Mish, sorry, I do not gamble, so am very ignorant about poker terminology. Chips and bets are pretty much the only gambling words I know of<g>
I would assume the two hole cards are the things I bet which will go to China's favor? If they are, then my cards are (contrasting what Stratfor and Friedman claimed):
1) China will not have any national scale riot in the near future (in the next 5 years). Most of those 50,000+ riots a year happened in the recent years were related to the back pay and most of them attended by only a few people. Since last year, the gov. of all levels have really started to attend to the matter, and paid majority of the back pay before this Chinese New Year. And a lot of cities and provinces have also adopted some administrative measures to prevent this kind of problem from happening in future. So the social riot in China should be reduced this year.
Stratfor, like a lot of people in the US gov., has wanted to see China in chaos. So in my opinion they are confused by their own imagination from the reality. They have read too much into those small/unorganized demonstrations. Majority of Chinese, whether they are well-to-do white-collar workers, or poor low-wage earners, or those who are unemployed, are all busy with making money, so very few care about politics now. Some of them have to make money in order to survive, and some of them are busy with making more money in order to buy a BMW or a high-end apartment. It is true that the Chinese gov. was a little paranoid when Zhao Ziyang dead, but it is understandable that the gov. will do anything to maintain the society stable. Zhao’s death had not even been noticed by the majority of the Chinese, so it was completely a non-event, as much as those overseas political dissidents wanted to fanfare with it.
The social tension has been improved somewhat since last year as a result of some new policies adopted by Hu-Wen new administration. And they will continue to do the same in the coming years, and hopefully, the gap bet. the rich and poor will be narrowed somewhat, and dissatisfaction among the disadvantaged will be reduced.
2) There will no financial collapse in China’s banking sector like a lot of people from the West predicted. Chinese state banks will be undergone some major revolution, if not already, thus, bad debt/non-performing loans will be dramatically reduced. By the end of 2005, China’s banking sector will be in much better shape than what it is at the beginning of the year.
Chinese economy will slow down in the sectors targeted by the gov. , such as steel production. From March, all the iron ore imports need to have a state license. And this year all the steel plants which have <0.8 million tons of annual production will be closed down. There will be similar policy coming out in other overheated sectors.
The state banks will continue to be tight on loans, but the Chinese gov. will allow those private lending (usually with much higher interest) which are now “underground” to become open and legal (Chinese law has never ruled private lending as illegal). So the two will balance each other out, by and large, to prevent the economy becoming either too hot or has hard landing.
3) About the one-child policy: Only those who have lived in cities have actually practiced one-child policy since 1980. In rural areas (including all the rural migrant labor), 2 children are normal, and many couples have 3-4 children. One does not even go far, just the suburb of Beijing will tell you exactly that. So there will be no demographic crisis described like Friedman. Yes, the population structure will become older and grayer, but it won’t become a crisis. And 5-10 years down the road, the gov. policy may very well be changed into 2-child policy if indeed things looking bad.
The matter of the truth is: Chinese women now have to retire at 55 and men at 60. In case there is a labor shortage in future, the gov. can always raise the age for retirement by 5-10 years. What is the big deal??
4) Now about the profit: it is true that many plants in China have a very low profit, especially those sweatshops, which specialize assembling only. But those no-profit/low-profit plants will gradually be taken out by the market force. From this year, China will have formal bankruptcy law, and the state banks will stop holding bags for them. I read that more than 3000 (or more?) SOEs in China will be bankrupted this year, and 5 million workers will be involved. And all the small banks with bad performance and high proportion of bad/non-performing loans will be closed by the end of 2005.
To sum up, yes, it is true that China has a lot of problems, but historically speaking (we are talking about 2000+ years of history, China now is among those of the most prosperous periods. Yes, those who predict that Chinese economy will collapse may be eventually right since China, like other capitalist countries, will not escape from boom-bust cycle. But due to the size of the population, the macro-level control, and the mix of market/planning economy, the cycle for China might just be much longer than other smaller nations, and the landing might just be much softer than other economies. |
