IN AN industrial zone near Chengdu, the capital of Sichuan province in south-west China, a sign colourfully proclaims the sprawl of factories to be a “delightful, harmonious and happy district”. Angry steelworkers must have winced as they marched past the slogan in their thousands in early January, demanding higher wages. Their three-day strike was unusually large for an enterprise owned by the central government. But, as China’s economy begins to grow more sedately, more such unrest is looming.
China’s state-controlled media kept quiet about the protest that began on January 4th in Qingbaijiang District, a 40-minute drive north-east of Chengdu on an expressway that crosses a patchwork of vegetable fields and bamboo thickets. But news of the strike quickly broke on the internet. Photographs circulated on microblogs of a large crowd of workers from Pangang Group Chengdu Steel and Vanadium being kept away from a slip road to the expressway by a phalanx of police. Word spread that police had tried to disperse the workers with tear gas. In the end, as they tend to—and undoubtedly acting on government orders—factory officials backed down, partially at least. The workers got a raise, albeit a smaller one than they wanted. Managers’ wages were frozen.
Strikes have become increasingly frequent at privately owned factories in recent years, …Unrest in China: A dangerous year | The Economist
The global economy started to slow down by the end of 2007, although it wasn’t apparent at the time. It was obviously apparent by 2008. China then proceeded to stimulate its economy to buy time until the global economy could turn around in the next year or two. Except, that turn around never happened.
Fast forward to 2012 where we find our-self today. China’s stimulus is wearing off. The global economy is still fundamentally in trouble and teetering on the edge of the abyss. China is having difficulty growing at 8% or more required to keep social unrest under control. So, not unexpectedly, China’s unrest to starting to grow. Did China’s leadership really think it could grow at 8% or better forever? China’s consumers are not stepping up to the plate to take over. China’s leaders recognize that they are in trouble.
Apparently, the consensus of economists at Davos, Switzerland was that China’s state capitalism model represents one of the best ways to solve the economic problems in the west. These are the same guys that didn’t see the global financial crisis coming in the first place, but never mind. Now we need to look to China to solve all of our problems – either directly or indirectly. Apparently, the best way to drive your car is to only look in rear-view mirror. If you accidentally look through the windshield, then please ignore.
In nature the survival of the fittest rules the day. In economics failure brings a promotion. Those that actually saw the global financial crisis coming are generally marginalized because they aren’t team players – by daring to think differently. Why not fire the economists that didn’t see it coming – that is their job after-all, and put the in charge the economists that actually saw it coming? No, we get weak solutions by weak economists that are incapable of doing their job. The future is not going to be bright for China, and it is not going to be bright for the west. We are all going to follow Japan into economic stagnation until something comes along to push us all over the cliff.
The book below explains that China is a lot more fragile than you think.
China: Fragile Superpower
Once a sleeping giant, China today is the world’s fastest growing economy–the leading manufacturer of cell phones, laptop computers, and digital cameras–a dramatic turn-around that alarms many Westerners. But in China: Fragile Superpower, Susan L. Shirk opens up the black box of Chinese politics and finds that the real danger lies elsewhere–not in China’s astonishing growth, but in the deep insecurity of its leaders. China’s leaders face a troubling paradox: the more developed and prosperous the country becomes, the more insecure and threatened they feel. Shirk, a former Deputy Assistant Secretary of State responsible for China, knows many of today’s Chinese rulers personally and has studied them for three decades. She offers invaluable insight into how they think–and what they fear. In this revealing book, readers see the world through the eyes of men like President Hu Jintao and former President Jiang Zemin. We discover a fragile communist regime desperate to survive in a society turned upside down by miraculous economic growth and a stunning new openness to the greater world. Indeed, ever since the 1989 pro-democracy protests in Tiananmen Square and the fall of communism in the Soviet Union, Chinese leaders have been afraid of its own citizens, and this fear motivates many of their decisions when dealing with the U.S. and other nations. In particular, the fervent nationalism of the Chinese people, combined with their passionate resentment of Japan and attachment to Taiwan, have made relations with this country a minefield. The paperback edition features a new preface by the author.
China: Fragile Superpower
Susan Shirk gives her readers some useful tools to better assess the future behavior of a fast-resurging China after being “humiliated” for a century and a half (pp. 153 – 55, 185 – 87). Shirk clearly explains that Chinese communist power has two faces. China wants to be seen as behaving responsibly to foster economic growth and social stability (pp. 105 – 139). Shirk correctly states that actions rather than words will make it more credible. Establishing this reputation requires China to accommodate its neighbors, to be a team player in multinational organizations, and to use economic ties to make friends (pp. 109, 199, 223, 257 – 61).
In case of a major crisis, especially one involving Taiwan, Japan or the United States, China could show its other face by acting irresponsibly due to the absence of effective checks and balances of the Chinese system. Party leaders could recklessly play the nationalistic card again as they did with Taiwan in 1996 or with Japan in 2005 if they need to look strong domestically with other leaders, the mass public, and the military (pp. 10 -12, 43, 63, 69, 77, 139, 151, 173, 179 – 80, 186 – 90, 197, 205, 219).
The Communist Party has bet on jingoism since the 1990s because communism in China is a dying ideology in which almost no Chinese believes (pp. 11, 63 – 64, 145, 148, 164 – 70, 186). The Party implausibly claims that ordinary Chinese are unworthy of Western democracy because their country, unlike India, does not have religion to manage them responsibly (p. 53). Chinese leaders know that Chinese nationalists can turn against the Party if they appear too weak to deal with foreign pressures (pp. 61, 66, 173, 180).
Economic interdependence has had a somewhat moderating effect on the relationship of China with the outside world, including Taiwan, Japan, and the U.S. (pp. 24, 96, 145 – 46, 190, 195, 233, 241, 247). Due to their fear of widespread instability and their lack of political legitimacy, Party leaders, however, have not displayed much courage in taking unpopular measures such as enforcing intellectual property rights or stopping currency manipulation in trading abroad (pp. 26 – 27, 53 – 54, 60, 73 – 74). Chinese leaders are well aware that the increased protectionism in the U.S. against the fast-growing trade deficit with China and the rampant piracy of U.S. products in China are not politically sustainable, especially in case of a majority change in Washington in 2009 (pp. 25 – 26, 248). At the same time, Shirk correctly points out that the ongoing fiscal profligacy of the U.S. is weakening the country at the profit of China (pp. 26, 249).
Of all China’s challenges, the need for “social stability” overrules all other considerations, even it means sacrificing long-term diplomatic objectives for short-term domestic political gains (pp. 38, 52 – 54, 109, 148, 183 – 87, 197, 224, 234, 254 – 55). For the Chinese communist leaders and their families, losing power could result in the loss of their possessions or even their death (pp. 7 – 9). To keep its authoritarian grip on power, the Communist Party has articulated a three-pronged policy (p. 39):
1) Avoid public leadership splits
Shirk gives a useful overview of the “selectorate,” the group of Party members who have the power to choose the leaders, and the modus operandi of the Party (pp. 39 – 52). The Communist Party is not known for its openness in framing domestic and foreign policies (pp. 43 – 44). Patronage is essential for keeping the Party in power, which feeds an endemic corruption from which many communist bigwigs enrich themselves at the expense of ordinary Chinese (pp. 60, 68 – 69). Party leaders learn from the Tiananmen fiasco that destabilizing internal dissent can undermine the Party’s grip on power (pp. 48, 53, 162). Keeping elite contests for power hidden from the public is increasingly difficult as the audience-driven media are testing the limits on what can be reported (pp. 39, 50, 52, 55, 78, 183). Although China is a still a long way from having free mass media, resourceful Chinese increasingly give the Communist Party a hard time for censoring “undesirable news (pp. 82 – 83).”
2) Prevent large-scale social unrest
Shirk demonstrates with conviction that Communist China’s obsession with internal stability paradoxically makes the Party very sensitive to public opinion due to the lack of any democratic institution to allow ordinary Chinese to express themselves peacefully (pp. 52 – 53, 66). Shirk overviews with mastery the multiple possible threats to one-party-rule and which means the Party uses to either neutralize or reduce these threats (pp. 52 – 69). Paradoxically, the more developed and rich China becomes, the more insecure and threatened Communist Party leaders feel (p. 5).
3) Keep the People’s Liberation Army on the side of the Party
Unlike their predecessors, Mao Zedong and Deng Xiaoping, Communist Party leaders Jiang Zemin and Hu Jintao are less politically secure and have a greater need to keep the military satisfied to safeguard them from domestic rebellion (pp. 46, 73, 77, 158 – 60, 202). Communist Party leaders seem to have a harder time saying no to the military demands for weaponry buildups and aggressive policies (pp. 70, 75 – 76, 222 – 23). The senior leadership of the PLA uses the Taiwan issue as the paramount factor for getting more “toys” approved (p. 74). By covering foreign policy, audience-driven media are making it harder for Communist Party leaders not to treat foreign policy as domestic politics (pp. 78 – 104, 140 – 254). Furthermore, history is not on the side of China because rising powers are likely to provoke war (pp. 4, 9 – 10, 210 – 11, 219, 243 – 45, 261 – 69). All of these factors undermine the credibility of the “peaceful rise” that Jintao – Wen Jiabao have promoted since 2002 (pp. 108 – 09, 252).
To summarize, China’s behavior cannot be correctly understood without a proper grasp of the tectonic forces that have molded the country’s history, geography, and culture.
Why do dictators cling to power at all cost? Will leaders in China, and Russia too, cling to power at all cost – even nuclear war?
Any attempt to diagnose a defining psychological feature of dictatorship would be facile. But in the public record available on many of them — Stalin and Mao, Saddam Hussein and Gaddafi himself — one can begin to see patterns that shape a dictatorial personality. At least since the Office of Strategic Services (now known as the Central Intelligence Agency) commissioned a secret profile called “A Psychological Analysis of Adolf Hitler,” which was issued in 1943, psychologists have sought an explanation for the authoritarian mind. New research has brought us closer than ever to understanding how leaders become despots.
There are at least three explanations for dictatorial behavior:
1. Dictators are psychopaths.
This is the simplest and most seductive psychological explanation of dictatorship. It’s also the least helpful….
2. Dictators are paranoid narcissists.
Most non-dictatorial leaders employ subordinates who are empowered to question them. Dictators arrange their lives so that no one can play this role. …
3. Dictators are more or less normal people who develop mental disorders in the extraordinary circumstance of holding absolute power.
How does such a man become a monster? At this point, it’s tempting to invoke Lord Acton and say that absolute power corrupted Mugabe. But how, exactly? What is the mechanism by which power corrupts?
In a new paper called “How Power Corrupts,” a Columbia University team of psychologists suggest that power doesn’t change the psychology of powerful people but, rather, their physiology. Lead author Dana Carney and her team hypothesize that because power eases so many daily stressors — dictators never have to worry about driving a car or paying a mortgage — powerful people show persistently lower levels of cortisol, a hormone closely associated with stress.
The Psychology of Dictatorship: Why Gaddafi Clings to Power