Reading the Chinese economy is never easy. Numerous macroeconomic indicators are released periodically; sometimes these barometers exceed analysts’ forecasts while at other times they fall short of market expectations. While opinions may differ on precise numerical details such as the growth rate, there is broad consensus that China is experiencing a slowdown and that a recession in the Middle Kingdom has ramifications globally.
China has experienced great prosperity in the last decade, witnessing the rise of a bourgeoning middle class and unprecedented growth in consumption, production, and investment. These newfound riches, however, have come at great cost. Apart from the obvious – environmental degradation, social inequality, rampant corruption – an often overlooked consequence of China’s rise is the dangerous message it has sent to the rest of the world.
China’s economic ascendancy has emboldened despots and authoritarian rulers worldwide. Its success has shown (confirmed, rather) the viability, effectiveness, and profitability of oppressive ruling regimes provided they deliver strong monetary gains for a segment of the local population and foreign business interests. In its most recent report, Freedom House, an NGO specializing in human rights and political freedom research, noted an overall decline in global political rights and civil liberties for the ninth consecutive year. China has become the poster child for what Freedom House dubs a “return to the iron fist”. It is a naive hope, but a Chinese recession may expose the inherent flaws in such a model of development and encourage some of the pariah regimes that make up the CCP’s fan-club to rethink their modus operandi, if only out of economic interest and not moral responsibility.
As bad luck would have it, years of Chinese growth had coincided with economic stagnation, occasionally decline, in many Western democracies, spanning the Global Financial Crisis and the European sovereign debt debacle. Not only has China sold its flavor of nation-building to the Kim Jong-Uns and Mugabes out there (the latter was recently awarded the Confucius Peace Prize), it has convinced a growing handful of intellectuals and politicians across the developed world. Visit any bookstore and one finds the shelves dotted with business bestsellers lauding China’s economic success and hailing its unique brand of “state capitalism” as a superior path of economic development. And for good reason! As evidenced by Xi Jinping’s recent UK visit: violently subjugate and persecute your peoples and world powers will pamper you with red carpet treatment and multi-billion dollar business contracts! A reversal of fortunes in China will hopefully stem this alarming trend of “appeasement” where concessions on fundamental human rights are made to malicious, totalitarian states for short-lived economic gains.
Back at home, bolstered by their country’s rising economic prowess, millions of Chinese are eager – and feel empowered – to restore China to its “rightful place” in the world order (that is, at the very top), spurred also in part by an inferiority complex after being humiliated by all those Western powers a century ago, a reminder the Party never tires of voicing. This sense of “entitlement” is the crux of Xi Jinping’s “Chinese Dream” and explains a wide range of Chinese behaviorisms, ranging from mainland tourists lashing out at Hongkongers with nationalistic diatribes when criticized for defecating in public, to the country’s belligerent actions in the South China Sea, where foreign policy has been dominated by sabre-rattling hawks anxious to flaunt their new military might. The illusion of a rich, confident, and powerful China (albeit with a giant chip on its shoulder) is further exacerbated by the state media and its relentless tide of nationalist rhetoric. If and when the country falls on hard times, this message may find a tougher audience, and its citizens can no longer trot the globe while drunk off a nationalistic ego trip.
China is an integral part of the world economy, and the linkages that constitute global trade and commerce are unlikely to come undone, however undesirable the CCP may be. Economists have long debated a “China hard landing” scenario, and there is little doubt a Chinese recession will send ripples across global markets. A Chinese slowdown, however, will hopefully also trigger a “rebalance” of sorts – not in monetary terms, but a shift in focus so the world can objectively re-evaluate the negative externalities that accompanied China’s rapid rise and their implications for socio-economic discourse around the globe.