The Chinese may not be quite as successful as they appear

From where we sit today, with a feckless president sliding into dementia, whose family has received billions from the Chinese and who may be caught in the web of blackmail for his, or his son’s, sexual predilections, China is in the catbird seat and we are doomed. Perhaps, though, China is not as all-powerful or impregnable as it appears. Totalitarian societies have serious structural problems and China is showing all of them.

My initial premise is that there is no better system for wealth creation than the free market. Before leftists shackled America with punitive wealth transfer taxes and harmful trade agreements, America’s free-market led the world in dynamism. It was innovative, affordable, and moved humanity forward in wonderful ways. It truly was the magical Carousel of Progress that Walt Disney personally envisioned for the 1964 World’s Fair. I first saw the show in 1970, when I was a child, and I was overwhelmed by the wonder of it all. This was America, with all its promise:

China too seems to be bursting with progress, innovation, and overseas accomplishments. Except that it’s not true; not true at all.

What China has is a totalitarian mercantilist system – or let’s just be honest and call it fascism. It’s no longer purely communist insofar as China has allowed a private sector to develop and it supports wealth creation. However, while individuals can make a profit, the government still controls the private sector, underwriting it and dictating how it may operate. This underwriting allows it to compete in the world.

The “dictating how it may operate” part is more of a problem. The government is a terrible manager. Imagine if every business in your country were run by the DMV, except that the employees were treated like slaves. Heck, you can go further and imagine that the employees actually are slaves, living in concentration camps, with the women raped and forcibly sterilized, and everyone physically abused and denied any semblance of liberty.

Slavery sounds like pure profit because labor is allegedly free. However, the employer is now responsible for providing employees with room and board, no matter how minimalist. The employer must also provide 24-hour guard services to force the employees to work. Most importantly, slaves are not productive. The only power left to them is to work slowly and badly.

The Chinese are also hampered by a culture that, unlike the neighboring Japanese, is not dedicated to exquisite perfection. The Chinese are perfectly capable of doing things wonderfully well, but you know from buying cheap, shoddy Chinese goods at every store in America that the fascist work ethos doesn’t even try. There’s only so long that people will put up with that before seeking better alternatives. At the end of the day, you’ll do better buying a good $10 hammer rather than repeatedly replacing poorly made $5 dollar hammers.

And of course, the Chinese don’t innovate. They steal. Significant parts of their economy are built on industrial theft.

Because their domestic economy, while it looks as if it’s booming, is a chimera, the Chinese are doing what all tyrants do when their economies are hollow: They expand, sucking up wealth from foreign countries. Currently (thankfully) their imperialism is economic in nature with the Belt & Road initiative that puts poor countries in China’s debt. Eventually, though, those countries too will have their economies hollowed out by China’s rapacious policies, all of which are dedicated to funneling wealth to the government.

China has one other big problem common to all dictatorships: A sclerotic bureaucracy that is incapable of doing anything other than desperately trying to please the dictator. And that’s how I get to a fascinating article in The Wall Street Journal:

After Chinese leader Xi Jinping ordered rural poverty eliminated by 2020, bureaucrats in the southwestern city of Mianyang got busy—with paperwork.

Instructed to devote 70% of their time to the campaign, they diligently filled out forms certifying compliance, a practice known as “leaving marks,” said Pang Jia, a local judicial clerk who joined the effort. When higher-ups demanded photographic proof of their home visits, some aid workers made up for missing winter photos by posing in cold-weather clothing during summer house calls, Ms. Pang said.

Since taking power in late 2012, Mr. Xi has realigned Chinese politics with his domineering style and a top-down drive to forge a centralized state under the Communist Party. But his efforts are running into an old foe: bureaucracy.

Party observers say the drive for centralization in a sprawling nation too often fosters bureaucratic inertia, duplicity and other unproductive practices that are aimed at satisfying Beijing and protecting careers but threaten to undermine Mr. Xi’s goals.

Chairman Xi’s trying to fight his bureaucratic problem, but it’s one intrinsic to dictatorships, so he is unlikely to prevail.

Unlike many WSJ articles, this one is not behind a paywall and I urge you to read the whole thing. We cannot get complaisant about China’s goals but it helps to understand that our major geopolitical rival has weaknesses.

IMAGE: Xi Jinping. YouTube screengrab.

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