The interesting question is whether their Social Contract will survive. So far, the people are generally satisfied with the Party's performance but in the years to come growth will inevitably slow, if only because their economy is so massive that compounded growth is difficult. I think the strategy is that by then the Party will have a much more efficient way of enforcing control over individuals than they did in 1989...
This is the question that keeps me up at night. Their rate of growth should naturally slow as their economy reaches capital saturation. And there are a lot of worrying structural features of the Chinese economy. For instance, they hit their 2030 metropolitan housing target a few years ago due to their stimulus packages driving a massive residential construction boom. So technically they should cease all residential housing construction for the next 15 years or so... They're also going to have a harder and harder time maintaining their capital controls (e.g. pegged exchange rates) as their foreign currency reserves run down. All hell could break loose if they can't defend their peg against speculative attacks.
If it's a slow melt scenario, maybe there will be enough time for the CCP to re-negotiate the social contract. But if any of a number of possible economic shocks hits China, and they're suddenly staring down the barrel of recession or a Japanese-style lost decade or two, I can't help but think the only way to avoid being dragged out in to the streets by angry protesters would be to declare war on another country (...Japan).
Maybe start taking a more aggressive stance on the Senkaku Islands, for instance. And the vague sense I have (and correct me if I'm wrong) is that the Trump administration intends to pursue a more 'isolationist' geo-strategic policy.
This is the question that keeps me up at night. Their rate of growth should naturally slow as their economy reaches capital saturation. And there are a lot of worrying structural features of the Chinese economy. For instance, they hit their 2030 metropolitan housing target a few years ago due to their stimulus packages driving a massive residential construction boom. So technically they should cease all residential housing construction for the next 15 years or so... They're also going to have a harder and harder time maintaining their capital controls (e.g. pegged exchange rates) as their foreign currency reserves run down. All hell could break loose if they can't defend their peg against speculative attacks.
If it's a slow melt scenario, maybe there will be enough time for the CCP to re-negotiate the social contract. But if any of a number of possible economic shocks hits China, and they're suddenly staring down the barrel of recession or a Japanese-style lost decade or two, I can't help but think the only way to avoid being dragged out in to the streets by angry protesters would be to declare war on another country (...Japan).
Maybe start taking a more aggressive stance on the Senkaku Islands, for instance. And the vague sense I have (and correct me if I'm wrong) is that the Trump administration intends to pursue a more 'isolationist' geo-strategic policy.