Aug 21 2010

China Surges to #2 and Contemplates More Freedom: The Implications for Space

One way or the other, China will be a major player in space and on Earth during the next 10 -15 years (i.e., the 2015 Maslow Window)

The New York Times (8/15/10) concurs.

After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States. The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

Will China ascend to global leadership in space during the next 10-15 years?
Click .

The Times suggested that China’s surge will continue and may eventually approach the much larger capacity of the U.S. “as early as 2030.”

China’s continuing growth fits well into a scenario that 21stCenturyWaves.com sketched over 2 years ago in “10 Reasons Why China is Good for Space”:

China’s space program stretches back more than 35 years, suggesting that space will expand in importance because of the growing economic, technological, and scientific culture of the country … China’s very rapid economic growth hovers around 10% annually. This is very important internally to the Communist Party leaders, as well as to major export sources like Wal-Mart! It also provides the financial cornerstone for future Chinese technology and space initiatives.

China’s challenges include its low GDP per capita value of $ 3,600 –similar to “impoverished nations ike Algeria, El Salvador and Albania” – versus $ 46,000 for the United States. Interestingly, the Times credits the Communist Party with China’s surge.

There is little disputing that under the direction of the Communist Party, China has begun to reshape the way the global economy functions by virtue of its growing dominance of trade, its huge hoard of foreign exchange reserves and United States government debt and its voracious appetite for oil, coal, iron ore and other natural resources.

Quite a different view is offered by a Chinese General recently in the popular Hong Kong magazine, Phoenix, in which he sees a choice for China of either “American-style democracy or Soviet-style collapse.”
According to General Liu Yazhou,

If a system fails to let its citizens breathe freely and release their creativity to the maximum extent, and fails to place those who best represent the system and its people into leadership positions, it is certain to perish … ‘The secret of US success is neither Wall Street nor Silicon Valley, but its long-surviving rule of law and the system behind it … The American system is said to be ‘designed by genius and for the operation of the stupid’. A bad system makes a good person behave badly, while a good system makes a bad person behave well. Democracy is the most urgent; without it there is no sustainable rise.

This is similar to American self-described “panda hugger” Thomas P. M. Barnett’s view (2/12/10) about the necessity for more freedom in China.

Once the extensive growth period is done and the “golden period” of demographic advantage dissipates, there is no advantage to having authoritarian government–despite the many myths recently created about the “superiority” of China’s single-party state. China is heading to the all-things-being-equal part of advanced development, and when a regime reaches that point, democracies simply perform better–not by how they run things but by how they get the hell out of the way of those who really need to run things, aka the private sector.

Such a transition might actually be easier than it sounds based on the impressions of international analyst Chris Mayer who recently visited Beijing and reports that “A more bustling capitalistic city would be hard to imagine … (and) There must be more communists in Berkeley than in Beijing.”

On the other hand, despite China’s 11.1% growth rate in 1st half of 2010, Stratfor cautions against linear forecasting and, in fact, sees a “Japan-like collapse” for China by 2015. In their Decade Forecast for 2005 – 2015 (2/5/05) Stratfor asserted the following:

Perhaps our most dramatic forecast is that China will suffer a meltdown like Japan and East and Southeast Asia before it. The staggering proportion of bad debt, enormous even in relation to official dollar reserves, represents a defining crisis for China. China will not disappear by any means, any more than Japan or South Korea has. However, extrapolating from the last 30 years is unreasonable. We also expect there to be significant political consequences … Why, then, if STRATFOR sees a China on the verge — if not already in the midst — of massive internal upheaval, is there a general global acceptance of the idea that not only is China on an unstoppable rise, but that people should pour their money into the Chinese economy? In part, this is due to tunnel vision — assessors of the Chinese economy are looking only at the booming center-coastal economies in and around Shanghai. In part, it is intentional self-delusion, a failure to connect the dots.

China’s approaching tipping point presents an opportunity to highlight trends — without giving away too many trade secrets — that are illuminated by the empirical, long-term approach of 21stCenturyWaves.com. Here are a few.

1) Gen Liu Yazhou agrees with Stratfor.
After several admirable years of sticking to their unpopular, but rational China-collapse-by-2015 forecast, Stratfor recently found an important ally: the courageous Chinese General. Media hype about China catching the U.S. economically by 2030 appears increasingly unrealistic. But it also weakens somewhat the case for private investors to make long-term financial commitments to China’s economy. (Also, see #4 below.)

2) The Japanese deflationary decade was consistent with Long Wave trends.
According to the Wall Street Journal (8/17/10), “After its property and stock bubbles burst in 1990, Japan also embarked on what may have been the longest and most expensive Keynesian policy experiment in world history.” This deflationary trajectory mirrored the downward trend of the long economic wave which reached its trough in the late 1990s. By contrast, the U.S. experienced a remarkable economic boom in the 1990s, although — possibly due to long wave effects — it never gained the momentum or had the widespread demographic impact of the 1960s Kennedy Boom (which triggered the 1960s Apollo Maslow Window).

For more, see “200 Years of GDP Trends Support a Near-Term, New Space Age.”

3) Will China choose American-style democracy over Chinese communism?
China insiders insist that the country is held together by rapid economic growth and nationalism — both of which, of course, are strongly connected to China’s space program — not devotion to the Communist Party. Thus a near-term China collapse could indeed trigger major political changes like those advocated by General Liu Yazhou.

4) A near-term, Japan-style Collapse of China Will Be Relatively Brief.
There are at least 2 major reasons why a China collapse will be brief: a) Political reforms in China would be expected to stimulate the Chinese economy through increased freedom and innovation, and b) the dynamic upward turn of the global economy — much like we experienced in 2007 just before the financial panic — as we ascend toward the 2015 Maslow Window, will shorten the Chinese deflationary interval.

5) A Grand Alliance for Space or Apollo-style Competition?
The juxtaposition in time of a likely China collapse by 2015 accompanied by liberal political reforms, and the approach of the 2015 Maslow Window, is not as coincidental as it seems, and will virtually guarantee that China will not experience anything like the Japan Deflationary Decade. In fact, the real possibility exists that China will rebound early in the 2015 Maslow Window to become a (or “the”) global leader in space.

One key indicator to watch is China’s possible participation in a joint Russia-China manned Mars initiative after 2015 as an outgrowth of their joint mission in 2011 to Phobos.

Ironically, a robust, growing Chinese economy – which is in everyone’s economic interest around the world — might be more likely to trigger a new Apollo-style space race, instead of a more productive ‘Global Alliance for Space,’ that might be favored in less prosperous times.

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One Response to “China Surges to #2 and Contemplates More Freedom: The Implications for Space”

  1. […] Cen­tury Waves reminds us of China’s increas­ing role in space explo­ration in the […]

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