Pop literature on contemporary China tends to do one of two things: predict the rise of the Middle Kingdom as the world's newest and greatest superpower, or presage the country's implosion. With a title like The Coming Collapse of China, it's clear which side of the pie Gordon G. Chang has chosen to eat from.
By Chang's own admission, China is a place where hard facts are hard to come by and reliable statistics are nonexistent. So, in this book, which strives above all to base its doomsday prediction on facts, how are we to trust the basic elements of the author's calculation? The maddening truth is that ultimately we cannot be convinced of Chang's absolutist conclusion. No one has a clear grasp of what the future holds for this massive powder keg of a nation, though many have made careers by claiming clairvoyance on the subject.
But if there were ever a time when credible analyses of China's economic, political, social and military situation were crucial, that moment would have to be now. China faces a laundry list of grave problems a mile long, including adjustment to WTO regulations and rule of law, the peaceful transition of power set to occur later this year, rescuing its insolvent banking sector, placating hundreds of millions of unemployed and underemployed workers, restraining its war-hungry army during the next Taiwanese presidential election in 2004. The list goes on.
So, of all things, Chang begins his book with a long-winded section on Falun Gong, Uighur separatists in Xinjiang and Tibetan "splittists." These are the pet topics of Western writers in particular, primarily because they make for good copy and photos back home. But when Falun Gong followers get dragged by their hair and thrown into vans by plainclothes police officers on Tiananmen Square, bystanders don't rush to the old ladies' defense. That's because most Chinese don't care much for Falun Gong. The cult is not large enough in itself to bring down the government, nor will people rally behind it.
Likewise, Chang's impassioned arguments that the Internet will undercut the Communist Party's authority and may be the final straw on the camel's back seem like a weak echo of similar claims made in the 1980s. Orville Schell's Discos and Democracy, for example, suggested that because the Chinese were experiencing a new degree of economic freedom in the reform era then, liberal democracy was just around the corner. June 4, 1989 put paid to that possibility.
Furthermore, after the Tiananmen crackdown, the emerging middle class gladly accepted the tacit agreement with the party that they could enrich themselves as long as they made no more demands for political reform. Having coopted the middle class and intellectuals, in other words those with access to the Internet, the party has little to worry about from that side of society. Chang succumbs to the Western temptation to assume the Chinese desire freedom and democracy more than they do material wealth. The evidence since Tiananmen, however, points in the other direction.
The Coming Collapse of China is best when it focuses on China's ailing state-owned enterprises, or SOEs, and on the country's disastrous banking sector. If China is to collapse, it won't be because of subversive ideas entering via the Internet, nor foreign invaders, nor the Tibetan exiles rushing in from Dharamsala over the Himalayas. China's demise is far more likely to be triggered by an Argentina-style economic implosion due to gross incompetence and corruption, both of which China has in large measure.
Chang offers numerous real cases of successful companies that are forced by the government to absorb an ailing SOE against its will to keep workers receiving paychecks and off the streets. Shortsighted moves like this will be the death of the party when its enterprises crumble under foreign competition after WTO rules take full effect.
The party has also been digging its own grave, Chang says, by demanding that the four state-owned banks lend to the SOEs to cover up hundreds of billions of US dollars in annual losses. These loans, not surprisingly, are never repaid, which means that the loans are, in fact subsidies, extended to SOEs from out of the savings of individual Chinese depositors. And when a bank is only recovering 10 percent on most of its loans, its amount of cash on hand for withdrawals is hazardously low, which is why a run on any of the major banks could spell the end of the party.
"In view of all these trends, growth in the future will slow, consumer prices will decline, exports will stagnate, foreign investment will fall further, and the economy will stagger. Beijing can, by decree, postpone the onset of symptoms, but eventually the laws of economics will apply. ? We are but a few years, perhaps five, from that time," Chang says.
The economic picture, as Chang paints it, is bleak and worse still because the party refuses to tackle the problem head on, especially that of WTO accession. Hu Jintao
The sections of this book that concentrate on China's financial sector make the best cases for a possible meltdown in that country, but Chang has unfortunately padded his analyses with weak tangents on the Internet, social discontent and corruption as forces that will destroy the party. And even though Chang's evidence from the finance sector is made to seem scary, it curiously doesn't dwell on China's US$220 billion in foreign reserves, US$25 billion trade surplus over the past year and double-digit industrial production growth which, together, don't exactly ring of impending disaster. Not only that, but because China's banks are state-owned and their collapse would mean the party's collapse, Chang says they won't be allowed to fail. So, why all the talk of collapse in the first place?
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