Monday, March 30, 2009

Not Super Power but Super Trouble

China has often been proclaimed as the next superpower by many commentators. This is an ill-informed judgment. A proper pattern recognition would reveal that it is in line for vary bad days ahead. A brief look at China's history is in order. Throughout its history, China has always been infatuated with being solidly unified as one nation. Its writing system reflects such preoccupation. The Chinese have many dialects, each unintelligible to one another, yet these dialects share the same written characters.

However, beneath the seeming tranquility lies stresses that creep up over time. Like the geological earthquake that needs to take place in order to release the stress deep inside the earth, China must every now and then suffer upheavals to dissipate the stress build-up. China's past upheavals occurred in timely intervals of 50 years. Any delaying of the upheaval will ensure that the next will be cataclysmic.

China also was never interested in what the outside world had to offer. It built the Great Wall to keep the barbarians out. Instead it was the outside world that tried to nuzzle its way into China. The Qianlong Emperor of the Qing Dynasty summed up this attitude perfectly in his writing to King George III after receiving Britain's mission in 1793 "Our ways have no resemblance to yours. As your ambassador can see for himself, we possess all things. I see no value on objects strange or ingenious, and we have no use for your country's manufactures". His grandfather, the Kangxi Emperor whose reign of 61 years is the longest in Chinese history, issued a prescient warning in 1717 regarding the British presence in Canton, "There is cause for apprehension lest in centuries or millennia to come China may be endangered by collision with the nations of the West."

Mao Zedong was one leader who perfectly understood China's peculiarities because he was an avid reader of history. He initiated the Great Leap Forward in 1958 and the Cultural Revolution in 1966 to release the tension within the system. Millions died. However both were controlled releases. He could end what he started. Mao was cruel but he achieved his objective, which was to ensure China remained united as a nation. The alternative could have been much worse; possibly a prolonged anarchy had the state fractured.

Deng Xiaoping who succeeded Mao in 1978 embraced free market and opened up to the world. It was a foolhardy decision. Now China has no control over its future. The prosperity that Deng wrought buys respite only as long as it lasts. He had a mild foretaste in 1989 with the Tienanmen Square protests which was triggered by a price inflation. But inflation can be easily tamed compared to the catastrophic oncoming deflation which has practically no remedy.

Capitalism is like riding a bike or spinning a top. Growth that it engenders cannot be allowed to falter. China is now moving fast. Unfortunately it is not on a bike but a runaway juggernaut with failed brakes. The coming crash that we are about to behold wouldn't be an interesting sight indeed.

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