China: April 2009 Archives

China's exports fell by more than 17% in March, following a decline of 25.7% in February. This has been the trend for the last five months, since the beginning of the global financial crisis. About 140 million of China's migrant workers work in export industries. According to official figures, about 23 million of them lost their job since the beginning of the year. Many were sent on long "vacations" and/or are working less hours per week. The figures are based on data from December 2008, and cover only migrant workers, the most vulnerable segment of the local workforce. A more moderate rise in unemployment is visible in other parts of the economy as well. Taking into account the continued deceleration of China's growth over the past 4 months, it is safe to assume that the number of unemployed is now higher. 

An old Jewish joke says that modern society is based on the ideas of three old men: Marx said "Everything is about Money". Freud said "Everything is about Sex". Then, Einstein arrived and concluded that "Everything is Relative".

The Chinese economy has slowed down dramatically over the past six months and demand for real estate in China's major cities declined sharply. Concurrently, new data has been published about the disparity between China's male and female citizens and the subsequent troubles Chinese men face when trying to find a wife. Now, a local Real Estate Developer is trying to strike a new balance between Marx and Freud in order to get the market going again.

One of China's most severe problems is the huge gap between the way it sees itself and the way it really is. China is a self-styled superpower but it responds hysterically to the slightest criticism. It boasts "5,000 years of history" but spent most of the 20th century erasing every trace of its own culture. It is a country in which harmony is the most popular word but disparity is the most common attribute. Etc. etc.

This gap between subjective and objective reality is one of the most destructive factors in China's modern history. It prevented the country from pursuing proper reforms after its first contact with the western powers, and led it (proudly) into a century of humiliation and defeat. Since then, the Qing dynasty has been replaced by the CCP, but the perception gap remains wide, and seems to be expanding.

An economic crisis is upon us, and the public (finally) seems to be fed up with financial types who see the world through charts and graphs. The common view is that economic "experts" have led us into this mess. Now more than ever, it is clear that economics, unlike physics or chemistry, cannot make accurate predictions about real situations based on empirical research. This is because its subject matter is influenced by natural, political, psychological, and cultural factors. Thus, economics can mostly be used to test theoretical assumptions about isolated phenomena and describe processes after the fact.

Still, a quick look at internet traffic over the past twelve months reveals an interesting trend: traffic for the web sites of some of the world's most popular economists - Paul Krugman, Brad DeLong, and Nuriel Roubini - has grown by an average of more than 160%. Krugman's blog on the New York Times web site enjoyed a growth of more than 260%, while the site's overall growth stood at slightly more than 22%. The bulk of the growth has been during the past six months. One could argue that at times of crisis, people consume more news. However, traffic for the world's most popular news web sites - CNN, International Herlad Times, and the BBC - has grown by an average of less than 6% during the same period.

I am now reading Jonathan Fenby's biography of "Chiang Kai Shek and the China He Lost". One of the interesting bits in the book is the fact that 75% of all cadets at the Whampoa Military Academy came from relatively well to do families and were either sons of landlords, middle-income farmers, or local officials.

The academy was established by the KMT (China's Nationalist Party) in 1924 in Guangdong province, and served as the breeding ground for China's leading revolutionaries. Nationalist and Communist figures such as Chiang Kai Shek, Zhou Enlai, Lin Biao, and even Vietnam's Ho Chi Min were among the academy's instructors and graduates. Mao Zedong, the son of a well to do farmer,  was never a student at the academy, but served as the Director of Propaganda for the KMT between 1925 and 1927.

At times like these, it is especially important to remember that China's revolutions were almost always instigated and managed by people from the country's small middle class. So, while today - as before - the country's farmers don't have the means to bring about political change, it is their rich compatriots in the cities that the government shoud be more worried about. And it is.

The discussion surrounding the global financial crisis is plagued with dishonesty. In most cases, the crisis is used by commentators and politicians as an excuse to promote their agenda - big/small government, nationalization/chapter 11 for banks, more/less regulation, etc.

While US commentators differ widely in their analysis of the causes for the crisis and their proposed solutions, most of them have one thing in common: a reluctance to accept the fact that the crisis was caused by anyone other than the US and that the prevention of the next crisis requires more than just regulatory and political change in the US. In a Post Traumatic Stress Disorder of sorts, Americans blame themselves for the crisis, and seem to enjoy describing the fall of their own empire and the invalidity of their own values.

And so, I was pleasantly surprised to read Paul Krugman's article in yesterday's New York Times. Krugman seems to be America's new economic oracle, and has been an ardent critic of Bush and Obama's response to the current crisis. In the article, Krugman is finally pointing his analytical skills towards China and stating a few important facts:

Danwei is running a T-Shirt design competition. The theme must have "some connection with Danwei's content, or the meaning of the Chinese word 'danwei'". My contribution is below.



For those not familiar with China: The text - 为人民服务 - means "Serve the People", an old Communist maxim. The image is based on the signature look of Chinese government officials.