By Paul Mason
Reporting for BBC Newsnight and World News America
I am on the dockside at China's Tianjin port. It looks quieter than it was in 2005, but no less impressive.
Giant container cranes and gantries swing box-loads of, what? Volkswagens, iPods, cashmere sweaters, steel bars.
Whatever they are, the exports are down, by 26% year on year. And that is the root of China's crisis.
After 1,000 miles (1,600km) and 14 days on the road, I am too exhausted to do anything more than a provisional SWOT analysis of China's economy. Here it is. McKinsey & Co eat your heart out.
CHINA'S ECONOMIC STRENGTHS
- The ability to pump $580bn into the economy, two thirds of it bank lending, without any democratic checks and balances, planning permission etc, and use an army of bureaucrats to make it happen the night you decide to do it
- Huge desire and unmet need for a bigger and better consumer economy: this pent up demand makes it easier to transfer to a more consumer-led growth pattern and a bigger welfare state.
CHINA'S ECONOMIC WEAKNESSES
- The ingrained culture of high saving, which continually depresses demand. This will take more than an edict or slogan to change, as there is evidence that as well as precautionary saving against illness and old age, Chinese people actually save because they fear the whole Communist Party regime will one day collapse into a chaotic mess
- The Chinese government is finding it easier to decide to build railways than it is to stimulate consumer demand or welfare spending. Boosting domestic demand is one thing, but there is only so long you can do it by "borrowing" next year's infrastructure spending for this year
- The collapsing eco-system places a major constraint on any growth model, especially one that is being implemented by "decree". You cannot decree the water table to come back, or crops to grow, as Chairman Mao Zedong found out after 1958.
- To switch much faster to the domestic-demand led growth model. I have had Chinese officials tell me, in all seriousness, that it would take 50 years. I now think they will seriously embrace it within 10, and then the whole world's centre of gravity will tilt to Asia.
- The pro-market faction in the CCP prevents the state and the Keynesian social measures taking full effect. The export industry lobby is highly connected to those in the state who have got rich by promoting export-led growth
- It all happens too slowly because of pure, bureaucratic inertia
- The rest of the world does not recover fast enough or fully enough in the next two years and China, having shot its bolt with a massive stimulus, then goes into its own credit crunch and its own W-shaped recession
- People want change. They are fed up with the perpetual mismatch between what is supposed to happen and what does happen, as I have experienced all too clearly on the road. They are sick of petty bureaucracy, graft and official indifference to pollution.
As a journalist roving around unannounced, going into fenceline communities forced (they allege) to breathe unclean air, or meeting migrant workers organising for better wages I think I'm seeing China as very few people see it, even key members of the bureaucracy and the media.
The media here is very constrained, not absolutely, but quite a bit. Officialdom responds to negative stories by trying to work out how they were stupid enough to let journalists near them, rather than the scandal itself.
The top leaders have to resort to subterfuge to escape the moving Potemkin Villages built around them by their underlings whenever they try to experience reality.
Finally it is clear there are multiple realities in China. The Muslim village, the techno-trance party, the Maoist revival, the Steve McQueen wannabes on their vintage motorbikes.
When Chinese people do get a media that faithfully and accurately reports everything that is going on, and an uncensored cyberspace, they will be amazed at their own greatness and diversity.
I certainly have been on this trip.
Read Paul Mason's Idle Scrawl blog
Paul Mason's journey across China will be broadcast in two parts on Newsnight on Tuesday 16 and Wednesday 17 June 2009 at 10.30BST on BBC Two, and then available to watch on the Newsnight website.