Tuesday, June 18, 2013

China Dream or Nightmare?

China Dream or Nightmare?
By Erick San Juan

"We must make persistent efforts, press ahead with indomitable will, continue to push forward the great cause of socialism with Chinese characteristics, and strive to achieve the Chinese dream of great rejuvenation of the Chinese nation. To realize the Chinese road, we must spread the Chinese spirit, which combines the spirit of the nation with patriotism as the core and the spirit of the time with reform and innovation as the core.”  - Chinese President Xi Jinping

This is how President Xi Jinping described his China Dream and he made his first reference to it in November 2012, when he was promoted to the top Communist Party post.

The propaganda storm began in earnest after he became president in 2013. He used the term numerous times in his first address to the nation as head of state on March 17, 2013. (From the Economist online 5/4/2013)

There is nothing wrong to have a dream especially if it’s for the good of one’s country. But it is very important to have some sort of a roadmap to achieve such dream or goal. In the case of China dream, some observers believed that Mr. Xi has been short on specifics and on how to put the dream into practice.

“Others are not so optimistic about the China Dream. They see it as a propaganda campaign by the ruling Communist Party to win public affection. It certainly comes as problems mount for China's leaders.

The economy is slowing and more university graduates are now struggling to find jobs. There is also growing anger over official corruption and pollution.” (Ibid)

Sounds familiar? Any government leader dreaming of a better life for its countrymen will be frustrated if there will be no effort in addressing the perennial problems confronting the daily lives of the populace.

Some analysts are quick to notice the decline in China’s economy, and where else does this significant decline will go but the collapse of a dream that in the process may turn into a nightmare.

From the Wealth Daily’s Special Report (June 12, 2013 | Opinion page) stated that - China has the world’s largest population and second largest economy. In the last few years, it’s seen an outstanding economic growth rate, averaging 9 to 10%. The fact that China is now the world’s largest trading country makes this pretty significant.

But in the second half of 2012, this fell short… Growth was 7.6%, a three-year low.

Another red flag appeared towards the end of the summer when the Purchasing Managers’ Index, which measures manufacturing activity, fell to a nine-month low — dropping from 53.1 to 52.0. The 50-point mark separates expansion from contraction, and though China’s number was still above that line, it was hovering dangerously close.

One thing after another has had analysts turning a suspicious eye to China, a quickly-developing nation that, until now, had inspiring economic growth. And one after another, these analysts are all asking the same question: Is China’s economy on the brink of decline?

One factor that has contributed to its decline could be the “government corruption has been the link behind all of the slowing sectors in China. High-ranking officials and their self-interest have perpetuated the economic bubbles and pushed many sectors to the current point of instability. And it’s these officials that will continue to push them past the point of no return.

Past Chinese leaders did not address this perennial problem of corruption that it snowballed into something really big that is pushing the Chinese economy down the slope. Scandal after scandal has been the talk of the town, so to speak.

One of the biggest scandals that lit up the news recently was that of former Chinese politician Bo Xilai’s wife, Gu Kailai, who was tried and convicted for the murder of British businessman Neil Heywood. The murder took place after an alleged dispute between Heywood and Gu Kailai, during which Heywood was said to have threatened the woman’s son.

But this trial, which repeatedly made international headlines, is just the tip of the iceberg for Chinese government corruption…

Other instances are much less public, lack hard evidence, and are therefore all the more treacherous to the economy.

In March the son of senior party official Ling Jihua was killed in a car accident. It wasn’t the tragic death that struck suspicion, but the circumstances surrounding the event: Ling Jihua’s son was driving a Ferrari when he crashed, a car worth $270,000. His father, meanwhile, makes a reported annual salary of $15,000. The car was worth 18x his father’s annual pay. (Ibid)

There are other cases of corruption among the high-ranking Chinese officials that tops the list of the Chinese populace long list of grievances. Other problems that besets China are - strong production, weak demand, housing bubble, bad loans, precarious balance, among others.

Li Zuojun, deputy director at the Development Research Center of the State Council, wrote in a paper detailing the specific ways China must overcome its economic challenges:

    “If the government uses a superb macro-control technique, lets the air out of the bubbles little by little without triggering an economic crisis or social unrest, and timely cultivates new economic growth and new competitive advantages so that businesses are restructured and upgraded…the bubbles would not burst. However, in 2013 there will be unprecedented pressure, which will warrant a high degree of vigilance and attention.

But if government corruption continues to overshadow this “vigilance and attention” to economic growth, China’s situation will get worse… to the point that thirty years of growth will implode.” (Ibid)

Such situation is not farfetched and could it be that the China Dream that President Xi Jinping wanted to happen will become a nightmare? Or the China Dream is the prelude to hard times ahead?

 Let's hope that the pattern of world wars will not happen this time....

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