Generational Dynamics: Forecasting America's Destiny Generational
 Forecasting America's Destiny ... and the World's


Generational Dynamics Web Log for 22-Mar-07
Premier Wen says China is "unsteady, unbalanced, uncoordinated and unsustainable"

Web Log - March, 2007

Premier Wen says China is "unsteady, unbalanced, uncoordinated and unsustainable"

In press conference, he also scolds Taiwan over Chen's "four wants."

We can imagine the shock and surprise if President Bush ever described America as "unbalanced," or if Tony Blair described Britain as "unsteady."

But at Chinese premier Wen Jiabao's press conference on Saturday, he was asked about the economy, and he used those words and more:

"China's economy has maintained fast yet steady growth in recent years. However, this gives no cause for complacency, neither in the past, nor now, or in the future. My mind is focused on the pressing challenges. "A country that appears peaceful and stable may encounter unexpected crises." There are structural problems in China's economy which cause unsteady, unbalanced, uncoordinated and unsustainable development.

  • Unsteady development means overheated investment as well as excessive credit supply and liquidity and surplus in foreign trade and international payments.
  • Unbalanced development means uneven development between urban and rural areas, between different regions and between economic and social development.
  • Uncoordinated development means that there is lack of proper balance between the primary, secondary and tertiary sectors and between investment and consumption. Economic growth is mainly driven by investment and export.
  • Unsustainable development means that we have not done well in saving energy and resources and protecting the environment.
All these are pressing problems facing us, which require long-term efforts to resolve."

Wen left out the word "unstable," but in fact that word is applicable as well. What I wrote in January, 2005, is that China is becoming increasingly unstable and approaching a civil war, and Wen's speech serves to illustrate that.

With regard to Wen's second point, "unbalanced development," the divide between urban and rural areas has continued to worsen. Rural incomes average about $450 per month, while urban incomes are three times as high, around $1350 per month.

To make matters worse, Chinese Communist Party (CCP) officials have freely taken property from citizens in rural areas for whatever development project they desire. And so, besides the urban/rural divide, there's an enormous divide in rural areas between the Úlite classes and the peasant classes. (For those familiar with Communism and Mao Zedong, this is an ENORMOUS irony.)

China: Land seizures in Shunde county in Guangdong province <font size=-2>(Source: AFP)</font>
China: Land seizures in Shunde county in Guangdong province (Source: AFP)

The results have been almost hard to imagine for Americans. There are tens of thousands of regional rebellions each year, according to official Chinese ministry figures. If only ONE such rebellion ever occurred in America, it would be major international news. The adjoining graphic illustrates the recent problems in just one county. These problems are repeated across the vast country.

Unable to support their families, over 100 million people have moved, in a huge mass migration from rural to urban areas, to get jobs. (For comparison, the entire population of the US is about 300 million.)

From there, the next problem is Wen's first point: "Unsteady development means overheated investment as well as excessive credit supply and liquidity and surplus in foreign trade and international payments."

I first wrote a brief note about this in 2004, when China's economy grew much faster than planners had wanted. China's entire economy has been a bubble economy for several years. Wen is well aware that this can't continue for long, and his third point indicates where he sees a danger of dislocation: "Uncoordinated development means that there is lack of proper balance between the primary, secondary and tertiary sectors and between investment and consumption. Economic growth is mainly driven by investment and export." This "uncoordinated" development means that there are many inefficiencies in the economy.

The solution may seem simple -- just correct the inefficiences. But trying to do that means that millions of people, whose jobs depend on those inefficiences, may lose their jobs. And any large dislocation, whether caused by attempts to correct inefficiencies or just a good old fashioned recession, brings into play those 100 million plus migrant workers.

China has a long history of massive, nation-wide rebellions. Right now, China's well-trained riot police are keeping the tens of thousands of annual regional rebellions under control, but a dislocation of a huge mass of migrant workers would cause China to become completely unstable and head for a new mass rebellion.

What would China's leaders do in that event? That brings the military into focus.

Let's take a look at China's latest National Defense document, issued in December 2006.

First, you have the People's Liberation Army (PLA):

"To effectively fulfill its historic mission in the new stage of the new century, the PLA is speeding up the revolution in military affairs with Chinese features and enhancing in an all-round way its capabilities of defensive operations under conditions of informationization. ...

By the end of 2005, China had completed reducing the PLA by 200,000 troops, and the PLA currently has 2.3 million troops. ...

The Army is speeding up the upgrading and informationization of its active main battle equipment to build a new type of ground combat force which is lean, combined, agile and multi-functional. Priority is given to building Army aviation, light mechanized and information countermeasures units. The share of the armored component in the Army combined combat forces has been further raised. The artillery and air defense component has fielded new types of cannons, field antiaircraft missiles, reconnaissance early warning radars, fire-control systems, and intelligence and command systems, and increased the proportion of ground-to-air missiles to antiaircraft guns. The engineering component has grown in step with the main combat arms, and improved its capabilities of accompanying support and precision support. The anti-chemical component has established a preliminary nuclear, biological and chemical (NBC) protection system tailored to joint operations, and greatly increased its capabilities of rapid NBC protection, NBC emergency rescue and operations against NBC terrorism. ...

The Navy is working to build itself into a modern maritime force of operation consisting of combined arms with both nuclear and conventional means of operations. ... Efforts are being made to improve maritime battlefield capabilities, with emphasis on the construction of relevant facilities for new equipment and the development of combat support capabilities. The Navy is endeavoring to build mobile maritime troops capable of conducting operations under conditions of informationization, and strengthen its overall capabilities of operations in coastal waters, joint operations and integrated maritime support. ... The Navy is enhancing research into the theory of naval operations and exploring the strategy and tactics of maritime people's war under modern conditions.

The Air Force is working to build an informationized air fighting force with both offensive and defensive capabilities. It is reducing the number of combat aircraft, giving priority to the development of new fighters as well as air and missile defense weapons. It is working to enhance command and control systems. It stresses mission-oriented and confrontational training, increasing combined tactical training of different arms and aircraft types, and conducts training in flying refitted new aircraft and using new weaponry and equipment in an active and stable way.

So the PLA, now a slim 2.5 million people, is for "external" wars, fighting against foreign enemies.

But the same document describes another armed force, People's Armed Police Force (PAPF), consisting of 660,000 people:

"The People's Armed Police Force (PAPF) is charged with the fundamental task of safeguarding national security, maintaining social stability and ensuring that the people live and work in peace and contentment. It strives to make itself a powerful, disciplined and politically reliable force. ... The PAPF has a total force of 660,000. ...

In peacetime, the PAPF is tasked to perform guard duties, handle emergencies, combat terrorism, and participate in and support national economic development. In wartime, it assists the PLA in defensive operations.

Every day, more than 260,000 PAPF servicemen are on guard duty. Through the combined use of manpower, facilities and technologies, the PAPF has effectively enhanced the efficiency of guard duties and security in recent years. The PAPF annually handles an average of over 100 cases of attempted attacks against guarded targets and escape attempts by detained suspects and imprisoned criminals, organizes thousands of important temporary duties, and ensures the security of important international and national conferences and large-scale events, in cooperation with the government departments concerned. Adhering to the guidelines and principles for handling emergencies, and using proper methods and tactics, the PAPF effectively safeguards the fundamental interests of the people, social stability and the dignity of the law. The PAPF anti-terrorism units closely follow the state's anti-terrorism guidelines and principles, and enhance their combat-readiness training. They have been involved in the successful handling of cases of bombing attempts and kidnapping incidents. The various units of the PAPF take an active part in efforts to keep local order, and assist the public security departments in catching and arresting criminal suspects and cracking down on organized criminal gangs.

For comparison purposes, I estimate that the FBI has 1 person for every 10,000 population, while the PAPF has 1 person for every 2400 Chinese population, or over four times as many people per capita.

At this size, the PAPF is large enough to put down a regional rebellion, but if the rebellion expands into tens or hundreds of millions of people, as happened with the Taiping rebellion in the 1850s-60s, or the civil war in the 1930s-40s, then the PAPF would not be able to handle it.

At that point, the CCP (government) would be facing its own demise, and would do what it had to do to reunite the country -- start military action against Taiwan, Japan or even America. This is not as farfetched as it might seem, as this kind of thing has happened numerous times in history. Some nutjobs even accuse President Bush for having started the Iraq war for the same reason.

That's one scenario for how a war might start, but it's not the only one.

What we're seeing today is a game of international brinksmanship between Taiwan and China.

Taiwan President Chen Shui-bian has been taunting China and China has been threatening Chen, ever since Chen was elected in 2000.

Chen was the first president who openly favored independence for Taiwan. This prompted China to say that Chen, along with his vice president Annette Lu, were the "Scum of the Nation." Relations between Chen and China became even worse when Chen was reelected in 2004.

In February 2005, Chen made a conciliatory speech in which he reaffirmed the "five noes" that he had originally laid out in his 2000 inaugural address:

Shortly after Chen made that speech, China infuriated Taiwan by passing the Anti-Secession Law on March 14, 2005. The CCP intended the law to "convince" the Taiwanese people that reunification is in their best interest. Instead, it provoked massive anti-Chinese riots in Taiwan.

Now, at the two-year anniversary of the Anti-Secession law, recent polls of the Taiwanese people have shown that the law did not accomplish its purpose. The overwhelming majority of Taiwanese people believe that the law was hostile, that China should not be interfering in Taiwanese affairs, and that it's up to the Taiwanese people, not the Chinese, whether Taiwan reunifies with China or becomes independent.

Then, earlier this month, China's premier Wen announced a 17.8% increase in its military budget for 2007. On the second anniversary of the Anti-Secession law, this was taken as specifically targeting Taiwan militarily.

However, it's unusual for any country to accede to threats when it's entering a generational Crisis period. This is a time of high nationalism and high anxiety, as well as vitriolic political turmoil (as can be seen in the U.S. these days). Chen had been strongly criticized by his supporters when he reaffirmed the "five noes" in 2005, and after the CCP's recent announcement of a very large military budget increase, Chen gave a new speech: the "four wants and one without." (The Chinese people have interesting ways of saying things, don't they?)

Chen's "four wants" are as follows:

Chen's "one without" refers to a lack of left and right wing political lines.

There's an interesting language-related point in this. According to an article in Taiwan's China Post, the translation "four wants" is not entirely accurate. According to the article, Chen used the word "yao," which means "want" when used as a verb; but Chen used it as a noun, and then it means "imperative," in the sense of "a command or an unavoidable obligation or requirement or simply a necessity." If this is the case, then Chen's speech is much sharper than press reports have indicated.

As I mentioned above, any country entering a generational Crisis era tends to act in a certain way. This is the time when the generation of people who survived the last crisis war (here, the civil war between Mao Zedong and Chiang Kai-shek) have mostly disappeared, leaving behind the arrogant post-war generation who have no fears and think they know everything. When this generation takes charge, the country enters a generational Crisis era. The population experiences what's known as "cognitive dissonance," because their certain knowledge is challenged by reality. In Taiwan's case, the building assumption that Taiwan can be independent comes into conflict with the reality of thousands of Chinese missiles pointing at them.

I found a remarkable example of this in a Taipai Times article.

In a statement supporting Chen's vice president, Annette Lu (whom China has dubbed the "scum of the nation,") in her candidacy for president, former presidential adviser Koo Kwang-ming made the following comments in reaction to China's military threat:

"But there won't be a war in the Taiwan Strait, because China wouldn't want to drive away foreign investors and risk an economic collapse. ...

[In the worst-case scenario], I would welcome [a war]. ...

Taiwan's biggest crisis is the lack of a national consensus on the nation's future despite the military threat from China. But if China were to launch a military attack against Taiwan, a consensus would be formed within a week."

Well, he's certainly right about that consensus, and it probably wouldn't even take a week. But he doesn't seem to grasp the consequences of such a war for Taiwan itself, or perhaps doesn't care.

In this context, Chen's "four wants" speech seems quite similar. His speech is clearly a major provocation to China, and he seems not to fear any possible consequence.

In fact, Chen seems determined to draft a new constitution before he leaves office in 2008, although there's no guarantee that it will be adopted. Chen may be leaning towards a "second republic" constitution, drafted by a Taiwan think tank. It clearly spells out the path to independence.

So if Taiwan's leaders are in a state of denial and anxiety, the same is true of China's leaders, who often seem close to hysteria. I've previously quoted Chinese officials screaming and threatening war, saying that hundreds of American cities will be destroyed by Chinese missiles, and that "one inch" of Chinese territory is worth more than the lives of Chinese people.

This brings us to Wen Jiabao's remarks about Taiwan in the same press conference that we began with:

"The years 2007 and 2008 will indeed be crucial for cross-Straits relations. Why? Because they are critical to upholding peace and stability across the Taiwan Straits. In my Report on the Work of the Government, I reiterated our firm opposition to all forms of separatist activities, including "de jure Taiwan independence". We are watching closely the attempts the separatist forces in Taiwan are making for "Taiwan independence". We will never allow any change to the history, reality and universally-recognized legal status of Taiwan, that is, it has been an inalienable part of China's territory since ancient times. ...

This is a trend no one can reverse, as described in a classical Chinese poem: A thousand sails pass by the wrecked ship; ten thousand saplings shoot up beyond the withered tree."

This last paragraph is a cute allegory. I think that perhaps it might have a generational meaning -- that new generations make old ideas obsolete.

Unfortunately, Wen's state of denial is so complete that he has it backwards. He apparently believes that by using his carrot and stick approach, alternately threatening war and offering economic incentives, then the people of Taiwan will increasing want to be unified with China. (Is there anything that Tony Blair could possibly say that would make Americans want to become part of Britain again?)

I'm aware of absolutely no evidence that supports Wen's hopes and dreams, and plenty of evidence that contradicts it. In Wen's allegory, the "withered tree" are the generations that fled China for Taiwan in 1949, and still yearn to return to their homeland. The young "ten thousand saplings" are the new generations that have no personal memory of China, consider it to be a foreign country, and were so horrified by the 1989 Tiananmen Square massacre that they want nothing to do with China. The number of these "young saplings" grows every day.

Taiwan poll results to question: "Do you feel Taiwanese, Chinese or both?" <font size=-2>(Source: WSJ)</font>
Taiwan poll results to question: "Do you feel Taiwanese, Chinese or both?" (Source: WSJ)

This is supported by the adjoining graphic which I've discussed several times. It shows that the number of people calling themselves "Taiwanese," rather than "Chinese," has been growing steadily, as the younger generations continue to take over, and the older war generation dies off. I've seen polls (somewhere?) that show that the number of people calling themselves "Taiwanese, not Chinese" has risen to almost 70%.

Another change is in the use of language. There is a dialect known as Minnan, which is considered to be the indigenous Taiwanese language by the Taiwanese themselves. The use of Minnan has been suppressed by harsh government actions for the last century, first by the Japanese colonists and then by the Chinese nationalists, but now the use of Minnan has been soaring, displacing Mandarin which, of course, is favored by China's officials.

What all this means is that time is NOT on China's side. The carrot and stick approach is fine, but it only means that, from China's point of view, the situation is Taiwan is getting worse every day, as Taiwan's population feels less and less connected to China.

Now, there are a series of sharp political deadlines coming up. These are as follows:

Now, the Summer Olympiad is an incredibly big deal to China. It's taken on the emotional stature of a "sweet sixteen" coming out party for a girl. China has been planning for that moment for years, and wants to use the Olympiad to demonstrate to the world that China is an incredibly wonderful place. They're even planning to shut down factories in the Beijing area, so that the smog level will be reduced. This is a VERY BIG DEAL.

Here's what to watch out for:

And what about the United States?

A number of people have said or written to me the same thing, with few variations: "We don't care about Taiwan. Furthermore, we're tied down in Iraq, so we can't defend Taiwan. Even if Bush tried, the Democrats would stop him."

If there's anyone reading this who believes that even the tiniest shred of this claim is true, please put it out of your mind. It is totally wrong, and it's dangerous to depend on it:

So that's the kind of thing we're headed for, one way or another.

In closing, I'll quote a few paragraphs from China's March 2005 Anti-Secession Act:

"(Article 1) This Law is formulated, in accordance with the Constitution, for the purpose of opposing and checking Taiwan's secession from China by secessionists in the name of "Taiwan independence", promoting peaceful national reunification, maintaining peace and stability in the Taiwan Straits, preserving China's sovereignty and territorial integrity, and safeguarding the fundamental interests of the Chinese nation.

(Article 2) There is only one China in the world. Both the mainland and Taiwan belong to one China. China's sovereignty and territorial integrity brook no division. Safeguarding China's sovereignty and territorial integrity is the common obligation of all Chinese people, the Taiwan compatriots included.

Taiwan is part of China. The state shall never allow the "Taiwan independence" secessionist forces to make Taiwan secede from China under any name or by any means. ...

(Article 4) Accomplishing the great task of reunifying the motherland is the sacred duty of all Chinese people, the Taiwan compatriots included. ...

(Article 8) In the event that the "Taiwan independence" secessionist forces should act under any name or by any means to cause the fact of Taiwan's secession from China, or that major incidents entailing Taiwan's secession from China should occur, or that possibilities for a peaceful reunification should be completely exhausted, the state shall employ non-peaceful means and other necessary measures to protect China's sovereignty and territorial integrity.

The State Council and the Central Military Commission shall decide on and execute the non-peaceful means and other necessary measures as provided for in the preceding paragraph and shall promptly report to the Standing Committee of the National People's Congress.

(Article 9) In the event of employing and executing non-peaceful means and other necessary measures as provided for in this Law, the state shall exert its utmost to protect the lives, property and other legitimate rights and interests of Taiwan civilians and foreign nationals in Taiwan, and to minimize losses. At the same time, the state shall protect the rights and interests of the Taiwan compatriots in other parts of China in accordance with law."

In the context of a China that Premier Wen describes as "unsteady, unbalanced, uncoordinated and unsustainable," the generational changes that continue every day are making the entire situation increasingly unstable.

From the point of view of Generational Dynamics, this war is coming with almost mathematical certainty. In view of the regional instability, China's extremely rapid militarization and anxiety of the Summer 2008 Olympics, this war could be triggered by any of a wide variety of possible scenarios: a bird flu pandemic, an international financial crisis, a Chinese economic recession, Taiwanese election polling, or any random political action in Taiwan that panics the Chinese.

(If you're not familiar with the role of panic in initiating a war during a generational crisis era, then read how Israel panicked in pursuing the summer Lebanon war with Hizbollah.)

This is what's going on in the world, though few Americans realize or grasp it. Meanwhile, our clown college Congress is arguing over one moronic Iraq war resolution after another, and yesterday took time out to debate whether the earth will be one degree or two degrees warmer by 2099. It's good to know that our country is in such good hands. (22-Mar-07) Permanent Link
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