Enter the Dragon – Making Sense of the Middle Kingdom
June 18, 2007 at 4:39 pm | Posted in Uncategorized | 1 CommentThe rise of China dominates headlines around the world. It has extremely high economic growth, foreign exchange reserves of over $1 trillion and is preparing to host a most spectacular Olympic games. China is changing at breakneck speed, new cities are sprouting up, old cities are livening up, and the country as whole is experiencing an industrial revolution of a scale and speed unprecedented in world history. And yet, in some ways, there is nothing extraordinary about the rise of China. All we are witnessing is a return to historical normalcy. According to Angus Maddison, economic historian at the University of Groningen, between 1600 and 1900, China’s share of the world GDP ranged from 25% to 33%. During this period China’s agriculture was more advanced than the West’s, its cities were bigger, urban literacy was higher and its ruling classes were more meritocratic. The Middle Kingdom is still a long way from achieving those levels.
Like the Americans and the French, the Chinese have a sense of manifest destiny. It stems from their long history, prolonged periods as a large empire and their humiliation at the hands of foreign invaders in the 19th and 20th centuries. The Chinese want their country to be rich, powerful and respected in the world. They feel they are a unique people with a history unrivalled by any other civilization and, therefore, aspire to attain their rightful place in the world. As China’s economy grows dramatically it is being able to project financial and military power to achieve that goal. China is a powerful player not only in South-east Asia, Central Asia and North Korea but also in Africa. Its rise in Africa has been most dramatic where it is building infrastructure, buying commodities and lending to governments on a scale reminiscent of European powers in the 19th century. China is also an enthusiastic participant in the WTO and, with a trade-to-GDP ratio of around 70%, is one of the world’s most open economies.
For many, especially in the US, China’s rise is causing alarm. Many wonder how far China will go. It is increasingly acquiring economic and military strength but money and guns alone will not be enough for China to become a great global power. It will also need ideas and this is its Achilles heel. China offers no new ideas or paradigms to the world. It is merely trying to adapt to the world as it is but has little vision of what it would like the world to be.
Academics on both side of the Atlantic often comment on lack of creativity that they find among their Chinese students. In the words of a German professor, Chinese students tend to be smart but not bright; they reproduce answers but do not ask questions and find it difficult to think in new ways. Numerous academics and professionals who have worked with the Chinese have come to similar conclusions. During a recent visit to Paris the writer stayed in a youth hostel and in the evening a group consisting of Australians, Americans, Argentineans, Poles and Indians started talking about world issues ranging from the middle-east to climate change. However, none of the Chinese joined the conversation or exchanged pleasantries with us. They kept to themselves and were sightseers rather than open minded inquiring travelers. In the writer’s experience this behaviour forms a pattern and the Chinese are the most difficult community to reach out to. What explains Chinese insularity and lack of curiosity? It is partly cultural snobbery and partly poor English language skills but the key explanation lies in China’s authoritarian system where people prefer the known to the unknown and lose their spirit of inquiry.
China’s attempts to control the flow of information to its citizens are reminiscent of Soviet methods in the Cold War days. Any visitor to the Xinhua website will find that while the Spanish football league is reported better than in the BBC, the rest of the news is barely fit for adolescents. The Chinese are served propaganda instead of news. During the writer’s first visit to Shanghai, he was shocked to find that credible news websites like the BBC were blocked by Chinese authorities. It is not just news which is censored; all forms of expression are controlled. Furthermore, even the past is off limits for any enquiry. June 4th was the 18th anniversary of the suppression of the Tiananmen Square protests and June 8th was the 50th anniversary of the “anti-rightist movement”, launched by Mao to crush dissent. However, there was hardly any reflection on, leave aside re-evaluation of, the two historical episodes in recent Chinese history.
Since the 1980s China has increasingly embraced the market. It has jettisoned communist policies but continues to pay lip service to communism. It is trying to build a capitalist economy in a society where the Communist Party monopolizes power. The party is forcing China to live a lie. Theory and reality do not match. No principles underpin China and a moral vacuum lies at the heart of Chinese life. Abuse of power and corruption are endemic. There is no rule of law or accountability in the country. Corrupt officials are engaged in a massive land grab as property rights remain nebulous and ill-defined. Guangxi, the Chinese word for connections, is all important. The urban elite do not question anything because the party has allied itself with the elite’s interests. Furthermore, members of the elite draw a distinction between themselves and the party, and shrug away social responsibility. Most are too busy getting rich and, if they feel altruistic, they establish charities rather than raise uncomfortable questions.
In some ways, the Cultural Revolution has shaken the core of Chinese society. Intellectuals talk of the loss of an ethical anchor and a moral compass in today’s China. A generation of spoilt single children, little Emperors, is now coming of age which only believes in conspicuous consumption. The Chinese have a valid reason when they say they do not want to commit to carbon dioxide targets as they are trying to industrialize and their development concerns outweigh environmental ones. But they have no excuse whatsoever for not controlling the exploding demand for tiger bones or ivory which is putting endangered species to risk. The elephant, the tiger and the lion are all at risk because of obscene and irrational Chinese greed.
China’s meteoric rise is creating both external and internal tensions for itself. Japan, Russia, India and smaller Asian nations are all wary and, at times, scared as China seeks to expand its influence along its huge borders. At the same time, internal problems are mounting. The gap between the southern coastal states and the rest of China is widening, there is a huge divide between urban and rural areas, income inequality is acute and the peasants in certain areas are getting restive. Given its one child policy, China faces the spectre of turning old before it becomes rich. The Middle Kingdom’s external challenges will be manageable. As long as it does not invade Taiwan, China will not find its envious rivals clubbing together to hammer it down. Its power shall grow and, although it will never be a credible challenger to the US, it shall be the dominant Asian power for some time to come. Internal problems shall test China more. Will corruption, repression and inequality lead to an upheaval? What will happen in a downturn? How will it deal with its ageing society? And most important of all, as it increasingly becomes a market economy, how long can it continue to live a lie?
Is France ready for Sarkozy?
June 16, 2007 at 8:34 am | Posted in Uncategorized | Leave a commentA profound shift has taken place in France, la grande nation. Nicolas Sarkozy, the son of a Hungarian aristocrat and a Greek Jewess, has taken over as President. Seven of the 15 members of his cabinet are women and one is the daughter of a North African cleaning lady. Interestingly, only two members of his cabinet went to ENA, the elite Ecole Nationale d’Administration, which has hitherto been the cradle for the French political elite. In fact, Sarkozy himself is the first non ENA president of the 5th Republic.
Perhaps even more striking has been Sarkozy’s appointment of ministers cutting across political lines. The new defence minister was until recently a key adviser of Francois Bayrou, the centrist presidential candidate. Furthermore, four men of the left are in the cabinet; the most famous among them being Bernard Kouchner, a founder of Médecins sans Frontières and a champion of humanitarian intervention. By putting Kouchner in charge of foreign affairs Sarkozy has sent a clear signal that he is interested in reaching out to everyone. His cabinet is a broad church with members from all shades of French political life, unprecedented in the history of French democracy.
As president, Sarkozy has got off to a sensational start. The media is saluting what the Economist called his “artful mix of political inclusiveness, policy creativity and symbolic renewal” in naming his cabinet. Opinion polls say that he is the most popular newly elected president since de Gaulle. And on June 17th, when the French vote in the second round of their legislative election, his party is expected to win a thumping parliamentary majority. Sarkozy, a short hyperactive man with boundless energy, seems to be riding high but it is still unclear whether France is ready for him.
In France, the socialists may be scattered but socialism remains a powerful idea. The French state accounts for 54 per cent of the GDP and has an overly generous welfare system. Any casual visitor to France might think the country was doing well. It has great healthcare, good infrastructure and some of the best known companies in the world. But the French system rests on shaky foundations. The French work too few hours, a bare 35 per week. Heavy taxation destroys the incentive to work and has driven droves of French across the Channel and even across the Atlantic. Economic growth has been pathetic and unemployment has remained stubbornly high. The infamous French bureaucracy throttles entrepreneurship and makes life extremely difficult for small businesses. Furthermore, the education system is in crisis. It stifles creativity and rewards rote learning. Even the Grande Ecoles, the highly selective and prestigious French schools, do not compare to the top Anglo Saxon universities. The Eiffel Tower is emblazoned with the names of great French scientists and thinkers, counterparts to them do not exist in today’s France. For all its intellectualism and extremely high level of culture, la grande nation is in intellectual decline but is unaware of that fact.
Many of France’s current problems can be traced to May 1981 when the left seized power under Francois Mitterand. The ENA elite dominated and, apart from decorating Paris with yet more beautiful architecture, it did little to prepare France for future challenges. At a time when Britain experienced the Thatcherite revolution and, as a result, emerged as a dynamic economy, France slipped towards statism and decline. Chirac’s election did nothing to change the situation. Though nominally a man of the right, he was a populist without principles interested only in power for power’s sake. An ENA man himself, he shied away from crucial reforms and continued with the policies of the 1980s which were clearly not working. Although he came to power on a promise to mend “social fracture” he is leaving France as divided as ever.
Sarkozy, to his credit, is one of the few politicians acutely aware of France’s problems. He is promising a slew of reforms which, if implemented, will shake up the country. He proposes to exempt workers from tax and social-security charges for hours worked above the 35-hour week, let mortgage-interest payments be deducted from income tax; tighten immigration rules; and stiffen sentences for young and repeat offenders. He also wants to guarantee minimum service on public transport during strikes, loosen the legal right of the big five unions to represent all employees in a workplace, introduce a single job contract with progressive rights and reform unemployment benefit. Other plans include making 50% the top limit on all personal taxation and social charges, reducing inheritance tax, reforming special pension privileges of employees in the public sector and granting universities more autonomy to set fees and recruit staff and students.
The big question is how a France used to the status quo will respond to such changes, many of which will be painful. The unions will go on strike. Students, buoyant from last year’s victory over de Villepin and who voted overwhelmingly for Sego Royal, will take to the streets. Insiders in the famously obstructive French bureaucracy will do all they can do to impede change. Already the Socialists have seized upon the proposed rise in VAT from 19.6 to 24.6 per cent, a rise of five percentage points, and made it a campaign issue. The French have yet to wake up to the fact that the sums in their economy do not add up. Their overly generous welfare state has to be trimmed down and the tax burden has to be redistributed. Bringing these changes shall bring people on the streets, a formidable French tradition since the days of the revolution. France faces turbulence in the coming days which will be reminiscent of Britain in the early Thatcher years when she took on the unions.
Sarkozy’s victory is likely to prove to be a turning point as significant as Mitterand’s election. Then the country made a leftward lurch and now it has moved in the opposite direction. French voters realising the significance this year’s elections have voted en masse. In the presidential election, voter participation was 84%, much higher than 64% in the US and 61% in the UK. Sarkozy campaigned for “rupture” with the past and he now has a mandate to achieve it. The million dollar question is whether France understands what “rupture” entails and whether it has the stomach for change?
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