China’s economy is currently on the operating table, hunched over by surgeons, chest cavity splayed open, hooked up to a cardiopulmonary machine, surrounded by nurses staring at monitors flashing vital signs. It all looks rather grim.
This surgery, however, is not an emergency bypass. That would be too easy. China has had many of those already – stimulus packages, grand infrastructure projects and many rounds of directed lending.
Every two decades or so, going all the way back to the founding of the PRC in 1949, the surgeons get ambitious. These guys are mad scientists attempting a comic book trope – to create the ultimate superhero.
They want to inject super serum, replace skeletal calcium with adamantium and dose the patient with gamma rays, giving China the powers of shazams out the wazoo.[...]
In the lamented “pre-reform” era, China’s mad scientists engineered spectacular growth by increasing investment from a prewar 6% of GDP to 20% in the first Five-Year Plan, covering 1952-1957. This led industrial output to register a compound annual growth rate.
The Great Leap Forward accelerated this growth to 66% in 1958 and 39% in 1959 before crashing and burning in 1961 when mismanagement of communal farms and “backyard blast furnaces” caught up with the mad scientists.
Course correction starting in 1962 recovered all lost ground by 1965. According to economist Cheng Chu-Yuan, China’s GDP growth averaged 11% between 1952 and 1966, the eve of the Cultural Revolution. (T. C. Liu of Cornell and K. C. Yeh of the Rand Corporation have a lower estimate: 8%.)
More importantly, China built a full kit of infrastructure, machinery and equipment capable of driving future industrialization.[...]
Many analysts have a tabula rasa understanding of China’s reform era, as if there had been no economy before Deng Xiaoping. In reality, China’s industrialization started right after the formation of the PRC with some of the fastest growth recorded in the 1950’s and 1960’s. Even during the “low growth” Cultural Revolution, resources directed towards public health (for example, barefoot doctors) and primary education doubled life expectancy and quadrupled adult literacy by 1980 from pre-PRC levels.
The mad scientists are now at it again. They have about twenty years of new data not just on China but from the rest of the world. When Zhu Rongji was head surgeon, history had ended and markets reigned supreme. This time around, the surgeons are correcting for market irrationality and negative externalities. The next twenty years is again being determined on the operating table.
Three years ago, the surgeons pried open China’s chest cavity with the three red lines credit limits, instantly seizing the speculation driven property sector. Since then, they ripped out unnecessary organs like education companies, clamped the Ant Financial artery and eviscerated the video game industry.
All of this has caused spasms in vital signs from lackluster growth to rising youth unemployment. Wondering whether China will or will not stimulate the economy next quarter or next year is missing the forest from the trees. For the next few years, China’s economy will still be under the knife and whatever adjustments will merely be anesthesiologists and technicians nominally dialing the drugs up and down and adjusting the heart-lung machine to maintain vital signs.
What are these mad scientists trying to achieve? We believe President Xi Jinping’s 2020 target of doubling China’s GDP by 2035 stands. That is an average growth rate of 4.7% for 15 years. But beyond just a numerical target, it is important to figure out what superpowers China is trying to acquire. And just as importantly, what Kryptonite factors China is attempting to inoculate itself against.
China wants America’s Silicon Valley, but regulated; Japan’s car companies, but electrified; Germany’s Mittelstand, but scalable; and Korea’s chaebol conglomerates, but without political capture. It wants to lead the world in science and technology, but without cram schools. A thriving economy, but with common prosperity. Industry, without air pollution. Digital lifestyle, without gaming addiction. Material plenty, without hedonism. Modernity, without its ills. This is, of course, a wish-list and unrealistically ambitious. But these mad scientists sure as hell are going to try. They’ve developed a taste for it.
In college, early into the semester, we went through a ritual called course exchange. Students gathered in an auditorium to swap classes after sampling lectures for three weeks – satisfaction was not guaranteed. The strategy passed down to underclassmen applied to both course exchange and significant others: “Add before you drop.”
China is undergoing – but perhaps botching – the same process with a more party-esque slogan, “Establish the new before abolishing the old.”
The surgeons have been on a tear gutting the old. The big kahuna is, of course, the property sector. But right behind are platform monopolies, private education, financial services and video games. The new has been playing catch-up, with 5G equipment, electric vehicles, photovoltaics and wind turbines being leading examples.
From all appearances, the Industrial Party is in ascendance and China will double down on climbing the manufacturing value chain. The Industrial Party is a political identity that believes industry, science and technology should determine China’s future. Adherents believe that China’s strength lie in the technical skills of her population and thus favor hard-science, high-tech industries as opposed to services and business model innovations.
Therefore, Chinese politicians, whatever their predisposition, must find a way to create space for this next generation of scientists and technicians to develop themselves. They cannot be confined to a production line at a Foxconn plant. Maintaining social stability means finding a use for future scientists and technicians, which means pursuing industrialization. Is there any other way? The key variable for determining the course of China’s future development is thus the massive number of talented technical and scientific workers.
If mistakes were made, it would have been in sequencing and in faith – dropping before adding is a poor strategy in both love and course exchange. China’s mad scientists may have been too confident that electric vehicles and renewable energy would be followed quickly by semiconductors, pharmaceuticals and commercial aircraft.
Perhaps they have reason to be confident. Planning for this surgery has been in the works since 2015 with the Made in China 2025 project. China has been steadily eroding imports of high value added intermediary goods like batteries, precision parts and electrical components, flipping trade with South Korea from deficit to surplus.[...]
China never properly transitioned from its Soviet era Material Product System (MPS) of national accounts to the United Nation’s System of National Accounts (UNSNA) standard, leaving out much of services from reported GDP.
We calculate that China accounts for 22-24% of global GDP and 20-23% of global consumption. We also calculate that household consumption is 50-55% of China’s GDP, in line with global averages. China should easily be able to grow at 4.7% through 2035 with only a modest increase in consumption’s GDP share (5 percentage points over 10 years) without upsetting global economic balances.
In the reform period prior to Xi, everything was sacrificed at the altar of economic growth. In the new era, growth has been walked down from 9.6% in 2011 to an average of 4.7% in the Covid years (2020-2023) as an increasing litany of issues were given precedence. Debt however, soared over this time from 175% of GDP to over 300%. What exactly did all that debt buy?
When Xi assumed leadership of China, he declared that inequality could not be allowed to increase further. Inequality is perhaps the major Kryptonite factor of the American economy which China wasted no time in matching as the economy roared with market reforms.
While still problematic, inequality, as measured by the Gini coefficient, has steadily fallen since 2010 largely as a result of massive investment in urbanization, pushing people into cities and pushing cities up the tiering ladder.[...]
China also poured resources into stamping out last-mile poverty. While most poverty alleviation in China was through economic growth, recalcitrant extremely poverty could only be eradicated by concentrated marshaling of resources, from relocating entire villages to weekly visits by social workers.[...]
Since peaking in 2012, air pollution in Beijing has been cut by over 60%, with Shanghai falling over 50%. China, which used to dominate the list of most polluted cities, now only claims one spot in the top 20. None of this came cheap, from installing scrubbers in smoke stacks to increasing renewables to moving heavy industry to strict emissions regulations for cars.[...]
Before Hu Jintao handed the reins to Xi, Hu warned delegates to the 18th Party Congress in 2012 that “[corruption] could prove fatal to the party… and [cause] the fall of the state.” The popular opinion in the West is that Xi ended China’s highly successful reform era because of an ideological bent. This is off the mark. Xi was brought in to clean house as the wheels were coming off from excesses of the reform era.
Throughout Xi’s decade in office, there has been no letup in his anti-corruption campaign. In 2022, a record 638,000 officials were punished for corruption. While there haven’t been any large scale ideological appeals to the public, it’s a different story within the 98-million-member party.
During this time, free market capitalism and liberal democracies also faced their own existential tests. Success or failure going forward will depend on whether liberal institutions remain intact in the West and whether party discipline can be maintained in China.
What the PRC has had since 1949 is a governing party with the political autonomy to play mad scientist. [...]
Of course we live in the real world, not a comic-book world. The question in the real world has always been whether the economy can be engineered by mad scientists from the top down or is it best left to the invisible hand of the market? [...]
The standard economic opinion – against all evidence – is that China was economically stagnant before Deng’s market reforms. The thinking on this for the American economys is undergoing a transformation in egghead land – just how has neoliberal economics benefitted the American people over the past few decades?
In a Q&A exchange at a conference in Malaysia, Eric Li, the barbed-tongued venture capitalist, was asked, “Do you think top-down directives are sustainable in the long run?”
To which he replied, “It’s the only thing that’s sustainable.… That’s why America is failing today.” After World War II, Li said, the Americans “lost the ability to do top-down design.”
Dec 2023
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Abduction - Chapter 17
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Wenona pointed out that the guards were still there, they had just fallen back in order to try to stay mostly out of sight. Mostly. It was still made perfectly clear that they were very much being guarded. Mike stared at the doorway where he knew they were lurking just around the corner. They'd been there a while. They'd been following them all day, or solar rotation, or, argh, whatever!
He felt exhausted. Physically and mentally.
The worst place had been the infirmary.
At first, it was very hospital-like and normal. It reminded Mike a lot of the medical wing he and Wenona had lived in while aboard the Gladius. They used equipment that was, more or less, the same as what Demfar and Gerben used to to scan, analyze and heal the remainders of their wounds. The cuts from Simmo's knife on his tanned arms had been scabbing and looked like they'd leave nasty scars. After a few passes of the machine, his arm was almost as good as new. There were still faint scars, but they were only noticeable to him because he knew where to look for them.
The medics were… friendly. It was like Demfar times two. But not necessarily in a good way. They wanted to know everything about humans. Or rather, they wanted to hear about humans from humans. They, like Demfar, had read up and done as much research as they could, but that was very different than having two live specimens in front of you. They questioned, poked, prodded relentlessly until Wenona finally got fed up. The medic ended up splayed out on all six limbs on the floor.
The guards had rushed in, clawed hands on blaster hilts. The medics shooed them away, assuring them that everything was fine. They remained curious from a more cautious distance after that.
That part of the infirmary, as fun as that had been, was fine. It was as they were leaving that they walked by a large room whose occupants made both him and Wenona stop in their tracks.
The room was similar to the one they'd just been in, but it was filled with gurneys and platforms filled with various alien shapes.
They weren't moving. At all.
Mike's heart started pounding as he realized he recognized a few of the shapes. There was a group of squifra near the middle of the room. They had Confederation uniforms on. One in particular stood out. It had camouflage patterns of browns and purple's on its skin. It looked so much like Demfar. It couldn't be Demfar, though, right?
Another alien, closer to them caught his eye, furry and cat-shaped. It's fur was the color of dark gray, like the remains of a fire that had gone out. It couldn't be… it couldn't be Thurrin, could it? Please no.
The guards ushered them away from the room, but not before they also saw a few Sefra. They looked so much like Jeb. There were also many, many species of aliens he didn't recognize, in various uniforms, colors, sashes. As Mike followed the guards from the room- the morgue, he realized now what was, he caught eyes with Wenona. They had solved the mystery of why they hadn't seen any bodies in the debris outside. He was sick and horrified by it. He'd seen a body before, at his great aunt's funeral, but this... this was radically different. These could be the remains of his friends, killed by enemies, and blasted into the cold vacuum of space.
At least they hadn't been left there.
How many from the Gladius were in that room? Or in another room like it?
Mike was so lost in thoughts, that he almost jumped when he felt Wenona’s hand on his shoulder. He looked back. Her eyes looked the same way he felt.
“Mike,” she whispered, “are… are you okay?”
No. No he wasn’t. She wasn’t either, but neither of them said so. Instead, Wenona reached out and pulled him into her arms. He hugged back. The two of them stood there, in a beautiful hallway outside a terrifying room on an alien ship, far from home or anything familiar.
There are different kinds of hugs one can give or receive. Brief hugs one gives to friends or family member when you greet them. Awkward side hugs one gives to a coworker, or an acquaintance from that activity where you helped them with something but you barely remember. There are hugs that one gives to a loved one when saying goodbye, or the kind after seeing them when they return from being away a long time. Etc. But there is one special kind of hug that few really know how to give. It’s the one where you’re held tightly in strong arms and you can almost feel that your cracks and broken pieces are being pushed back together.
Those are the best.
The thing about that kind of hug is that they take time to really get the full effect. That was time Mike and Wenona didn’t really have.
Unsure of what the heck was going on, the guards stood around watching the two humans hold each other. What were they doing? Should they break them apart? Was it possible to break them apart at this point? That appeared to be quite a hold they had on each other. The guards looked at the humans and around at each other. Maybe this was a normal human thing?
Sensing the growing unease of the guards, Wenona let go and they both turned to face forward down the hall. A few of the guards’ narrow faces tilted sideways. One was trying and failing to hide what looked like might be a grin.
Ooookay. Mike and Wenona glanced at each other in the corners of their eyes. “So,” Mike started slowly, “are we off then?”
The next location thankfully, was a short trek around the corridors and down one level.
If Mike had been asked to describe a stereotypical lab from the movies, he probably would have described the room they were now standing in pretty well. It was very well-lit and looked clean, if a little cluttered with data pads, strips of strange fabric, weird metal boxes, and scraps of what looked might have once been rubber bands. Really big rubber bands. There were multi-colored fluids bubbling in strange glass vials, vats, and straws of various sizes. There were coils and wires spread out in every direction running between machines he could only guess the purposes of.
The wall just to the right of the entrance they’d come in was almost completely covered with screens and displays. A large, tan, four-armed alien was bent over entering data, looking back and forth between its many large fingers typing at insanely fast speeds and a small wooden object sitting on the table next to them. It looked like - was that a ukulele? No, it had too many strings. Where did they get a tiny guitar?
The guard next to Mike stepped forward and made a quick series of clicking noises. The other alien didn’t look up, but grunted a low tone as if to acknowledge them. Without stopping from typing, it used a spare arm to lift up what looked like a half-helmet, half-headband device covered with movable lenses and visors on its head.
The guard that had stepped forward before sighed and looked a bit exasperated before making the fast clicking sound again, a little louder. “Drin, if you could spare a moment, we’ve brought the humans as requested by Commander Rozar.”
“Wait. What?” the scientist or whatever “Drin” was looked up sharply, the spectacled headgear nearly flew off their head. It sat precariously on top of his brow, dangling on one of the long curved horns protruding from the alien’s forehead. He stood like that, gaping at Mike and Wenona before finally righting his headgear and closing his gaping mouth.
“I thought someone was going to let me know when they were coming!”
“Apologies, Drin. We thought you’d been informed. We’ve just come from the medical wing,” the guard bowed again as Drin stepped toward them, muttering under his breath about ruined welcome plans and first impressions.
The scientist stopped a few feet in front of them and frowned at the group. “I assume they’re in full health then?” The main guard nodded. “Good. You’re excused.”
“Sir?” The guards shuffled uneasily.
“You’re excused. Get out of here. I have work to do.”
“Sir, we were told to stay close by and guard the humans. They are dangerous. They’ve already proved to be quite a handful, we’ve been ordered to stay and make sure they-”
Drin straightened his back, showing off his impressively tall stance. “I’m sure I’ll be able to manage.I don’t give much of a gregunian’s left beak who ordered you to do what. This is my lab, and I give the orders here. Now get out. You can wait in the hall if you must.”
Slowly, the guards filed back out the door, which shut promptly after the last one’s tail cleared the doorway. Drin turned back to Mike and Wenona and studied them a moment. They studied him back. He stood about eight feet tall and was covered in short, soft-looking tan fur. The curved horns protruding from his forehead were ridged and ended just behind where his long floppy ears started.
“If I’m going to be totally honest with the two of you, you are not at all what I was expecting.”
Mike felt his face scrunch up, but also couldn’t help but give a confused smile, “Uh, okay. Sorry, I guess?”
Now it was Drin’s turn to look confused, “Sorry? Sorry for what? This is amazing! Do you have any idea how long I’ve been waiting to get some actual humans in my lab?” He obviously meant it as a rhetorical question, because he immediately turned to grab a handful of instruments off a nearby table and turn back to them. One tool turned out to essentially be a fancy measuring tape.
Wenona, glared at Drin as he came closer to measure her, “The medics already took all our measurements. Can’t you just get all that from them?”
He ignored the look she was giving him and started measuring her height, length of her arms, circumference of her head, etc. “I suppose I could, but I’d prefer to make accurate catalogs. I don’t mean to offend the buffoons they hired in the medical wing, but they’re complete imbeciles.” He pulled a strand of Wenona’s hair straight up and measured it as well.
After a few more measurements, and after Wenona slapped him away when she’d finally had enough, it was Mike’s turn.
“So,” Mike started, holding up his arm or turning as needed, “you said we weren’t what you were expecting? What did you mean?”
“Hmm? Oh yes,” Drin finished and replaced the tool to the table which began uploading its measurements to the datapad next to it. “Your race’s reputation has spread remarkably fast, even through the blockade. I suppose that by the time we heard of you, pure information devolved into rumors and exaggerations. After hearing about many of the habitats earth offers, and some of the feats your kind has supposedly accomplished, I thought you would be shorter and stockier, maybe with more fur if you’d come from cold climates. Would you say that your builds are typical of humankind?”
Mike and Wenona looked at each other. Mike nodded, “Yeah, we’re both pretty average height-wise I guess. I’ve always been the tallest in my classes though, but I’m certainly no pro-basketball player or anything.”
Drin obviously had no idea what that meant, but he looked delighted to hear it anyway.
“I can see how the rumors started though. After your planet defeated the Kahsks, it’d be easy to embellish and exaggerate about a race capable of such a feat. The Kahsks made a mistake invading your planet. Well, it was a mistake for them, obviously, but for many of the rest of us, it was something akin to an opening door. New opportunities!” Drin paused to motion the two of them towards a large machine bolted to the side of another table. Wenona held back a bit nervously. Mike stepped forward as Drin had him hold his arms out straight a few inches from his sides. The machine began scanning Mike with a bright green light.
Drin watched the readouts on a screen on the other side of the scanner as he continued, “The Burnti Empire and the Kahsks have had a long history of… rivalry I guess could be one word for it. When we found out they’d been suffered such major losses to their fleet, we were of course intrigued.” The green light stopped and the machine beeped loudly. “Fascinating,” muttered Drin. He motioned Mike to step away and it was Wenona’s turn.
“Anyway,” Drin removed his headgear and set it down gently as he shook his head, “We tried learning as much as we could about the race that had taken them down. The blockade, as it was, made that difficult, but certainly not impossible. I have a lot of connections that I’ll admit are not all savory. Rozar has a lot of connections with bounty hunters. Between the two of us, we commissioned deliveries of as much as we could get from Earth to be smuggled across the blockade. Eventually we were able to get live specimens, which have been fascinating to study, but until now, we’ve never been able to successfully get a human.” The scan for Wenona stopped and the machine beeped loudly again. Drin smiled and looked up at them, “And now, we have two.”
“Wait a minute,” Wenona snapped. Her shoulders tensed and a horrified glare began spreading across her face. “Do you mean to tell me you were the ones who hired the montauk that kidnapped us?!”
Oh.
“We might have. I mean, we’re not the only ones in the galaxy hiring them, and not every shipment we hired always came through. Sometimes they’d find another buyer who paid more or was simply more convenient to deliver to. The blockade tended to dissuade a lot of… uh, transactions with us after all. We’re lucky we were able to get what we did. All things considered, we’ve managed to learn so much, but now that you’re both here-”
He didn’t get to finish. Wenona had grabbed a small handheld device off the table and threw it as hard as she could at him. It broke into pieces as it hit him square in the chest.
“YOU!? You did this!? What are we then? Just cargo you finally had delivered?” Another projectile hurtled toward Drin, this one aimed at his head. He was just barely able to duck in time. “Do you have any idea what you’ve put us through? My family? They probably think I’m dead! This is your fault!”
Drin, not wanting any more equipment thrown across the room, lunged at Wenona. Before he could grab her, she dove between his outreached arms and rolled into a pile of stacked metallic boxes. Mike rushed to her side to help her up, pushing a large drum behind him to put an obstacle between them and the alien scientist. The drum was lighter than Mike expected and it continued to move, toppling over and knocking down anything and everything not securely fastened down.
Mike had to admit, it was quite an impressive mess.
Drin turned around and watched in horror as the boxes and crashing drum created a domino effect. The once well-organized lab was suddenly thrown into chaos. Bumps, thuds, and the sound of shattering glass was everywhere. Eventually it climaxed with a loud, hollow clattering of falling metal and a sudden yelp of a large animal.
Both Mike and Wenona froze. Slowly, they turned to the back of the lab where the sound had come from. “What the heck was that?” Mike’s whisper felt strained. Somewhere behind one of the counters, they could hear shuffling of something moving among the fallen lab items. What sounded like claws clicked on the hard surface.
Something furry and strong grabbed their wrists and pulled them back.
“Got you!” Drin gave a low chuckle. “I suppose they did warn me you might be a handful, but I knew I’d be-” he stopped as he noticed the humans already had figured out. His specimen was free.
Slowly, Drin pulled Mike and Wenona behind him as he carefully paced towards the drawer where he kept a spare blaster. Mike could hear the creature padding closer to their side of the lab. He could hear it panting and sniffing. Then it growled. It was a low, dangerous growl that seemed to shake everything in the room. Or maybe that was just his imagination playing it up, because MAN! Everything about that growl told his instincts to turn tail and run.
The growl stopped and the sniffing started again. Drin had nearly reached the drawer when the creature came around the corner.
“You’ve got to be kidding me,” muttered Wenona.
It was a dog.
An honest to goodness, from earth, massive dog.
Its muzzle was nearly black, but the rest of its shaggy fur was a mixture of black and golden brown. Its eyes looked droopy and red. Its legs were long and thick, its shoulders looked like they probably would come to Mike’s waist.
No one moved for what seemed an eternity. The trance was broken by the sound of a drawer as Drin slowly began pulling it open. The dog growled again and the drawer stopped. Sniffing, the dog turned its massive head towards where Mike and Wenona were standing.
“Good doggy,” Mike drawled in the most calming voice he could, “nice doggy.”
Something seemed to click in the dogs eyes and suddenly it came bounding towards them. There was nowhere they could go, they had already backed themselves up as far as they could. It was going to eat them! Before they could think of another idea of what to do, the thing was on them.
Literally, on them.
Its paws reached up onto Mike's showers and it barked, loud booming barks before it slathered his face with the biggest, wettest licks any dog had probably ever given in the history of forever.
Mike was completely knocked off his feet and the dog gave the same happy greeting to Wenona. Soon, all three of them were sitting on the floor laughing, or barking in the dog's case, as Drin looked on from across the lab, still frozen in place. His expression was priceless.
“Really need to get a camera somehow,” Mike chuckled to himself.
He scratched around the dog’s ears and down around his neck. That earned him a few extra happy licks to the face, which he tried and failed to push away. His fingers caught on something around the dog's neck. A collar maybe? As soon as the dog leaned over to share the slobbery love with Wenona, Mike was able to pull the collar around so he could read the tag.
“Carson.” The dog turned back to him, as if recognizing the name. “Welcome to our pack Carson.”
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