Trending: China Skepticism

Those of us who live in China take it for granted that it is not the “miracle” often portrayed in media reports. Changes over the past thirty years have been vast indeed, but as this blog’s posts of the past two years suggest if not directly say, China’s still got to straighten up its act in terms of corruption, human rights, and legal culpability before it can be considered a truly astounding and laudable accomplishment.

This type of banter may seem like the intellectual musings of someone too deep in her China-head; someone who just never “got over” the fact that she gets cut in line every time she waits for the bus (and subsequently goes off on a tangent about the cultural causes of this phenomenon), or can’t get good service at a restaurant, or hears another story about some poor handicapped man being arrested for begging in front of a government official’s cousin’s one-year-old  son’s birthday banquet. Oftentimes, it is the business people who wax the most lyrical about the return on their China investments, equating their capital gains with China’s progress. While this is not at all unreasonable, it does certainly leave out half — if not more than half — of the China-story.

This is why I’ve started to perk up when stories of China skepticism appear in Western media sources, particularly the likes of Forbes and the Wall Street Journal. Junheng Li, an investment analyst and founder of JL Warren Capital LLC, has recently launched a new Forbes blog Due Diligence that specifically aims to challenge the presence of gold pots in China’s bowl of Lucky Charms. What she witnesses time and again at conferences is the well-groomed enthusiasm for certain businesses in China, as if tapping in to the stock-picker’s “conventional wisdom” that China = financial opportunity. After a while, it starts to look like a circus.

More on that in her future posts and eventual book. Michael Pettis of the Carnegie Endowment gave a speech at the Australian Investment Conference last year along the same lines: not China-bear, just critical. This type of well-informed, specific and refined skepticism hits China’s image where it matters most: its so-called economic miracle. Muddy Waters, an investment research firm, has made a killing off of stoking China-skepticism for years. While their research raises questions of Chinese cultural issues versus Western understanding of business practice (i.e. misconstruing Chinese cultural habits for bad business practice; see a criticism here), I think we will be seeing increasing amounts of skepticism towards China’s economic promise in the future. China may be sitting on a golden nest of US loans, but it has enough of its own domestic issues with government corruption, nebulous banking practice, and FDIC-not-insured that those eggs may just crack under the bird’s weight.

So keep a feel on the media’s pulse for China, as it may just be taking a turn in the near future.

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3 Responses to Trending: China Skepticism

  1. Good post. I’ve noticed the same thing, but I think the key thing to remember is that no one really knows where China will go! I’ve been of the opinion for the last couple of years or so that China is the new counter-insurgency: it’s becoming a gravy-train that any analysts on the make can jump aboard, portraying themselves as an expert. I don’t think anyone can truly predict China’s trajectory with any degree of confidence. I guess that’s what makes it the most fascinating country in the world.

    In terms of China skepticism, I think there is a healthy dose of Western wishful thinking at play. Westerners, and particularly Americans, are become scared of China. The U.S. doesn’t want to accept it as a peer who will contest its primacy, at least in East Asia, so a lot of analysts are clinging to anything that suggest Beijing will be unable to sustain its re-emergence. I suspect that China has a few bumpy years ahead, but barring any major catastrophe, in the medium to long-term I think its prospects are good, at least economically.

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  3. Carrie says:

    I also totally agree with your take on things. When we visited the States a couple of years ago, it seems every 60 minutes episode and special report was documenting China’s rise to superpower fame. They would do these pieces on how green China has become environmentally and how advanced their technology is becoming. I found myself shaking my head and trying to tell people what “real” China actually looked like. I just want people to question all the flowery accolades that are constantly being thrown to a country warped in secrecy.

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