New normal means that it's business as normal
Updated: 2015-03-16 09:37
By Ed Zhang(China Daily)
Recently a few overseas China watchers have predicted, once again, China's imminent collapse. And again, one can only predict there will be something when there isn't. As with the stock market, where there will always be a danger to match one's call with the reality, predicting a country's collapse, or a regime's downfall, is, by nature, a risky game.
I have worked in private sector businesses dealing with China for more than a few years, and have as much experience watching Chinese economics and politics, and would like to offer a personal view on the current debate.
There are things in China that constantly bug me, and many things that I really hate. But as for the overall state of its economy, I would say it's still a long way from grinding to a halt, much less a collapse.
Of course, the economy faces difficulties, more than in 2008, when the rest of the world was in deep trouble. But is anyone justified in saying things are more difficult than in 1998, when Asia was in the middle of financial turmoil, Hong Kong was being attacked by currency raiders, and domestically, the Yangtze River Valley was alarmed by unprecedented floods, and more than 10 million workers were sent home in premier Zhu Rongji's reform of State-owned enterprises, many to face destitution and despair?
Or is anyone justified in comparing China's present difficulties with the troubles it faced in 1989 and 1990? Or to compare them with the lingering chaos and near bankruptcy, as admitted by officials themselves, of the 10-year-long "cultural revolution" (1966-76)?
One who is familiar with China's experience likes to recall the many mass rebellions in its history. But that appears so, partly because its history is long. In the last 1,000 years, in fact, there have been only two or three mass rebellions that resulted in regime changes.
There have been more state failures caused by the ruling elite themselves, from the very first dynasty of 2,200 years ago, which built the terracotta warriors to guard its emperor's mausoleum, to the very last dynasty, which ended in the 1910s, where factional in-fighting drained the regime of all the resources for much-needed reform.
No matter how many economic woes there are, they cannot bring down China unless there are political complications, such as a failure of central leadership, and the government's inability to keep performing its regular functions. Political changes are unlike earthquakes. When they come, they do show signs and have signals.
This is not the case in Beijing right now. Why is the top leaders' anti-corruption campaign, which has indeed rounded up some widely scorned good-for-nothing officials, seen only as a factional power struggle? One has reason to doubt that those who made such observations only because they were lent a wrong pair of spectacles.
Like it or not, one basic thing in understanding China is that it is different from others in that, through its history, it always has a government with a very large administration that controls almost everything and provides everything, or a government led by administration.
Once given a task by the central leadership, this immense administrative system can have many ways of mobilizing many resources toward its completion, if not over-completion - as seen in frequent periods of overheating and over-investing in the local governments' reckless chase of GDP in the past 20 or so years.
An administratively led government will start to correct itself when its administrative power can no longer function as desired. And to prevent a financial crisis, China's central government can be very prompt and effective in printing money and collecting it, passing it out and taking it back, and giving orders on how it is to be spent.
Now that its task is no longer to chase GDP, China's administrative machine is slow in the way it works. Part of it can be explained as officials' lack of understanding of the so-called economic new normal, or what the new task is. But it would be an exaggeration to say they are all waiting for a coup. Once a new task is defined, along with due reward, that machine can start running at full steam again.
The author is editor-at-large of China Daily. Contact the writer at email@example.com