U.S. must take notice of China's emergence

U.S. must take notice of China's emergence
VALLEY VIEWS
By Seemi Ahmad
The news of China's economic growth is pervasive.
Every media outlet extols the pace of its gross domestic product growth (9.5 percent in 2004), of its construction activity (half the world's heavy machinery is in China) and its expanding exports (seven out of 10 goods sold at Wal-Mart are made in China).
According to some estimates, China's economy may replace Japan's as the second largest in the world by 2020. China is spreading its wings deliberately and methodically by combining its new-found economic clout with overtures to developing countries through joint ventures and trade pacts.
How do China's immediate neighbors perceive this growing power? On my recent trip to South Asia, I was intrigued by the sudden shift of focus in that region of the world. China and India are now new destinations for foreign students, as well as for rich patients with complicated medical needs. The well-heeled had always looked to Europe or the United States for new products, new trends, advanced medicine and travel; times are changing. Shanghai, Hong Kong, Kuala Lumpur, Bangkok and Dubai have become popular tourist havens. There is new buoyancy and optimism about the emergence of China as an economic power. Importantly, China's growth is not perceived as a zero-sum game by its neighbors, since they see the benefits spilling over into their own economies.
Pakistan gives access
Take the example of Pakistan. To augment energy supplies in Pakistan, China is helping it build hydro-power and thermal solar energy plants. They jointly completed the 480-miles-long Kharkhuram highway, the fabled old Silk Route, linking northern Pakistan to China's Xinjiang province.
In cooperation with China, Pakistan is constructing a $250 million port city in Gwader. Not only does this port give China access to the warm waters of the Arabian Sea, this alternative and shorter route links China directly to energy supplies from the Middle East, easing its worries that a potential naval blockade of the Malacca Straits by hostile nations could disrupt its existing vital route for oil.
At the same time these projects benefit Pakistan's economy enormously. The Gwader port will serve other landlocked Central Asian countries creating windfall revenues for Pakistan. Such projects are being replicated by China in other developing nations where this increased foreign investment and trade offer a promise of prosperity.
China is actively signing strategic agreements for raw materials and energy supplies with countries in Asia, Africa and Latin America. Its trade pact with the Association of Southeast Asian Nations would create by 2010 the world's largest common market. It just signed free trade agreements with the South Asian Association for Regional Cooperation which includes, among others, India, Pakistan, Bangladesh, Nepal and Sri Lanka.
Populous and poor
The sense of excitement among association countries about this development is palpable. These countries are home to 25 percent of the world population, but they also have half the world's poor. They are aware free trade agreements offer them one sure prescription to alleviate poverty. Such bilateral and regional agreements have created amity and goodwill between China and its neighbors.
It is important to note that China faces fewer hurdles when it undertakes projects or signs trade pacts since it is unencumbered by environmental regulations, labor unions or even property rights. Building a stadium in New York City is much harder than building the Three Gorges Dam in China, which, when completed by 2009, will displace about two million people.
There is, however, mounting concern that the United States is losing influence in South Asia and Southeast Asia. The exclusive focus of the U.S. on the Iraq war and on combating terrorism prevents it from countering the "economic diplomacy" adopted by China. The U.S. needs to do more and needs to do it soon so it can retain its influence in a region that promises to expand its economic dominance in the 21st century.
Wednesday, November 30, 2005
Seemi Ahmad is an associate professor of economics at Dutchess Community College in Poughkeepsie.

China aims for moon landing by 2020

China aims for moon landing by 2020

THE ASSOCIATED PRESS
HONG KONG - Budget permitting, China wants to be able to put a man on the moon and build a space station in 15 years, a space program official said.

“I think about 10 to 15 years later, we will have the ability to build our own space station and to carry out a manned moon landing,'' Hu Shixiang, deputy commander in chief of China's manned space flight program, said in Hong Kong.

But the goal is subject to full funding, Hu said, explaining that China's space program must fit in the larger scheme of the country's overall development.

He said China wants to master the technology for a space walk and docking in space by 2012.

China is developing its space program at its own pace, not competing with the U.S., Hu said.

“It's not the competition of the Cold War era,'' he said.

Hu is visiting Hong Kong following China's second successful manned space mission, together with the mission's two astronauts, Nie Haisheng and Fei Junlong. He made his comments in a televised question-and-answer session with news executives.

The two astronauts orbited Earth for five days last month aboard the Shenzhou 6 capsule, traveling 2 million miles. China's first manned mission was in 2003, when astronaut Yang Liwei orbited for 21 1/2 hours.

Hu stressed that China intends to explore space for peaceful purposes, saying Beijing “is willing to work hard with people around the world for the peaceful use of space.''

Chinese space officials want to study the possibility of making rockets with 25 tons capacity _ three times the capacity of existing rockets _ but the government hasn't approved the funding, he said.

Hu dismissed suggestions that the space program is too costly in a country that while growing rapidly, is still struggling to eradicate poverty in the countryside.

The recent space mission cost $111 million, compared to the $23.5 billion China spent on combating pollution last year, he said.

U.S.-China Relations: Many Interests at Stake

Globalist Document > Global Economy
U.S.-China Relations: Many Interests at Stake      

By The Globalist | Wednesday, November 30, 2005      
As the U.S. debate over China continues, the U.S.-China Economic and Security Review Commission has just released its 2005 report to the U.S. Congress. In this Globalist Document, we present the report's main conclusion: While China is clearly focused on its own national interest, the U.S. government has no unified policy to deal with China.
China’s leadership has a coordinated national strategy for dealing with the United States.
China’s dependence on the U.S. economy provides the United States with enormous leverage to demand that China adopt greater reforms.
It knows what it wants to obtain from the United States — most significantly, a market for its exports, investment, technology and management skill — and it tailors its economic and diplomatic policies to achieve these goals.
China is willing to achieve its goals through means that threaten many U.S. interests. It continues to proliferate components for weapons of mass destruction and ballistic missiles to countries of concern.
It refuses to support many U.S. initiatives in the United Nations and other international bodies and is seeking to reduce U.S. presence and influence in the Asian region.
The U.S. strategy
In short, China is focused on the most effective ways to develop its comprehensive national power and further promote its position in the world.
Unfortunately, the United States has no coordinated, national strategy for dealing with China. We need one that specifies and prioritizes what we want to accomplish, what outcomes are and are not acceptable — and how to reach those goals.
Dependency on the U.S. economy
But China’s dependence on the U.S. marketplace for the sale of its products and as a source of investment and technology is so large as to make China’s economic growth, to a substantial extent, dependent on the U.S. economy.
To become competitive again, the United States must take responsibility for its future.
This provides the United States with enormous leverage to demand that China adopt greater reforms and abandon its mercantilist practices.
Unfortunately, the United States has pursued a policy of economic engagement with China that has not yielded results, while China has actively pursued its own interests.
The result is that our corporate sector is increasingly looking to China as a source of profits, either in terms of offshoring or outsourcing, and it is becoming more and more an export platform for products.
Economic growth in China
The transfer of manufacturing capacity to China has been joined by the creation of numerous and substantial research and development (R&D) centers and capabilities, capabilities which affect the competitiveness of the U.S. economy.
As production and R&D move to China, the resulting pressure on remaining U.S. operations and the downward pressure on U.S. wages intensify.
Globalization's impact on China
In the absence of well-defined and effective public policies, corporate interests have been able to set the course of our economic relationship.
China is focused on the most effective ways to develop its comprehensive national power and further promote its position in the world.
The cycle intensifies as investments in and trading relationships with China increase. More companies are concerned that they will face retaliation by Chinese authorities and/or their related businesses.
And, as the sourcing patterns of these companies change, their vested interests in protecting their investments increase, to the detriment of the U.S. standard of living.
Elected officials must reclaim control of the policy agenda. Addressing the problems posed by China and the impact of globalization demands that the United States initiate new efforts and programs to advance our own national competitiveness.
Maintaining U.S. competitiveness
The nation needs a self-renewal on the scale of the post-Sputnik era, with major new educational programs to create new generations of scientists and engineers. We can remain competitive only if we address education, health care, community, transportation and industrial infrastructure, job training and other issues.
We must learn the importance of balancing consuming, saving and investing. To become competitive again, the United States must take responsibility for its future.
Altering China’s market
The debate about trade and globalization is framed by discussions about trade theories that do not adequately account for mobile factors of production, such as technology and capital.
China is willing to achieve its goals through means that threaten many U.S. interests.
The theory is intended to apply to free markets, a condition that does not exist with China, which is by definition and in reality a non-market, command economy.
China can, and does through government actions, alter the trade equation and its outcomes on a daily basis.
Securing interests
The challenge is to bring China into the international order as a responsible actor, rather than — by inaction or acquiescence — condone its behavior within an international order it manipulates for its own accumulation of economic, political and military power.
We must carefully craft and articulate a U.S.-China policy based squarely on the national and economic security interests of the United States.
Adapted from the November 2005 Report to Congress of the U.S.-China Economic and Security Review Commission. For the full-length report, click here.

Will China have the last laugh?

Will China have the last laugh?
By William Pesek Jr. Bloomberg News
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Sometimes it takes a bit of humor to make sense of the global economy. In that spirit, the American pop icon Ben Stein offers an amusing and useful view of China's rise.
 
Yes, his biography highlights roles in films like "Ferris Bueller's Day Off" and mentions that he attended high school with the Hollywood celebrities Sylvester Stallone and Goldie Hawn. But the former host of "Win Ben Stein's Money" also wrote speeches for Presidents Richard Nixon and Gerald Ford of the United States and remains a commentator of some note.
 
What is Stein saying about China? Don't believe the hype.
 
"It all reminds me a lot of how the news media and the Central Intelligence Agency went berserk after the launching of Sputnik in 1957, and it was forecast that the Soviet Union would soon be the world's technological and economic hegemony," he wrote in August. "That talk was based on a number of faulty assumptions and a good deal of hysteria. Obviously, it didn't happen."
 
I was reminded of Stein's point during conversations I had in Russia in September. Ask citizens of Moscow or St. Petersburg if China will soon rule the world and you'll get a roll of the eyes and some variation of: "Well, isn't that what the Soviet Union was supposed to do? Look at us today."
 
Now superimpose those sentiments over President George W. Bush's recent visit to Kyoto, Japan. There, as Bush was en route to South Korea for the summit meeting of the Asia-Pacific Economic Cooperation forum last week, he reminded the world not to take Japan for granted when predicting Asia's future. It was a good point.
 
What's disturbing is that leaders of the biggest economies are fretting over China's strengths, not its vulnerabilities. A financial crisis there would have huge implications for the global economy. Rather than asking officials in Beijing what they are doing to shore up the financial system and avoid social instability, world leaders are focusing on China's currency.
 
With so many serious people missing the big picture, perhaps a humorist like Stein can help out.
 
"One disadvantage of being 60 is that you have to get up in the middle of the night, often more than once," Stein wrote recently. "But a big advantage of advancing age is that you get to recognize news media silliness when it happens. This comes to mind in terms of the economic relationship between the United States and China."
 
This column has made the argument before that the hype over China resembles the dot-com extravagance of the late 1990s. Back then, analysts and journalists who dared to question the wisdom of buying stocks like Pets.com or Boo.com were dismissed as dinosaurs who couldn't grasp the "New Economy." Those raising doubts about questionable accounting tactics were shushed.
 
The reaction to China's advance feels a lot like that. Want to annoy a room full of executives or investors? Just express a bit of skepticism about China's ability to sustain economic growth of more than 9 percent.
 
Watch how red faces become when you question the wisdom of buying shares in China Construction Bank or other state-run lenders. See how folks shift in their seats when you suggest that Chinese industrial growth could entail environmental disaster, or that the Communist Party cannot maintain social order indefinitely.
 
It's not that China, with the world's seventh-biggest economy, is likely to collapse; the economic potential is astounding.
 
What is out of kilter is the sense that nothing will go wrong, that China's leadership is superior to that of other countries, that Asia's "New Economy" has suspended the rules that apply to all national economies. Skeptics are ridiculed or ignored.
 
Even Stein has been dropping the humor of late. Last week, he told CNBC that "no bubble goes on forever. We know that from history. The Chinese bubble won't go on forever."
 
Much optimism about China is based on the size of its population. Rising incomes there may lead to vast markets for companies and investment banks everywhere. What is transpiring in China is rivaled, though, by developments throughout the continent. India and Southeast Asia are ready to roar, too.
 
Developing economies are looking inward, trading more among themselves and creating unprecedented relationships. Increasingly, China needs India to ensure its growth, and vice versa. The symbiosis that exists in this region is bigger than China.
 
And don't forget Japan. "Now, because of the recovery in Japan, Japanese savers and investors may be more willing to take risks abroad," says Masahiro Kawai, special adviser to the President of the Asian Development Bank. "That means more capital could flow to Asian countries that need it."
 
So rather than giving China too much credit or fearing its ascent, world leaders should be seeking assurances that it can handle the risks facing the economy. If China hits a wall, so might large parts of the global financial system. And that, unlike some of Stein's musings, will be anything but a laughing matter.
 
 

China's reawakening returns the status quo

By Saul Eslake, ANZ BankOctober 20, 2005

THE emergence of China (and India) as significant influence in the world economy and in world markets for tradeable goods and services, commodities, labour and financial assets is, arguably, the most significant change in global macro-economics since at least the breakdown of the Bretton Woods currency system in the early 1970s.
China is the second-largest economy in the world, having overtaken France in 1984, Russia in 1985, Germany in 1987 and finally Japan in 1995. If the long-term consensus projections compiled by Consensus Economics in April are vindicated, by 2015 China will have overtaken the US as the world's largest economy.
Even though China may rank No. 1 in terms of absolute size, in 10 to 15 years it will still be a relatively poor country. On the latest projections, China's per capita GDP will be barely more than one-fifth that of the US in 15 years and slightly less than a third of Japan's.
The prospect of China becoming the world's largest economy represents not an emergence, as it is usually portrayed, but rather a return to the order that has prevailed throughout most of human history. According to calculations by Angus Maddison, from at least the beginning of the common era until the early 19th century, China or India were the world's largest economies.

A peacefully-rising China is a resolute force in maintaining world peace

A peacefully-rising China is a resolute force in maintaining world peace

By Zheng Bijian

Ladies and gentlemen, friends,

   We are glad to have this opportunity to discuss regional cooperation in East Asia and Sino-American relations with American experts and academics prior to the China-US summit.

   Many of you would have noted the speech on Sino-American relations made by US Deputy Secretary of State Robert Zoellick on Sept 21. I would also like to focus on the same topic to explain how a peacefully-rising China is a resolute force in maintaining world peace.

(1) It has been proven that having an awareness of the overall situation and being pragmatic are keys to increasing mutual trust and improving ties.

   Sino-American ties are important but complicated. In the new situation where China and US are driving global economic development from the manufacturing and consumption ends respectively, active communication between both countries to promote interaction and increase trust is of utmost importance to developing healthy bilateral ties as well as
maintaining a peaceful, prosperous world.

   I would like to point out that US President George W. Bush, Secretary of State Condoleezza Rice and other American leaders have emphasised on responding pragmatically to China's show of goodwill, bearing in mind the big picture of sound bilateral ties, during a domestic debate on Sino-American relations this year.

   Mr Zoellick's speech can be said to have expressed an important political stand of the US leaders towards Sino-American relations in recent years. It is a substantial expression that contains the gist of the US policy on China.

   The tone of his speech indicates an acknowledgement of the logic behind China's path of peaceful emergence. His speech also recognises the success of China in opening up and joining the global economy.

   We also took note that his speech acknowledges that China's path is different from that of the former Soviet Union and therefore US should adopt a more pragmatic strategy towards China.

   Furthermore, his speech states that US is willing to work with a peacefully-rising China in maintaining and improving existing world order.

   Of course, there is another side to the story. While I appreciate the awareness of the overall situation and pragmatic spirit displayed in Mr Zoellick's speech, this does not mean I agree with all his views.

   Like other high-level US officials who have spoken on their policies on China, Mr Zoellick has certain ideological prejudices when looking at the Chinese Communist Party (CCP) and the Chinese socialist system. Adding to the complications are the various voices and actions attempting to influence US policies on China, including those by certain high-level
officials.

   All in all, I feel that the development of Sino-American relations has highlighted the importance of keeping in mind the overall situation and being pragmatic.

   When we are clear about the big picture and adopt a pragmatic attitude towards specific problems, we can then grab opportunities to push ties forward. Otherwise, misjudgement and mistakes would happen. We would lose those opportunities and even make a historic mistake.

   Just as R&D (research and development) can stimulate economic development, I believe O&P … minding the Overall situation and Pragmatism… can bring realistic achievements for Sino-American relations.

(2)   To deepen Sino-American understanding, a fundamental issue is how one views the CCP and its goals in the 21st century.

   I want to begin with the different choices made by the CCP and its Soviet counterpart in 1979. Both are communist parties and they made important strategic choices in 1979 that determined their fates.

   Brezhnev's Communist Party of the Soviet Union decided to invade Afghanistan, embarking on a ""world revolution' campaign to gain global domination through military conquests that eventually brought destruction upon itself.

   In that year, however, the CCP made the historic decision to reform and open up, embarking on a developmental path with economic construction at its core and connecting China with the world through globalisation. We have journeyed on this road for 26 years and will continue on this path. This is my first point.

   My second point is that economic globalisation has helped China achieve its peaceful rise. Thus the CCP has no intentions of challenging the existing international systems and does not propose to destroy or overthrow them with violent means.

   Globalisation has given rise to unnecessary expansion and invasion for resources, but it has also provided the conditions through which China can obtain the resources it needs for its modernisation.

   There are of course illogical aspects in the existing world order. We therefore advocate using reforms, and not other ways, to build up a new world order.

   I ask all of you to take note of my third point. The core principle currently guiding the domestic and foreign policies of the CCP is this: seek international peace, seek domestic harmony and seek reconciliation across the Taiwan Strait.

   Since embarking on a peaceful rise in the late 1970s, the CCP has adhered to developing a market economy along with building a socialist nation ruled by law and promoting culture and harmony in society.

   We combine the rule of people with the party's leadership and the legal system in order to develop a broad democracy. Our experience tells us that democracy and the legal system cannot be separated. Democracy without the legal system will bring only disaster to our people while a sound democratic system which allows the people to participate in politics in an orderly manner will ensure the well-being for our people.

   Lastly, I want to stress that the different paths taken by China and the former Soviet Union stem from the different understanding of socialism, from the different historical and cultural traditions, as well as from the different interpretation and grasp of the peoples' wishes.

   The CCP understands socialism as developing productivity internally and advocating peace externally. Historical, cultural traditions that the party values include harmony in diversity, trustworthiness, neighbourliness; in other words, not doing unto others what we do not want others to do unto us.

   The CCP knows the Chinese people want to wipe out poverty; they want progress, a strong nation and a harmonious society where everyone is happy.

   There is therefore no basis to the view that China will turn autocratic or embark on expansionism just because it has been under the long-term rule of the CCP.

(3)   I would like to talk about a point that is linked to the 11th five-year plan announced recently. It is about the three major trends that are inevitable in China's peaceful rise. The first is China will continue to focus all its efforts on development. Mr Deng Xiaoping once said the key to solving all problems in contemporary China lies in the country's own development. He also said we have to work hard and do our own work properly.

   The fifth plenary session of the 16th Central Committee of the CCP (the Fifth Plenum) has captured his words in this line: Concentrate wholeheartedly on development. This is a major undertaking affecting 1.3 billion people!

   The Chinese population will hit 1.5 billion people between 2030 and 2040. To a certain extent, China will be making a big contribution to the human race if it resolves the survival and development issues of a quarter of the world's population.

   This undertaking will occupy a few generations of the Chinese. We neither have the time, energy nor the need to threaten anyone or any country. We can say that this undertaking has never been attempted by any big countries in modern history.

   The second trend is China will, on the basis of maintaining its independence, continue to participate in globalisation, taking more initiatives to pursue a path dependent on the domestic and international markets.

   Due to its large population but limited resources, including energy resources, China will pursue a new industrial path and a conservational society with Chinese characteristics.

   The Fifth Plenum has stressed that China's per capita GDP in 2010 is to double that of 2000 while energy consumed per GDP unit must be 20 per cent less than that of 2005; environmental deterioration must also be curbed and over-tilling must be brought under control. All these will allow our balance of payments to achieve equilibrium and our open economy to reach a new height.

   China will continue to work towards promoting domestic consumption and relying on its own strengths to solve its developmental problems, and not burden other countries. This has also never been attempted by any big countries in modern history.

   The last trend is that China will achieve a renaissance based on socialism along with its peaceful rise and convergence with world civilisation.

   China's peaceful rise has been defined as a coordinated development of material, political, spiritual civilisation and a harmonious society. It is a construction which will enhance the qualities of its people and boost harmonious ties internally and externally.

   This signifies another great revolution in the Chinese society in the first half of the 21st century and another great reform for the Chinese people.

   This definition has become a fundamental policy, paving a peaceful, civilised and open path.

   Mao Zedong, founder of New China, had said in the 1950s: ""China will become powerful and yet amiable.'

   Deng Xiaoping, chief architect of China's reform and opening-up programme, had also said during his 1992 tour of southern China that ""socialist China should use action to show the world it opposes hegemony and power politics; it is a resolute force in maintaining world peace'.

   Hence, we are treating this big undertaking seriously and will work on it for a long time. This, too, has never been done by any big countries in modern history.

Mr Zheng Bijian, a close adviser to the Chinese leadership and chair of the China Reform Forum, gave this speech in Mandarin at a conference in Beijing on Sino-American relations and cooperation in East Asia on Nov 3. This speech was translated by Ho Cheeng Cheeng, The Straits Times translation desk.

As China Grows, More U.S. Schools Teach Mandarin

As China Grows, More U.S. Schools Teach Mandarin
BROOKLINE, Mass., Nov. 21, 2005 — At the Driscoll public schools in Brookline, Mass., the kindergartners already know more Chinese than most Americans will learn in a lifetime.
The second graders can string sentences together, and the eighth graders are nearly fluent. In this school system, learning Mandarin is mandatory.
Carol Schraft, principal of the Michael Driscoll School, said the goal is to "educate children for the world as it's going to be — not of the world we're living in now."
Economists predict that by the time these five year olds enter the job market, China will be the world's second-largest economy.
"If we want to be doing business in China, we are going to need students who can function in Chinese and understand Chinese culture," said Vivian Stewart, vice president of the Asia Society.
School districts from Philadelphia to Portland, Ore., are now adding Mandarin programs.
"I'm not really sure what I want to be when I grow up, but I figure Chinese will keep me more prepared for whatever it is," said eighth grader Samsun Knight.
Next fall the College Board will offer Chinese advanced placement tests for the first time. Employment agencies report a surge in demand for Mandarin speaking babysitters from parents who want their children to start learning young.
The Driscoll teachers like to tell their students that if they learn Chinese, they will be able to communicate with nearly a third of the world's population — the seven percent who speak English, and the 18 percent who speak Mandarin.
Huajing Maske, a teacher in the Driscoll school system, says for students who learn the language, "the younger the better because they are not intimidated by it."
Second grader Hannah McGan agrees.
"Is Chinese hard? Sort of," she said. "Once you start and then it's easier and easier."
The challenge for schools now is to find good instructors. Until more Americans master Mandarin, there will not be many people who are qualified to teach it.
ABC News' Nancy Weiner filed this report for "World News Tonight."

China Rising: Get ready for China's century

China Rising: Get ready for China's century

By MARCUS GEE

Beijing — At the north end of Beijing's Imperial Palace stands Coal Hill, a man-made summit built with the sweat and blood of countless labourers. Climb it and you can absorb a sight that for 500 years, only emperors and their retainers could see: the inner precincts of the Forbidden City. With its arching, tiled roofs of mustard yellow and its high vermillion walls, this is the secret heart of the most inward-looking empire the world has ever seen.

For centuries, China shut itself off from the rest of humanity. Secure in its cultural superiority, disdainful of Western ideas and science, it welcomed foreigners only as supplicants, forcing them to kowtow before its emperors ”with ashen face and trembling knees” behind those walls.

But today, a new Chinese empire is rising, one that looks outward instead of in. Emboldened by 25 years of pell-mell economic growth, a reborn China is bidding to become a great power again — perhaps the great power.

It was Napoleon who warned, ”Let China sleep, for when she awakes she will shake the world.” Look down from Coal Hill and you can almost feel the tremors. Before you, to the south, lie the hundreds of palaces and lesser buildings of the imperial sanctuary; beyond that, the sweeping expanse of Tiananmen Square and the citadels of Communist power on its flanks.

Look to the east or west, and the new China comes into focus. Dozens of construction cranes jut into the sky. Satellite dishes top the summits of gleaming new hotels and office towers. As the sun sets in the west and a full autumn moon rises, the neon lights of a global city blink to life, advertising Western fashions, Western movies, Western values.

After centuries of isolation and stagnation followed by 100 years of civil war, revolution, famine and foreign occupation, China is rejoining the modern world, determined to restore the wealth, power and status that are the birthright of the planet's most populous country and oldest continuous civilization.

With its lost years behind it, it has a powerful, almost desperate yearning to catch up with the rest of the world. In place of the ancient emperor cult and the fleeting cult of Mao, it has adopted a new religion: the cult of the new. Like the nouveaux riches of its big cities in their Rolex watches and Prada boots, China wants the best, the latest, the shiniest of everything.

If other big cities have airport-to-downtown railways, Shanghai must have the latest, coolest kind: a magnetic levitation train. If other cities have trendy architecture, Beijing brings in ultra-trendy Dutch architect Rem Koolhaas to design its radical new state television building. High culture? Shanghai plans to build 100 museums and vie with Paris and New York as a capital of art and learning.

At last count, China had 595 McDonald's restaurants in 105 cities. Beijing alone has more than 100 highway overpasses, proudly advertised on the country's banknotes. The number of cellphone users is growing by five million a month.

This is a country rushing headlong into the future — building, wrecking, earning, accumulating, striving, competing; restless, ingenious, irrepressible, brassy, boastful, fearful.

You don't have to be in China to experience its rise.

In the past few years, and this year more than ever, people in Canada and around the world have begun to feel it in their everyday lives. At the local Wal-Mart, you have China to thank for $10 children's jeans and $50 DVD players. At the gas pump, you can blame China's insatiable demand for oil for 90-cents-a-litre fuel.

If you are an employee of Canadian mining company Noranda, your new boss may soon be the Beijing government. If you have a mortgage, China has helped you out by investing some of its more than $440-billion of foreign exchange reserves in U.S. Treasury bills and keeping interest rates down throughout North America.

Quite suddenly, China has emerged as a moving force of the global economy. Not only is it the new workshop of the world, churning out a third of its computers, half of its digital cameras and DVD players, half of its clothing and two-thirds of its photocopiers and microwave ovens. It is also a voracious importer, gobbling up 40 per cent of the world's cement last year and pushing up the price of steel, copper, iron ore and soybeans, as well as oil.

And this is only the beginning. On present trends, China could overtake Japan as the world's second-largest economy by 2016 and take the top spot from the United States by 2040.

Look a little further into the distance, and China looms even larger. Even if its growth slows to 4 or 5 per cent a year from the current 9 per cent, it would have an output of $40-trillion by 2054. Today, all Group of Eight economies together produce only half that figure.

Think of how far it has already come. Just 20 years ago, a sunset visitor to Coal Hill would have looked down on a sea of bicycles carrying commuters in Mao suits through a cityscape of dingy apartment blocks and ancient neighbourhoods toward their jobs in outmoded, state-run factories.

But in 1978, Chinese leader Deng Xiaoping made a decision that, looking back, was one of the most daring of the 20th century. Casting aside Communist orthodoxy and declaring that ”to get rich is glorious” — a phrase that could be the slogan of the new China — he began opening the country's closed, centrally planned economy.

Released from the bondage of central planning, the Chinese quickly exhibited the genius for commerce and trade that characterize Chinese communities from Hong Kong to Singapore to Canada. Their dynamism has transformed China at developmental light speed, turning a peasant society into an industrializing nation with more than 236,000 millionaires.

Of course, many things could still interrupt China's progress. With its immature stock market, shaky banking system and hundreds of rusting state-owned businesses — not to speak of its outmoded, undemocratic political system — China is bound to take a tumble somewhere along the road to riches. But, then, the United States went through no fewer than 10 boom-and-bust cycles during its rise to economic supremacy in the 19th century.

That rise changed the face of the world, and China has 260 times as many people as the United States did then. As veteran Singaporean leader Lee Kuan Yew once said: ”It's not possible to pretend that this is just another big player. This is the biggest player in the history of man.”

But what kind of player? While he was U.S. president, Bill Clinton said that the fate of the world hangs on how China defines its greatness. Will it be like Japan after the Second World War, content to grow wealthy and keep a low profile? Or will it be more like Germany before the First World War — arrogant, aggrieved and aggressive?

That is probably the biggest question mark hanging over the first half of the 21st century, and one of the most disputed. Bookshelves groan with books heralding the ”Coming Conflict” with China or the ”Coming Collapse” of China. The country's boom is either the greatest opportunity the world has ever seen, or the biggest threat; either awe-inspiring miracle, or approaching disaster; either the best news in years, or the worst.

Consider the good news first. Since Deng Xiaoping executed China's historic U-turn at a session of the Eleventh Central Committee of the Communist Party in 1978, 270 million people have climbed out of poverty — the most successful development project in history, and a slap in the face for those who say globalization helps only the rich.

China had such a miserable 20th century — from the chaos of its warlord era, to invasion by the Japanese, to civil war between Nationalists and Communists, to the famine and fanaticism of Mao's reign — that the early 21st looks like a golden era by comparison. Despite the corruption, authoritarianism and contempt for human rights shown by their governing regime, China's 1.3 billion people, a fifth of humankind, are generally richer, safer and freer than they have ever been.

What is good news for the Chinese is also good for everyone else.

Today's stable, growing China is far less threatening than the poor, paranoid version of Maoist times, when the country spat venom at the ”imperialist West” and went to war with the United States (and Canada) over Korea, with India on its Himalayan frontier and nearly with the Soviet Union over their common border. It may be a simple coincidence, but China has not fought a war with anyone since it took on Vietnam in 1979, a year after launching its reforms.

China's economic rise should lift all boats, improving incomes around the globe. Despite fears about outsourcing to and competition from China, its boom has already helped pull Japan out of the longest downturn in its postwar history and helped the United States recover from its recent recession.

First to cash in will be resource-rich countries such as Canada, which will keep busy supplying China with timber, paper, aluminum and other commodities. Consumers should be winners, too. Investment house Morgan Stanley estimates that American shoppers have already saved about $100-billion because of lower prices on clothing, shoes and household supplies from China.

Now, the bad news.

Because of its huge population, China had the biggest economy in the world until the United States passed it in the 1880s. Then came a quick and traumatic decline. Proud China became the doormat of the Western powers, which occupied its ports, burnt its Summer Palace and flooded it with opium to pay for their purchases of tea and silk. The sting of those insults still lingers.

That is why historians sometimes compare it with Germany, which entered the 20th century feeling buoyed by its recent economic success but nervous about its place in the world and angry about its perceived exclusion from the big-power game. Today's China shares that mix of confidence and insecurity. With 14 countries on its border and a history of foreign invasions, it feels vulnerable and defensive even as its power grows. Ross Terrill, the American author of a recent book on China's rise, calls the modern Chinese state”pretentious, aggrieved and fearful.”

As China grows more powerful, these impulses are bound to assert themselves more often. The aim of its foreign policy is clear: to make up for past humiliations by restoring China's fuqiang — its wealth and power. In time, a confident, growing China, a giant chip on its shoulder, is bound to challenge the world's balance of power, not just in Asia but around the world. If any country has a chance of replacing the United States as king of the hill, it is China. If it remains undemocratic, it may also pose an ideological challenge to the liberal values of the West — an example, it will say, of how societies can have prosperity without ”Western” democracy and human rights.

Beijing is already flexing its new muscles. When Washington slapped duties on China for ”dumping” cheap products on the U.S. market last year, Beijing quickly retaliated by cancelling a high-profile mission to the United States to buy American farm goods. Moving to protect its supply of vital raw materials, it successfully pressured the United Nations Security Council to water down a resolution threatening the government of Sudan with sanctions over its role in the refugee crisis there.

In years to come, it could find itself propping up more regimes that supply its resources or host its industries, just as the United States often supports them today. David Hale, a U.S. Sinologist, says it is not far-fetched to imagine a day when Chinese troops set out to put down a revolt against the Saudi royal family.

In the past, China has had few scruples about backing unpleasant regimes. It has sent nuclear equipment to Pakistan, chemical-weapons material to Libya and missile technology to Iran. It stood with the murderous Khmer Rouge of Cambodia until the bitter end, and even now supports the brutal junta that rules Myanmar.

For the time being, however, China is on its best behaviour. Since Deng's great opening, the country has joined dozens of international clubs, from the World Trade Organization to the International Labour Organization to the Nuclear Suppliers Group. Last year, Mr. Hu attended a North-South dialogue sponsored by the G8, a group Beijing once denounced as a clique of the Western powers.

China has patched up relations with its old rival, India, and stepped up ties with France, Russia, Germany and the European Union. To show it is a good global citizen, it is sending troops to Haiti under the UN's blue flag, the biggest Chinese deployment of its kind.

Everywhere they go, Mr. Hu and his colleagues insist that China is a ”status quo” power with no interest in climbing the greasy pole of world domination. As they are quick to point out, they have no history of conquering foreign peoples (unless you count the Tibetans, which they don't). Their slogan of the moment, ”peaceful rise,” is designed to comfort a fretful world.

Chinese foreign minister Li Zhaoxing told The Globe's Geoffrey York this week, ”China's development will not threaten anybody or compromise their interests.”

In their own backyard, the Chinese have made no move to challenge the military mastery of the United States in the Asia-Pacific region, as the Soviet Union did by building a vast, blue-water navy capable of projecting force far beyond its own shores. Unlike the rising United States, which put its foot down over European meddling in its hemisphere in 1823, China has as yet pronounced no Monroe doctrine for Asia.

Even if Beijing is just biding its time, it has a long way to go before it becomes a superpower that can go toe-to-toe with Washington.

China started from such a low point that, even after 20 years as the world's fastest-growing economy, its per capita output is only about $1,000 (U.S.), 136th in the world and about on par with Honduras, Morocco or the Philippines. And despite spending tens of billions on arms over the past decade, it still can't come close to matching the United States, which spends seven times as much on its military.

In fact, if the world has anything to fear from China in the short run, it is not its strength but its weakness. Behind the glitter of its booming cities, China has enormous problems: rampant pollution; a rising income gap between rich cities and poor countryside; mass unemployment in less-industrialized regions.

If China goes off the rails, all of East Asia, indeed all of the world, would feel it. Threatened with collapse, the Communist regime might easily play the patriot card by invading the ”renegade province” of Taiwan and returning it to Chinese hands.

But in the fall of 2004, failure and war are the last things on Chinese minds. With so much pain and turmoil in their recent past, its people are grabbing the chance to fulfill the words of the Chinese proverb: Live long and prosper. Average life expectancy has risen to 71 years. Four-fifths of urban homes have refrigerators and washing machines, half have air conditioners and DVD players, and a fifth have computers. Car sales are rising by more than 40 per cent a year.

In just four years, China will celebrate its success with a giant coming-out party: the Beijing Olympics. A big digital clock in Tiananmen Square ticks down the minutes until the Games open. A short distance away, on Coal Hill, people gather on autumn days to watch the sun go down.

On this particular evening, the air is cool and still. A young couple embraces. A graceful old man performs tai chi. As the dark gathers, a bat, Chinese symbol of good fortune, flits around a pagoda roof. From the city below, comes the ceaseless din of traffic — the sound of China rising.

From Saturday's Globe and Mail, October 23, 2004

China's dream of harmonious existence

China's dream of harmonious existence
Lun TanChina Daily  Updated: 2005-11-10 05:57
President Hu Jintao suggested in his September 15 speech at the United Nations General Assembly that a "world of harmony" be brought about by all nations on Earth.
This signifies first of all the importance of the co-existence of diversified civilizations on our planet.
About 6 billion people of 2,500 ethnic groups in more than 200 countries dwell on Earth. Christianity, Islam, Buddhism and many other faiths exist side by side.
Pluralist civilizations constitute a very important driving force for the progress of the human race.
Tolerance, which is free of restrictions by any ideologies and social systems, plays a role of paramount importance in bringing about peaceful co-existence for different civilizations. Only respect for each other, equal treatment, learning from each other and being considerate can ensure harmony in the world.
Applying this in the international political arena means consultation among all parties involved, not unilateralism driven by hegemonic ambitions.
This calls for democracy in international politics, instead of "what I say goes."
This is based on an optimistic judgment of international politics over the last six decades since World War II, when the idea of "world of harmony" was yearned for and conceived.
Fully-fledged wars and the Cold War in the 20th century were waged by big powers whose mutual relations were strained over a long period.
Looking to the future in the new century, we can be sure the big powers will alternately encounter times of strained relations and enjoy relaxed exchanges. Although the possibility of a deterioration of relations should not be ruled out, the big-power relations are poised to develop in a benign direction. The international community should help make this happen because the nature of relations between the leading global powers will determine war and peace on the world stage and the smooth running of world affairs and upheavals, as historical experience tells us.
In addition, countries are becoming more and more dependent on each other economically, taking into account the accelerating economic globalization process, which will help foster better ties between nations, big powers included.
At the same time, the negative aspects of globalization should by no means be ignored. While driving world economic growth, globalization is making the world's wealth disproportionately concentrated in the hands of a small number of countries and a handful of individuals.
The ever-widening gap between the haves and have-nots has become the root cause of upheavals and social unrest, which renders this world disharmonious.
The gap between the least developed nations and the most developed widens each day, as does the disparity between the poorest populations and the richest ones.
According to a UN report on the development of the human race released this year, the total income of the richest 500 people in the world is higher than that of the 416 million poorest people put together.
The unfair and unjust world economic order is seriously hampering the harmonious development of the world economy.
Take aid to poor countries. Some rich countries that have enjoyed sustained prosperity since the end of the Cold War have not become more generous. Their per capita income has increased by more than US$6,000 but their per capita aid to poor countries has dropped to US$1.
Poor countries often run into tariff barriers set up by rich countries that are three to four times higher than those between wealthy countries.
Taking all this into account, eradicating world poverty and redressing the current unfair world economic order are pre-conditions to the world's balanced development, and, in turn, harmony.
Viewed from other angles, the idea of a "harmonious world" has been put forward because this world is not harmonious at present.
After September 11 and the Iraq war, profound changes have taken place in the world political arena. Contradictions have become unprecedentedly acute - the clashes between terrorism and anti-terror campaigns; the contradiction between the United States' unilateralist inclinations and the world's general trend towards multilateralism.
Wars and armed conflicts are posing a large threat to the harmony of the world.
Twenty-three serious armed conflicts are going on in the world today, including those raging and those cooling down.
Environmental damage, refugees, deteriorating public hygiene, proliferation of weapons of mass destruction and cross-border organized crime are other factors threatening the harmonious development of the world.
In view of this, a common security mechanism, common prosperity and pushing for the reform of the United Nations, in addition to tolerance, are the remedies prescribed by China.
In particular, the role of the United Nations, which is at the core of the world's collective security mechanism, should be strengthened, not weakened.
The idea of harmony is rooted in traditional Chinese thinking.
The Chinese word "he" has not only the connotations of "harmony" and "unity" but also those of "centripetal" and "coherence."
For the ancient Chinese, "harmony" was always at the core of dealing with everything from state affairs to neighbourly relations. The concept has always had a profound influence on the country's relations with the rest of the world.
At the same time, the Chinese have always emphasized the importance of "ruling a country benevolently," instead of "rule by force." This is a different expression of "harmony."
Putting forward the idea of bringing about "a world of harmony" today is also a way of promoting Chinese culture in the modern context.
The article is based on a discussion by international affairs specialists that appeared in Global Times
(China Daily 11/10/2005 page4)

As China rises, so does Japanese nationalism

As China rises, so does Japanese nationalism
Japan is stuck in its past, and its refusal to come to terms with it threatens to define its future and that of the whole of east Asia
Martin Jacques
Thursday November 17, 2005
The Guardian
The past year might be described as the moment time of China's rise. Of course its rise long predates these years, but this fact has suddenly been recognised worldwide, well beyond the global elite. It is now part of the popular common sense, not simply in Europe but everywhere; indeed, Europe has been relatively tardy in this process. The buzz surrounding Hu Jintao's visit is part of this picture. The phenomenon is even evident in China itself, where the past two years have seen a much wider awareness of both the fact and implications of the country's rise. In the face of this changed consciousness, it is inevitable that new stances will be adopted and new policy positions struck around the world. This is already happening in Japan, notwithstanding its typically understated tone. Developments there can only be described as ominous. While Europe still thinks of itself as somehow central to the future, east Asia is where the future will be played out. It is in that context that we should see the import of current trends in Japan.
(image placeholder)(image placeholder)hen Junichiro Koizumi, the Japanese prime minister, secured his dramatic and overwhelming victory in September's general election, its significance was generally interpreted as a victory for his programme of privatisation and deregulation. This, however, is secondary. Far more important to Japan's future is Koizumi's implicit and incipient nationalism. This was demonstrated again on October 17 with his latest visit to the Yasukuni shrine, where class A war criminals are honoured, despite the opposition of China and South Korea and the wave of anti-Japanese demonstrations in China earlier this year.
Little is made too explicit in Japanese society, but the new cabinet, which Koizumi announced last week, spoke volumes about both his intentions and likely future trends in Japan. The two top positions, chief cabinet secretary and foreign minister, were given to Shinzo Abe, the man most likely to succeed Koizumi when his term finishes next September, and Taro Aso respectively. Both are rightwing nationalists and both, like Koizumi, are regular visitors to Yasukuni. This is the first time that the three key positions in the cabinet have been occupied by such figures. The previous cabinet secretary, who had opposed Koizumi's visits to Yasukuni, was dropped from the cabinet and the former foreign minister, who did not visit Yasukuni, lost his position.
One might think that this is to read too much into such visits to the shrine. On the contrary, they are symbolic acts, an expression of how Japan's past and future should be seen, and as such a deliberate, if coded, signal to the Japanese. Nor are these visits naive or innocent in the message they send to China and South Korea. Koizumi may express the view that they do not give offence to these countries but he knows that they do. And this, indeed, is their very intention. The more these countries protest, the more likely it is that Koizumi will continue to visit the shrine. He is laying down a marker - for the Japanese and to the Chinese and Koreans. Japan's future is already beginning to take shape.
The causes of growing Japanese nationalism may be diverse, but they are increasingly driven by one overwhelming factor: a fear of the rise of China. That is the only way the behaviour of Koizumi and the other leading lights in the Liberal Democratic party can be understood. It could be different. China, widely credited with having pulled Japan out of its long-running recession, represents an enormous economic opportunity for Japan, and is already Japan's largest trading partner. But far more powerful forces than mere economics are at work. Ever since the Meiji restoration in 1868, Japan has turned its back on Asia in general and China in particular: its pattern of aggression from 1895 onwards and the colonies that resulted were among the consequences.
To engage with China requires Japan to come to terms with its past, and Koizumi's visits to the shrine represent a symbolic refusal to do so. Japan is stuck in its past, and its past now threatens to define its future and that of east Asia. Even during the postwar period, when Japan dominated east Asia economically and China was weak and self-absorbed, it never had an influence commensurate with its economic strength. The reason was simple: its failure to atone for its past and embrace a new kind of relationship with its wronged and distrustful neighbours. If Japan could not do it then, it is even less likely to do it in the face of a resurgent China that is rapidly displacing it as the economic and political fulcrum of east Asia.
The broader significance of the shift within the cabinet, and the Liberal Democratic party more widely, should not be underestimated. Japan remains a profoundly hierarchical society. Apart from a brief few months a decade ago, the Liberal Democrats have continuously held power more or less since the war. This lies in a much longer tradition in which the ruling elite has enjoyed an extraordinary continuity as the determinant and arbiter of Japan's course. If anything, that situation has been strengthened over the past decade with the effective collapse of the Socialist party, once the second-largest party, and the marginalisation of the Communist party; both fiercely opposed Japanese nationalism.
The rise of Japanese nationalism should be seen alongside another trend: the increasingly close links between Japan and the US. Earlier this year Japan affirmed, for the first time, its willingness to support the US in the event of a conflict over Taiwan. It has also agreed to work with the US to develop and finance a missile-defence system whose intention is clearly the containment of China. It is not difficult to see the early signs of a new cold war in east Asia, with Japan and the US on one side and China on the other. It does not have to be like this. If Japan grasped the nettle of its past and ushered in a new era in its relationship with China, South Korea and the rest of the region, it would surely play a major role in the evolution of the most economically powerful region in the world. Instead it looks increasingly likely that Japan will remain in splendid isolation from its continent, weighed down by fear, suspicion and anxiety that its neighbours, above all China, will seek to lord it over Japan in the way that Japan did over them for over a century. Its only solace will lie in looking across the Pacific to the US, which is likely only to intensify its isolation. Japan faces an extremely uncomfortable future.
· Martin Jacques is a visiting professor at Ritsumeikan University in Kyoto, Japan

How China learned to love capitalism

How China learned to love capitalism
In the run-up to President Hu's visit to Britain, author James McGregor looks at how his country is changing
Sunday November 6, 2005The Observer
China is simultaneously the world's largest startup and the world's largest turnaround. The country can draw on a 2,000-year tradition, but also on Western business know-how and technology - that is why it has been able to make progress so quickly.
If you think about the last decade of China's economic and social development in terms of comparable changes in the history of the United States, you can feel the wind on your face. China is at once undergoing the raw capitalism of the robber baron era of the late 19th century; the speculative financial mania of the 1920s; the rural-to-urban migration of the 1930s; the emergence of the 'first-car, first-home, first-fashionable clothes, first-college education, first-family vacation, middle-class consumer' of the 1950s; and even aspects of social upheaval similar to the 1960s.
It almost seems as if Deng Xiaoping, China's leader from 1978-1997, used Harvard Business School's turnaround guidelines as his blueprint. Consider just a few:
· Establish a sense of urgency. This was easy after the Cultural Revolution. The Communist party had to change course or lose power.
· Form a powerful guiding coalition. Deng empowered practical reformers but also left veterans of the Long March [1949 - it preceded the formation of the People's Republic under Mao Zedong] with enough of a grip to apply the brakes.
· Create a vision. Deng challenged the country to quadruple per-capita GNP from 1980 to 2000, a goal achieved four years early.
· Communicate the vision. Day and night, the state-owned press celebrates progress and exhorts new goals.
· Institutionalise new approaches. All major reforms, from farming to housing to finance and privatisation, were tested and refined as local experiments before being spread nationwide and surrounded with regulatory structures.
The start-up side of the equation is where foreign businesses and governments come in. China needed capital, technology, manufacturing expertise, management know-how, and overseas markets for its products. Like all start-ups, the Chinese have progressed through frantic trial and error, making it up every day, copying and modifying the practices and products of others, always sprinting to capture the market first, always aiming at the next pile of quick profits.
Given their cultural proclivities, I'm not surprised that I have never met a real communist in China - somebody who believes in the abolition of private property or the philosophy of 'from each according to his ability, to each according to his need'.
'Mao Zedong Thought' is still a core part of China's official ideology, and the 'Yan'an Spirit' of self-sacrifice and simple living is still the professed ideal for Chinese officials. The Chinese Communist party has recently tweaked its liturgy to protect private property and to state that the party is the vanguard of all Chinese people, not just the workers and the peasants.
But officials still endure endless speeches and propaganda study sessions where the words of Marx and Lenin are swirled into ever more creative combinations. They then climb into their Audi or Mercedes saloons and check stock prices on their mobile phones as they head home to apartment buildings named Beverly Hills, Park Avenue or Palm Springs, where their sons and daughters with Harvard or Wharton MBAs wait to discuss privatisation deals.
For most party officials, life is guided by the proverb zhi lu wei ma (point at a deer and call it a horse) - which means saying one thing and doing another is a way of life because the party believes that to do anything else would risk destabilising the system.
The 1989 Tiananmen Square massacre was a tragedy but also a turning point. It was caused by a deep split between conservatives and reformers in the party. Conservatives won the battle but lost the war. In the aftermath of Tiananmen, the party accelerated privatisation and market reforms because its credibility was shredded and could only be rebuilt by quickly improving people's lives.
Throughout the 1990s, in fact, the Communist party has resembled trickle-down Republicans. Private enterprise was not only allowed but the newly rich became celebrated as the country's new model workers - except when they were being jailed for corruption. The nation's resources were turned away from social programmes and into the construction of mind-boggling amounts of infrastructure aimed at supporting a market economy that could compete in the world.
I was once told that an ideal Chinese government should be like a strong water-skier behind a boat. The raging entrepreneurial drive of the Chinese people is the boat. The government is the skier who drags along behind, every now and then yanking on the rope with enough force to alter the boat's direction a bit if it heads off course.
All of this isn't a cynical exercise. If the business community is the 'old boys' network' in the west, the Communist party is the 'old boys' network' in China. While few, if any, officials believe in communism, they do believe in the system, that it should be protected and that it should, and can, be improved. The party today operates much like a corporation in the way it makes decisions and deals with people. Bright young officials are selected for ideological indoctrination and management training, and moved through increasingly responsible positions. Like a corporation, there is some democracy at the top of the party and almost none at the bottom.
This fairly modern system is grafted on to ancient attitudes and practices, however. China is largely ruled by its deeply ingrained culture. For the party, this is manifesting itself in the wealth that the political aristocracy is rapidly accumulating, wealth being a necessity to keep their families on top in a market economy. Nobody will ever admit this publicly, but it is quietly accepted that the families of senior Communist party officials will use their status and connections to quietly build assets.
This unspoken practice could be viewed as a permutation of the of the old 'inner court and outer court' system that dates back to the Han dynasty 2,000 years ago. In those days, the inner court was the extended imperial family and its trusted retainers. They had a right to the nation's wealth and controlled the military and the entities responsible for policing the government bureaucracy, or outer court. Today, the inner court is the top several hundred Communist party leadership families that emerged from the revolution. The Chinese military and government watchdog organisations today report to the party, not to the government bureaucracy, the equivalent of the old outer court.
The speed at which China went from communism to embracing capitalism should be no surprise. This is a country where the traditional greeting for Chinese New Year is gongxi facai (congratulations on getting rich). At weddings, guests line up at a table outside the reception hall where their red gift envelopes of cash are ripped open, counted, and recorded as everybody in line watches.
Given the distrust of the political system resulting from the Cultural Revolution and the corruption and constant change in the reform era, many Chinese place their trust only in money. This was most bluntly put to me by a cynical and scruffy 29-year-old cigarette smuggler surnamed Yang whom I met one day while wandering the streets in the city of Wuhan between meetings. A week earlier, two policeman had been shot when they tried to extort money from a street vendor. When I told Yang that I was American, he told me of the shooting as if it were a positive event.
'America is great because guns make everybody equal. Freedom in China is a pocketful of money,' he said, showing me a six-inch-thick wad of 50-yuan notes. 'In China, you either have money or you have to be obedient.'
Sitting in my apartment in Beijing today, I find myself constantly amazed at how normal business in China has become, both in terms of international practices and the traditional Chinese way of doing things. The start-up and turnaround aspects of China's economic rebirth are blending together. Fifteen years ago, when I arrived in Beijing, the coming of winter was signalled by the piles of cabbage on every street corner - the only vegetable available until spring. People would shove cabbages under stairwells, windowsills and beds in their chilly cement-floored flats, and eat them throughout the winter, cutting away more and more rotten leaves to find palatable bits as winter progressed.
Today street corners in Beijing are littered with department stores, mobile-phone shops, foot-massage parlours, Starbucks kiosks and fashionable pedestrians who must sprint when crossing the street to avoid being mown down by one of the millions of new Chinese car owners.
I live in a new but nondescript apartment building on the city's east side. My Chinese neighbours are entrepreneurs or executives for multinationals who often buy one apartment to live in and one to rent. On weekends we all converge on the dozen or so pirated DVD shops in the neighbourhood where any Hollywood movie of note is available with Chinese subtitles for $1 a disc. Our building, like nearly all residential apartments in major Chinese cities, has broadband access to the internet, where porn is plentiful but non-sanitised news and political sites are usually blocked.
In the winter, my neighbours store away their fake Callaway golf clubs, bundle up in their fake North Face parkas, grab their fake Prada purses, lace up their fake Nikes and speed away in their Chinese-made Buicks and Audis to meet friends at first-rate restaurants serving Italian, Thai, Japanese, Indian, California-fusion, or French cuisine, unless they are seeking comfort food and opt for Chinese bistro and a warm plate of sea slugs, chicken feet or peppered pork intestines.
A couple of decades of averaging 9 percent annual growth has transformed China in terms of material goods. It has created a society of haves and have-nots, with significant poverty remaining in many rural areas and rust-belts and tremendous wealth evident in cities large and small across China. The majority of the population is much better off.
Government social programs are weak but fast economic growth and the country's strong family system have so far provided a safety net. In poor villages I have visited in western China, most people have televisions and other conveniences because they have children who have gone off to the cities to work in factories or on construction projects who send much of their income home.
A country that was until recently poor but safe has become one that is unsettled and insecure. There is nothing to believe in but making money. Personal introspection is not a strong suit in Chinese culture. Discipline is the first thing people learn in life, not happiness. In traditional Chinese philosophy, emotions damage your body. Anger hurts your liver, too much happiness hurts your spleen, worry hurts your lungs. Kids are taught not to cry. Adults are supposed to suppress, suppress, suppress.
The saving grace of China, and the allowable release valve, is that the people have a fabulous sense of humour. When I was a reporter visiting different cities, I would sometimes seek out and drink beer with migrant worker peasants. They typically lived 10 or more in a room in plywood hovels as they worked 12-hour days building luxury high-rises. Instead of complaining to me about the unfairness of their lives, they would tell me jokes and tease one another.
One of the first expressions a foreigner will learn in China is chi ku (eating bitterness) because the Chinese take great pride in their ability to endure hardship. Many hardships are endured today because rapid economic improvements of the past 25 years have made Chinese people optimistic that life will continue to get better.
Some foreign businesspeople in China are very deeply integrated into the Chinese business scene. Foreign businesses are no longer an oddity, but a part of the fabric of Chinese commercial life, though the foreigners themselves are still outsiders in the eyes of Chinese society.
A young man I met a few years ago from my hometown of Deluth, Minnesota, learned this at a wedding. In the mid-1990s, Mark was an English teacher at a Chinese school in the coastal city of Quanzhou in Fujian province, across from Taiwan. One day a student invited Mark to attend his brother's wedding, to be held in a village in the mountainous interior of Fujian, about an eight-hour bus ride from Quanshou. On the day of the wedding, Mark was a little nonplussed when he arrived at the banquet hall to find bride, groom, and entire wedding party waiting on the kerb to greet him.
When he was escorted into the banquet hall, Mark was even more surprised when everyone in the room rose and applauded. He was seated at the head table, then invited to accompany the bride and groom as they made the rounds toasting each table. By the end of the banquet, Mark was more than a bit drunk and revelling in his inexplicable celebrity status. As they walked out of the banquet hall, Mark's student put his arm around Mark's shoulder and said into his ear: 'Thanks for coming, you really added great atmosphere.'
Now Mark understood: he was nothing more than an exotic decoration. As foreigners living and doing business in China, we really should remember that in the eyes of many Chinese, we are here only to add a bit of atmosphere - and some technology, know-how, and money, of course.
In viewing China as the world's biggest startup and turnaround, and considering the role of foreign business and Chinese tradition in the process, it is helpful to remember a slogan from the Qing dynasty that was often quoted by Mao: gu wei jin yong, yang wei zhong yong (make the past serve the present, make foreign things serve China).

US Shouldn't Fear Rise of China, India

US Shouldn't Fear Rise of China, India
American leadership can survive and even gain from Asia's new stars as long as trade is free

Robert Samuelson
The Business Times, 26 May 2005
AMERICANS are having another Sputnik moment: One of those periodic alarms about some foreign technological and economic menace. It was the Soviets in the 1950s and early 1960s, the Germans and the Japanese in the 1970s and 1980s, and now it's the Chinese and the Indians.
To anyone old enough, there's no forgetting Oct 4, 1957, when the Soviets sent the first space satellite into orbit. It terrified America. We'd taken our scientific superiority for granted. Foolish us. Soon there were warnings of a 'missile gap' with the Soviets. One senator admonished that Americans should 'be less concerned with . . . the height of the tail fin on the new car and prepared to shed blood, sweat and tears if this country and the free world are to survive'.
The missile gap turned out to be a myth, as did many later theories explaining why the Germans and the Japanese would inevitably surpass us. They were said to have better managers, better workers and better schools. They outsaved and outinvested us.
Let's see. In 2004, Americans' per capita incomes averaged US$38,324, reports the Conference Board. The figures for Germany and Japan were US$26,937 and US$29,193. One puzzle about the US economy is why it doesn't do worse when there are so many reasons that it should. Our students do fare poorly on international comparisons.
In a recent study of math skills of 15-year-olds in 29 countries, done by the Organisation for Economic Cooperation and Development (OECD), Americans ranked 24th.
America does depend heavily on immigrants to fill science and engineering jobs. In 2000, immigrants accounted for 17 per cent of US scientists and engineers with bachelor's degrees, 29 per cent with master's degrees and 38 per cent with doctorates. And our savings and investment rates are low.
In 2001, the US savings rate ranked 22nd out of 25 OECD countries.
The explanation is this: Every complex economy is more (or less) than the sum of its parts. What matters is not just how much we save - but how well we invest. The Japanese have squandered much of their higher savings on unproductive investments. Similarly, many work skills are learned on the job.
Perhaps 70 per cent of the gap in average incomes between the US and Western Europe reflects the fact that Europeans work less than Americans. The Europeans are entitled to their preferences (longer vacations, earlier retirement), but their higher unemployment and lower labour-force participation rates mean that fewer people acquire real job skills - and that some with skills don't use them.
The apparent American deficit in scientists and engineers is also exaggerated. Only about a third of our science and engineering graduates take science and engineering jobs. The rest often work as managers, salespeople, analysts or something else. If there were a shortage, the pay would go up. In 1999, the median salary of US scientists and engineers was US$60,000 - solid but not spectacular pay. As for immigrants, they come for the opportunities.
The Sputnik syndrome is an illusion. It transforms a few selective economic happenings - a satellite here, a Toyota there, poor test scores everywhere - into a full-blown theory of economic inferiority or superiority. As often as not, the result is misleading. We are now going through this process with China and India. Their entry into the global economy is a big deal, with some obvious pluses and minuses for us.
As they get richer, some of their talent that once came our way may stay home (especially if we make getting US visas harder). On the other hand, good ideas that originate in Bangalore or Shanghai will soon benefit people everywhere - just as good American or Japanese ideas have before.
Do China and India threaten us economically? Possibly, though not in the usually imagined way. Their low wages and rising skills will continue to cost us some jobs, especially in an easily interconnected world. But if global trade were reasonably balanced, we should roughly gain what we lose. Countries that export would spend their earnings on imports.
Unfortunately, trade isn't well balanced. China and many Asian countries (though not India) run huge surpluses; they sell more than they buy. That's why the Bush administration is rightly pressuring China to revalue its currency, which would make Chinese exports more expensive and its imports less expensive.
The danger is that the China bloc destabilises the world economy - not that it soon overtakes us.
On being overtaken, history teaches another lesson. America's economic strengths lie in qualities that are hard to distill into simple statistics. We've maintained beliefs and practices that compensate for our weaknesses, including ambitiousness, openness to change (even unpleasant change), competition, hard work and a willingness to take and reward risks.
If the US loses this magic combination, it won't be China's fault. - Washington Post Writers Group
Source:The Business Times