Confucianism and Trade Imbalances

The enlightened dictatorship of money

Three ways China will disappoint in 10 – 20 years

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We’ve all heard predictions of China’s collapse, and it doesn’t appear to be happening.  They will make themselves a world economic power in some way or other (as the second-largest economy, they really already are) but they do so by covering up certain problems rather than solving them.  Here are some things that surprisingly are really not necessary for development, even if China doesn’t really win any awards for developing without them.

1) They will never really develop soft power.  Sure they have done some innovative things in their relationships with smaller countries – basically buying them off – but when the money runs dry, there won’t be too much else there.  Whenever they’re not looking, these countries will form their own opinions.  (Note that at the ASEAN conference, which disintegrated over the China territorial issue, there was really only one country, Cambodia, on China’s side.)  At the end of the day, soft power comes from listening, not expanding communications networks to deliver whatever the latest propaganda message is.  And I really doubt that they would address certain concerns like, for instance, the biggest famine in world history, instigated by the Communist government.  …Or other minor details.

2) They won’t become a reserve currency.  Even the preliminary step of internationalization is quite controversial, if you read through the lines.  With this accounting standoff, for instance, there seems to be a strong sentiment that Chinese capital should stay in China.  Well guess what?  Chinese capital is denominated in RMB.  There are really two ideals at stake here, national status and national protectionism, and they are mutually exclusive when it comes to capital movements.  In fact, it is not at all clear if Chinese policy makers even knew what they were signing up for in the first place with this internationalization thing.  They seem to have two sleek sounding propaganda slogans on this issue, with messages that are diametrically opposed.

3) They will have mafias – even state linked ones – running around inside their borders with immunity.  The Bo Xilai thing was just the tip of the iceberg.  All East Asian countries seem to have similar issues, due to underdeveloped legal institutions, but with China, due to the size of its government, I can see the potential for corruption to get much crazier in general.

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Written by Maofucious

July 22, 2012 at 12:34 PM

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