The China Economy Explained

Some people think that China’s march to economic world domination is inevitable. However, this may not be the case as the economy of China is resting on shifting sands that if the central government loses control for an instant the house of cards could come tumbling down and then China will face a depression the likes of which has never been seen before in the history of the world.

In this article, we will look into the secret of the Chinese economy and some of its weaknesses as well. Though China is striving to become #1 in world affairs and it may help catapult China’s largest economic partners into rapid prosperity China’s economy is a very fragile thing that is not as a “sure thing“ as many would have you believe.

So how did China Economy get so big so fast in such a short period of time?

That is the first topic we will cover first, then we will show some of the potential weaknesses that China has to contend with.

China is a homogeneous society

Even though there Are 56 ethnic minorities in China, one makes up over 90% of the population and that controls the reins of power is the Han. If you understand this, you will see that this creates a monolithic structure that ensures stability in both foreign and domestic affairs. The culture itself is hierarchical and everyone pays respect to those above them whether by position or by age. The idea of family is the glue that holds China together and familial bonds have what have held China together over the last few millennia. Everything in Chinese society revolves around family, children and the rearing of them is one of the main driving forces of Chinese society.

All you have to do is walk into any shopping center and you will see the massive amount of goods aimed at the young in China. Whether it is baby food, toys, and clothing, China’s parents spare no expense in their Children’s wants and needs.

This has caused some problems as the children of china are what we in the west would call “spoiled rotten” and they can do virtually no wrong.

Therefore, this can be one of the society’s stumbling points in its long-term development and China’s relations with other nations as these princes and princesses grow to adulthood.

China’s Central Party Structure is hierarchical and self-perpetuating

Following the teaching of Chairman Mao, China has followed a course laid out by him and his successors in a manner that is almost incomprehensible by Westerners.

Party members not only study Mao’s writings but those of the leaders who followed him later.

They not only study his word but they also memorize it, they can repeat it verbatim, and write it out word for word.

This is taught in all schools and those who enter the party are expected to be able to spout the words of the leadership without hesitation if they want to progress in the party and move up the hierarchy.

That is not to say they have no originality or creative thought. Their main focus is the party and the defense of the homeland against foreign influence.

They take this very seriously, as witnessed by their dogged determination to reclaim the former borders and lands lost during their “Hundred Years of Shame” When the 8 powers divvied up China into chunks run by various foreign municipalities. The major powers that did this were England, Russia, Italy, France, Germany and even the US to a lesser extent. They have not forgotten and they are working hard to get payback with interest.

The South China Sea, for example, will be claimed by China within the next 10 years either by negotiation or force as the Chinese see this as their manifest destiny. American politicians scoff at this but if you watch what is going on Cheese society and the alliances they are building up are all geared to making this a reality.

Their recent build-up of strategic islands gives them the ability to command the entire region and deny the West’s access to these parts of the world as they have developed the technology to counter America’s carrier task force policy with Area Denial Weaponry (ADW) and behind the scenes negotiations with America’s leadership.

Their quest for a “Blue Water Navy” also shows their determination, as you look that the bulk of their fleet and resources are focused to the south and east toward Australia.

Economy that has to pay almost nil in R&D costs

Whether by hook or by crook, China has profited by getting almost for free what the West has paid trillions of dollars in technical progress, which we used to build our infrastructure our economies with. They send their students abroad and while they are in our universities, they are often asked to participate in Research & Development projects and after graduation, they are snapped up by the very companies and later these same students develop the tech for western companies.

However if you ask any of the millions of these Chinese living in America today, what their nationality is and they will answer Chinese, not Chinese-American as you would expect. Therefore, when they travel home they think nothing of taking all that they have learned or studied home, start their own businesses, and use everything they have learned in the West to enrich themselves and all with the blessing of China’s government.

Obama recently OK’d the issuing of 10-year tourist visas, which will provide even more opportunity for the Chinese to visit and take home anything that they glean from our libraries, colleges, and universities.

This has opened a doorway to allow even more of our intellectual resources to funnel its way back to China’s economy.

You can blame it on cyber crime, but in reality, we ourselves, have opened up the door to allow our tech to go east.

Some would say it works both ways. However, this is not the case as Chinese can read English and Mandarin. This bi-literacy rate has almost reached 90% in recent years and virtually no one in America can read even a Chinese newspaper as it requires a minimum of 5-6000 characters, which would allow the reading and even beginning to understand “China Daily.” (One of China’s largest newspapers)

Our universities teach about 600-1000 of these characters a year and most students never get the hang of reading Hanzi. (The written language)

The Chinese loyalty is to China first and their philosophers believed that deception is a sound strategy when dealing with anyone “Not Chinese.”

This also means you could be married to a Chinese national, have children, and even live in China, but you will never be taken into their confidence as you are not Han.

There is an adage about only believing 50% of what you read in American newspapers. You should try to read a Chinese newspaper and see the dichotomy of what really being said. Our leaders really have no idea what is really going on in China and that goes the same for business, and the news media as well.

You would be surprised if you read the articles that are published for western consumption and then read the Chinese version of the same story. It is truly an eye-opener.

So does China have any weaknesses?

So far, we have touched on only a few of the things, which China is doing right (In their eyes.) to advance their country and we have not even gone into the worker’s mentality at all. This in itself gives China a tremendous edge over western societies. (We will save that for a future article.)

China, however, has some very glaring weaknesses if you look hard enough.

Even though the county has a population of over 1.3 billion, not counting the hundreds of millions of Chinese living and working abroad, 6-800 million of these people are making far less than the 3-400 million who live in coastal cities. The best being Shanghai, Guangzhou, and Dalian, this sets up a large underclass. One that is not benefiting as much from China’s rapid modernization, as those already living in these 50 or so Silver cities and the 13 Golden cities as they are called, which enjoy a high standard of living. This is China’s way of classifying which are the best cities to live and work in.

This could give rise to a social struggle similar to what occurred in America in the 1960s on a much larger scale. This is why the Party spends a lot of its time shunting resources to give appliances, TVs, and even computers to the rural areas to appease the farmers who are in the majority in terms of numbers. If they are not handled with kid gloves, they could overturn the apple cart. China would also like to make use of this vast population but education is the main sticking point as there still are not enough teachers to work in these areas.

This keeps the upper leadership up late nights making sure they head off any hot spots before they occur.

Students want more

The tip of China’s spear is their children and the kids in college want better schooling, the ability to live, and work where they will at a high wage.

I have been watching this for over 10 years, the students are becoming a driving force once more, and the government now has to answer their wants now, as they are the future of China’s continued progress.

This too becomes a future problem that could derail China’s plan to overtake the US in the next few years.

Overcrowding of the coastal cities

Since the best jobs are in the coastal cities, there is a migration of people from the rural areas to these centers. As the people continue to migrate to these centers of better living and higher pay, the city leaders are becoming hard pressed to keep the standard of living at the current levels, as more people demand more resources and amenities. This overcrowding is bringing the quality of life down in some cities already.

If this situation is not addressed, the house of cards that is China’s economy could come, tumbling down.

Environmental Concerns

President Obama has pledged to cut America’s “Carbon Footprint.” China is maintaining that they are still developing and as long as they continue with this claim, they will be largely free of any censure or condemnation. Especially since they have used their “Soft Power” (Money) to make sure public opinion is on their side. However, there is a problem with water and air quality that China will need to deal with quickly to keep air quality and water quality at a livable level.

If this is not addressed China’s will become a wasteland in 20 to 30 years.

Final Thoughts

China is a juggernaut no doubt but it is one that is balanced on a knife’s edge. One wrong move by the central government could spell disaster for China’s economic growth and survival if any of the things that have been mentioned today fall out of alignment China could end up like America and fall into recession and stagnation.

This would not reflect well on the government. However, what is worse is that it could also have drastic consequences for the rest of the world as well, as most everything that is manufactured today is coming to our stores and via Amazon deliveries stamped “Made in China.”

So if China goes into recession so does the rest of the world as well.