Through the bamboo darkly!

I am still peering as hard as I can into the mystery that is Chinese affairs and with a little help from friends and from the experts in the media I am beginning to discern a sort of pattern.  First of all, most of the experts seem to think that the Bo Xilai affair was a personal matter that flared up and went out of control and thereby offered the 'moderates' in the government the chance to strike down a man who, whilst being enormously rich himself, yearned for a return to good old-fashioned Mao-ism.  According to Jonathan Fenby in The NYT, the timing was perfect because the CCP (Communist Party of China) is due to hold its five-yearly congress later in the year and several places on the 9-man standing committee of the polit-bureau, the highest organ of power in the land, are up for grabs.  Bo Xilai had been making a hard play for one of the places not least because the multi-metropolitan province he ran has a population of over 32 million!  His grip on this power-base was beginning to give him every appearance of being an old-fashioned warlord with all the possibilities of schism that entails and which the Party could not accept.

But, as Fenby points out, the Bo Xilai affair is a symptom not a cause.  The fact is, or appears to be, that the there is a very real difference of political philosophy emerging amongst the Chinese leadership and it arises because of, and how Karl Marx must be chuckling, "internal contradictions".  Most people in the west assume that China is growing in wealth and power and to an extent that is true, but at the same time huge problems are also arising.  Some are, so to speak, 'technnocratic' like a growing shortage of water in the north, a huge increase in pollution, fairly useless regulations on health and safety and corruption being rife and growing.  A falling birth-rate and an enormous aging population is already looming large.  At a more political level is the realisation that China's economic model, tremendously successful over the last 30 years, is now out of date - and if that reminds you of the UK you will have an idea of the difficutlies for any government trying to re-jig an economy.  Apart from anything else, the government, as such, was not really responsible for the 'Chinese miracle'.  It was, like all true capitalist explosions, the result of myriad small, local and actually illegal activities by peasant farmers and small shopkeepers and businessmen acting with a nod and a wink (and probably a backhander) in conjunction with local Party apparatchiks.  (From personal experience during my nearly three years in Singapore I cannot stress too highly the entrepreneurial drive that seems to abide in so many Chinese.)

However, whilst individual Chinese entrepreneurs built up their businesses, the government made sure to hold on tight to the main institutions of the economy - the banks and the big state-owned enterprises.  In other words, the Chinese polit-bureau is now facing the sort of huge institutional barriers to progress and freedom that Margaret Thatcher in the UK had to take on in the 1980s.  Gradually, in the Chinese way, they seem to be making a start.  Their currency has been allowed to have a wider band within which to float against other currencies - particularly the dollar.  The state-owned banks are under pressure to operate under the same market disciplines that the smaller private banks have to do.  Of course, all these changes are pushed forward on the "softly, softly, catchee monkey" principle and any signs of ill-discipline like that which regularly afflicts the internet is swiftly dealt with.

And, of course, even in this 'global village' of international business there is still a 'Chinese way' of doing business which harks back to the first rumbustuous beginnings of the industrial revolution in England and the gradual civilising of the 'wild west' in America as Michael J. de la Merced reports in The NYT:

It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.

Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.

And this week, more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing late on Thursday.

As one local American expatriate put it:

“What you have here are Western systems of corporate governance that don’t work with strong-willed Chinese C.E.O.’s,” said Paul Gillis, a professor at the Guanghua School of Management at Peking University.

You can say that again:

The company disclosed in its regulatory filing that it was investigating the unauthorized transfer of ownership in several of its colleges to unknown people.

Then on Monday, as ChinaCast was preparing to pay out wages, several men burst into the Shanghai office, demanding the financial department’s computers. These people forcibly took the equipment and punched at least one of the company’s outside lawyers, according to a letter to employees from Mr. Feng.

On Tuesday, another group of men claiming to have Mr. Chan’s approval ordered an electrical blackout to stop the workday, according to the memo. ChinaCast called in the police to throw the people out.

Operating in China might be described as 'a velly lisky business'! 

There are, of course, two other areas of Chinese governance which are going to be hugely important in the next 50 years.  Like so many other nations both now and in the past, there is a sort of symbiotic relationship between military and foreign policy but it is not clear at this stage who is leading, the soldiers or the diplomats.  I have come across very little information on the People's Army although a recent article by Adam Lowther and Panayotis A. Yannakogeorgos in The American Interest cast some light on the Second Artillery Corps which is the formation designated as the custodian and operator of Chinese nuclear weaponry.  The authors sum up the questions that arise:

In the modern Chinese military treatise The Science of Campaigns, the essence of Chinese nuclear strategy is described as lying "in the ingenious selection of targets, ingenious choice of timing opportunities, ingenious use of forces and firepower, and the ingenious application of operational methods." This prompts several questions: Who is targeted? What is the objective? When will it happen? Where will the Chinese deploy it? And why and how will they do it?

Worryingly, they say that Chinese strategy is based firmly on memories of the "century of humiliation" inflicted on China by the hands of 'foreigners'.  One can't blame them but one hopes that they are not overly obsessive!  Even so, one man who has studied the country's history:

Alistair Ian Johnston has pointed out in his analysis of three thousand years of Chinese military history, when China was at its weakest, it employed a strategy of appeasement. When it grew stronger but remained relatively weak, China employed a defensive strategy. When China was militarily superior, it took the offense

I don't suppose it is too difficult to discern Chines foreign policy aims which can be summed up as a desire for much greater power in South East Asia and the Pacific.  The possibilities (or in some cases - Taiwan - the probabilities) are manifold.  As I have remarked before, the Americans need a very shrewd and long-term policy in its dealings with China.  This means that idiots like Romney threatening to indulge in an economic war from day one of his presidency need to be sat upon.  The Americans should remember Theodore Roosevelt's words: "Speak softly, and carry a big stick."

 

Comments

[Whyaxye]

"Chinese strategy is based firmly on memories of the "century of humiliation" inflicted on China by the hands of 'foreigners'. One can't blame them but one hopes that they are not overly obsessive!"

I think the MoD ought to get working immediately on our latest defensive strategy. A perfect Mandarin translation of the phrase:

Look, we know you are very angry, but what are a few jokes about "flied lice", compared to what those bloody Japanese did to you?"

[A K Haart]

I get the impression that a rapidly ageing population is going to become a very big headache within a few decades. Too many pressures building up and not enough flexibility to cope with them. Interesting times indeed.

[dearieme]

Wot abaft the "century of humiliation" inflicted on foreigners by China?

[Andra]

Well, what abaft it?

[David Duff]

In issuing my strictures concerning American diplomacy I should have made clear that the same thing applies to the Chinese - it takes two to tango and/or to have a punch up! That is why the forthcoming changes to the standing committee of the polit-bureau are crucial. One assumes subtlety on the part of the Chinese but you would be a fool to depend on it, they have their home-grown hot-heads as well as us!