In a recent forum on Australian TV, participants debated if China was headed for a boom or bust. Many commentators around the world now regard continued economic growth of around 10 percent as a given -- and with it, the continued political monopoly of the Chinese Communist Party (CCP), which is credited for the economic miracle.
It was therefore interesting to hear a number of informed participants in the studio audience express a healthy skepticism about those claims.
The optimists believe that the 21st century belongs to China. It will increasingly become the engine of global economic growth, benefiting not only itself but the world. They are not concerned about the imbalance between its politics and economics, with the CCP wielding a monopoly on power. In their view, political pluralism would lead to social collapse, an argument generally made by the government in Beijing.
Of late, some China experts or sympathizers have come to argue that economics has simply superseded politics in China.
Economics, in their view, is the new politics, and hence all the fuss about political pluralism is irrelevant.
The new history textbooks for high school students in Shanghai have virtually eliminated China's political history from their course content. According to a New York Times report from Beijing, "Socialism has been reduced to a single, short chapter in the senior high school history course. Chinese communism before the economic reform that began in 1979 is covered in one sentence. The text mentions Mao Zedong (
China's history is now all about "economics, technology, social customs and globalization." In other words, an ancient civilization going back 5,000 years was given an abrupt new beginning in 1979 and 1980, when economic reforms began.
At the level of global politics, China's presumed emergence as a superpower is seen as a useful corrective to US unilateralism.
However, notwithstanding the rosy picture of China's future, there are many danger signals discounting such a scenario. First of all, there is an assumption that China's economic growth is likely to continue at 10 percent or more for the foreseeable future -- which doesn't seem sustainable.
The economy is overheating, and might be headed for a crash. In a recent survey by Caijing magazine, 56 percent of Chinese economists saw signs of overheating, up from 15 percent in April.
But even if this weren't the case, the economy's pace is creating various social and economic imbalances. There are sectoral imbalances resulting from misallocation of financial resources. For instance, state control of financial resources has resulted in a massive transfer of funds to the property sector, leading to an overheated real estate market. Indeed, there is a view that this is where the crash might occur, creating a ripple effect.
Inefficient use of financial resources in real estate and elsewhere has created the problem of non-performing loans. If China were an open political system, there would be a run on its banks.
The misuse of funds is also creating severe social problems. The overheated real estate market, fueled by funds which might be productively used elsewhere, is putting a financial squeeze on the urban middle class. As beneficiaries of the urban economic boom, this class is the CCP's support base.
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