Trading places

Years ago I predicted that the early 21st century in Asia will be like the early 20th century except that the roles of Japan and China will be reversed. At this point I can see how the process plays out. In early 20th century it was naïve to assume that Asia will modernize steadily with the strong leadership of Japan. Today, it is naïve to assume that China will democratize itself and pave the way for a long prosperity of Asia through peaceful means. It is obvious for Chinese communist party leaders that they don’t gain anything from Chinese democracy. They will lose everything when China is democratized. I think that some Chinese officials make comments about the need for political reforms only when they criticize their rival factions that support stricter state controls.


The Chinese leaders have no incentive and no intention to accept democracy. They seem to be building the strong economic and military power to fend off foreign and domestic pressures while they implement their sophisticated totalitarian control. China will not offer the alternative model (to the one with democracy and rule of law) for the world to follow, but it offers a model for 21st century’s dictators (“Peaceful Rise” while increasing its military budget more than 10% per year is a clever peace of propaganda).


Many people who wanted to see the demise of China made wrong predictions. It is important to separate their hopes and fears from what is likely happening. They need to think “what the options will be if they were Chinese leaders” to get more realistic scenarios. Then you can rule out the future where China launches total war against the US for the global domination. The most important thing for Chinese leaders is to keep their system as long as they can.


Here is my prediction of what will happen:

Great recession in late 2000s: While the financial shock caused ripple effects around the world China is relatively unscathed. However, the policies that they used to keep their economy afloat deprived them the opportunity to soft land their bubble economy.

2010-2020: Japan will face financial crisis and political turmoil. In a dire economic situation Japanese people will strongly resent China.
China will face the inevitable burst of its bubble economy after it becomes too obvious that most of the Chinese workers cannot afford to buy their homes (just like what happened in Japan). There will be massive riots in everywhere in China. Still, Chinese government will retain the control of media and their leaders will survive the crisis by using their nationalistic sentiment. Chinese leaders will start to say “Foreign powers are determined to stand in our way to restore our rightful position as the leader of Asia”. They will choose the target of their nationalist propaganda carefully. They will choose a hated and militarily weak nation such as Japan as their scapegoat. China will take a hard stance toward Japan in territorial and historical issues.

2020-2030: China’s population bonus ends. The rapid aging of its citizens and decline in the working age people will slow down Chinese economy. At that point there will be groups of neo nationalists in China. They will be the creation of Chinese prosperities rather than the economic hardships. One group will be right wing neo nationalists (new China chauvinists) who believe that Chinese communist party and foreign powers are major obstacles for China to materialize quick improvements in their living standards that they deserve. Another group will be neo socialists who are outraged by the big income inequities but disguise themselves as neo nationalists. Their strategy will be gradually getting into local branches of the government and silently exercising controlling influence (local military districts that Chinese government has a hard time controlling will be their target too).

Chinese government will try to control neo nationalists, but they will have the situation of “tail wagging a dog”. By controlling local government branches, they can do things to push the central government to the edge. If they control a military district they can start a military skirmish too. Since they are free from a fear of divided China they can launch a well calculated coup. It will be a power struggle rather than a democratic revolution. There is no guarantee that communist party wins.