Doomsday predictions
M V Kamath There are, as everyone knows, scores of
India-bashers who have little love for India and even less for Indians.
From Katherine Mayo down to contemporary India-specialists there have not
been people wanting who were convinced that India is going down the drain.
To them there is nothing good about India and little positive to say. But
one has come across very few China-bashers. For some reason China has
always fascinated Westerners, especially Americans. Right from Edgar Snow
onwards there have been writers and commentators who have invariably
presented China in a sympathetic vein. Gordon G. Chang the author of this
book is a rare exception. Brought up as most people in India are to treat
China with some respect if not awe, it is hard to take this book which
speaks authoritatively of the coming collapse of China seriously.
Chang’s credentials are not to be sneezed at. He has lived and worked
in China for almost 20 years, most recently in Shanghai, as Counsel to the
American law firm Paul Weiss. His articles on China, goes the claim, have
appeared in The New York Times, The Asian Wall Street
Journal, The Far Eastern Economic Review, The International
Herald Tribune and not the least in South China Morning Post
and reportedly he has been interviewed as an expert of developments in
China by CNN, CNBC and the BBC. It is therefore hard to dismiss Chang as a
nonentity not to be taken seriously. According to him China looks powerful
and dynamic and those who have visited China briefly and seen the
splendour that is Shanghai have come wide-eyed with wonder. But, says
Chang, China, is a "paper tiger". As he puts it: "Peer beneath the
surface and there is a weak China, one that is in long-term decline and
even on the verge of collapse. The symptoms of decay are to be seen
everywhere". Chang points out to many factors. He says there are "armies
of the unemployed roaming China, the single most immediate threat to the
continued existence of the Party and the government it dominates". More
significantly, he says that "at any one time, the unemployed and
underemployed exceed the combined population of France, Germany and the
United Kingdom". Can’t we say that about India as well? Then again Chang
says: "The symptoms of economic decline are all too evident. State-owned
enterprises.... are uneconomic. The state-owned banks are hopelessly
insolvent, as a group the weakest in the world. Deflation has gripped
China for more than three years. Mountains of obsolete inventory scar
balance sheets. Foreign investment stagnates. Corruption eats away at the
fabric of the economy and foreign currency fees the country". How much of
that can’t we say of India as well? This book was first published in 2001,
hardly two years ago. Writes Chang: "As time passes, the underlying
problems fester. Economic dislocations become social ones, with dark
political overtones. At some point in time there will be no solution. Then
the economy and the government will collapse. We are not far from that
time." Really? Either Chang is wrong or our international news agencies
are not telling the truth. He says that "virtually every day unpaid
workers, resentful peasants and other disaffected elements of society take
to the streets.... One day the central government will not be able to
maintain social order... When that time comes the consequences will be
severs... No government can withstand the will of all of its people". Is
this wishful thanking? Is this overreaction to the situation as it exists?
Not that Chang is always critical. He concedes that "in the extraordinary
era from 1978 through the middle of the 1990s China had the
fastest-growing economy in the world, perhaps the fastest in world
history". He also concedes that Deng Xioping remade China "and, on balance
it is a far better country for all that he did". Soft it is not that Chang
is unmindful of the positive side of China and its economy. What he
therefore has to write about, for instance, Public Sector Enterprises
should be taken seriously. These State owned Enterprises apparently have
been losing heavily, with workers, in turn losing their jobs. Writes
Chang: "They used to demonstrate in the tens and hundreds. Now they
protest in the thousands and tens of thousands". That is a dangerous
situation. Shocking is Chang’s charge that the government has been cooking
figures and telling wholesale lies. Cadres falsified statistics and
Beijing leaders pretended not to notice. There is an entire chapter on
banking in China and it is anything but complimentary. Banks have been
failing "almost every week". Depositors took to the stacks. The Big Four
Banks were insolvent. But were they dead? As Chang puts it: "No. Not only
are they alive, they are actually thriving. Their story shows that when a
country designs a system free from economic constraints, almost any
situation, even one completely divorced from reality, can exist"! And he
adds: "Beijing will do everything in its power to keep the state banks
alive. That, however, does not mean that they are assured of survival. It
just means that of all segments of the economy, banking will be the last
the fall". If what Change says is true — and there are many who agree with
him — China has been playing with statistics and they are not reliable.
Change asks: "How can Beijing’s technocrats know what they’re doing when
their statistics hide the truth? No one knows how much more debt the
Central Government can take on because no one’s working from the facts".
It is an amazing statement to make. But it is apparently true. Chang has
even less praise for China’s legal system. Me calls the Courts "crippled"
because they can’t deliver justice. Chang says "it will take years for
China to develop laws protecting shareholders" and he adds: The courts
won’t help because the Party will not made them enough power. Jiang Zemin
is resisting reforms that would weaken the Party authority over state
enterprises". Such is the situation in China as Chang sees it. The
Communist Party apparently has been struggling to keen up with great
changes over the last two decades "but now it is beginning to fail as it
often cannot provide the basic needs of its people". Corruption and
malfeasance have been eroding the Party’s support from shall hamlet to
great city. Central government leaders do not know what to do as the
institutions built over five decade have become feeble. This is a
different China from the China we have been hearing of and one suddenly
becomes aware that things in that great country are not what they seem.
How should India react to such a situation? Obviously with caution. It is
not that India is perfect, but then India has its advantages, the chief of
which is democracy and the prevalence of the will of the people. The
Courts function and people abide by the law. China, it transpires, has
been vowelised to the gullible among us. But even as one reads through
The Coming Collapse of China one wonders whether like Communist
Party threnodists, this author, too, is taking us for a ride. What is
Truth? The Roman Viceroy Pilate is supposed to have asked. We may not know
it completely. Truth has many sides but the wise will never let their
armour down. India certainly shouldn’t.
