Bear in a China Shop
By Callimachus | Related entries in Foreign Policy, The WorldMinxin Pei, the China hand at the Carnegie Endowment for International Peace, writing in Foreign Policy, predicts “China’s future will be decay, not democracy.”
China’s economic performance since 1979, for example, is actually less impressive than that of its East Asian neighbors, such as Japan, South Korea, and Taiwan, during comparable periods of growth. Its banking system, which costs Beijing about 30 percent of annual GDP in bailouts, is saddled with nonperforming loans and is probably the most fragile in Asia. The comparison with India is especially striking. In six major industrial sectors (ranging from autos to telecom), from 1999 to 2003, Indian companies delivered rates of return on investment that were 80 to 200 percent higher than their Chinese counterparts. The often breathless conventional wisdom on China’s economic reform overlooks major flaws that render many predictions about China’s trajectory misleading, if not downright hazardous.
Pei focuses on China’s internal problems, but, if his gloomy forecast is correct, this could have serious consequences for the region and the world. For one, long experience in the 20th century has suggested that the most fertile breeding ground for military adventurism and terrorism is a nation with a disproportionate population of young males who have little hope of economic advancement or marriage and family. And, at least in terms of population, that’s where China is heading.
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