PRC going under?

Discussion Open Forum
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Allright everyone, here’s another idea–but it isn’t just mine. I found somebody who explains this better than I do.

How much are we reading lately about Mainland China and the unstoppable juggernaut that is the Chinese economy? How many times are Western journalists repeating the official government economic numbers without question? How many US, Taiwanese, and other Western companies are chasing the idea of setting up in China to make their fortunes?

Is there anybody else who believes the litany that China is the next Promised Land for business sounds reminiscent of hype behind the Dot.Com fever?

I thought that I was a lonely voice on this subject, until I found a book that is pretty well explained in this link:

The Coming Collapse of China

Believe me–I know that China is ascending. But I think there are some definite snags they’re going to hit on the way up.

(BTW–the book’s on sale in Taiwan. I bought a copy as Eslite. And no–I don’t work for the publisher.)

Please check this out, and share your thoughts.

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I think China is going to be in for a rude shock soon. So many people have put their money into State banks that have financially disastrous lending policies, i.e. they lend money to and invest in state enterprises regardless of whether or not they are profitable ventures. Now with China’s entry into the WTO, and the subsequent entry into China of western financial institutions with much safer banking practices, a run on the banks would be the beginning of the end, because every Chinese citizen will want to put their money into Citibank, Standard Chartered, ABN AMRO or some other safe haven. Imagine the outcry when they find out their savings are gone! The Communists will be out on their collective asses pretty darn quick. Then democracy? Don’t count on it. Chaos, more likely…

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The PRC is dying… the leaders don’t want to admit it cause if they do, the country will fall apart. Their tatics to hold it together are to promote patriotism and make other countries appear as an aggresor against the Chinese people. The reconnaisance plane incident and the bombing of the embassy were examples of where the PRC went full out to blow it out of proportion.

Thereby following the logic that “my enemies enemy is my best friend”, so the US is the Chinese people’s enemy and the PRC are the Chinese people’s friend.

Imagine tomorrow that the PRC gave people absolute freedom and delared that communsim has been scrapped. The country would fall into anarchy. The people in the western areas of China would either revolt and try to take over or else declare indepaendance. The PRC doesn’t want to be another USSR, with the great nation of China falling into chaos.

How long more can they keep the PRC together, who knows?
Maybe this is an ROC tactic, keep PRC at arms length, always keep them guessing, then when the PRC does crumble, the ROC can jump in and say, “look at Taiwan, look at the ROC, we too were poor and hungry 50 years ago, now we are rich and have good lives, this is what you could be too, follow us, we can give you food and wealth”.
I think when Chinese people would see and hear the promise of money, they would be straight on the band wagon.
Maybe a lot of the PRC’s problem with the ROC is that the ROC shows up the PRC; and the PRC knows that PRC citizens aren’t blind to how much better their lives would be if they lived under the ROC.

True to say that the older generals in Beijing that fought the KMT would love to have another go, but the younger people, what do they want? Somehow I think it is more like a new mobile phone, money, a good job and what comes out out of this, respect, dignity, self fullfillment; and not this PRC idea to retake Taiwan or to attack Taiwan and their brothers. If the ROC could give them the promise of money etc, and the PRC fell, I think, well maybe not A Bian, but someother ROC official would be gladly welcomed to take over.
And no doubts this is what the KMT and those One China dudes want, why have they never diverted from the avenue of rejoining China (Chung Hwa). They are trying to gain ground everytime the 'One China " comes up.
Now its a confederation, but they want to make it so, that on the day that Rong Tza Ming and the others get fired, they will be in a position to take over.

I have often wondered how China could adopt communism, a society where everyone is supposed to be equal(classless); when for thousands of years Chinese society was based on classes and obeying somebody who is higher than you.
I guess it served Mao and his Red Guards in one respect, cause if one thing was known to Mao if he read his history; it was the normal ‘Joe Soap’ Chinese people were taught NOT to think, just listen to somebody else and do what they say.

Also I am curiuos to the understanding of an ordinary PRC person living in some back water in China. Do they think that the Taiwanese are living on some little island like Alcatraz imprisoned by CKS grandson and his croonies, do they live in complete ingnorance, or do the know what really happens in Taiwan?
I know that the PRC basically censored all references to the Yuan elections last weekend, which makes perfect sense cause if most people in the PRC saw this, it would be another nail in the PRC coffin. What the ROC should try and do is sell the idea of the ROC more to the ordinary guy in some ass end province in China. But as long as the Chinese media is state controlled this can not happen. Maybe the ROC should set up some pirate TV netwrok braodcasting to China

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quote:
I thought that I was a lonely voice on this subject, until I found a book that is pretty well explained in this link: “ The Coming Collapse of China” Believe me--I know that China is ascending. But I think there are some definite snags they're going to hit on the way up. {Britai}

First the title is the wrong title if Gordon wanted to draw attention to the problem of “government” and predict the imminent demise of the Communist Party (CCP). If he wanted to predict the end of “China”, that is simply too ridiculous.

Recently there was a seminar in Hong Kong about China’s WTO and it mentioned the Tiananmen incident. Unusual, so that’s why I decided to mention this here. As we all know the great architect of China, Lord Deng Xiao Ping, after meeting Margaret Thatcher had a dream in 1978 just before the 6.4 incident. He said in a famous speech with halting style Putonghua something like: “ opening up was the ONLY road and turning back (all other) lead to death (dead ends)”. And then his dream specifically was to quadruple (4X) the living standard of the Chinese people in 20 years. What is worth pointing out is that that dream was exceeded many times over: In 20 years the living standard of people in China went up over 10 times if you use traditional GDP measures i.e. without even the central planners doing anything dramatic, drastic or brilliant. Zhu RongJi, the economic tsar of China was brought in to “cool” the markets because they didn’t understand why it was so “hot”. Now Gordon wants to tell us all this will be destroyed by a bunch of “central planners”, and the imminent demise of the Central Party. No other central planning govt has ever achieved this much in human history. How can we possibly attribute everything to the one party CCP? After the 6.4 incident there was a brief pause in economic growth, Deng went down to Shenzhen in 1982 and said: “Behold let there be riches”, and there was. Then as if like magic confidence returned, and the stock markets of Shanghai were crasy again (note 1993-95 bull run). Last year the daily trading volume of Shenzhen stock market nearly matched that of Hong Kong’s. If in 20 years this can happen, we can afford to slow down a bit surly, don’t you agree? i.e. loose a few years here and there, get the property prices right down and then buy again because this time round you can discount the bad news and you can buy even more with greater certainty because no one likes to repeat their “mistakes”. You can also round up the previous distracters and put them in labour camps or whatever.

There is also another famous contrarian: Marc Faber. Gordon Chang obviously does not agree with Marc but Gordon will fail (I predict). But let’s talk about book sales $$$$. Even the “Tiananmen Papers”was a serious disappointment in the sales. TP made more money in the Chinese version, which was not intentional I’ m sure but overall it was still a great disappointment for the publisher. Does Gordon plan to come out with a Chinese version? His audience I’m sure is the West rather than the “mysterious” East. “Rich Dad Poor Dad” by Robert T Kiyosaki was a major seller in the Mainland market. So was Harry Potter. This shows us where the heart of China is in money and magic. Well?? at least not in communism.

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they lend money to and invest in state enterprises regardless of whether or not they are profitable ventures? Now with China’s entry into the WTO, and the subsequent entry into China of western financial institutions with much safer banking practices, a run on the banks would be the beginning of the end, because every Chinese citizen will want to put their money into Citibank, Standard Chartered, ABN AMRO or some other safe haven. Imagine the outcry when they find out their savings are gone! {Maoman}

This view does not really provide any insight to what is likely to happen Mr Maoman. E.g. Argentina is currently running a higher percentage of NPLs (bad debts) than China and Argentina does not seem to be facing an imminent bank run, nor affecting the currencies of the neighbours it mostly trade with such as Brazil, Mexico, Peru, Chilli even though these are not strong currencies. Argentina is also more how we say “open” with less control ~ i.e. western and democratic if you will than China.

Chinese depositors are used to being controlled and coddled as to what they can do with their deposits, even their foreign currency USD accounts, so a traditional bank run as a last resort is unlikely. The start and enormous success of China’s very first open ended investment fund (like a Unit Trust) just 3 months ago in September very much proved this view to be true. How many years did Maoman say he was in China?

For a bank run to happen, the “flow” of money must not be restrictable in some way. Banking systems in China are still too inefficient, to allow this. Even the credit card system of one bank is poorly “connected” to that of the other bank. e.g. you cannot shop at certain outlets with credit card A, issued by say bank A, but only with some other issued by another bank B. strange? Sometime the problem is not electronic; it is just plain lack of trust. Foreign banks are not allowed to do retail lending yet so there is no chance of them offering much safe haven. In such an unfluid system, people can never draw enough savings to make a difference. China will use its police to beat back any disorderly queues at the banks or simply tell people to go home to wait for the money.

Another interesting news coming out yesterday: Mexico is saying that they benefited from the joining of WTO(GATT) looking back since they joined 10 years ago in 1991. Mexico sees China as even more “prepared” than they were when they entered the “world” market. Other than EU, Mexico was also one of the foremost objectors of China joining the WTO because it sees China as completely wiping out Mexican labour intensive industries. Last year there were several delays caused by individual countries negotiating with China for the WTO: EU, Mexico and India are the ones I can remember.

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David K,

First of all, thank you for offering your views.

You’re right–the title of this topic was meant to specifically raise interest but wasn’t specific enough. To be more accurate, the idea that I’m proposing is that the Communist Party in China cannot last.

You’ve cited some very interesting history concerning the gains made by China. But my contention (and I believe the author of the book I refer to agrees) is that business in China has made these gains IN SPITE OF the communist government. Giving credit to Deng is appropriate for the freedom he gave to Chinese businessmen. But a free-enterprise system could have excelled very well without his government’s “permission”.
These gains that you believe should be attributed to the central planning committees are not of the planning committee’s doing.

The point of the book is that CHINA and it’s business community will continue to excel, but that the GOVERNMENT of China will not–and in addition it could possibly gravely injure the economic health of the country.

And as far as your challenge of Gordon’s book being published in China I can throw that back at the Mainland government. Will they in fact publish this book in it’s entirety? THERE IS NO FREE PRESS IN MAINLAND CHINA. Are they willing to let his words spread throughout the business community of that country without censorship? I don’t believe so, but I hope that I am proven wrong.

And I don’t agree with Maoman’s scenario’s either, but you’ve got to be kidding if you think that China’s banks are ready to compete with foreign financial institutions without massive protection. And it’s a strange thing to be arguing that the inefficiency of China’s banks have a protective quality to them–even to the point of the government using force to stop a run on the banks.

And as far as Mexico’s financial/trade “experts”, I don’t give their corrupt nepotistic opinions much credence either.

And there’s another facet of the book not addressed here: that the different provinces of China are showing signs of unrest and possible political unrest. I’d like to also know your views on this.