Blowback (Chinese Tofu Dreg)
Blowback is a term that refers to the negative reaction by people to government policy. For decades, China has been syphoning business from Western countries who were escaping progressively increasing taxes and regulations. This growth legitimized the Chinese Communist Party (CCP) after the failure of the Great Leap Forward. However, this boom is ending, notably with the covid lockdowns, imploding property market, failing banks, and historic floods. As the Chinese people are impoverished, Chinese politicians will experience blowback by losing popularity, which could result in another Chinese warlord period as local officials fill the power vacuum.
The Chinese Communist Party came to power in the aftermath of World War II. After spending the 19th century losing power and territory to Western Nations (Opium Wars) and Japan, suffering revolts (1850-1864 Taiping Rebellion, 20 million dead), and the failed Boxer Rebellion against Western (including Japanese) occupiers from 1899-1901, the Qing emperor of China was overthrown in 1911 to create the Republic of China. He was replaced by president Sun-Yat-Sen.[1]
However, the Chinese Communists wanted to run the country and many areas were controlled by local politicians and warlords. China experienced civil war from 1927-1949. In the middle of all of this, Japan invaded from 1931 until 1945, which ended up resulting in the Communists (People’s Republic of China) winning the civil war in the mainland. The Republic of China only controlled Taiwan, conquered by the USA in 1945 from Japan who had taken it from Qing China in 1895, where it still exists as a separate nation.
Via the US State Department’s Office of the Historian,[2]
“The 1911 revolution was only the first steps in a process that would require the 1949 revolution to complete. Though the new government created the Republic of China and established the seat of government in Nanjing, it failed to unify the country under its control. The Qing withdrawal led to a power vacuum in certain regions, resulting in the rise of warlords. These warlords often controlled their territories without acknowledging the nationalist government. Additionally, the reforms set in place by the new government were not nearly as sweeping as the revolutionary rhetoric had intended; unifying the country took precedent over fundamental changes.”
However, Communists, Marxists, Socialists, and all denominations of that religion have a poor track record of creating prosperous societies. Chairman Mao Zedong, leader of the People’s Republic of China from 1949-1976, instituted the Great Leap Forward (1958-1962) and the Cultural Revolution (1966-1977).
The Great Leap Forward resulted in 20-100 million mostly starving to death. The Chinese weren’t proud of their “success” so hid the famine from the world.
Via the magazine article, The Great Leap Forward, written by Clayton Brown in Education about Asia, Winter 2012,[3]
“As food reserves in the countryside diminished, peasants began dying in droves by the summer of 1960. They collapsed in fields, on roadsides, and even at home where family members watched their corpses rot, lacking the energy for burial or even to shoo away flies and rats. Some families would hide the remains of relatives in the home so that the living could collect the food rations of the deceased. Hunger drove the starving to forage for seeds, grasses, leaves, and tree bark, and when even these became scarce, they boiled leather or ate soil just to fill their stomachs, even when it destroyed their digestive tracts. Given the prevalence of hunger and exposed corpses, some inevitably turned to cannibalism. Although this involved scavenging for the most part, occasionally persons—usually children—were intentionally killed as food.
[…]
Estimates of deaths directly related to the famine range from a minimum of twenty-three million to as many as fifty-five million, although the figure most often cited is thirty million.”
The Cultural Revolution meant to replace the inferior culture of China with the superior religion of Marx. It spread terror and poverty.[4]
Via Britannica,[5]
“Mao’s concerns about ‘bourgeois’ infiltrators in his party and government—those not sharing his vision of communism—were outlined in a Chinese Communist Party Central Committee document issued on May 16, 1966; this is considered by many historians to be the start of the Cultural Revolution, although Mao did not formally launch the Cultural Revolution until August 1966, at the Eleventh Plenum of the Eighth Central Committee. He shut down China’s schools, and during the following months he encouraged Red Guards to attack all traditional values and “bourgeois” things and to test party officials by publicly criticizing them. Mao believed that this measure would be beneficial both for the young people and for the party cadres that they attacked.
The movement quickly escalated; many elderly people and intellectuals not only were verbally attacked but were physically abused. Many died. The Red Guards splintered into zealous rival factions, each purporting to be the true representative of Maoist thought. Mao’s own personality cult, encouraged so as to provide momentum to the movement, assumed religious proportions. The resulting anarchy, terror, and paralysis completely disrupted the urban economy. Industrial production for 1968 dipped 12 percent below that of 1966.”
In 1971, Nixon took the USA off of the gold standard because we had printed more gold receipts (paper dollars) than we had gold dollars to back them. In 1972, President Nixon met with Mao to discuss opening trade with China.[6]
According to History.com,[7]
“Still mired in the unpopular and frustrating Vietnam War in 1971, Nixon surprised the American people by announcing a planned trip to the PRC in 1972. The United States had never stopped formally recognizing the PRC after Mao Zedong’s successful communist revolution of 1949. In fact, the two nations had been bitter enemies. PRC and U.S. troops fought in Korea during the early-1950s, and Chinese aid and advisors supported North Vietnam in its war against the United States.”
As inflation from abandoning the gold standard, taxes, and regulations increasingly made business in America unprofitable, the owners moved their businesses to China.
After the death of Mao in 1976, Deng Xiaoping was the next major Chinese leader until his death in 1997. Going in an out of power over the previous decades, Deng would act as a king maker, putting his political allies in important posts, notably Zhao Ziyang (Premier of the government 1980-1987 and General Secretary 1987-1989) and Hu Yaogang (Chairman from 1981 to 1982 and General Secretary from 1982 to 1987).
Per Britannica,[8]
“From that point on, Deng proceeded to carry out his own policies for the economic development of China. Operating through consensus, compromise, and persuasion, Deng engineered important reforms in virtually all aspects of China’s political, economic, and social life. His most important social reform was the institution of the world’s most rigorous family-planning program—the one-child policy—in order to control China’s burgeoning population. He instituted decentralized economic management and rational and flexible long-term planning to achieve efficient and controlled economic growth. China’s peasant farmers were given individual control over and responsibility for their production and profits, a policy that resulted in greatly increased agricultural production within a few years of its initiation in 1981. Deng stressed individual responsibility in the making of economic decisions, material incentives as the reward for industry and initiative, and the formation of cadres of skilled, well-educated technicians and managers to spearhead China’s development. He freed many industrial enterprises from the control and supervision of the central government and gave factory managers the authority to determine production levels and to pursue profits for their enterprises. In foreign affairs, Deng strengthened China’s trade and cultural ties with the West and opened up Chinese enterprises to foreign investment.”
However, this growth was mired with difficulties. For example, liberalization led to more Chinese citizens wanting more freedom faster, which resulted in the Tiananmen Square Massacre in 1989. The one child policy has resulted in girls being aborted and millions of men left without the opportunity to find a woman. As a result, many people just lie flat, meaning they have taken the philosophy of doing the bare minimum, and expect no advancement in life. [9][10][11]
An unknown Chinese citizen refusing to let tanks pass shortly before the Tiananmen Square Massacre.
The Chinese banking and property markets are imploding, which the covid lockdowns were meant to cover up, notably Country Garden today and Evergrande in 2021. They make the USA look solvent in comparison.[12][13][14]
As this except from Bryce Elder at the Financial Times shows, the property market in China has been in distress for a while already. He writes,[15]
“Even so, effects of a Country Garden default won’t be as severe as last year’s Evergrande default, because the sector shake-out has already happened, with 40 per cent (by 2021 sales) of the market already in default, JPMorgan tells clients.”
Many of the construction projects are called Tofu Dreg, meaning that they are made of unsound material, like the leftovers (dregs) of tofu, a soft spongey food. These buildings are known to have their walls crumble and fall off after investors have bought the projects. Imagine living in a tofu drug high rise during an earthquake, like the 2008 Sichuan earthquake that killed roughly 100,000 Chinese citizens![16]
So, people can’t get their money out of the bank and many of their investments are tofu dreg.
Adding to China’s woes, historic rain led to historic flooding, such as the Forbidden Palace in Shanghai flooding for the first time in history after 600 years.. Instead of flooding Shanghai and some new capital area, the government flooded Hebei province, notably the city of Zhuozhou. Probably thousands have died. Some places are still under water and flooding. The government’s rescue operation has been a failure. They don’t appear to be doing much and are prohibiting people from helping. However, people are still helping. This will not help the CCPs image.[17][18]
As the BBC noted on August 12,[19]
“China is no stranger to floods, but July saw a trio of typhoons from the Pacific Ocean over three weeks, which exacerbated seasonal monsoon rains. Two of the three made landfall in the country, including super typhoon Doksuri, which churned slowly over large areas of north-west China for several days, inundating Beijing and surrounding provinces such as Hebei. That week, the Chinese capital experienced the most rainfall in 140 years.
[…]
She says that it had been raining heavily until July 30, when the downpour eased. The family believed the worst had passed, but stayed home, worried that going outside could expose them to mudslides.
But the following morning ‘the rain came down heavily’, Ms Chang said. As water rapidly filled the house, she and her husband tried to pump it out. But within half hour, flood water and mud smashed through the front wall.”
China Insights reports in a video from August 14,[20]
“The Chinese government, in an effort to protect the city of Beijing, Xi’s pet project Xiong’ An Xinqu area, and the metropolitan city of Tianjin, has repeatedly discharged floodwaters from reservoirs without warning, as well as dug up riverbanks to release floodwaters. It has resulted in the flooding of several cities and rural areas in Hebei province, causing major fatalities, injuries, and property damage.
Zhuozhou city became one of the flood storage areas. An area that flooded up to 12 meters at its deepest or 39 feet. Online news claims that the real scene of the Zhuozhou flooding in China is comparable to the 2008 earthquake in China in which more than 100,000 lives were lost.”
If the above isn’t enough to show that China’s economy is in trouble, now Chinese exports are falling precipitously. If they aren’t exporting, that means that many people aren’t finding work in the world’s factory. No wonder so many are lying flat.[21]
The CCP has held on to power because they have made enough of their citizens wealthy so that they want to be part of the system. But, if the system is leaving them broke and powerless, then people will stop supporting the CCP. At that point, the CCP’s only option will be Tiananmen Square 2.0 or liberalization, with many powerful politicians losing power.[22]
Blowback is a term that refers to the negative reaction by people to government policy. For decades, China has been syphoning business from Western countries who were escaping progressively increasing taxes and regulations. This growth legitimized the CCP after the failure of the Great Leap Forward. However, this boom is ending, notably with the covid lockdowns, imploding property market, failing banks, and historic floods. As the Chinese people are impoverished, Chinese politicians will experience blowback by losing popularity, which could result in another Chinese warlord period as local officials fill the power vacuum.
[1]https://www.hamiltonmobley.com/blog/the-opium-wars
[2]https://history.state.gov/milestones/1899-1913/chinese-rev
[3]https://www.asianstudies.org/publications/eaa/archives/chinas-great-leap-forward/
[4}https://www.hamiltonmobley.com/blog/socialism-is-the-opiate-of-the-people
[5]https://www.britannica.com/event/Cultural-Revolution/Rise-and-fall-of-Lin-Biao-1969-71
[6]https://www.hamiltonmobley.com/blog/august-15-1971
[7]https://www.history.com/this-day-in-history/nixon-arrives-in-china-for-talks
[8]https://www.britannica.com/biography/Deng-Xiaoping
[9]https://www.bbc.com/news/world-asia-48445934
[11]https://www.youtube.com/watch?v=BhZEjGlUUC8
[12]https://www.hamiltonmobley.com/blog/chinese-covid-prisons
[14]https://www.hamiltonmobley.com/blog/a-black-swan-in-china
[15]https://www.ft.com/content/f295df85-d954-42b9-bc4b-3adf678032e5
[16]https://www.britannica.com/event/Sichuan-earthquake-of-2008
[17]https://www.youtube.com/watch?v=Wq6Tx-7t9Ws 3:40 People of Hebei suffering for Beijing
[18]https://twitter.com/jenniferzeng97/status/1689093653648556032 6:40 government lying flat and not letting people rescue flood victims because of bureaucracy.
[19]https://www.bbc.com/news/world-asia-china-66458546