
Everything you know about China is wrong - tytso
http://www.foreignpolicy.com/articles/2012/08/29/everything_you_think_you_know_about_china_is_wrong
======
tokenadult
The author of this piece, Minxin Pei, has been writing about national policy
in China for a long time for a variety of publications. I get the sense, from
what I remember of his earlier writings, that his own views on issues have
been updated by observing the path that China's development has followed since
the end of the Cultural Revolution (back when I began studying the Chinese
language and Sinology). There are an increasing number of observers who think
the current governance and policies of China are unsustainable. I too think
much of the gee-whiz reporting about China's "inevitable rise" in the last few
years is very reminiscent of overoptimistic predictions of "Japan as Number
One" back in the 1980s. Most likely, the more entrenched democracy and ability
to criticize the government openly that the United States has as compared to
China will help the United States muddle through and continue to be the
world's sole superpower. First-generation immigrants from China like Pei will
help that process of the United States adjusting to new world realities of the
twenty-first century.

~~~
001sky
China is of a _order of magnitude_ larger than Japan. 1200m vs 120m people. If
china modernizes along the lines of Japan pre WWI, it doesn't really matter if
they "stall" at some stage. Chineese construction sites look like something
out of the movie _Contact_. The game has been changed. US needs to be paying
attention. Technology has increased the ability to "play catch up." On the
other hand, its had minimal impact ability to differentiate amongst the more
advanced economies.

~~~
wisty
$7 Trillion GDP, 1344 Million people.

$15 Trillion GDP, 312 Million people.

When China only catches up to 25% of the US GDP per capita (where Brazil and
Russia are), it will overtake the US. The the US will have to boast about its
per-capita GDP, which really isn't that good (compared to many other OECD
countries, most importantly Canada).

I get the impression that a lot of US things go unchallenged (by most
Americans) because they are "number 1", so they are obviously doing everything
right.

~~~
bwanab
It would help your argument to get your facts right. The only OECD countries
ahead of the US in GDP per capita are Luxembourg, Norway and Switzerland.
Canada's is about 85% of the US (source <http://stats.oecd.org/>). It's true
that many things go unchallenged by most Americans and there's no question to
this American that we don't do everything right, but facts need to be
respected.

Edit: these are purchasing power parity numbers.

~~~
wisty
I used nominal GDP.

Obviously, if you have a few billionaires and a lot of peasants the GDP PPP
will be high. You'll have a low cost of living (due to low labor costs, and
plenty of supply), and a high average GDP (due to the billionaire).

Median GDP (PPP or otherwise) won't be so great, though.

I'm not saying the US sucks, just that once you stop looking at aggregate GDP
you actually have to start thinking.

~~~
mertd
I don't quite get it. Why should we pretend Warren Buffett et al. don't exist
in this context? If these billionaires are a part of the US economy, they
contribute to its strength.

~~~
stcredzero
In some sense, many billionaires stop being a citizen of their home country
and become a "citizen of the world." This also goes for multinational
corporations.

Warren Buffett is a notable exception to this, however, being "bullish on
America."

------
quanticle
I'm a huge fan of Foreign Policy, but I do think that this article is one of
their weaker pieces. It basically boils down to saying, "Well, yes, China
looks strong, but it has many internal weaknesses that may bring it down, and
therefore we should be careful to plan for a future in which the Communist
Party falls." Well, that may be true, but it's also unhelpful. It can be said
for any country. I mean, no nation is invincible or omnipotent.

Yes, China has flaws in its growth model. But are those flaws large enough to
knock down the Chinese Communist Party within the next two decades? I
personally don't think so.

~~~
vilius
I wish there was a place, where you could read objective summaries of HN
articles. Like yours "Well, yes, China looks strong, but it has many internal
weaknesses that may bring it down, and therefore we should be careful to plan
for a future in which the Communist Party falls."

~~~
F_J_H
I'm not sure that is an "objective" summary, and hence the challenge with the
type of site/place you are wishing for...

------
JumpCrisscross
If China continues as an ascendant power the U.S. will need an offshore
balancing presence in Asia-Pacific. If it dramatically implodes, ditto - a
reunifying Korean Peninsula and reforming SE Asia, to say nothing of a
politically ruptured China, merit our attention. Either way, it seems, the
criticism Asia-Pacific pivot appears premature.

The only case where it is overshooting is in the case that China stalls and/or
enters a period of slow, decades-long decline. Given the nationalist tensions
in the South China Sea and the country's addiction to growth for social
stability that seems unlikely.

~~~
skrebbel
Damn, you guys really talk about people and countries like they're pawns on a
chess board.

~~~
legutierr
Maybe queens and bishops, not pawns.

But I think you have it backwards. Chess was created to teach tactics and
politics, was it not (at least apocryphally)? This way of thinking may be
where chess came from, rather than the other way around.

~~~
skrebbel
Good point! Still, I don't know which is scarier. The fact that even some
HN'ers consider countries and peoples things to be molded and manipulated for
the country's good, or the fact that this kind of thinking has been such a
common idea for so long that a popular game was modeled after it.

------
OllieJones
Here's a contrarian piece on the Chinese personal savings rate: no organized
retirement benefits means all kinds of hiding of assets.

[http://brontecapital.blogspot.com/2012/06/macroeconomics-
of-...](http://brontecapital.blogspot.com/2012/06/macroeconomics-of-chinese-
kleptocracy.html)

~~~
001sky
_Longevity in China is increasing rapidly and the one-child policy results in
a grandchild potentially having four grandparents to look after. The “four
grandparent policy” means the elderly cannot expect to be looked after in old
age. Four grandparents, one grand-kid makes abandoning the old-folk looks easy
and near certain.

Nor can the elderly rely on a welfare state to look after them. There is no
welfare state.

So the Chinese save. Unless they save they will starve in old age. This has
driven savings levels sometimes north of fifty percent of GDP. Asian savings
rates have been high through all the key industrializations (Japan, Korea,
Singapore etc). However Chinese savings rates are over double other Asian
savings rates – this is the highest savings rate in history and the main cause
is the one-child policy._

\- Summary of the argument

~~~
vorg
> Four grandparents, one grand-kid

Under present regulations, if two people marry, who are both "only children",
then they can have two children. So four grandparents means two grandkids.

The one-child policy is slowly changing into a two-child policy, via the slow
rollout of many exemptions. I'm guessing the policy will morph into a complete
two-child policy one day (though never completely disbanded because the
National Family Control Administration workers will want keep their jobs).

------
giftedbygod
Europeans won't really have their pensions too. The same is about broken
American SS system. But it is just so much easier to notice problems somewhere
else. At least Chinese werent promised any pension so they save. Do Americans
think what will happen if their politicians break the promise? Or pay them wii
heavly inflated dollars for their benefits? Have they saved? Oh, no they trust
the Government. You see how Americans are stupid and Chinese wise? How can you
not save trusting that the Government will pay you pension in an old society?

Pensions made sense in young societies. They are temperorily phenomenon. Have
existed for 60 years. Like communism. Gone!

~~~
akgerber
Social insurance in Germany has been around since the 1880s. Social Security
has been around since 1935, or nearly 80 years.

Social insurance may change in the future, but so long as the elderly still
have a vote, they will vote very heavily in favor of maintaining a social
insurance program.

And if the elderly don't have a vote, the socioeconomic system will have
changed so much that merely having "saved" won't fix anything. Likewise, if
the dollar has experienced hyperinflation and benefits are worthless, any
private savings will be as well.

~~~
giftedbygod
Social insurance in Germany was Bismarck's invention. Everybody paid. One in
ten lived long enough to collect any benefits. Now you will have 30% of the
society to cover living cost of the other 70%. They can vote for financial
pyramids in their beloved democracy as much as they want. Guess what, the
ponzie schemes will still not work.

~~~
philwelch
Unless you're going to send elderly people back to work, if 70% of the
population is elderly then the other 30% is still going to have to work to
support them--that or let them starve. It doesn't really matter _how_ you do
the accounting.

------
stcredzero
_> ...two left-leaning think tanks, released a report forecasting that China
will have 200 million college graduates by 2030. The report (which also
estimates India's progress in creating human capital) paints a grim picture of
U.S. decline and demands decisive action._

What is the quality of those 200 million college graduates, however?

One can liken human capital to architecture and building. A house can look
like an impressive fortress of concrete and rebar, while the underlying
reality is quite different. Witness the buildings in the earthquake stricken
regions of Turkey and Sichuan province that fell down because of cost cutting.

Companies can be like this as well. Most large corporations have a façade of
solidity while much of the interior is actually made out of fluff, with
particular strong structures contained within. In this analogy, good Startups
are like little pillboxes or maybe even like tanks. They're all strength. (Or,
in William Gibson's words, "all edge.")

I spoke at length with another resident of the hacker hostel I'm at. Her
parents moved from China, and the family goes back periodically. She also just
graduated from Stanford. Her take on the situation there is that there's a
minority who relate very much to western tech culture. They view themselves as
part of the same extended tribe that the SV tech belongs to. In other words,
they view themselves as being like us. They are likely to be an influential
and affluent minority, however.

------
loeschg
I fully expected this article to say pretty much the exact opposite. That our
view of China is "too weak."

------
danso
I'm surprised the OP didn't mention the inevitable demographic shift, as the
number of able-bodied citizens drops in comparison to the over-60 population:

[http://www.guardian.co.uk/world/2012/mar/20/china-next-
gener...](http://www.guardian.co.uk/world/2012/mar/20/china-next-generation-
ageing-population)

Of course, every modern nation faces this problem. But China has had a
particularly aggressive birth control policy, which makes repopulation
inherently difficult.

------
stupandaus
The thing about China is that outsiders fundamentally do not know the inner
workings of the PRC Politboro. In recent years, there have already been major
changes in the structure of the system (see: Xi Jinping, Bo Xilai, etc.) that
were unforeseen.

------
batista
> _In the late 1980s, they feared that Japan was going to economically
> overtake the United States, yet the crony capitalism, speculative madness,
> and political corruption evident throughout the 1980s led to the collapse of
> the Japanese economy in 1991._

Crony capitalism, speculative madness, and political corruption? Yes, those
things are not prevalent in the US at all... _cough_ dot com bubble,
Haliburton, housing bubble, Bush and co, Enron, trillion dollar bailout
_cough_

~~~
batgaijin
I've always been curious about the debt of the Japanese government...

[http://www.independent.co.uk/news/business/japans-crime-
inco...](http://www.independent.co.uk/news/business/japans-crime-incorporated-
the-years-of-the-bubble-economy-lured-japans-yakuza-gangs-to-muscle-into-big-
business-terry-mccarthy-in-tokyo-explores-their-corporate-web-1479105.html)

[http://www.independent.co.uk/news/world/yakuza-settle-bad-
de...](http://www.independent.co.uk/news/world/yakuza-settle-bad-debts-with-a-
bullet-as-japan-bubble-bursts-1317210.html)

------
bsphil
Linkbait? I'm pretty sure they do have a few buildings that are made of half
styrofoam covered in plaster, and a bridge filled with garbage and covered in
rebar and plaster.

