Page 208 - The Drucker Lectures

The Changing World Economy [ 189

grow all its food. Between 200 and 400 million Chinese peasants
are unemployed. And some 200 million of them have already
left the farm and are trying to get to the cities, even though the
cities, too, do not have any jobs and have no housing. And in the
prosperous parts of China—that is, the coastal parts—there are
still thousands of big state-owned enterprises that are woefully
inefficient and in most cases turn out products that nobody, not
even in China, wants to buy. Yet the state enterprises employ
something like half of the labor force of the coastal cities, around
100 million.
To keep these enterprises going rather than liquidating them
creates enormous inflationary pressures. To close them down,
however, would create such unemployment as to make social
unrest and perhaps even civil war inevitable. Since the middle
of the seventeenth century, China has had a peasant rebellion
every 50 years because of the enormous overpopulation on the
land. The last one was Mao’s. It was the first one that succeeded
in overthrowing the regime. The two nineteenth-century ones
were both put down by foreign troops—Western and Japanese.
Otherwise, both the Taiping Revolution of 150 years ago and
the Boxer Rebellion of 1900 would have overthrown the regime.
They came close enough. Mao’s peasant revolution of 50 years
ago was the first one to succeed in doing so.
So far, the Chinese have been successful in walking a very
narrow line between social unrest and inflation. But with every
day the tension is growing, and the problems become less man-
ageable. The one country to watch, therefore, is China. There is
a probability that it will succeed in muddling through. There is
a probability of civil war, which would be a repetition of China’s
old tradition. And there is the most favorable possibility of China
again splitting itself into more or less autonomous economic re-
gions. In the 1920s we used to call them “War Lords.” Now we
are talking of “autonomous economic regions.”