Jan 052017
 

I can think of no more fascinating global political subject these days than China. So many things make it extraordinary. For starters, China’s one-child policy means that China will grow old before it grows rich. Cheap labor made China the world’s “manu-factory”. But the shrinkage of China’s working-age population has already begun.  Wages for factory workers are rising. Companies long since have begun shifting manufacturing to countries with lower labor costs, e.g. Vietnam.

China has focused on pell-mell economic growth in part to keep citizens from becoming restive about the complete lack of political rights. How will it deal with the problems posed by an aging but relatively well-educated and informed population?

Developments in China for good or ill will have disproportionate impact on the global economy, indeed upon every one of us. Whether the iron grip of the Communist party can survive China’s fast-rising standard of living, and what happens if it does not, are endlessly fascinating questions for me.

Partly to help myself keep track of articles of interest, I will post here brief excerpts of articles that augment my very modest understanding of what is going on in China.

As recently as five years ago, senior Communist cadres would still quietly assure western interlocutors that their ultimate goal was a gradual and peaceful transition to a democratic China. [President] Xi has changed all that. He has repeatedly rejected liberal democracy and western political thought (with the exception of Marxism) and instead vowed to usher in a “great rejuvenation” that harks back centuries to when the Chinese emperor was master of “all under heaven”. For the first time in 40 years, nobody in China can argue that the system is liberalising.

Jamil Anderlini, Financial Times, January 5, 2017

This project [a massive new cement plant in China’s industrial northeast]—and others like it—helps to explain why signs of an economic pickup in China this year are unlikely to last. The rebound is supported by struggling local governments desperate for a short-term lift to growth, even if that means encouraging investment in industries linked to construction that are all in monumental surplus. Their recklessness defies the central government’s efforts to rebalance the economy toward services and consumption.

Andrew Browne, Wall Street Journal, April 20, 2016

 

According to Credit Suisse ’s most recent Global Wealth Report, China’s middle class (individuals with wealth between $50,000 and $500,000) now ranks the largest in the world with 109 million members, surpassing the U.S. with 92 million members. According to the Boston Consulting Group, China has by far the most private wealth in Asia, and ranks second only to the U.S. globally.

Cui Tiankai, China’s ambassador to the U.S., Wall Street Journal, February 17, 2016

When President Xi Jinping rose to power in 2012…[s]tyling himself as a reformer on a par with Deng Xiaoping, he unveiled a 60-point plan to roll back the state and cede a “decisive role” to markets as China set out to switch from investment to consumption-led growth. Yet entering year four—out of an expected 10—of Mr. Xi’s administration, the reforms are largely on hold. Capital flooding out of China is one sign that some investors are giving up the wait.

Andrew Browne, Wall Street Journal, February 17, 2016

After decades of Chinese economic success, it has become easy to forget that the quasicapitalist China has been unstable all along. Decades after the death of Mao Zedong, political and economic power still grows out of the barrels of guns. Without the guns, China would soon have a new government- or many of them, or none at all.

Thomas G. Donlan, Barron’s, August 31, 2015

China’s political system is badly broken, and nobody knows it better than the Communist Party …  China’s strongman leader, Xi Jinping , is hoping that a crackdown on dissent and corruption will shore up the party’s rule. He is determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse. But instead of being the antithesis of Mr. Gorbachev, Mr. Xi may well wind up having the same effect. His despotism is severely stressing China’s system and society—and bringing it closer to a breaking point.

David Stambaugh, Wall Street Journal, March 7, 2015

China, once the manual labour “workshop of the world”, has become the biggest buyer of industrial robots as rising wage costs and growing competition from emerging economies have forced manufacturers to turn to technology. [China] bought one in five robots sold globally in 2013, overtaking tech-savvy Japan for the first time.

Tanya Powley, Financial Times, June 2, 2014

Twenty-five years of high economic growth have produced enormous wealth that invites looting by the ruling elites. At the same time, the party’s suppression of the opposition and civil society has created an ideal environment in which the ruling elites can loot without restraint. Endemic corruption is the most visible sign of the decay . . .  One can make a case that a kleptocracy has taken root in China.

Minxin Pei, Financial Times, May 27, 2014

Although GSK [GlaxoSmithKline] is still waiting to hear the [corruption] charges against it, in the Chinese justice system suspects are considered guilty once the Communist party says so. China had a conviction rate of 99.93 per cent in 2013 and in all high-profile or “sensitive” cases the conviction and sentencing is a political decision made by party officials before the trial.

Jamil Anderlini, Financial Times, May 16, 2014

Faced with rising labor costs at home and negative perceptions about their employment practices in Africa, Chinese companies are setting up new factories on the continent and hiring more Africans. The companies efforts will test whether the masters of low-cost manufacturing can be as productive in Africa as they are in China.

Peter Wonacott, Wall Street Journal, May 15, 2014

The defining fact of China in our time is its contradictions: The world’s largest buyer of BMW, Jaguar and Land Rover vehicles is ruled by a Communist Party that has tried to banish the word luxury” from advertisements. It is home to two of the world’s most highly valued Internet companies (Tencent and Baidu), as well as history’s most sophisticated effort to censor human expression. China is both the world’s newest superpower and its largest authoritarian state.

Evan Osnos, New York Times, May 11, 2014

The US is on the brink of losing its status as the world’s largest economy and is likely to slip behind China this year, sooner than widely expected, according to the world’s leading statistical agencies.

Financial Times, April 30, 2014

China fought for a year to undermine new data showing that it is poised to usurp the US as the world’s biggest economy in 2014 . . . “They don’t want to be seen as number one. They’re worried about the political implications with the US,” said one person involved in preparing the report. “They begged and threatened for a whole year . . . China hates it.”

Financial Times, May 2, 2014

A financial crisis in China has become inevitable. If it happens soon, its effects can be contained. But, if policy makers use further doses of stimulus to postpone the day of reckoning, a severe collapse will become unavoidable within a few years.

Prasenjit Basu, Financial Times,, April 28, 2014

Over the past five years, at least 39 farmers have resorted to this drastic form of protest [suicide by self-immolation]. The figures, pieced together from Chinese news reports and human rights organizations, are a stark reminder of how China’s new wave of urbanization is at times a violent struggle between a powerful state and stubborn farmers — a top-down project that is different from the largely voluntary migration of farmers to cities during the 1980s, ’90s and 2000s.

Ian Johnson, New York Times, September 10, 2013

To begin to comprehend China’s vast underground economy, one need only visit this city’s major transportation depots and watch as peddlers openly hawk fake receipts. . . . Buyers use them to evade taxes and defraud employers. And in a country rife with corruption, they are the grease for schemes to bribe officials and business partners. Making them and using them is illegal in China. Some people have been executed for the crime. But demand is so strong that a surprising amount of deal-making takes place out in public.

David Barboza, New York Times, August 4, 2013

China is the world’s second largest economy, but the enormous costs of its growth are becoming apparent. Residents of its boom cities and a growing number of rural regions question the safety of the air they breathe, the water they drink and the food they eat. It is as if they were living in the Chinese equivalent of the Chernobyl or Fukushima nuclear disaster areas.

Edward Wong, New York Times, August 4, 2013

How Chi­nese of­fi­cials be­have or mis­be­have not on­ly will af­fect us — from the value of our cur­ren­cy to the level of our in­ter­est rates to the qual­i­ty of the air we breathe — it may be the biggest thing that af­fects us out­side of our own gov­ern­ment.

Thomas L. Friedman, New York Times, July 31, 2013

Chinese are buying up infant milk powder everywhere they can get it, outside of China. And that has led to shortages in at least a half-dozen countries, from the Netherlands to New Zealand. The lack of supply is a reminder of how the consumption patterns of Chinese — and their rising food and environmental safety concerns — can have far-reaching impacts on critical daily goods around the world.

Edward Wong, New York Times, July 26, 2013

Chi­na is in big trou­ble. We’re not talk­ing about some mi­nor set­back along the way, but some­thing more fun­da­men­tal. The coun­try’s whole way of do­ing busi­ness, the eco­nom­ic sys­tem that has driven three decades of in­cred­i­ble growth, has reached its lim­its. You could say that the Chi­nese model is about to hit its Great Wall, and the on­ly ques­tion now is just how bad the crash will be.

Paul Krugman, New York Times, July 19, 2013

Without innovation, China cannot sustain high growth, as the artificially low prices of land and capital for politically favored firms become difficult to maintain and the supply of cheap labor dwindles. Unlike in India, a significant slowdown could be regime-threatening for China — today’s young people, with higher expectations than their forebears, will have less tolerance for a shortage of good jobs and affordable housing. China’s leaders may be riding a tiger that will be hard to dismount.

Pranab Bardhan, New York Times, July 15, 2013

By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination. Beijing’s essentially unlimited financial resources allow the country to be a game-changing force in both the developed and developing world, one that threatens to obliterate the competitive edge of Western firms, kill jobs in Europe and America and blunt criticism of human rights abuses in China.

Heriberto Araújo and Juan Pablo Cardenal, New York Times, June 2, 2013

China’s elderly are poor, sick and depressed in alarming numbers, according to the first large-scale survey of those over 60, an immense challenge for Beijing and one of the greatest long-term vulnerabilities of the Chinese economy. The survey of living conditions for China’s 185 million elderly paints a bleak picture that defies the efforts of the government to build what it calls a “harmonious society,” one dedicated to human welfare rather than simply economic growth. Of the generation that built China’s economic boom, 22.9% — or 42.4 million — live in poverty with consumption of less than 3,200 yuan a year ($522).

Tom Orlik, Wall Street Journal, May 31, 2013

The Chinese government is planning for private businesses and market forces to play a larger role in its economy, in a major policy shift intended to improve living conditions for the middle class and to make China an even stronger competitor on the global stage.

New York Times, May 25, 2013

[T]he conventional notion that the modern Chinese system combines political authoritarianism with economic liberalism is mistaken: A more accurate description of the recipe is dictatorship and cronyism, with the results showing up in rampant corruption, environmental degradation and wide inequalities between the politically well-connected and everyone else.

Bret Stephens, Wall Street Journal, May 25, 2013

In the face of China’s rapid economic expansion and growing presence on the global stage, it is often forgotten that the country is running out of water . In per capita terms, China’s water resources are just a quarter of the world average. Eight of China’s 28 provinces are as parched as countries in the Middle East such as Jordan and Syria, according to China Water Risk, a consultancy based in Hong Kong.

Leslie Hook, Financial Times, May 15, 2013

Village family-planning officers vigilantly chart the menstrual cycle and pelvic-exam results of every woman of childbearing age…. If a woman gets pregnant without permission and is unable to pay the often exorbitant fine for violating [China’s one-child] policy, she risks being subjected to a forced abortion. According to Chinese Health Ministry data released in March, 336 million abortions and 222 million sterilizations have been carried out since 1971.

 Ma Jian, New York Times, May 21, 2013

For all China’s modern trappings — the new superhighways, high-speed rail networks and soaring skyscrapers — analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cold, hard cash. Many experts say it is not a refusal to enter the 21st century as much as wariness, of the government toward its citizens and vice versa.…Adjusting for the size of its economy, China has about five times as much cash in circulation as the United States.

David Barboza, New York Times, May 1, 2013

 

Extreme air pollution is driving expatriates out of Beijing and making it much harder for companies to recruit international workers . . . In January, air quality readings published by the city authorities and the US embassy indicated levels of toxic smog on some days that were nearly 40 times higher than those considered healthy by the World Health Organisation.

Jamil Anderlini, Financial Times, April 2, 2013

Pollution in China is now so bad that it threatens to obscure the vision being laid out by Xi Jinping, the new president. Mr Xi has popularised the idea of a “Chinese dream”, an obvious foil to the American dream. His dream seems to involve increasing wealth at home and increasing power abroad.But the choking smog suggests that the leadership needs to rethink its national goals. After all, what is the point of rapid economic growth if it creates cities in which it is dangerous to breathe?

Gideon Rachman, Financial Times, May 7, 2013

Americans who fret about the wave of baby-boomer retirements should consider this: Since 2009, when China enacted a nationwide program of rural pensions, some 325 million Chinese have been promised retirement benefits. That’s more than the entire population of the United States.

 Mark W. Frazier, New York Times, Feb. 19, 2013

Chinese shoppers last year became the largest group of luxury consumers in the world, overtaking Americans and Japanese for the first time.

Wall Street Journal, Feb. 6, 2013

Last year, China’s working-age population fell for the first time… The decline, which came four years earlier than expected, shows China has just about exhausted one of the most important factors in its three decades of rapid growth: an endless stream of new workers.

David Pilling, Financial Times, Feb. 7, 2013

The urbanisation of China lends itself to jaw-dropping numbers. In the past 30 years, 500 [million] people have moved to the nation’s cities – as many as the combined populations of the US, Britain, France and Italy. Another 300 [million] are projected to exchange their ploughs for urban life by 2030, at which point one in every eight people on Earth will reside in a Chinese city.

Simon Rabinovitch, Financial Times, Jan. 28, 2013

There is no great clamour in China for western democracy. The party remains the nation’s guardian. But the simple fact of joining the middle class leads ordinary citizens to demand transparent, accountable government. Prosperity gives them a vital stake in the rule of law; and the digital revolution provides a means to press their case. For now, the party thinks otherwise. The consequence is a China that looks at once stronger and more fragile.

Philip Stephens, Financial Times, Jan. 25, 2013

As Beijing’s leaders try to find new ways to invest $3 trillion of foreign reserves, the country has been aggressively expanding in industries with strong economic potential. … Aerospace represents the latest frontier for China, which is looking at parts manufacturers, materials producers, leasing businesses, cargo airlines and airport operators. The country now rivals the United States as a market for civilian airliners, which China hopes to start supplying from domestic production.

Keith Bradsher, New York Times, Jan. 22, 2013

China is losing its competitive edge as a low-cost manufacturing base…with makers of everything from handbags to shirts to basic electronic components relocating to cheaper locales like Southeast Asia. [A decline of foreign direct investment] also is the result of a long-term trend of rising wages and other costs that have made China less attractive, especially for basic manufacturing.

Wall Street Journal, Page 1, Jan. 17, 2013

China’s working-age population shrank in 2012, marking the beginning of a trend that will accelerate over the next 20 years and have -profound implications for the world’s second-largest economy. By the end of December China’s population aged between 15 and 59 was 937.27 [million], a decrease of 3.45 [million] from 2011, according to figures released by China’s National Bureau of Statistics yesterday.

Jamil Anderlini and Ed Crooks, Financial Times, Jan. 19, 2013

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