Ordinary average citizen, jai-alai connoisseur, and journeyman Xi Jinping’s got a problem. He’s decided to gamble the future of his little Party cabal on the concept that he can always have it both ways.
1) That he can deliver modern strong economic growth to the masses while also maintaining total economic control in the hands of the cabal
2) That said modern strong economic growth will keep the masses tame so they don’t overthrow the cabal
Even if you believe (2) is possible (I don’t), the real problem is (1) is impossible. Xi’s starting to learn that modern capitalism and total state control don’t mix. And the result is his economy’s tanking, and the dude doesn’t know what to do.
You can’t have an economy where you let a Shanghai taxi driver play the stockmarket one day, and then wake up in the morning and pull levers from Beijing to order the market what to do. It doesn’t work that way. Either the market becomes a chaotic mess or economic growth slows. In today’s case, both are happening.
So today, using his lever, Xi’s decided to let the yuan devalue in an aggressive attempt to kick start exports. He’ll probably have about as much success with that as he did trying to save the stockmarket last month. Meaning he’ll fail and lose even more credibility. Then what? I suspect he doesn’t know. Sooner or later he’s going to run out of people he can arrest.
China’s still growing faster than just about anybody else, and has more cash than most alien empires, but the glory days of the past are gone. What happens next is key not just for China, but for the rest of the world that’s now driven as much by what happens in Beijing as in Washington. And I think we’ll see over the next few months, an equally dominant display of political incompetence from both global capitals.
I’m actually wondering if the whole global economy is about to crash again like 2008. China’s slowing and taking all of Asia with it. Europe is still in perpetual debtor’s prison. America and Britain are only growing very, very slowly. Narendra Modi’s attempts to recharge India have amounted to very little. And on and on.
It might get real ugly this winter as folks stop shelling out cash on vacations and start freezing again. I wonder if the planet has the slack to absorb another big recession? Everybody’s still recovering from 2008. What a mess that’d be.
Eh, that’s quite the depressing thought. Uh, have a nice day please.
“Hmm, now that I actually think about it this way, it really doesn’t make any sense after all. Oh. Hmm.”