China Is Bankrupt: "In China, every province is a Greece"--And The Elite Are Jumping Ship

by Monica Davis

A Hong Kong financial analyst says China has out-Greeked the Greeks and Cypriots.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. He coined the phrase: “In China, every province is a Greece.” MOREHERE

The Chinese economy and the military are making trillions of dollars from slave labor factories and global exports of cheap goods.  Department stores around the world depend on cheap Chinese good for those “low prices.”  But, how much good is all of that money if the military siphons it off?

And what culpability do Western companies have, when they are only interested in cheap labor and an uninterrupted supply of finished product?  Charles Kernaghan, director of the National Labor Committee, said

“I don’t believe for a second that the multinational high-tech corporations care about the young workers in China; that is not part of the equation,” Kernaghan said. “Apple, HP, Microsoft, etc., did not go to China because they like the people there. They are there because of the low wages, the lack of benefits, the absence of independent unions and NGOs, the complications that would come with a democratic government. The companies are doing nothing concrete to protect worker rights. MOREHERE

Western companies are only interested in the bottom line.  They don’t give a hoot about working conditions of their foreign workers; nor are they much interested in the American workers they threw out into the street. Unfortunately, what goess aroun comes round: many of the workers they dumped can barely afford their cheap products. Even the Chinese forced labor cheap stuff is becoming too expensive for people on unemployment, unemployed or working two minimum wage jobs to stay afloat.

If you have a country whose economy is collectively run, you have no incentive for improvement; you answer onlty to oyourselves. And if you exist in a communist dictatorship, anything the military wants, it does. And this is what’s going on in China. You have a dictatorship supported by a rapacious, powerful military, which uses factory profits to generate funds to run the nation’s army and fuel its industrialization.

At present, China is undergoing massive super-industrialization. While the nation produces more steel than the next 4 nations combined, its domestic rapid industrialization process is consuming most of its output.  The country is even pre-building infrastructure, sometimes partiallly–such as bridges that are now in the middle of nowhere, but are in the path of near future growth. But, all is not as it seems.

There are an alarming number of business suicides in China.  Many oligarchs–like their Russian counterparts. are leaving the country. In an article detailing China’s economic crisis, Henry Zeng says that China has a deficit in its balance of payments for the first time since 1998.  He also  notes the increased tendency of wealthy Chinese to leave the country:

Even more telling is the growing trend of wealthy individuals (each with over $1.6 million) leaving China in the past few years. According to the SAFE report, over 16% of the country’s one million wealthy individuals have emigrated, with a projected 44% intending to follow suit. Many of them have already sent their children abroad for higher education, and some have invested heavily in U.S. real estate. MOREHERE

Sixteen percent have already left and another 44 percent of China’s wealthy want to leave the country–and take their wealth with them.  The huge numbers of Chinese worker bees busily crafting cheap goods for export belies the cracks in the foundation of the country’s economy.

One of the problems many political scientists see it the amount of corruption and wealth accumulation in the Chinese elite. Many of the elite are the children of long-time Chinese politicians and Communist 

For instance,  Li Keqiang, who was installed as Chinese premier, talked about a self-imposed revolution where the nation returned to a market based economy. Li acknowleges that moving from a central controlled economy to a market based one would result in massive opposition. 

Are we looking at another upheaval in China, and if so, is this why many wealthy individuals and families want to jump ship? Looking at the nation’s federal governing body, analysts note that 90 of the delegates are each worth over a billion dollars.  These wealthy oligarchs are looking to Li to defend their interests, suppress opposition and serve as midwife to an economy which increases its share of global wealth.

 

The richest 90 NPC delegates are reportedly each worth an average of $US1.1 billion—making the NPC by the far the wealthiest “parliament” in the world. These billionaires backed Xi’s rise to power, including those who owed their fortunes to his free market policy in several coastal provinces during the 1990s and 2000s when he was a provincial party secretary. They are clearly confident that Xi will use his position as head of the military and the police state apparatus to defend their interests and suppress any opposition from the working class.

Xi’s foreign policy also represents the corporate interests of this social layer. Behind the criticisms by Chinese officials in recent years of the “unfair” global order led by the US, are the desires of this new elite to take a greater slice of the wealth owned by the Western bourgeoisie, rather than receive only small profit margins as cheap labour providers. MOREHERE

Once again, China may be on the verge of revolution. The new elite wants a greater share of global wealth and is willing to use the nation’s military to counter domestic opposition. And the small farmers, working class and poor want to survive.

Like the American Dream, the Chinese Dream may be a boon for elites, but a graphic nightmare for the working class and family farmers. Xi is looking at a three-headed dragon: revolution, war and economic catastrophe. As John Chan notes: 

The “Chinese Dream” will quickly turn into a nightmare for the Chinese workers and small farmers. Xi’s more assertive diplomacy will only heighten the danger of war with Japan, and above all, the US. At home, pry.o-market restructuring will seek to make the wages of Chinese workers “competitive” with those in other cheap labour platforms, such as India and Vietnam, thus deepening their already unbearable poverty.

China remains a secretive country with a tightly controlled media and economy.  If there is economic trouble in the provinces, Chinese leaders aren’t about to announce it to  the world. And when the house of cards comes tumbling down, how much of the world’s economies will it take with it?