From “The Australian” newspaper we have a
report of multiple protest demonstrations, some of them violent in China. This should not come as a surprise to anyone who is monitoring Chinese affairs. The country is an overheated boiler waiting to blow. The people of China are increasingly aware of their suppression and brutal treatment by the corrupt communist government. The banking system is teetering on the verge of collapse. Inflation is kicking in with a vengeance. The housing bubble is as volatile as that in the U.S.A. Central planning has wasted vast sums of money on infrastructure that nobody has any use for. Huge “ghost cities” have been built that nobody occupies. Urban, coastal Chinese grow rich by exploiting slave labor from the agricultural interior, where hoards of people still go barefoot. And construction companies fail to pay their workers. When these workers object they are suppressed by corrupt local bureaucrats. People are being poisoned by air and water pollution, tainted food and counterfeit medications.
Meanwhile, U.S. and European companies have moved manufacturing to China to take advantage of low paid, essentially slave labor. What will these companies do when the boiler explodes? What will happen when Chinese currency kicks into hyper-inflation? How should the financial world react when China becomes so preoccupied with suppressing the discontent of its population, maybe even revolution or civil war, that it loses interest in buying U.S. government debt? Will the communist government launch an attack on Taiwan as a distraction from its internal problems?
There has been a parade of commentary in the past couple of years to the tune of “China will overtake the U.S. economically, if not also militarily.” Or “China is doing all the modern things, such as high-speed rail, modern airports, high-tech manufacturing, etc.” “The West needs to learn from China.” Nonsense. This is the same kind of hand wringing we heard in the 1970’s about “Japan Inc”. The Japanese supposedly had all the answers, the better formula, the best economics, the best education, they were destined to overtake the U.S. economically and buy up all of our most valuable assets, and on and on. Then, in the 80’s and 90’s the American entrepreneurial economy kicked in, Japan swooned, and the silly notions were proved wrong. And Japan wasn’t even our enemy.
Today communist China is not our friend and is far from a model for our future. It is a dangerous illusion waiting to collapse, perhaps violently, with uncertain consequences for our well-being.