15 December 2012

World Bank and US National Intelligence Council Agree: This Will Be the Chinese Century

When the bureaucrats and analysts of the World Bank and the US NIC agree that the US is on the way down, and China is on the way up, then it must be true, nicht wahr?
On Monday, the National Intelligence Council released its fifth “Global Trends” report. Among its conclusions, the study predicted that the Chinese economy would surpass the American one to become the world’s largest “a few years before 2030.” 
The report, a blend of analysis from the American intel community and experts in almost 20 other countries, is consistent with most assessments of the subject. The World Bank, for instance, made the same prediction (pdf) this year.
_World Affairs Journal

Predictions about the ultimate decline of the US -- and the end of a global Pax Americana -- ring true, as long as the nation follows its current political, cultural, immigration, and economic policies. But what about China's ascendancy?

... a growing number of China watchers have been raising the alarm that all is not well in the world’s second-largest economy. Indeed, any discussion of China these days would be far more foresighted to focus on the growing challenges and potential dangers that the new leadership is facing.

Leadership divisions and scandals...

Slowing economic growth...

Irresolvable territorial disputes...

Environmental disasters in the making...

No New ideas...

...Should China’s new leadership merely muddle along for the next decade, then the next turnover of power in 2022 may take place under much more unsettled and less promising conditions. How will the PLA respond to a China that is growing weaker on the world stage or one whose goals are being frustrated by other nations? Will the leadership stick together if growth continues to slow or debt loads increase such that financial crises plague the nation in the coming years? These are questions to which Western and Asian governments should be paying close attention, and they should be figuring out which metrics are most important for understanding China’s current trajectory. _TheDiplomat
It doesn't look as if the authors of the reports from the World Bank or the NIC took all of the listed factors into account when they made their predictions.

An interesting critique of the NIC report

One of the most disturbing aspect of modern scholarly reports such as those from the World Bank and the NIC, is the lack of intellectual depth and diversity that goes into them. Groupthink has wormed its way into all levels and functions of governments, intergovernments, and NGOs -- just as groupthink is in control of most academic and media institutions. And ideological groupthink is merely an excuse for not thinking.

Meanwhile, back in China, the new leadership appears to be doubling down on the mistakes of its most recent predecessors.
...the three principal reasons for China’s growth over the last three decades—continuous reform, benign international environment, and favorable demography—no longer exist. And Chinese leaders cannot just wave a wand and create new conditions for growth. In fact, the anti-reformist bent of the newly unveiled Politburo Standing Committee, the apex of Chinese political power, makes positive change look unlikely.

The triumph of the hard-liners means that, when China needs economic reform the most, the political system will be least able to deliver it. China has progressed about as far as it can within its existing political framework. Today, there is a growing recognition that fundamental economic restructuring cannot occur unless there is far-reaching political reform, reform certainly more ambitious than the “inner-party democracy” that leaders like to talk about. Yet meaningful political reform is completely off the table, as the disappointing lineup of the new Standing Committee makes clear.

China is now trapped in self-reinforcing—and self-defeating—feedback loops. In one of these loops, a slumping economy is creating a crisis of legitimacy. The legitimacy crisis, in turn, is causing a wide-ranging political crackdown. The crackdown makes reform impossible. The lack of reform prevents long-term economic growth. _ World Affairs

China's government is beginning to act as if it believes that the dragon is the new global hegemon. It is clear that China's leaders wish to throw the country's weight around on the global stage. The new leadership should be watched closely for signs of belligerent intent, as China continues a rapid build-up of its military infrastructure.
One of the elementary rules of foreign policy is when you are in a hole, stop digging. But judging by their recent behavior, Beijing’s foreign policy mandarins and national security establishment are clearly in violation of this rule...

At around the same time as the diplomatic uproar over the new Chinese passport design, the People’s Liberation Army Navy (PLAN) conducted its first successful landing and take-off operations from its retrofitted aircraft carrier. The televised test might have boosted the Chinese military’s image and self-confidence, but the message this event sent around the region, given China’s hardline position on territorial disputes and its neighbors’ fears of the PLA’s growing military capabilities, cannot be very reassuring.

But that is not the end of the actions taken by China recently that are likely to cost Beijing’s new government dearly. A few days before Japan’s Diet elections on December 16, which are expected to produce a right-wing government with deep antipathy toward Beijing, the Chinese government escalated its challenge to Japan’s territorial claims to the Senkaku/Diaoyu islands by flying an official, albeit unarmed, maritime surveillance plane over the airspace of the disputed islands. As expected, the move incensed Tokyo and can only be expected to bolster the Liberal Democratic Party’s (LDP) chances and lend more credence to their call for a tougher policy toward China. _TheDiplomat
The future is one of the most difficult things to predict. We know this, because predictions of the future are almost invariably wrong in many or most aspects.

Large bureaucracies in governmental, academic, inter-governmental, commercial, etc. institutions must continue to attempt to chart their paths ahead. To do this, they must continue to make future predictions -- even if they are invariably wrong in most meaningful ways.

What can you as a single individual do? Hope for the best, but prepare for the worst.


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Blogger J said...

The problem of large bureaucracies making predictions is that the report-writers's interest is not aligned with the oranizations's interest. All they want is to advance in the hierarchy. To have a sharp report the very life or freedom of the writer must be in play. Wladimir Lenin knew that if he misunderstood the workings of the Russian Revolution, he would end like his big brother.

Saturday, 15 December, 2012  
Blogger Bruce Hall said...

5 years ago, I wrote an article about "Why China Subsidizes Us." This was in response to various economists' views that it was a good thing that China was providing us ultra cheap labor and ultra cheap products... in effect, subsidizing our economy.


Sunday, 16 December, 2012  

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

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