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    Greater China
     Sep 8, 2010
China spells out its fears
By Alexander Casella

BRUSSELS - While the press briefing given recently by the Chinese ambassador to the European office of the United Nations was not totally unprecedented, it was also not a matter of routine and the previous such briefing - which was also the first - was held in 2004.

So what prompted He Yafei to suddenly invite some 50 foreign journalists accredited to the United Nations for an on-the-record briefing on the subject of China and the global economic crisis? The ambassador indirectly gave an answer to that question when he stated that the Chinese were actually not very good at managing their international public relations.

According to informed sources, this view is also shared in Beijing


and the impetus for the briefing as well as the general outline of the ambassador's presentation came from the Chinese Foreign Ministry.

This said, the presentation held last month was no dogmatic recitation of a prepackaged pronouncement. The ambassador spoke with hardly any notes, making for an eloquent and convincing production.

Being destined to a group of journalists which, with the exception of this correspondent, were not particularly oriented towards Asia, the presentation could be summarized as "China for beginners through Chinese eyes", with one caveat.

It provided in one single, concise package a credible image of how the leadership in Beijing views the challenges that face China in the context of a globalized world.

According to ambassador He, China has one, overriding priority; to put its house in order. Not only is this no easy task, but also it is one that, both for internal and external reasons, is becoming more difficult and more complex every day.

Globalization, of which China is inescapably a component, combined with the current financial crisis, has created an overall climate of uncertainty. And while a global financial collapse has been forestalled, the debt crisis within the European Union, combined with a worldwide recession, has unavoidably affected China.

Thus, by late 2008, exports from Guangdong province diminished by 20% compared to the previous years and tens of thousands of workers have lost their jobs. Conversely, if the Chinese financial system survived the crisis it is because China has been slow in opening its capital markets. China's grow rate in 2009 reached 9.1% and its fiscal deficit to gross domestic product ratio was kept below 3%. Ultimately, the dilemma for the authorities is to manage foreign access to its financial markets. Too little access would be an impediment to the country's development and too large an access would render it vulnerable to outside financial fluctuations.

But beyond these immediate issues, the real question is how to manage China's long-tern reform process. In the late 1970s when the process was in its infancy the issue was to find simple solutions to immediate simple problems.

Success, however, bred its own tribulations with the country now facing substantive infrastructural problems combined with an excessive reliance on exports. The end result is that the authorities are now faced with the need to implement a stream of parallel, simultaneous, mutually supporting reform processes, with the failure of one or more liable to impact the whole process.

To ensure a reasonable degree of employment China must create some 24 million new jobs a year and this at a time when some 120 million people in rural areas are underemployed or surplus to requirements for labor. Compounding the problem, while unskilled labor is still abundant, specific sectors are starting to emerge that suffer from a lack of skilled labor.

Perennial unemployment in the rural areas cannot in the long term be solved by migrant labor temporarily moving to the cities. Ultimately, the goal is to redistribute the country's population and transform a society that historically has essentially been rural to one with an urbanization rate of more than 50%. This process is well on its way and in 2008 in eastern China the urbanization rate had reached 56%, while it was still at 38% for the rest of the country. By 2020, however, the authorities feel that a 50% urbanization rate will have been achieved and that 700 million Chinese will have become city dwellers.

Mega cities will not only require mega infrastructures in terms of transportation, housing, power, schooling, health, sewage and water supply. They will also require a new household registration system, a new tax system, a new national medical insurance scheme and - last but not least - a social security network.

The task is so daunting that foreign relations, when they don't have an overriding economic or security dimension, are secondary considerations. Thus, China aims essentially for the status quo or, in the words of the ambassador, the refusal of "unilateralism", encouraging multilateral cooperation, be it through the United Nations or the Group of 20, and emphasizing that as regards the two Koreas, it is both "impartial" and a strong advocate of a "peaceful" solution.

Appreciating the full, and daunting dimension of the blueprint for China's future as presented by He can only be achieved from the perspective of a macro-political view. China started to go into free-fall in the mid 1950s when Western invasion, the collapse of the Imperial government, warlordism, Japanese expansionism and civil war brought the country to its knees.

By the end of World War II, China was at best a geographical expression. The coming to power of the communists in 1949 saw the reinstatement of the Chinese state and of a central authority, be it the Communist Party or the state, which it controlled.

While the excesses of the exercise of power by Mao Zedong in the Great Leap Forward and the Cultural Revolution were essentially the result of his personal aberrations, the centralized authority that he had brought about survived and that proved his enduring legacy. On his death in 1976, his successors proceeded to disentangle China from the aberrations that he had fostered while retaining the authority of the state and thus of the Communist Party.

That the reform process now exceed by five years the lengths of Mao's rule is indicative of how far China has moved away from a set of dogmas that bear no relevance to the modern world while retaining the state legitimacy that the founders of the People's Republic had brought about.

Paradoxically, while Mao made a name for himself for ruthless social engineering, his successors have moved far beyond anything he could have dreamed of in their making of a modern China. Traditional China was a rural society rooted in the land. Urbanizing China is undoubtedly the greatest revolution the country has ever faced and the dangers it entails are real.

While in times of economic downturn laid-off migrant workers always have the option of returning to their home villages to find a way of surviving, unemployed urban workers have no such option and have the habit of rioting in times of need.

Hence, urbanization goes hand-in-hand with the creation of a social net if the regime is to survive a possible major economic crisis. This in turn requires a multifaceted reform process, a task for which the Chinese, who had a tendency to prioritize rather than to proceed on a wide front, will have to acquire new skills.

Communications have also rendered specific shortfalls impossible to dissimulate or to sidetrack. News of natural disasters spreads fast and the government is held responsible for a speedy response, not an easy task when those in need amount to some 80 million people.

With about 20% of the world's population, the consequences of success, or partial success, of China's ability to put its own house in order will be daunting. And in comparison, Mao's "reforms" will pale in insignificance but, if anything, he will be remembered for having made it possible.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

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