SPEAKING
FREELY China's danger of vested
interests By Benjamin A Shobert
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
In what may be the
most common pathology among historians, economists
and public-policy makers, the desire to compare
and contrast stands uniquely as the tool by which
we attempt to place today's fact patterns against
what has happened in the past.
This
scavenging of history has its place, perhaps less
as a way of
pointing to exact parallels
between cause and effect, and more generally as a
mechanism for illustrating those common questions
we collectively forget to ask, choose to look
over, or push behind us in the struggle over daily
life.
This comparative process has a
weakness, namely its inability to accommodate the
uniqueness of a people to build on the lessons of
history and create something genuinely different.
US dialogue over China predominantly fails
in this respect, in no small part because it pains
Americans' collective historical memory to think
that it now falls on another people to bear the
mantle as history's vanguard, that somehow China
may now be unique in a way we Americans once were,
but no longer feel ourselves to be.
Misgivings about our own future and our
own response to the challenges of modernity play
into an unwillingness to believe that others
elsewhere may find solutions our culture rejects
as too austere or unnecessarily paradoxical.
In addition, the self-interest through
which too many Americans singularly view China
complicates our ability to let China develop in
ways that may not rely on knowledge we have
attained or tools we have developed.
China's now seemingly ubiquitous
ascendancy to global supremacy has motivated many
pundits to try to place its growth against the
backdrop of similar trans-historical stories of
ascendancy, looking for predictable opportunity,
potential and, less so, downside risk.
If
we are to be purposeful in choosing the most
important lessons history has to teach about
China's current economic growth and politics, it
should be to see through the fog and point toward
elemental issues that have caused countries to
lose their momentum, not fulfilling the potential
others see within them.
As rare as it may
seem to find Americans willing to be realistic
about what cautionary tales history has to tell
regarding China's rapid economic expansion and
political changes, it seems that even fewer are
willing to reflect on the opportunity of China to
remake the world's understanding of political
institutions, as well as social and economic
theory.
A June special edition of the
prestigious McKinsey Quarterly included an article
titled "The road ahead for capitalism in China".
Its analysis fell along fairly predictable (and
hence reasonable, as judged by much of the
intelligentsia) lines: China must choose between
"two starkly contrasting possible futures ... a
market economy under the rule of law or crony
capitalism".
But in the obviousness of
this observation, is the potential for China's
originality being lost? Is the supposed starkness
of the two choices symptomatic of the world's
bifurcated view of China: either it must develop a
free market along the lines developing economies
predicated on export growth have, or it must
descend into a form of quasi-capitalist-riven
kleptocracy seen in vague outlines in Russia?
Some of this is paternal, an effort to
"school" China on those lessons we Americans
learned painfully, and such efforts are both
reasonable and necessary. Yet this impulse
overlooks China's philosophical traditions that
have, among other things, an inherent balance
unique to China - a balance the world sorely
needs.
Original thought regarding China
seems rarely to extend beyond those knowledgeable
about its culture, history and politics - and each
of these areas does certainly demand a respect for
China's uniqueness. But it seems too much
commentary on China stumbles in its attempt to
acknowledge China's cultural and historical
uniqueness without an equal appreciation for how
China might find solutions which incorporate
tensions, paradoxes and paradigms deemed untenable
in developed economies.
No doubt much of
this is hubris, a resistance to the idea that a
country in which most still prefer to describe
with a capital "C" Communism than a small "s"
socialism could have something genuinely unique to
contribute to the world.
And yet if we are
honest about what amazes us regarding China, the
very speed of its change is a part of our
collective fixation, and the Chinese government is
no small part of what makes such rapid transition
possible.
In the midst of governments in
developed economies that face widely maturing
manufacturing bases and social-entitlement
programs badly inverted in terms of payers to
payees, China stands relatively unique as a
government willing to confront the inadequacies of
its centrally planned economy, state-owned
enterprises (SOEs), and the broad social questions
related to bringing hundreds of millions of
peasants from a life of agrarian obscurity into a
world of manufacturing and adaptive technology.
We may encourage China to let failing SOEs
crash under the market's pressure, yet how many
subsidized industries within our own borders would
collapse if we followed our advice? How many
developed economies can gradually idle whole
industries, laying off millions of workers, all in
the interests of globalization, encouraging
foreign investment, and political reform? For too
much of the political dialogue over China, the
stridency of our advice is poorly matched by our
own transparency and actions.
Honoring the
changes made by the Chinese government is not an
easy task in contemporary US foreign-policy
discussions. Invariably, such an approach is seen
by many as appeasing a government that suppresses
what we view as necessary components of a
democracy.
For too many, a compliment to
the changes within China's political institutions
is somehow ceding ground on those outstanding
reforms believed to be mandatory for a government
after the advent of capitalism and the
implications of the Enlightenment. China's
unclearly defined policies concerning certain
freedoms do constitute lessons the West has fought
over, and no one is the better if we allow our
commercial interests to make us unwilling to
antagonize China over such issues.
While
certain pundits and policy wonks are no doubt
guilty of pandering to an increasingly powerful
Chinese global actor, the reality is that the
world would be a much more stable and sustainable
place were more governments willing to take the
risks and make the types of structural changes to
their economies that China has; too few rightly
appreciate these risks.
The millions of
laid-off workers (referred to as xiagong
zhigong) who were thrown into the wind with
little of a parachute during the economic reforms
from 1995 to 1999 are just one of the examples of
the Chinese government being willing to take risks
to change and adapt.
Similarly, the
tempered response to the Asian currency crisis of
1997 by China's leaders is now sufficiently dated
that it has been assumed that no more reactionary
and destabilizing options were present. China
managed to see beyond the short-term palpitations
in the global equity markets in the interests of
their long-term plans.
We forget that a
country so new to the structural risks inherent in
a free-market economy could have otherwise
reacted. In fact, among the factors that
contributed to that crisis being manageable,
China's measured response showed a maturity now
taken for granted.
None of this should be
mistaken for striking the necessary cautionary
notes about China's growth. The fallout from
China's unbridled growth will be real, and much of
it will be painful - to everyone from the average
Chinese worker to the Chinese entrepreneur, to the
Western businessman relying on price and product
parity from within China for his own needs.
Articles and books have been filled with
stories about dubious real-estate deals, SOEs and
banks nefariously interrelated, gross
overcapacity, and peasant revolts due to changes
in land rights. But missing in properly sounding
these warnings seems to be an appreciation that
China's reforms should take place in ways unique
to China's own needs, not our own.
Among
the prescient points made in Henry C K Liu's Asia
Times Online article China: Banking on bank
reform (June 1, 2002), perhaps none is
more relevant than the idea that some parts of the
banking reforms outsiders are arguing for within
China have more to do with accommodating Western
commercial interests than they do with what is
necessary for China's unique needs.
The
fact that China's 400 million-plus inland agrarian
peasants may require social policies and
investments whose payback is on a time horizon no
bank could justify seems lost on those who
criticize certain aspects of China's banking
system.
Again, this is not to say that the
banking system has not capitalized SOEs that
should be allowed to go out of business, or that
banks have engaged in what could at best be termed
speculative real-estate offerings. Somewhere, the
advice doled out to China needs to find a balance
between what the world wants to see to maintain
its ongoing investment in China and the needs
China has for massive social spending to draw
portions of its citizenry into the modern day.
Why is it that China's own needs for
methodical change at a pace it can socially
internalize are inconsistently acknowledged?
Because at the base of too much of the critique of
China's banking system stand our own interests in
owning a percentage of the financial opportunity
represented by the savings, spending and credit of
the still-untapped Chinese consumer.
China
is no panacea to anyone - even the unquestionable
vastness of its own untapped potential provides no
certain future of prosperity for itself. But the
hinge on which much of China's future may turn is
not solely its contribution to the world as an
export-driven success story through low prices.
Rather, the hinge on which China's future turns is
how it chooses to respond to the variety of advice
being doled out by people whose motives have
little to do with China's best interests, and
everything to do with what they can gain from
working within China's borders.
The recent
spate of articles on China's banking system have
as much to do with the actual liquidity problems
represented by non-performing loans within banks
as they do with interpreting how China's
government will respond to the new challenges
facing it as the country makes its transition from
a centrally planned economy to whatever form it
will ultimately be.
Certainly, we are all
curious about the extent of the banking problem;
but this interest belies our deeper curiosity
about how China's government will respond to new
challenges and problems.
Were all of us to
divest ourselves of the cultural and historical
preconceptions with which we interpret China,
perhaps we could see a country that stands unique
at this time in history to learn from the excesses
of free-market fundamentalism, and couple them to
the lessons of the Enlightenment, capitalism and
democracy, the idea of a country tempered by the
good of the whole, an ability to think
collectively while still valuing the individual.
How sad that the truest lesson China may
teach is the lesson a democracy should most easily
illustrate: that what is best for the whole may
not be most easily tapped into through appealing
to the individual's best interests.
The
concept of a mixed-market-based approach to a
country's self-regulation may be a concept China
must develop on its own and then teach to the
world. It is unlikely any of us will be the worse
off for their attempts to find such a balance, and
we should do what we can to encourage China to
find its own unique solution to the amalgamation
that is a society's collective needs and the means
of encouraging individual attainment.
Benjamin Shobert is the managing
director of Teleos Inc (www.teleos-inc.com), a
consulting firm dedicated to helping Asian
businesses bring innovative technologies into the
North American market.
(Copyright 2006
Benjamin Shobert. Used by permission.)
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
