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China: White water rafting through history

China industrialCHRIS OVERLAND

ADELAIDE – Over recent times I have been writing, almost to the point of tendonitis, that China’s decades-long ‘economic miracle’ is a present day replay of how all advanced economies have developed.

First, there is a dramatic acceleration as resources are mobilised in a large scale modernisation and industrialisation phase.

Accompanying this there are huge inflows of capital as the export and internal markets begin to expand at a furious pace.

The cavalcade of exploitation, duplication, speculation and eventually ‘creative destruction’ - the hallmarks of neo-liberal capitalism in full cry - assail the economy at the same time.

Then, just when everyone is happily imagining this stratospheric growth will continue forever, the economy hits the wall.

The ‘wall’ being the regular and inevitable limits of growth that apply when an economy matures, its competitive advantages no longer sufficient to encourage large capital inflows and most of its resources fully utilised.

This is the point where the distortions and problems previously hidden beneath the ‘rivers of gold’ begin to surface.

This is what just happened to construction company, Evergrande, a victim of many factors including its own reliance on debt which has soared to $400 billion and thousands of apartment properties that nobody wants to buy. Now it’s waiting to see if the Chinese government will save it.

And president Xi Jinping has many problems like this: a highly inefficient steel industry, an over reliance on imported energy and other resources, a vulnerability to capricious foreign markets and a relatively weak internal market for consumer goods.

If you read economic history, you’ll see that something similar – at various times has – happened to Britain, Germany, France, Japan, the USA, the USSR, Korea and it seems to be China’s turn.

The baffling thing is how leaders like Xi (and the many others before him) manage to convince themselves that their country is exceptional and can avoid the fate of those who preceded them.

Similarly, the various Sinophiles in the Western world evidently have no knowledge of history and so have come to believe that China is ‘special’ and will not fall victim to the same fate.

China is not ‘special’ or ‘exceptional’ in any sense other than that it has its own unique history and culture.

In the same way, Britain and the USA were not exceptional. Rising powers always wrongly attribute what turns out to be a streak of good luck to some inherent favourable characteristic about their country and its people.

It may be British ‘pluck’, ‘Yankee know-how’, Japanese fastidiousness, German organisation, Aussie willingness to ‘have a go’…. There may be some truth in them but they’re usually over-rated but persist only until they don’t work anymore.

China’s ‘economic miracle’ is not special, just history repeating itself ‘with Chinese characteristics’, and many observers have now correctly divined that all is not well.

British journalist Ambrose Evans-Pritchard related the full scope of China’s problem’s in the UK Telegraph two days ago under the headline, ‘China's energy crisis will rock the whole world’.

Evans-Pritchard refrained from predicting what will happen because he appears to understand that we are in the midst of one of those periodic ‘hinge’ moments in human history, the true nature and impact of which remains essentially unknown and unknowable. This is not fun but it is definitely interesting.

Evans-Pritchard himself has converted to cash 80% of his own “modest salaryman’s portfolio”, so he’s playing safe.

We are white water rafting the tide of history right now and who knows where we will end up or what rapids may await us?


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Bernard Corden

My Dear William,

"Every dogma has its day" - Anthony Burgess

William Dunlop

Whether in monetary form or in the ultimate political power form, greed often becomes the great leveller.

One need only look at history's repeated repetitions.

The late chairman for life, Mao, is one of the later specimens.

But, of course, the great leveller, The Grim Reaper, took care of him.

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