Ignore China's rise - arrogance and ostrich mentality - the need to understand China

Personally, I sense the fear and hypocrisy are the weighing down heavily on many China watchers.   In fact, many Asian critics do not know better than their economic competitors. Despite having a globalised education and affluent lifestyle (myself included), the high speed at which Third world nationals (not confined to Chinese) are acquiring knowledge and skills could frighten many laid back workers in the developed world.

http://www.guardian.co.uk/world/2012/mar/25/china-rise-ignorance

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Our ascendancy of the past two centuries – first Europe and then the US – has bred a western-centric mentality: the west is the fount of all wisdom. We think of ourselves as open-minded but our sense of superiority has closed our minds. We never entertained the idea that China could surpass the US. Backward, lacking democracy, bereft of Enlightenment principles,the product of a very different history, it was not western. So how could it? We were the universal model that everyone else had to embrace to succeed. The only form of modernisation that worked was westernisation. China would inevitably fail: the project was unsustainable. By insisting on seeing China through a western prism, we refused to understand China in its own terms. Our arrogance bred ignorance: we were not even curious.

China is, indeed, in so many ways, not like the west. It is not even primarily a nation state but a civilisation state. Whereas the west has primarily been shaped by its experience of nation, China has been moulded by its sense of civilisation. This helps to explain why the Chinese place such a huge emphasis on unity and stability, their reverence for the state and their embrace of ideas such as "one country, two systems" in Hong Kong. Similarly, unlike Europe, China never sought to acquire overseas colonies but established a tribute system in east Asia. The Chinese state bears a fundamentally different relationship to society compared with any western state. The state is seen as an intimate, as a member of the family, rather than, as in western discourse, a problem, a threat, or even the enemy. For the Chinese, the state is the embodiment of its civilisation: as such, it could not be more important, it lies at the heart of the Chinese pysche.

It is impossible to understand or make sense of China through a western prism. As China becomes a great power and, over the next two decades, steadily usurps America as the dominant global power, we will no longer have any alternative but to abandon our western parochialism and seek to understand China on its own terms. But the shift in mindset that faces us is colossal.

What does it mean to be a civilisation state? What was the tributary system and how will it shape China's future behaviour? Why is China's idea and experience of race so different from ours? Just as every non-western country was compelled during the 19th and 20th centuries to understand the west in its own terms, it is now our turn to make sense of a country so different from our own.

It will be a Herculean task: we always look west, hardly ever east. When Bo Xilai, a leading contender for one of China's top positions, was dismissed more than a week ago, it received little attention in our media even though it was the most important event of its kind for more than two decades. Compare, if you will, the attention, devoted by the British media – notably the BBC and quality newspapers – to the Republican primaries with that given to China in the build-up to the Communist party congress in November, when President Hu Jintao and Premier Wen Jiabao will be replaced by Xi Jinping and Li Keqiang. The latter is of far greater consequence yet the coverage is paltry in comparison.

We have an enormous China deficit that urgently needs addressing. It is replicated throughout our culture; there has been much talk of promoting Mandarin in our schools and yet, in both the state and private sectors, pitifully few offer it as a serious option. Our economy exhibits the same morbid symptoms: Britain exports more to Ireland than it does to China, India, Russia and Brazil combined. Unless we address these questions, we face the prospect of being sidelined by history.

China's remarkable economic growth started in 1978, but as its economy was then only a 20th the size of America's, its global impact was minuscule. By the turn of the century, however, after more than two decades of double-digit growth, the Chinese economy was more like a quarter of the size of America's, with the consequence that its global effect was of an entirely different order. The story, moreover, was no longer simply about China because by then its rise had begun to transform the world. Only with the financial crisis in 2008, however, did the west finally begin to wake up to the implications.

Although countless commentators speak lazily of the global financial crisis, this is a misnomer. A visit to Beijing will soon dispel the illusion. The place is brimming with energy, elan, confidence and brio. While the west is mired in austerity and stagnation, with a psychology to match, China is riding an extraordinary wave of optimism. In 2010, according to a Pew poll, 91% of Chinese felt good about their country's economy compared with 24% in the US and 20% in Britain. While most western economies are still smaller than they were before 2008, the Chinese economy has been growing in the region of 9-10% a year. That is why it will overtake the US almost a decade earlier than previously predicted.

2008 ushered in a new era, the beginning of a Chinese world economic order. Until recently the US largely shaped globalisation but now China is increasingly assuming that role. Its most dramatic expression is trade. China will shortly become the world's largest trading nation. It imports huge amounts of natural resources and exports a massive volume of manufactured goods: in 2011, it overtook the US to become the world's largest producer of manufactured goods, a position America had previously held for 110 years. In 1990, there was hardly a country in the world for which China was its chief trading partner. By 2000, there were a few, but nearly all were in east Asia. By 2010 the list stretched around the world, including Japan, South Africa, Australia, Chile, Brazil, India, Pakistan, the US and Egypt. Imagine how long the list will be in 2020.

China is rapidly emerging as a great financial power. In 2009 and 2010 the China Development Bank and the China Exim Bank – which I would guess the great majority of Observer readers have never even heard of – lent more to the developing world than the World Bank. Just as the Rothschilds funded much of Europe's industrialisation in the 19th century, so these two banks are now doing the same on a far larger canvas, namely the entire developing world, comprising 85% of the world's population. Meanwhile, in late 2008, China began making the renminbi, hitherto a currency that circulated only in China, available for the settlement of trade. The HSBC has predicted that by 2013-15 half of China's trade with the developing world (which constitutes more than half of China's total trade) will be paid for in renminbi. It is the first stage in the process by which the renminbi will replace the dollar as the world's dominant currency.

The centre of gravity of the global economy is remorselessly shifting from the developed to the developing world. China is the main player and the outcome will be the rapidly declining influence of the developed world and the reconstitution of all major global institutions, notably the International Monetary Fund and the World Bank, to reflect this.

Pause for a moment and think what it feels like to be in Beijing these days. The place is on fire. It is alive with argument and debate. A country growing at 10% a year is constantly throwing up huge and novel problems that require response and solution. It is a far cry from Britain mired in stagnation, where debate rarely ever breaks new ground and for the most part is backdated. In contrast, China is not only remaking itself with extraordinary speed, but is also remaking the world. Beijing resembles London in 1850 or Washington in 1950, but on an epic scale. It is the most interesting and stimulating city in the world.

I spent much of last autumn as a visiting professor at Tsinghua University in Beijing. My stay was a whirl of talks and discussions. Far from the western image of China being devoid of debate, Beijing is positively throbbing with it. And it is extraordinarily open-minded and open-ended. I was invited to give a lecture at the ministry of foreign affairs to around 100 young diplomats at which I suggested that a foreign policy based on Deng Xiaoping's principles was no longer appropriate: a new approach was required that reflected Chinese growing global interests while also drawing on its history. Far from being taken aback, those present entered into a vigorous discussion. These debates, furthermore, are infused with huge significance. As China becomes a great global power they will shape its future policies and priorities – and thereby the world.

One might think that in such times, and with such glittering prospects, China would be full of hubris, bordering even on arrogance. On the contrary, the opposite is the case. The Chinese are still deeply preoccupied with the colossal problems that confront a still poor and developing country of 1.3 billion people. Inequality has soared, sowing the seeds of growing resentment against the rich; land seizures, as events in Wukan recently demonstrated, provide a continuing threat to social stability; massive corruption is corroding the sense of justice and fairness. While possessed of the kind of inner confidence and experience that comes from being the heirs of a great civilisation, the Chinese have no illusions about where they have got to and the tasks that lie ahead.

In November, the Communist party will hold its 18th congress. It will elect a new leadership for the next 10 years during which time China will undergo profound change. Already, there is a major shift under way in economic priorities from low value-added production and massive exports towards higher-end production and domestic consumption. During the next decade we can expect important political reforms.

In Britain, meanwhile, China will continue to receive scant coverage. But, kicking and screaming, forever looking backwards to the age of the west, we will, nevertheless, be dragged into the age of China. Time waits for no country. Over the next decade, we will increasingly come under China's spell.

It is worth reminding ourselves that last October, when the future of the euro was in grave doubt, European leaders pleaded with China to extend a huge loan. Britain is also broke and needs Chinese money for its infrastructure projects. There will be a growing clamour to learn Mandarin. And, as yet hardly recognised, we will find ourselves coming under the growing influence of Chinese soft power, be it the influence of Chinese parenting or the country's stellar educational performance. China will irresistibly shape our future.

China 2030 : mistakes that World Bank would not want to be associated with

Would Chinese economic policy makers be naive to the extent of taking the advice of China 2030 Report written by pseudo economists whom the World Bank has disclaimed from?   


Chinese state companies have undergone transformation and authorities continue to tighten regulations to check aggressive and unprofitable investments.


The authors may better make use of their talents to provide prognosis and prescription for the economic ills inflicting US and Europe. 


China experienced phenomenal success by adopting socialism with capitalist characteristics. Perhaps US and Europe would benefit from capitalism with socialist elements to address chronic economic excesses, unemployment and social problems. 

Drop Deng's policy? WB's wrong therapy

By John Ross

China.org.cn, March 2, 2012

The World Bank's report China 2030 has, unsurprisingly, provoked major criticism and protest. I have read World Bank reports on China for more than 20 years and this is undoubtedly the worst. So glaring are its factual errors, and economic non-sequiturs, that it is difficult to believe it was intended as an objective analysis of China's economy. It appears to be driven by the political objective of supporting current US policies, embodied in proposals such as the Trans-Pacific Partnership.

Listing merely the factual errors in the report, of both commission and omission, as well as the elementary economic howlers, would take up more column inches than are available to me. So what follows is just a small selection, leaving space to consider the possible purpose of such a strange report.

The report has no serious factual analysis of the present stage of China's economic development. On the one hand it is behind the times and "pessimistic", saying China may become "the world's largest economy before 2030". This is extremely peculiar as, by the most elementary economic calculations, (the Economist magazine now even provides a ready reckoner!) China will become the world's largest economy before 2020.

On the other hand, the report greatly exaggerates the rate at which China will enter the highest form of value added production. As such, the report calls for various changes in China, and bases its calls on the rationale of "when a developing country reaches the technology frontier'. But China's economy, unfortunately, is not yet approaching the international technology frontier, except in specialized defense-related areas. Even when China's GDP equals that of the US, China's per capita GDP, a good measure of technology's spread across its economy, will be less than one quarter of the US's. Even making optimistic assumptions, China's per capita GDP will not equal the US's until around 2040, by which time China's economy would be more than four times the size of the US's! Put another way, China will not reach the technology frontier, in a generalized way, for around three decades, so this rationale can't be used to justify changes now.

The report appears to envisage China's development path differing from that of every other country on the planet. It claims that in China "the continued accumulation of capital… will inevitably contribute less to growth". But one of the most established trends of economic development, first outlined by Adam Smith and econometrically confirmed to the present day, is that capital's contribution to growth increases with development. Deng Xiaoping certainly argued that economic policy must have "Chinese characteristics", i.e. be adapted to China's specific conditions. However, he never argued that China was exempt from economic laws, which is what this report appears to envisage!

The report makes elementary economic mistakes, such as confusing the consequences of high export shares with trade surpluses. It argues: "If China's current export growth persists, its projected global market share could rise to 20 percent by 2030, which is almost double the peak of Japan's global market share in the mid-1980s when it faced fierce protectionist sentiments… China's current trajectory… could cause unmanageable trade frictions." But if China increases its import share at the same rate as exports, this would not create major trade frictions. Japan's problem was trade surpluses, not export share.

It is almost impossible to believe, given such elementary mistakes, that this report was intended as a serious objective analysis of China's economy. What, then, is its goal? , The report spells out its goal clearly enough in calling for China to abandon the policies launched by Deng Xiaoping which brought such success. It says: "Reforms that launched China on its current growth trajectory were inspired by Deng Xiaoping… China has reached another turning point in its development path when a second strategic, and no less fundamental, shift is called for."

What is this new "non-Dengite" economic policy? Deng Xiaoping's most famous economic statement was "it doesn't matter whether a cat is black or white provided it catches mice". Effectively, this means, in economic terms, that a company should not be judged by whether it is private or state owned but by how it performs. The proposed new economic policy overturns Deng's dictum by saying: "Reintroduce judging cats by color, promote the private sector cat."

The consequences of this are clearly seen in the report's financial proposals. During the international financial crisis, China was protected by its state-owned banking system. The US and European privately-owned banks simultaneously created the financial crisis and were flattened by it, throwing their economies into crisis. China, however, suffered no significant setback.

The reasons for the US and European banking crisis are well understood. Modern banks are necessarily very large, both in order to undertake international operations and because of the inherent risk of large investment projects. They are literally "too large to fail", as the failure of any large bank creates an unacceptable economic crisis. This theoretical point was rammed home by the devastating consequences of Lehman's collapse, following which no government will allow a large bank to fail.

But a situation in which the state is blocking the bankruptcy of a large bank, whose profits are being privately retained, creates disastrous risk. If large private banks are state guaranteed against crippling losses, but retain profits, they are incentivized to undertake potentially profitable but highly risky operations. The disastrous results of this scenario were seen during the financial crisis.

Extraordinarily, this report proposes that China abandon the financial system which brought it successfully through the financial crisis and instead adopt the one which led the US and Europe to disaster. This is the real significance of "privatization would be the best way to make SFIs [State Financial Institutions] more commercially oriented".

This ties in with US TransPacific Partnership pressure for the elimination of China's state-owned companies, which are seen as giving China a completive advantage over the US. The US, of course, does not possess such companies. If the US is worried about the competitive disadvantage created by not having state-owned companies, it should create some, not call for China to abandon its own.

The last World Bank report of this type was published in February 1991 and its Study of the Soviet Economy provided the basis for Russia's economic policies of the 1990s.

The result was that Russia suffered the greatest peacetime economic disaster to befall any country. GDP declined by more than half. Russian male life expectancy fell by four years and we saw the beginning of a population decline, which continues to this day. The USSR subsequently disintegrated, in what Vladimir Putin called the greatest geopolitical catastrophe of the 20th century. Russia has not recovered.

This type of economic program is therefore not simply a "theoretical" model. It has been thoroughly and demonstrably discredited on account of the catastrophes it has produced. Russia was ill advised enough to adopt this type of economic program. It is to be hoped, then, that China does not follow the same course.

http://www.china.org.cn/opinion/2012-03/02/content_24786018.htm

Bo Xilai - coup not on the cards?

Overzealous cadres do not have a good ending. That included the great leader Mao.

Bo Xilai who injected revolutionary ideology in the comfortable lives of prospering Chinese and undercurrents of criminal gang operations failed in his duty by entrusting the job to mafia buster Zhou Yongkang.

Hard pressed to find easy answers, the convenient way is to refer to socialism for guidance. It could cut both ways - either too hot or too cold.

The National Congress session closed on a mediocre note of self check and awareness. However, there was no big bang despite the removal of Bo Xilai, a princeling no less.

Talk of a coup are at best rumour mongering of free gossipers and speculators who are not in touch with Chinese political developments. Chinese leaders have learned from mistakes in history not to take reshuffle lightly. Do what you must for the overall good of the people and nation even if it meant hurting feelings.

On the receiving end, Bo is no softy nor a Lin Biao reincarnated. He has accepted his fate graciously. That will open up opportunities for future rehabilitation should he prove his worth. Confronting the leaders, making a fuss and whipping up a scene are not going to do Chinese or himself any good.

http://www.latimes.com/news/nationworld/world/la-fg-china-coup-rumors-20120323,0,6191555.story

Australia's Last Chance with Bob Carr? China Unfazed by Conservative Hypocratic Rudd Doctrine

Time is on China's side. China would not bet on the rise and fall of leaders in its neighbouring countries. Even during tough times of nation building and isolation, China was able to stand its own. With more economic clout, China could afford to play cool and focus on practical matters. Over time, China could prove to its neighbours and other powers that it does not harbour any ambitious and expansionist intentions which have long been associated with imperialism, the root of evil that has overstretched brought many great nations down. 


Bob Carr's appointment as Australia's new Foreign Minister may be a welcome change. Nevertheless, the precise nature and course of bilateral relations remain to be seen. 


The premature euphoria of Kevin Rudd's appointment has melted away quickly. The Mandarin speaking scholar who researched on the crossroads and challenges in Chinese history during the Tiananmen protests was neither a friend nor a diplomat when dealing with China. By now, most Chinese in the mainland and overseas in Southeast Asia and Australia realise that Rudd was no ally as claimed from the official White Paper statement to his public humiliation of China's domestic policies and a peek into his inner thoughts of pro-American grandstanding. 


How international partners play its game does not matter. China's priority is to sustain and share its wealth with the population. This may also mean increasing domestic consumption and contracting production and exports. These would inevitably raise cost of essential products and hurt the middle class and poorer people in developed countries. 

http://www.theaustralian.com.au/news/world/bob-carrs-chance-to-rally-china-interest/story-e6frg6ux-1226306548752

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The resignation of Kevin Rudd as foreign minister was a welcome development for Beijing. One clear impression based on a week of meetings in Beijing with Chinese officials and researchers as well as Australian China-based diplomats is that the "Rudd factor" has been an underlying tension in China-Australia ties for four years. With Rudd no longer in government, Chinese interlocutors were willing to elaborate on their dislike for the first Chinese-speaking Western leader.

Interestingly, it was not the 2009 Defence White paper nor the (in)famous Beijing University speech by Rudd in 2008 that appears to have caused the greatest irritation among Chinese foreign policy specialists. Rather, it was Rudd's uncomplimentary remark about Chinese ("rat f . . kers") at the Copenhagen Climate Summit in addition to his comments to Hillary Clinton about being prepared to use force against China, disclosed by WikiLeaks.

So the Darwin decision has put Australia on the radar screen of China's foreign policy establishment. Some might ask, for better or for worse, but in the words of one Australian official, it is better to be noticed for the wrong reasons than to be "just a hole in the ground". Australia struggles to get the attention of a rising power, which in its foreign policy thinking is absorbed by its relations with its neighbours and other major powers, especially the US. 


Herein lies a real and substantive opportunity for Foreign Minister Carr, an unknown entity to Beijing. Carr should seek a meeting with his Chinese counterpart as soon as possible. Australia needs more meaningful strategic engagement with China. Raising the level of regularly scheduled, recurring summit meetings to the deputy prime minister or foreign minister level would establish a high-level mechanism, which is not susceptible to the inevitable ups and downs in relationships.


It would also offer the possibility to deepen discussions between Canberra and Beijing from merely bilateral issues to broadly regional issues. It is in Australia's interests to be perceived by China not only as a trading partner, but also as an important and useful regional player, with which regional problems can jointly be addressed.

China's Rise : Indonesia reassures Australia over security concerns

The present Indonesian leadership is more enlightened than some of the former post-Suharto governments that are "nationalistic" and discriminatory towards its own population. Apart from recovery from chaotic state and economic doldrums, Indonesia appears to generated a sophisticated vision and strategy in a more complex international environment.

In this respect, Indonesia is far more advanced and open-minded than the Australian government in seizing opportunities without allowing prejudices to colour its foreign policies. Ignorance breeds fear and contempt for another who has miraculously survived and prospered. The US and Australia are constrained when it chooses to transplant their values, colonial past and experience from the Cold War to fit a different world order.

President Susilo Bambang Yudhoyono hopes to steer an equal distance between China and US. He sees increase US military presence in the Asia-Pacific region at Australia's encouragement would only increase tensions.  The Indonesian leader obviously has a good understanding of Chinese intentions.

Indonesia now recognises that using force will not settle disputes and favours negotiations to settle conflicts and disputes in the region.  Nevertheless, in the longer term, Indonesia seeks to play a bigger role in Southeast Asia as Malaysia declines economically and exploits religion and racism for political ends.

Base on past history, culture, economics and pragmatism, the Chinese are careful not to stretch its resources, a stronger China will not take on the policeman role which US and NATO countries have been very enthusiastic. Chinese governments have always been contented to disseminate Chinese culture and language but are reluctant to commit or expand militarily beyond its territorial borders.

http://www.canberratimes.com.au/opinion/lets-join-neighbour-to-ensure-ongoing-prosperity-20120315-1v80k.html?skin=text-only

While the Australian foreign affairs and trade department is non-chalant in its written declaration, actions speak louder than words as the government moves towards closer strategic partnership with the US.

http://www.dfat.gov.au/publications/chinas_rise/summary.html

http://www.google.com/hostednews/afp/article/ALeqM5ilIfaXpRxbrIVQ0UO58sc2QkQw6Q?docId=CNG.bf557d272421957daefbee9ec684b820.201

Milestone National Congress : China's Economic and Political Reforms - Legacy of PM Wen Jiabao

This is a momentous event. China has moved up another notch in the good governance and democratic development ladder. If China does it right, it will grow into a powerful nation with its special economic and political model. This is already evident with many African countries casting aside the old school development prescription. If the new generation of Chinese leaders are not careful and let success swell their heads, China will fall and falter, and could have negative impact on the rest of the world. 


The dismissal and demotion of Bo Xilai shows that extremism, couched in populism and charisma, has not place in modern China. It also shows that princelings and connections are not immune from penalties he, his associates and subordinates commit errors that caused suffering to the people. Those who insist that nothing could be done to eradicate corruption, nepotism and cronyism must ponder again and look on the bright side. 


http://www.bloomberg.com/news/2012-03-15/bo-xilai-axed-as-chongqing-head-after-china-government-probe-1-.html 


It is fine to revisit revolutionary principles, but overzealousness and ideological radicalisation is likely to shift China's course off balance. Maoist style campaigns are too disruptive and a thing of the past. It was argued in post-war communist China that mobilisation was necessary to develop a massive country of poor and illiterate people. 


Times have changed. Excessive capitalism or return to socialism are not the answers. China has to continue evolve a dynamic hybrid system to face new challenges. 

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Premier Wen invoked the “Resolution” twice during his final NPC press conference, following an emphasis of the document by President Hu Jintao at the anniversary celebration of the Communist Party of China last July.

“Reforms have reached a critical stage. Without the success of political reforms, economic reforms cannot be carried out. The results of what we have achieved may be lost. A historical tragedy like the Cultural Revolution may occur again. Each party member and cadre should feel a sense of urgency,” said the Premier.

For the older generation that bore witness to the Cultural Revolution, it stands as a painful memory. But for younger generations, this history is sits remote, displaced. But it was a national experience that can’t be erased. At the very least, in the same sentiment of Premier Wen during the conference, we have no right to forget it.

Excerpts from : http://www.marketwatch.com/story/china-premier-wens-memorable-press-conference-2012-03-15?reflink=MW_news_stmp

Elections : Chinese direct democracy models have come a long way

It is a step forward for the Chinese government (with overlapping membership of Chinese Communist Party) to public promote direct elections in the country.

http://www.chinastudygroup.org/li-zhaoxing-china-direct-elections-are-there-difficulties.html

Indeed, the People's Congress has a strong foundation build from grassroots elections, unlike the less participatory and representative primaries of US presidential elections.

http://www.world-china.org/newsdetail.asp?newsid=3306

This may come as a surprise to many so-called China watchers who are no experts in the multi level and regional people's government. Way back in the 1980s, just out of the Cultural Revolution, Chinese people have taken the initiative to experiment with democracy from the grassroots upwards. This was enshrined in the 1982 constitutional reform. Village committees have been thriving since then, though these are never captured or picked up in the mainstream western media. Contrary to the impression of an all-powerful central authority and top down directives, local governments (for better or for worse) could formulate suitable policies make independent decisions.

https://www.chinabusinessreview.com/public/0103/horsley.html

http://aceproject.org/ace-en/topics/es/esy/esy_cn

Mao Zedong's call for people's democracy had been tainted by his personal insecurity, attachment to theories and his henchmen's hunger for power. Ironically though, perhaps Chinese are experimenting participatory politics that suit local conditions to fulfil the aspirations of their "great leader" who liberated them from slavery and colonialisation.

China is even considering holding direct elections in Hong Kong in five years' time due to the close ties between the former British colony and mainland.

http://chinaelectionsblog.net/?p=15493

While China is improving, the West has been on decline with regard to "democracy". The developed world has evolved into a less democratic system, too entrenched in money politics.  Electorate are either disillusioned and apathetic to participate.  At the same time populist single issue politicians and parties in the likes conservative and intolerant Tea Party are exploiting the less educated working class to power.

Instead of vilifying China's democratic models, perhaps those who professed to be practising democracy should reflect, observe others, and look internally for reforms. Who would have expected protests to gather strength among free and contented citizens of democratic countries? Only in poor, deprived and authoritarian systems in the less developed world - but stay tuned, things are changing gradually but surely. For a huge diverse nation like China, economic and social stability should take precedence. Culturally, the self could be sacrificed for common good. A hundred years is not too long to wait.