China's Downward Spiral. Gordon Chang Talks to A&G.

Author & Columnist Gordon Chang joined A&G to talk about the mounting demographic challenges faced by China's communist leadership and how China's many issues will impact the global economy. 

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Episode Transcript

Speaker 1 (00:00):
Been looking forward to this conversation. We're joined by author
and columnist Gordon Chang, widely recognized authority on what's happening
in China, Chinese American relationships and that sort of thing.
Gordon's recent column caught my eye. China's economy is collapsing.
Here's why you should worry, Gordon. Welcome, How are you, sir?
I'm fine, thank you, and thank you so much. Joe, Oh,
it's it's my pleasure. So it's funny Jack and I

(00:22):
and Jack's off today, but we're both really into Chinese
American relations, the rise of China, China's future, and that
sort of thing. While as Rush Limbaugh might have put it,
the drive by media just always repeats China is the
great rising economic power. China will soon eclips us. They'll
soon have the biggest economy on Earth, and a lot
of us are over here shouting whoa, whoa, whoa. China

(00:43):
has some serious problems going on, so glad to hear
you writing about it. Tell us about the current state
of China economically, and then we'll get to what it
might mean down the road. Yes, China right now has
an economy which is perhaps zero growth. Maybe negative. If
there is any sort of positive growth at all, it's
probably less than one percent. And the reason is, of

(01:06):
course the COVID lockdowns, which still are plaguing in the country,
including still plaguing Beijing and Chinhai where they're putting new
neighborhoods into restrictive measures all the time. But they're more
fundamental problems. The most fundamental problem is that siege and thing.
The Chinese ruler is moving back to a state dominated economy.
We know that doesn't work. Also, they've got too much

(01:28):
debt um and that debt problem is is something that
they can't solve. But it's not just the economy. This
is in the context of a country which really is
in distress. Uh, tell us more about that sort of distress.
I mean, because the COVID will come and the COVID
would go. But I know a lot of problems are
are structural. If you will, yes, but the problems are structural,

(01:51):
and the most structural problem of all is demography. China
right now has a population of let's say one point
for one billion, which is the numb were from the
most recent reporting of the National Bureau Statistics UM. Most
people expect China by the end of the century will
have a population of maybe five million, maybe six hundred

(02:13):
million if they're lucky. Um So, really this is the
biggest demograph that fall in history and the absence of
war or disease. No country has ever gone through that before.
So we don't know how China will navigate it. But
all of its other problems, um, and there are a
lot of them, have to be seen in the context
of a rapidly shrinking country. Well, and you couple that

(02:37):
with j and Ping and when you know, I can't
remember when it was, but Jack and I had long
assumed that JN Ping Stalin. A lot of the communist
leaders just wanted the legitimacy, the promises of communism, but
we're really running kind of an old fashioned dictatorship behind
the scenes. They didn't believe their own rhetoric. But it seems,

(02:58):
you know, that Jan Ping actually believes in communism, that
it will work, and that it's time to run in
this unruly capitalist thing that's that's bought them everything they have. Yes,
and we never know, of course, within someone's mind, but
it's clear that siegent Ping revers Mousedong. He's consistently felt

(03:18):
that way over the course of decades, and we've seen
his actions as a ruler, which is to move away
from the liberalization of the economy in China which created
all that growth during three and a half decades. Also,
he believes in totalitarian social controls and we're seeing the
return of those, so that China has really moved back

(03:38):
to a society that he's starting to resemble the nineteen fifties,
only with high speed railroads and buildings and skyscrapers. Um.
But really what he's doing is he's taking the vitality
out of China, and that ultimately is something that has occurred.
It occurred in the first years of the People's Republic,
of course, but it's also occurred during the Imperial Error

(04:00):
from time to time where China's leaders closed up their
country and it's always resulted in disaster at Joel and
in your piece which folks can read it Armstrong and
Getty dot Com link to the Daily Caller. Um, it's uh.
You mentioned there have been a handful of run on
the runs on banks. There's a very very fragile situation
with the real estate market. So I mean, if all

(04:23):
of those birds come home to roost and and China
goes into a severe state of unrest or or recession,
obviously that will affect the world economy. Do you want
to talk about that just a little bit before we
get into other geopolitical questions. Sure, um, it will affect
the global economy, but much less than we think. You know,

(04:43):
everyone says China is an engine of global growth. And yes,
China does have and has had growth. But the point
is China's growth has come at the expense of other
countries because of their stealing of intellectual property and their
predatory trade practices. So if China were, for an since
just a magically disappear off the face of the earth,

(05:03):
it actually would be good for growth of other countries
because to be an engine of global growth, you've got
to buy the goods and services of other countries to
create growth elsewhere. And the engine of global growth today,
as it's been consistently since the end of World War Two,
is the United States. Because we run these enormous trade
deficits with others, We're creating growth around the world. The

(05:25):
Chinese are taking away growth from other countries. Author and
columnist Gordon Chang is online. We're talking about China's economic
fragility and what it might mean. And then you you
hit me with You hit us with a sentence, a
couple of sentences that I thought were just terrific and
I did not see coming. In your peace, you ask
why should we care? Well, for decades, the primary basis

(05:46):
of legitimacy the Communist Party has been the continual lead,
continual delivery of prosperity. Now, because of the accelerating downturn,
the party's only remaining basis of legitimacy is nationalism. That
was the twist that I did not see coming. What's
that likely to look at like? Well? Si jun Ping
believes that the Communist Party has a right to rule.

(06:07):
He knows that his primary basis of legitimacy is gone.
He can no longer assure prosperity, which means that he's
got to show a strong China. Now, a strong China
means military misadventure abroad. It means, for instance, going after India, Japan,
the Philippines, Taiwan, even US. We've seen some very hostile

(06:28):
maneuvers by the Chinese Air Force and Navy over the
last couple of months. These guys are just sort of
looking for a war. Um you know, they may say
they don't want it, but they're taking actions that can
lead to it, and so therefore we've got to be
prepared that not as the Pentagon says that if war
comes with China it'll be next decade, We've got to
be prepared for the here and now. So you think

(06:51):
it's a putent like effort to provoke outsiders to attack
China to rally the people to the party, it would
probably to be attacking others. In the first instance. We
saw this in June with the sneak attack on India.
We have seen this, of course with these very provocative
air maneuvers um, not only with regard to Taiwan, but

(07:14):
also last month they almost tried to uh they almost
brought down in Australian reconnaissance playing in international airspace. So
this is really dangerous stuff that they're doing. And so
you know, the law of averages says that there's going
to be a collision or there's going to be deaths,
and that could lead to the spiral downward from which

(07:36):
there is no recovery. If you are to advise the
Joe Giddy administration on dissuading the Chinese from from pushing
too far and provoking the sort of conflict you're talking about.
What would you suggest, is there any dissuading them. I
think that there is, because they realized that we're a
stronger country. Um. What they don't believe is that the

(07:56):
United States has the political will to defend our friends
and allies. And a matter of fact, Ukraine is a
great demonstration of a failure of deterrence. We were far stronger,
our allies, were far stronger than Russia, and yet we
failed to stop the Russians from attacking on the Chinese.
Look at that, and I think the way that we

(08:16):
stopped them from going after Taiwan or whatever is we
make it clear that we will fight. And the way
to do that is, for instance, to stay to Taiwan.
We will defend you, will give you a mutual defense treaty,
will put our soldiers on the island as a trip wire,
will preposition um military supplies. We will do those things

(08:37):
that make it clear that we will fight. People will
say that that's extraordinarily risking, and I say, yes it is.
But because of misguided policy, over the course of decades,
our policies, we've created a situation where every option is
exceedingly dangerous, and the most dangerous option is to continue
with policies that have put us into this predicament in

(08:59):
the first place. Gordon Chang is an independent voice taking
a look at China. We always are interested in his opinion. Uh,
he's the author of the Coming Collapse of China. You
can follow Gordon on Twitter at Gordon g Chang. Gordon
is always interesting to catch up. Thanks so much for
the time. Well, thank you, Joe, I really appreciate it. Yeah,

(09:19):
no problem. Again, it's a little frustrating, and you don't
need to be an authority. I don't claim to be
an authority, but you just hear the same cliches about China,
repeat it over and over again, and and uh, it's
a behemoth. I mean obviously the population, the economy and
the rest of it. But it is an enormous, complicated, troubled,

(09:39):
aging country and and not the you know, the plucky,
young upstart that it's been portrayed as in the mainstream
media for the longest time. They are well. All international
politics is an extension of domestic politics, as we try
to remind you all from time to time, and countries
often ex rest there Uh, their difficulties domestically by reaching

(10:04):
out and poking somebody in the eye or or you know,
forming an alliance or writing a treaty or something like that.
But man, never forget domestic politics or what drive international
politics in China matters these days, so you've got to
keep an eye on what's going on internally. So I
hope you enjoyed that I did Armstrong