On China: A Re-Run

I wrote the following piece over two years ago. Given what we now see happening in Hong Kong, I think it remains a valid assessment of China's "century."

April 2, 2012

China's Century? Not if We Don't Give It Away

Years ago in Jakarta, I occasionally would meet, lunch, or dine with a husband-wife team of correspondents for two prominent American newspapers. They were very pleasant, had a sense of humor, and a great deal of experience overseas, mostly in Asia. They were well-educated, wrote well, and had the standard liberal biases of their class--e.g., they hated President Bush, hoped John Kerry would win the 2004 election, and viewed the United States as a seriously flawed country on the way to the dust-bin of history. They saw the 21st century "belonging" to China in the same way that the 20th "belonged" to us. They made the usual arguments about China's manufacturing prowess, well-coordinated and determined political class, social discipline, and education--which is the real kind, not the "women's studies" kind. Their writing reflected these views. This narrative continues today from other purveyors of conventional faux wisdom such as the annoying and boring Thomas Friedman, and the condescending and insufferable Fareed Zakaria.

Don't buy it. The 21st will prove "China's century" only if we destroy ourselves; but, if we do, odds are we're taking China with us--and the Chinese rulers know it (more to follow).

I love Chinese history; been to China several times; and like and respect the Chinese people--they work hard, they like Americans, and want to study and live in America. I have dealt with China's very slick, tough, and well-trained diplomats. That said, I have found it impressive over the years to see how China has transformed itself from a poor, brutal authoritarian police state into a poor, brutal, authoritarian police state with large foreign currency reserves. Sorry, but shoddily-built skyscrapers, and streets clogged with Fords, BMWs, Lexus, and Buicks, and lined with luxury stores and restaurants cannot hide the hard facts.

Confucius's 2500-year old Analects still provides an accurate account of China's philosophy of governance in which every person has an assigned role; failure to keep to it has dire consequences. I saw the repression at work in a visit to Tibet which escaped the control of our handlers. Even outside Tibet the legal system, to put it mildly, remains opaque, capricious, subject to political manipulation, and harsh. Avoid Chinese cops--who seem to be everywhere--and courts. For all the vaunted economic progress, control of the legal-political system remains with an unelected and corrupt Communist Party cadre. These rulers have agreed among themselves that not one will have the total power once wielded so disastrously by Mao. The top jobs rotate; major decisions are not made solo. Progress? I don't know. We saw a similar development in the USSR after Stalin: how is the USSR doing these days? The people remain cut out. The elite decide what's best, the people must comply--see Confucius. This secretive, stale, corrupt, aloof, and repressive system remains a major hindrance for China's development as a true power. Despite ham-handed attempts to block outside influence, word spreads of ways to live which do not involve fear and blind loyalty. We probably will not see a Chinese 21st century, but we will see a "Chinese Spring," and it could get nasty.

We hear a lot of heated nonsense about a GOP "war on women." To see a real war on women, go to China. Thanks to Chinese preference for sons, the one-child dictate means females in China are disappearing: they are being aborted, killed, and given for adoption overseas. This is gendercide, a human rights disaster of major proportions and one almost ignored. Moral issues aside, China is heading for demographic disaster. Marrying age men vastly outnumber women. Among those who can afford it, there is a hunt on for foreign brides. Large groups of young Chinese men charter planes to Indonesia, Malaysia, and elsewhere, and hold "speed dating" sessions at local hotels in the hunt for brides, stoking the anti-Chinese hatred which lies just beneath the surface of many Asian societies.

In East Asia, China is deeply feared and resented. East Asian leaders would much rather deal with the United States, and are big proponents of an active US military and economic presence in the area. They do not want China (and previously Japan) as the undisputed big gorilla in the region. As a senior Vietnamese diplomat once told me, "Everybody wants to be American. Nobody wants to be Chinese. Even the Chinese want to be American." This from a man whose father, he said, died fighting the US Marines in Hue, and whose own son was studying in California. Unless you're wealthy and can isolate yourself from Chinese reality, China is an unpleasant place to live for a foreigner, especially one from another Asian country. It has little in the way of "soft power" or uplifting universal values; it does not welcome immigrants, and views foreigners with the same sort of suspicion and disdain that Chinese citizens themselves find in much of East Asia.

Even in the economic sphere there is less than meets the eye. Most Chinese, the overwhelming number of them, live in crushing rural and urban poverty, work under appalling conditions, and suffer levels of environmental pollution and food contamination that no Western society would tolerate. The mass education system is a disaster. Increasingly foreign firms, which, after all, have fueled China's economic growth, are encountering shortages of skilled and semi-skilled workers, and are no longer quite so eager to set up shop in China.

China's banks are a mystery. They are secretive, corrupt, and work closely with the Party and the government. China pursues a policy which will be coming to the end of its rope soon, that of keeping its currency artificially low to keep exports cheap, and try to keep the job creation machine churning. The central bank, which holds the largest foreign currency reserves in the world, must come up with ways ("sterilization") to sop up the currency generated in China by the influx of foreign currency to prevent inflation and prevent the Chinese currency from appreciating against other major currencies. This involves forcing the banks to keep an ever increasing reserve, and forcing them to buy low or no yield government bonds. I am no expert, but the ones whom I know wonder how long that can continue. The experts ignore another aspect to this: the overseas political side of it. China's trading partners, the US and Europe most notably, are reaching the end of their patience with China's currency manipulations. A trade war is not inconceivable; China would have the most to lose.

One of the greatest threats to China's future is President Obama. His administration's reckless spending and conjuring of dollars out of thin air is ruining us, and stretching the Chinese ability to "sterilize" the effects of all the dollars pouring in. It is no wonder that Chinese authorities have been lecturing Obama on the need for fiscal restraint and budgetary responsibility. China is tied to our mast. If we sink, they go with us--their billions and billions of dollars in US bonds, worthless. Let's view it as a backhanded compliment to our silly President.

As stated at the outset, China will have as much power and influence as we let them have. China's future as a superpower will be decided in Washington, not in Beijing. Under the Communists, China has not proven an inventive or innovative society; their technological progress is bought, borrowed, copied, or stolen. The USSR tried that, too. They offer no compelling alternative vision to the West's prosperity and freedom. They can try to become a military bully, but that will go only so far in their very complicated neighborhood and with the serious structural and resource weaknesses they suffer.

China should copy and try one thing from the West it has not so far: it works in Japan, in the Republic of Korea, and, ironically, in the "breakaway" Chinese province of Taiwan. I am talking about freedom, the real kind, not the Communist Party kind.