Here is a list of articles that describe the frailties, or foretell the collapse, of the Chinese economy and maybe even the social structure of China. They have all come from the China news cycle over the last couple of weeks, most have been picked up through the Hao Hao Report. Their inclusion marks my retreat from a daily engagement, over the last few months, with that cycle. I have never been one for losing my self in the news of the day, here or at home, but by engaging here a little more recently I have certainly gotten more of a sense of the China news out their and the orchestrators of that news. I will endeavor to keep abreast of things but not quite in the same way. As always we’ll see how we go.
Below this list is an introduction to one of the articles; which draws a parallel between the over heated greed and growth of the Toyota Company and the present stage of economic development in China, predicting the inevitability of crisis. Further on is an exchange that I had with Charlie from Chengdu Living (apologies for getting Charlie involved again here) while briefly commenting on this article on the Hao Hao Report. It was only the third time ever I have made an extended contribution to a comments section, so I note it here for my own sense of reference but also as an optimistic interlude between these various prognoses of China doom:
What Are the Odds That China Will Follow 1920s U.S. and 1980s Japan?- The Boom and Bust Blog The China Bubble- Forbes.com China’s Bubble Trouble- Real Clear Politics.com What’s Powering China’s Skyscraper Boom- Skyscraper News.com China, Let’s See If You Can Innovate- Fortune Magazine Educated and Fearing the Future In China- New York Times China Is The Next Toyota- The Huffington Post China’s Bubbles and Demographics- ZhongNanHai Blog Google, China and 1984- The Huffington Post Poll Shows Concern About American Influence Waning as China’s Grows- The Washington Post The Arrogance of China’s Leadership- Spiegel Online China Is Dubai Times A Thousand- Bloomberg.com
China Is The Next Toyota
from the New York Times:
‘Here’s an instructive thought experiment. Let’s read Akio Toyoda’s comments about his company’s problems, and substitute China as the frame of reference:
“I fear the pace at which we have grown may have been too quick. I would like to point out here that Toyota’s priority has traditionally been: first, safety; second, quality; and third, volume. These priorities became confused. We pursued growth over the speed at which we were able to develop our people and our organization.”
The parallels are extraordinary. China’s remarkable economic surge over the last two decades — and the pride, if not hubris, embodied in that rise — is a national narrative-in-the-making that parallels Toyota’s corporate story. Just as China’s dominance is seen as an inexorable trajectory, Toyota’s was too… We now realize that Toyota’s growth came at a price… But China’s rapid ascendancy carries with it a far greater risk of overstretch and structural weakness than Toyota’s. China’s problems are more pervasive and threatening…’ Continue reading this article
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Chengdu Living- Charlie: Great article – the Toyota / China comparison really seems to suit this argument well.
NFX: Got to disagree. Food for thought but China certainly can’t be said to have ever put ‘safety’ and ‘quality’ before ‘volume’. I know that is in part the point but what it misses is the slow development of Chinese society the other way. Toyota went from a to b, China it seems slowly is going to go from b to a; with greater regulation, more higher end products, huge investments in green technologies, scarce resources and infrastructure. Though no one will dispute the institutionalized corruption and potential for some "inevitable crisis", it could equally be said that the Chinese President’s words were a point on the transitional path from b to a, not a path to be simply measured in months or a few years, rather than Akio Toyoda’s words which were made upon arrival at b.
Nstanosheck: I have to agree with NFX here, the argument is wrong.
Jaycasey: The article’s point isn’t rocket science. Knowing what is sustainable growth and what isn’t is difficult for companies as well as countries. Toyota, like many other companies before it tried to grow faster than it’s management/engineering resources could handle. China has the same problem. The only difference is that China never has been in a manageable state and given its overheated growth, can’t get there. Quality will continue to suffer.
Chengdu Living- Charlie: No one made the claim that China put safety or quality before volume, because that would be ridiculous. The parallel between Toyota and China in this context is clear: China, like Toyota, has grown at an unsustainable rate and is headed for a similar fate. China is like Dubai on a much larger scale: dozens of locations around the country are now sprawling urban centers when they were not more than villages a generation ago. If you understand what happened to Toyota and what’s happening to Dubai and China, you can see a pattern emerging.
I don’t follow your A to B analogy – could you clarify?
NFX: I know the article’s analogy is based on the idea of over expansion and unsustainable growth but my point about highlighting the fact that China has never put safety and quality before volume is that the path here is a different one to that taken by Toyota. Now, the idea of the article may well of course still hold because they are both suffering the same consequences of hyper-growth at present. However, the path that Toyota took from a- b, (a-being sustainable growth/quality/safety etc, b- being unregulated expansion) is different to the one being taken by China, which I would argue is one of a movement slowly away from b towards a. Maybe, people do not think this subtle difference is important, but the nature of a corporation descending into greed and over-reaching growth is different to a nation using every means at its disposal to emerge from widespread poverty and wholly inadequate societal infrastructure. This is not to excuse the consequences of such a development but instead of simply looking for a catastrophe or disaster around every corner which of course there are many, it might help us recognise the work that is going on to move this country of people towards a more manageable state. It may be oh so easy to laugh at such a statement but I think that would miss the movement, however slow, that is going on here, from b- a.
Chengdu Living- Charlie: Correct me if I’m wrong: you believe that irresponsibility and greed led Toyota towards a crash, but China, due to it’s green energy movement and increased quality and safety, is turning a corner by being responsible? Everyday there are articles posted on this site that examine the facts and argue the opposite – that China, with it’s growing power, has not demonstrated that it’s shaping up to be a responsible world leader. If you have overwhelming evidence that I haven’t seen of China’s “B to A” transition I would love to see it, because I’m curious how you reach such a conclusion.
NFX: No, that is not my belief. I read those same articles. I do feel though that many of those articles are not always giving a balanced appraisal of a situation. There are so many articles running through here (The Hao Hao Report) that seem to be happy looking for the flaws and disasters as ends in themselves, even simply to validate the authors own perspective and ego. It seems to me that they do not always do so in the name of constructive criticism. I think you and I are both agreed that Sergey Brin’s approach towards China was one of the better approaches possible, recognising the problems and trying to work on their edges. Many here acknowledge the insights from James Fallows’ commentary, he too does not critique for critique’s sake, he offers a balanced appraisal and he does so by always making clear, as Brin did, that the bureaucratic and political focal points within the government structures here are numerous and that to get a clear sense of what Chinese society and government is is difficult.
The point I was simply trying to make, is not one about whether China will be a responsible world leader or whether overall its policies today can be perceived as responsible, but that there are policies that are moving Chinese society towards what I referred to as (a), sustainability and security. I emphasised that I meant it only in the sense of a small point on the path in that direction. I was not swooning over news about a wind farm here, a bit of educational or transportational investment there or the prosecuting of the odd Supreme Court Justice. Just recognising that China is not rushing blindly into oblivion and disaster, even if many of its policies from the last decade or so may lead it there, as Mr. Hanft points out. It will, as Jaycassey notes above, be a question of whether China’s overheated growth can be managed. Mr. Hanft also refers to the inevitability of crisis, "wait and see" he says with the smugness of a man reveling in his futurist insight. Following on from Brin again, I will hold on to a bit of his optimism and see all this within a longer time frame.
Chengdu Living- Charlie: That’s a very thoughtful reply NFX, I appreciate the explanation – you make a lot of great points! I think the Toyota/China comparison has as much a place as your counter argument though, which is why I voted it up. From the evidence we can draw separate conclusions but I think to appreciate both sides for the perspective they offer affords us a better understanding of what’s really happening. Thanks again for sharing your thoughts.
NFX: Agreed, more food for thought. Cheers.
Gtowna: Way to go the both of you here with this exchange! I learned a lot, thank you.
Interlude Over:
From the last week:
China Arrests More Than 1,000 People for Endangering State Security- The UK Telegraph Further Xinjiang Separatist Attacks Expected- Today Online.com China’s Acquisition of Sea of Japan Port Rattles Its Neighbours- The National Eleven Tigers Starve to Death at China Zoo- Reuters Chinese Granny Buried Alive by Property Developers- Telegraph UK China’s Oil Demand Increase ‘Astonishing’, says IEA- The BBC
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