
The Party's Over: China's Endgame - vorador
http://www.worldaffairsjournal.org/articles/2010-MarApr/full-Chang-MA-2010.html
======
papersmith
Not saying his points are without merit or anything, but Gordon Chang is a
well-known neocon writer. He regularly contributes to the Glenn Beck show.

<http://en.wikipedia.org/wiki/Gordon_G._Chang>

Many of his earlier apocalypse predictions didn't seem to take hold. Many
journalists consider him a bit of a nutter.

Just saying.

------
nl
This article is opinion (poorly) disguised as facts. For example:

 _Chinese technocrats, goaded by a multitude of analysts and foreign leaders,
have known for years that they would have to diversify the economy—steer it
away from investment and exports and toward consumption. Yet Wen, in office
since 2003, has not made much of an effort to do so. His stimulus plan targets
the creation of infrastructure and aims almost entirely to boost industrial
capacity even further, which would only aggravate the unbalance of the Chinese
economy._

Contrast that with actual facts:

 _China's domestic demand, as the government had long wished, has started to
become more of a driving force for the country's economic growth than in the
past.

Signs of a domestic consumption boost are apparent as people are spending more
on domestic commodities, export falls, and the government plans for more
consumption stimulus.

Data from the National Bureau of Statistics (NBS) last Wednesday showed that
China's domestic consumption had maintained an upward trend since the
beginning of the year. For example, China's retail sales rose 14.8 percent in
April year on year. It was 0.1 percentage points higher than in March._

[http://news.xinhuanet.com/english/2009-05/21/content_1141192...](http://news.xinhuanet.com/english/2009-05/21/content_11411924.htm)

Or maybe this:

 _Chinese Premier Wen Jiabao stressed the importance of promoting domestic
consumption and independent research and development during a three-day
inspection tour of the central Hunan Province, which ended Sunday._

[http://english.china.com/zh_cn/business/economy/11021617/201...](http://english.china.com/zh_cn/business/economy/11021617/20100320/15863015.html)

A real analyst would write an article about _why_ this policy is taking time
to work properly, kinda like this one:
[http://seekingalpha.com/article/157568-ramping-up-china-s-
do...](http://seekingalpha.com/article/157568-ramping-up-china-s-domestic-
consumption-what-s-taking-so-long)

~~~
Perceval
I find it pretty funny that you 'countered' Chang's opinion with the official
state-run propaganda rags of Beijing. Those sources will never admit anything
negative about China.

~~~
nl
Of course not - that's exactly the point. They can be relied on to parrot the
official line exactly.

So if the official sources are saying that increasing domestic demand in China
is a priority, then it probably reflects official policy.

(There may be exceptions to this, but exceptions demand some evidence and I
don't see _any_ evidence at all in the original post)

------
liuliu
I agree with the conclusion, but I am not comfortable with the theory that
China is falling because the export number is sinking. China had a worse time
in last year particularly in export sector but it turns out to be OK. However,
I do worry that the population surplus is going to dry out soon. Large part of
"the China miracle" was based on the cheap labor. Once that is ran out, China
has to establish a sustainable economy growing model like any other developed
countries (IP driven).

------
jojopotato
This might be a stretch, but it seemed like some of the attitudes expressed in
the article could be true of the US as well:

> “I don’t know anyone who believes in the party anymore,”

Tons of people don't believe that the US Gov't can do anything correctly or
efficiently anymore, I believe it's a sentiment found among many people.

> This regime will not last long. Who knows you won’t be our next leader?

Mirrors an attitude that their leaders, like presidents, will change
periodically and it's best not to bet on a single one point of view.

Now that I wrote this out it seems like a bit too much of a stretch.

~~~
swombat
Well, yeah, the US govt has many of the same problems - but the US government
is democratic (at least apparently). People can at least hold on to the hope
that in 4 years, "Change" will be coming. They get to demonstrate politically,
organise themselves, vote, etc.

No such safety valves in a totalitarian regime.

~~~
jojopotato
I agree that the overall situation situation for a person in the United States
is totally different, I just thought it was a bit interesting that the same
types of sentiments can be found in very different countries.

------
jimbokun
"At the end of July last year, for instance, some thirty thousand steelworkers
in the rust-belt province of Jilin fought with police and beat to death a top
manager who had threatened large layoffs after a merger."

I live in Pittsburgh, so this comment immediately reminded me of this:

<http://en.wikipedia.org/wiki/Homestead_Strike>

People had to die on the way to getting some sane working conditions in this
country. Perhaps Chinese workers are close to this point now?

------
swombat
I hope the article is correct. From what I hear of people who have lived there
recently, China appears to be so full of bubbles it makes a fresh pint of
Guinness cheese look positively flat.

The tragic thing is, if China does blow up, there will probably be tens of
millions of people who will die in the process.

------
anigbrowl
Interesting concepts, which echo some other analyses; but the author seems
overly sure of himself. Of course, prophets of doom always look that way at
the prophetic stage...then again his book on the 'coming collapse' has been
out for 9 years.

I would have been more impressed if his ideas had been accompanied by
statistics or graphs, rather than individual data points or reports of trends,
whose significance is hard to evaluate.

------
aresant
Serious question - how can a non sophisticated investor bet against the
chinese economy?

~~~
soldarnal
Probably the least sophisticated way is to buy shares in an inverse ETF. There
are a couple bear market ETFs that target Chinese indexes (FXP and CZI). (I'm
not endorsing anything here; please understand whatever you invest in before
doing so.)

~~~
DenisM
Don't buy any inverse ETFs until you understand the "inverse ETF decay"
problem well. Serious stuff.

~~~
3pt14159
This really cannot be said enough. I thought I had figured out a way to
arbitrage the oil market sometime last year. Luckily I decided to "make the
trades on paper" and see how it turned out before actually putting down ten
grand. The devil is in the details, of course, and after watching what
happened and fully reading the prospectus of the inverse oil ETF I realized
what happened. Always READ THE PROSPECTUS if you are going to be using ETFs or
anything else exotic. Again: READ. THE. PROSPECTUS.

------
adamtmca
Just saying "in the Great Depression, the exporting countries had the hardest
time adjusting to deteriorating economic conditions" fell flat for me.

Maybe it's because I've been studying for my macro final all day but I think a
lot more economic depth would be in order to support his thesis.

------
louislouis
His book 'The Coming Collapse of China' was published in 2001. That's almost
10 years ago and he's still chanting doom n gloom. Perhaps when he says 'The
Coming' he means sometime in the next 150 years. Who knows.

------
dkimball
China's extraordinary growth is because it's in the process of
industrialization -- which, by definition, only happens once for a given
country, and in which ideology does not have a very significant influence.
Examples of industrializations of this sort include the Gilded Age in the US
and the 1920s and 1930s in the USSR; contrary to what Chang expects, they
don't go away once they're completed (but, since governments do not create
them, they aren't endorsements for the government which conducts that
industrialization; cf. Fernand Braudel's _A History of Civilizations_. For an
extrapolation of the same character, but not in the context of economics and
thus easier to recognize, see <http://xkcd.com/605/>).

Is China under its current regime stable over the long term? I don't think so.
If the very guards in the prisons have no belief that the state will endure
through their lifetimes, and their junior officers think nothing of
complaining to foreigners about the incompetence of the civilian leadership,
the state will probably not weather a strong internal challenge.

Do I think this challenge will come from a democratic opposition? Of course
not. China is seeing a large amount of enthusiasm for the country and little
enthusiasm for its government; in this circumstance, the most likely result is
the overthrow of the Communist government in favor of a nationalist government
of some sort (which will probably be enough of a headache for the rest of the
world that we'll long for the good old days of the export-minded Communists).
Expect a replay of the 1911 Revolution and the overthrow of the Qing; I
wouldn't even rule out an era of "postmodern warlordism" in the interstitial
period before the next government solidifies its power. It sounds silly, but
China is a very large place, and asserting one's authority over the whole
country -- especially after the collapse of a dysfunctional bureaucracy and/or
a civil war -- is a non-trivial exercise.

I don't think the timeframe for this is particularly long, either, except by
the standard of CEOs. I think most of HN's readers will see a breakup and new
regime in China within their lifetimes; if I had to place a bet, I'd expect it
to occur 40 years from now, give or take ten years -- that is, once the
generation currently in their 20s and 30s ages into political power.

------
andrewcooke
if this is true, what gets caught in the crossfire? i imagine a failing regime
would attempt to create unity by identifying some external enemy. who? taiwan?

~~~
influx
They could more safely target "internal" targets such as Tibet or perhaps the
Uyghurs...

~~~
potatolicious
Agreed. It is unlikely that any violent action against domestic groups would
incur anything other than stern rebukes internationally. Certainly nobody is
going to go to war with China over Tibet.

On the other hand, Japan has something resembling a defense pact with Taiwan -
between those two, if I were the CCP, there's a pretty easy decision.

~~~
Frazzydee
And don't forget the USA and the Taiwan Relations Act.

I don't think China can so overtly attack Taiwan any time soon.

Plus, based on my experience, mainland Chinese sentiment seems to already be
against Tibetans and Uyghurs (more so the latter). They feel that the party
has already given them a lot in attempt to promote their success, yet they
continue to protest and generally cause trouble. Anecdotally, the majority of
pickpocketers are supposedly Uyghurs.

~~~
Perceval
The Taiwan Relations Act is not really binding on the U.S. since we shifted
recognition. Not that there won't be strong Congressional pressure on the
president to act on behalf of Taiwan. But there is no official military
alliance between the U.S. and the ROC.

~~~
Frazzydee
I'm not sure why you think it's not binding since recognition shifted– the
Taiwan Relations Act was passed _after_ the US switched recognition (so you're
saying it's never been binding?). I would presume that any provisions that are
phrased as being binding are indeed binding unless the Act is repealed.

Maybe you could clarify what you meant by "binding"? Of course the Act can
always be repealed so if you meant that there are no international law
obligations, then you're likely correct there. But I think that as long as the
Act is in force, I don't see why it isn't binding.

I didn't mean to imply that there was an official military alliance, but the
Taiwan Relations Act authorizes the US to treat Taiwan as if it were a foreign
country (I assume you can't sell weapons arms to private parties or rogue
states). It also requires the US to make defence articles and services
available.

Also, the Act leaves some open-ended possibilities that the US won't comment
on- most notably military action. If that's a looming possibility, however
unlikely, it will make China think twice before invading Taiwan.

IMO if China's going to take over Taiwan, it'll be mostly economically and
culturally, not by military might.

------
sailormoon
_I was trying to talk to a group of residents, some young and a few elderly,
about the Olympics. Nobody wanted to discuss the Games, which were dismissed
as just another government-staged event. All they wanted to hear was news from
the American campaign trail._

That doesn't sound like any Chinese I know. The Chinese I know are completely
apathetic about politics, anyone's politics. They are concerned with their day
to day lives and making money. As long as the government isn't _too_ bad, they
ignore it.

I think this piece is wishful thinking; the author is projecting his deep
feelings about politics and democracy onto the Chinese public and I just don't
see that as reflecting any kind of reality I've observed there.

~~~
donaq
I agree. Many of my Chinese colleagues are exactly like you described. This
piece is wishful thinking.

