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Enfrentará a China uma revolução de expectativas crescentes?

Nov 11, 2019 Barry Eichengreen

ZURIQUE – Durante mais de uma década, a China foi responsável por um quarto, ou mais, do crescimento económico global. Com a sua economia a navegar actualmente por mares revoltos, a questão reside em saber se este desempenho impressionante continuará.

As Cassandras que apontam para a possibilidade de um abrandamento do crescimento chinês invocam regularmente o espectro da armadilha do rendimento médio. Agora que a China já não é pobre, alertam, as taxas de crescimento diminuirão, tal como aconteceu em quase todos os países que atingiram o mesmo nível de rendimentos. O crescimento é dificultado, observam, quando deixa de poder basear-se na acumulação pura e simples de capital. Agora, tem de basear-se na inovação, que é difícil de promover numa economia que ainda é dirigida centralmente.

Depois existe o pesado endividamento do sector empresarial. Uma diminuição dos resultados poderia tornar insustentáveis muitas destas dívidas. Independentemente das consequências serem incumprimentos em série ou uma enxurrada de resgates que transfiram a responsabilidade para o governo, o resultado enfraqueceria as finanças do país e minaria a confiança dos investidores.

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0 Comments on this paragraph, 6 Comments on this article

Hui Chung Ying Nov 15, 2019

Really would love the author to provide more substantive evidence of the weakening of Xi's power and cracks in in his leadership and thus "Chinese politics and governance will not be the same after the COVID-19 outbreak" as asserted, which presently rest on a single premise that Xi has not made a lot of public appearances in recent months in the article. On the other hand, the high level of societal mobilisation and strict control of human mobility -- down to the village level, in combating the epidemic while everyday supplies with the exception of facial masks being met for a population of 1.4 billion under such circumstances without a high level of stress, suggests a government very much in control. If the author could provide more insight on, say, the economic impact of the epidemic - right at this difficult time of economic transformation and trade war, or the factional struggles or at the very least observations which point to an unhappy and angry population (hard evidence is difficult, I know), and less rhetoric, it would be much more interesting. (by the way, Hubei and Wuhan top leadership has been replaced, and a guy holding a position similar to CDC advisor / head in Hubei is under "attack". So heads have rolled and will roll, Chinese style, just not so sure it gonna be Xi's.)
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Andrew Benington Nov 13, 2019

Hong Kong demonstrators are emboldened by the cultural change created by the one child policy.
China’s one child policy, 1979 to 2015, has created an adult population of under 40s in the coastal and eastern economic powerhouses who are single children. Each 10-40 year old is expected to support 2 parents, as couples they have to support 4 grandparents. Socially and politically they are untouchable.
The adults under 65 are the parents allowed only one child. For them each of the under 40s are their precious single child.
This single child culture is about to transform China from authoritarian state to a rule of law democracy. When the mass demonstrations come, the authoritarian state will evaporate.
- Andrew Benington Nov 13, 2019
  
  The CCP is divided along the same progressive-conservative axis as western democracies. Formalising that divide and introducing representative democracy while maintaining social order and good government is an enormous challenge. The CCP is capable of making this transformation and of taking the population with it.
  Hong Kong proves the window has begun. Move with the tide and China’s future is one of peace and prosperity. It is a challenge and a great honour to have the opportunity to shape the future of ones country.
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Joe Bu Nov 12, 2019

“While China is moving rapidly up the global per capita income league tables, its ranking for infant mortality, at 122nd, remains shockingly low.”

Yo Barry, you going senile or something? Low ranking infant mortality is good. China’s infant mortality is 12 per thousand, vs 65 for the world average. China’s per capita PPP GDP of $18k is at the world average. So China is outperforming in infant mortality by a wide margin.

That’s a big wiff Barry. Aren’t you supposed to be some distinguished egghead?
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j. von Hettlingen Nov 11, 2019

Amid mass protests in many parts of the world, Barry Eichengreen says China is not immune. While widespread protests against the leadership and the Communist Party (CCP) are unlikely, many Chinese do have a litany of grievances against their government. The leadership is aware of the challenges facing the economy and of popular unrest in the event of a deep recession. Ordinary Chinese accept Xi’s consolidation of power and the role the CCP plays in their lives, in return for prosperity.
Recent data shows Chinese GDP grew at its weakest rate since the early 1990s. The author says these are warnings of the dreaded “middle-income trap” – the tendency of fast-growing developing economies to revert to a much weaker growth trajectory just when they get their first whiff of prosperity.
After decades of double-digit growth, China is no longer a poor country. Future growth is going to be “harder” and rates will fall, when they “can no longer be based on brute-force capital accumulation.” Now, growth “must be based on innovation, which is difficult to bring about in an economy that is still centrally directed,” according to the author.
Another problem is China’s “heavy debt load” in corporate sector. “A decline in earnings could render many of these debts unsustainable.” As state-owned enterprises are behind the corporate debt, the government has to carry the burden of their bailouts. This “would weaken the country’s finances and sap investor confidence.”
China’s total corporate, household and government debt rose to 303% of GDP in the first quarter of 2019, from 297% in the same period a year earlier, as Beijing steps up support for the cooling economy while trying to contain financial risks.
The author also points out that an aging population will usher in a shift in “investment from industrial capacity to social services. This will imply slower growth insofar as productivity chronically lags in the service sector.”
Not to rule out is the impact of an allout trade war with the US. Since Trump is a “tariff man,” he might seek to “deflect attention” now that he is sensing the heat of the ongoing impeachment inquiry. “Like any autocrat meeting resistance at home, he will marshal support by focusing on a foreign opponent.”
Despite the Cassandras of an economic downturn, social unrest is “unlikely,” because the “Politburo continues to deliver improvements in living standards – and its security apparatus is formidable.”
As protests across the globe show, they are “spontaneous, sparked by small matters, like a hike in fuel prices or metro fares. But, because those small matters are indicative of the government’s disregard and even ignorance of popular concerns, they morph into larger movements. These movements are leaderless, relying as they do on social media, which makes them hard to behead, but also causes them to evolve in unpredictable, even violent, ways.”
However, mainland Chinese share a number of grievances with their peers in Hong Kong. Now they are watching the development there closely. Apart from income inequality, lack of job opportunities and social mobility, rural Chinese complain about land grabs, and discrimination in urban areas, where the house-price-to-income ratio is high on the whole. While Hong Kong ranks third among 95 countries, China comes fifth.
Since Xi is the most powerful leader since Mao Zedong, jailing dissidents and political enemies, he faces little opposition. He is the standard-bearer of China’s “Red” aristocrats and apparatchiks, who want the CCP to control markets and corporations, and every aspect of the society, monitoring people’s behaviour with the help of technology, such as artificial intelligence. This political and economic repression is increasingly at odds with a rising Chinese middle class that wants a greater voice in how the country is governed, and a dynamic and resilient economy and society.
In March 2012, the outgoing prime minister, Wen Jiabao, made his strongest public call for change, arguing that China could risk another "historical tragedy" like the Cultural Revolution unless it enacted political reforms that had reached a critical stage.
As China is the world’s second largest economy in an interdependent world, no one wants Beijing to fail, due to the ripple effects on the rest of the international community. But the leadership has to have its people’s best interests at heart, not its own political ambitions and gains. Leaders must bear in mind the ancient doctrine of "Mandate of Heaven" - if a king ruled unfairly he could lose this mandate, which would result in his downfall.
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Godfree Roberts Nov 11, 2019

The hoped-for collapse of China is still a long way off, if this article is any indication:

"the corporate sector’s heavy debt load" is offset 4:1 by the corporate sectors liquid assets.

"the country’s aging population" currently retires at age 55. Raising that age and continuing the automation of the production (currently one-fourth of South Korea's) will handle that.

"popular unrest"? The PRC has the most trusted government on earth. Americans trust their government only one-third as much.

"broader concerns about housing prices"? Why be 'concerned' when 90% of people own their homes and 80% of them have no mortgage?

"concerns about the quality of health care"? Healthy life expectancy at birth is higher in China than in the USA.
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