Kaiser Y Kuo has written an important article about the role of China in the modern world called The Great Reckoning.
Adam Tooze describes the scale of China's cities.
China’s cities are the most gigantic experiment in urbanization in history. If anywhere has a claim to define the “norm” of urbanism it is China...China in 2025 may have as many as 160 urban centers with a population of more than 1 million. Of these 18 are megacities with 10 million inhabitants or more.
For sake of comparison the US can claim to have no more than ten urban areas with a population of one million! Being in China makes you realize how profoundly anti-urban America is. There are only two US conurbations - NY-New Jersey and LA - that would qualify as megacities. On sheer scale, neither would qualify as Tier 1 in the Chinese rankings.
For further comparison, the EU counts 39 urban areas of over 1 million inhabitants but only one city-region, Paris, with a population of over 10 million.
There is not a single city in either Europe or the US that can compare to the awesome scale of the largest Chinese conurbations.
Cynthia Chung explains that China’s experience in World War 2 is too often forgotten today.
When WWII started and Japan had taken the side of fascism, China contributed its military forces on the side of the Allies. China had the second highest death toll in WWII after the Soviet Union. However, if you look more closely at the graph depicted above, the number of civilian deaths is much higher than military deaths (by about 12 million). This is because the Japanese fascists committed genocide on the Chinese people. The most notorious being the Nanking massacre which not only had a gruesomely large death toll but became infamous for its horrific torture and mass rape on the Chinese people. During this ethnic cleanse by the Japanese fascists throughout the entire WWII (which overlapped the second Sino-Japanese war), mass graves were dug out and millions of Chinese people would be told to step inside before they were shot to death. The Jewish holocaust is recognised as one of the worst crimes against humanity in recent history. However, not much is given to the memory of the mass genocide that was committed on the Chinese people during the same period.
Cynthia Chung explains that China’s involvement in both WWI is too often forgotten today.
When WWI had started, China offered their support militarily to the cause of the Allies. Japan had already become a member of the Allied force and it was recognised that their relationship with China was not on ‘friendly’ terms, especially since the First Sino-Japanese War in 1895.
China’s loss in this war allowed for a series of treatises that divided chunks of China amongst several nations. One particular region that China very much wanted back was Shandong, which was considered sacred land for the Chinese people since it was not only Confucius’ birthplace but also home to the ancient state of Qin, the last kingdom conquered by Qin Shi Huang, who proclaimed himself China’s first emperor in 219 B.C. Japan was at the time in possession of this region.
Japan was asked whether China could be ‘permitted’ to contribute military support for the Allied cause, to which Japan refused since this would give China a more equal footing with its relations to the West. Despite this refusal, China offered to support the Allies as laborers. Starting in 1916, China began shipping thousands of men to Britain, France and Russia who would work to repair tanks, assemble shells, transport supplies and munitions. Since China was officially neutral, commercial businesses were formed to provide the labor.
After a year of supplying labor, the Chinese contribution remained largely unrecognised diplomatically. By the end of the war, Chinese workers would rank as the largest and longest-serving non-European contingent in WWI.
By the end of the war, western powers ultimately awarded the Shandong territory to Japan in the Treaty of Versailles. China was understandably upset and refused to sign the treaty. The Versailles Treaty became a clear sign to the Chinese that they could not trust the European nations to support China’s welfare and that China would have to look elsewhere for support moving forward. [America did eventually intervene on this decision and awarded the territory to China in 1922.]
Another blow would be China’s earning of only two seats at the Paris Peace Conference, relative to Japan’s five seats, the reason why China had fewer seats was because they did not play a military role in the war- a role they were forbidden to play.
Chinese opposition to the foreign intrusion in their country continued, just as American settlers got tired of British interference in the colonies. In 1900, the Boxer Rebellion broke out. Peasants who felt betrayed went on rampages against the foreigners who were taking advantage of them. Westerners only know about the Boxer Rebellion from the movie 55 Days in Peking, which gives a rather slanted view of the events.
The first clash was with the Germans, but the crisis quickly escalated and the largest international force that the world has seen was despatched to put down the rebellion. In June 1900, the Boxers laid foreign legations in the Chinese capital, including the embassies of Russia, France, Japan, the United States. By early August, a multinational coalition of nineteen thousand soldiers, including British, French, Japanese, Russian, German, Austrian, Italian, and American troops, was mobilized from Tianjin, which had been occupied in late July. The force reached Beijing on August and prepared immediately to attack the city gates. It entered the city on August 14 and by opening the way for British units to relieve the legation compound, quickly lifted the siege of the legation quarter and the Northern Cathedral.
The Europeans followed up by sending an even larger force to extract revenge. Vessels carrying roughly ninety thousand European, soldiers, among them twenty-two thousand Germans, arrived in Tianjin. Although the Chinese armies had been defeated, the allied army carried out seventy-five “punitive expeditions” around Beijing and Tianjin. These were directed against the general population.
Almost immediately after their arrival in China, members of the eight armies turned to looting. It began with the occupation of Tianjin in late July and stretched well into October 1900 in Beijing. Later, diplomats and missionaries joined the soldiers in looting. The sack of Beijing was similar to what had occurred at the Summer Palace forty years earlier, as “loot fever” took hold among the foreigners The ensuing phase of uncontrolled plunder affected not only Beijing and the new Summer Palace on its western outskirts, but many other cities and towns in the province of Zhili. The German commander Waldersee admitted quite frankly in a November 1900 diary entry the extent of damage and destruction inflicted by looters on Beijing and other wealthy, centuries-old cities.The Boxer Protocol was forced on the Chinese a year later.
By the permitted plundering for three days after the occupation, which was followed by private plundering the population of Beijing suffered great, not even quantifiable material damage. Each nationality assigns to another the palm in the art of looting; but the fact remains that they have plundered thoroughly... There is now a rich trade going on with the objects acquired in the plundering. Already traders, namely from America, arrived making fortunes... If one is so naïve at home to believe that all this was done for Christian culture and propaganda, he will be disappointed.From 1900 to 1902, Beijing and Tianjin were placed under foreign occupation. Barracks were built in Tianjin to house thousands of foreign troops, and a provisional government was set up there by the allied forces. (185)
The Chinese government also had to prohibit by law the founding of anti-foreign societies. The nations that had against the uprising gained the right to post permanent garrisons in North China. The most devastating clause, however, concerned the huge indemnity of 450 million tael, excluding interest, which far exceeded the Qing government’s annual budget of 250 million tael. This sum represented the sum submitted by other countries for military expedition costs, damages to property, and lives lost. There was, however, no process by which the validity of the claims and their amounts was assessed requirement to make this large annual payment mortgaged the budgets of Chinese governments tor decades to come, with significant consequences. (185)The Chinese government was forced to pay all the expenses of the nations that had invaded them and looted their wealth. The collapse of the government a few years later led to the nation being split up and ruled by cruel warlords for a couple of decades.
The people of the United States and Europe have forgotten these events, although they enjoy seeing Chinese artefacts in their museums and antique shows. But the Chinese have not forgotten. So when they rip off Western companies, they are just doing what was done to them by Christian nations a century earlier.
The efforts to negotiate a trade deal between the US and China seems to be failing. Many Americans are angry because they believe that the Chinese are cheating and ripping off their businesses.
Before judging, we should read a bit of history. The early Chinese experience in dealing with the nations of the West was not that great. (The quotes come from Making China Modern by Klaus Muhlhahn).
In the nineteenth century, British merchants were importing exporting opium from India and selling it in China. The Chinese government was concerned about their impact that opium was having on their people, so they closed the border to British merchants. The British were upset by this action, so they sent gunboats.
In June 1840, with the arrival of a British fleet at the mouth of the Guangzhou River, the first Opium War began- The war lasted almost two years and was a complete disaster for the Qing empire. By the summer of 1842, the British fleet celebrated victory as it reached the Yangzi, and prepared to shell the old capital, Nanjing, in central China. The Qing court capitulated shortly thereafter. Negotiations with the British were held onboard a British ship and in a small temple just outside of the city walk of Nanjing. (94)
The Treaty of Nanjing (August 1841), the first of the so-called unequal treaties, opened China to the West and marked the beginning of a growing western dominance in the nation. According to its terms, the Qing had to open Guangzhou and tour other ports for direct trade between foreigners and Chinese. The island of Hong Kong was ceded to Britain in perpetuity and China agreed to pay twenty-one million silver dollars in reparations British merchants who had been driven out of Guangzhou. Twenty-one million silver dollars represented a considerable burden for the already strained Qing treasury. A supplementary treaty signed the following year gave Britain extraterritoriality—that is, full exemption from local laws for all its subjects in China. In 1843, France and the United States, and in 1858, Russia, negotiated treaties similar to England’s Nanjing Treaty, including provisions for extraterritoriality (94).A second Opium War was fought between 1856 and 1860.
After the first Opium War, the city of Guangzhou became a center of anti-European agitation. The literati of the city’s great academies protested against “barbarians” entering the city. A movement emerged in Guangdong province, promoting the fortification and militarization of villages and small towns for self-defense.., Local society rose up against the European presence, to protect their economic interests and their homeland. (95)When a British ship was captured, the government did not hesitate to start planning a reprisal.
What happened next was unprecedented. France and Great Britain formed an armada the likes of which the world had not yet seen. The fleet that departed for North China in the summer of 1860 numbered 41 war vessels and 143 transporters, carrying 24,000 Indian, British, and French troops artillery, and engineers; thousands of horses and mules; and thousands of support personnel. (98)The Chinese lost all the ensuing battles.
The empire had to watch helplessly as even the capital Beijing was occupied in mid-October 1860, driving the Xianfeng emperor out of the city to his summer palace at Chengde. The Qing army lost over five thousand men...Imagine if the Chinese had sailed up the Thames and looted Windsor Castle of all its treasures. Would that ever be forgotten?After occupying Beijing, the troops set out for a palace complex on the outskirts of Beijing called Yuanmingyuan (the Garden of Perfect Brightness) built by the Qianlong emperor at the height of the Qing empire. In revenge for the Qing military’s violence against the thirty-nine English and French prisoners it had captured, Lord Elgin ordered the British army to destroy and burn Yuanmingyuan to the ground. It took two full days of burning and demolition to destroy the hundreds of exquisite palaces and buildings in Yuanmingyuan. Ironically, this had been a palace complex, perhaps the only one in the Qing empire, that featured a section of European-style buildings, fountains, and formal gardens. Called “Western Mansions” (Xiyang Lou), it was modelled on Italian baroque architecture, which the Chinese had become acquainted with from drawings and descriptions by Italian and French missionaries At the center of Western Mansions was a Mediterranean-style landscape of fountains, basins, and waterworks surrounded by a palace, pavilions, aviaries, and a maze. This section of the palace reflected Qing China’s curiosity about foreign objects and interest in foreign civilizations. The gardens also had hundreds of Chinese-style palace buildings—art pavilions, pagodas, temples, and libraries—as well as Tibetan and Mongolian-style buildings.
Before burning the rich and lavishly appointed palaces, British and French soldiers and officers carried away as much loot as they could. A French soldier wrote: “I was dumbfounded, stunned, bewildered by what I had seen, suddenly Thousand and One Nights seem perfectly believable to me. I have walked for more than two days over more than 50 million worth of silks, jewels, porcelain, bronzes, sculptures and treasures! I do not think we have anything like it since the sack of Rome by the barbarians.” (99)
The 1858 and 1860 treaties extended the foreign privileges granted in the first Opium War and confirmed or legalized the developments in the treaty-port system. Great Britain, France, Russia, and the United States would die right to establish embassies in Beijing, marking the first opening of and France of eight million taels of silver each, and compensation to British merchants of three million taels of silver. Eleven additional ports were opened to foreign residence and trade, including Niuzhuang, Tamsui (Taiwan), Hankou, Nanjing, and Tianjin. The lease of the Kowloon peninsula was ceded to Great Britain. Foreigners, especially merchants and missionaries, were allowed free movement throughout the interior. Hardest to swallow for Qing authorities were not necessarily the economic rights given to western governments, such as trade and the opening of treaty ports, but the non-economic political privileges that affected the stability of social order. Chief among them was the legalization of opium, which would all but guarantee a deepening of the social and economic problems caused by opium addiction. (101)The British and French used military power to get the monopoly over drug dealing in China.
The Chinese economy faces a lack of internal demand. When the current growth phase began, everyone in China was poor. For many years, it relied on growing demand for its exports, but since the GFC that growth has faltered.
The Chinese government is now encouraging its middle classes to get into the share market, so the regular income and wealth effects will encourage consumption increasing the demand for production.
However, the share market fall will shake confidence and act as a break on consumer demand.Government Action
The government is taking actions to prop up the market. The People’s Daily claimed, "We have the conditions, the ability and the confidence to preserve stockmarket stability”. Interest rates have been cut. Central-bank funded share-buying schemes have been implemented. Initial Public Offerings have been cancelled. Short selling has been limited. Rules for pension funds and the social security funds have been changed to allow more investment in stocks.
State-owned companies and controlling shareholders have been ordered not to sell their shares. Rules changed so investors can use their houses as collateral to borrow money to buy stocks. A state-owned securities financing company has lent $42 billion brokerages so they could purchase blue-chip shares.
Trading in 90% of share has been suspended, either at the request of the companies themselves, or compulsorily because prices fell more than 10% in a day.
The actions have had an effect, as share prices have rallied.
However, government attempts to stand against the tide of the market usually fail in the long term.Economic Growth
However, China still has enormous potential further growth.The government channelled production in to infrastructure but that is no longer so effective. China does not need anymore “ghost cities”. A “One Belt, One Road” initiative is encouraging infrastructure to connect China with the Middle East, and hence to Africa and Europe.
However, whereas companies in the US and Europe rely on equity funding, Chinese companies have expanded using bank debt rather than equity. This means that the share market is far less important than in the West. This means that the impact on the real economy will be much less. The share market crash is unlikely to trigger a major depression in China.
However, the Chinese economy is a state controlled economy. History shows that governments are not clever enough to fully control their economy. The Soviet Union collapsed when the economic contradictions got to great. China has the same contradictions, so it will eventually fall apart too.China has a debt-based economy. Total debt is $30 trillion. Government debt is equivalent to 300% of annual GDP. It make take a long time, but this will eventually catch up on it.
The financial media have now switched their attention to the Chinese economy. Here is some background information. There are a lot of “howevers” that are usually missed.
Between 2005 and 2007, Chinese stocks rose nearly 500%. In 2008, the market crashed, losing 73% of its value.
However, long-term investors in the share market have experienced ups and downs are still will ahead.
In the 12 months leading up to the peak of the recent rally stocks gained about 150%. Now, they are down by about one-third.
However, shares are still 80% up on a year ago.
Chinese investors have lost more about $3.4 trillion in equity value from the markets mid-June peak.
However, they gained about $6 trillion earlier in the year. Insiders with good information have done really well.
The losers are those who got into the market in the last few months. More than 40 million accounts were opened between June 2014 and May 2015. Those who were late to the party will be feeling pain.
Chinese regulators have relaxed strict limits on buying stocks with borrowed money. As a result, the volume of "margin trading," By the time the stock market reached its peak in June, people had bought 2.2 trillion yuan ($350 billion) of mainland stocks with borrowed money.
However, this financing is not a systemic risk; it is just about 1.5% of total assets in the banking system.
Poor Alternatives
Bank deposits in Chinese banks of $2 trillion, which is twice GDP. About 15,000 per person. People need savings to pay for health care and their retirement. These are not funded by the state in China.
The Chinese government has always kept interest rates low to make it easy for businesses to expand. They are being subsidised by people with money in the bank, who get a poor return on their savings.
Some Chinese have shifted their money to the share market to get a better return than they can get from the bank. This switch is understandable, as up till now it has looked like easy money.The Government has encouraged the share market boom. Some investors call it a “state bull market” or the “Uncle Xi Bull Market”. Some believed that the government was guaranteeing the shares would go up. A People’s Daily editorial in May, shortly before the market peaked, predicted that the good times were just beginning. This is why the government is working so hard to keep the bubble from popping.
Property has been the main source of wealth for the Chinese middle and upper classes. Selling land to property developers has also been a primary source of funding for most city and village governments, as they do not have authority to levy their own taxes. China's property market has been in a slump due to a slowing economy and excess inventory for a while now, so many people are now seeing the share market a better investment.
Small Investors
In total, there are now more than 90 million stock traders in China, which is more members of the Communist Party.
However, this is only 5 percent of the population, so it is relatively small.China has a workforce that is rapidly becoming more educated and urbanized. Ordinary people discovered the idea of trading stocks with borrowed money.
31% of university students have invested in the share market, with three quarter are using money borrowed from their parents. Two-thirds of Chinese investors haven’t completed high school. Even Chinese farmers are buying stocks.
However, the stockmarket still plays a surprisingly small role in China. Most business activity is financed by debt, not equity. The value of shares available for trading is only a third of GDP, compared with more than 100% in developed economies. Less than 15% of household financial assets are invested in the stockmarket.Foreign hedge fund investors have made some huge sales on the Chinese share market.
This leads some Chinese investors to see the falling prices as a Western attack on China.
The second trumpet released judgment that affects the sea.
The second angel sounded his trumpet, and something like a huge mountain, all ablaze, was thrown into the sea. A third of the sea turned into blood, a third of the living creatures in the sea died, and a third of the ships were destroyed (Rev 8:8).
John saw a large mountain blazing with fire and being thrown into the sea. This is not a physical mountain. The Old Testament prophets described the powerful empires that controlled the world as mountains (Isaiah 45:1-2; Micah 1:4). In Daniel’s vision the Kingdom of God is represent by a huge mountain (Dan 2:5). A blazing mountain also represents God’s activity on earth (Deut 4:11).
This vision relates back to the Psalms, where God’s judgment against a powerful empire is likened to a “flame that sets the mountains ablaze” (Psalm 83:14). John saw the collapse of an empire that is influential throughout the earth. In Revelation, the sea represents the people of the earth.The waters you saw…. are peoples, multitudes, nations and languages (Rev 17:15).
The decline of this mountain will just affect its own people, but shock waves will spread out to harm the people and nations of the world.
One nation that has brought prosperity to the world in recent times is China. The Chinese empire controls more than a billion people, which one fifth of the population of the world. The rapid development of Chinese manufacturing has flooded the world with extremely cheap consumption goods. Container ships from China have supplied the greatest consumption binge that the world has ever known.
Every empire that controlled has eventually collapsed under the strain of holding such a diverse and populous area together. The Communist Part of China has now controlled this immense empire for more than sixty years, but the strains are sowing. Transferring control to each new generation of leaders is precarious process. There is a huge divide between the urban people who have benefited from economic development and the rural poor who still struggling to survive. Monetary inflation is producing economic pressures and rigidities that will be difficult to control.
The people of the world are now dependent on cheap goods imported from China, at a time when the government of the Chinese empire is becoming increasingly unstable. If it were to collapse into civil war or economic depression, terrible economic suffering would come to the world.
The collapse of the Chinese economy would destroy a huge chunk of the world shipping activities. If the Chinese factories stopped exporting, hundreds of container ships would be laid up with no economic purpose.
Only a third of the sea is harmed, so this is only a partial judgment. The people of the world will experience the worst effects of the judgment, which suggests that John saw an economic catastrophe, rather than a political or military collapse. The Chinese economy will experience a serious setback, but the Chinese empire will not be destroyed. It will continue on as a major political and military power until it has fulfilled its purpose in history.
During the imperial period, China was divided into eighteen provinces and 1,300 districts. These districts were too large for a magistrate or governor to control, so a system of surveillance was introduced.
Households were organised by the thousand and then subdivided into sub-groupings of hundred and then ten. Headmen kept a register of everybody in each group, recorded comings and goings, and reported offences to magistrates. Villagers were required to tell the headman of any illegal behaviour they encountered—failure to do sow was a crime (Jonathon Fenby, The Penguin History of Modern China, p.6).The Chinese Tens and Hundreds were not voluntary associations that emerged in society, but were imposed from the top to achieve control over society. They are fulfilment of what Samuel prophesied would happen. These counterfeit Tens and Hundreds were not a source of cohesion, but a tool for control.
Judging by his last speech before leaving for Beijing to watch the Jingo Games, George W is quite put out by the Chinese government for invading Tibet and putting dissenters in prison without trial.
What is wrong with these pesky Chinese. Don’t they know that God has given America special authority to invade any country in the world and change the government by force. Only America is allowed to hold taxi drivers in prison forever without trial.
While he is in China, George had better put these upstarts right.
