Is China Headed for a Breakup Just Like The Soviet Union’s?

The Wall Street Journal article “The Coming Chinese Crackup” by Dr. David Shambaugh, a leading expert on China, forecasts that China may be heading towards the same political breakup the Soviet Union experienced in 1991 under Mikhail Gorbachev.

“China-watchers have been on high alert for telltale signs of regime decay and decline ever since the regime’s near-death experience in Tiananmen Square in 1989. Since then, several seasoned Sinologists have risked their professional reputations by asserting that the collapse of CCP (Chinese Communist Party) rule was inevitable.”

Dr. Shambaugh suggests:

“Consider five telling indications of the regime’s vulnerability and the party’s systemic weaknesses.”:

  1. Many of the richest and most powerful citizens are making plans to leave China permanently. Some have already left the country. A large number have already transferred their wealth to safe havens.
  1. Since becoming China’s leader, Mr. Xi Jinping, has arbitrarily increased political repression. The crackdown is severe compared to the tactics of prior leaders. One signal that he is not popular are reports that he recently changed his security detail.
  1. A number of CCP’s leaders have signaled that they are not happy.
  1. The extensive corruption continues which is corroding support for the CCP and Mr. Xi’s policies and actions.

“Moreover, Mr. Xi’s campaign is turning out to be at least as much a selective purge as an antigraft campaign. Many of its targets to date have been political clients and allies of former Chinese leader Jiang Zemin.”

  1. The economy is not an unstoppable and powerful force. There are problems which are not easily fixed. “…economy…has slowed to its lowest pace in two decades.” My question: Will China experience the economic malaise Japan experienced?

Dr. Shambaugh’s conclusion:

“These five increasingly evident cracks in the regime’s control can be fixed only through political reform. Until and unless China relaxes its draconian political controls, it will never become an innovative society and a “knowledge economy”— a main goal of the Third Plenum reforms. The political system has become the primary impediment to China’s needed social and economic reforms. If Mr. Xi and party leaders don’t relax their grip, they may be summoning precisely the fate they hope to avoid.“

Based on my experiences managing a business in China, I see Dr. Shambaugh’s treatise as reasonable. I suggest adding the following intractable problems to the Sinologist’s lists of telltale signs of that may result in decay and decline:

  • Servicing the massive debt China has incurred to support economic growth.
  • Its hazardous environmental conditions.
  • A number of its manufacturing operations are inefficient with knowledge, processes and productivity comparable to the USA in the 1970s.

Dr. Shambaugh is a professor of international affairs and the director of the China Policy Program at George Washington University and a nonresident senior fellow at the Brookings Institution. His books include “China’s Communist Party: Atrophy and Adaptation” and, most recently, “China Goes Global: The Partial Power.”

Follow-up articles:

BBC May 10, 2015 “China Cuts Interest Rates to 5.1%” – to stimulate economic growth.

Bloomberg April 28, 2015 “China Is Set to Lose Manufacturing Crown”

Reuters’ April 15, 2015 “China growth slowest in six years, more stimulus expected soon”

 

 

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