Commentary Magazine


Contentions

Will China Collapse?

My May 16 post, “Trade Showdown with China,” attracted a comment from one “Tongluren,” who asked, “Is this the same Gordon Chang that insisted that China will collapse in 2007?” It’s a fair question.

My first book, The Coming Collapse of China (2001), predicted that the Chinese Communist party would fall from power by the end of this decade, that is, by 2011 (not 2007). One of my principal arguments was that international commerce would remake Chinese society in ways that the country’s collective leadership—now composed of nine aging engineers who all favor blue suits and red ties—would not be able to handle.

Most people, like my new friend Tongluren, believe the Chinese one-party state is durable. If there is any consensus about China’s trajectory at this moment, it is that the Communist party will lead that nation to geopolitical and economic dominance in a few decades, perhaps sooner. “Resilient authoritarianism,” championed by Columbia University’s Andrew Nathan, is the latest intellectual flavor.

So it is no great surprise that people often ask me, in light of the spectacular performance of the Chinese economy in the last half decade, whether I have changed my opinions on the stability of the modern Chinese state. I have, in one important respect: I am surprised that China’s trading partners have been so tolerant of its failure to meet its World Trade Organization obligations. China’s economic success is based not only on structural factors like cheap labor and extreme environmental degradation, but also on widespread violations of trade promises. WTO membership limits the Communist party’s ability to continue those violations—and therefore to rack up enormous trade surpluses—but only if other nations enforce their rights.

At first, other nations were tolerant. America waited until March 2004 to file the first WTO complaint against China. Then Washington gave Beijing a private warning in February 2006 that its informal grace period was over. After more Chinese intransigence, Washington and Brussels took the unprecedented step of joining in a complaint the following month. Finally, Americans lost patience and filed three cases this year. In one of them—concerning intellectual property violations—we have been joined by Canada, Japan, Mexico, and the European Union.

China’s trading partners have just begun to scratch the surface with cases like these. Undoubtedly, additional complaints are on the way, as even more nations lose their patience with Beijing’s predatory trade practices. So WTO membership can eventually lead to major dislocations in the Chinese economy. Before joining the global trading organization, Beijing set the rules and administered the game. Now, however, it has submitted itself to external requirements and foreign tribunals.

Sensing American frustration, Beijing is approaching next week’s trade talks with the Bush administration with a hint of desperation. It is making pugnacious pronouncements, purchasing large quantities of American technology and soybeans, and pleading for more patience. It is, in fact, doing everything but complying with its trade obligations. Chinese leaders know that their economy cannot compete according to the rules. And that is one reason why the Chinese one-party state, which is overly dependent on exports to deliver prosperity, might just yet collapse.