Coming Collapse of China

Coming Collapse of China

by Gordon G. Chang

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China is hot. The world sees a glorious future for this sleeping giant, three times larger than the United States, predicting it will blossom into the world's biggest economy by 2010. According to Chang, however, a Chinese-American lawyer and China specialist, the People's Republic is a paper dragon. Peer beneath the veneer of modernization since Mao's death, and the symptoms of decay are everywhere: Deflation grips the economy, state-owned enterprises are failing, banks are hopelessly insolvent, foreign investment continues to decline, and Communist party corruption eats away at the fabric of society.

Beijing's cautious reforms have left the country stuck midway between communism and capitalism, Chang writes. With its impending World Trade Organization membership, for the first time China will be forced to open itself to foreign competition, which will shake the country to its foundations. Economic failure will be followed by government collapse. Covering subjects from party politics to the Falun Gong to the government's insupportable position on Taiwan, Chang presents a thorough and very chilling overview of China's present and not-so-distant future.

Product Details

ISBN-13: 9781588360212
Publisher: Random House Publishing Group
Publication date: 09/15/2001
Sold by: Random House
Format: NOOK Book
Pages: 368
Sales rank: 67,630
File size: 581 KB

About the Author

Gordon Chang has lived and worked in China for almost two decades, most recently in Shanghai, as counsel to the American law firm Paul Weiss. His articles on China have been published in The New York Times, The Asian Wall Street Journal, The Far Eastern Economic Review, and The International Herald Tribune. This is his first book.

Read an Excerpt


The Dinner Party

The Revolution Has Grown Old

[A] revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another.

—mao zedong They will move Mao Zedong’s body soon; it lies on hallowed ground. When the Communist Party of China falls, when the third Chinese revolution succeeds, they will move him from Tiananmen Square, the center of Beijing and the heart of China. So much history has occurred in Tiananmen, and so much more has yet to happen. The People’s Republic was proclaimed there, and there, inevitably, its end will be announced. And when it falls, the people will take Mao’s body from the square to mark a new beginning.

“We should die fighting,” said Mao. The Party, born of conflict, knows no other way. It will not politely leave when the people demand it; they will have to take back their government by force. Revolution is not a dinner party, Mao informed us, and it’s not gentle, temperate, or kind. It’s an insurrection and an act of violence. And China’s history has set the pattern. Dynasties appear strong, even toward their end. Chinese rulers resist to the last moment, even when it is clear that change must occur. It seems that peaceful evolution is not yet part of this people’s story. The Chinese have endured so much during the past century. If all were fair, this century, the one that has just begun, should be kinder to them. It won’t work out that way, however. “We should die fighting,” Mao said, and that’s just what is going to happen. Their suffering is not over yet.

So the Communist Party has shown the world that only force will be able to move it. The people are supposed to be intimidated by this colossal display of obstinacy, and, at least for the moment, many are. But they just wait in silence and let their resentments fester. The Party knows how to suppress, but it no longer has the power to lead. It has forgotten what once made it great.

“The Revolution has become a dinner party,” says Maggie Farley, who has taken Mao Zedong’s quip on revolution and stood it on its head. Her one short sentence summarizes the history of the People’s Republic.

Both Mao and Farley are correct. Indeed, if Mao could see what has become of his China, he would agree with Farley, a journalist and former resident of Shanghai. Mao, unprompted, might even say the same thing himself. He would, no doubt, utter Farley’s words as a condemnation of the current state of affairs or perhaps as one of his many calls to action. No, revolution is not a dinner party, but there is little that is revolutionary in present-day China. Farley conveys the image of a mass movement institutionalized, something that Mao, who promoted the concept of “continuous revolution,” sought to prevent.

Today the people no longer want Mao’s revolution or the party that administers it. And so the People’s Republic is going to fall, just like its predecessors. History shows that the Chinese people, once aroused, will not be denied. The Ming and the Qing, the last two imperial dynasties, and Chiang Kai-shek’s Kuomintang, the Nationalists, all fell quickly.

For the Qing, it was over almost as soon as it began. The Chinese, disgusted by their oppressive and inept rulers, demanded change. Some sought constitutional restraints on imperial power and others wanted revolution, but all knew that the current system had failed China. At the end it took just an incident—and almost any would have sufficed—to trigger rapid collapse. An accidental explosion in October 1911 ended in the abdication, four months later, of Puyi, the six-year-old emperor. With him went a dynasty of more than two hundred years and imperial rule of two thousand. Sun Yat-sen’s Revolutionary Alliance stood triumphant; China, for the first time in its history, had a republican form of government. And for the first time in many decades there was hope.

China’s troubles had not ended, however. Turmoil followed the first days of Sun’s Republic of China. Disorder resulted in national weakness, which triggered yet another wave of idealism and activism. The Communist Party of China was founded in 1921 in those crosscurrents, and during that time of turbulence the Communists thrived. They espoused the hope of Chinese nationalism and struck a responsive chord in both city and countryside.

Sun Yat-sen died in 1925, but by then new leaders had already taken his place. Chiang Kai-shek, a general who married a sister of Sun’s widow, succeeded in uniting most of China under Kuomintang rule in the late 1920s. The Kuomintang, the renamed Revolutionary Alliance, and the Communist Party were born of a common Leninist model and throughout their histories have been allies and enemies, creating a confusing tale from the 1920s through the 1940s. They struggled together as allies to unite China and drive out their common enemy, the Japanese, but they also could not help but fight one another. The Kuomintang’s campaign against the Communists, the story of brother against brother, resulted in bitter struggle. At one point, the Communist army faced extinction. Beginning in October 1934 from inland Jiangxi Province, Mao Zedong’s force of 80,000 started a 6,000-mile retreat that took slightly more than a year. When the legendary Long March was over, the army was reduced to a tenth of its original size, but it survived to fight again. Further conflict was inevitable: two Leninist parties could not inhabit the same space.

During the Second World War, China, briefly united under Chiang Kai-shek, was split into pieces controlled by the Kuomintang, the Japanese, the Communists, the Tibetans, and the Muslims. Chiang’s Kuomintang had failed; the Chinese fear of disunity had come to pass. Chiang could not hold China together, so he did not succeed in leading its people.

When the end came for the Kuomintang, it came quickly. Chiang Kai-shek had large forces, but Mao had something more important. The ragtag Communist army swept out of the countryside after the Second World War to surround the cities and prevail. The people had had enough of Kuomintang corruption, brutality, and incompetence. In 1949, Chiang’s forces simply disintegrated, falling to the Communists as fast as the Ming Dynasty had to the Qings three centuries earlier. His capital of Nanjing surrendered without resistance. Chiang could only retreat to Taiwan.

“We the 475 million Chinese people have now stood up and the future of our nation is infinitely bright,” proclaimed Mao Zedong. On October 1, 1949, he would declare the founding of his republic from the Gate of Heavenly Peace, the main entrance to the Forbidden City of the Ming and Qing emperors. And he would make the old imperial capital of Beijing the Communist seat of power. With the exception of Taiwan, Mao would unify China within a year. Decades of internal strife and disunity would come to an end. With the exception of the tiny enclaves of Hong Kong and Macau, foreigners had been removed from Chinese soil. A chapter of humiliation, a period spanning hundreds of years, had closed. Chinese revolutionaries had prevailed for the second time in the twentieth century, but now they would remake the country as they saw fit. It was morning again in China.

“A clean sheet of paper has no blotches,” wrote Mao, “and so the newest and most beautiful words can be written on it, the newest and most beautiful pictures can be painted on it.” China was war-torn, exhausted, and hungry. It was what Mao later would call “poor and blank.” To him, that was a virtue. He could build New China as he saw fit. He had the power, and the people, poor and blank, were eager to follow. His radical transformation of Chinese society began in the countryside with land reform. Redistribution built initial support for the new regime. Collectivization, more radical in scope, would follow.

For a time private industry survived. Despite mass campaigns designed to make them compliant, patriotic “national capitalists” continued to operate their own businesses alongside the government’s enterprises, which had been confiscated from foreigners and departed followers of Chiang Kai-shek. At first the private sector contributed about 40 percent of China’s industrial production. Mao either thought that China needed a transitory stage of capitalism before socialism could develop or felt that he could not do everything at once. In any event, China’s mixed economy, part public and part private, seemed to work well in the initial years.

Mao, however, changed course. In 1953, China both inaugurated the First Five-Year Plan, which called for rapid industrialization along Stalinist concepts, and formally announced the “transition to socialism.” State-owned enterprises, soon to embody China’s industrial might, were formed. Nationalization at the end of 1955 ended most private ownership of industrial assets.

The push to Stalinize industry was not controversial at the time. Deng Xiaoping, who later won praise for experimenting with capitalist techniques, was a supporter of this radical step to Stalinism. National pride, not to mention considerations of self-sufficiency, overcame Communist Party cadres’ misgivings about following a Soviet model of industrialization. Moreover, initial economic success, aided by contributions from China’s neighbor to the north, ensured continued support of the idea within the Party.

In order to create and maintain state enterprises, the People’s Republic developed a modern bureaucracy, the largest China had ever known and one of the world’s largest up to that time. Of course, state-owned enterprises, or SOEs, did not operate according to market forces; they moved according to decisions made by economic planners, who organized themselves into bureaus and ministries that grew in both size and number. Mao wanted rapid industrialization, and he wanted a centrally planned economy. Yet he could not stand the bureaucratic and professional elites that came into existence to sustain these goals.

Mao’s irreconcilable ambitions led to the concept of “permanent revolution,” which was later transformed into “continuous revolution.” These theoretical notions then resulted in the excesses for which he is remembered: the Hundred Flowers movement, the ensuing antirightist campaign, the Great Leap Forward, and the mother of all Chinese upheavals, the Great Proletarian Cultural Revolution. Although different in nature, all these events, one following the other in quick succession beginning in 1957, were the result of Mao’s desire to continually cleanse the Party and central government of the bureaucrats and others needed to run the centralized society and economy he had envisioned in the early 1950s.

These campaigns forever scarred China and the party that conceived them. The Great Leap Forward, for instance, was intended to produce a thousand years of Communist happiness. More to the point, Mao, the Great Helmsman, promised in 1958 that China would catch up to the West in fifteen years. Mao’s utopian mass campaign to decentralize industrialization to backyard furnaces and collectivize agriculture into communes ended in the deaths of tens of millions of people. The effort devastated agricultural production, but falsified statistics showed bountiful harvests and those claims led to tragedy. Millions starved while granaries were full with crops of past years. Bodies literally littered the fields, but few were willing to tell Party leaders that the people were suffering from their ill-conceived policies. Steps to alleviate the greatest famine in history could not be taken as the Party, founded on revolutionary fervor and optimism, could do anything but admit its own failure.

As a result, the glorious Communist Party brought the People’s Republic almost to the brink of collapse. By 1961, even senior Party cadres recognized that they had no choice but to abandon the Great Leap. China then reemphasized large-scale industrialization. State-owned enterprises, as a concept, could not help but look good in comparison to the Great Leap’s utopian ideal of decentralized communal development, which had caused such unimaginable suffering to the Chinese peasantry.

Then there was the Cultural Revolution. Mao launched that bizarre campaign in 1966 in yet another attempt to revitalize society, this time by destroying all that was old: customs, habits, culture, and thinking. Millions of youths roamed the country in one of the most abnormal periods of history. State-sponsored chaos destroyed the institutions of society and scarred generations of Chinese. The People’s Liberation Army eventually restored order in the country after clashing with youthful Red Guards, and by 1969 the campaign was declared over. A revision of official history, undertaken to support the political aims of later leaders, now recounts that the Cultural Revolution lasted until 1976, when members of the infamous Gang of Four, which included Mao’s wife, were arrested. China emerged from an era of struggle and began the arduous task of rebuilding.

China’s economy had been shattered by the Cultural Revolution. Moreover, during the last years of Mao’s rule it became evident that the development model he had copied from the Soviets was unsuitable. It was not so much that China’s industry was technologically deficient; it was more that the nature of the system, with its large central planning apparatus and its overriding emphasis on output, was grossly inefficient. The process of reform tentatively started just at the end of Mao’s reign. Zhou Enlai, his premier, announced the now-famous Four Modernizations (of agriculture, industry, defense, and science and technology) in January 1975. With Mao’s death in September 1976, the way was cleared for innovation that hadn’t been possible during his rule. First Hua Guofeng, Mao’s chosen (but politically inept) successor, and then Deng Xiaoping began to roll back the more utopian and unrealistic aspects of Mao’s achievements.

Deng’s name became synonymous with change as a refreshing burst of experimentation followed his successful grab for control of the Party. Almost everything was remade, whether or not it was covered by one of the designated modernizations. During these heady times even unorthodox methods were tried. The Party of Public Assets, a literal translation of the name of the Chinese Communist Party, experimented with privatization, a dreaded term in today’s China. Stock of state-owned enterprises was first issued in the middle of the 1980s, mostly to employees. Then equity markets opened in Shanghai and Shenzhen. People were again free to get rich. That, Deng claimed, was “glorious.” “Poverty is not socialism,” he reminded Party theoreticians. Deng could accept the notion that some would achieve wealth before others, however unpalatable that was to those who demanded egalitarianism before all else. After all, Mao was no longer able to complain.

In the extraordinary era from 1978 through the middle of the 1990s, China had the fastest-growing economy in the world, perhaps the fastest in world history. Most people benefited, and a few, by speculating in the volatile stock markets or starting their own businesses (or both), became wealthy. Enrichment of the few, however, was not the point of the exercise. In the eyes of Party cadres, it was an undesirable but inevitable consequence of reform.

Reform, however, was taken only so far. State-owned enterprises proved remarkably resistant to change. SOEs, inspired by Stalin and designed by Mao, were not only the provider of goods to the state, they were also the primary deliverer of social services to the people. In a completely self-contained society, such enterprises could prosper. In an increasingly interconnected world, they are uncompetitive and have no place at all. Today, at the beginning of the Tenth Five-Year Plan, China’s planners still do not know how to help them. SOEs are the greatest economic problem facing the People’s Republic.

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The Coming Collapse of China 2.4 out of 5 based on 0 ratings. 13 reviews.
SeekerVL More than 1 year ago
Almost nine years have passed. The year is 2009. China has not collapsed. China's GDP is expected to surpass Japan as the #2 biggest economy in one year or so. China's current GDP is more than Brazil, Russia and India combined. The world financial system (especially the US and UK banks) is in such a deep mess and teetering towards a great depression. Now the world hopes for China to stimulate sufficient growth to kick start this very sick global economy. The US hopes China will continue buying their treasury and bonds. Many Australian mining companies are near collapse desperately seeking Chinese investment. The IMF wants greater Chinese participation and money. Despite being disproved by the accumulated evidence since the book was published, the author is still obsessed with the theme of China's collapse through his Forbes Magazine's columns and on-line blogs, which has found many willing audience in US. Of course 'willing audience' because these guys are HOPING for this to happen. That his why G Chang's assessment about China is hopelessly subjective and biased up to this day. I don't know whether we should admire or ridicule the mental gymnastics employed by GC to maintain this delusion and of not calling a spade, a spade. With the US in so much debt (and continuing with the huge deficit) and dollar in deep decline, I wonder whether Gordon Chang has the guts and honesty to look at his own country and backyard, and offer some useful remedy e.g. starting with the greed of Wall Street and costly American imperial hubris. We can make all kinds of prediction and conclusions based on our ignorance or intelligence, bias or honesty; however the future and reality have a delightful and humbling way of sifting what is dross and precious.
Guest More than 1 year ago
Like a coroner opening a corpse, Gordon G. Chang dissects China's regime. His book is an indictment of the Chinese Communist Party, part autopsy report and part emotional polemic. While the ultimate truth of Chang's predictions remain to be seen (though the intervening years have shown increasing market growth in China, contrary to some of his expectations), the evidence that he amasses is impressive. Most intriguing is his contention that China's accession into the World Trade Organization ¿ heralded by many as the country's economic panacea ¿ ultimately will expose the weaknesses of China's infrastructure and begin the process of disintegration. Although Chang strongly supports his claim that collapse is imminent, you can't help but wonder, with 20-20 hindsight, if he too quickly dismissed the ability of the Party to react to changing times. After all, the regime has already outlasted most of its Communist counterparts by a decade. Nevertheless, we recommend this accessible book to policymakers, anyone doing business or investing in China, and to general business readers.
Guest More than 1 year ago
I think all the bad reviews are probably from Chinese-Americans who feel that they have to have some bit of loyalty for China. Try to think from this point of view: the government of China is NOT the culture of China. It is okay to love your motherland but do not be so blind as to defend it without reason. If you are wondering, I am a Cantonese boy. First, although I think Falun Gong is a joke, it does not deserve to be punished. Second, how can China work to be the head of two major world religions? (Buddhism and Catholicism) Third, why is China persecuting the Muslims and Buddhists? Fourth, Taiwan gave up its dictatorship for a non-Koumingtan person with democracy. The more China whines about Taiwan's independence, the more it will have to wage a war it cannot win (think about military history, too) Fifth, do you really think that China is a stable country? Millions of people are revolting all the time over there. Just because their media doesn't report it doesn't mean it don't happen. When I was in Hong Kong for 3 months, I heard about tons of bad stuff. Around 100 people die each week in China's mines (that was my crude estimate before reading this book...and I was equally surprised by how accurate it was). Also, read the WashingtonPost. Every week or so, they do a "real look" into China that spans a couple pages. Those writers are just scratching the surface of how unstable China is. Finally, isn't it funny how when the Americans accidentally bombed the Chinese embassy, the Chinese glorified the three reporters and built statues and said something like "We will never forget?" Well come September 11 and there were more than 3 Chinese nationals killed in the WTC and what has China done to honor those victums of a deliberate terrorist act? Once again, I am a Chinese-American. I am not a Falun Gong quack or Taiwanese. Read the book objectively before denouncing it without hard fact. Oh Yea, Mao will so kill himself if he found out what happened to his "beloved kingdom."
Guest More than 1 year ago
While the Title Sound Very Sensationalism, the contents are all about the writer poor assumption and lousy prediction. It may be another writer finance by CIA to bad mouth China, before the 11 Sept. Now CIA got more serious business to deal with the Islamic Terrorist, so you can expect no more this kind of cheap book around.
Guest More than 1 year ago
After reading Chang's book, I felt much of the arguments and theories put up by him in this book are not well supported with evidence. While arguing how ideology will play a role in China's collapse, Chang himself is rather troubled or deeply affected by his own hard-held ideology: His deep resentment towards the communist. I wouldn't call him a 'sinophobic', but he does sound like one of those who came a long line from Joe McCarthy and his people. I wonder if his personal ideological belief might have prevented him from reaching more objective conclusions. Needless to say, Chang's book does point out many of the problems that trouble China today. No doubt about it. However, it is Chang's conclusion that China will collapse that I found hard to buy. Chang failed to prove his case, which is the issue of 'inevitability'. A sick man might die, but not necessarily.
Guest More than 1 year ago
I am a native Chinese, now working in NYC. When economy is booming, people pay little attention to all the other things. But when it comes into recession.....something unavoidable is going to happen. May those communists go to hell. Anyone who rape the other's freedom to thought and speak should go to hell. It is fortunate for all American to be an American.
Guest More than 1 year ago
Mr. Chang has taken the contrary view to that so often optimistically espoused by experts on China. While most argue that China will be the world's largest economy in ten years, he argues that the foundation of the past success is built on an unsustainably rotten platform of corruption, misinvestment, and bureaucratic strangulation that will doom the country to significant chaos. While he makes a superb case for things not being as rosy as advertised in China, he fails to conclusively establish his points about future instability. As a result, you should think about this book as describing one scenario of what could happen in China with weak political leadership. This book should be required reading for companies that import from China, invest or plan to invest there, and those wanting to partner with Chinese companies. The book's many examples show that it is very risky to count on China for your future growth. Your position there is only as strong as your political connections at the moment. He who is on top now, may be on the bottom tomorrow. That part probably will turn out to be true even more true in the future. Be very careful! Although Mr. Chang has lived in China for twenty years, it is hard to imagine that anyone can capture exactly what people there are thinking. Although his observations are surely based on reality, exactly how strong that reality is can be hard to determine from the book. Too often, the arguments come from a few examples, rather than systematic evidence. On the other hand, there may be no way to gather systematic evidence, even by those in power. For example, it does seem like religion and political dissidence are on the rise. But how deep is this trend? Anarchists were active in Russia for 20 years before the Russian Revolution, and were basically irrelevant to the final political result. If China loses the race into high technology as Mr. Chang suggests, the country can still prosper by exporting lots of low technology products as it has done successfully in the past. The country is the world's most successful exporter to the United States. That basic strength is unlikely to disappear. The challenges of unemployment and underemployment from the shutting down or collapse of state-owned enterprises are real ones. If the country opens its doors to foreign investment and lets its markets be freer, much of that can be overcome as well. The overseas Chinese can certainly fund an enormous amount of economic improvements in China, but will need to see a more dependable political environment before they do. Non-Chinese investors can also help. Certainly, the potential opportunity to invest in China looks better than Russia, assuming that corruption can be held in reasonable check. That's the wild card, because corruption now seems to be significant. Communist regimes certainly have retreated around the world. The main question in China is whether the ideology will be abandoned by the party first, or the party will be abandoned by the people. Mr. Chang argues for the latter. I don't know enough to have an opinion, but a corrupt regime (as he describes here) may be flexible enough to change ideologies when the potential economic rewards are great enough. Time will tell. It certainly does appear that a banking crisis will be hard to avoid. Such a crisis would trigger another currency devaluation, which would probably cause more Asian dislocations like we saw in 1997 . . . which would cause large financial tides around the world. His basic argument seems right that the rapid growth of the past was created by excess credit and mostly went into unnecessary capital investments. Countries just don't grow this rapidly without excesses of capital spending. In many of the stories, I thought I was reading about other Asian countries in 1997. How will history repeat itself in China? After you finish thinking about Mr. Chang's argument, think about where else your assumptions from what the e
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The author clearly has let his anger of China's communist party show over objective writing. Not worth the effort to read.