With the recent news of the volatility on the Chinese stock market and a slowing economy, many spivs and speculators have been fretting over the fundamental health and long term wellbeing of the Chinese economy. Is the world's second largest (or perhaps even first) economy headed into a severe downturn or prolonged slump? Will China be able to successfully effect a transition from a manufacturing and export led economy to one with a stronger consumer led and services orientated equilibrium?
I remember as a teenager in 2001 when the United States slipped into a recession, the favored refrain of economists was when America sneezed, the rest of the world caught a cold. Fifteen years later it is now China which is the primary driver of global economic growth and now it is when China sneezes that the world economy is at risk of a nasty virus. This in itself is a remarkable achievement. When discussing the current Chinese economic situation, it is prudent to bear in mind Mark Twain's famous quip: «The reports of my death have been greatly exaggerated».
The slowdown in the Chinese economy must be seen with a proper sense of proportion and perspective. The transformation of the Chinese economy since «Open and Reform» was inaugurated in 1978 by the incredible visionary and statesman Deng Xiaoping has represented the fastest and most successful reform of an economy and society in the history of human civilization. Before «Open and Reform» China was largely a rural and agrarian economy. It is hard to imagine it from the vantage point of 2016 but back in 1978 Spain, Brazil, Canada, Italy, the UK and France all outperformed the People's Republic with the United States, Japan and Germany ranked by the World Bank as the top three.
However – through the amazing work ethic, creative dynamism and productive grit of the exceptional and highly talented Chinese work force and wise, innovative policy making of the Chinese State under the exemplary leadership of Deng Xiaoping – in the space of thirty two years China had displaced highly developed, sophisticated and established economies such as Britain, France, Germany and Japan to become the second largest economy on the planet in terms of Gross Domestic Product, hot on the heels of the power house United States and by Purchasing Parity Power estimates the largest economy overall. It did all this in the face of stiff competition from the richer, Established economies of the world.
Now, the global economy is heavily dependent on Chinese economic growth and thanks to China's more balanced and disciplined economic model, helped pull America and the world back from the brink of a Great Depression after the grossly irresponsible Western engineered calamity of the sub-prime mortgage Global Financial Crisis of 2008. No country and no economy in human history has risen so rapidly and climbed up the ladder of economic and social progress lifting over 500 million of it's people out of poverty and delivering greater standards of living, better paid jobs, higher incomes, more social mobility and greater economic opportunity.
So after decades of double digit growth or advancements over 7% a slowdown was always inevitable especially in light of poor performance and instability of the Euro-zone and the bankrupt Reaganite Laissez-faire economic model of American and British free market fundamentalism pursued by successive Anglo-American Governments since the 1980s. China is now undergoing a period of rebalancing and reinvention, complimenting her status as the «workshop of the world» with greater emphasis on consumer led growth and services. The Chinese people historically have never been profligate spenders, preferring to exercise fiscal discipline and build up financial security for difficult times when the going gets tough, rather than gorging themselves on excessive materialism in the manner of their more fickle and greedy Western counterparts.
As the BBC documentary film maker, the brilliant Adam Curtis, demonstrated in his seminal program «The Century of the Self», before the advent of mass marketing and advertising in the West, most people only bought things they really needed that were essentials for living. However, from the 1920s onwards when Sigmund Freud's nephew Eddie Berneys extrapolated Freud's psycho-analytic techniques and taught corporations how to use such techniques in public relations advertising campaigns to sell consumer goods to the masses, Western publics switched from buying goods which were not essential to living but which spoke to their subconscious, irrational desires.
As the old saying goes: «If there is no need…its greed». Western corporate capitalism and consumerism, underpinned by Freudian marketing manipulation has led the West into the obscene extreme individualism and greed we see today in North America and Europe with the masses bombarded left, right and center with adverts selling them every gadget and gimmick that corporations come up with. One cannot even attend the cinema without having to sit through thirty minutes (yes thirty minutes!) of pathetic advert after advert mined with subliminal messaging.
The British economy for example is basically one glorified shopping mall were human beings have been reduced to nothing more than «consumers» desperate to have the latest gas guzzling tank of a car as a status symbol or the latest flat screen TV, the latest iPhone etc. Rather than keep economic growth sky-high the challenge for the Chinese State and people is to find a balance between productive manufacturing and consumer led services while avoiding the debilitating social consequences which have befallen Western economies and societies such as Britain that have undergone similar reorientations away from manufacturing led economic models towards a consumption based «service» model. Without credit-fueled consumer spending, there would be very little to the British economy. The British economy is essentially kept afloat by rampant high street spending underpinned by low interest rates and the banking/financial services sector in London.
The policy responses of British Governments and the Bank of England after the Financial Crisis and Crash of 2008 have been akin to treating a heroin addict with more heroin, flooding the economy with even cheaper money in the hope that people will keep on spending and living off credit and debt. Under the leadership of President Xi Jinping, who alongside Angela Merkel, is one of the greatest Statesman and Leaders in the world today, I am confident the remarkable Chinese people and their amazing country will rise to the challenges before them as they have always done throughout their rich history and avoid the pitfalls and mistakes their Western counterparts are doomed to repeat over and over again. Throughout the ages – whether it has been dealing with racist British imperialist thieves or the unspeakable barbarism of the invading Japanese during the Second World War – the Chinese can handle whatever is thrown at them, always finding their way through to better times.