About Me

Jan 8, 2012

A Stronger China is a Weaker China (and Vice Versa)

2012 is a roller coaster year, fasten your seat belt. It’s going be another bad year. I’m not sure how bad it would be. Eurozone is still unpredictable. China is slowing and US may experience the combination of worst economy and politics.
The situation is turning from bad to worse.  The real disaster will play out in quarter 3 or 4, if we allow it to play out. Still, I think we will be muddling through for the whole 2012.
What did I mean by a stronger China is a weaker China. Simply put, the stranger China grows, the more domestic challenges it faces. These will keep China busy for a while. It will become less assertive.
The biggest threat to Chinese leaders is environment, I think. The growth happened over the last 30 years was at the heavy expense of the environment. You don’t need to be an expert to understand how bad the environment in China is. The air in the cities, especially in Beijing, is very dirty and most of the rivers are poisoned.
Photo Credit : The Nation 
I remember reading an article by The Time on why Chinese millionaires and billionaires are leaving China. The unexpected answer is that a number of them said they left because of air quality and the quest for higher education.
The second biggest threat is the redistribution of wealth. Ordinary and peasants are left behind as the economy is sprinting ahead. One needs a strong middle class for a strong and sustained economy. Cut the tax for the rich may raise productivity. But, who’s goanna buy it, if not middle class people?
People closely connected to the Party makes big bucks without hard work. So, when the Government wants to transfer the wealth, they (the rich) may oppose to any significant change. Trying to strike the balance between wealth transfer without shaking leadership is a huge challenge for CPP.
The western parts of China are landlocked, resource-poor and ethic-hatred-stricken.  It takes efforts, time, money and high commitment to make the Western parts at least half prosperous like the coastal regions.  It keeps Chinese busy dealing with this important issue.
A number of scholars agree, including me, market force will democratize China. What I’m not sure it would be a democracy within a single party or multilateral parties. There may be a huge reshuffle at some point within the Party.
The bottom line is that China will become less assertive and pre-occupied with domestic problems for years to come. If the leaders are able to deal with these problems, China will emerge again. Don’t get confused China is in decline by being less assertive.
But there is a footnote for this conclusion. US is interested in Asia than ever. A new geopolitical game is arriving. If US decides to play it at all costs, China will go with the flow. And a less assertive China would be a more proactive.
Wining the New Geopolitical Game: Making the Superpower’s Rivalries Work to Our Advantage is my next project. How do we confront the new game in Asia and take advantage of it?  I’ll try my best to offer workable solutions. 
By the way, I'm reading On China ( in epub ) by Henry A. Kissinger. Drop your mail here or send me a Facebook message, if you want to get it.