Saturday, May 09, 2015

A humanitarian civil war?

Depending on who you ask China is the new superpower, about to overtake the US, or it is a closed, highly corrupt authoritarian state about to implode, due to its internal defects. China's nominal GDP at $10 trillion is less than that of the US at over $16 trillion but on Purchasing Power Parity China has already overtaken the US. China has invested vast sums of money in building infrastructure in Africa and Latin America to project its soft power. Its private sector is buying up firms in Europe, which are cheap because of the fall in the value of the Euro. It is building a ' silk road ' to connect its economy with those of its neighbors. It is establishing a BRICs Bank and an Asian Infrastructure Investment Bank to bypass the IMF and the Asian Development Bank. On the other hand there are those who see an imminent end to China. Apparently, 64% of High Networth Individuals, that is 393 millionaires and billionaires, are emigrating or thinking of doing so. Chinese President, Xi Jinping believes that Mikhail Gorbachev was a weak man and his policy of perestroika and glasnost were mistakes that led to the collapse of the Soviet Union and the Communist Party in Russia. He has instituted a crackdown on corruption to increase his own power and to tighten the grip of the Communist Party. But there is opposition to his policies from others in the Party and from local officials who are losing out. An article in China's state controlled Xinhua says that democracy would have been disastrous for China. " At best, China would have been another India, the world's biggest democracy by Western standards where 20 percent of the world's poorest live and whose democracy focuses on how power is divided. In 2014, India registered a per capita gross domestic product equal to a mere quarter of China's GDP," it wrote. The Chinese government has issued a Document no 9 to root out western ' universal values ' from the system. As Mr Modi heads to China he should always bear in mind the contempt the Chinese have for us. There are many examples of the ' benevolent dictator ', such as Park Chug-hee of South Korea, Augusto Pinochet of Chile and Lee Kuan Yew of Singapore, who have made their countries wealthy by working towards development but concentration of power in a few individuals is inherently destabilising as others try to subvert them to grab power for themselves. Some think that since promotion of officials depended on growth they used corruption to promote the massive growth in the economy. While the total debt has risen to 282% of GDP the government is looking at more fiscal stimulus, which will increase debt, to stop the sharp slowdown in the economy. Let us hope that China collapses quickly, before it has dammed all the rivers in Tibet which flow into India. A civil war in China would be excellent for all its neighbors.

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