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Posted at 4:34 PM ET, 01/20/2011

What to worry about when you're worrying about China

By Ezra Klein


There's a lot of good stuff in Nick Kristof's overview of contemporary Chinese politics, but this is the part most relevant to the topics I cover:

Trade is at the heart of the tensions [between America and China], and China is clearly keeping its currency artificially low (and probably will continue to do so) in an effort to preserve jobs at home. This is destabilizing the international system — but let’s not exaggerate the impact on our own economy. Chinese goods mostly compete with products from Mexico, South Korea and other countries, and it is stealing jobs from those countries more than from America.

Trade figures also exaggerate China’s exports. For example, China assembles iPhones, so their full value counts as Chinese exports. But, in fact, less than 4 percent of the phone’s value is contributed by China, according to a study by the Asian Development Bank Institute. A greater share is contributed by Japan, Germany, South Korea and the U.S.

Kristof goes on to suggest various ways in which the political system is coming to be dominated by hardliners. It's that trend, and not economic competition (which I think is a misguided framework to begin with), that worries me in China.

When you talk to people in America about China, they're very worried about China's continued growth. But when you talk to people in China, or to people who study China, they're very worried about China's continued growth. It looks a lot less sure to them than it does to us. And that has the Communist Party very scared.

The Communist Party in China has convinced itself, or at least tells people that it has convinced itself, that the country will come apart if annual growth drops below 8 percent for any sustained period of time. There's just too much inequality, and too much anger, and too much pent-up demand for the current system to survive if growth isn't greasing the skids.

They use that as justification for all sorts of political and economic misdeeds. But China's growth eventually will drop below 8 percent. And I'd guess, based on conversations with people who know the country a lot better than I do, that the society won't totally fall apart when that happens. But it's easy to imagine the Communist government, which is suddenly facing riots and discontent that it doesn't know how to deal with, giving into the hardliners who want to channel that anger away from them and toward Japan or India or America or even just Tibet.

To put it another way, China's growth shouldn't scare us. It's what happens if they stop growing that should.

Photo credit: Tracy A. Woodward - The Washington Post.

By Ezra Klein  | January 20, 2011; 4:34 PM ET
Categories:  China  
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Next: Reconciliation


--"There's just too much inequality, and too much anger, and too much pent-up demand for the current system to survive"?

I am pretty sure you didnt read the PEW report and what Patrick J Buchanan writes:

"In a survey of 24 countries by Pew Research Center, the nation that emerged as far and away first on earth in the satisfaction of its people was China. No other nation even came close."

I always wonder why some Americans tend to lecture to a prove functional system with their own proven rotten one. For geopolitical reason? I think you'd worry about fact that pisoff Americans' anger, frustration and even hatred to their government, a rare and dangerous scene I seldom witness.

Posted by: eastman1 | January 20, 2011 7:07 PM | Report abuse

Like how Boehner said that we have the responsibility to make China comply to human right standard of the West. Of course if any other countries dare to interfere in our terror investigations around the globe, in other countries, we cannot stand for it.....

Such view pretty much is still prevalent in our nation since the end of the Cold War. There is no intrinsic introspection to take a hard look at ourselves and our hypocrisy that alienates us from most people in the world as we are really scared to look ourselves in the mirror, especially our corporate politicians from both parties.

Posted by: PeterT2 | January 20, 2011 8:28 PM | Report abuse

I think the average person in the U.S. tends to have a major blind spot to China's problems. There is an assumption that they can maintain in the logarithmic growth phase indefinitely while paying nothing to workers and stifling all dissent. I don't think that works. As China grows, wages will have to rise, their currency will have to strengthen, and some of these internal fights will need to be fought. What's that saying about revolutions tending to occur after periods of economic growth? This isn't to say that China will come apart at the seams, but it will begin to have the inevitable problems that other developed nations have.

Posted by: willows1 | January 21, 2011 10:12 AM | Report abuse

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