Niall Ferguson: will China crash and burn?

The historian outlines how the astonishing rise of the People’s Republic could spell disaster – for China and the West

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Thirty years ago, when I was 17, the word “Chinese” meant takeaway chicken chow mein. In economic and political terms, China scarcely mattered. Today, however, the People’s Republic is poised to become the largest economy in the world.

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The transformation is without precedent. Imagine the biggest industrial revolution in history compressed into just a few decades.

Forty years ago, China’s economy was smaller than Britain’s. Today it’s more than six times larger. According to the International Monetary Fund, in 2016 it will probably overtake the United States to become the biggest in the world.

A fifth of humanity is on the move. There are now 11 cities in China with a population of more than six million. By contrast, there are 11 countries in the European Union with a population of less than six million.

Chinese-dominated world

China’s rise affects all of us. With Western governments (including Britain’s) competing to attract Chinese investment, we are having to kowtow to new Asian masters. After half a millennium when the West outstripped China, it’s an astonishing turnaround.

So in many ways the biggest questions of the 21st century are all about China. What would it be like to live in a Chinese-dominated world? Or could the Red Dragon crash and burn in a recurrence of the chaos that has devastated China in the past? Over the next few years, these questions will become central to all our lives. That’s why I spent much of last year travelling through China, in search of answers.

Niall’s visit to China

I didn’t just go to Beijing and Shanghai, the favourite destinations of Western visitors. I went to marvel at the First Emperor’s vast necropolis in Xi’an. I visited the cave dwellings of Yan’an, where Mao Zedong plotted his takeover of China.

I journeyed to his birthplace in the little village of Shaoshan, still a place of worship for millions of devotees of his personality cult. And I crouched in the simple hut in Xiaogang village that was arguably the true birthplace of Deng Xiaoping’s economic reforms.

But wherever I went – from the paddy fields of Anhui to the steamy streets of Chongqing – I encountered frenetic activity. On the outskirts of every city there are serried ranks of tower blocks and cranes, and row upon row of newly constructed apartment blocks.

Economy

It’s impressive. Trouble is that much of this new construction is the result of a bubble in property prices that is now rapidly deflating.

And that’s not the only threat to China’s miracle economy. In the space of a generation, China has gone from being one of the most equal societies in the world to American levels of income inequality. Today, China’s hundreds of millions of rural poor are at the mercy of corrupt officials and rapacious land speculators, who have been grabbing their farmland for development.

Last year, anger in the countryside produced open revolt in the village of Wukan, in Guangdong province. In the cities, meanwhile, there is growing unrest among China’s 250 million migrant workers. While a few Chinese have become billionaires, most have to live on miserable wages, earned in wretched conditions.

Aging population

China is aging, too. Between now and 2050, the number of over-60s in this country is going to rise by a staggering 230 million. So the share of the elderly in the population will rise from just 12 per cent now to very nearly a third. Just as in Europe, a dwindling number of workers is going to be supporting an ever larger population of old folks.

How will the Chinese cope as economic growth slows – which it inevitably must? I certainly wouldn’t put much money on a “jasmine revolution”. To most Chinese, as far as I can see, democracy is not the number one priority. Centuries of centralised rule and Confucian philosophy mean that aspirations for greater individual freedom take second place to fear of disorder.

Chinese nationalism

The recurring nightmare of China’s leaders is that their country will descend into dong luan – turmoil – as it did repeatedly in the 19th and 20th centuries. Their best hope of avoiding that may lie in a phenomenon many Western commentators underestimate: Chinese nationalism.

Go to Tiananmen Square at five o’clock in the morning to watch the raising of the red flag and you’ll find a throng of Chinese people already there. It’s not an especially impressive or protracted ceremony – nothing like the pomp and ceremony of the changing of the guard at Buckingham Palace.

And yet each day thousands of Chinese come and wait for hours just to watch the national flag being unfurled. Ask them why they do it and the say things like: “When I see the flag raising I just have this emotion that I can’t really express… a kind of pride and nationalism in China.”

One way this mood manifests itself is in shrill attacks on the way the Western media represent China. In 2008, for example, a number of bombastic videos appeared on YouTube, expressing rage at the way Western television was depicting unrest in Tibet. The really significant thing about a group like “Anti-CNN” is that it is in no way an official entity. It’s an authentic expression of youthful patriotism.

Computer hackers

Other young Chinese patriots go further. They already regard themselves at war with the West – in a uniquely 21st-century form of war. In a dingy internet café in the backstreets of Beijing, I met Liu Qing, a “Honker” – Chinese computer hacker – and founder of the Red Hacker Alliance. Honkers like him see their mission as defending Chinese interests against attacks from the West. And attack is their preferred form of defence.

According to MI5, Chinese hackers have targeted British defence, energy, communications and manufacturing companies. Our intelligence agencies have also recorded attacks on websites of government departments and even the Houses of Parliament.

I asked Liu if he thinks there is a cyber-war going on now between China and the United States? “I think there’s an all-out war,” he replied.

And this is no video game. It’s because of people like the Honkers that the US has set up a new Cyber Command. In conventional military terms, China will take decades to close the gap with the US. But in the realm of cyber-warfare, the gap is so narrow as to be nonexistent.

Nightmare scenario

So here is the nightmare scenario. China’s economy falters. Unrest breaks out and the spectre of dong luan (turmoil) returns. To appease popular anger, the Chinese government panders to this resurgent nationalism. It blames the West for its problems and becomes increasingly aggressive towards us.

Far-fetched? Not really. It wouldn’t be the first time in history that a rising power has pursued an aggressive foreign policy to stave off pressure for domestic political reform.

Rapid growth, internal instability, youthful nationalism, overseas expansion: I for one am reminded of the way that Germany made its first bid for world power one hundred years ago – a bid that led ultimately to the First World War.

Could China’s rise repeat the same disastrous trajectory of Germany a hundred years ago? It’s something to ponder the next time you order a Chinese takeaway.

This is an edited version of an article from the issue of Radio Times magazine that went on sale 6 March 2012.

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Niall Ferguson presents China: Triumph and Turmoil tonight at 8pm on Channel 4/C4 HD