Long on China, Short on the United States
by Tim Swanson
by Tim Swanson
The year is 1969. Chairman Mao is beginning to construct underground escape tunnels throughout Beijing and anticipates a Soviet invasion and bombardment within days. The PRC has just detonated its first hydrogen thermonuclear device in Lop Nur and the countryside is seething in a book-burning cultural revolution. To many foreign observers, the end of China is imminent.
The year is 1979. Soft-spoken minister Deng is quickly drawing up agricultural-reform plans to prevent widespread famine and to stymie civil unrest. Border skirmishes between the PLA and Vietnam turn into a hot war involving tens of infantry divisions. Total foreign investment amounts to a mere $800,000. To many foreign observers, the end of China is imminent.
The year is 1989. Perestroika-minded Gorbachev visits Beijing to repair diplomatic dialogue. International media outlets cover the bilateral event while thousands of students simultaneously occupy Tiananmen Square. By the end of the summer, tanks roll through the city and multinational businesses leave once again. To many foreign observers, the end of China is imminent.
The year is 1999. President Jiang continues reforms and privatizes thousands of state-owned enterprises putting more than 4 million Chinese temporarily out of work. Currency collapses sweep across East Asia smothering South Korea and Thailand. Industry leaders such as Daewoo go bankrupt. The IMF lends tens of billions of dollars to several emerging countries as their stock markets crash. During this period, China's GDP drops more than 2.5% as exports slow. To many foreign observers, the end of China is imminent.
The year is 2009. China's GDP growth slows to an unimaginable 5%. Exports to the developed world nearly stop as demand shrivels into the single digits. Half of all toy-exporting factories have closed, sending tens of thousands back to their family farms. Many foreign owners have quietly left the factories, leaving behind unpaid workers. Mainland stock markets continue to dip as listed firms repair balance sheets and account for losses from overseas investments. To many foreign observers, the end of China is imminent.
January 21, 2009
Tim Swanson [send him mail] is a graduate of Texas A&M University and is shivering his timbers in central China. Visit his blog.
Copyright © 2009 Ludwig von Mises Institute
