China’s stock-market swoon is a sign of much deeper troubles in the economy. If things head south, the world will tremble.
Jeane Kirkpatrick, President Ronald Reagan’s ambassador to the United Nations and an adviser to Hubert Humphrey, famously posited — and I paraphrase — that a free-market economy would inevitably bring down communist regimes.
This was borne out in Eastern Europe and the Soviet Union (which faced many other internal rots) but was adamantly disproved after the massacre at Tiananmen Square in 1989. The Chinese Communist Party essentially made a deal with the people: You can get rich as capitalists as long as you leave us in charge.
But what if, as the urbane Zhou Enlai said in another context, it is too soon to tell?
This is only one of the questions that arises amid the ongoing collapse of China’s stock market. This is only one manifestation of big trouble: add in the dangerous banking system, debt, environmental degradation, corruption linked to the party, and the elites in Beijing can’t be feeling too comfortable. No wonder their children are buying houses here. The Communist Party’s legitimacy is predicated on maintaining prosperity and adding ever more millions into the “Chinese dream.” Take that away and what happens? In a free society, people have the outlet of elections (however much they have been corrupted by the oligarchs in America). China has no such outlet for popular discontent. Another issue is history rhyming. In 1929, the stock collapse in the United States, then the ascendant economic power, helped bring on the contraction that led to the Great Depression. Then, Europe was already in bad shape from the aftermath of the Great War. Now China is ascendant, by some measures the world’s largest economy (and Washington state’s largest trading partner). Europe is in bad shape because of the eurozone and austerity. A Chinese economic collapse would have world-shaking consequences. None of this may come about yet. Again and again over the past two years, China has pulled back from the brink. But its fundamental economic distortions are enormous and can’t be ordered to shape up by the politboro. Today’s Econ Haiku: Rain forest on fire Record highs in Seattle Don’t say ‘climate change’…
China’s stock-market swoon is a sign of much deeper troubles in the economy. If things head south, the world will tremble.
Jeane Kirkpatrick, President Ronald Reagan’s ambassador to the United Nations and an adviser to Hubert Humphrey, famously posited — and I paraphrase — that a free-market economy would inevitably bring down communist regimes.
This was borne out in Eastern Europe and the Soviet Union (which faced many other internal rots) but was adamantly disproved after the massacre at Tiananmen Square in 1989. The Chinese Communist Party essentially made a deal with the people: You can get rich as capitalists as long as you leave us in charge.
But what if, as the urbane Zhou Enlai said in another context, it is too soon to tell?
This is only one of the questions that arises amid the ongoing collapse of China’s stock market. This is only one manifestation of big trouble: add in the dangerous banking system, debt, environmental degradation, corruption linked to the party, and the elites in Beijing can’t be feeling too comfortable. No wonder their children are buying houses here. The Communist Party’s legitimacy is predicated on maintaining prosperity and adding ever more millions into the “Chinese dream.” Take that away and what happens? In a free society, people have the outlet of elections (however much they have been corrupted by the oligarchs in America). China has no such outlet for popular discontent. Another issue is history rhyming. In 1929, the stock collapse in the United States, then the ascendant economic power, helped bring on the contraction that led to the Great Depression. Then, Europe was already in bad shape from the aftermath of the Great War. Now China is ascendant, by some measures the world’s largest economy (and Washington state’s largest trading partner). Europe is in bad shape because of the eurozone and austerity. A Chinese economic collapse would have world-shaking consequences. None of this may come about yet. Again and again over the past two years, China has pulled back from the brink. But its fundamental economic distortions are enormous and can’t be ordered to shape up by the politboro. Today’s Econ Haiku: Rain forest on fire Record highs in Seattle Don’t say ‘climate change’