On The Centennial Of The Chinese Communist Party

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Yves here. On the one hand, the Chinese Communist Party does deserve a lot of credit for the simply remarkable rise in living standards in China. I don’t know if this factoid is still true, but as of about ten years ago, Jospeh Stiglitz pointed out that all of the reduction in poverty in developing economies was due to the rise of China. Other low income countries, on average, had stood still as China marched ahead.

On the other, the Chinese Communist Party’s apparent success was due in large measure to China being allowed to enter the WTO despite not meeting its entry conditions. The US was particularly keen to see China join, since the belief was that a more prosperous China would become more democratic and therefore aligned with the West. That movie didn’t work out according to script.

Finally, I wonder what readers make of the closing jibe about Taiwan. I must confess to not knowing much about its founding period, but I would assume that the Chinese who fled were not peasants. If true, having a high or even moderate skill level in population would seem to confer considerable advantage.

By Barkley Rosser, Professor of Economics at James Madison University in Harrisonburg, Virginia. Originally published at EconoSpeak

July 1, 2021 is now over in China but for a few more moments it is still the centennial of the Chinese Communist Party where I am. Just a couple of observations. This is partly driven by seeing multiple posts on Econbrowser by “ltr” praising the Chinese Communist Party and not allowing for even a hint of crirticism.

So indeed there is much to praise in the Peoples’ Republic of China (PRC) today, with indeed by and large the CCP able to take credit for leading to these outcomes. These include such widely publicized matters as apparently eliminating deep poverty, having a successful space program that is matching achievements made by the US in the past and is moving into new ones in the future such as a joint moon base with Russia. It also includes developing a substantial solar energy industry, and getting the largest real economy in the world according to PPP GDP measure. There is much more, a lot more.

Of course, most critics note current problems that are being either ignored or lied about, with the treatment of the Uyghurs in Xinjiang at the top of the list. But policy in other minority areas such as Tibet, suppression of liberties in Hong Kong, aggressive policies towards many neighbors, and suppression of efforts to determine the origin of the Covid-19 virus.

However, I think the Chinese Communist Party should be willing to admit some past disasters, especially as they can argue they have moved beyond them, overcome them. At the top of this list is the massive famine in which millions died that accompanied the Great Leap Forward. There is also the horrible mistreatment of many people during the Great Proletarian Cultural Revolution. These were excesses of Maoism. But they were overcome by following the Dengist reforms later, with Deng Xiaoping labeling the Mao legacy ad 70% good and 30% bad.

More deeply there is the problem that if one compares the PRC to the ROC, the government on Taiwan, which predated the Chinese Communist Party, its record is simply far superior. Aside from things that can be achieved by a very large country, Taiwan has a superior performance on pretty much all economic, social, and political measures. The latter not only is a functioning two party democracy, but it has a far higher real per capita income, as well as much greater income equality.

The Chinese Communist Party could have done a lot better.

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  1. ambrit

    It is arguable that the primary ‘success’ story of the CCP is the enforced limitation of the countries population due to the “One Child” policy. Imagine a China today with a population of two billion plus people.
    Another positive aspect of the CCP’s record is that there are no outside “Spheres of Interest” in the country today. For good or ill, China is making it’s own way in the historical arena. The West has to respect that fact.

    1. PlutoniumKun

      Demographic assessments I’ve seen indicate that the one child family did little to change the overall trends of population growth and stability – at most it took a chunk of around 200 million people from 2 or 3 age cohorts. For whatever reasons, nearly all Asian societies seem to go through a process of rapid population growth as they go into middle income, and then face a very rapid and fast decline – the trends in South Korea, Taiwan and Japan are very similar. China is already starting to panic over a coming decline in people of working age and is trying to encourage people to have more children. As usual they are trying to do it by exhortation rather than, for example, providing good quality parental leave and free childcare.

      1. ambrit

        I have read that large families are often a product of non-industrial agricultural societies’ ‘need’ for labour. When the society transitions into an urban, industrial economy, population is self limited by families no longer needing ‘extra’ hands to do agricultural labour. That’s the theory anyway. As with anything human based, there is a lag between ’cause’ and ‘effect.’ In a large population, such a ‘lag’ can be very big.
        In the West, I would observe that a ‘lagging’ population of working age people is made up through immigration from the regional hinterlands. To that end, it can be argued that Capitalists are using a truly class based calculus. The “owning” class imports needed “working” class “organic units of production.” Correct me if I am wrong, but I perceive a strong xenophobia in the Chinese cultural complex. (Attitudes in Japan are similar from what I read.) [It is quite possible that I am missing the extent of Western xenophobia due to being embedded in the West.]
        Sorry for the ramble.

        1. PlutoniumKun

          To an extent this is true, but there are other forces at work. A key reason why Asian societies seem to go into rapid demographic decline seems to be a capitalist insistence on pushing women to work while not providing adequate childcare or allowing them to take long periods of leave from work without losing their position in the pecking order. Its tough enough being a woman in a Japanese company without asking for a year off because you want a child. Northern European countries with stronger protections tend to maintain (slightly) higher birthrates.

          Many Asian countries are, for cultural reasons, very averse to immigration – or at least immigration from countries that they see as a little beneath them (i.e. their poorer Asian neighbours). I’m not sure if this is sustainable for them in the long term, but many seem willing to take an economic hit. Their big domestic capitalist companies may disagree, but in most cases they seem to be losing the argument.

          Interestingly, China is now going through this process as they run out of a cheap wave of young workers. It will be interesting to see how they deal with it.

          1. ambrit

            It will depend on how resilient the CCP ethos is. If China follows the neo-liberal Western model and relies exclusively on ‘automation’ to make up any ‘productivity’ gaps, then trouble will not be far from their door. However, if a “saner” world view holds sway, and the ‘public good’ is elevated above any ‘private good,’ then china will have a good chance to remain united and stable. I always try to remember that stability is a primary goal in that culture. (This is the most ironic part of the equation. Radical collectivism was promoted in what is arguably one of the most “conservative” cultures in the world today.)
            Stay safe, be vigilant.

          1. ambrit

            This also ties in with my observation concerning the change over from the older labour intensive methods of farming to industrial farming techniques. (I would consider the introduction of mechanical farming machinery as a type of “Industrial Revolution” in the field of agriculture.) As the labour part of the farming equation decreases, women, having been relegated to the status of ‘brood mare’ for the production of “Organic Units of Production” in the agricultural sphere, have been freed up to divert much of the time and labour involved in the production of those “Organic Units of Production” to other pursuits.
            Of more recent vintage, the development of practical methods of birth control have also tended to free women from the status of “brood mares.” Previously, women died frequently from birth complications. The extra “Organic Unit of Production” generally died with the birth mother. Secondly, a primary form of population control before “modern” birth control was infanticide. I can imagine a woman becoming depressed and eventually psychotic from the experience of having some of her children whisked away to never be seen again. So, I’ll posit this change in women’s lives as a net positive for their mental health.
            As for “Ramble On.” I immediately looked up the Led Zep song of the same name and rocked out while helping Phyl do breakfast.
            “Oh come on now! Give me a break! I just woke up!”
            Back to headphones for this ageing geezer.
            Stay safe and keep those Pink Bunny Slippers communication devices in good order. Who knows when Fearless Leader will give us “the Call.”

        2. Susan the other

          We, the West, are the ones who have been pushing China to (first) export export export, and (now) import import import. But we aren’t reading the Chinese very successfully. Their manufacturing and export economic complex really can’t be sacrificed, nor can they automate too quickly when there are still so many people to employ. For us to expect China to change too rapidly is not all that rational. I don’t see China being able to organize a social transformation into wide spread social spending and well being without maintaining its manufacturing and export focus, but China is looking down the road to an aging population and a low birth rate. The only way modern countries can solve that problem (which the entire planet is facing) is by state organization for all the social necessities. That takes time. Look at the mess we’re in – even Pelosi and Biden are disagreeing. The same applies to Taiwan – yes they received lots of money and help from us over the decades, but we’re all in the same boat now.

          1. ambrit

            Agreed about China’s internal dynamic. It seems that the CCP hasn’t got the memo yet that globalization supercedes any “national” interests. Being such a large part of the global economy, I would not be surprised to see China say no very forcefully to some of the Neo-liberal Apparat’s demands.
            “..we’re all in the same boat now.” A very leaky and foundering lifeboat at that!

    2. vlade

      I disagree with your last two sentences. China is just more subtle about it than say the US, or even Russia.

      But it’s definitely trying to widen it’s sphere of influence, in many ways – as it was almost all the time ex 19th century.

      In the 16th century China was about a quarter of what it’s now IIRC, area-wise.

      1. ambrit

        I’d say that China was trying to widen it’s “sphere of interest” out of a perceived necessity to counter the “soft imperialism” of the West. Chinese “cultural exceptionalism” can be likened to the West’s explicit “cultural exceptionalism” of the Colonial Period. Both establish a “narrative” that ‘supports’ and ‘enables’ the appropriate elites’ “right” to rule.
        (I have seen it argued that ‘modern’ China is an example of an ideological “sphere of interest” in action. The country was, the argument goes, colonized by Marxism.)
        As for the 16th century ‘area’ of China, I’d observe that this might have been roughly true concerning the Han Chinese population, but that, as with every significant political “empire,” the cultural complex really defines a polity. In the 16th century for example, what is now Germany was a hodge podge of petty states, all speaking a more or less identifiable form of one language, German. (Real German speakers will no doubt laugh out loud at this conciet, but that is how it looks from the outside.)

      2. Zamfir

        If I read ambrit correctly, they mean that the CCP successfully limited foreign powers within China, after a century where the country suffered greatly from such influence. That seems correct to me, and somewhat separate from Chinese efforts to widen its own sphere of influence.

        This might also be relevant to the comparison with Taiwan. Taiwan (and South Korea and Japan) joined the wealthy US sphere of influence. The US then chose not to exploit its position of power (or at least, not too much), because it preferred to have strong allies in the region.

        I don’t think that option was ever on the table for mainland China.

        1. vlade

          Ok, if his reference was that China got out of the humilitations of the 19th century (continued till after WW2), I agree on that.

          That said, it was always a self-imposed defeat, compare with Japan. Most people in the mid 19th century expected China to take the path Japan did, but when it didn’t they jumped on the weakness.

          The ruling Chinese classes at the time were way too arogant (for many reasons) to accept there was anything to learn from outsiders, unlike Japan (and similar to the today’s US and West in more general).

          1. ambrit

            I’ve been thinking about this and observed that one of the main intellectual ‘reforms’ of last century China was the replacement of the ideograph based written form of Chinese with a phonetic based written form of the tongue.
            To become a Mandarin, and thus a member of the extant Chinese Imperial PMC, one needed to master the ideograph form of the language. With over four thousand ideographs, this was a lifetime endeavour. Working class people simply did not have the time to devote to this. Persons of exceptional language skills or members of the leisure class were the primary sources of literate people in that China. This limited admittance to the upper echelons of the Chinese Civil Service. After the introduction of the phonetic based written form of the language, any reasonably intelligent person could become “civilized.” The leadership cadres were greatly expanded, leading to the introduction of competing points of view on policy due to the sheer proliferation of literate persons.
            Anyway, that’s my story and I’m sticking to it.

            1. Zamfir

              The “simplified” writing system is not phonetic though? The characters often use phonetic clues, but so do the traditional characters. The simplified system mostly makes the characters themselves simpler, with less strokes to write them and more standardized components in them.

              Kids learn some thousands of characters in school, it’s a huge endeavour but hardly the study of a lifetime. Taiwanese kids learn the traditional characters, it does not appear to make much difference in practice.

          2. John

            The two Opium Wars and the Taiping rebellion predated the Meiji Revolution in Japan. The West, with Britain and France in the lead, took every advantage of China’s weakness and distraction that they could and did not let go until forced to in the mid-twentieth century. There is a famous political cartoon from 1901 which has the monarchs of Europe about to carve up the “Chinese pie.” The Japanese are looking on with interest. I cannot recall off hand if the USA is at the table, but you can be sure that we would eagerly have shared in any gains. Open Door, you know.

            1. vlade

              I’d actually argue that the difference between Japan and China was that in Japan the faction that understood they can’t stay as they were won (after a civil war), but in China it didn’t. Japan had treaties imposed on it too, same as China had, which lead to an economic collapse.

              The problem with China was that under the Empire, it wasn’t actually as tightly controlled as most people think, and the prefectures/provinces had quite a bit of autonomy. It was much harder to get everyone to pull together – basically, civil war was the only way to do it, which is why it was only after the WW2 that China became reasonably centralised again.

              Japan had its civil war in the 19th century, and by late 1860s could move on. China didn’t until early 20th, and with Japan getting involved, it didn’t get resolved until after WW2, and neither Great Leap nor Cultural Revolution helped. So it wasn’t until late 70s, early 80s when it could have started getting sorted.

  2. PlutoniumKun

    Taiwan had a very significant advantage (as did Singapore), in that fleeing Nationalists took a significant amount of capital with it from China when it was formed (a quick look around the main museum in Taipei and compare it to any museum in mainland China is enlightening – the Nationalists basically hauled everything of value with them they could find). I’ve never seen any analysis about the make up of mainland immigrants, but I’ve always had the impression that the most educated Chinese fleeing Mao went to the US or Singapore or other outposts, not Taiwan, as most smart people didn’t want to be too close to Chiang Kai Sheck. He brought a chunk of the petite bourgousie with him, not the elites. But Rosser is right in that in so many ways Taiwan’s achievement is much more impressive, in that they developed a very good economy and strong democracy with relatively low inequality from a very nasty and corrupt dictatorship. The speed with which they jumped from a sweatshop based economy to one based on high tech can only be matched by South Korea I think. And both did it while transitioning from hard right dictatorship to moderate democracy.

    I think a more instructive comparison is with Japan and South Korea. If you take a baseline from the mid-1950’s economically, politically and socially, all three societies were impoverished and broken from war and revolution. In reality, the huge growth in Chiina is just catch up growth (which is the easiest type of economic growth other than finding oil) after 3 decades or so of self imposed self defeating stupidity. China has still not proven that it can break through the middle income trap, although I think it is likely. But the enormous build up of internal debt will be a huge problem which, if not handled correctly, will lead to a long term period of Japanese style deflation. It shouldn’t be forgotten that the only thing really unique about China’s growth is the sheer size of China itself. Many other large countries – Argentina and Brazil for example – have gone through extraordinary spurts of growth at various times, only to hit a wall or self sabotage.

    What you can credit the CCP with is maintaining a very strong level of internal security and peace on what was, in the post empire years, a miasma of warlords and competing interests. You could argue of course that if the Nationalists had won the civil war now or they had done a deal with the Japanese in the 1930’s, then China would now look like a much larger Taiwan. Perhaps so, but it could also have broken up into semi-feudal fiefdoms and maybe look a little more like Brazil.

    1. vlade

      Chiang was horrible. TBH, I’m not sure whether he or Mao were worse, I guess each was bad in a different way, so it’s a bit of asking what’s better hanging or drowning.

      I do agree that Mao was much better at ruthlessly getting rid of opposition and hence bringing in some sort of stability, even with the Cultural Revolution (which was anything but stable, it was at times almost as bad as the Warlords time from what I read/heard).

      The fun thing on this is that a one of the reasons why Chiang lost the civil was was Japanes Ichi-Go offensive, which from purely military perspective had no meaning except for destroying large chunk of Nationalist armies (and making them more hated by Chinese peasants) and helping Chiang to remove Stillwell – which also backfired to the point where US press saw Mao as a progressive democratising force.

      1. PlutoniumKun

        Yes, I think we’ve discussed elsewhere that much of modern Asia arose from the crass stupidity of the Japanese government of the 1930’s. Ichi-Go is one of the big forgotten offensives of the war (amazingly, D-Day was only the third largest military offensive of the summer of 1944, after Bagration and Ichi-Go).

        Its very hard to overexaggerate just how much damage Mao did to Chinese culture and society. They are only just now starting to peice together a real sense of cultural and national unity. AAK of Ask a Korean recently posted some shots of a Chinese historical drama where the characters were wearing Korean clothing – it seems nobody in China noticed, there is a real loss of history and culture. But this of course allows the CCP to embark on the biggest ghosting of all time, constructing an entirely new national narrative.

        1. vlade

          It’s also funy, as of the three most important (culturaly) Chinese novels, I know CCP is not happy with at least two, because they are about establishing new order (Romance of Three Kingdoms) and bandits taking on the state (Water Margin).

          RoTK even starts with “The empire, long divided, must unite; long united, must divide. Thus it has ever been.” CCP hates that sentence I’m told.

          1. PlutoniumKun

            Yes, one of the sad features of modern China is that the once burgeoning cultural scene has gradually been choked off. About 15 years ago I was following the Beijing punk scene which was amazing, fantastic and original – but its increasingly a shell of itself as venues and outlets are slowly being restricted. China was making wonderful movies in the 1980’s that would never get passed through the formal and informal censorship system now. The Chinese have learned that the most effective way of censoring cultural material is indirectly – I guess they learned this much from Hollywood.

            1. Larry

              That’s interesting to hear. I would assume with so many large population centers you’d see a flourishing of pop culture creativity. Michael Pettis sometimes writes up some of his favorites as well.

              1. PlutoniumKun

                Yes, that’s one of the fun things about Michael Pettis’ twitter (highly recommended). He is a fan of the music underground there. I haven’t been following much music for a while now, but its good to hear there is still a scene clinging on. I have to say though that the few I’ve listened to have been nice, but not really inspiring, although maybe my music taste is just getting stale. It may also be that my Chinese friends who pass on music links have terrible taste.

      2. Soredemos

        Given that Chiang didn’t manage to kill up to 60 million Chinese, I’d say Mao was ultimately worse.

        1. vlade

          Well, it’s also about opportunity. TBH, many of the civilian casualties in China during WW2 (and there were millions of them, no one knows how many really) do go against Chiang, as KMT army had no problems taking what they needed from the peasants (never mind forcibly conscripting them). Mao husbanded his forces much more, knowing he’d need them after the war.

          1. Soredemos

            Sure, but to get anywhere near Mao’s bodycount he would have had to, upon getting control of the whole country, embarked on something equivalent in scope to the ‘Great Leap Forward’, and it would have had to similarly go epically wrong. I’m not sure what such a project would be for Chiang.

            1. ambrit

              All Chiang would needed to have done was to bungle a few annual harvests, something well within the (in)competence of a supremely corrupt clique like the Nationalist Chinese seemed to have been back then.

    2. Ook

      One cavil with taking the 1950s as a baseline for comparison:

      Japan had already become an industrialized society in the 19th century with a record of self-governance, so post-1950s was a rebuild.
      Likewise, pre-war, Taiwan had already developed along significantly different lines from China and had different levels of expertise.

      Post-war Taiwan was the recipient of US aid and cooperation (and so was Japan), while mainland China was the recipient of US embargoes, including a grain embargo in the 1950s.

      So a 1950s baseline may not mean very much even if they were all technically smashed and destroyed at that time.

      1. PlutoniumKun

        US financial aid to Japan was miniscule – and dwarfed by Japans war reparations to its neighbours. Most economic historians I’ve read indicated that the main benefit the US provided to Japan in the 1950’s was accidental aid via the Korean War – Japan sold a lot of supplies to the US military and arguably this was the spark needed for ‘lift-off’. Japan obiously had the remnants of an advanced economy, but all it had was its know-how and a ruthless desire to rebuild. The US had nothing to do with it.

        Taiwan recieved some Marshall Plan aid up to around 1961, with little after that. It was never a major recipient, certainly in comparison to Europe. Its most impressive economic growth was decades later.

        US Aid to Korea was mainly in the form of urban regeneration, by way of flattennig every city apart from Busan on the peninsula.

        1. ObjectiveFunction

          PK, it’s only rarely that I disagree with you in matters of fact and history, but in this case I feel you’re understating (or sidestepping?) American influence on the reorganization of postwar Japan’s industry, economy and society.

          Japan’s catastrophic defeat hit a massive ‘reset’ button on much of their world view. Bluntly, in addition to insanely attacking 4 of the 5 other world powers*, their military industrial machine had utterly screwed the pooch on logistics, leaving their troops eating their shoe leather and each other. So the discrediting (and often, death) of the Meiji-era ‘kuromaku’ cleared decks for new ideas and new leaders.

          While you’re correct that this didn’t take the form of massive material assistance or subsidies, there was a massive knowledge transfer, along with wider institutional and cultural transformations (land reforms, etc.), at first US-directed but rapidly embraced by the Japanese themselves.

          MacArthur, whatever his flaws as a general and a human being, had the virtue of being a good delegator, and actively backed the small team of MIT New Deal technocrats who oversaw the pilot programs, focused (wait for it) on radio tubes and then transistors…..

          The upshot was that the Japanese became the eager intellectual heirs of the shop floor level collaboration and continuous improvement that had made America the world’s workshop and innovation leader from 1825 to 1950.

          ….American management, meanwhile, took a hard right turn into the swamp of financial engineering and Taylorism.

          * China, British Empire, USA and they attacked the USSR along the Manchurian border in 1938-1939, getting their arses handed to them.

          1. vlade

            Historically, Japan has shown it can learn while retaining large parts of its cultural heritage. First in the 19th century – it industrialised at an incredible rate, and then post WW2.

            Japan’s problem was (and from the little I know about Japan, it may still persist in some ways), that a lot of decisions were made not at the highest level, strategically, but at the mid level.

            You need to make a lot of decisions at the mid level, but not the strategic ones. So you had Navy and Army actively competing against each other w/o anyone like Roosevelt/Churchill (never mind Stalin) being able to kick them into shape at least a bit.

            You can see it very clearly at the end of the war, where many knew the war was lost, and the question was only about how it would be lost, but no-one could really get themselves to finish it until the Emperor made a historically unprecedented intervention (and the West often fails to understand how exactly unprecedented it was). And even then you had mid-level army officers trying to sabotage it.

            1. drumlin woodchuckles

              What led the Emperor to make that historically unprecedented intervention?

              1. ambrit

                He had the courage to admit defeat and place the welfare of the nation above his own. (He was complicit in the run up to war, but was lucky enough to be very useful to the occupying power after.)

          2. PlutoniumKun

            I can’t say I’m an expert on post war Japanese economic policy, but I’ve read a little on the subject and I’ve never come across any argument that the US had any significant influence on industrial policy. Pre-war, Japan was a peculiar economy, capable on the one hand of churning out the finely engineered Zero and Type 91 torpedo and the monstrous Yamato, while also failing to produce more than a bare handful of tanks a month. The country was full of tiny workshops, often very skilled and advanced, but little in the way of real scale. It was this model that led to what became the Japanese industrial model of a core factory surrounded by numerous small permanent fixed suppliers, refined by Toyota, but certainly recognisable in the pre-war years.

            Again, its not my area of expertise, but most of the writers on the topic I’ve read say that what is most surprising about the Japanese governmental and institutional system is how little it actually changed during and after the war. The US was obsessed with taking down the former fuedal power systems, seemingly unaware that the aristocracy hadn’t been a real power for a century. They did little more than create (welcome) reforms of agriculture. But the mid layer of bureacracy that swarmed from govenment to the nascient big conglomerates making all the important decisions stayed the same, and with the Yoshido Doctrine in place essentially kept the war going, just switching from guns to money as their weapon.

            Thats certainly always been my understanding of what happened, but I’m happy to be shown otherwise.

            One of the surprising things to me is just how little resentment the Japanese people felt towards the idiots who led them to disaster. I suspect this is as much to do with the US identifying and singling out a few scapegoats and hanging them, plus the very amorphous way decision making spread through the system, making the system at fault, not the individuals. Its harder to have a revolution against a system you belong to, than a groupf of leaders.

            1. ObjectiveFunction

              If you read this, Edwin Reischauer (later JFK’s ambassador to Japan) wrote a book on the Occupation.

              In spite of MacArthur being a Trumpian egomaniac and a paleoconservative and one of the GOP’s ‘Great White Hopes’ in the 1950s, he proved quite amenable to New Deal policies and structures being implemented. That was all greatly to the dismay of the China Lobby Repubs who otherwise adored him.

              A number of the key administrators, like Homer Sarasohn, later found themselves targeted in the McCarthy era, and their distinguished careers cut short.

              Interesting history, but it may be the definitive book on that time remains to be written, perhaps by a Japanese.

            1. The Rev Kev

              Demming told the Japanese that if they pursued quality, that within five years the world would be beating a path to their doors. And he was right. Before him, Japanese goods had an international reputation for being nothing but crap but afterwards, well, the following clip says it all-

              https://www.youtube.com/watch?v=c1QcjsjjtRc (20 secs)

    3. Larry Y

      Many educated did flee to Taiwan. For educated and uneducated, if they didn’t have Western connections, or weren’t Cantonese (Hong Kong, Southeast Asia, Americas), or Hokkien (Southeast Asia), there really wasn’t a better choice.

      The faculty of Shanghai Jiaotong University and Tsinghua University (China’s top tech institute, Beijing) set up parallel institutions in Hsinchu, the center of Taiwan’s chip industry.

      The four most influential Taiwanese Buddhist groups – Fo Guang Shan, Tzu Chi, Chung Tai, Dharma Drum – were founded by monastics from the mainland or their students.

      There was also Taiwan’s access to the Southeast Asian “Bamboo Network”. Aside from anti-communism, the shared Hokkien/Hoklo cultural background greased some wheels. Human and financial capital flowed back and forth from Malaysia, Singapore, Philippines, Indonesia, etc. These economies were and are still dominated by the Chinese diaspora. Crazy Rich Asians hints a bit at this connection.

  3. The Rev Kev

    I have just spent some considering what would have happened if the Nationalists had ignored American demands but had instead gone in to finish the Communists after WW2 leading to a Nationalist victory. So what would a Nationalist China look like after their victory? If there were two characteristic of the Nationalist that was always widely noted, it was their corruption and their incompetence. So how does this all play out? Well, malaria would be still endemic and not wiped out in China for a start. Poverty too would be endemic. In spite of the attempts for a Nationalist government to have a dictatorship throughout the country, China is too large with too many people for that to be a successful idea. So perhaps you would still see the rise of strongmen and warlords from time to time who would band together to defy the central government.

    As the Communists lost, there would be US military bases (including SAC bases) throughout the country especially near the border with the USSR in most of the 20th century which would have influenced the politics of the different regions. China would be a NATO ‘partner.’ As neoliberalism rose in ascendancy from the 1980s on, much of the country would have been sold off and poverty would have increased even more than the usual Chinese levels. Most of China’s resources would be owned by foreign interest who would exploit it to their own needs which would keep China being alternately known as ‘the sick man of Asia’ or ‘the sweatshop to the world.’ In some ways, it would resemble India right now with some regions having for power than others and much of China’s people would still be living a subsistence rural means of life. We may not like China as it is now but for ordinary Chines, this alternate China would have been far, far worse.

      1. The Rev Kev


        Republic of China (Taiwan) – Total Area: 36,197 km2 (13,976 sq mi)
        People’s Republic of China – Total Area: 9,596,961 km2 (3,705,407 sq mi)

        Just sayin’ :)

        1. upstater

          Point well taken on geography! I think the achievement of the CCP in mainland China is one of scale. Comparing such a large, sprawling, diverse country to far small, more homogenous ones like SK, Japan and Taiwan is invalid. While China has many ethnicities, languages and other distinctions, the other 3 largely do not. China has to support a huge, indigenous military complex at great financial and opportunity cost, while SK, Japan and Taiwan are free riders. A more valid comparison of China’s progress is with India or Indonesia.

          1. PlutoniumKun

            If you want to play the geography game (which I’m happy to do so, as an ex geographer), China is not diverse, it is at least 92% Han and 80% mandarin speakers (as a first language, pretty much everyone speads standard mandarin). If you think China is diverse, I can only assume you’ve never visited. And this applies to fringe tribal areas and Tibet as well as the big cities due to China’s policy of swamping minorities with Han populations.

            China is not, and never has been a big military spender. It spends about 1.7% of GNP on its military, far less than South Korea and only slightly more than Taiwan and Japan. This doesn’t, however, include expenditure on its vast internal security apparatus (‘for the maintenance of harmony’) which probably dwarves the official army and navy.

            China also has massive natural resources – surprising amounts of oil (the worlds no.6 producer), coal, iron ore, rare earths, etc. Only Russia and the US is more bountifully provided.

            1. upstater

              No game is being played here; only pointing out a country that is 10, 20 or 50 times larger than alleged “peers” is a far more complex economic, managerial and political problem to be solved. And 8% non-Han ethnicity or 20% non-Mandarin speaking people amounts to tens of millions of minorities. Regional differences and governance are a huge deal in China — as they are in US or Russia for that matter, even if language or ethnicities are similar. Taiwan or Korea are simply not in the same ballpark, and while Japan is comparatively large and multi region, it is largely homogeneous ethnically. One can’t compare apples and oranges, aside from being types of fruit.

              Maintaining a huge military (or more properly a national security state) may be a small percentage of GDP, but it comes with a huge opportunity cost. The US spends under 4% of GDP on the DOD, but it employs a disproportionate number of engineers and other technical professions that are removed from the talent pool of industry. SK, Japan and Taiwan have been and remain free riding protectorates that simply do not have the requirement or costs for an independently developed defense establishment. Recall, of course, this was a huge factor in the dissolution of the USSR.

            2. jason v

              I’ve enjoyed reading this thread and thanks for the input, PK.

              I’d like to ask a follow up on your comment here. I speak mandarin and yet I often struggle communicating with people over 50, outside of the north. Furthermore, Han have been encouraged to move into the peripheral zones to cut down the diversity. Xinjiang and Hong Kong have been hot issues lately but these are not new problems.

              My follow up would be, do you know any good sources that talk about how these changes progressed over the last century? I guess my point is, I agree that China today is much less diverse than people might expect, but that is a product of deliberate party work, and even initiatives that started a lot earlier than that.

              1. PlutoniumKun

                You have one up on me if you speak mandarin. Earn you say you struggle communicating with them, do you mean in terms of language, or just that they don’t want to be open with you? I have heard it said that many Chinese are far more reluctant over the past few years to talk to foreigners for fairly obvious reasons. The older 50’s in China can remember things that the younger generation only heard about in stories (if even that).

                I honestly don’t know of a specific source for what you ask for, apart from the usual modern histories (I am way behind on my reading right now). But certainly China has always has an ethnic focus – it goes back to the 1960’s at least that there was an active policy of resettling Han people in ethnic areas. The results were often pretty horrible as you’d expect if you dump people in a very harsh environment and expect them to look after themselves.

                1. Jason V

                  Right I wasn’t clear. What I meant was I can’t understand what they say, not that they don’t want to speak to me. I think the number of mandarin speakers is a bit exaggerated or the threshold for “some” is fairly low, but the trend is definitely in the direction of everyone being able to speak it. It’s not uncommon for children to speak mandarin only, the parents to speak decent mandarin and a local language, and the grandparents and up to only speak the local language. It’s sad to me that a lot of language diversity will disappear but it definitely will help with communication.

                  1. PlutoniumKun

                    Yes, there are all sorts of issues with younger generations speaking a mostly standard mandarin having difficulties with their older folks, although so far as I’m aware most older people will understand (if nothing else, from watching TV) standard mandarin, they just may not speak it very well.

                    My first introduction to this was in a Chinese restaurant in Liverpool in the late 1980’s. I was out with a Professor who had spent the previous 3 decades in universities in China (one of the very few non Chinese permitted to stay). It was amusing to see the shock on the faces of some Shanghai sailors there when he offered to translate for them in an argument with the mostly HK and Fujianese Chinese staff.

                    As a traveller of course, its much easier with people who speak standard mandarin. When I visited Tibet in 2006 I found that I could communicate with Tibetans in my simple tourist mandarin while I was unable to understand anything with other Chinese (even numbers sounded entirely different from what I’d learned). I was very relieved to meet some Beijingers who were having similar problems.

                    I think a lot of it has to do with the media being overwhelmingly saturated in a standardised mandarin so people under 30 grow up with this (even in rural areas), and find it natural, while older people struggle with it.

                    I wouldn’t worry too much about the loss of dialects. Countries like France and Japan have been dealing with this for much longer, and yet they still retain lots of very interesting dialects, some practically different languages. I’m continually amazed at the variety of dialects even in a supposedly very homogenous country like Japan. Korea also has a surprising variety (well, it was surprising to me, I just assumed that a small country like that wouldn’t have much more than local accents).

                    I was talking recently about this to a fluent Irish Gaelic speaker I know – despite it being spoken by only around 50,000 people or so as a first language, there are several dialects that are very, very different. Her advice – which I think is good advice – is to stick to a specific dialect when learning a new language, then move on to the more standardised version, rather than vice versa. It will give you a much richer ‘natural’ tone when speaking and will help when you have to deal with other dialects when you achieve more fluency. Unfortunately, in my experience almost all mandarin and japanese and other Asian languages are taught in a very standardised formal form which I don’t think is helpful. Its one reason, for example, that even ‘good’ foreign Japanese speakers have pitches patterns (very important in Japanese) that wander all over the place. This is the main characteristic of the ‘Gaijin accent’ that amuses the Japanese.

                    1. jason v

                      Interesting! I did not know that about Gaelic. That problem is definitely prominent in many people I know who learn mandarin. You gotta just start speaking like the locals.

            3. Susan the other

              I did not know that about oil reserves. I thought oil was China’s Achille’s heel.

              1. PlutoniumKun

                China is still a net importer thanks to its high demand (and rising rapidly). Its reserves are rapidly declining.

    1. ObjectiveFunction

      Had a slightly less nutty faction of the Japanese military ‘Rectification’ movement come out on top in 1936 (they were all ideologically nutty, but it was personality driven and not all the leaders were as stubborn as Tojo ‘the Razor’), it is possible that Japan would not have invaded China in 1937. In which case they would not have suffered a US embargo and been able to sit out World War 2 as they had the Great War, keeping their possessions in Choseon, Manchukuo and Formosa and their Pacific island mandates.

      Chiang would have been pressured to expel his German advisers after 1939, and the IJA would have likely stepped in (with US blessing), directing instead of destroying his 20 German-trained divisions, which would then be deployed ruthlessly and savagely against Mao. The USSR too would have had a much harder time supporting the Communists across Mongolia with the Japanese in Manchuria.

      (Under these circumstances, I don’t see the American empire putting SAC bases in China; the Japanese would likely be playing the US off against the Russians)

      Kuomintang China would continue to industrialize and modernize its society on corporatist bourgeois lines, albeit with heavy (and likely resented) Japanese and US business interests stepping into the concessions being vacated by the exhausted European colonialists. Japanese control of the industrial north would require much earlier development of coal (energy) rich areas like Xian.

      ….Unfortunately, the Chinese peasantry in the undeveloped and strife-torn hinterland might not have fared better than they did under Mao: floods, famines, epidemics and brutal military repression. One could imagine huge refugee slum cities piling up next to industrial centers. By the 1970s though development would be sufficient that China would again start looking outward, particularly at the Japanese Co-Prosperity Sphere.

      I love alternative history.

      1. vlade

        Japan had a massive chance to become a true leader of Asia. If it CPS was more than empty words, and, as you say, the faction which pushed for cooperation with China instead of takeover won, it would have been an interesting world.

    2. Raymond Sim

      How on earth could the Nationalists have done any of this without war with the Soviet Union, early and awful?

      Anyone wondering what that would be like should look into the Soviet conquest of Manchuko, and even better, the early events of the Korean War.

      The result would have been the Red Army’s version of Chinese Communism.

      1. ObjectiveFunction

        That’s the 1945 Red Army, fresh off disemboweling the Wehrmacht, facing a rump Japanese Kwangtung Army drawn down to a mere shell after nearly 4 years of war with the Americans and withdrawal of its air cover to the home islands, plus its 1944 ICHIGO offensive in China.

        The 1939 Red Army couldn’t even overrun Finland.

        Zhukov’s triumphs at Kalkhin Gol, for which he nearly got shot by Stalin, were strictly defensive.

        If you’re proposing that Stalin could have overrun both a Japan-backed KMT China and a US-backed Japanese empire, after Hitler had torched half the Motherland, well, color me a little skeptical. But hey, it’s alt history!

    3. weimer

      Have to agree with you, RK. Additionally, this piece is way too short comprehensively to evaluate what CCP/Chinese govt. have been able to accomplish. To focus on some past mistakes, and then conclude that ‘it could have done better’ is a bit bizarre and tells us nothing of the present.
      Comparisons with Taiwan – are kind of like ‘so what?’ Apples and oranges. Taiwan is much smaller and easier to manage.
      Plus – I think even Lai (HK billionaire, supporting protests there) said in an interview that his father opted to go to HK, because Kuomintang was just too corrupt (didn’t they also get into major skirmishes with the indigenous population, after they took over the island?).
      From my perspective, the accomplishments of the Chinese people deserve much more respect – or, at least, a more thorough evaluation.
      And yes – for comparison, just look at India!

  4. Edward

    “I think the Chinese Communist Party should be willing to admit some past disasters, especially as they can argue they have moved beyond them, overcome them.”

    An American “U.S.-splains” to China what it should be doing. Rosser seems to want to focus on China’s past failures and not its current successes. China has been saying recently that they will resist U.S. imperialism.

    1. deplorado

      Also, the pretext for allowing China into the WTO: who has ever cared about rights and democracy when there is profit to be made? So no doubt some believed that (or at least said so) — but China was let into WTO so it can more readily be forced open its markets to the world’s domimant corporations. The CCP though had leverage and took good advantage of it.

      How has that fig leaf approach of “let China get richer and it will become our ideological mirror and obedient ally” worked out for the global strategic balance of power? China owns the supply chains of the world. Oops.

      I can’t decide if US policy towards China was just stupid, or was just corrupted by greed. No, pretty sure it was the latter.

      So, CCP won, no matter how you slice it.

      1. Edward

        I agree with you. That is what I thought when I read the claim about the WTO humanitarians admitting China to promote democracy.

  5. LadyXoc

    How is it possible that in an article about the accomplishments of the 100-year reign of the CCP there is no mention of incredible internal infrastructure upgrades (dirt roads to high speed rail) or Belt and Road Initiative. Taiwan was “modernized” as a colony by Japan during their imperial occupation, followed by KMT occupation (as it was experienced by many Taiwanese). Built railroads, basic infrastructure. Taiwan is also blessed with abundant food and able farmers: why they are a desirable colony. A war like the KMT-CCP-Japanese war on the mainland was never fought on its soil, with attendant destruction. Size-wise, Taiwan is to Cuba as China is to US. These matters cut deeply into modern Chinese politics and unless deeply knowledgeable, “fools rush in where angels fear to tread.”

    1. Raymond Sim

      I’ve read that in 1945 Taiwan had more miles of railroad than all of the mainland. Heavily bombed by that point, I would imagine, but still …

      What’s the mantra? “Steel, Railroads, Electriification”? Something like that. Literacy should probably be in there. It seems to work, whatever the motives or nominal ideology of the actors.

      Stalinists, Imperialists, Maoists – they all have a positive legacy to the extent that they built the basis for real wealth creation.

      I hope it’s obvious I’m not asserting anything about the balance of bad vs good done by anyone.

      1. PlutoniumKun

        The pre-war Taiwan rail system was mostly narrow guage local lines to facilitate the suger cane and lumber industries. It had little post war worth except for tourism. The main Taiwanese system is almost entirely post war.

        China had something like 9,000 km of railways by the early 20th Century, albeit in a very fragmented form making it inefficient at connecting cities.

        1. Raymond Sim

          Did facilitating those local industries include connecting them to ports and population centers? Did moving that lumber around help when it came to building postwar? Obsolete or rapidly supplanted infrastructure can still be invaluable, see: Canals.

          The fragmentation of Chinese effort circa 1900 sounds like ‘Advantage: Co-Prosperity!’ to me.

        2. Basil Pesto

          funnily enough, my maternal grandfather, son of Jewish emigrés from Odessa, was born in Harbin, his family having contributed to the construction of the railroad. Not sure if he himself worked the railways before emigrating to Australia.

  6. Tom Pfotzer

    My interactions with Chinese are mainly commercial; I buy parts from them via Ebay, Amazon and Alibaba on an occasional basis.

    Alibaba is a very interesting window into the function of the Chinese economy, and it differs very remarkably from what has been, up to now, available in the U.S.

    Alibaba is an online marketplace for sub-assemblies. It’s available, and functions well, for any enterprise from basement-scale upward. The breadth and depth and quality of product are unmatched world-wide.

    Millions of enterprises, most especially Mom and Pop operations use it, and it serves as supply-chain purchasing agent for a great deal of the bottom 2/3 (in terms of scale) of the Chinese economy.

    Ebay is a faint shadow of Alibaba. A great deal of the products sourced from and enabled by Alibaba now show up in Ebay and Amazon.

    Alibaba almost single-handedly, and with top-down support, broke the major barriers to entry for millions of Chinese wanna-be business people. I don’t have access to the figures, but I’d bet heavily that “new business formation” metrics in China .vs. the U.S. are wildly different, and have been for decades.

    China Post, which was developed to provide virtually free transport from China to the U.S. was implemented at about the same time as Alibaba. China Post offers packaging, aggregation, customs clearing, transport, and injection at ports of entry into the U.S. postal system. This is a spectacular example of top-down economic design. I don’t believe there’s an analog here in the U.S.

    China also has a state-sponsored internet vacuum cleaner that hoovers up technical know-how from any enterprise foolish enough to connect their enterprise operations to the internet. You may not like it, but there’s no question that it’s unprecedented in efficacy and scale.

    China put a lander on the dark side of the moon, then put a lander on Mars. Stuck the landings on the first try. From 6th grade to PhD in one leap (metaphorically). China developed a way to use quantum entanglement to provide hack-proof data communications. These are phenomenal achievements.

    I also re-iterate other posters’ points re: the Belt and Road initiative. I don’t believe there’s a historical precedent for the political stance, the scale, and the rapidity with which it’s being accomplished.

    As we consider all that is China today, I suggest we evaluate our competitors and fellow nations with eyes wide open. The West going to have to run very fast, and for a long time, to keep from getting run over by China.

    Lastly, as a culture they understand and are executing the Long March.

    1. Susan the other

      So, I did not realize that it was China that developed quantum entanglement for secure electronic communications. Nobody gives them credit. Is that what 5-G is all about?

      1. Michaelmas

        Is that what 5-G is all about?


        As for quantum entanglement for secure communications, that’s relatively speaking the easiest potential ‘quantum technology’ to do — though Chinese scientists did it between a satellite in orbit and Earth surface, which is neat.

        Quantum computing is harder and much, much more important. Here they’re moving ahead, too —

        ‘Physicists in China challenge Google’s ‘quantum advantage’-


  7. David Jones

    Another Democracy good Communism bad argument right? Perhaps a better comparison would be with India bequeathed democracy by the British Raj after the war while Mao murdered million by design an accident.

    However,I imagine few Chinese citizens now would swop their lot for the basket case that India has become.

  8. Sound of the Suburbs

    If they do work it out in China, they need to let the following know:
    Australia, New Zealand, Canada, Norway, Sweden and Hong Kong.
    They aren’t aware they have a problem, but they do.

    The last lamb to the slaughter was India
    They had created a ponzi scheme of inflated asset prices in real estate and it collapsed.
    Now they need to recapitalize their banks.
    Their financial system is in a bad way, recovery isn’t going to be easy.

    It’s a classic mistake of neoclassical economics, everyone does it.

  9. Sound of the Suburbs

    The Chinese wanted to increase domestic consumption.
    Unfortunately, they were using neoclassical economics.

    Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
    They let real estate rip and have now realised why that wasn’t a good idea.

    The equation makes it so easy.
    Disposable income = wages – (taxes + the cost of living)
    The cost of living term goes up with increased housing costs.
    The disposable income term goes down.
    They didn’t have the equation, they used neoclassical economics.
    The Chinese had to learn the hard way and it took years, but they got there in the end.

    Everyone that uses neoclassical economics trips up over the “cost of living”.
    Disposable income = wages – (taxes + the cost of living)
    Taxes and the cost of living sum together in the same brackets, so it shouldn’t be hard, but today’s policymakers don’t have the equation.

    “Who put that other term in the brackets with taxes?” neoliberal policymakers

    What they really mean is ……
    Who removed the other term in the brackets with taxes?
    The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between “earned” and “unearned” income and they conflated “land” with “capital”.
    They took the focus off the cost of living that had been so important to the Classical Economists as this is where rentier activity in the economy shows up.
    It’s so well hidden that everyone trips up over the cost of living, even the Chinese.

    1. Tom Pfotzer

      The rentier activity shows up in every step of the supply chain, not just the cost of living (consumption-related) portion of the economy.

      I do agree that “rentiers” put a lot of straws into the economic milkshake.

      The problem I see with your points – good though they certainly are – is that capitalism requires rentier-thinking. Everyone wants their own moat-ringed toll-gate on the Rhine, and they will work very hard to get it.

      How are you expecting to provide motivation to capitalists if they can’t “make a killing”?

      1. Sound of the Suburbs

        Everyone wants their own moat-ringed toll-gate on the Rhine, and they will work very hard to get it.

        They want it.
        The system is working well when they can’t get it.
        They want to make a killing, but a lot of money will suffice.

  10. Sound of the Suburbs

    Thirty years ago.
    The West was triumphant, and western liberalism had won the day, it was the end of history.
    The Berlin Wall had fallen and a uni-polar world was born.
    The US reigned supreme.
    China was insignificant and Russia was moving towards the West with Gorbachev.

    How could we possibly mess this up?
    Everything was going our way.

    The Americans came up with the Washington Consensus.
    Thirty years later we discover China was the main beneficiary; it went from almost nothing to become a global superpower.
    Oh dear.

    1. deplorado

      yep. the repercusions of this failure of the West will be felt for centuries (if the West still exists and if climate change does not wipe civilization out)

  11. Scott1

    I don’t have time to read all of the comments. They have tended to be excellent.
    I look forward to Ed Rutherford’s upcoming book “China”. He is an awesome talent since books like “London” or “New York’.
    You Tube episodes by laowhy86, and with his buddy ADVChina were giving what were guided tours on their radio connected motorcycles providing commentary to go with their helmet cameras. It is a war to come indicator that they have had to leave the country.
    My standing was from becoming big in China for combining the I Ching & The Bible and positing a nation of airports that picked up where the UN left off. This is old news. Pilots being apolitical prevents me from acquiring support. That I was fired by Piedmont didn’t help either. [There’s more & I’m working on a Documentary edit from my channel.]
    XiJinping actions mean war is coming. The US has been at Econ War with both China and Russia because it refuses to help with any world gov. grow from the UN. I fear that the human mind is too small to create any world institution big enough to politically engineer peace enough.
    Stability leads to instability.

  12. square coats

    Ok since Rosser is setting this up as a comparison involving both economic considerations *and* humanitarian considerations, I find it entirely dubious that he didn’t mention the “White Terror” aka the almost 40 years long state of martial law in Taiwan. During this time there was brutal government suppression of any possible threat to their rule, about 140,000 Taiwan citizens were imprisoned and 1000s were executed.

    Also he failed to mention the ROC more or less seamlessly continued the colonization of the island’s indigenous inhabitants, which had been ongoing during Japanese control (though before that there was another period of Chinese control and before that I think Spanish control for a bit at some point, but it first started with the Dutch…), though some say the ROC were actually worse.

    Currently indigenous peoples as a whole make up about 2.5% of the total Taiwanese population. At some point after the martial law was ended, the government managed or was forced to notice how badly indigenous groups had been deprived of the ability to attain adequate standards of living (due largely to a gradual process of completely eliminating their rights to their inhabiting and traditional use of their lands along with contradictory forced assimilation into the now dominant Chinese culture but also systemic barriers and discrimination). So the government started a sort of rigorous affirmative action policy-ish? Basically cynically addressing and promoting indigenous people’s attempts to maintain their own separate group identities and collective self determination as a tool by which the government could promote internationally the image of Taiwan being a clearly distinct, separate entity from mainland China.

    Different indigenous people in Taiwan point to how the affirmative action plans never address actual indigenous needs but instead go to mostly promoting things like tourism to different areas where various groups are starting to reclaim some rights to narrow use of their traditional lands. There are also generally strings attached requiring often for groups to become charicatures of themselves for the benefit of tourists. The government encourages and disseminates a paternalistic image of them as backwards and in need of aid but incapable of determining their lives for themselves.

    The most recent economic disparity statistic I found from searching briefly just now is from 2017, when the average yearly income for an indigenous household was a bit over $25,000 vs. for Taiwanese (Chinese ethnic) household was almost $35,000.

    Also it’s not quite two parties, there’s two dominant parties, but a handful of other quite small ones and I think it’s not at all unusual for candidates to run as independent of any party affiliation and get quite a bit of public support. I don’t know too much about it though.

    I might be wrong on details here and there so please double check something I said here on the offhand chance you for some reason find your self needing to quote me in a high stakes situation…

  13. Sound of the Suburbs

    Everything seemed to be going so well for China
    What could possibly go wrong?
    They are using neoclassical economics and making all the usual mistakes.

    Neoclassical economics is the economics of the Roaring Twenties, the Wall Street Crash and the Great Depression.
    Sooner or later policymakers use the economic growth model of the Roaring Twenties, which leads to a financial crisis.
    If you don’t save the banks you will then get a Great Depression.

    At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
    No one realises the problems that are building up in the economy as they use an economics that doesn’t look at debt, neoclassical economics.
    As you head towards the financial crisis, the economy booms due to the money creation of unproductive bank lending, as it did in the 1920s in the US.
    The financial crisis appears to come out of a clear blue sky when you use an economics that doesn’t consider debt, like neoclassical economics, as it did in 1929.
    1929 – US
    1991 – Japan
    2008 – US, UK and Euro-zone
    The PBoC saw the Chinese financial crisis coming and you can too by looking at the chart above.
    The Chinese were lucky; it was very late in the day.
    The Chinese had done the same thing as everyone else, but worked out what the problem was before the financial crisis.

    The Chinese have reached the end of the line with the debt fuelled, “Roaring Twenties” growth model.
    They need to find out how an economy really works.
    That should keep President Xi busy for a while.

  14. Jessica

    1) There is much that the PRC can be criticized for, but using Taiwan as a comparison is not fair. Taiwan was not part of China for 50 years and mostly missed out on the enormous devastation of the Taiping Civil War and other rebellions in the mid-1800s that killed millions, the Japanese invasion, and the subsequent war between the KMT and the CCP. (Taiwan did suffer tens of thousands of deaths when the KMT invaded Taiwan in 1948.)
    Interestingly, in the 1950s, the US all but forced the KMT to engage in the kind of land reform for which the US overthrew Mossadegh in Iran and Arbenz in Guatemala around the same time.
    About Japan, the biggest benefits that Japan received for its acceptance of US dominance was a huge technology transfer and a big economic boost from US purchases of supplies in Japan during the Korean War. (The Koreans in turn financed some of their initial industrialization with what they were paid for sending Korean soldiers to Vietnam as mercenaries.)
    2) Whatever the many flaws of Maoism, the Maoist era did successfully lay the groundwork for the rapid economic development that followed. That is why when the US-led nations wanted to a bottomless supply of cheap labor, China could supply it, but India could not. Chinese workers had a much higher literacy rate and were healthier.
    3) According to “The World Turned Upside Down: A History of the Chinese Cultural Revolution” by Yang Jisheng, 90% of those killed in the Cultural Revolution were executed by the PLA and other security forces at the behest of the pro-bureaucracy faction (i.e. the faction that has ruled China since the death of Mao and end of the Cultural Revolution) during the phase when the PLA was used to put the genie of popular mobilization back in the bottle.
    More than half of the remaining 10% were killed by those Red Guards and the like who were fighting on behalf of the bureaucracy (because they were children of leading cadres). History is written by the victor and in this case, as so often in Chinese history, they have done a thorough job of blaming their own sins on their defeated opponents. (This is why the first emperor in each dynasty is portrayed as such exemplars and the last emperors are so reviled.)
    Yang Jisheng was a top Chinese media figure and wrote this book (and one about the Great Leap Forward famine) because his beloved foster father died in the famine. So he is not pro-Mao.
    I read similar figures in other books on the Cultural Revolution by Chinese sources.

  15. Michael

    Finally, I wonder what readers make of the closing jibe about Taiwan. I must confess to not knowing much about its founding period, but I would assume that the Chinese who fled were not peasants. If true, having a high or even moderate skill level in population would seem to confer considerable advantage.

    I am no expert on the Nationalist diaspora Yves, but I can assure you of this: the vanguard of the CCP were not peasants either. Every key figure – including Mao – was an urban, college-educated, intellectual. The Party’s critical supporters, towards the end, were as well. As with much else about the two parties, the character of the diaspora’s membership is a distinction without a difference.

  16. Michael

    I must disagree that the “Chinese Communist Party could have done a lot better”; because (from a historical perspective) the Party’s greatest accomplishment is neither the oft-mentioned material nor technological improvements.

    The various Chinas of the Han, Tang, and Song dynasties were all much, much more contemporaneously prosperous and much, much more contemporaneously advanced.

    What sets the Communists apart is not only taking a “China” that had predictably fractured after the fall of the Qing and unifying (most of) the Qing’s territory under their unchallenged rule, but (with a little help from the Japanese Imperial Army) also managing to channel the emergent nationalistic tendencies that had emerged among an educated, but non-elite, minority just a few decades before into something no China had ever been: a coherent, cohesive nation-state.

    I would suggest that is a lot better than could have been expected in the fall of 1949. Whether that outcome, and how this cohesive political construct has been maintained, is a qualitative good is another matter entirely.

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