Posts Tagged ‘CCP’

Today, as Libyan rebel forces close in on Tripoli, it seems yet another nation will overthrow their authoritarian rulers in the Jasmine Revolution. Since the movement broke out in December, political forecasters have devoted plenty of ink to speculation over if and when China’s authoritarian government will collapse.

For the record (and anyone at the Ministry of Truth who may stumble upon this), I don’t at all wish for a collapse or overthrow of the Communist Party. Gradual reform leading to real public accountability would be much better than the abrupt dismemberment they’re setting themselves up for with the current iron fist approach.

But in the fairly-likely event that they do dig their own grave, where does that leave a post-Communist Party China?

The Party would have you believe that the country would dissolve into absolute chaos; that they’re the Elmer’s glue holding the whole rickety apparatus together. Without them, people would take to the streets to pillage, rape, torture, kill, etc.  Plenty of foreign observers share that bleak outlook too.

But a few weeks ago I spoke with Uri Dadush, former World Bank director of international trade and author of the book Juggernaut: How Emerging Markets Are Reshaping Globalization. He said China’s GDP is projected to grow at around 5% annually for the next 40 years. “Even if there is a political crisis, that doesn’t mean that China will not grow,” he said.

In economic terms, revolutions aren’t as catastrophic as they appear to be, especially in recent history. This chart maps Egypt’s annual GDP growth for the past 50 years. This measure shows how much the GDP grew in a given year compared to where it was the previous year. It’s good for highlighting economically disruptive events.

Clearly, Egypt has always been a fairly turbulent country capable of enduring crises and quickly bouncing back, never dipping below 0% growth. But the most significant part is if this chart were extended to today. It would show a dip to 2% growth in the fiscal year ending this June, which included the Jasmine Revolution. Before the revolution, it was predicted to grow at around 5%. The government overthrow may have very briefly slowed growth and had some opportunity costs, but it was hardly chaos. Now Egypt’s economy is humming again and will probably hit 5% growth again by year’s end.

Here’s China over the past 50 years:

The two largest dips were during government directed campaigns; the Great Leap Forward being especially catastrophic. Then in 1987-1988 there was massive (over 20%) inflation of the Yuan which partly enabled the Tiananmen Square uprising. The crackdown did scare away some investment. Growth slipped a bit but remained positive and quickly rebounded.

An even better indicator of national well-being is per-capita GDP, because this shows how the wealth of the average person is growing or stagnating. A flat line here is bad; people aren’t getting any wealthier. A downward slope is very bad; people are becoming worse off. If you look at China by this measurement the story is very promising.

There’s a very gentle negative slope during the 60’s and the power struggle of the late 70’s, then it’s all upward. Tiananmen didn’t even leave a mark.

Let’s look at another country’s per capita GDP growth and see if you can spot when the revolution took place:

There’s a sharp decline beginning in 1996 ravaging the average person’s net worth by over 33%, but if you think that’s where the political upheaval was, guess again.

The Asian Financial Crisis devastated Thailand, but when a military coup a decade later overthrew the ruling Prime Minister after a year-long political crisis, there wasn’t even a blip. Per capita income continued to grow to its highest levels ever.

These economic charts don’t tell whole story, but they do tell a lot of things. They tell that, even in the midst of political crisis, people still buy things and people are still working at the store to sell to them. Then there’s a whole network of manufacturing and investment behind those people that continues to expand. So the idea that a political crisis throws the country into violent chaos is greatly exaggerated. And what may have caused a serious disruption even 30 years ago might be hardly noticeable now thanks to globalization.

Mr. Dadush explained, “The drivers of economic growth are very fundamental. They are much deeper than even big political developments. They have to do with technologies and ideas that have already been invented. Once they’ve been invented it’s very difficult to stop their spread. If you have more or less the conditions and you have educated people you can absorb these things and you will have economic growth. Educational openness to the world, the absorption of ideas and technology are very fundamental forces. They can be delayed by political disaster but they cannot be stopped.”

There are plenty of non-political things that can tank the economy, like a housing bubble, demographic decline, foreign financial collapses, protectionism, environmental catastrophe, natural disasters, etc. But contrary to what the Party would like everyone to believe and what all those (totally existent) foreigners who dream of seeing China in chaos believe, political upheaval doesn’t seem to be a serious threat to the economy or the common person’s well-being.

This doesn’t necessarily apply to developed countries as strongly though. Once they’re developed they rarely see more than 5% growth in a given year and become more vulnerable to market and political fluctuations, as you can see in this chart of the US and Japan:

But it will be a long time before China gets to that point as a nation; around 40 years according to Dadush. So China could bounce back much more easily from any political crisis than these nations could.  A prolonged civil war might be different, but that’s very unlikely. Even then, it wouldn’t be as destructive as one would imagine thanks to the fundamental global business presence.

Whatever replaced the CCP would certainly have significant long-term economic impacts, but the simple act of a power switch (non-violent or otherwise) would hardly knock growth and the institutions supporting it out of place. Even in a country that, as we all know, has its own “special circumstances.”

I’m sure economists (which I am not) and others can poke holes in this theory. Tunisia isn’t bounching back quite like Egypt, but it wasn’t growing as much to begin with either. And Libya is still in a drawn out civil war (again, extremely unlikely in China) and its recovery is yet to be seen. But none of these countries come close to having the business apparatus and distribution network in place that China does, which are both hedges against “chaos.”

However, the most important thing these economic charts don’t address is happiness during and after a revolution, which obviously doesn’t equate with economic stability. Economic growth still allows for unchecked corruption, wealth inequality, trampling of human rights, perversion of justice, unfair trade practices, arbitrary violence and wholesale withholding of important information. It would indeed be a shame if the Chinese people were ever subjected to that.

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Chart Sources: World Bank data powered by Google Public Data Service (a great resource for comparing countries’ economic and social aspects)

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Tom from Seeing Red in China just ran a great piece called “This system cannot last forever – China’s coming change” where he uses nice graphs and timelines to illustrate what many already suspect: the Communist Party’s economic-based legitimacy check is almost fully cashed. This graph tells the story best:

This shows that, in spite of incredible economic growth, Chinese aren’t any more satisfied with their lives now than they were 12 years ago. The post-1979 boom that lifted people out of poverty is bringing diminishing returns to life satisfaction.

It makes sense. Compare someone who lived through the Japanese invasion and Mao’s idiotic campaigns to someone born in the 90’s who grew up watching American movies and having their teeth brushed for them. The latter, which takes their economic standing for granted, could very well be the undoing of a Party that derives its legitimacy from pulling the nation out of poverty. So if that happens, what comes next? Here’s a few possibilities:

Scenario #1: The Party says, “This absolute power thing has been swell, but now it’s time allow real freedoms, which will move our economy up the value chain. It’s also time to give the public a real check on our power by allowing them a mechanism to throw out those who don’t represent them.”

It’s possible, but anyone who’s studied basic world history can figure out about how likely that is. Especially given that the only Politburo member who even pretends to want substantial reform is leaving next year.

Scenario #2: Give Marxist ideology another whirl.

That crapped out about the time Mao died, but the New Leftists are trying to revive it as a source of legitimacy. This might make for some fun nostalgia, but not very likely to sustain the government on its own. And it’s not like the CCP hasn’t been vainly trying to convince the public that socialism is still relevant all along anyways.

Scenario #3: That just leaves the CCP’s fail-safe pillar of legitamacy: Good old-fashioned nationalism. Anti-Japanese, and to a lesser extent Anti-American and European nationalism have worked wonders thus far. The “Century of Humiliation” narrative has left latent animosity toward these places and embedded a sense of gratitude toward the Party that rescued the country from the foreign imperialists.

But how far can this same old tactic go when it’s not accompanied with economic legitimacy? Not very. If the Party thinks its power has a clear and present existential threat, desperate times might call for desperate measures – wag the dog-type measures that seek out the nationalistic furvor a war brings.

The tried and true enemies of the US and Japan wouldn’t work for this. Either case would be economic suicide and put the Chinese Navy up against the US’s. Getting an naval ass-kicking wouldn’t do much to endear the Party to the people.

There’s Taiwan, which might make more sense. But again, economics and the possibility of a US military intervention makes it unlikely – on top of the fact that it could turn into a drawn out occupation with a resistant population. A failed attempt at taking Taiwan would just make matters worse for the CCP.

So that just leaves the South China Sea with a big target on Vietnam. China claims pretty much the entire sea, so military enforcement of these claims would be seen as perfectly legitimate and non-imperialistic by Chinese. The international community would cry foul, but if it got to this point, a bad reputation would be the least of the CCP’s concerns. And American military intervention on behalf of Vietnam would be tough sell to the broke American public.

Vietnam regularly patrols the sea, so getting a USS Maine-like incident to spark a war wouldn’t be hard. China is already the biggest baddest navy in Asia and has just rolled out its new aircraft carrier. It could be combat ready in five years, with a supporting fleet in ten – right about the time China’s economic growth is expected to slow considerably and the post-90’s kids will be adults.

Keeping the war naval would keep civilian casualties low, the PLA would get to show off its new toys, victory would be swift, and the average Zhou in China would get a patriotic hard-on. It would be the Persian Gulf War on steroids.

There would even be the added benefits of complete control over the sea’s resources and a warning to other neighbors that China is serious about its claims.

This strategy would only be a temporary solution to the Party’s legitimacy predicament though. The Persian Gulf War sent George H.W. Bush’s approval rating soaring to almost 90%…then he lost his re-election bid the following year. But, as James Fallows put it, China’s government is basically guiding a raft down white water rapids. It does everything it can to avoid the rock in front of it, which just allows it to confront the next rock behind it.

Wagging the dog would buy the government time, which would allow them to regroup and think up the next hair-brained scheme, which if history (or present) is any indicator, would involve a Stalinist clampdown. OR they could go back to scenario #1 and initiate substantive reforms. Hell, they could even do that now and avoid the whole thing. But if I were Vietnam, I wouldn’t get too attached to the South China Sea.

The Catholic church and Communist Party are once again at odds as China recently ordained a bishop that wasn’t approved by the Vatican. Both sides are especially touchy when it comes to sovereignty issues. The Vatican thinks it has sovereignty over all people, souls and things Catholic. The Communist Party believes it has sovereignty over everything within China’s borders…and often things well beyond. The Vatican is the only European country that never bothered to recognize the PRC diplomatically (it still recognizes The Republic of China, AKA Taiwan), which doesn’t help matters either. I always get a kick out of seeing these two squabble, because stubborn sovereignty claims are scarcely the only thing they have in common. Here’s a few similarities I can think of off the top of my head:

Communist Party

Catholic Church

Vast paralyzing bureaucracy

Vast paralyzing bureaucracy

Regular self-criticisms to higher officials make members feel inadequate and insignificant in the face of the benevolent Party

Regular confessions of sins to higher church leaders make members feel inadequate and insignificant in the face of the benevolent church

Assures outsiders that corruption and graft can be effectively combated internally without external oversight. Has been failing for decades.

Assures outsiders that child molestation can be effectively combated internally without external oversight. Has been failing for decades

Dogmatic political slogans regularly etched into the minds of school children with mind-numbing songs and chants

Dogmatic scripture regularly etched into the minds of church goers with mind-numbing songs and chants

Ideology and depiction of history full of contradictions and outright nonsense

Doctrine and view of history full of contradictions and outright nonsense

Used Cultural Revolution to weed out and kill millions of non-believers…along with countless bystanders

Used Crusades to weed out and kill millions of non-believers…along with countless bystanders

Creepy habit of displaying preserved corpse of founding leader

Creepy habit of displaying preserved corpses of many leaders

Why aren’t they better friends?
If you can think of other things they have in common, please add in the comments.