In 2001, Gordon Chang wrote The Coming Collapse of China.
The book was very popular, earning Chang a substantial income and invitations to speak at seminars and on television programs around the world
Now, 15 years later, the collapse has not happened, and the Communist Party remains very much in power.
Those reading the news coming out of the National People’s Congress in Beijing this week are wondering if Chang’s prediction is coming closer.
One item was the planned dismissal of up to three million workers in the steel, coal mining and cement industries, to reduce chronic overcapacity in these sectors.
It was one of several pieces of bad news – a higher budget deficit, slowing economic growth, weak demand in major export markets and record levels of debt.
“The outlook for fiscal revenue is grim,” Finance Minister Lou Jiwei told a news conference.
The target rate of growth for gross domestic product for this year is 6.5-7 percent, compared with actual growth of 6.9 percent last year, the lowest in a quarter of a century.
The military was disappointed to see its budget grow by only 7.6 per cent, the first single-digit percentage increase since 2010.
For the last 30 years, the mantra of Chinese officials has been “bao ba” (保八) – maintain GDP growth of at least 8 percent, the minimum needed to absorb the millions of school and university graduates each year and keep unemployment at a manageable level.
Since 2011, the budget for internal security has exceeded that for the People’s Liberation Army.
This is a sign that, for Beijing, the biggest threat to its power does not come from American aircraft carriers or Japanese bombers but from domestic protests.
This means money to hire more police and People’s Armed Police and buy the latest crowd control and anti-riot equipment.
Teams of well-armed police are on standby 24 hours a day in major cities, provincial capitals and large county towns.
They can be called into action at a moment’s notice, with the aim of limiting a protest to those who started it and not allowing it to spread.
For a Chinese official, the quickest way to be dismissed or transferred to a lower position is a failure to ensure “social stablity” – allowing such an incident to grow and, worse, let it be photographed, spread on social media and reach the media outside the mainland.
The last published figure for “mass incidents” was 90,000 in 2010, up from 8,700 in 1993.
These include labour strikes and unrest, protest against confiscation of rural land and seizure of urban property, as well as demonstrations against financial fraud and bad decisions by officials.
The official media are not allowed to report these incidents unless they receive specific approval from the propaganda department.
Xu Shaoshi, head of the National Development and Reform Commission, said Sunday that the economy was broad enough and growing fast enough to create jobs for the millions who will be laid off, especially in the service sector.
“Easier cross-regional flows and the use of online job fairs will help laid-off workers find jobs,” he said.
So what does all this news mean for Hongkongers?
They are more exposed to China risk today than 10 years ago and much more than 20 years ago.
They have deposits in mainland banks in Hong Kong, they hold shares in mainland companies or firms that have large exposure there and hold renminbi deposits.
Two decades ago, such exposure was limited, if it existed at all.
Many Hongkongers work in China or go there for business or pleasure.
They can protect themselves against turbulence in China by switching out of mainland banks and stocks and converting their renminbi into other currencies.
They can establish the right of residency in another country; if they have already done so and live in Hong Kong, they should visit that country often enough to meet the legal requirement to keep the residency.
But the history of the last 38 years, since the start of the open-door era, is in favours of the bulls, not the bears.
Waves of emigration and disinvestment followed the 1989 military crackdown and the approach of 1997.
Tens of thousands of Hongkongers sold their assets here and emigrated.
Many now regret having done so.
The assets they sold here have soared in value; by comparison, the ones they bought in Vancouver, Toronto, Auckland or Los Angeles have risen modestly.
The Hong Kong Special Administrative Region passport gives them admission to as many countries as the passport of their new country.
Many could not find a job overseas worthy of their talent and experience.
China’s economy has continued to grow at a much faster rate than that of the countries where they emigrated.
Beijing has put “social stability” at the top of its policy agenda; it uses police, legal and internet controls impossible in the West.
So, despite the arguments put forward by Chang and many others, the weight of evidence is still in favor of the government and its ability to grow the economy and retain the necessary level of stability.
The best advice: keep your passport safe and up to date, diversify your assets, including Chinese stocks and currency — and stay in Hong Kong.
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