THE IMPENDING FALL OF CHINA (?)

Image source: Hexun.com

Image source: Hexun.com

The People’s Republic of China boasts the world’s biggest population, its second-biggest economy and its second-biggest military. It is generally acknowledged as the leader of the “emerging economies” reshaping global trade and of the developing world as a whole. Its manufacturing sector is peerless. It is beginning to form its own regional organizations and development funds and forging patron-client relationships with its neighbors and parts of Africa. Its navy dominates the South China Sea and is beginning to patrol further and further from the homeland, like in the Bering Strait between Russia and Alaska and the Indian Ocean.

With China presenting such a strong, confident, and formidable picture to the outside world, it might seem odd to make doomsday predictions about it. But some observers of the country interpret its strength as masking deep internal weaknesses. In 2007 Susan Shirk wrote a book, China: Fragile Superpower, that argued that the ruling Communist Party is actually deeply concerned and vulnerable and that its aggressive overtures are attempts to compensate for its weaknesses. Chinese tend to react with unusual hostility to any criticism of China, and that’s partially because of historical reasons, but it’s also a sign of profound uncertainty over its own stability. People get defensive when their weak points are probed.

While most scholars acknowledge this and admit that China isn’t as sturdy and monumental as it seems, a few go even further and predict that the whole system — the Party and its monopoly on power at least, maybe even the whole state — will collapse. Normally this is dismissed as a fringe theory, but this March David Shambaugh reopened the debate with a provocative article in the Wall Street Journal: “The Coming Chinese Crackup.”

If you slam into the paywall or don’t feel like reading it for some reason, Shambaugh makes 5 main points to demonstrate his thesis that it’s gonna blow sooner rather than later:

1) An unusually high number of rich Chinese are either emigrating to places like Australia or America or moving key assets and buying property there.
2) Xi Jinping, the Party chairman and overall dictator, is intensifying the Party’s usual strict censorship and repression of dissent or even uncomfortable facts.
3) Even Party apparatchiks don’t care about Communist propaganda (or Xi’s propaganda) anymore.
4) The whole system is hopelessly corrupt and Xi’s purge will just hollow it out instead of fixing it.
5) Xi’s economic reforms from 2013 aren’t going anywhere fast.

Before you dismiss this thesis altogether, know that Shambaugh is a professor at George Washington University in Washington, D.C. and a respected Sinologist (China expert). He has studied the regime for decades and has insider access (as he makes clear in the article). He also dismissed predictions of an imminent demise for a long time and decided the signs of breakdown were getting too dire to ignore anymore.

The looming historical precedent here, of course, is the collapse of the Communist Bloc. Russia and China have many parallels (which I’ll get to one day). Both are vast Asian empires ruling over hundreds of millions of people and a lot of minorities; both were mostly poor and behind the times; both underwent violent convulsions in the early 1900s that replaced sclerotic emperors with fanatical Communists. Mao Zedong, China’s dictator, consciously modeled his new country after the Soviet Union (although with major differences). Both seemed unshakable, monolithic, and fearsomely strong to foreigners. Both had state-run economies, narrow and totalitarian political elites, and limited access to foreign media or information to keep the system insulated from external influences.

… But the Communist Bloc, the Soviet empire, collapsed, and in a few short years. When the Soviet dictator Mikhail Gorbachyov introduced reforms to free up the political system and allow free speech, first the Soviet satellites broke away, then the whole Communist system melted down. 6 years after he came to power, 1 of the 2 superpowers was gone. Foreign observers were flummoxed. They predicted that Gorbachyov’s reforms would change the game, for sure; they didn’t think it would cause a total collapse.

Haunted by this failure, they look to China since China is so similar in so many ways. Its economy is still mostly directed by the state. The Party still controls everything and tightly regulates information. The flag is unchanged; the anthem is unchanged; Mao statues dominate city squares; students study Communist literature like Marx and Lenin. Meanwhile, economic reforms have made China hardly a “Communist” country anymore, and information on the outside world is readily available. Chinese can travel abroad (and are doing so in increasing numbers) and foreigners can visit and tell them how different things are back where they come from.

So it’s natural to think it’s only a matter of time before the system falls apart. For certain, China’s leaders are scared and nervous, and their anxiety motivates them in their policies. The Tiananmen Square uprising in 1989 was crushed to avoid any developments that might lead to what happened in the USSR shortly thereafter. China’s rigid censorship and tight secrecy are motivated by fear that too much criticism could rock the boat and start the process of collapse. The feverish nationalism that the Party perpetuates is meant to bolster its grass-roots support (because the Party = the nation, you see) and distract from unresolved unpleasantness. Beijing’s refusal to even discuss the demands of the “Umbrella Revolution” in Hong Kong last year shows that it sees that movement as the top of a slippery, catastrophic slope.

So is China about to crack up? Well… it’s not that simple. Some of Shambaugh’s arguments do sound fairly ridiculous. A stack of unsold Xi books in a campus bookstore is probably not a sign that the end is nigh. In fact — as my older article on Xi pointed out — Xi enjoys some popularity and presents a more warm, accessible father figure than the dour leaders of the ’00s. Chinese emigration is also nothing new. The millionaires are probably hedging their bets in case shit hits the fan, but Chinese have sent their kids to foreign schools and worked overseas for years.

Macau-based professor Chen Dingding makes these points and more in a rebuttal of Shambaugh’s piece in the National Interest. He thinks Chinese officials are delighted by Xi’s “China Dream” and see his policies as dramatically reforming the country. The anti-corruption campaign, he maintains, is a necessary measure meant to shore up the Party’s credibility, since a traditional Chinese hatred of inequality (which is where the Communist movement came from in the first place) was sparking undeniable resentment at crooked fatcats. The economic slowdown is inevitable and a growth rate of 7% is still really fast.

Chen and other Chinese scholars also take issue with Shambaugh’s implied criticism of the whole system and point out that America has problems with corruption and inequality too. The notion that an American-style system would do just the trick for curing China’s malaise (although Shambaugh never actually states this) is obnoxious, imperialist, arrogant, and ignores the fact that most Chinese aren’t really clamoring for democracy, just stability and prosperity. They think that the root of Shambaugh’s and other Westerners’ opinions is a profound discomfort with a powerful China and a refusal to acknowledge that an authoritarian, non-Western social model could actually be succeeding.

Recent events have added an interesting twist to the tale — and on the face of it, seem to bolster Shambaugh’s argument. Rapid growth in stock trading, huge piles of local government debt, and a real estate bonanza fueled a giant, increasingly obvious economic bubble. Persistently high growth figures (like 7%) and ongoing construction and investment made a lot of onlookers suspicious that China’s economic joyride would last forever. (They never do, you know.) Sure enough, in July and August the stock market finally crashed. While only a small percentage of Chinese own stocks, it’s a sign that China’s boom years are done. The government also panicked and engaged in emergency measures to shore up the stock market, which not only put off investors even more, but made a mockery of its hopes to let markets play a “decisive role” in the Chinese economy. Suddenly China’s leaders weren’t all-knowing and wise when it came to economics anymore.

It’s way too early to make any statements about the stock market crash’s effects on China’s long-term economic prospects, but it’s obvious that its growth rate is slowing down and will slow down further. Since a robust economy is the most important pillar of the Party’s legitimacy and popular support, its leaders are even more rattled than before. This moment could be looked back on as the beginning of the end for Communist-ruled China, as Shambaugh writes.

And yet Shambaugh’s critics make good points. A bungled bubble burst won’t seriously damage decades of impressive progress and smart decisions from the Beijing elite. Skeptical scholars like Gordon Chang have predicted the apocalypse for years now with no blatant signs of demise yet (until now, maybe). When comparable crises hit the West, only cranks foretell the imminent collapse of the whole system. It’s also worth keeping in mind that, since it’s a one-party state, China has no viable opposition movements, so a political collapse would be very messy and might even lead to more civil war or new bosses who are more or less the same as the old bosses. Don’t expect a quick, painless transition to Taiwan-style democracy and pluralism.

Therefore it’s hard to say one way or the other whether Shambaugh is right. The Chinese model definitely won’t last forever; the question is when it will come down. The Soviet collapse was really, in hindsight, a historical anomaly. Great powers have collapsed before, but never so fast or entirely due to internal erosion. The miasma left in the wake of the Arab Spring has shown the world that pro-democracy uprisings don’t always have happy endings. But Shambaugh makes good points, and it’s worth keeping his arguments in mind as Xi, Li Keqiang, and the rest of the Politburo navigate the dangerous waters ahead by steering China into the modern world without loosening their rigid control of the system. There’s a reason Sinologists are often called “China watchers”: it’s a country that demands close attention.

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