Crisis Coming in China?
Tim Duy at Economonitor follows up on a recent FT Alphaville series (I have come to really love Alphaville, by the way) concerning the possible signs of massive cash outflows from China. Duy is of course correct in that massive capital flight from China is probably a good leading indicator of meaningful economic trouble ahead – after all, the economic indicators there are really quite opaque and capital flight would represent one of the few unambiguous signs for outsiders if there was about to be a real economic collapse. I am clearly not qualified to judge how convincing these arguments are.
However, I am going to go out on a limb here and guess that predictions of political turmoil and/or collapse in China following an economic crisis are overblown. It’s a given in popular Western discourse on China that people merely put up with the Communist regime because it delivers solid economic growth, but I don’t think that’s an accurate depiction of really how any people think. Westerners find it inconceivable that we would tolerate living under an oppressive regime because it delivers economic growth, and I think it’s odd that this mindset is so easily imputed to Chinese people.
The popular take on Russia is pretty illustrative – there an oppressive government has done away with democracy and yet has massive popular consent. It’s also delivered impressive economic growth for the most part, but that’s not why Putin and his faction are popular. His governance has delivered security, an assertive and independent foreign policy, and has generally been successful at claiming legitimacy (if not electoral legitimacy). Elections are rigged…but Putin would win even if they weren’t!
I strongly suspect that the achievements of the Chinese Communist Party in delivering order, growth, and world prominence have endowed with more legitimacy in the eyes of the people than facile American commentators would assume. Furthermore, I just don’t see any real potential alternative power structures around which opposition to the regime would be constituted. The same could be said of Egypt in 2011, but China in 2012 has not been ruled and immiserated by a sclerotic military regime for the last 30 years. It’s always tough to make confident predictions…but suffice it to say I would expect Communist Party power in China to be pretty resilient in the face of even a very serious economic crisis.