Out­comes of China’s jolt un­clear

The China Post - - COMMENTARY - BY JOHN J. MET­ZLER

The re­ver­ber­a­tions of main­land China’s eco­nomic jolt are be­ing felt world­wide from New York, to Lon­don, Frank­furt and Tokyo. It’s the fear of a slow­down in the once su­per­charged Chi­nese econ­omy, which has sent China’s Shang­hai In­dex mar­ket into a tail­spin down over 20 per­cent in two weeks. The eco­nomic knock-on ef­fect has been sober­ing since China, as the world’s sec­ond-largest econ­omy, has been a driver of global growth and com­merce.

Omi­nously in par­al­lel, the Peo­ple’s Re­pub­lic of China is set to stage a mas­sive mil­i­tary pa­rade in Bei­jing to com­mem­o­rate the 70th an­niver­sary of the end of WWII, and to celebrate the coun­try’s role in de­feat­ing Im­pe­rial Ja­pan. China’s rul­ing Com­mu­nist party (CCP) and its Chair­man/Pres­i­dent Xi Jin­ping are us­ing this event to stoke a new na­tion­al­ism not only against Ja­pan but as cru­cial to­wards let­ting East Asia know that the Chi­nese dragon is not a pa­per tiger.

China’s de­cel­er­at­ing econ­omy and rum­bling so­cial un­rest, may soon be off­set by ramped up pa­tri­o­tism. While China’s rulers know that com­mu­nism has long ago lost its luster, proud and jus­ti­fi­able Chi­nese na­tion­al­ism serves to unite the peo­ple.

For a gen­er­a­tion, China’s eco­nomic re­forms brought a grudg­ing le­git­i­macy to the CCP.

The PRC’s power Par­a­digm is sim­ple: a Su­per­charged econ­omy/ high GDP growth, Chi­nese na­tion­al­ism with the self-right­eous­ness of re­gained sta­tus, and a strong mil­i­tary able to both de­fend the borders and pro­ject power in re­gional crises such as the South China Sea or Tai­wan.

The PRC has mol­li­fied its cit­i­zens with so­cio/eco­nomic pros­per­ity, has se­duced them with high oc­tane na­tion­al­ism, but has kept them in check through the CCP’s undis­puted one party rule and rigid au­thor­i­tar­i­an­ism.

If the CCP now fal­ters in its eco- nomic growth, and maybe can’t de­liver the ben­e­fits to a grow­ing mid­dle class, does the regime then turn to darker meth­ods and stoke the em­bers of bor­der dis­putes, his­tor­i­cal griev­ances and look to out­stand­ing dis­putes like Tai­wan, the South China Sea or the con­tested Daioyu­tai/Senkaku Is­lands?

Western com­mer­cial hype over China is noth­ing new and the daz­zling eco­nomic sto­ries which have emerged from the main­land over the past 25 years, while im­pres­sive, need to be taken with more than a grain of salt. Bei­jing’s sta­tis­tics may look good on a press re­lease but has the CCP fudged the num­bers? Growth is ex­pected to be 7 per­cent this year. Of­fi­cially any­way.

Will the PRC’s GNP-ism, namely the ide­ol­ogy of high eco­nomic growth and crony cap­i­tal­ism swag, be re­placed by saber-rat­tling na­tion­al­ism? This is where it can get dan­ger­ous.

De­spite be­ing po­lit­i­cal ri­vals, the PRC and the Re­pub­lic of China in Tai­wan re­main ma­jor com­mer­cial part­ners; China is Tai­wan’s num­ber one trade part­ner with US$130 bil­lion in two-way trade last year. More­over as a po­lit­i­cal en­tice­ment, Bei­jing is will­ing to run a large trade deficit with the is­land democ­racy.

China re­mains the USA’s sec­ond largest trade part­ner with US$590 bil­lion in trade but with a mas­sive US$343 bil­lion deficit fa­vor­ing Bei­jing.

The PRC is South Korea’s num­ber one trade part­ner too. China has just de­clared its cur­rency by 2 per­cent as well to boost com­merce.

And let’s not for­get about Bei­jing be­ing the USA’s ma­jor banker with over a tril­lion dol­lars in U.S. debt to the Peo­ple’s Re­pub­lic. What if China called in these Amer­i­can loans to prop up its econ­omy? At the same time, the PRC is sad­dled with tow­er­ing and dan­ger­ous debt of its own.

But let’s re­turn to the pa­rade for a mo­ment. This pa­tri­otic ex­cess is based on a very se­lec­tive read­ing of history. To be sure China was a vic­tim to Ja­panese ag­gres­sion start­ing with Tokyo’s takeover of Manchuria in 1931 and the sub­se­quent dis­mem­ber­ing of China well be­fore Pearl Har­bor in 1941. Mil­lions of Chi­nese died.

Yet it was Na­tion­al­ist China un­der at­tack. For the most part it was the Na­tion­al­ist army, not the Com­mu­nist rebels, who re­sisted the Ja­panese. Chi­ang Kai-shek’s China, one of WWII’s Big Five Al­lied pow­ers, thus played a sig­nif­i­cant role is fight­ing and ty­ing down mil­lions of Ja­panese on the main­land who oth­er­wise would have been free to fight Gen­eral MacArthur’s ad­vanc­ing Amer­i­can mil­i­tary on­slaught in the Pa­cific.

Un­ques­tion­ably the PRC has had an se­ri­ous eco­nomic set­back which has been felt round the world. China seems to have lost some eco­nomic luster, but is hardly out of the game. John J. Met­zler is a United Na­tions cor­re­spon­dent cov­er­ing diplo­matic and de­fense is­sues.

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