Tuesday 30 June 2009

Is China Going For Broke?


So now it is China. Having written off the Ottoman, Tsarist, Austro-Hungarian, British, French, German, Portuguese, Spanish, Soviet, soon the USA, and sundry other imperial entities in the last century, it is time for a new one.

China has been running a surplus on the foreign exchanges for some time, so has money, more or less in the bank, as opposed to the old style developed nations. China is central to the new BRIC grouping. Brazil has timber, water, a lot of other things, but not much idea of financial or economic controls. Russia has energy resources, substantial industry and armaments, a rudimentary modern structure, but a system of government that more or reflects the days of Ivan The Much Misunderstood, and financially is in difficulties. India is India, too complex to summarise, but unpredictable. The consequence is that China, with the money, a centralised and dominant government, a skilled and active population, and a rapidly expanding economy is at the centre, and is using its influence abroad.

But we have been here before with China. Emperors have come and gone, some great, some disastrous, and some damaged by climatic or population events they could not control. There have been times of Warlords, of foreign invaders, and others of periods of relative stability. There have been times when China has looked to the wider world, and times when they have kept to themselves and their own troubles at home. Which way is it going in the near future?

We are told that China’s banks are not as well structured or financed as we have always assumed, and that a lot of the credit given recently given has been unwise and will involve losses and retrenchment. Also we are told that China may now stop stockpiling commodity reserves, in a way that will impact on foreign supplies. The Chinese it seems have been buying land abroad in a way that has left them open to allegations of a new colonialism, never mind the food supplies for the growing populations of the countries in question. There has been a huge property boom that is said to be never ending. Well they always are, according to the experts. What might trigger a cascading set of problems is impossible to predict.

Our assumptions of China’s internal stability are questioned because of the firm hand of control on what stories emerge from the interior. Externally, we gather that some in China want to expand into the relatively less populated areas in the region to give space for its own growing population. One area, it seems, is Siberia, despite this being a part of sovereign Russia. Russia made the mistake once of selling Alaska, in 1867, but I do not see them making the same mistake again.

Perhaps we have all been gulled by all the media hype and delight at the Big Show of the Olympics of 2008, without enquiring about the cost and the manpower entailed. China is a very large, very complicated, intricate and interdependent polity with an authoritarian government reluctant to change course as eventualities arise. It will go blundering on whatever circumstances arise that suggest more open government and more flexibility of movement. It is putting too much trust into money men and too little into what severe issues could arise. Amongst them could be many of its peoples running out of patience with the dereliction and destruction around them.

An old Chinese curse is “May you live an interesting life” so when might matters and events in China begin to become very interesting? The Chinese love betting, but what numbers will they draw next?

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