China: A Global Hegemon On Shifting Sands

Charles Hugh Smith | Sep 18, 2014 01:28AM ET

Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century.

Which nation with aspirations of global dominance (i.e. hegemony) has these attributes?

1. The nation's recent prosperity is based on a vast expansion of credit.

2. The nation has 100+ million obese/diabetic citizens.

3. The citizens have little say over central government policies that favor cronies.

4. The nation faces demographic headwinds as the number of people in the workforce declines and the number of retirees balloons.
5. Large regions of the nation suffer from chronic water shortages.

Hmm, sounds like the U.S. is a match so far.... Let's add a few more attributes:

6. The nation's credit expansion has relied on a largely unregulated shadow banking system.

7. The nation is in the midst of an unprecedented housing bubble.

This could still be the U.S., but America's unprecedented housing bubble popped in 2006--the current bubble is a mere echo bubble. Let's add a few more attributes:

8. The nation is beset with unprecedented "external" environmental costs as a result of rapid and largely unregulated industrialization.

9. The nation suffers from large-scale desertification.

10. Over half the nation's monied Elites have either left the nation or plan to leave and transfer their financial wealth overseas.

The only nation with aspirations of global hegemony that fits all these attributes is China. The conventional China Story holds that the 21st century will be China's century, much like the 20th century was America's.But this story overlooks the vast demographic, health, environmental and financial problems built into China's land, people, and Central-Planning systems of finance and governance.

Consider two charts drawn from John Hampson's recent overview of China ‘Catastrophe’ Hits 114 Million as Diabetes Spreads .

How much of the nation's surplus wealth will be devoted to fixing the environmental and health costs that are already visible? How much of the wealth is actually phantom wealth that will vanish as the housing bubble based on an unprecedented credit bubble pops?

The China Story based on demographics, health, environmental damage and financial Central Planning is a quite different one from the China will be the global hegemon in the 21st century story. Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century.

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Written By: Charles Hugh Smith

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