Macro Investor: China will bridge its stimulus gap

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Throughout its long and at times tumultuous history, China has been a difficult country to govern. Beyond the stereotype of a harmonious Confucian society ruled by a benevolent and infallible father-emperor and a technocratic elite of mandarin administrators, another reality appears. China has always been a vast and teeming land of divergent interests, factions and centres of political gravity, with ever-shifting alliances, frameworks and borders. That political dynamic – as alive today as it was 2,000 years ago – has largely been a product of China’s geography.

From the Han Dynasty to the present, China’s governments have been necessarily dictatorial. The natural environment – where soils are difficult, farms are small, and disasters commonplace – has not provided fertile ground for a large middle class or democratic social infrastructure.

Unlike the well-watered plains and river valleys of northern Europe and America, where, since the decline of Feudalism, small landowners were easily able to produce surplus goods and find few restrictions to trade or travel; Chinese society – where it has not migrated – has largely been one of hierarchy, obedience and dependence on top-down control for survival. Like Russia, where the difficulties of geography arguably allowed the serf system to survive hundreds of years beyond its decline in Western Europe, pre-modern systems of political control were able to prevail, notwithstanding the country’s tremendous achievements in other pursuits of modernity such as art, science, technology, literature and philosophy.

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