The expression ‘garbage time’ refers to the latter part of a game, once the outcome is already inevitable and the rest is simply going through the motions. The notion can also be applied to national economies in the grip of bubbles, once they’ve passed the point of no return. There are many states that this could currently be applied to, notably most of the Anglo-sphere and other European countries. Few commentators would apply it to China, but this merely indicates that they haven’t looked below the shiny façade to see the reality beneath. Of course China remains a manufacturing powerhouse, but its spectacular rise involved a great deal of bad debt, compounded by extensive corruption. It’s now experiencing capital flight, as wealthy individuals seek to leave the country before a government set on extracting resources from wherever it can takes what they’ve earned. There has been a major crackdown on enterprises deemed to be too independent of the CCP, with potentially severe consequences for successful entrepreneurs. Attempts to prevent the exodus, such as confiscating passports, have not entirely prevented the outflow.
State-directed infrastructure build out was conducted with little thought as to whether or not the investment would be useful or productive, hence malinvestment was rife. Political considerations often clouded common sense. In addition, so-called ‘tofu-dreg’ construction is common, with substandard building materials and corners cut wherever possible due to corruption, so that buildings may be disintegrating after a very few years. Major developers are now going bankrupt as the real estate market, structured as a ponzi scheme, collapses. Local governments were required to fund themselves through land sales and development fees, and therefore had every incentive to encourage rapid build out with no regard for quality. Little to no consideration is given to aspects such as drainage, so extensive flooding is very common. Many local tragedies have occured as a result, but these are never reported. No news of adverse events of any kind is allowed to propagate, even when casuality figures are very high. The true impact is never admitted to, because social stability is priority number one. The government is concerned about a superstition around ‘losing the mandate of heaven’ due to not being able to protect people from disasters. Since it cannot, or doesn’t care to, protect people, it needs to conceal its failures.
The long-standing one child policy has crippled China demographically, so that in a state with 15-20% youth unemployment, every young person is expected to support four grandparents when they can barely support themselves, let alone afford to marry or start a family of their own. Young men are expected to pay a bride price, which can be very substantial, for instance perhaps purchasing a home for the bride’s parents. Many women, especially those that are highly educated, often have unrealistic expectations in this regard, and may refuse to settle for less, choosing to remain single instead. In a country with a highly skewed sex ratio, due to a preference for boys under the one child policy, many women remain unattached, leaving an even larger number of young men with neither a partner nor employment. Even though the one child policy has been reversed, its effects remain ingrained psychologically. China has fewer births now than it did in the 1950s, and more and more young people are opting out of society, choosing to ‘lay flat’ as the expression goes in China.
China is an extremly authoritarian country, with mass surveillance in cities, swift and brutal crackdowns on dissent, and a system of social credit scores measuring compliance that are used to control the population by controlling access to everything including own’s own money. The country lacks a means to seek redress for governance failures, social safety net, and also a system for mental health support. As the country’s real estate market, previously 30% of GDP, implodes, and is dragging the much of the rest of the economy down with it, workers are increasingly not being paid. Life savings, and sometimes generational wealth, lost in real estate, compounded by non-payment of wages owed is creating a desperate situation. The combination of all these factors has broken many of its people, creating a low-trust and entirely transactional society, where beggar-thy-neighbour is common. A major response to this has been revenge against society attacks, where distressed people are finally pushed over the edge. The most common forms are unpaid employees burning down their factories, knife attacks against young children, and mass vehicular manslaughter.
China is already mired in an economic depression, with an increasing proportion of its population feeling desperate and lacking any kind of support. China never lifted hundreds of millions from poverty – that was propaganda. In reality the average income is roughly $6000/year, distorted by urban high earners, meaning that the average for a majority of the population is lower. Rural people are typically very poor, but even in urban areas homelessness has increased dramatically, and people with PhDs are reduced to becoming delivery drivers for what amounts to pennies per day. Now there are so many delivery drivers that the market is over-crowded, meaning that income is suppressed even further. The system cannot course-correct, as entrenched incentives punish any attempt to do so, meaning that the system is destined to break, probably violently. Extreme centralisation, such as exists under Xi, never lasts for long. It typically leads to a schlerotic and self-serving bureaucracy, factionalism among the elites, fiscal exhaustion, over-emphasis on wealth extraction from the public, and military over-reach. These factors erode political legitimacy until the people finally revolt. Efforts made to prevent this become ever more intrusive and controlling, and in turn more expensive to maintain. Society becomes ever more brittle, as China already is today.
To ride out such a time, resilience is essential. The centralised systems will eventually break down, including those that act as life support. People will need to build parallel systems to provide for essential functions, and they must act together. In doing so they build relstionships of trust and a sense of community. Knowledge must be preserved through the contractionary time, so as to have a solid foundation for rebuilding. Operating as close to human scale as possible is the best way forward. Dynamism can be restored once the authoritarian shakles have disintegrated, but the transition will be very difficult, not only for China, but internationally considering how many foreign countries dependent on China as a reliable trading partner. The coming depression will be global. It won’t be the end of the world, but it will be the end of the world as we’ve known it. Being psychologically prepared is half the battle.
