Rich and au­thor­i­tar­ian? Gaug­ing the fu­ture of China

The Washington Times Weekly - - Culture, Etc. -

The Olympic torch re­lay was not in­tended, least of all by Bei­jing, to be­come an ex­er­cise in China’s pub­lic hu­mil­i­a­tion. Yet as the world’s at­ten­tion turns to­wards the 2008 Olympics, it sees Ti­betans gunned down in the streets of their cap­i­tal, demo­cratic ac­tivists im­pris­oned for writ­ing “sedi­tious” emails and bishops placed un­der house ar­rest.

That a sup­pos­edly mod­ern­iz­ing China still show­cases such me­dieval hor­rors calls into ques­tion the prin­ci­pal the­ory lu­bri­cat­ing China’s rise: That is the com­fort­ing idea, cease­lessly pro­mul­gated by the Wash­ing­ton pol­icy-mak­ing es­tab­lish­ment, that a rich China will in­evitably be both cap­i­tal­ist and demo­cratic. Or as Ge­orge Bush put it in 2005: “As China re­forms its econ­omy, its lead­ers are find­ing that once the door to free­dom is opened even a crack, it can­not be closed.”

But what if the pre­vail­ing Wash­ing­ton be­lief that China can­not be both rich and au­thor­i­tar­ian is wrong? What if those who in­sist that the West’s eco­nomic and po­lit­i­cal ex­pe­ri­ence con­sti­tutes uni­ver­sal truth have been merely la­bor­ing un­der an eth­no­cen­tric delu­sion?

The lead­ers of the Chi­nese Com­mu­nist Party, heir to a gov­ern­ing tra­di­tion of the mailed fist and hob­nailed boot, clearly be­lieve they can have a wealthy and pow­er­ful coun­try with­out ced­ing power to the peo­ple. And why shouldn’t they? They have presided over a “so­cial­ist mar­ket econ­omy” that has ex­pe­ri­enced a quar­ter cen­tury of ex­plo­sive eco­nomic growth, all the while keep­ing the “door to free­dom” her­alded by Pres­i­dent Bush locked and heav­ily guarded.

Th­ese two bets about the fu­ture of China and the world are on the ta­ble, ex­plains long-time Asia ob­server Ea­monn Fin­gle­ton in his new book, “In the Jaws of the Dragon.” “What if — sur­prise! — China’s top lead­ers turn out to have had a bet­ter un­der­stand­ing of the Chi­nese char­ac­ter than any­one in Wash­ing­ton? What if in, say, 2025 or 2030 the United States finds it­self fac­ing off against a China so rich that it has sur­passed all other na­tions in mil­i­tary tech­nol­ogy, yet a China that re­mains tren­chantly op­posed to West­ern val­ues?”

Mr. Fin­gle­ton, who has resided in Ja­pan for the past 20 years, has a ma­jor ad­van­tage over to­day’s China watch­ers. Un­like them, he is in­ti­mately familiar with the suc­cess­ful eco­nomic poli­cies pi­o­neered decades ago by the Ja­panese and now be­ing clearly copied by the Chi­nese. As he writes, “Top Chi­nese lead­ers have been in- spired by the now vo­lu­mi­nous ev­i­dence that, in mod­ern­ized form, au­thor­i­tar­ian Con­fu­cian­ism ef­fort­lessly out­per­forms West­ern cap­i­tal­ism.”

The East Asian eco­nomic model that China has adopted from Ja­pan, it turns out, can only be im­ple­mented by a strong gov­ern­ment hand. How else, he asks, could China have erected and main­tained a labyrinthine sys­tem of trade bar­ri­ers, ar­ti­fi­cially un­der­val­ued its cur­rency, driven up its sav­ings rate to un­prece­dented lev­els, de­vel­oped so-called “pil­lar” in­dus­tries, and put sys­tem­atic pres­sure on for­eign com­pa­nies to trans­fer their most ad­vanced pro­duc­tion tech­nolo­gies to China?

Those who be­lieve that China can­not be both rich and au­thor­i­tar­ian thus have it ex­actly back­wards. The New China is get­ting rich pre­cisely be­cause it is au­thor­i­tar­ian. Why should China’s lead­ers give up a good thing, es­pe­cially when it means giv­ing up their power — and pos­si­bly their heads — in the bar­gain?

Since China, like other prac­ti­tion­ers of the East Asian eco­nomic model, is ob­vi­ously eat­ing our lunch in trade terms, why aren’t its preda­tory eco­nomic poli­cies more widely known? In ad­di­tion to the eco­nomic ig­no­rance of China watch­ers, Mr. Fin­gle­ton scores “a re­mark­able pol­icy of ob­fus­ca­tion — and some­times out­right de­cep­tion — by East Asian lead­ers . . . [and their] ap­ti­tude for Potemkin vil­lage-style dra­mat­ics.

I think here of the de­struc­tion der­bies that Bei­jing or­ga­nizes from time to time to show its “com­mit­ment” to en­forc­ing in­tel­lec­tual prop­erty rights. Poor street ven­dors will have their pi­rated DVDs seized and, when the pile of cas­settes is im­pres­sive enough, a bull­dozer will pul­ver­ize it be­fore the as­sem­bled for­eign press. The story goes out over the wires that China is fi­nally get­ting se­ri­ous about en- forc­ing agree­ments first inked over two decades ago. Mean­while, the well-con­nected fac­to­ries that made the de­stroyed DVDs some­how es­cape of­fi­cial scru­tiny, con­tin­u­ing to churn out mil­lions of copies of movies on which MGM and Dis­ney share­hold­ers will never see a penny.

If there is any one se­cret to China’s su­per­growth, it is that China socks away nearly half of its GDP each year, money that can then be rein­vested in in­fra­struc­ture and new pro­duc­tion fa­cil­i­ties. This is not only the world’s high­est sav­ings rate, it is the high­est sav­ings rate that any na­tion has ever achieved since records started be­ing kept. And it is, Mr. Fin­gle­ton con­vinc­ingly ar­gues, a di­rect re­sult of the re­lent­less sup­pres­sion of con­sump­tion by Bei­jing.

In the West, the sav­ings rate is de­ter­mined by mil­lions of freely made de­ci­sions by in­di­vid­ual savers. Not so in China, Mr. Fin­gle­ton ar­gues, where the gov­ern­ment has im­posed “a panoply of con­stric­tions on con­sump­tion,” from trade bar­ri­ers and anti-con­sumer land poli­cies, to travel re­stric­tions and a ban on credit cards.

“While most of th­ese seem rel­a­tively in­signif­i­cant, in the ag­gre­gate they con­sti­tute a tight tourni- quet.” As a re­sult of th­ese and other au­thor­i­tar­ian mea­sures, China’s “so­cial­ist mar­ket econ­omy” con­tin­ues to grow at nearly 10 per­cent a year, while Amer­ica’s trade deficit con­tin­ues to widen, and its man­u­fac­tur­ing sec­tor con­tin­ues to be hol­lowed out.

There is much more to Mr. Fin­gle­ton’s rich ac­count, from the ways China keeps its mar­kets closed to the sys­tem’s par­a­sit­i­cal approach to tech­nol­ogy. He makes a cred­i­ble case that, at least in eco­nomic terms, the Con­fu­cian au­thor­i­tar­ian val­ues by which China is ruled “are not only fun­da­men­tally in­com­pat­i­ble with those of the West but, in head-to- head com­pe­ti­tion, prove strik­ingly more ro­bust.”

What­ever one thinks about Mr. Fin­gle­ton’s the­sis — and it is hard to ar­gue with 25 years of nearly dou­ble digit eco­nomic growth while the U.S. is mired in re­ces­sion — it is clear that Bei­jing and Wash­ing­ton are headed for con­fronta­tion. Wash­ing­ton’s de­sire to “change China” into a coun­try that re­spects hu­man rights and is a re­spon­si­ble stake­holder in the global com­mu­nity, he notes, is more than matched by Bei­jing’s de­ter­mi­na­tion to main­tain a so­cial­ist mar­ket econ­omy and au­thor­i­tar­ian con­trols.

I would add that lead­ing Chi­nese strate­gists are so con­fi­dent in the su­pe­ri­or­ity of their au­thor­i­tar­ian sys­tem that they as­sert that it is not China but the United States that will change in years to come, “tran­si­tion[ing] away from cap­i­tal­ism . . . to­ward some type of ‘so­cial­ist mar­ket econ­omy.’” At some point, they be­lieve, the U.S. gov­ern­ment will sim­ply have to in­ter­vene to reg­u­late trade and the mar­ket­place to stop the on­go­ing hem­or­rhage of cap­i­tal and tech­nol­ogy to China.

To coun­ter­bal­ance Bei­jing’s preda­tory trade poli­cies, Mr. Fin­gle­ton en­dorses mov­ing to a Value Added Tax to level the ex­port-im­port play­ing field, or even adopt­ing War­ren Buf­fett’s sug­ges­tion of a sys­tem of pub­licly auc­tioned im­port li­censes, which would force ex­ports and im­ports into bal­ance.

For the mo­ment, how­ever, the on­go­ing con­test of val­ues and in­sti­tu­tions is in­her­ently un­equal. Pace Fin­gle­ton, “[i]t is as if an Amer­i­can box­ing cham­pion chal­lenged a Chi­nese kung-fu mas­ter. Con­fi­dent that the world is con­verg­ing to West­ern val­ues, the Amer­i­can as­sumes his Chi­nese ad­ver­sary will fight by Queens­berry rules. The kung-fu mas­ter, how­ever, sees noth­ing wrong with kung-fu rules. Par­tic­u­larly as they give him an un­beat­able ad­van­tage.”

Ac­tu­ally the fight is play­ing out far worse than this, metaphor­i­cally speak­ing. For the kung-fu fighter pub­licly agreed to fight by Queens­bury rules be­fore the match, and signed a treaty to this ef­fect. Then, in the very first round, he caught the boxer off guard and kicked him in the groin. Fend­ing off a flurry of “il­le­gal” blows and kicks, the boxer some­how man­aged to sur­vive un­til the end of the round, re­gain­ing some of his strength af­ter the bell. The kung-fu mas­ter was con­trite as the next round be­gins, as­sur­ing the now bat­tered boxer that he is very sorry for vi­o­lat­ing the rules and will abide by them from now on — right be­fore kick­ing him in the groin again. And so it goes, round af­ter round.

The ref­eree should stop the fight, you say. Don’t count on it. The ref­eree was bribed by the kung fu mas­ter be­fore the fight.

Steven W. Mosher is pres­i­dent of the Pop­u­la­tion Re­search In­sti­tute and the au­thor of “Hege­mon: China’s Plan to Dom­i­nate Asia.”

Li­nas Garsys / The Wash­ing­ton Times

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