7 September 2012
Norman Pagett writes:
“Seven percent growth may seem high, but for China, which had double-digit growth for 20 years, it really means bad news,” said Li Cheng, a China expert from the Brookings Institute. He said there was risk of millions of layoffs which could spark “the largest crisis in (Communist China’s) history because it may cause revolution.”
China has fallen into the same economic trap as the rest of the developed world. A little late perhaps, but it was nevertheless inevitable.
Like those in the west, China’s leaders listened to economists who told them that the route to prosperity was to suck in materials and resources and build factories as fast as possible, hire as many workers as could be hauled in from the fields and retrain them to produce the cheap shiny toys that the prosperous and wealthy westerners were desperate to get hold of.
This they duly did, and the promises of the economists held good. The cash flowed faster and faster, so more workers were hired, more factories were built and more apparent wealth was created. The Chinese were busy passing money to each other with the same delusions of prosperity that we all have.
Problem is, once that rollercoaster is running, nobody can get off because the system cannot be slowed down or stopped. If it does everybody ends up in a messy heap
But the Chinese rollercoaster is slowing down because the wealthy west is now too poor to buy Chinese goods like they used to. The Chinese model of prosperity has only been in existence for a generation, but already factories are closing down, and uncomprehending workers are wondering what happened. Like the rest of the developed world, prosperity was supposed to be forever. The link to the previous peasant life has been broken, they are city workers with no work, there is no infrastructure to sustain hundreds of millions of non-productive workers long term within Chinese society, and the wealthy west will never again be able to buy what they produce in quantity.
No wonder the Chinese leaders are scared of revolution.