Here are more predictions of bust or even doom for China. I doubt any of this is founded on adequate information or analysis, so these are just WAGs. But interesting.
- “The Coming Collapse of The Chinese Economy“, Professor Ching-hsi Chang, The Epoch Times, 25 August 2005
- “China has become a giant ponzi scheme“, Andy Xie, posted at an unknown Chinese website, 3 August 2009
- “The Return of Thomas Mun“, Martin Hutchinson, posted at The Prudent Bear 27 July 2009 (well worth reading!)
- “The Coming China Meltdown“, Martin Hutchinson, posted at The Prudent Bear, 4 August 2009
- The Coming Collapse of China, Gordon G. Chang (2001) — Also: an interview at RealClearWorld.
About Martin Hutchinson
Martin Hutchinson is the author of “Great Conservatives” (Academica Press, 2005). Details can be found on the Web site Great Conservatives. He was formerly Business and Economics Editor at United Press International.
About Andy Xie
Formerly an economist with Morgan Stanley Analyst. He became famous for his bold email, for which MS fired him. See this Asia Sentinel article for the text. See his Wikipedia entry for more about his background.
Other posts about China
- Power shifts from West to East: the end of the post-WWII regime in the news, 20 December 2007
- What you probably do not know about China’s food crisis, 21 April 2008
- China becomes a super-power (geopolitical analysis need not be war-mongering), 9 July 2008
- Words to fear in the 21st century: Lǎo hǔ, lǎo hǔ, Lǎo hǔ, 14 July 2008
- A different perspective on the US and China, seen by an American living in Russia, 23 March 2009
- China – the mysterious other pole of the world economy, 22 July 2009
- Another big step for China on its road to becoming a great power, 27 July 2009
Perhaps we should define what we actually mean when we discuss the question of a possible Chinese collapse: For some collapse means China will simply vanish from the pages of history and go away – disappearing into warlordism and civil war. I consider that to be an unlikely fate for a civilization that has existed in 5.000 years. I am sure they will manage the next 100 years.
Collapse would rather be Russian style: The breakdown of an empire and huge economic dislocation and chaos – in the short term. But also resurrection in the longer term. Russia has witnessed two collapses in the last twenty years – the breakdown of the Soviet Union in 1991 and the financial collapse of 1998. The Russians are still with us even today and they are again parading with tanks and missiles on the Red Square.
China dumped a huge amount of stimulus money into their economy, and it seems that Chinese companies are using their stimulus money to buy stocks for some quick returns. With their market up over 80% for the year, this should hardly be surprising. They are also dealing with lax controls, since this money was to be spent on “productive” activity. Here’s a relatively short article on why Beijing is so worried, and rightfully so. Their failure to manage this properly will impact the world economic recovery.
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Fabius Maximus replies: I suggest you give too much attention to the financial press. The economic significance of this is probably near zero. Other aspects of the China speculation story — such as Chinese speculators stockpiling commodities (e.g., iron ore and copper) might have significance. But perhaps not, as the prices of these things have risen more-or-less along with the broad commodity complex. For more on this see “Are the Chinese stockpiling everything?“, Scott Grannis, posted at the Calafia Beach Pundit, 30 July 2009.
Economist Richard Wolff on China. Video here.
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FM Note: Also see this “China: Bogus Boom?“, John H. Makin, American Enterprise Institute, August 2009
There does seem to be a desperate need to convince themselves and others that China will fail. From the very beginning of the credit crunch there has been an endless run of stories predicting Chinas doom.
I suspect it will fare far better than we will. It doesn’t need to print money to put into the Chinese economy…it has more hard cash in their banks than we have.
Yet for all the predictions of doom, we do seem be making more trips there with our begging bowls at the ready.
It’s clear that China has its problems, but it has its strengths as well. There is clearly no magic formula to growth, and it would seem that Chinese growth has followed when (1) Capital flows to the right places; and (2) Individuals, company’s and their property ‘believe’ they will be protected by the law (although it may not actually be the case).
The bottom line appears to be an environment in which the vast rural population can gain access to capital and [perceived] protection, thus allowing their entrepreneurial talents to flow. Tapping this community’s strengths and passions will make or break the country. Thus I take solace in the recent announcement of rural pensions [yes, the pitfalls are clear, but directionally its important]. In addition, the recent plan to allow listing of Chinese firms incorporated overseas on the Shanghai Exchange. Again, I know its not directly related, but its again a move in the direction of allow capital to flow more freely.
Robert,
china was a gathering of warring clans for 5000 years (give or take a couple dynasties). it’s only been the past 60 or so that they have been unified. things tend to regress to the mean so your idea that they might survive for 100 years may happen.. but it’s equally likely they will revert back to the provinces that make up china, complete with all the internal fighting.
The centripetal forces acting upon China are approaching critical levels. The normal state of affairs is not unity but chaos. That is to be its fate.
China has lots of pollution, which essentially is economic inefficiency. It has an unstable sex ratio. It will therefore probably collapse – but could explode.
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Fabius Maximus replies: Everybody has problems. Nations very seldom collapse or explode, despite the frequency with which such extremem outcomes are predicted.
“china was a gathering of warring clans for 5000 years (give or take a couple dynasties).”
You’ve been watching too many kung fu movies. Dynasties: Shang, Chou, Chin, Han, Sui. Tang, Sung, Yuan, Ming, Ching. More than a couple – eh?
Duncan,
China proper was a gathering of warring clans. even under the shang, chou, chins, and han dynasties. tang, song, and yuan came close to preventing clan warfare but fell short. the ming and ching were absolute rulers. so i stand by my statement of “give or take a couple dynasties”.
that is the context of what i meant.
It’s interesting the array of distorted positions and misfits that you’ve cited for a China collapse. While China is not without its risks, I think that Fabius you risk more in terms of credibility by citing off-beat authors.
* Did you know Epoch Times is run by the Falun Gong, no friends of China? Did you also notice that Professor Chang is most likely a Taiwanese independence supporter?
* Andy Xie strikes me more as a media whore who will do anything for attention.
* And Martin Hutchinson? He’s perhaps more like you: A westerner who hopes for China’s collapse and wants to find as many signs as possible.
* Remember Gordon Chang’s “Coming Collapse of China”? I don’t remember much about it either.
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Fabius Maximus replies: I believe the credibility gap is on your side, for such an odd comment. First, your assumption that I agree with everything I post is silly — obviously false to anyone reading this site. As the About page says, this side looks for truths beyond what’s know. That means considering heterdox scenarios and non-mainstream sources.
“Did you know Epoch Times is run by the Falun Gong, no friends of China?”
Do you look only at analysis by friends of China? Who is more likely to more clearly write about the adverse scenario: their friends or enemies?
Your comments about Xie and Hutchinson are just hot air. Both have reputations earned over long careers. That does not make them correct, just worth reading. That you have not heard of Chang’s books is meaningless, IMO.
I’m actually quite familiar with Gordon Chang’s predictions which never came true. How about non-friends of China — perhaps acquaintances like Pettis, Fallows or for that matter even Ferguson? I think these guys have much more insight than the ones you cite.
As for enemies, yes I agree sometimes they can have insight — only not true this time.
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Fabius Maximus replies: I am only on Chapter 2, but I doubt that he was forecasting over such a short time horizon (published in 2001). The point of looking at the weakness of China is that the “China will dominate the world” meme is so prevalent.
Michael Pettis’ blog (China Financial Markets is on my daily reading list. An article of his appears here later this week. Nothing yet cited here as his writing tends too technical for a general geopol blog, except in a detailed analysis (which I’ve not done, yet). Fallows is a brilliant guy, but his comments about China I find uninteresting (probably reflecting my limitations, not his).
Any suggestions? What articles about China have you found esp striking or interesting?
As for Ferguson — He has written much about China, but again nothing IMO striking (mostly about the US-China “marriage”). An his general audience articles tend to be IMO of far lower quality than his academic work. As in this from his op-ed in the Financial Times yesterday:
Any suggestions? What articles about China have you found esp striking or interesting?
Most of the really interesting stuff comes from people’s mouths who don’t want to be published as they either 1) don’t want to get into trouble with the Chinese authorities 2) want to profit from their insights or 3) are in a politically-sensitive position. If you go to China and can speak Mandarin well enough, there’s a lot that people will tell you — and this doesn’t have to be the apparatchiks who generally tell you what you want to hear. Most of my info comes from what people tell me; not much of it comes from published works.
For published stuff, I tend to like Fallows — his essays on China freedoms, dissidents and the one on how the reserves are generated were outstanding and ring true — at least from my experience. But I found his interview of the head of CIC to be a bit too awestruck and not very enlightening. I find Ferguson faintly racist and perhaps more snobby in that faded Empire sort of way. I really like Pettis’ work of course.
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Fabius Maximus replies: I agree about the best stuff being off-the-record. I find that to be true in most fields with which I am familar. I have no direct contacts in China, but what you say very much applies to those I know who do have them.
Fallows essay’s about life in China are great. His articles about either economics are IMO so-so; the Economist publishes far better (they are first rate about mechanics, but generally consensus cluesslessness about the future). Much of Ferguson’s academic work is great; his pro-Imperial popluar articles are IMO nonsense.
Great Article!!! I was very happy to ready it all. thanks for the info.
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If you want an idea of just how badly the English-speaking world wants China to fail, try doing these two searches:
“china is a house of cards
“india is a house of cards