Chinese calling themselves communists….Latinos calling themselves catholics

Diego on September 12, 2007  ·  Log in to Reply

Hi Martin, I am an Argentinean living in Australia and I regularly read your blog as your opinions are very interesting but this time I had the urge to tell you that you surpassed all expectations and wrote a great, realistic articule about China. I can see a lot of that is already being “exported” from China to the world as here the Chinese population is about 700.000 as their culture and way of living and thinking is notorious and exactly as you mentioned. I also like the way you presented the idea in the openning paragraph…I couldn’t stop reading after that. Well done and thanks for sharing your thougths! Diego

Rebeca on September 12, 2007  ·  Log in to Reply

Martin,

You agree point by point with all the Chinese I know! But neither of them could explain it so clear and simple.

Henrique Valle on September 15, 2007  ·  Log in to Reply

Hi, a friend of mine (Francesco Cardi), forwarded me your blog post.
I am from Brazil and have lived in China for the past 5 years, so I hope I can contribute a bit to this interesting discussion.

Chinese calling themselves communists….Latinos calling themselves catholics

China calling itself Communist is like Latin countries calling themselves Catholic. The Communist Chinese seem to like money as much as the Catholic Latinos like sex and yet both have “ideologies” whose main principles are based around repression of what those cultures like the most. Maybe it is unsuccessfully trying to fight these “excessive” desires that makes these cultures come up with ideologies that are so far from their own reality of life. You are as unlikely to find a Chinese who believes in sharing his wealth as you are to find a Brazilian who practices abstinence. But there you go.

That’s very true. China still calls itself communist even though Communism unnoficially ended when Deng Xiaoping proclaimed “Being rich is glorious”. The propaganda machine was then setup to celebrate and glorify success cases of China’s early industrialization. To tell you the truth, this conceptual discussion hardly matters and you dont see people in the street debating ideology. How you call the system hardly matters, what it DOES is what it is really important.

Chinese extremely high GDP growth rates are as unrealistic as those of my native Argentina during the 90s. Argentina was growing at 9% per year in the 90s because it was borrowing enormous amounts of money that then it failed to pay leading to the largest default in human history ($220 bn). China´s growth partly comes from destroying both its own country and the planet as a whole. China is borrowing against its own future. This morning when I left Beijing it was another “sunny day” but you could not see beyond 400 meters because of a perennial pollution cloud that is always on top of the city. If the externalities of Chinese growth were counted in their measures of GDP Chinese growth would be significantly lower. Don´t expect athletes to break any records during the Olympics except maybe Chinese ones who are used to the pollution.

I am a bit embarrassed to say I know less about Argentina, our neighbours, than China. But I will say this: the model of development of the two countries is completely different. Argentina’s currency was artificially appreciated to favour imports and access to technology, while China was executing a 180 degrees opposite strategy of grabbing as much foreign currency it could through exports. China didnt borrow a penny from anyone, and in fact they today are the biggest creditors of the United States, holding hundreds of billions of dollars in American bonds today, PLUS completely obliterating any chance of speculative capital intervening in its currency strategy, which makes a lot of sense in the long run (if, and only if, you have a complete and detailed plan of where you want your economy to go, which China, differenly from your country or mine, have).

I can understand that the Chinese Communist Party argues that if China introduced democracy now the result would be chaos. Until my recent trips to China I thought differently but now I believe that the “Communist” are right. China is a nation of mostly one child families who raised a generation that seems to be extremely selfish and unruly. One of the simplest demonstration of this is watching traffic in Beijing. What stands out the most about driving in China is how every driver seems to believe that the road is a competition track to get ahead of others and if that includes running over pedestrians or the few cyclists left in China so be it. To me the roads of China are an image of what would happen if the country adopted democracy now. It would probably desintegrate into a lot of small and corrupt regional parties who would make China worse off than now. Everyone would try to gain advantage over anyone else, it would be like capitalism without the basic welfare state and anti trust rules that are needed to prevent capitalism from becoming the “winner takes all game” that destroys society.

You make interesting points. The approach of China towards democracy is called “Incremental Democracy”. It takes time to implement a full democracy. Democracy without the proper supporting institutions (legal system, free press) will be hard to thrive in any country, and examples of such, like Brazil, prove that you need more than slogans and faces painted with the countries colors shouting on the street to have a working democracy. I thoroughly and unreservedly agree with your point that democracy in China today would be chaos.

As for the “selfishness”, this is a cultural trait dating from the begining of last millenia. It’s a very strong trait of Confucianism.
In my years here, the best resource to understand this intriguing facet of the Chinese society was a book written by a famous Chinese scholar name Lin Yu Tang. The name of the book is My Country, My People. It is a MUST READ for anyone trying to understand Chinese culture (I can ship a copy to you if you are interested, it’s still in my to-do list to scan this book in digital format). One of the best quotations of the entire book, which completely explained to me the same attitudes you mention on the road goes by something like this: “in China family is man’s castle, where friends and relatives are protected with walls inside, and where everything outside is loot, to be pillaged”. The social unity of this country is the family first of all. As you might imagine, this is also a reason why legal systems, nepotism and corruption are understood in a different way here (there is a famous fable of Confucius praising a young man that, faced between handing his thieving father to authorities and keeping the honour of the family intact chose the later).

While I understand that the Chinese Communist Party wants to preserve itself in power and I believe that this is necessary for a few more decades I think that some of their actions are absurd and counterproductive, especially their control of the media, the press and the internet. In my view the biggest hope for the Communist Party has to preserve itself in power is to convince its citizens that it deserves to stay in power rather than just lying their way into it. If “communists” were able to convince me , a pro democracy visitor, that they should stay in power (Iraq is a good proof that democracy is not the best system for everyone) I don´t see how they can´t convince their own new middle classes that this is the case. Instead if they keep controlling the internet, lying and so on any spark will start the next Tianmen.

All governments lie, to different degrees, and that’s the nature of men: perpetuate themselves in power by any means.

I am shocked that the Chinese Government chose a development model based on big cars as cars are made mostly by foreign companies using foreign raw materials and powered by foreign oil. Cars are destroying China. China has now only one car per 20 people. USA almost has one car per person. China just can´t afford to achieve American levels of car ownership as it cannot afford to pay for all the imported oil, ore, roads and other materials needed to make and maintain cars. China had one great thing going for it and that was bicycles. What happened? Why is not China pushing for electricity based transportation systems baffles me. China could lead the world in non oil based transportation but it does not. Moreover relying on oil ultimately means for China relying on the United States to protect China as USA is the only global power with the resources to act militarily in the oil producing regions of the world.

I dont think they “chose” cars at all. Licencing a plate in Shanghai costs more than 5,000usd alone. Very FEW people can afford cars. Problem is there are too many people in China. As for transportation systems, there are dozens of lines of subway being dug throughout the country, so I’d say that the government is doing exactly what it should. And I disagree that the US is the sole power to assure oil resources. Central Asian republics, Sudan, and a number of other sources are Pro-China. Darfur is a conflict of one power (USA) trying to control resources going today to another power (China). Humanitarian, human right abuses? That’s never been a priority for anyone. In fact, Africa, neglected by the Western World and left to itself is, thanks to China’s cheap products in exchange for raw materials, is developing a bit faster now. It’s good for both Africa and China, and definitely not so good to the West (by losing markets that they neglected).

One of the main reasons why every day is a cloudy day in formerly sunny Beijing is coal. And what is worse is that China has a lot of coal. In its rush to grow China is creating many environmental dumps as what the Chinese do is instead of mining coal they blast it off the ground. What are the other choices? In my view they are, widespread adoption of solar energy including home based solar heaters of the kind that are very common around the Mediterranean, widespread adoption of wind power in the right areas as Spain and Germany have done, a great deal of investment in nuclear plants who in spite of all their problems as France has shown they are the only ones who can provide the massive levels of electricity that China needs for homes, businessess and should also need for transportation.

I might be off here but isnt the price per megawatt of solar energy is several times more expensive than the price per megawatt of coal generated energy? China is a poor country and before it can appreciate the importance of the environment, it will need to feed its population. Is this an excuse? No, but this is a factor that is seldom included in any analysis. Also, regarding growth, what is also misunderstood is that with the WTO a very important part of Chinese economy (agriculture) is under pressure. Prices of staple foods abroad are cheaper than the not so efficient local agriculture and as such hundreds of millions of people might might suddenly be out of their jobs. Currency appreciation plays a role here too I suspect. So the challenge of China is industrializing fast enough so that these hordes of people can shift from agriculture to light manufacturing. There are several infrastructure projects related to that, moving industrialization to the inner provinces. If the economy doesnt grow fast enough (perhaps at whatever cost), the problem will be much, much bigger than if it grows slowly and puts hundreds of millions of people out of their job. So, the question is much more complex than choosing between devoping respecting the environment or not.

Another issue that China has to deal with is the dislike of the Chinese for Chinese brands. As nationalistic as the Chinese may look to some to me they seem insecure about their own identity and in love with foreign brands to a level that I have not seen in the other successful economies of Asia. The Japanese love their own brands, the Koreans love their own brands, the Chinese love all brands but theirs. To the Chinese, consuming their own brands seems to be a sign of failure. As soon as they have some money Chinese consume European, Korena, Japanese and a few American brands. But the paradox here is that these are the same Chinese who make the products for the foreign brands. Look at where Sony products are made and you will see what I am talking about. They are mostly made in China. The Chinese strong dislike for the Japanese seems to end…. when they go shopping. Personally I think it´s great to like all brands. But to particularly dislike your own brands means that your country is destined to supply commodity labor for foreign companies so they can profit selling your products again to you at high profit. This must change for China to develop. The Chinese have to learn to trust and love their neighbor´s labor.

That’s very well observed, however we need to understand that China’s strenght so far was not in developing brands, but in producing cheap products. Perhaps that’s impacting them in a massive scale when the consumers have an actual choice. In fact household brands such as Haier are making excellent products for the local market and even their customer service (something that years ago didnt even exist) is to some extent a model. Developing brands takes ages, and China just started. In fact, you might recall that Japan and Korea launched their brands exactly at the Olympic Games in their countries. Samsung was unheard of before the Olympics, and look at what they became (sure, there are many other factors at play here, but I hope you get what I mean).

So my conclusion after spending a week in China is that China has made tremendous progress since my first visit to that country in 1988, that in spite of having a one party system it is a much freer country now that in the times of Mao and it is making a lot of progress but that a lot of this progress is in the wrong direction. China is a house that´s being built with such structural flaws that at some point it may need to be torn down and rebuilt again at great economic and social costs. Instead if the Chinese Communist party took advantage of its “dirigisme” to steer the nation away from cars, coal, and deception it could do a great deal of good for the future of the Chinese.

Your house metaphor is spot on, and trust me, there is not a single day living here that I dont ask myself when will the “tore down” start.

Great post.

Henrique Valle on September 18, 2007  ·  Log in to Reply

In response to Rodrigo:

I will start by your conclusion:

“We are learning that the western industrial development model is not viable for China, simply because there are not enough resources for it to work.”

And then you said:

“I think these facts (below) can add to the argument that china is not making use of their “dirigism” and avoiding a dead end… economics studys what happens with scarce resources.. i think they are clearly getting too scarce for the development of china.. they have to do everything much more efficient.”

Of course the Western model is not viable, but I dont know where was it said that this is the model that China chose. It isnt.

I dont think that China’s objective was ever to consume as much as America does. Europe itself doesnt consume as much as the US, so why and more importantly how would China ever achieve that?

In fact just to give you an idea Chinese culture does not promote regular meat/beef eating and I dont think that will ever change. We are equating development to americanization, but that is simply NOT the case. Not everybody wants to be America and China certainly doesnt and cant.

Of course China’s development will put pressure on resources worldwide, and the deflation it caused through manufacturing will be offset by the increase in raw materials cost (we are already seeing that for many years in fact, look at the iron ore and copper prices).

As for transportation: well I take the subway every day in Shanghai and I see the development of new lines both here and in many other cities in the eastern seaboard. The Beijing subway is expanding at a ridiculous fast rate as well and billions are being poured in train infrastructure as well (fast trains from Beijing to Shanghai just started), integrating provinces and decreasing costs enourmously. Not to mention electric bikes which are prevalent.

Development of roads is crucial to allow the folks at the countryside to start getting a bigger share of the cake (a crucial self-preservation measure by the CCP). Think about it: 20% of China’s GDP is tied in logistical costs while the average in Europe is 8% and 5% in the US. Think about how much more efficient the economy could be, leading to less waste and hence lower inflationary pressures.

If you visit the countryside in China, where still 80% of the country lives, you will realize that the idea that China is aiming for 1 or 2 cars per household doesnt hold any water whatsoever. Not even in the big cities. A license plate alone makes a car purchasable by hardly more than 1% of the population and you and I won’t be alive to see more than 10% of the population being able to purchase a car.

This calculation of beef and oil is completely, thoroughly wrong and guiding our thoughts by it can be quite a mistake as it does not reflect the guiding principles of China’s development.

In fact what it creates is a little alarmism of what China’s development can cause to the status quo, and that is quite an egotistical position in my opinion. This quite shallow approach also ignores the fact that China’s development will bring hundreds of millions of consumers eager to spend their earned cash in perhaps products from abroad, which is a god send to stagnant companies elsewhere in the world. That’s how trade works.

Mostly everybody wins with China’s economic growth. Those that will lose something are those who did not do their homework, and as such cant complain of being left behind. That means mostly your country and mine.

We knew it was coming, we knew China was opening and many industries chose the protectionist way to bar China in their little home markets instead of thinking and innovating and finding their niche.

The same way: the developed West neglected Africa as long as it could. Now for the Africans there IS someone willing to go there and build infrastructure for affordable prices, and that is another thing China is doing for its own benefit that is a threat to the status quo.

To sum it up: thinking in a win-lose mindframe is a passport for future conflict, where eventualy everybody will lose. China has a lot to prove in terms of developing responsibly, but its goal of seeking a better future for itself must be respected.