China's Communist Party - 90th Bday Celebrations, Augers of the Future?
July 1st will mark the 90th birthday of the Chinese communist party. And many, those nonagenarians know how to party.
Well, they know how to throw money at a problem anyway. As mass celebrations are to be had across the country.
However, what is perhaps more interesting is the party itself. It currently comprises 80MM people, which in any other nation (sans India) would be a big chunk of the population... but in China, it means a large percentage of the middle class are party members, and often middle class because they have been able to ride the coattails of party membership to decent paying and moderately influential jobs in the sprawling and mostly inefficient state-owned enterprises and local governments.
Those state-owned enterprises and local governments are, in my opinion, far closer to collapse than many would believe. They have sucked down huge amounts of capital and have a incredibly high default rate. Local governments (which operate much more like local investment funds than what we would call government) have notoriously spent trillions on infrastructure and building projects which are complete white elephants. Seriously, there are whole empty cities in China. That is not good investing. These companies and local governments are kept afloat by government banks, which take the bad debts onto their own books and offset it with foreign currency reserves - which China has no shortage off. Because of the huge level of currency reserve, I no longer believe that China will face a massive debt crises as I once did, but I still believe they are risking debt contagion, and will have to re-evaluate the spending by state owned/run businesses and branches.
In the long-term then, Party membership may not mean what it once did, because the big bumbling bureaucracy will have to go. And without being able to offer cushy middle-class jobs, the Communist party really would be in trouble.
Communism is China is very much "some are created more equal than others." The numbers of the urban disenfranchised are growing, because officially, you are never allowed to move into the cities, and thus you are never given any of the benefits a communist system is meant to include. You get no social security, no guaranteed job, no heath benefits. The only thing you "get" is completely screwed over, and that is not a recipe for happy communists.
What keeps this 90yr old institution running so efficiently then? Well, that would be the urban wealthy, those who really have the power. They are not always party members either, but generally live in a sort of uneasy truce with the party, where they are allowed to grow their companies like mad and make huge bundles of money while paying very little in taxes and their companies dodge most of the minimal government regulation which do exist. In return, they leave politics more or less well enough alone.
This is somewhat similar to the deal made between Putin and the Oligarchs when he came to power. There of course two things happened: the Oligarchs got into politics, and Putin turned out to be the sneaky motherfucker of the decade.
So the situation stands thus: unless China keeps growing rapidly, it will face political unrest. And the one thing China will have a hell of a time doing over the next decade is growing as rapidly as it has done. The population is getting older, the global economy is possibly in for a slow decade, and the economy is also maturing to the point that government lead industrialization just will not have the same rapid effects it has had.
Also, in a bit of a misquote of Jack Donaghy (Alec Baldwin on 30 Rock): "The first generation works their fingers to the bone. The second generation grows up to be doctors, lawyers, and businessmen. The third generation gets sociology degrees and goes snowboarding." He applies it to immigrants to the US, but I think it is also somewhat fitting for China emerging from the middle ages.
Do I still think that China is the biggest threat to the United States other than Obama? Yes. But I believe that they will have a hell of a time managing their own economic and political development over the next decade.
Well, they know how to throw money at a problem anyway. As mass celebrations are to be had across the country.
However, what is perhaps more interesting is the party itself. It currently comprises 80MM people, which in any other nation (sans India) would be a big chunk of the population... but in China, it means a large percentage of the middle class are party members, and often middle class because they have been able to ride the coattails of party membership to decent paying and moderately influential jobs in the sprawling and mostly inefficient state-owned enterprises and local governments.
Those state-owned enterprises and local governments are, in my opinion, far closer to collapse than many would believe. They have sucked down huge amounts of capital and have a incredibly high default rate. Local governments (which operate much more like local investment funds than what we would call government) have notoriously spent trillions on infrastructure and building projects which are complete white elephants. Seriously, there are whole empty cities in China. That is not good investing. These companies and local governments are kept afloat by government banks, which take the bad debts onto their own books and offset it with foreign currency reserves - which China has no shortage off. Because of the huge level of currency reserve, I no longer believe that China will face a massive debt crises as I once did, but I still believe they are risking debt contagion, and will have to re-evaluate the spending by state owned/run businesses and branches.
In the long-term then, Party membership may not mean what it once did, because the big bumbling bureaucracy will have to go. And without being able to offer cushy middle-class jobs, the Communist party really would be in trouble.
Communism is China is very much "some are created more equal than others." The numbers of the urban disenfranchised are growing, because officially, you are never allowed to move into the cities, and thus you are never given any of the benefits a communist system is meant to include. You get no social security, no guaranteed job, no heath benefits. The only thing you "get" is completely screwed over, and that is not a recipe for happy communists.
What keeps this 90yr old institution running so efficiently then? Well, that would be the urban wealthy, those who really have the power. They are not always party members either, but generally live in a sort of uneasy truce with the party, where they are allowed to grow their companies like mad and make huge bundles of money while paying very little in taxes and their companies dodge most of the minimal government regulation which do exist. In return, they leave politics more or less well enough alone.
This is somewhat similar to the deal made between Putin and the Oligarchs when he came to power. There of course two things happened: the Oligarchs got into politics, and Putin turned out to be the sneaky motherfucker of the decade.
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| Yes, I am the love child of James Bond and Otto Von Bismarck |
Also, in a bit of a misquote of Jack Donaghy (Alec Baldwin on 30 Rock): "The first generation works their fingers to the bone. The second generation grows up to be doctors, lawyers, and businessmen. The third generation gets sociology degrees and goes snowboarding." He applies it to immigrants to the US, but I think it is also somewhat fitting for China emerging from the middle ages.
Do I still think that China is the biggest threat to the United States other than Obama? Yes. But I believe that they will have a hell of a time managing their own economic and political development over the next decade.
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