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Treading Water

from the December 23, 2013 eNews issue

Doing much for China’s pride, the Jade Rabbit was sent out onto the moon this weekend to explore its dusty, cratered surface. The lunar rover represents a moment of peaceful exploration in the midst of Beijing’s primarily militaristic space program, offering a major sense of accomplishment to the Chinese who are catching up after 50 years of U.S. and Russian space domination. Despite its success in space, though, China’s ledgers have been harmed by the world’s financial troubles, and rising debts and layoff threats are causing Beijing to scramble to patch the holes.

While the Jade Rabbit rover was recently able to jaunt peacefully about the moon’s surface, China’s space program has been dedicated to fighting off the perceived threat of U.S. satellite power and to offer some views from space for itself. China’s surveillance satellites not only take pictures of the ground, they include weaponry that can target and destroy other satellites. When the U.S. showed support for Taiwan in 1996 by positioning aircraft carrier battle groups in the area of the Taiwan Strait, Beijing had no way to find and attack them. Now China’s satellite prowess is believed to have the power to locate carrier-sized objects, even if the technology is not as sophisticated as that of the United States.

In its harried effort to catch up, since 2010 China has launched enough military satellites to match the number the United States has floating through the skies. It has been testing satellites that can be maneuvered to close in on targets and destroy them, including the expensive surveillance or communication satellites of other nations. Space could become the next big battlefield in more ways than one.

In the meanwhile, the global economic crisis has affected export-giant China. The Wall Street Journal reports that China’s domestic debt has risen from 128% to 216% of GDP since 2008, as the government continued infrastructure and real estate development to keep its economy moving. State-owned companies must still borrow money to avoid laying off excess workers, and overproduction is a serious issue. The world isn’t buying as much, yet China is determined to maintain 7% growth. The Chinese government is not legally able to take on debt directly from banks and must keep a balanced budget, but “shadow” debt is increasing, debt lent by trust companies and other non-bank financial institutions.

“They may be ‘talking the talk’ on addressing the debt issue,” said China economist Tao Wang. “But it’s hard to tell if they can walk the walk because of the rapid development of shadow lending.”

The overproduction is no joke. China has steel stockpiles that have no immediate purpose and has built entire cities filled with buildings where nobody lives. The wealthy initially snapped up the buildings, but found there weren’t tenants available who could pay the rent. In a country of 1.3 billion people, it’s amazing that new apartments can sit empty year after year, but the kinds of people moving into the cities are poor rural folk who cannot afford the apartments of the wealthy middle class. China’s overdevelopment in the name of “growth” has made even real estate a bad investment as property values plummet.

China has pushed forward on urbanizing the country, taking pressure off of agricultural and rural areas and increasing domestic consumption of goods and services as a means of depending less on exports. The migrants who move into the cities, however, do not get to enjoy urban welfare because they are still classified as rural residents under hukou, the household registration system. They don’t just need a place to live; they need education and food and health care and jobs. The government has said it will prioritize a smooth transition of migrants’ residential status, starting with the smaller and medium-sized cities and strictly controlling growth in the large ones, but the re-registration process will still take time.

The Chinese government stated that its future plans include development of inexpensive housing and the building of mass transportation infrastructure, as well as more focus on the environment. These things take money, though, and raising it causes just as much turmoil in China as anywhere else. The government has recently said it will make adjustments to tax systems for local authorities and will also encourage private investors to take part in building and running public facilities.

No system, economic or otherwise, can be propped up artificially for long. China may not collapse like troubled countries in South America, but continually borrowing money to produce steel that nobody needs and buildings that nobody will inhabit hardly can benefit China in the long run.

Even if Beijing can finally land a probe on the moon.


Notes


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