During a time of economic turmoil when millions have lost their jobs, 20 percent of young people are unemployed, 45 percent of those who graduated last year have yet to receive a job offer and 11.6 million new graduates are set to enter the job market, Chinese President Xi Jinping (習近平) is sending the Chinese People’s Liberation Army to conduct military drills around Taiwan.
The posture of invading Taiwan is simply to show China’s displeasure over the meeting of President Tsai Ing-wen (蔡英文) and US House of Representatives Speaker Kevin McCarthy.
History records monarchs constructing majestic palaces as their people starve. The parallels display the depravity and cruelty of the Chinese Communist Party. Half-finished construction projects in China have effectively bankrupted millions of households. Lockdowns amid the COVID-19 pandemic have chased foreign firms out of the country. The policy of advancing state enterprise and limiting private industry has reduced Chinese entrepreneurship to street stalls.
The greatest economic accomplishment in human history is turning into an economic nightmare. The Chinese dream has driven many people to desperate measures. How sad it was that three young men and one young woman recently jumped to their death at the Heaven’s Gate Mountain scenic area.
Few would have dared believe that political power and monetary strength could in such a short time lift so many out of poverty or imagined that it could lead to tragic consequences.
Under an authoritarian regime, political power can guide financial investment to economic miracles, provided that the two are in harmony.
In a capitalist economy, the natural selection of strong enterprise and the “creative destruction” of inferior companies constantly improves efficiency, productivity, quality and even labor relations through economic evolution. While occasional recessions or corrections seem to be inevitable, capitalist societies have learned how to prevent mistakes from piling up to cause a great depression for almost 100 years.
The economic woes in China can be attributed to two mechanisms of revolutionary nature: defying market forces with political will and the sudden death of enterprise freedom.
Due to central planning, nonperforming assets grow, resulting in ghost cities.
Moreover, the profit driven by the revenue-hungry local governments has ended up with messy unfinished apartments all over the country. In one estimate, the real-estate bubble is so incredibly large that every two people in China have to own and live in one huge building of hundreds of apartments to maintain their utilities. The political force in effect enabled the grand-scale Ponzi scheme not only in these unfinished buildings, but also the disappeared bank deposits.
Under the political banner to advance state enterprise, many business leaders were asked to resign and many companies were stopped, like those in the video game industry and the online learning sector. The sudden death of enterprise freedom by the institutional tyranny breaks the fabric of entrepreneurship.
Moreover, the war wolves are fostering distrust about China’s reliability as the world’s factory.
Former Singaporean prime minister Lee Kuan Yew (李光耀) believed in China’s intention and likelihood to rise to be the greatest power in the world.
However, it is doubtful that without institutional discipline by checks and balances, without freedom for entrepreneurship, without democracy to enable harmony of political will and market force, that China will be able to even keep its people employed, let alone its economic and military might.
China must choose democracy and freedom to feed its people.
James J.Y. Hsu is a retired professor of theoretical physics.
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