GATHERING STORM CLOUDS OVER CHINA
(…as its economy deflates from its zippydee-doo-dah skateboard mode)

The gathering storm clouds over China from current economic, political, and social turmoil is causing renewed – China Syndrome – concerns in the rest of the global community.

As its economy deflates from its previous zippydee-doo-dah skateboard mode to that of a more sedate tricycle’s pace, that process, combined with the Euro Zone’s rapidly fading financial credibility, and America’s anemic re-start of its economic engine’s performance, is increasing everyone’s anxieties and certitudes that the entire planet’s economic machinery is about to implode and go to hell in a hand basket.

None of that is true, of course, but still, if a boomer economy like China seems headed for the same kind or recessionary conditions as in the rest of our world…such a viewpoint may not be too far off the mark.

Actually, in China’s case however, it’s more about transitioning from an export oriented economic model (mass producing low quality, low priced goods and services for foreign markets), and shifting towards a new model focused on producing higher quality, better value goods and services for an expanding consumer domestic market instead. That’s not an easy shift to accomplish under any conditions, but, with its mountain of accumulated cash resources from the former, some two billion in population, and a well developed infrastructure, China should be expected to do it with relatively few hiccups along the way. The question is, however, does it have the political smarts and matrix to do so.

Frankly, maybe not, here’s why:

–       The Chinese Communist Party’s previous absolute hold on the levers of political and economic power has progressively eroded over the past three decades.

–       In the process it has morphed from a purely ideologically driven system into a totally corrupt oligarchic one instead, gorging on the cow-pie of wealth those decades of economic boom have produced for it.

–       While that process has helped it avoid the chaos which followed the collapse of its neighboring Russian Soviet system, it may have set the scene for something ultimately less desirable for China. That is, conflicts within that oligarchic collective, ending up with a new form of dictatorship.

–       And of all those oligarchic interests involved the one most likely to emerge as the top ruling dragon from such conflicts is…the PLA…because, since it controls the military, and most of the security apparatus as well, its octopus-like tentacles reach down to almost every level of Chinese society and enterprise.

–       Thus, its hierarchs are in a prime position to take control over those levers of economic and political power, as the new overlords of a system organized and structured along the lines of the old – Cosa Nostra – with a supreme council of a half dozen or so “Dons” replacing the Party’s –Politburo – and its cadres, with its own “syndicated” establishment.

–       To what extent the PLA hierarchs can do so will depend a lot on how effectively they can ‘accommodate” those other oligarchic interests outside of the PLA…into their new order of things. The current political maneuverings and turmoil we see there may be a precursor of things to come.

–       The only optimistic aspect of this situation is that the Chinese are, above all, supreme pragmatists, and no one there wants to kill the golden economic goose that’s been lining their pockets so well for all those decades. So the odds are such a transition will be done in a relatively peaceful way.

–       The only wild card in all this is the Chinese people themselves. Having had some thirty years of ever expanding economic and personal freedom, they are not likely now to tamely accept exchanging one system of dictatorship for a new one that might try to limit or restrict further expansion of those freedoms. But since the new generation of power elites are mostly self-made and drawn from a broader pool of the people than before, these are more likely to provide a workable framework to allow greater opportunity for both economic and social mobility, as their political guide for how they’ll react to their people’s  desire for…more.

How it will all end…remains to be seen.

CENTURION