. It's Chinese people's responsibility to fight for their own future, not up to westerners.

JIMTWEST3 said: Not even Mexico can compete against the undervalued cheap Chinese currency.

To compare Mexico with China is like comparing apples and oranges. Both countries are poor, but the culture and economical behavior between Mexico and China are different. It's like comparing two wealthy nations - French and Saudi Arabia.

CDAVS31 said: She has been ordered, in her capacity as a "class leader" to organize an "activity" extolling the virtues of the CCP.

So, what's the point. Be aware that Chinese are polite. They may say something you like to hear because they are nice. Don't be too excited.

RJlupin1 Author Profile Page:

Speculations on whether or not China's economy will continue to grow are just that. I'm sure in the 1920's people thought the same thing about America. The thing to remember is that China's economy is fueled by foriegn investment and increacing foriegn spending on Chinese goods which are very volitile and will dry up if the foriegn economies have a downturn. Its also important to note that no economy can grow at the rate China has forever. Eventually, China will produce all people are willing to buy and then the economy will slowdown or maybe even fall because 30% of Chinese jobs involve construction of new factories. After that most growth would be tied to an increace in service related jobs and would be slower. As far as a colapse though? I doubt it.

jimtwest3 Author Profile Page:

Chinese goods are cheap because the Communist Chinese Committee FIXES their exchange rate.
By making Chinese currency cheap, China has raped the world's economies, displaced jobs, and enriched only a few individuals, and forced many of our factories to close. Not even Mexico can compete against the undervalued cheap Chinese currency. Because Chinese Currensy is so undervalued, the Chinese people can not afford to buy goods made outside of China, and our factories can not compete against cheap Chinese products flooding our stores. The opportunity to open up markets in China by opening up trade with China has turned out to be a really bad joke.

cdav531 Author Profile Page:

I'm living in China now. I pay a university student to assist me at times and she told me that she and her classmates the other day were subjected to more than seven hours of political indoctrination mostly about how wonderful China and the CCP is and how Deng Xiaoping's "opening" of China was magnificent, etc. She said a great number of students simply nodded off during the presentations. She has been ordered, in her capacity as a "class leader" to organize an "activity" extolling the virtues of the CCP. Seems to me the CCP IS a bit fearful of losing its grip. Remember that 6/4/89 began with disgruntled university students. Should be "interesting" to see what happens.

Caveman1 Author Profile Page:

I think many observers (and the Chinese people) gave the Communist Party too much credit for the economic growth that China has achieved. China's present situation is merely the result of a natural recovery after all the years of self-inflicted damage caused by the Mao years (which are themselves a result of foreign powers trying to dominate China for its market potential). The driver of growth has been foreign investment and the adoption of western business practices and technology by the Chinese people and their own hard work. But this shouldn't be mistaken for brilliant political or economic leadership. All the Party has done is open up the doors to foreign investment - to become a superpower, China will have to add all those other tough ingredients that the US/the advanced Western democracies have been adding for two centuries - rule of law, freedom of the media and speech (open debate), transparent government, human rights, etc etc. Otherwise the average Chinese person continue to have the same standard of living as someone living in Albania or Papua New Guinea.

generalyuefei Author Profile Page:

To TheOtherHand,

Remember the early 19 and 20th century?

The West keeping their work to crack China into pieces. It's dream of generations, passed through gene:-)

but, economy of China is the biggest problem I have to agree.

That is reason we have to be in peace to solve the problem.

TheOtherHand Author Profile Page:

"For years we've heard the narrative in the United States that China was going to have a smooth ride to superpower status"?

Really? What I have heard FOR YEARS are arguments like yours. Remember how popular the book "The Coming Collapse of China" had been? What a laughing stock.

Donald2 Author Profile Page:

Posted on November 18, 2008 20:15
This challenge might be good for China. After 20 years of run away growth, the Chinese youth under single-child policy do not have the ambition and spirit from previous generations which raise China to where China is today. Hardships make people mature; the Great Depression produced the best generation in WW2 for US. The suffering of Culture Revolution produced the graduates of class 77 and 78 (if you know what I am talking about). Let's see what Chinese will come out of this challenge.

Donald2 Author Profile Page:

China should massively increase its investment in domestic infrastructures such as education, health care to boost internal consumption. China should also slow down the investment in foreign debts. If I borrow a line from Sara Palen, China is investing in foreign countries which may not like China. I don't really see the logic of this foreign debt buying. Is China so weak so needs to buy foreogn debt to boost its confidence, or thinks owning foreign debt will increase peace? At end of the day, it will be and should be Chinese to pull China out of this mess, right?

luyi99 Author Profile Page:

What I feel is the author is waiting, hoping and wishing for a “breakdown of the entire political order” in China simply because China is an authoritarian political system.

orange2 Author Profile Page:

There is an unintended pun at the top of this web page: "PostGlobal -- Will China's Miracle Train Derail?"

That's where we are headed rapidly -- towards the Post-Global Economy. Under the banner of "Globalism", America's factories have been shut down, dismantled, wrapped in oil paper and crated, and shipped to China. And what did we get in return? Cheap plastic forks and melamine in our dog food.

Well, the party is over. The deal is done. The illusion of the wonderful Reagonomics "Free Enterprise" and "Global Free Market" is done for. Now the long struggle to survive locally begins, and we begin severely handicapped by the loss of everything -- our factories, our jobs, our economy, even our Treasury.

It's enough to make you wonder who was smart, and who was stupid, and who was paid to be stupid.

generalyuefei Author Profile Page:

The only one greatest and true problem is,
that our population.
Our population is too huge, we are too many.
None of US or China or any other country and religion will survive this storm.

I have to agree with Dalai on this one.

People have to compete, lie, rob for their need.

Jobs, food, education, social security benefit...
are all going to flush out by this.

The world is too giant for anyone wise or good faithful party to drive.

If anyone could not to have child, or have less children, would done a great thing for humanity.

If there are only 1/3 population now, people are friendlier, reporters are more truthful, and politicians are faithful... the world is peaceful.

Now everyone need to compete to survive, life is too hard for everyone.

shane_beck Author Profile Page:

Never happen as long as the communist party keeps control of the PLA. Still I wouldn't be surprised to see various regions push for greater autonomy since they have different and competing priorities for national resources. Will be interesting to see if the party pushes the hyper-nationistic line to keep the Chinese youth on side.

va22207 Author Profile Page:

This article listed some difficulties the Chinese government faces during the current global economic crisis, such as
1. closing of factories and hence loss of jobs;
2. protests, some of them violent;
3. huge drop in stock market;
4. unemployment of some college graduates.

But there are also some opportunities for the Chinese government brought by this economic crisis.
1. the huge drop of commodity prices, enabling Chinese to do grand construction projects to stimulate economy.
2. lower inflation making consumer happy.
3. huge foreign currency reserves and government tax surplus enabling raising salaries, reducing taxes, reducing college tuition. People made the money, it is the time to let people enjoy it.
4. at least the government can blame economic crisis on USA.

In balance, there are new challenges and opportunities for the Chinese due to the financial crisis.
If they use the opportuinities right, they can come out of it stronger. Time will tell.

Mr. Pomfret's analysis emphasizes the challenges, but did not mention the opportunities.

wangAustin Author Profile Page:

Well, China has lots of problem right now and its system may or may not survive this crisis. But I can say the same thing about the western democracy. Haven't we already seen the adoption of communism economic policies in this country? If Obama presidency turns out to be a phony and the economy slides into a great depression, I won't be surprised to see riots throughout this country.
Just think about the last great depression, by the time of the Berlin Olympics, Nazi Germany seemed to be the model for the world and Soviet Union was never even caught in that crisis. No wonder people like Charles Lindbergh became a fan of the Nazi ideology. Had Hitler not overplayed his cards, he could have defeated the Western Democracies through economic warfare. The truth is US was NOT saved by either the New Deal or its capitalism, it was saved by the WWII.

ventangled Author Profile Page:

I think most of these analysis are quite premature and unreliable. The reality is that China is experiencing job losses and other consequences of the worldwide economic slump, all of which were expected one way or the other. The ramifications have not been more dramatic than whatever the Western countries have witnessed so far and to infer any conclusions from these events about the future stability of the country, either politically or economically would be pure speculation. Especially something far-reaching and thinly-justified as the scenario the author has presented in this article.

ghormax2 Author Profile Page:

I am amazed to see the many people commenting who assert that Mr. Pomfret is biased, while their own reply is just as biased. The principle problem is that we do not know what will happen but there are clear signs of trouble for China and the government has already reacted. Are there efforts enough? No one knows because that depends on many factors.

But I'd like to point out that even those scientists like Andrew Nathan, who promoted the argument of "authoritarian resilience" Pomfret refers too, have argued that this is based on economic growth and regime performance. A less optimistic analysis comes from Minxin Pei, who argues that the Chinese political system is trapped in transition and reforms are very difficult.

I think we can all agree that this economic crisis will be a great challenge for the Chinese government. The problems Pomfret mentions are all real and stability in China is as real as it was in the former Communist countries before its fall. It depends a lot on the regimes ability to cope with the crisis and unlike Western governments, its sole legitimacy is delivering economic growth (and perhaps nationalism, which is a worrisome thought).

Finally, I think no one wishes China bad. On the contrary, recognizing the problems (which in China are systemic due to massive problems of responsiveness in the political system) is important for finding solutions. While many seem to pin their hopes on China, I think it is useful to put this into perspective. China's opaqueness surely leaves all options open and we have to accept the possibility of the train derailing even if that would greatly increase the economic problems in the Western world.

Aprogressiveindependent Author Profile Page:

John Pomfret's opinions, as they occasionally have been in past posts, are overall simplistic and superficial in his analysis. Hardly anyone has suggested as he states, China's path to superpower status would be a smooth path. This has never been true for any country in the past, present or future.

While China's overall economy will probably eventually overtake the United States during this century, this is a highly misleading statistic. Given the fact China has a population abour four times larger than this country, the per capita income in China will likely lag behind many countries well into at least the next century.

One can hardly be surprised or find fault with most Chinese for being apparently apathetic about political issues. Until this year, with the excitement about Barack Obama's candidacy, far more Americans, including most youth, were more concerned about materialistic concerns than politics. Mr. Pomfret seems to suggest Chinese youth should be more concerned about politics than their material well-being, yet few Americans would subordinate their personal and family material well-being, especially on an on-going basis, to concerns about politics.

The closing of many factories in Quangdong province is partly because the appreciation in the value of the yuan, about 15-20% higher than a few years ago, and higher wages for workers have made some Chinese exports less competitive. Many companies are relocating to countries where labor consts are less expensive, especially in southeast Asia.

Widespread strikes and protests certainly reflect discontent, as well as resentment, among many people in China. However, these isolated protests , primarily over local issues, do not necessarily suggest the overall political system is unstable.

osha1 Author Profile Page:

An interesting facet of this crisis is that so many of the elites in China have so many eggs in baskets that are overseas. I think this sort of situation leads to increased instability since there are so many people who have other options than staying to work out the problems. This has been the historic problem in Africa, for example, when the going got tough, the elites went to the airport. How likely is wide scale emigration if the political situation deteriorates? If Chinese emigrate to the US and keep their American paper doesn't that dramatically improve our balance of trade? I would expect a US policy to encourage Chinese to come to the US would be in our long term interest.

nepacific Author Profile Page:

I continue to be revolted by Mr. Pomfret's apparent enmity for China, but in this case I agree with his analysis.

Corruption, inequality, and the inability of the Centre to control regional and local officials are all bearable as long as the economy is expanding. But as soon as the money from relatives working in coastal cities dries up, there will be more and more unrest in interior regions.

Politically, China does not change incrementally. People's resentments are hidden until they reach the boiling point, and then all hell breaks loose.

voter Author Profile Page:

Mr Pomfret, can you start writing something more constructive and beneficial for both the U.S. and China instead of praying everyday for the collapse of China? You will be a much happier person. China and Chinese have never thought that changing and modernising the country for the sake of progress is an easy and smooth path.

dahuanzhou Author Profile Page:

"Some 10,000 factories are shuttered in southern China. Factory bosses are jumping over walls and fleeing China and their debts. More than 1 million people have lost their jobs over the last few months in one province of the country alone."
I guess that you mean the case happened in Guangzhou or Dongguan of Guangdong Province. yes, I basically agree with your statement, not only that, I can raise a real example to make your story more convincing. A boss from USA whose name I don’t want to mention set up a factory in Guangzhou, His secret code of running the factory was” never using my own money to run the factory”, So he borrowed money from all possible sources, customers, buyers, even from his employees,meanwhile , he delayed the payment to workers , landlords, vendors, without exception for 15 years. He even transferred the advanced money from customers to USA and set up other company, He ran back to USA recently,leaving huge debts unpaid, the remaining assets in the factory was not enough to pay his debts. From such kind of examples, we got lessons that China can not rely on foreign investment too much. we need to enlarge our domestic needs. If China can overcome financial crisis with its own effort, it is also a great contribution to fight world economic recession, because W-Mart, McDonalds, Kenturkey,Microsoft... can also make money in China.

george22_1999 Author Profile Page:

1 I agree with some of the other posters that your analysis is superficial, nevertheless, its good to get Americans thnking about China.

2 The timing for the trade slowdown couldn't be better for China. They need to pause and and turn inward in order to address some of the very problems you mention-the apparent rebirth of the 'iron rice bowl', the future status of the policy of bleeding off underemployed rural workers into urban jobs, and other pressing domestic matters.

3 The moderate growth, 'develop the countryside', faction had only apparently lost out to the growth at any cost faction. After a brief foray into hypergrowth, the pro-growth Shanghai gang has been crushed by the current export slowdown. The moderates are now in the driver seat, although the infrastructure earmark you cite is not really as big as it sounds, so its an open question whether they will exploit their oppurtunity.

4 Younger Chinese not political? Well, you are wrong about that, they aware, involved, and jingoistically nationalistic. It will take far worse challenges than this to get them to quit rooting for their homeland.

Lawrence2 Author Profile Page:

The basic promise that China will face more political chalenges during the upcoming economic slowdwon is simply wrong. The Chinese government is spending money furiously to stimulate the economy and domestic spending. The short term effects will be less complaints from ordinary people as they will see more benefits from new social wellfare programs. Yes, dispite the communist lalel, the chinese people enjoy much less protections from unenployment, little pensions for retirement and often lacks afforfable health insurances. All these problems will be alleviated somewhat by the new stimulus package. Finally, we have been hearing this for the last twenty years: that the Chinese political system is unstable after the adoptation of a free-market economic system. The historical record on this has been clear: Little has changes in the last twenty years. Why would it destablize now?

reader8288 Author Profile Page:

Having finished reading this article, I'm greatly impressed by the authors mixture of polical bias with economic ignorance. Being economically unable to find sufficient proof for his argument, the article relies heavily on political slogans.

Ahthough economy and politics are inter-related, there are also clear boundaries between the two. At least now, the problems facing China is far more like a economic than a polical problem.

Despite the enormous challenges and difficulties, China's economy is still a hopeful one for the following reasons:
1. China's financial system is much better regulated, with little freedom for the risky financial derivatives which plunged America into credit crunch.
2. Most Chinese people do not rely too much on credit. Their saving rate is much higher, debt rate is lower, which frees them from heavy debt burdens and offers them greater potential to consume even when growth rate is lower.
3. The treasury has enough fund to boost domestic investment, and through a multiplier effect, boost GDP growth, whereas the US treasury lacks money to do so now, a situation far different from the FDR years.

What the article bewilders me most is the intention of the author. Is he objectively analyzing China's economic problems, or deliberately hoping China's economy to collapse? Maye only the author himself can offer an answer.

Gurbat Author Profile Page:

simplesimon33: Once the economy improves, whole world will be back knocking on China’s door for goods that nobody else can supply so cheaply.
Ever heard of hunger riots? The comoditity markets are going to skyrocket in this decade. What does that mean for people around the world? It means people around the world will be more worried in this decade to fill up their stomachs, rather than texting on the wireless.

People knocking China's doors - Keep dreaming your Utopian dreams. Bamboos can hardly be described as staple food.

lhao333 Author Profile Page:

It is so amazing to read the writing that got nothing in it but parroting some others' parroting. There are so many flaws and superficial analysis, I dont even know where to begin to address. It is almost as one is watching Lou Dobbs' show, it make you laugh for its' stupidity and angry for it spreads outright lies.

For one, tell me what province that More than 1 million people have lost their jobs over the last few months in one province of the country alone.

For two, The demonstrations of 1989, I was there. The primarily reason was not economic troubles. It was the desire for a more open society where people has the opportunities to make their own decisions in life. I visit the country numerous times and stayed there extensively in recent years. While seeing a lot that still need to be improved, (true in every other country likewise) I am very proud of the accomplishments the county has made. With the government regulated banking system, China has better chances to weather the financial crises. Whether China will become a superpower remains to be seen. Why superpower anyway? How about equally powered?

simplesimon33 Author Profile Page:

With 2 trillion dollars in foreign exchange reserves and authoritarian government, China is in much better shape than its democratic counter parts in the west, east, south and north. Chinese Communist leaders would have no compunction suppressing domestic violence brutally if need be since they are not answerable to anyone. All they have to do is ride out the storm until the world economy picks up. Once the economy improves, whole world will be back knocking on China’s door for goods that nobody else can supply so cheaply. But democracies in the world can not suppress the similar domestic violence resulting from this meltdown. They would need another world war to pull them out of coming depression.

Samson151 Author Profile Page:

Well, considering China has relatively few natural resources and that their economic growth spurt has been almost entirely due to other countries' desire for cheap labor -- yes, I'd say they're in trouble. Deep yogurt, to be precise.

And they've got this big standing army to support, as well. Like Russia, North Korea, and Iraq under Saddam, the Chinese army serves a dual purpose as full-employment agency as well as fighting force. Lot of mouths to feed there.

Once you're outside the urban areas, the country is very third-world. A lot like the old Soviet Union and Eastern Europe. An overlay of success on a deep well of poverty.

Heard it said that the Chinese government is always more afraid of the Chinese people than of foreign devils. And once they've left the farm, they don't want to go back...

edbyronadams Author Profile Page:

There is a huge difference between the political situation in China and most of the rest of the world. The Chinese leadership has no theoretical justification for wielding power. They are neither closer to God, nor closer to Marx and certainly not legitimized by the will of the people. They have hung their fate on delivery of the good life to the Han and barring that, their hold on power looks tenuous.

stikyfingas Author Profile Page:

I think China will be fine, debt-wise they own the majority of America's debt so the should end up way on top at the end of the recession. The growing Chinese market itself should be able absorb the excess production that is not being shipped overseas.

PatrickInBeijing Author Profile Page:

Is Mr. Pomfret warning of, or wishing for China to experience problems? It often sounds like the later.

The Chinese government is moving quickly and in a forthright manner to boost its economy by spending money on building infrastructure. Ironically, the new President of the United States wants to do the same thing in America!!! Gee, how strange!! What is good in America, won't work in China. How strange!

What most people in China want is good government that works. Where they have it, they are happy. Where there are issues, they speak up. Ironically, such an "unfree" country seems to be full of people who think they have the right to protest. And who expect their government to listen when they do. And amazingly, it does listen!! And changes are made.

Isn't that good? Of course, we wish that there were no violence during protests, but how often in America are there elements during demonstrations that engage in violence? Why does the WAPO seem to support violence in China, but oppose it in America? Tough to figure out.

No one knows what the future will bring anywhere in the world. But at the moment, the Chinese government seems to be moving towards addressing the real needs of ordinary people, while the US government is still struggling to take care of billionaires.


Anyway, most people I talk to hear wish Obama good luck (and think he is very handsome), and wish that he brings the change people need so very much.

renaldo__ Author Profile Page:

The China goods buying spree in western world was primarily fueled by easy credit avaialble to consumers.

The current credit crisis in western world will make is very difficult for China to sustain its GDP based on western buying patterns.

More importantly this downward financial cycle will see newer supplier countries for western world, thus contributing the shrinking the China's western market share.

On the other hand, China has a huge scope for economic development within its boundaries. So if properly planned it can keep its GDP afloat for foreseable future atleast.

Stock market down 70%. It really does not hurt to have fewer paper billionaires.

howardxue Author Profile Page:

As you mentioned, protests, some of them violent, are erupting "throughout the country"... Wow! "protests throughout the country"??? Using so scaring extreme phases like this, you must be kidding me man... Haha, I get a little scared and trembling in my booties...

So as an responsible blogger and the deep thinker, what's your good constructive suggestion to China and foreign investers in this tough time? Or you may be now giggling: "Thanks God, at last China's authoritarian political system is in for a real challenge now, hopefully it will collapse and turn chaotic nationwide next year. Gladly we are looking forward to a new China with no more superpower status ahead but super chaos inside out."

C'mon, we are tired of kinda perceptions, like "Look, everyone, China is imploding ,decaying and collapsing" perceptions...

Oxen Author Profile Page:

Time will tell.

ADRossin Author Profile Page:

re: David E. Hoffman's piece on South Africa Uranium raid:

David - - Did you ask Matt Bunn what the attackers intended to do with the uranium they MIGHT have been after? You let him get away with a scare story, but he has no answer, because he is just interested in scaring people!

Dave Rossin

Glenderful Author Profile Page:

There is a sense of deep pessimism in China right now. So many recent graduates are unable to find jobs and qualified people in current positions can't seem to move up or even get a lateral position. Patience is wearing thin.

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