China: Asia's Toothless Paper Tiger

by Jeff Schweitzer

Jeff Schweitzer is a scientist and former White House Senior Policy Analyst; Ph.D. in marine biology/neurophysiology

As North Korea's creepy regime blusters and threatens, China proves powerless to reign in its crazy uncle. We should not be surprised at this impotence; but are however because almost every aspect of conventional wisdom about China is wrong.

We have short memories, and as a consequence we keep perpetuating the same myths and mistakes as if the past is nothing but a black void offering no lessons for the future. The unquestioned assumption that China will be the next economic superpower is a case in point. In making that claim we have clearly forgotten "The Japan That Can Say No." In making that claim, we clearly ignore the impacts of environmental degradation on future economic growth. We ignore basic realities of macroeconomics.

I come to this discussion having lived in Japan for two years in my youth. Later in life, I participated in multiple negotiations with the governments of Japan and China as Chief Environmental Officer at the Agency for International Development and during my time in the Clinton White House as the Assistant Director for International Science and Technology. I offer that background because the confluence of science, technology, economics and the environment has much to say about the future of Japan and China, and how those economies will impact the United States.

Panic Attack

Wild assertions about Asian economic dominance have had cyclical rises in popularity for decades. We can learn important lessons about China from the previous high point in the 1980s, if only we would glance back. Do we not remember our fears of the Japanese economic tsunami that threatened to envelop the United States? Japan was buying up iconic American real estate like the Rockefeller Center, Columbia Pictures and the Pebble Beach golf course, creating angst about our patrimony. Hawaii became an extension of Tokyo. The Japanese business model was crushing American industry. The Japanese economy was expanding while ours was contracting. The trade imbalance with Japan was exploding. Japan became the world's biggest creditor just as the United States earned the dubious distinction of being the world's biggest debtor. Japan was the very image of high quality and efficiency that the whole world wished to emulate, while American industry had a growing reputation for making sub-standard products considered second-rate in the global economy. Japanese companies became industry leaders in fields previously dominated by American businesses. Japanese ascendancy was assumed, unquestioned, accepted as inevitable, a juggernaut unstoppable by a weakened United States.

In this heady environment, the Japanese grew to believe that their country and people were superior. This arrogance was captured perfectly in 1989 in The Japan That Can Say No, co-authored by Sony co-founder Akio Morita and Shintaro Ishihara, Tokyo's former mayor (governor). The authors boldly claimed that American workers were lazy, and that Japan benefited from a huge advantage with its highly educated workforce. The book went further to claim, in a fit of xenophobic racism, that Japanese character was innately superior to Americans, who have been contaminated by the problems of a multiethnic and multicultural society.

Yet this panic and hysteria are barely mentioned in polite circles today. We do not discuss the breathless headlines about Japan buying America. We bury the memory of the most prominent Asian experts pontificating ominously about a new world order. We do so out of a sense of embarrassment, because all the talking heads and prognosticators were simply wrong. Chalmers Johnson, perhaps the best known of the Japanese experts, later confessed with amazing understatement, "In retrospect I probably did overstate the nature of the Japanese challenge."

Lessons from Japan

And now we are repeating the exercise with China, perpetuating the same myths that we foolishly did with Japan. Astonishingly, Chalmers with no embarrassment ignores his poor vision of the future for Japan, and with no hesitation has predicted a similar dominant rise for China. I feel there may be a credibility problem here...

We have clearly learned absolutely nothing from our experience in the 1980s. Yes, China's meteoric rise has a different genesis than Japan's and significantly different implications for the United States. But the heavy breathing about China is wrong, just as the experts got Japan wrong. To understand why we misjudge China, we first have to examine our misunderstanding of Japan's false rise.

Cultural Limitations

The economic prosperity of the Clinton years, and a decade of stagnation and burst bubbles in Tokyo, proved beyond doubt that the hypothesis put forth by Morita and Ishihara represented nothing but insular racism rather than any fundamental truth about Japanese greatness. But how did all the pundits get so spectacularly off track before the reality of Japan's fallibility was exposed by world events? They simply did not look deep enough at Japanese culture.

America's economic might derives directly from an infrastructure that encourages individualism, innovation, entrepreneurship and risk-taking. Japan's economic growth resulted from the focused determination that derives from uniformity, conformity, risk-aversion and group-thinking. The Japanese approach has great merit, but severe limitations. Those limitations were reached in the 1990s. In the midst of our collective panic about Japan, I said to anybody who would listen, and I am sure nobody did, that we just needed to take a deep breath, and let Japan's methodology play itself out. The school system crushes individualism, punishes severely any attempt to innovate, and demands a degree of social conformity unthinkable in the United States. That fundamental constraint was missed by the experts - in a world driven by innovation.

Limits of Uniformity and Rigidity

Also missed were the structural limitations of Japan's "keiretsu" or cartels, most of which are illegal but exist as an open dirty secret. The Japanese economy was then, and in many ways still is, highly "cartelized" in manufacturing, farming and trade. This model of rigid uniformity in a school system that feeds automatons into a semi-monopolized command-control economy works well for an emerging economy, but is not suitable for global leadership. A culture and economy so hostile to individualism simply cannot outgrow a system dedicated to the entrepreneurial spirit. We have witnessed this truth.

We can see Japan's problem with a political analogy. A dictator has certain advantages over an elected president in a democracy. An absolute ruler unencumbered by negotiations with opponents can move by decree and react quickly. But while that model has certain short-term advantages, the limits can be seen by the results of history. The more flexible, messy, democratic approach has proven superior. Likewise, the American economy, which is messy, multicultural, scrappy and individualistic, is ultimately more powerful than the rigid, neater, uniform, and tidier Japanese model, in spite of the latter's short-term advantages. What we really ended up with is the Japan that can say maybe.

China

Just as we overlooked the structural flaws in the Japanese economy during Japan's rapid rise, so too are we blind to limiting and deep-seated constraints in China that will prove to be inherent brakes on growth. What pundits today fail to recognize is that China's economic expansion is more illusory than spectacular. The fundamental constraint on future growth imposed by severe environmental degradation in China is the story line that is not being read, even as the populace chokes on dense smog and drinks contaminated water. Multi-decadal double-digit expansion has been achieved at the terrible cost of unprecedented levels of pollution, irreversible damage to ecosystem functions, and depletion of critical non-renewable natural resources. China has sustained unprecedented growth by stealing, not borrowing, from future generations. That debt must be paid, and when the invoice comes due, the economic expansion will come to a grinding halt.

Environmental Destruction and Natural Resource Depletion

The magnitude of the environmental waste and destruction in China is so staggering as to be hard to comprehend. Sixteen of the world's 20 most polluted cities are in China. The country recently admitted to having "cancer villages." Nearly one-third of all Chinese lacks access to potable water, with a per-capita supply about one-quarter the global average. China admits that 90% of its groundwater is polluted. More than 70% of China's rivers, lakes and streams are heavily contaminated. Every year, nearly 6000 square miles of grasslands and forests are lost to desertification. Desert sands claim an area equivalent to New Jersey every five years. One impact among many is an unprecedented number of choking sandstorms, more than quadruple the number compared to just ten years ago.

Chinese air is now a nasty brew of sulfur dioxide, nitrogen dioxide and ozone. Many regions of China can now lay claim to the most polluted air in the world. The situation is only getting worse, because automobiles are now the leading cause of dirty air, even though China imposes emissions and mileage standards that well exceed those in the United States. If China achieves parity with the United States on per-capita automobile ownership, China alone would have 1.1 billion cars compared to the global fleet today of 800 million.

Acid rain is so pervasive and severe that crop yields have declined in about 30% of the country, and buildings are being seriously damaged in every urban area.

A projected population of 1.5 billion by 2031 will impose ever-greater demands on dwindling supplies of scarce but vital resources. At that population level, China itself would need to consume resources at a volume now being used by the rest of the world combined. For example, a Chinese population of that size would, with reasonable projections of per capita consumption, require about 100 million barrels of oil per day, compared to global use today of about 85 million barrels daily. They will soon exceed the oil consumption of the United States. China is already the world's leading consumer of tropical hardwoods, grain, meat, coal and steel.

Health Crisis

The impact of air pollution on human health is enormous. Journalist Deng Fei said, "If things continue like this, we will all be doomed. If the issue [of ground water pollution] is not properly solved, not only will it kill people but it will also drag down the entire healthcare system because of the number of cancer patients it causes."

From 2001-2006, a study conducted by Nanjing University showed that air pollution caused an increase in birth defects by an astonishing 50%, affecting 1.2 million babies. Respiratory diseases are now a leading cause of death in adults. A report from the United Nations in 2002 concluded that 23,000 respiratory deaths, 13,000 fatal heart attacks and 15 million cases of bronchitis were directly attributable to air pollution. The World Health Organization estimates that air pollution kills 656,000 Chinese each year.

The remainder of the animal kingdom is not immune, either, to pollution or habitat destruction. According to the IUCN Red List, China is a tenuous home to 385 threatened species. Some are familiar to the West, including the giant panda, South China and Siberian tigers, Asian elephant, and Yangtze River dolphin, but they are joined by many lesser-known species essential to normal ecosystem functioning.

Social Destabilization

The environmental crisis is not the only burden the Chinese must overcome. Social issues like the spread of AIDS, a disparity between numbers of men and women creating a restless and socially destabilizing "bachelor class", unchecked urban migration, and widespread racism will diminish prosperity and hamper economic growth as well.

China is fighting a losing battle between resource depletion, pollution, population growth and fragile political stability. Only by eating their seed corn have they been able to promote growth and maintain order, giving a false sense of progress that is not sustainable. The granary is rapidly approaching empty, and when the degraded and polluted land can no longer support the mirage, the miracle of the Chinese economy will be exposed for the myth that it is.

Economic Myth

In spite of fiscal hysteria, China does not own the United States, any more than Japan did earlier at its peak. This is true for three very different reasons. First, when you owe a bank $100,000, they are in control; when you owe the bank a few billion dollars, you are. China is simply too heavily invested in the American economy to make any move to endanger that investment. Second, the nature of China's financial relationship with the United States makes the idea of being too heavily indebted to them a bit silly. The U.S. government raises money, among other means, by selling treasury bonds. Buying those bonds is not equivalent to buying corporate securities. With stocks, you become part owner of the company in which you invested. Not true with treasury bonds: you don't buy "ownership" of the United States by investing in such bonds. You have lent the government money and expect a return (however small) on that investment, secured only on the good faith of the government. The U.S. did not sign over title so you can foreclose if you do not receive payment. In spite of claims to the contrary, borrowing money with only the promise to repay does not shift the balance of power between lender and borrower. Third, China's investment is exaggerated, representing only 7.5 percent of the $16 trillion in outstanding debt. The vast majority of the remainder is held by Americans and American institutions. Yes, I have just grossly oversimplified what is a complex macroeconomic relationship, but the bottom line message is valid. We have nothing to fear from China's investment in the U.S. economy. They need us more than we need them.

Take a Deep Breath

But the pundits keep babbling on. The New York Times published an article in 2005 opening with the paragraph:

"Not even 20 years have passed since the apparently unstoppable Japanese economic juggernaut struck fear in the hearts of Americans, and now China has emerged to be seen as the new economic menace threatening the nation's vital strategic interests."

Mercifully, the forecasts have been tempered a bit since then, but still talk ominously of a rising China. The very same expert who warned us about the land of the rising sun now says, yes, but "China is several orders of magnitude different from Japan."

When you hear experts talk about the economic threat posed by an ascending China, remember Japan. They are ignoring the obvious, just like in the 1980s. China is in deep trouble. I predict now for China what I did for Japan at its peak: China is simply facing too great of a burden of gargantuan social, economic, health and environmental disasters. They have nowhere to go but down.



Book Introduction:

Beyond Cosmic Dice: Moral Life in a Random World

by Jeff Schweitzer and Giuseppe Notarbartolo di Sciara 

June 22, 2009
"Beyond Cosmic Dice" offers a new perspective on the purpose and meaning of life free from any divine influence. By rejecting the false premises of religion, readers are free to pave their own road for a better life.


Jeff Schweitzer
 spent much of his youth underwater pursuing his lifelong fascination with marine life. He obtained his doctorate from Scripps Institution of Oceanography through his neurobehavioral studies of sharks and rays. He has published in an eclectic range of fields, including neurobiology, marine science, international development, environmental protection and aviation. Jeff and his wife live in central Texas, moving there after retiring from the White House as Assistant Director for International Science and Technology.

Giuseppe Notarbartolo di Sciara is an evolutionary biologist with a doctorate from the University of California. He serves as a marine policy advisor to various national and international bodies, and has recently represented Italy in multilateral environmental negotiations. Through appearances on television and radio, and the publication of articles and books, he has been striving to increase public awareness of marine conservation. Giuseppe lives with his family in Northern Italy.




     

 


This article is brought to you by the author who owns the copyright to the text.

Should you want to support the author’s creative work you can use the PayPal “Donate” button below.

Your donation is a transaction between you and the author. The proceeds go directly to the author’s PayPal account in full less PayPal’s commission.

Facts & Arts neither receives information about you, nor of your donation, nor does Facts & Arts receive a commission.

Facts & Arts does not pay the author, nor takes paid by the author, for the posting of the author's material on Facts & Arts. Facts & Arts finances its operations by selling advertising space.

 

 

Browse articles by author

More Current Affairs

Added 12.07.2018
The cabinet members who resigned this week apparently feared that politics is taking May toward a “soft Brexit,” their worst of all possible worlds........“soft Brexit,” maintains the status quo, more or less, letting Europeans freely circulate into British labor markets and allowing European firms to operate easily in the UK. The problem with “soft Brexit” is that it raises questions about why the UK is leaving at all, since it will still have the same obligations to Europe as before, it just won’t have a voice when the remaining 27 members of the European Union meet to make decisions.
Added 12.07.2018
One study on the 2010 World Cup found that there was a 37.5% rise in admission rates across 15 accident and emergency departments on England match days........Examining reports of domestic abuse in Lancashire (a county of approximately 1.5m people in Northern England), across the 2002, 2006 and 2010 World Cup tournaments, we discovered a 26% increase in reports of domestic abuse when England won or drew, and a 38% increase when England lost. Reports were also more frequent on weekends, and reached their peak when England exited the tournament.
Added 10.07.2018
If, back in the 1980s and 1990s, the US government, rather than arguing for Chinese economic opening, had prohibited any US company from investing there, China’s rise would have been significantly delayed, though not permanently prevented. Because that did not happen, China’s rise is now self-sustaining. A huge and increasingly affluent domestic market will make exports less vital to growth.
Added 10.07.2018
Comparing today’s demagogues with Adolf Hitler is almost always unwise. Such alarmism tends to trivialize the actual horrors of the Nazi regime, and distracts attention from our own political problems. But if alarmism is counterproductive, the question remains: At what point are democracies truly in danger? What was unimaginable only a few years ago – a US president insulting democratic allies and praising dictators, or calling the free press “enemies of the people,” or locking up refugees and taking away their children – has become almost normal now. When will it be too late to sound the alarm?
Added 09.07.2018
In view of such actions, expectations for Trump’s behavior at the upcoming summit have gone from prickly to dangerous. The sense of foreboding has been heightened by the announcement that, just four days after the summit ends, Trump will meet with Russian President Vladimir Putin, in Helsinki. The nightmare scenario is easy to imagine: Trump lays bare NATO’s fractures, including by questioning mutual defense, before selling his allies down the river by publicly embracing Putin. But this does not need to be the outcome.
Added 09.07.2018
After 2027 (or maybe even 2025, only 7 years from now), the number of EVs will rapidly accelerate, as virtually all new vehicles bought will be electric (an effect of rapidly falling battery and other component costs and of the fuel for electric cars being essentially free; you can power one off your rooftop solar array).
Added 03.07.2018
Most pundits interpret Trump’s outbursts as playing to his political base, or preening for the cameras, or blustering for the sake of striking future deals. We take a different view. In line with many of America’s renowned mental-health experts, we believe that Trump suffers from several psychological pathologies that render him a clear and present danger to the world.
Added 03.07.2018
In the United Kingdom, Brexit looms large, with everyone from government ministers to tabloid newspapers frothing daily about the deal that will be struck with the European Union and the effects that it will have. But the EU faces too many pressing challenges to be obsessing about Britain. The UK’s concern is understandable: evidence is mounting of the likely damage a departure from the single market and customs union will do to the UK economy. According to new research from the Centre for European Reform, the UK economy is already 2.1% smaller than it would have been had voters chosen to remain. The hit to public finances totals £440 million ($579 million) per week.
Added 26.06.2018
Nowadays, Britain’s words and actions on the world stage are so at odds with its values that one must wonder what has happened to the country. Since the June 2016 Brexit referendum, British foreign policy seems to have all but collapsed – and even to have disowned its past and its governing ideas. Worse, this has coincided with the emergence of US President Donald Trump’s erratic administration, which is pursuing goals that are completely detached from those of Britain – and of Europe generally. 
Added 26.06.2018
With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics.
Added 26.06.2018
The sights and sounds of Central American children being ripped from their parents by US Border Patrol officers have, by now, spread across the globe. The experience has been traumatizing to its victims and deeply painful to watch. It has also done incalculable damage to the very idea of America. This is June when we are supposed to be celebrating "Immigrant Heritage Month". Each year, I have taken this opportunity to recall my family's immigrant story - the opportunity and freedom they sought, the hardships they endured, and the remarkable progress they made in just one generation. 
Added 24.06.2018
State terrorism comes in many forms, but one of its most cruel and revolting expressions is when it is aimed at children. Even though U.S. President Donald Trump backed down in the face of a scathing political and public outcry and ended his administration’s policy of separating migrant children from their parents, make no mistake: His actions were and remain a form of terrorism.
Added 22.06.2018
It is now clear that the twenty-first century is ushering in a new world order. As uncertainty and instability associated with that process spread around the globe, the West has responded with either timidity or nostalgia for older forms of nationalism that failed in the past and certainly will not work now. Even to the most inveterate optimist, the G7 summit in Quebec earlier this month was proof that the geopolitical West is breaking up and losing its global significance, and that the great destroyer of that American-created and American-led order is none other than the US president. To be sure, Donald Trump is more a symptom than a cause of the West’s disintegration. But he is accelerating the process dramatically.
Added 20.06.2018
Sessions quoted a line written by the apostle Paul to a small community of Christians living in Rome around 55AD to defend the Department of Justice’s approach. He said: "I would cite you to the Apostle Paul and his clear and wise command in Romans 13, to obey the laws of the government because God has ordained them for the purpose of order." Sessions used the Bible because one of the most vocal opponents of the crackdown on asylum cases has been the Catholic Church. It’s no surprise that Sessions appealed to Romans chapter 13 verse 1 in response: not only did he hope to undermine Catholic authority by using the Bible against them, he cited a statement so broad that one might use it to defend anything a government does, good or bad. Picture below St Paul writing his epistles, by Valentin de Boulogne, via Wikimedia Commons.
Added 19.06.2018
 

I find it exceptionally irritating when I hear liberals worry about whether Israel will be able to remain a "Jewish and Democratic State" if it retains control of occupied Palestinian lands.

Added 18.06.2018
Daniel Wagner: "My prediction Korean War will be formally ended, the peninsula will be denuclearised, and a lasting peace will be the result."
Added 14.06.2018
Extract: PiS [ the ruling Law and Justice party] has established the most significant addition to the Polish social safety net since 1989: the Family 500+ program. Launched in 2016, Family 500+ embodies the nationalism, traditional family values, and social consciousness that the PiS seeks to promote. The program pays families 500 złoty ($144) per month to provide care for a second or subsequent child...........The program has been enormously popular. Some 2.4 million families took advantage of it in the first two years. The benefit, equivalent to 40% of the minimum wage, has almost wiped out extreme poverty for children in Poland, reducing it by an estimated 70-80%........... Liberal pro-European politicians and policymakers are not convinced. They complain that such a generous family benefit will weaken work incentives and blow up the government budget. But initial evidence suggests that Family 500+ has actually increased economic activity. It has also reversed the post-communist decline in fertility, increased wages (particularly for women), and enabled families to buy school materials, take vacations, buy more clothes for their kids, and rely less on high-priced credit for basic household needs. And, thanks to rapid economic growth, the government deficit has steadily fallen, not grown.
Added 12.06.2018
The depths of hypocrisy of the Republican Party in supporting Trump’s meeting with the North Korean dictator in Singapore are hard to plumb. This is a party whose leading members adopted the Ostrich Foreign Policy Principle for decades. If you don’t like a country’s government or political and economic system, pretend it does not exist.
Added 12.06.2018
US Defense Secretary Jim Mattis has spoken out against China’s strategy of “intimidation and coercion” in the South China Sea, including the deployment of anti-ship missiles, surface-to-air missiles, and electronic jammers, and, more recently, the landing of nuclear-capable bomber aircraft at Woody Island. There are, Mattis warned, “consequences to China ignoring the international community.” But what consequences?
Added 12.06.2018
With a general election approaching in September, Swedish voters are being warned that now it’s their turn to be targeted by Russian interference in the democratic process. According to Sweden’s Civil Contingencies Agency (MSB), which is leading the country’s efforts to counter foreign-influence operations, such interference is very likely, and citizens should be on the lookout for disinformation and fake news.