The powerful and precarious rise of China

The rise of China is one of the most important historical events, maybe the most important, of our time.

Jonathan Fenby, an experienced reporter and former editor of the South China Morning Post, gave a good account of China’s rise in his 2012 book, TIGER HEAD, SNAKE TAILS: China Today, How It Got There and Where It is Heading.

I finished reading Fenby’s book a week or so ago.  It reminded me of histories of the United States in the late 19th century, the era of the so-called robber barons.

Like the USA then, China has sweatshops, child labor, pollution, slums, suppression of minorities and rampant bribery and corruption.  But also like the USA then, China is full of energy and optimism, growing in wealth and power, and a land of opportunity for its entrepreneurs.

fenby.tiger.headWhen I was a boy, most Americans thought China was eternally doomed to upheavals, poverty and famine.

From the Opium Wars to the death of Mao Zedong, that was China’s fate.  But during the past 40 years, the Chinese leaders have made their country one of the world’s great economic powers, brought population growth under control and provided a basic subsistence to all and prosperity to many.

From 1978 to 2012, China’s economy grew 17-fold.  China’s economy is the second-largest in the world, although still far smaller than the United States.  It has a positive balance of trade.   It is the largest trading partner of Australia, the largest trading partner of Africa and a growing presence in Latin America.

Chinese companies compete and expand worldwide, while China’s own territory attracts industry from the USA, Europe and Japan.

The Chinese challenge, however, is much different from the Japanese challenge of the 1980s.  The Japanese challenge was that Japanese companies made products of a higher quality than U.S.-based companies.  This resulted in a competition for quality that was good for both the United States and Japan.

This is a different from the Chinese challenge of making products more cheaply than U.S.-based companies.  This results in a race to the bottom which is bad for most countries.

While many Chinese companies make world-class products, others cut corners.  Chinese companies are noted for cheap imitations of foreign brand name products.  Violation of copyright and theft of patents are common.  Fenby reported that 80 percent of counterfeit goods seized in the USA and Europe originate in China.

Chinese consumers complain of defective and contaminated products.  The Chinese elite, just as in the Communist days, escape all this.  They buy in special stores and even order produce from designated organic farms so as not to have to suffer the risks to health that ordinary Chinese citizens do.

The worst problem, according to Fenby, is lack of trust.  Government condemns private property without compensation for the benefit of wealthy developers, and the victims are not only ignored, but beaten up or arrested if they complain.  The laws give no protection.  Company reports and government statistics are suspect.  Foreign investors never know where they stand, which may explain the current pullback from China of some U.S. manufacturers.

Fenby reported great but unorganized unrest in China, ranging from spontaneous strikes in Chinese factories to the odd magical mystical cult of Falun Gong.

The Chinese rulers, remembering the upheavals of the Cultural Revolution and before, feel threatened by any form of popular protest.  They clamp down on it hard—hard, that is, by American standards, not by the brutal standards of Mao Zedong and Chiang Kaishek.

The discontent is a hopeful sign of progress, just as the upheavals and even the violence in the United States during the civil rights era were a sign of progress.  People became rebellious when their hopes are disappointed, not when things seem hopeless.

They didn’t rebel against Mao, despite the purges and famine under his regime.  But since Deng Xiaopeng, they see the possibility of more freedom and better government, but just out of reach.

Maybe China will come to dominate the world, as some Americans and Europeans fear.  China is certainly a power to be reckoned with.  In the old days, we Americans and Europeans feared that the Chinese would over-run less-populated lands.  Instead they are buying up agricultural land and importing food and other natural resources.

It is always a mistake to take the trends of the recent past and extrapolate them into the indefinite future.  China still has a way to go before it catches up with the USA.  China’s economic growth may become stuck, as Japan’s is, but I don’t think that either the Chinese or the Japanese will revert to where they were 50 or 100 years ago.

The problems of the United States in regard to China—off-shoring of U.S. manufacturing, an unfavorable balance of trade—will not be solved by trying to stifle the growth of China.  The solution to American problems lies within the United States.

LINKS

Eight Questions: Jonathan Fenby, Tiger Head, Snake Tails, an interview in the Wall Street Journal.

Tiger Head, Snake Tails, a review by Julia Lovell for The Guardian.

Tiger Head, Snake Tails, a review for Open Democracy.

China’s economic empire by Christophe Ventura for Le Monde diplomatique, about Chinese trade and investment in Latin America.

‘Made in China’ Now Being Made in Africa by Brandon Hong for The Daily Beast.

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