The wisdom of the ancient Chinese proverb "when a thing reaches its extremity, it goes on the reverse course" (物極必反) is about to be demonstrated in China. For years, due to Beijing's control over its media, the outside world erroneously thought the Chinese Communist Party really had a firm grip on the country and its people. But cracks in the facade that Beijing authorities have tried for so long to present have appeared with increasing frequency in recent years -- and with China's WTO entry, the world is beginning to doubt the ability of the country's economic structure to cope with trade liberalization.
Falun Gong (法輪功) followers in China are among those bravely trying to break through Beijing's media blockade in order to challenge the regime. One of the most blatant efforts occurred on Tuesday in Changchun, Jilin Province, the hometown of Falun Gong founder Li Hongzhi (李洪志), where the programming of eight local cable networks was interrupted for almost an hour by a Falun Gong film. President Jiang Zemin (江澤民) has reportedly ordered the execution of those responsible.
That the cable-hacking occurred the same day Premier Zhu Rongji (朱鎔基) condemned the Falun Gong as a evil cult during a speech to the National People's Congress must have been especially galling to the Beijing leadership. The event reflects that the people's resentment against the communist regime is boiling.
Chinese-American Gordon Chang (章家敦), a legal expert on China investments, has predicted that China will collapse in 10 years. Chang has the background to know. He has lived in both Hong Kong and Shanghai, and his book, The Coming Collapse of China was based on observations made while handling investment and trade joint ventures between China and foreign firms. His bold prediction stands in stark contrast to the commonly-held view that China's economy faces a prosperous future. Chang believes that the baggage of state-owned enterprises and the autocratic regime makes the country ill-equipped to deal with the change and international clashes that will be spurred by its membership in the WTO.
China's agricultural sector will bear the brunt of the coming challenges. It already suffers from excessive manpower to the tune of 150 to 200 million people -- many of whom have been forced to become illegal migrants to the big cities. The situation can only get worse. At the same time, the parasitic state-owned enterprises continue to suck the blood out of the economy. They only survive because of government-ordered loans -- to a total tune of US$490 billion by some estimates. If one further takes into consideration the pervasiveness of government corruption, the notion of China becoming an economic powerhouse seems absurd.
The people of Taiwan can't afford to ignore these alarming developments, which should give pause to businesses thinking of investing in China and those urging greater cross-strait cooperation. While the market potential of China may be great, so are the risks, especially if the regime faces chaos. Can investors withstand such major devastations? The people of Taiwan should keep their eyes -- and their minds -- open.