From the vantage point of a modern hotel in the heart of Beijing, it is tempting to admire the economic miracle around you and believe that this new world order is permanent. It isn't. We should not be seduced by the glass towers and rapid urbanisation. History is not done with the Middle Kingdom.
China has experienced rapid economic change unlike anything ever experienced. There are no historical parallels to guide us or the Chinese on what to expect next. The closest is Japan's re-industrialisation after World War II.
When that process was complete and Japan was no longer the high-tech cheap labour capital of the world, its economy floundered and it is now entering its third "lost decade".
China's economic growth is slowing as the easy gains from industrialisation have been achieved. Things are getting tighter.
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Those in the debt-collection business are telling me banks are pushing them harder for collections and the debtors are struggling to pay. Disturbingly, many of these loans were provided to buy property.
As economic growth becomes harder and investments more risky, money seeks the safe harbour of property. This high demand and easy credit is maintaining a bubble, especially in Shanghai and Beijing, and rising house prices provide an incentive to keep servicing mortgages.
However, in a parallel with the worthless Collateralised Debt Obligations that nearly brought down the Western banking system, Chinese banks are increasingly exposed to their domestic property market and have limited recourse if their customers default. There is no process for personal bankruptcy in China. If you owe a debt, it remains with you for life.
Although this seems good from the perspective of a creditor, it means there are few means of realising a debtor's assets should they become insolvent and anecdotal evidence is that defaults are increasing. When a homeowner does default, a bank cannot, in most cases, repossess the property. Socialism is not totally dead. A Chinaman's house is his castle; or at least his final redoubt.
The housing bubble is creating political stress, so the Government has placed restrictions on the amount banks can lend to home buyers and has introduced a capital gains tax to slow the growth in prices. If economic growth continues to stall, there is a risk house values could drop too far, below the level of debt owing on them. Banks may become insolvent, forcing the central bank to reach for the same handbook that the West used to prevent an economic collapse in 2009.
It should work, but it might not. The structural flaws that were evident in the Soviet Union only became obvious to us after its collapse. Although China seems stable now, it may be only after a crisis that we can see what should have been obvious at the time.