Economic Crisis Forces China to its Knees - If Only Temporarily
James Fallows | The Atlantic | March 2009
In China signs of the crisis are highly visible: abandoned factories and container ships, bankruptcies, massive migration to the Chinese countryside, and ironically clean air. Due to the large quantities of goods produced in China, which currently find no buyers, the country seems to suffer more under today's economic situation than any other. Many, therefore, consider this the end of the Chinese success story.
Certain Chinese pessimists especially enjoy comparisons with Japan and the former Soviet Union. Parallels to the Japanese economic misery experienced in the 80s and 90s seem particularly far-fetched. Nevertheless, some still consider whether the Chinese economy could, from one day to the next, succumb to the crisis and subsequently require over two decades to recover, as was the case with the Japanese economy. Comparisons with the former Soviet Union usual follow a political tack: whether the economic chaos could signify the end of days for authoritarian rule in China. Finally, the increasing growth and affluence of the country should be, in the eyes of many Chinese, the only legitimate basis for political leadership. However, if the obvious risks and problems of China's ascent in the past years could do nothing to slow its growth - such as environmental pollution, water scarcity, corruption, the schism between rich and poor, and insufficient safety standards - how could Soviet-style social displeasure unhinge the current government - simply because things are going slightly worse than in previous years? In China there has been and still remains great poverty. Furthermore, in the foreseeable future Chinese jobs will consistently be among those at the lower end of the value-added market chain. And nothing seems to indicate that public resentment for the current situation is directed against the authoritarian regime.
The probability is much higher that China will use this time of crisis to develop innovative products and secure high earning and highly skilled jobs positions in the long-term, which have been claimed by the United States for decades. Even in the midst of the economic chaos, affluent Chinese businesses are seeking to finally accomplish what, up until now, very few in China have managed: establish a high quality technology products market capable of yielding high earnings. The best example of such a firm is BYD, a start-up company founded in the 90s. At a recent car exhibition in Detroit BYD presented the first mass-produced, battery-powered, hybrid car, which can be plugged into a standard household outlet. The official goal of the company is to become the biggest car manufacturer in China by 2015 and worldwide by 2025. It is companies like BYD who could perhaps compliment the objectives of the Chinese government in the near future by keeping a greater share of added-value product earnings in China.
This summary was prepared by the Atlantic Community editorial team from "China's Way Forward," published here by The Atlantic, April 2009.
