SPEAKING FREELY Looking beyond the China dividend
By Benjamin Shobert
Every day airliners swoop down on China to drop off their passengers. Whisked
away to their respective business-class hotels, these men and women are the
vanguard of China's modernization. The rapid industrialization process China is
experiencing seems oddly reliant on equal parts centralized government
policymaking and freewheeling cowboy capitalism
decoupled from any unifying motive other than the free market's efforts to
locate and maximize profit.
Too few Western businessmen are wrestling with the implications of China's
ascendancy. Enraptured with thoughts of how the "China Price" will allow them
to capture market share in their own business, or giddy with the potential
revenue growth nested within the burgeoning Chinese market, most fail to ask
whether these pursuits should be tempered with an appreciation of China's
unique developmental needs.
Unfortunately, the little self-reflection that does take place has either
occurred late in the game, or falls into the predictable realm of geopolitical
punditry, which assumes China is America's next rival for hegemony and as such,
must be perceived as a competitor.
These are false choices that ultimately serve China poorly. Individuals are
quick to point out that because a large number of Chinese businesses
participating in global trade are state-owned enterprises (SOE), we must
incorporate a comprehensive national security analysis into decisions to sell
them technology or allow them to acquire non-Chinese assets.
That such a process easily becomes a type of non-legislative protectionism is
obvious. Our fear that SOEs are receptacles of the Chinese government's own
desire to internalize technology we might not otherwise share is a reasonable
concern, provided the oft-referenced transparency we claim is missing from
China's decision-making bodies is present when we deny acquisitions or
technology transfers.
Missing almost entirely is how else we might propose making China's transition
from its past as a centrally planned economy into a model we will accept. SOEs
are vestiges of China's communist past, and ridding their inefficient
architectures from the Chinese economy will happen in time unless we so
hopelessly stir up the mud with short-term expectations on change that the
Chinese government resists the next stage of openness necessary.
For too long, Westerners contented themselves to come into China, scout sites
for manufacturing expansions, meet with potential joint-venture partners, or
audit industrial capabilities to ensure the quoted price which motivated them
to come to China was accurate. As incentives, none of these are malicious, but
the practical outcome of such single-minded focus has been disaster for certain
aspects of China's development.
Unrelenting pressure on price, a reality businesses within developed economies
confront within the context of enforced labor, environmental and product
quality regulations hit the newly developing wave of Chinese entrepreneurs
hard. Not knowing any better, and accustomed to the Maoist pressure to make
reality conform to expectations even if fundamental disparities existed, this
new class of Chinese businessmen has cut corners.
Among other things, the net effects include a percolating rage among the
Chinese working class over the expectations of their new taskmasters, as well
as an environmental catastrophe in China's hinterlands.
Outsiders easily see the problems: labor unrest, the aptly named chog -
a manmade dust storm rising from China's construction euphoria swept up into
the jet stream and deposited around the world, too-common spills of
carcinogenic chemicals into rivers, and oil deals with nefarious African and
South American dictators.
All raise the fundamental question of whether developed post-industrial
countries have proposed or actively worked to transition alternative
technologies or ideas to assist China's attempts to modernize? As easily as
outsiders see these problems, they give the Chinese government too little
credit for the changes they have made, and by doing so, absolve their own
complicity in these respective problems.
For China's sake, we must work to see their potential through different eyes.
Instead of assuming they present a threat to our own global security, we should
see them as potential partners in a world increasingly hostile to secular
democracy. Rather than focusing on the speed with which we wish they would
dismantle the last remnants of their centrally planned economy, we should
embrace the stunning changes they have already made.
We should come together to wrestle with the common concerns that plague both
China and its economically developed partners: graying populations, pension
problems, environmental concerns, and non-exploitive methods of economic
development.
Unless we find a way to impact China's modernization constructively, we may
create within their culture, or our own, precisely the economic-military
calculus which has evolved in other countries circling around the irrational
belief that a country must choose between growth limited to what the market
would allow, or growth their military could take. Preventing such a choice
would not be only for China's sake, it would also be for the world's.
Benjamin Shobert is managing director of Teleos and an economic and policy
analyst covering China. He can be reached at bshobert@teleos-inc.com or at
www.teleos-inc.com.
Speaking Freely is an Asia Times Online feature that allows guest writers to have
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