The Wall Street Journal issued a story that appeared to rely on a single source “a person familiar with the data said” and Bloomberg, apparently unable to corroborate the leak, repeated key bits of the Journal article, with attribution.
The highlights:
Chinese exports fell an additional 2.8% in December versus the prior December, while imports plunged by 21.3%. However, the fall in imports is due to a significant degree to declining commodity prices.
The monthly trade surplus fell to $39.0 billion. but is still within striking distance of the peak month, November, when the surplus reached $40.9 billion.
Imports fell less than expected (consensus was for a 3.8% fall) and the decline in imports greater (expectations of 19.1%).
How markets react may tell us more about the mood of the moment than the fundamentals; the Standard Chartered economist, Stephen Green, that the Journal quoted, gave a mixed reaction. I had expected the decay in trade data to be worse than expectations, but my timeframe was January/February. The December factiods do not support that view, but monthly series are often noisy. A more decisively negative reaction comes from 24/7 Wall Street (hat tip reader Steve):
What was unimaginable a year ago has now happened. China has entered a recession and it may end up being deeper than the one in the US. It is not clear that the government can mount and manage a plan to create what would have to be in the range of ten million new jobs. This will be an even more difficult task if exports continue to fall sharply. China does not have a service industry which is anywhere close to being as large a part of the GDP as it is in the US.The illusion developed over the last decade that China had become an independent power with a population which could make and consume goods at levels which have never been seen before. During the last two quarters, it has become clear that the the opposite is true. China’s economy may be the most dependent large economy on earth.
If GDP in the US, EU, and Japan contract at 5% this year, China’s economy is very likely to shrink faster. It will be faced with a sharp drop in what it makes and exports. More importantly, large numbers of Chinese are leaving the huge new industrial cities and going back to rural regions where they can at least find work growing their own food. What is more than a trickle now could become a flood. Those who have gone back to non-industrialized sections of the country will not be net consumers at all.
With a short-lived and dwindling middle class, China no longer has the economic core to continue the “miracle”. China has just become another big country in trouble.
One of the somewhat optimistic assumptions about China that I question is “all those newly unemployed factory workers can just go back to where they came from and farm.” Informed reader input would be appreciated here, but let me throw out a contrary line of thought.
China’s most arable land, due to its proximity to the coast, has in many cases been put to other uses. I am under the impression that the hinterlands do not have highly productive soil. Let us assume, however, that these farms were at or only slightly above subsistence before large-scale emigration to the coast started. Now with fewer local mouths to feed and more land to exploit per remaining agricultural worker, it is possible that some (many?) of these local communities were able to sell more product, rather than produce solely for their own survival (after all, someone has to feed all those factory workers, right?). That is, productivity of farm workers would have improved if nothing else because each would in theory have more land on average to work (whether that happened much in practice is a completely different matter). Improved farming practices could also have led to an increase in productivity.
So the idea that millions can return to rural areas without disruption seems naive. You have more mouths to feed from the same amount of land, and no particular reason to think productivity or land under cultivation could change rapidly enough to compensate for such a large influx.
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Some of the migrants that return home will have farming to fall back on. But many will find their previous lives not “resumable” because the land has been transferred / taken over for other purposes, including development in the inland provinces.
It is not an entirely pessimistic situation, because many of the returnees have acquired expertise and skills unimaginable to their former villages only a decade ago.
Some of them, but not all, will no doubt become very successful entrepreneurs in their home villages.
The problem is, what about the portion that is not successful or no longer have a social network (the first safety net) back home?
Those of the people that are at the most risk of being disruptive even though they are nominally eligible to receive social security payments (however little) from their local governments.
China’s crash (almost certainly heading toward recession now) is far more important to the global economy than generally believed, because they are the “plug” or incremental demand in so many markets, and also the hopes of many western firms for future growth — that justifies investment now.
D
Lester Brown of the Worldwatch Institute anticipated this problem a dozen years ago in his landmark paper, “Who Will Feed China?” As Yves suspects, Brown demonstrated that China was paving over its arable land.
I am under the impression that the hinterlands do not have highly productive soil.
Totally depends, Yves. Sichuan’s preposterous: it’s as if some Creator stuck his thumb in the middle of the mountains and said, “and there shall be green.” It’s even been irrigated for 2200 years. I’ve never seen such large fruit. Even the mountains are covered in fog and deep green, with corn and apples grown in the highlands.
The staple changes from rice to corn when the region gets colder and drier. Part of Qinghai have a lot of corn farming. I’ve also seen extensive inland farming of corn and occasional wheat in Shaan’xi, with much terracing. It starts to get pretty barren for most of northwest Gansu, and Xinjiang’s got sparse wheat farming amidst the massive mountains and deserts. There’s some famous cultivation of grapes and melons in those areas, but not much volume.
Improved farming practices could also have led to an increase in productivity.
There’s a whole lot of that left to do. Most of these farms are manual labor and subsistence. During harvest season, you can see enormous piles of fresh grains sitting in house courtyards waiting to be milled. It’s really cool.
I don’t think food is going to be a huge problem, from everywhere I’ve gone and everything I’ve seen. The one-child policy is well adhered to by the middle class, if not those at either end of the spectrum.
Food is cheap and plentiful. 5 RMB will get you a huge, excellent bowl of noodles at a restaurant, and bread rolls are 1 RMB.
But many will find their previous lives not “resumable” because the land has been transferred / taken over for other purposes, including development in the inland provinces.
There’s a fair bit of that, D, but not as much as I’d imagined. China is absolutely huge. The development pattern inland feels like America’s heartland. There are many small towns where if you swapped the signs and the people, I’d have sworn I was in Nebraska.
I’ll make my usual offensive remark here. I’m not worried about these people finding subsistence or livelihoods, because life in inland China can be leisurely. It’s much more relaxed and slow-paced than America, on par with or exceeding that of Europe.
In Chengdu, where I’ve spent the most time, I’ve seen young men who literally live in their copy shops, which are open if they’re not asleep, and I’ve seen crumbled old houses from the late 1800’s in the alleys where people just herd their favorite cats and watch a lot of TV.
Although there is simmering discontent with the CCP, I see far more outright hatred of our own government here. I continue to believe China is at little risk of domestic unrest.
Looking forward to bg’s perspective. :D
If the US got back on its feet after production capacity was destroyed due to the war, which it could then fulfill to return to relevant status once more, doesn’t it mean that for China to stay the course someone else’s production capacity would have to be reduced/eliminated for their current problem to be resolved?
How much competition does China get from India?
“I continue to believe China is at little risk of domestic unrest”
I think the facts speak pretty loudly, there is lots of domestic unrest already. Roubini believes they need 6% gdp growth just to keep up with growth in labor.
There is as much arable land in China as the US, but 4x the population. Given that we each big burgers, export grain, and use corn for fuel, I do no think China is at risk of starvation. However middle class expectations are rising along was automobile purchase, obesity and the lot.
What was striking to me about Chinese agriculture is the small plots. It makes argiculture less efficient and more labor dependent.
I think to ndk’s point there was never very much to do for that average farmer/worker before. Returning to a plot of land (this is likely subleased rather than idle) is not full employment.
China is a intellegent and values based culture – more similar to America and Europe than most other cultures. The government propoganda has encouraged people to feel entitled, and to expect that they are the next world power.
although the culture has its plusses, the government (particularly at the local level where most governing happens) is not up to snuff.
There will be a lot of social and economic strain if too much of the China miracle unwinds. And that is exactly what appears to have started.
There is also the problem of overcapacity – Taiwan semiconductor fabs are running at 50%, cement factories are idle in the mainland, shoe and toy factories are folding. The high stock market (4x what it is now) overfed development, which amplified growth on the way up, and will amplify it going down.
Again, families are strong, and people won’t starve. But expectations are very high, and the government used high expectations to keep problems at bay.
Most of the more violent protests were from the lower classes. And that has helped the government. I expect the coming discontent to be from other parts of the society.
These comments are helpful, but I probably did not make my core point explicit. More people will be returning to the hinterlands. I doubt the main source of work/income/subsistence (farming) can be expanded (either via putting more land under cultivation, or increasing productivity) enough in such a short timeframe to offset the impact of so many people needing to be put to work. In other words, you will see a decline in per capita income in those areas.
However middle class expectations are rising along was automobile purchase, obesity and the lot.
That’s a great point, bg. There is an aspiration and hunger there that I haven’t seen in the more developed countries I’ve been in.
Some of the places I’ve been have stunned me with over-the-top, gaudy decor. When I complained to a friend that I’d hoped to see something a little more rustic and classical, he said that many Chinese people felt they had suffered through uncomfortable and difficult living conditions for a lifetime, and that this was their chance to go as far upscale as they could.
Who knew capitalism was the real key to the cultural revolution?
Anyway, I meant domestic unrest in a stronger form than riots at toy factories. Those don’t really bother me. I was implying civil war or risk of government falling, and I really don’t see that.
Every time I pose a question about these topics to one of my mainland friends, they whack me on the head, roll their eyes, and say, “it’s a lot more complicated than that.” I think the principal applies here too.
There’s a lot of grey between the fall of the CCP and toy factory riots, and I would fully expect to see China somewhere in there.
I doubt the main source of work/income/subsistence (farming) can be expanded (either via putting more land under cultivation, or increasing productivity) enough in such a short timeframe to offset the impact of so many people needing to be put to work. In other words, you will see a decline in per capita income in those areas.
You’re probably right, Yves, but I honestly think that given where those areas are at in the economic development curve, it really doesn’t matter much. They just live their lives out there; beyond the major factories dotting the landscape in planned developments, I don’t think those economies are deeply integrated with, well, anything.
It remains to be seen how disappointing those lives are to some of the nouveau pauvre, but for the countryside itself, I just don’t see things changing at all.
One thing I see when I go to Japan is the abundance of Chinese-grown vegetables and other foods in the supermarket. Although there’s been something of a backlash against it recently, a significant amount of the fresh food in Japan is still imported from China. I think that’s one thing the extra agricultural capacity was going towards. With more mouths to feed back home, what’s going to happen? Will they still keep exporting for the cash?
With more mouths to feed back home, what’s going to happen?
The issue isn’t more mouths to feed in China (beyond the normal rate of increase), but the location and employment status of said mouths.
Not only has much of the best arable land “been put to other use,” but mechanization has wiped out tons of Chinese agricultural jobs over the past three decades. The arable land is already being worked as much as can be, and the miniscule plots that most families have are not enough to support them no matter what combination of staple crops, chickens, pigs, and other crops that they throw together–that insufficiency was the impetus for the mass urban migration to begin with.
China has been experiencing substantial social unrest and increased urban crime (related) for roughly 7-9 years now. If they get anywhere near zero growth or, heaven forbid, a recession, then the ruling party will have to resort to some extremely severe methods to keep social order. I suspect that they will be supported by the urban intelligentsia in any such actions. If anyone has been around Henan’s cities lately, they will quickly grasp the dangers of a retracting economy. And we can only guess and worry about what the Party would need to do to maintain power in such a situation: war, forced famine, or worse.
I recall the Chinese curse, “May you live in interesting times.”
I’m a little uncomfortable coming across as a china expert, knowing some of my friends who are.
I think it is obvious that if people hauled themself 1000 miles to work in a sweat shop, it is going to be worse for them to go home. There wasn’t much there.
gdp will drop. incomes will drop, end expectations will drop.
ndk,
There was/is persistent civil unrest – most of it outside of GuangDong (the toy factories). Think how traumatized we were during the Watts riots, etc. It really is more unstable there. They hoped to outgrow it.
Wars don’t happen during the great moderations. They happen during the great dislocations, and when leaders feel threatened.
For anyone who hasn’t been out to the western half of China to see the human face, here are a few photos I took in Xinjiang, Shaan’xi, Gansu, and Sichuan. It might give you a flavor for the amazing variety in people and the type of life they live.
“Some of the places I’ve been have stunned me with over-the-top, gaudy decor”
I read somewhere that most of Europes great cities got their current building stock in the 1870’s during the last great credit/building boom there. I have often thought the same thing was currently happening in Asia.
Please ppl, stop the pretentious use of phrase “Chinese curse”,”old Chinese saying”, etc.
http://en.wikipedia.org/wiki/May_you_live_in_interesting_times
There was/is persistent civil unrest – most of it outside of GuangDong (the toy factories). Think how traumatized we were during the Watts riots, etc. It really is more unstable there. They hoped to outgrow it.
I would believe major unrest amongst migrant workers and university students. The Chinese versions of Iowa and South Dakota just didn’t feel at any risk, but I could very well imagine serious riots in the Chinese L.A. or Detroit. Whether those could be strong enough to affect civic order more generally is beyond me, but my gut feeling is they wouldn’t be.
“If GDP in the US, EU, and Japan contract at 5% this year…”
How optimistic. Japan and Germany’s exports declined by the same amount last year: 27%.
We’re looking at economic contractions above 10%, full stop.
The output from the small plots is more than double the output from the large tracts on a per hectare basis. China is handling thousands of insurrections annually, largely small and isolated events. Until there is a large regional or national movement the CPC will be able to keep things under control. Also firearm ownership is a tiny fraction of what it is in the US.
Yves,
I think you over-estimate the scale of migration that has occurred over the last 3 decades.
While clearly a huge number of migrant workers left their villages for more productive jobs (which will now be lost)… the vast majority of these workers didn’t participate in this migration until 5-8 years ago.
Keep in mind what China’s rapid growth implies when you look in the other direction: China’s economy 10 years ago was roughly 1/3-1/4 the size it is today. So, clearly things WILL backtrack when these migrant workers go back to less productive agricultural jobs…. but even if the Chinese economy contracted by 70%, we’d be back to where we were 10 years ago.
That’s obviously a bit of an absurd example, since obviously that contraction would be anything but uniform… but I’m just trying to make a point. The vast majority of Chinese have come a long way in a very short amount of time… and giving a little back will not be as painful as you might imagine it to be.
I, like just the vast majority of all other Chinese in their 30s, grew up without indoor plumbing, effectively no electricity, and absolutely no modern appliances. I didn’t have a flushing toilet until I had graduated high school… and I’m (only?) 32 years old right now.
So, keeping that in mind… it will take a long, long economic contraction before I see true “desperate” poverty. However, I will say the Chinese government does need to maintain its social investment in pensions, health care, and education. If they seriously fail to maintain at least minimal standards in *those* three aspects, then they likely would have a revolution on their hands.
“What was striking to me about Chinese agriculture is the small plots. It makes argiculture less efficient and more labor dependent.”
Maybe that is a good thing?
This seems to be another “projection”. First it was the Europe who was going to be much worse off and euro would collapse.
Now it is “most certainly” the Chinese who will soon have all out revolution there. Maybe, just maybe it is the Americans who are now at the bottom of the barrel…
What makes American nail salon and gym master consultants any better than Chinese peasants and factory workers? 70 percent of US GDP is now based on services for consumption with abandon. Chinese in their cities at least KNOW somebody in their family who is a farmer, Americans don’t.
Do you really think this JIT (Just-In-Time) based, BOTH for capital and for products, financing/logistic system is going to withstand and provide without any distruptions food and other essentials to all supermarkets across the country? ONLY one lousy week without daily deliveries to markets and malls and all American major cities without exceptions will be in chaos because markets will be empty! Don’t bother calling the National Guard since they are kicking ass in Iraq and Afganistan. FEMA…hah!
Then you as unemployed just happily go to the nearest supermarket and spend another two million dollars (during hyperinflation) of government money? I don’t think so.
Hope it does not go that bad but I am rather pessimistic about “Obama The Miracle Man” or any other miracles now showing up JIT.
You reading this are now part of the NEXT Greatest Generation. Challenges are mounting and huge…good luck!
Yves said: “One of the somewhat optimistic assumptions about China that I question is “all those newly unemployed factory workers can just go back to where they came from and farm.” Informed reader input would be appreciated here, but let me throw out a contrary line of thought. “
Agreed. When has an industrializing nation that has witnessed a massive influx of people from the countryside to the cities ever seen those same people go back to agrarian lifestyles in the face of an economic collapse? Never, so far as I know. Unless you count the building of shanty towns on the edges of garbage dumps where people can forage for food in the absence of employment as “farming”.
Why does anyone care about China? China lies about everything; has one billion slaves to do its bidding; no regulatory or environmental constraints; manipulates the markets almost as much as the U.S.; and without regard to the printing presses, owns an insolvent U.S. In fact, Paulson’s policies in large part were enacted to satiate his presumptive Chinese masters. I presume the China men are fully aware Paulson and his true masters can not be trusted and will likely inflate their way out of this mess. Quit pretending what goes on in China is real. The only real thing about China is its trade surpluses and substantial foreign reserves, nothing else. The true criminals reside here in the U.S. yet most recently Paulson tries to blame China for flooding the U.S. with capital, complete BS. Americans gotta quit lying to themselves.
the most important question to me is: whose people have most transferrable skills to come out strongest during the readjustment of the present economic dislocations.
it is clear that the world as a whole has overcapacity. there is plenty of room to improve consumption in most of asia, latin america, and africa, but the current gloabal currency regime simply precludes it and perpetuates the division between haves and have-nots.
I’ve spent the last two decades in East Asia and South Asia and have watched the transformation many call “miracle”, but which I cannot help but feel is just “buying off the shelf”. It’s great yes, but it’s also easier to grow at speed if someone else has already done the heavy lifting, i.e., invention.
There was a combination of awe/jealousy/resentment toward the lifestyle and achievements of the West in the mid-1980’s. Japan’s rapid growth served to provide hope and a sense of pan-Asian pride that Asia could compete with the West and not have to fall back on that old “5000 year history” mantra, and the Chinese period of great discovery and invention.
Japan’s bubble burst in 1990, but fortunately the rest of the world plowed ahead, creating markets for products and enabling the various “miracles” to materialize.
At the center of all of this was China. The government fed the nascent national pride by telling the people that their Motherland was the country of the future. The populace bought into it, even when their economic production was still little more than t-shirts and carnival prizes. Unlike Japan, though, where pride came not only from growth but also from the quality of the actual goods produced, China in general just went after the money. Pride came from numbers: growth figures, national wealth, percent of Mercedes purchases, etc. There were/are no Toyotas in China, in the sense of worldwide recognized quality.
The Olympics were the peak of pride and nationalism, even though the economy, and particularly the stock market, began to swoon long before the Opening Ceremonies. The Chinese were shocked when the Torch Relay was met by protest, as they could not believe that the world did not see them as being as great as they had dared to begin to believe they were.
Collectively, at both the governmental and societal level, the Chinese began to demonstrate just how weak and fragile their new found pride was. They made Jack Cafferty, the curmudgeonly social commentator on CNN, a national symbol of hate merely for a few off the cuff remarks.
“We’re growing 13%; what are YOU doing?” became the cry.
I saw this in China, and in other Asian countries where Chinese businessmen are regular visitors. There was an arrogance and a swagger that, while being reminiscent of 1960’s Americans and 1980’s Japanese, quickly got the folks from the Middle Kingdom the moniker of “Ugly Chinese” in much of Asia.
Now the last vestiges of what nurtured the growing pride is being taken away. Growth is falling. Folks are getting laid off and returning to the hinterlands, not as Conquering Heroes, but as the newly unemployed. Expectations have been dashed; hopes shattered.
Resentment first manifested itself against former employers. It has spread to resentment of government—against corruption and heavy handedness, and against the authorities for telling the people they were on the verge of becoming something that is not going to happen right now.
A wounded ego in one person is a dangerous thing. Wounded egos in a billion three is a potential cataclysm.
“imports plunged by 213%”
How exactly does any by-definition-positive quantity fall by more than 100%? And what did the writer actually mean to say instead?
I like Curious’s question.
Much more than the US, I would think China is in a very good position to prop up consumption, if not production. They have $2 trillion that the US is about to inflate away. Why not consume it now? Or at least a portion of it. It’s time for some generous unemployment benefits. Maybe just send every citizen a monthly stipend on top of that. Let the people spend the money that’s built up at the center. It may sound like bread and circuses, but it’s also just fair. The people earned it. Spend the money and float the RMB.
Overcapacity: this makes sense with respect to particular industries. But as a generalized proposition in the face of unemployment, it doesn’t. I don’t know how to solve it, but even so, I know that it doesn’t make sense.
Am I hallucinating? How can something fall more than 100%, and why has nobody else commented on this startling change in the way mathematics works?
This is not a positive to negative swing, although even if it was I don’t think it would be appropriate to state that anything fell by more than 100%.
The thing that most people have missed here is the revolution in agriculture that has occurred in most parts of China in the past 10 years.
Adoption of modern inputs, from fertilizer, pesticides, to the use of new improved varieties of seeds, use of manufactured feed for raising farm animals from chickens, geese to pigs and cattle, to the use of greenhouses to raise vegetables all year round, are techniques that make Chinese agriculture nearly unrecognizable from the past.
What this mean is that the arable land metric is difficult to use in a sensible manner to understand what is the art of the “possible” in agricultural output.
The problem is, will the influx of returnees to these areas generate sufficient economic activity (from their new found skills) to support the people in the rural areas?
I am cautiously optimistic that this can be done.
D
I had a length a few says ago posted on the extreme poverty in China for hundreds of millions of mostly inland farmers. As many as 100 millions formed the pool of migrant labor which manned the economic surge. Not only was the money sent back home used to lift the family out of the bottom poverty level of $1/day income toward the newer poverty level of $1.50/day. What happens when this outside income is removed? Also, while most funds were sent home, I am sure the workers experienced a better standard of living. Its a matter now of “How you’re gonna keep them down on the farm after they’ve seen Paree”
Or more precisely, the social psychologist Thomas Pettigrew, back in the 1960’s explored the results of rising expectation on the part of American Blacks. He predicted that if expectations increased more quickly then reality then we would get the anger we saw in the racial unrest of that time. Some see the LBJ Civil Rights legislation passed because of the need to “buy off” the risen expectations of this group.
From this position and the ubiquitous official corruption it seems unimaginable that there will not be major civil unrest.
The Chinese gov’t is well aware of this threat and has quickly promised to reestablish the Maoist social security net.
plschwartz
Yves, I know nothing about China. Here’s how it works in India:
– generally, there’s a famine, or crop failure of some kind (monsoon failure, say), or credit crisis (most subsistence agricultural land is leased). Result: the land can no longer provide, so it’s off to Chennai or Kolkata or Mumbai to survive.
– few willingly leave their families and social networks in the hinterland. They are forced to go.
– statistically, this automatically drives up per-capita GDP, because someone who was a member of a cashless and barter economy has now joined the formal economy. Note that social wealth has not actually increased; it’s just been formalized.
Five years go by, and there’s a problem in the cities. Exports dropped, maybe the monsoon failed across the country instead of just locally. You’ve gone back to your village once to get married, and you and your family never, ever want to go back to a place where the **** moneylender decides if your kids are getting a good schooling or not. Plus, you’ve been joined by relatives, and they look up to you as a success. Now what?
The answer is that I don’t know. But from my anecdotal evidence, you stay in the cities and try to make it work. In India, the government lowers the price of food to stave off social unrest (never mind that this screws the farmers even worse). I don’t know about China, but in India, getting off the land is emancipation. Some would go back, I’m sure, but most wouldn’t.
Either way, per-capita GDP is down. But GDP a poor measure of social progress when so much of the economy is informal, so I don’t see it as a big indicator of potential social unrest. This is not my expertise, though, so please let me know if I’m mistaken.
“More importantly, large numbers of Chinese are leaving the huge new industrial cities and going back to rural regions where they can at least find work growing their own food. What is more than a trickle now could become a flood. Those who have gone back to non-industrialized sections of the country will not be net consumers at all. With a short-lived and dwindling middle class, China no longer has the economic core to continue the “miracle”. China has just become another big country in trouble.
Vinny Goldberg here, and I hate to quote myself here, but I just can’t help it: “China will go back to doing what they do best, namely 15th century style peasantry, while we [the US] will go back to running the world.”
Time to crank up my favorite song, “Proud to be an American”, and have my French neighbor squirm a little more…lol
Vinny Goldberg has left the site.
When reading a lot of economic posts that weigh up complex issues such as currency, employment, trade, imports, exports and so forth I tend to see the direction as who is more screwed than who.
Surely it’s plain to see that we’re all stuffed. Relatively speaking those lower down the per capita GDP foodchain have a softer landing but otherwise it’s all looking messy.
However, I do think the U.S. and E.U are more open to civil unrest than China. The reason is simple. Disopbedience isn’t tolerated.
Wait till 30 something Essex boy can’t fill up his car. It will be unpleasant.
The U.S. is even more scary when I think of the sheer bewilderment in the event of breakdown of the food production and distribution system.
OK…Just saying right…
Charles Frith:
The fact that the American population owns guns will likely stimulate the government to ensure certain segments of the population more inclined to rioting are well supplied with food and heat. As such, I do not expect major rioting in the US, at least nothing worse than during the LA riots of the early ‘90s. Furthermore, the US truly has a very large police force and National Guard, certainly more than enough to keep law and order. Additionally, the US remains a resource and land rich nation able to switch to internal food production relatively quickly, and the American people remain a hardy and adaptive nation (thanks to those immigrant genes, I suppose).
On the other hand, Europe is in a lot more trouble. As is already seen, Putin is screwing Europe already, and he’ll probably go even further. As far as food goes, except for a few EU Western nations, agriculture in Europe is still in the Middle Ages. Just take a drive into Romania or Bulgaria, or Hungary, or other eastern EU member nations, and you’ll feel you’re in the 18th century. In fact, southern Italy, southern Spain, parts of France, and most of Greece (EU member for over 30 years) are so backward, they might as well be in Africa. As such, I expect large portions of the EU to enter near famine, followed by some form of revolution. The EU, whose days are numbered, will collapse, the East will return to Mama Russia, and the West will once again tuck-tailed beg the US to bail them out.
Vinny Goldberg out.
“The EU, whose days are numbered, will collapse, the East will return to Mama Russia, and the West will once again tuck-tailed beg the US to bail them out.”
Probably you said the same thing about euro, didn’t you? Cannot possible survice because Europeans are so weak blah blah blah.
It is the USA whose days are numbered despite all that buu-haa macho talk BEHIND the mercenary army. We will see how you manage as country with real SHTF coming soon very close to you. Katrina really did show how internally weak and undisciplined country USA really is.
There was an arrogance and a swagger that, while being reminiscent of 1960’s Americans and 1980’s Japanese, quickly got the folks from the Middle Kingdom the moniker of “Ugly Chinese” in much of Asia.
Yes, this is true. Recall the anti-Chinese riots in Indonesia in the late 90’s. And there is similar resentment in the Philippines and Malaysia.
Unchecked xenophobia is why I think East Asia will be the epic center of the next major military conflict.
Charles Frith: You are wrong, Americans are much too complacent to get angry. They’ll wait to be told what to do in a crisis for the most part, with a few manageable exceptions. They won’t target the government either.
In China, just like everywhere in Asia, people are much more likely to mobilize, especially against the government or any authorities. But this, as mentioned before, happens only when expectations are shattered and when there is a sign of weakness on the part of the authorities.
I think unrest in China is unlikely because nationalism is very high, and I believe that the authorities will have to feed this nationalism further by putting the blame of their situation on someone else, probably the US. People will be willing to go through rough times if they are provided for during a believed “temporary” phase of difficulties. This will give time to the government to make difficult changes to its economy and social structure without unrest directed at itself.
I think we will see the following:
1- Limited unrest due to massive job losses.
2- The government will quickly intervene to provide the people with the basic necessities for a certain time while acting to soften their situations.
3- The government will look for an alternative to reliance on anything American, an attitude it will make very public to increase nationalism and put the blame on the West, especially the US.
4- This will probably lead to a strengthening of relations among Asian countries, based on hopes and pride that this is an opportunity for them to free themselves from the needs of a weakened USA that will never go back to its former “glory”.
5- And then a finality, whatever it may be.
When has an industrializing nation that has witnessed a massive influx of people from the countryside to the cities ever seen those same people go back to agrarian lifestyles in the face of an economic collapse? Never, so far as I know.
China’s very unique for one key reason: rural property has always been non-transferable. (Note: … planned reforms announced 3 months ago will change this fact, going forward.)
In every other developing/industrializing nation, the rural poor have had the “right” to sell their property for whatever pittance in order to fund migration to the cities.
In China, that hasn’t been an option. Legally, rural land is only owned collectively, and no individual is able to cash out of their ownership. Therefore, any migrant worker you see in China still owns land somewhere in China, the same land he/she was working 10 years ago. That gives people an option to “go home” simply not available to residents in Brazilian or Indian slums.
Hey, that’s my theory! :D
commenting on it.
Well, I mean. In the end we need hard statistic right? demogrpahic, social compositions, ground reporting. Unfortunately those numbers are hard to come by. I am using my general observation, from what I know/heard.
I simply don’t see China doing big implosion like US. Slowdown maybe, but not crashing like US. That place is liquid.
I guess we’ll just have to see months from now.
” ruetheday said…
Agreed. When has an industrializing nation that has witnessed a massive influx of people from the countryside to the cities ever seen those same people go back to agrarian lifestyles in the face of an economic collapse? Never, so far as I know. Unless you count the building of shanty towns on the edges of garbage dumps where people can forage for food in the absence of employment as “farming”.”
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not all of them but a lot of the laid off workers are mostly young, just graduating, female, etc. These are the toys, garment, small appliances assemblies. Most affected by the crash. Most of them are migrant workers. (eg. notice how annually people travel back to the home village. These are not like US thanksgiving, but really “home”/family root.) Until very recently, in china you need a very strick residential permit to live anywhere. Moving around setting up new legal residency isn’t exactly easy in china. (again, family root, village life, property ownership, residential permit, are not the same as in western country. Population movement was highly controled until recently in China. So to most people urban/industrial life is very new and not deeply rooted. Less than 10 years. Family ties are elsewhere.)
The big question are skilled labor, like ship buildings, heavy machine operators. those usually are rooted in the city and firmly middle class. (with houses, mortgage, cars, etc)
Sy Krass said…
Uh guys, that read 21.3% not 213%