16 March 2012

China's Big Gamble: Will Beijing Wait Too Long to Prevent Collapse?

Washington Post
This video interview with Beijing-based economist Michael Pettis display's a more rational and sober view of China's economy than is typically available via the skankstream. As Pettis discusses, China must choose whether to take its medicine now, or to wait 4 or 5 years and be consumed by the aftermath of its neglected choices.

It is quite possible that the Beijing leadership -- both the current leadership and the leadership soon to be put in place -- is waiting to see whether Barack Obama is re-elected as US President. If Obama is re-elected, Beijing may feel safe in putting off its difficult decisions for a few more years, knowing that China is unlikely to be challenged or confronted by the Obama administration in any meaningful way. In addition, should Obama lead the US for an additional 4 years, Beijing is likely to gain strategically in comparison with an America clearly in decline under the Democrat.

But what might happen, should Beijing take too long to correct past mistakes and current policies? Perhaps another Beijing based economist, Patrick Chovanec, illustrates the danger best with his "Nine Nations of China" map:
Nine Nations of China
While Chovanec is careful to deny that he foresees an actual breakup of China into these 9 distinct regional powers, his portrayal of the fault lines is intriguing.

Here is how the 9 nations might rank in population, should an actual collapse and breakup of the Beijing government take place:
Rank Country Population
#1 India 1,140,566,211
#2 The Yellow Land 358,790,000
#3 United States 304,059,724
#4 Indonesia 237,512,355
#5 The Crossroads 226,260,000
#6 Brazil 196,342,587
#7 Pakistan 171,852,793
#8 Bangladesh 154,037,902
#9 The Metropolis 146,850,000
#10 Nigeria 146,255,306
#11 Russia 140,702,094
#12 Shangri-La 131,520,000
#13 Japan 127,288,419
#14 The Back Door 111,510,000
#15 Mexico 109,955,400
#16 The Refuge 109,770,000
#17 The Rust Belt 108,740,000
#18 Philippines 96,061,683
#19 Vietnam 87,558,363
#20 The Frontier 86,320,000
#29 United Kingdom 60,943,912
#30 The Straits 59,080,000
#31 Italy 58,145,321

Sources: National Bureau of Statistics of China and U.S. Census Bureau

Patrick Chovanec

Some of the 9 nations are wealthier, more populous, and stronger than others, but even the smallest in population ranks above Italy and just below the UK. There are reasons why Imperial China has broken up into warring regions time and time again throughout recorded history. No one of intelligence believes that this process cannot happen once again.

It is indeed possible that China could view a continuance of the Obama government as a guarantee of continued loss of strength in the US, giving them at least 4 more years to begin working on the serious structural problems of the middle kingdom. It is difficult to say just how emboldened Beijing's strategists might grow, should US voters make such a choice in November. But it is likely that Beijing would wait for the maximum time, to allow for a maximum weakening, before making any fateful moves, such as an invasion of Taiwan, combined with a proxy EMP strike over North America.

And during that waiting period of roughly 4 years, China's own economic and political infrastructure is likely to be experiencing growing shock waves that will become more difficult to ignore. That should be a matter of concern to any China watcher, particularly in terms of how Beijing strategists might react should the natural fault lines of China suddenly deepen and tremble.


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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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