Bussard Ramjet
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Kaiser Kuo, Doing Life in Beijing
198 upvotes by Ben Golub (Harvard Dept. of Economics; Ph.D. in economics,... (more) ), Edwin Khoo, Janelle Alicia Monroy, (more)
The below is a quick-and-dirty and incomplete list that I'll add to. I should note it also probably conveys a pessimism about the country's future that isn't an accurate reflection of my actual outlook, which falls a good bit short of blithely optimistic but is nonetheless not utterly bleak.
A rapidly aging population: China will be the first major economy to go gray before it gets rich, placing huge strains on working-age people who will have to effectively pay for pensions and healthcare for a disproportionate number of non-working elderly citizens. For a nominally socialist country, the weave of China's social safety net is woefully loose, and badly frayed in parts--most notably the healthcare system. This is often cited as a major cause of the high savings rate--something that chokes off consumption and contributes to the imbalance in China's economy (see below).
Gender imbalance: Preference for male children, with deep cultural roots, has skewed the percentage of male to female children dangerously. Though the one-child policy has been substantially relaxed in rural areas, and though sex-selective abortion is outlawed and physicians are forbidden from disclosing the gender of a fetus to parents, the gender balance does not appear to have improved. It may well be that social ills like increased criminality will arise when large unmarried male populations.
Income inequality: Income disparity is continuing to grow, and while China does not have quite the Gini coefficient of some other major countries, it has increased very rapidly throughout three decades of reform and opening. This manifests itself perhaps most immediately in the housing crisis, where prices have risen so fast that they've put home ownership out of realistic reach of many working class Chinese.
Environmental degradation: Polluted air, desertification, toxic waterways, soil erosion--China suffers a long, long litany of man-made environmental problems, much of it related to its coal addiction. Anthropogenic global warming is contributing to this problem, and to water shortages (see below) as glaciers melt at an alarming rate.
Dependence on fossil fuels: Coal is still far and away the source of electric power in China, and China's addiction to this is contributing to global warming, to pollution (and thus to health costs, to shrinking agricultural land because of acid rain, and to a generally lower quality of life).
An imbalanced economy, too dependent still on export with a relatively low share of GDP from domestic consumption compared to most developed nations. This also leads to chronic overcapacity, which exacerbates China's trade imbalance with certain major trading partners and is a perennial cause for tension in bilateral relations with, most significantly, the U.S.
Water shortages: Particularly in North China, water is in chronically short supply. Water tables beneath major metropolitan areas like Beijing have dropped precipitously. Enormous hydrological projects like the South North Water Transfer Project, which would convey water from the relatively well-watered South to the arid North in three systems of canals and pipelines, have hit snags and caused considerable controversy.
Ethnic tensions: Tibet, Xinjiang, and to a lesser extent Inner Mongolia all have active separatist movements, and ethnic tensions have boiled over in recent years in China's Tibetan Autonomous Region and other parts of western China where Tibetans live (in March 2008) and in the Xinjiang Uighur Autonomous Region (in July 2009)
Corruption: While China is by no means among the world's most corrupt countries, corruption certainly does remain a problem. The perception of corruption is a major factor in social unrest in China.
Lack of participatory channels: China's increasingly wealthy "middle class" wants, not surprisingly, a greater voice in policymaking. Informal channels like Internet public opinion may be stopgaps, but they are not a long-term substitute for more direct participatory mechanisms.
Eroding trust in government leadership: While a full-blown legitimacy crisis doesn't seem to be looming at present (polls actually show a remarkably high level of support for the government), there are important segments of society that have become deeply distrustful and cynical about political authority in China. The Internet has created a de facto public sphere where civil society can coalesce around any of the many issues laid out above; around unaddressed grievances (mothers of people killed in June 89, parents of children killed in the Sichuan Earthquake of 2008 due to shoddy school construction, people calling for a full accounting of the horrors of the Great Famine, the list is long). Internet censorship is another issue around which activists have coalesced. This is a very significant challenge to the Chinese leadership.
Frank Mulligan, International People Search & ... (more)
31 upvotes by Naveen Venkataraman, Russell Stadler, Jess Huang, (more)
Kaiser has hit the nail on the head but here are a few more Black Swans:
Expectations - Rising, rising, rising. The French did not revolt because Marie-Antoinette said "let them eat cake". The 10 years before the revolution had never been so good for the nation's peasants. Unfulfilled expectations were the final nail in the coffin of the French Monarchy. Right now many people's expectations are not being fulfilled.
Water Shortages - Kaiser has rightfully cited the water issue, but I would note the water shortages in the other countries that the Himalayas supply, like the Mekong, Brahmaputra etc. As water levels fall (happening) the potential for conflict is high because China is easy to blame.
Maritime Conflicts - Most countries work with the international model that the 12 miles limit is a country's strategic limit, and the 200-mile limit defines the area of economic control (oil, gas..). China seems to be pushing their strategic limit to 200 miles in the South China Sea.
Social Safety Net - No one in the current generation can even conceive of a time when there was not strong economic growth, and concomitant 110% employment. When the first recession comes there's not much to catch Chinese society. No welfare, no dole, weak medical system, undeveloped insurance system etc. Long-term success is not defined by how you deal with the good times, but how you deal with the bad times.
Hot Money - A cash influx into the country is great, but it always carries the risk that it might flow out. Much of the overseas private investment in housing was predicated on a rising value for the RMB and rising house prices. So a punt on the housing market was seen as a no-brainer. If the housing bubble bursts there could be serious outflow.
North Korea - Obvious one. Check out the length of the border with North Korea.
Unemployed Students - China now produces about 6 million graduates per year, and this may well be more than it needs. Many are going without a job and they are a potential source of social conflict because they are articulate and have the time to do something about their situation. Fortunately, they don't have the language of debate or opposition, and they are pretty much non-political. (Extreme nationalists the exception) But what happens if they wake up one day and see themselves in a mirror?
4-2-1 - On the same theme, the younger generation is under huge pressure because all the hopes and dreams of 4 grandparents and 2 parents rest with this one 'child'. The pressure for some seems to be unbearable now, and they are pushing back with the classic "I didn't ask to be born!"
Inflation - No, it's not only 5% .....
Advantages as Disadvantages - Being top in the world for mathematics is great, but the downside is that the cost is an entire country's ability to create. So you have lots of task implementers but not necessarily anyone to decide what tasks to perform. Having a huge base of potential 18/25-year old female production workers is also great until you want to move to higher-end services. Having lots of new graduates shows you are developing rapidly, except when they can't find a job ...
Form of Stability - Real stability comes in the form of a pendulum that swings left and right, only passing briefly over the equilibrium position in the center. China's stability consists of someone holding the armature in the centre and declaring a harmonious outcome, while their whole body vibrates with the efforts of holding it in place.
Like Kaiser, I foresee China doing what it has always done i.e. muddling through. This is possible when you have a non-convertible currency and massive reserves.
What are the biggest problems facing China? - Quora
198 upvotes by Ben Golub (Harvard Dept. of Economics; Ph.D. in economics,... (more) ), Edwin Khoo, Janelle Alicia Monroy, (more)
The below is a quick-and-dirty and incomplete list that I'll add to. I should note it also probably conveys a pessimism about the country's future that isn't an accurate reflection of my actual outlook, which falls a good bit short of blithely optimistic but is nonetheless not utterly bleak.
A rapidly aging population: China will be the first major economy to go gray before it gets rich, placing huge strains on working-age people who will have to effectively pay for pensions and healthcare for a disproportionate number of non-working elderly citizens. For a nominally socialist country, the weave of China's social safety net is woefully loose, and badly frayed in parts--most notably the healthcare system. This is often cited as a major cause of the high savings rate--something that chokes off consumption and contributes to the imbalance in China's economy (see below).
Gender imbalance: Preference for male children, with deep cultural roots, has skewed the percentage of male to female children dangerously. Though the one-child policy has been substantially relaxed in rural areas, and though sex-selective abortion is outlawed and physicians are forbidden from disclosing the gender of a fetus to parents, the gender balance does not appear to have improved. It may well be that social ills like increased criminality will arise when large unmarried male populations.
Income inequality: Income disparity is continuing to grow, and while China does not have quite the Gini coefficient of some other major countries, it has increased very rapidly throughout three decades of reform and opening. This manifests itself perhaps most immediately in the housing crisis, where prices have risen so fast that they've put home ownership out of realistic reach of many working class Chinese.
Environmental degradation: Polluted air, desertification, toxic waterways, soil erosion--China suffers a long, long litany of man-made environmental problems, much of it related to its coal addiction. Anthropogenic global warming is contributing to this problem, and to water shortages (see below) as glaciers melt at an alarming rate.
Dependence on fossil fuels: Coal is still far and away the source of electric power in China, and China's addiction to this is contributing to global warming, to pollution (and thus to health costs, to shrinking agricultural land because of acid rain, and to a generally lower quality of life).
An imbalanced economy, too dependent still on export with a relatively low share of GDP from domestic consumption compared to most developed nations. This also leads to chronic overcapacity, which exacerbates China's trade imbalance with certain major trading partners and is a perennial cause for tension in bilateral relations with, most significantly, the U.S.
Water shortages: Particularly in North China, water is in chronically short supply. Water tables beneath major metropolitan areas like Beijing have dropped precipitously. Enormous hydrological projects like the South North Water Transfer Project, which would convey water from the relatively well-watered South to the arid North in three systems of canals and pipelines, have hit snags and caused considerable controversy.
Ethnic tensions: Tibet, Xinjiang, and to a lesser extent Inner Mongolia all have active separatist movements, and ethnic tensions have boiled over in recent years in China's Tibetan Autonomous Region and other parts of western China where Tibetans live (in March 2008) and in the Xinjiang Uighur Autonomous Region (in July 2009)
Corruption: While China is by no means among the world's most corrupt countries, corruption certainly does remain a problem. The perception of corruption is a major factor in social unrest in China.
Lack of participatory channels: China's increasingly wealthy "middle class" wants, not surprisingly, a greater voice in policymaking. Informal channels like Internet public opinion may be stopgaps, but they are not a long-term substitute for more direct participatory mechanisms.
Eroding trust in government leadership: While a full-blown legitimacy crisis doesn't seem to be looming at present (polls actually show a remarkably high level of support for the government), there are important segments of society that have become deeply distrustful and cynical about political authority in China. The Internet has created a de facto public sphere where civil society can coalesce around any of the many issues laid out above; around unaddressed grievances (mothers of people killed in June 89, parents of children killed in the Sichuan Earthquake of 2008 due to shoddy school construction, people calling for a full accounting of the horrors of the Great Famine, the list is long). Internet censorship is another issue around which activists have coalesced. This is a very significant challenge to the Chinese leadership.
Frank Mulligan, International People Search & ... (more)31 upvotes by Naveen Venkataraman, Russell Stadler, Jess Huang, (more)
Kaiser has hit the nail on the head but here are a few more Black Swans:
Expectations - Rising, rising, rising. The French did not revolt because Marie-Antoinette said "let them eat cake". The 10 years before the revolution had never been so good for the nation's peasants. Unfulfilled expectations were the final nail in the coffin of the French Monarchy. Right now many people's expectations are not being fulfilled.
Water Shortages - Kaiser has rightfully cited the water issue, but I would note the water shortages in the other countries that the Himalayas supply, like the Mekong, Brahmaputra etc. As water levels fall (happening) the potential for conflict is high because China is easy to blame.
Maritime Conflicts - Most countries work with the international model that the 12 miles limit is a country's strategic limit, and the 200-mile limit defines the area of economic control (oil, gas..). China seems to be pushing their strategic limit to 200 miles in the South China Sea.
Social Safety Net - No one in the current generation can even conceive of a time when there was not strong economic growth, and concomitant 110% employment. When the first recession comes there's not much to catch Chinese society. No welfare, no dole, weak medical system, undeveloped insurance system etc. Long-term success is not defined by how you deal with the good times, but how you deal with the bad times.
Hot Money - A cash influx into the country is great, but it always carries the risk that it might flow out. Much of the overseas private investment in housing was predicated on a rising value for the RMB and rising house prices. So a punt on the housing market was seen as a no-brainer. If the housing bubble bursts there could be serious outflow.
North Korea - Obvious one. Check out the length of the border with North Korea.
Unemployed Students - China now produces about 6 million graduates per year, and this may well be more than it needs. Many are going without a job and they are a potential source of social conflict because they are articulate and have the time to do something about their situation. Fortunately, they don't have the language of debate or opposition, and they are pretty much non-political. (Extreme nationalists the exception) But what happens if they wake up one day and see themselves in a mirror?
4-2-1 - On the same theme, the younger generation is under huge pressure because all the hopes and dreams of 4 grandparents and 2 parents rest with this one 'child'. The pressure for some seems to be unbearable now, and they are pushing back with the classic "I didn't ask to be born!"
Inflation - No, it's not only 5% .....
Advantages as Disadvantages - Being top in the world for mathematics is great, but the downside is that the cost is an entire country's ability to create. So you have lots of task implementers but not necessarily anyone to decide what tasks to perform. Having a huge base of potential 18/25-year old female production workers is also great until you want to move to higher-end services. Having lots of new graduates shows you are developing rapidly, except when they can't find a job ...
Form of Stability - Real stability comes in the form of a pendulum that swings left and right, only passing briefly over the equilibrium position in the center. China's stability consists of someone holding the armature in the centre and declaring a harmonious outcome, while their whole body vibrates with the efforts of holding it in place.
Like Kaiser, I foresee China doing what it has always done i.e. muddling through. This is possible when you have a non-convertible currency and massive reserves.
What are the biggest problems facing China? - Quora
