I hasten to point out that “Communist” China is not, in fact, communist. And it hasn’t been for 40 years. Its economic system is state corporatism, or fascism, very much on Mussolini’s model. It’s surprisingly similar to our own system, although with much more authoritarian, top-down control.
by Doug Casey
International Man: Lee Kuan Yew, the former leader of Singapore, once said:
“The size of China’s displacement of the world balance is such that the world must find a new balance.
It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”
What is your take?
Doug Casey: China has united 1.4 billion people into a single political entity, so of course they have a lot of weight. But simply having masses of people under your political control doesn’t mean as much as it used to.
China would still be a poverty-stricken non-entity if it hadn’t been for the reforms that Deng Xiaoping made starting in 1980. Masses of uneducated, desperately poor peasants are more of a liability than an asset in the modern world. Deng transformed China’s economy into something that functions pretty much like those in the West. But now, Xi Jinping seems to be returning to the philosophy of Chairman Mao, with much more centralized control. That’s very negative for the country.
Secondly, China’s demographics are horrible. The average woman today only has 1.4 children. Low reproduction rates are to be expected when a society urbanizes. But China also had a draconian one-child policy starting in 1980 that only ended in 2015. That, and the fact the Chinese prefer males for cultural reasons, compounded the phenomenon.
Few people in the West realize that as a result of these things, the Chinese population is in steep decline. UN projections—which aren’t worth much but are still interesting—find that by the end of this century, their population could collapse to 600 or 700 million. And they’ll mostly be old people, so it’s not going to bounce back quickly.
I have real questions about whether China’s economic miracle of the last 40 years will continue. Perhaps it will even go into reverse. That’s because China’s huge transformation is the result of its adoption of some aspects of Western Civilization, which made the United States and Western Europe different from, and better than, any other countries in world history.
I think there are at least 12 characteristics that are underpinned the West. They are free thought, free speech, free markets, property rights, limited government, individualism, rationality, personal liberty, the concept of progress, privacy, the rule of law, and entrepreneurialism.
Humans everywhere understand their value and adhere to them sporadically, of course; without them civilization is impossible. But only the West made them integral to itself, as principles. They’re what made us unique.
International Man: Since 2013, China has been working on its Belt and Road Initiative, which stretches from East Asia to Europe. It’s primarily a trade network of seaports and railroads controlled by Beijing, reminiscent of the ancient Silk Road. So far, over 100 countries have signed on to the massive trade and infrastructure initiative.
What are its geopolitical and economic implications?
Doug Casey: In the short run, it’s resulted in a lot of profits for Chinese corporations and employment for the Chinese workers who are building these things. Locals are hired mostly for coolie labor—which I find amusing and ironic.
Everyone in the West seems to think the Chinese are going to take over the world. While I acknowledge China’s hyperbolic rise over the last 40 years, I question whether the Belt and Road won’t be a huge overreach. It could backfire for several reasons.
Number one, the benefits of the Belt and Road initiative are primarily political. It’s planned and run on the basis of politics, much more than economics. It’s basically a government boondoggle—about the biggest in history. Building infrastructure in unstable third-world countries is generally a sucker bet for lots of reasons; it’s likely to be shockingly unprofitable. It may lead to the bankruptcy of a lot of Chinese banks and corporations that are involved with it.
Number two, a lot of countries are starting to see it as Chinese neocolonialism. I think the natives are going to find the Chinese much more unpleasant colonial masters than the Europeans. Among other things, massive numbers of Chinese people are immigrating to Africa. It’s a guaranteed formula for conflict.
I suspect it’s going to end badly for the Chinese politically and economically, especially in Africa, which produces nothing but raw materials and poor people. When Europeans and Americans stop shipping billions in capital, technology, and food to the Dark Continent, the progress it’s made will go into reverse because its political and cultural mores are hopeless. That’s why the infrastructure in most places south of the Sahara—railroads, roads, waterways, utilities, you name it—have collapsed in the years since the Europeans left despite trillions in aid and investment. You can see it happening now in South Africa, which is by far the most advanced country on the continent. The Chinese will be even less successful than the Europeans.
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