Posted on 09/10/2014 10:24:39 PM PDT by Zhang Fei
In China, local bureaucracies are “effectively on strike,” notes John Fitzgerald, director of the Asia-Pacific Center of Swinburne Business School in Australia. Decision makers are not making decisions, he tells me, and business deals are being held up because officials are refusing to approve or disapprove them. A foreign professor I know reports that two well-placed academics in Beijing and Shanghai told him this month that those in charge, in their universities and elsewhere, are now so scared that “nobody dares to make decisions or do anything.”
From one side of China to another, officeholders are working as little as they can. Premier Li Keqiang, according to state media, thumped a table with his fist in May, slamming cadres for not “doing a stroke of work.” Last month, People’s Daily, the Communist Party’s flagship publication, issued three page-one commentaries criticizing officials for their dereliction, “avoiding the limelight” as the paper put it.
Government workers are going to extremes. Some of them are opting for early retirement. Others have gone further, jumping from buildings and taking their lives in less dramatic fashion.
(Excerpt) Read more at forbes.com ...
When did Gordon Chang say China would collapse?
I think 2015 is going to be scary financially.
What kind of economy builds ghost cities for millions who never move into them?
An economy where investors don't trust the stock market and choose to plow all their savings into real estate. An economy where real estate taxes don't exist. An economy where newly-developed real estate mainly consists of condo units in 40-story (& up) skyscrapers, which are easy to patrol and thus have relatively low maintenance (i.e. security) costs. An economy where new housing units consist of bare walls and hookups for power and plumbing, meaning there's not much to steal. (All new housing comes with zero amenities, so there's not much for crooks to strip. And yet there's a premium for new over existing homes).
China's stock market cap is 1/2 its GDP. The US's stock market cap is slightly larger than its GDP. And yet the Chinese household savings rate is 30% compared to the US's 5%. How do they manage this on their incomes? They eat out several times a month as opposed to every single day the way we do. They brew their own tea. We buy our coffee from Starbucks.
I guess that's why the ghosts like them so much.
When did Gordon Chang say China would collapse?
He has almost made a career of saying that the collapse was right around the corner.
Nonetheless, he does great reporting on the economic and political challenges facing China and its Communist Party. It is almost unique - he reports for Forbes (strongly free market)and speaks Chinese so he gets original sources. He is a frequent guest on the John Batchelor Radio Show. He points out the many weaknesses that otherwise go unreported, like the fraud rampant in their financial (and political) system, and the intense social pressures which the country seeks to manage.
I guess the bottom line is that things are just getting worse for China on the economic front - Debt is piling up unsustainably, and lots of it has been squandered on unproductive projects like ghost cities. Growth is slowing, and may have already slid into recession, if not for fraudulent reporting by the Party. Overseas markets are demanding less, competitors are taking the low cost producer advantage from them, and they are not effectively climbing to higher skill industries or innovating significantly. Foreign direct investment is drying up, as other places offer better opportunity, and China is abusing those who are invested there.
Politically, things are changing as well. That is the main thrust of this article. For decades, the Communist Party elite has maintained a detente, a kind of “professional courtesy” among the various factions and patronage networks within the Party, almost like a bunch of crime families which steer clear of each others rackets and avoid/manage confrontation with each other through Party processes. That seems to all be going out the window with the new guy, who is nailing high level bosses who would have previously been untouchable, and nailing them hard, like confiscating their billions, putting them in jail for life and purging their family and minions. It is kind of like the centralization within the party under Mao - which got to be a serious bloodletting.
Works for me. A country that tortures dogs before eating them is always welcome to lessen their population.
Didn't we do that in Houston way back when? And more recently in the run up to the housing market bust. In the later for sure we build a bunch of homes for buyers who were nothing but ghosts financially.
But, I get your point and you are correct. One factor that should be taken into account is the traditional Chinese individual savings rate - Chinese that are part of the developed Chinese economy have more money saved that most Americans. Also, the Chinese are pretty adept and getting by on the cheap. It is not as difficult a transition to give up on some creature comforts.
It's always puzzled me how a country with hundreds of millions of citizens living in poverty could be the world's number one super economic power.
Gee I hope the useful idiots (as Lenin called them) free tradin' away our technology to Red China use the money they make in China to rescue Red China's banks.
Oh and as things heat up vis-a-vis the Red China Communists and us that's good enough reason for the Communists to seize the assets of foreign corporations.. another little feature of Lenin's New Economic Policy (NEP) copied by Deng.
And don't expect a TARP to compensate for you loses, corporate America.
In his lifetime, Mao was a living god. Even today, he's China's major deity. If you want to get a Chinese person livid with rage, start talking about Mao's murderous and pedophilic proclivities.
The current party supremo, Xi Jinping, is anything but a deity. And therein lies the danger for him, personally. If the other factions get their collective act together, Xi could end up like Lin Biao, shot down while fleeing China in an airplane. There's a non-zero possibility of a senior retired general toppling Xi, much as Deng Xiaoping launched a coup d'etat against Hua Guofeng, Mao's hand-picked successor. It will take someone with prestige, charisma and organizational skills, but Deng showed that it could be done. Of course, Deng was the political officer in charge of the final campaign (Huaihai) that broke the Chinese Nationalist Party's back, so someone as capable as him might not exist in the communist party's upper reaches today.
“They brew their own tea. We buy our coffee from Starbucks.”
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As Tonto famously said to the Lone Ranger, “What do you mean, we?” I have never bought a cup of coffee from Starbucks, Starbucks coffee is like a McDonald’s burger, only to be resorted to if nothing else is available. The great Jackie Mason expresses my opinion of Starbucks perfectly. https://www.youtube.com/watch?v=1fGnIOZ1yY8
Thank you very much for the analysis and inside information, BeauBo. It’s a pretty scary situation we’re in.
It will be interesting to watch developments in China - nothing ever stays the same, and there are so many strong things pulling and pushing on the future of China. Fratricide within the Communist Party could be a big one.
I wonder what the chances are of a collapse of communist power, as happened in the Soviet Union and most of the other communist countries? A bursting of the economic bubble would be a challenge that they have not had to face since the Deng Dynasty. If the communist party loses the Mandate of Heaven, replacing it could be the ideal rationale for other leaders to depose Xi, and gain popular and international support for doing it.
When the Romanian Communist Party fell, it has been reported that high ranking party members scuffled over who would get to execute the former leader and his wife. After the executions, they re-branded themselves as a whole new party - same guys at the same desks, with different economic and foreign policies.
Xi may think he is Mao 2.0. Time will tell whether he is in fact Mao 2.0. Or Hua Guofeng 2.0. Or, if he's unlucky, Lin Biao 2.0.
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