Horrible extract from upcoming horrible book

[Saul Thomas <stthomas@nerdshack.com>]

This is a horrible article from Sunday's Observer. I forward it because 
some of you who are teachers might want to treat it as a specimen for 
analysis and discussion (I am thinking of Dan Vukovich in particular).

Saul
-------------

http://observer.guardian.co.uk/review/story/0,,1984044,00.html?=rss

New China. New crisis


In the last decade China has emerged as a powerful, resurgent economic 
force with the muscle to challenge America as the global superpower. 
But, in his controversial new book, Will Hutton argues that China's 
explosive economic reforms will create seismic tensions within the 
one-party authoritarian state and asks: can the centre hold?

Sunday January 7, 2007
The Observer

For more than 2,000 years, China's conceit was that it was the celestial 
kingdom, the country whose standing was endowed by heaven itself and 
whose emperors tried to reproduce heavenly harmony on Earth. All China 
basked in the reflected glow; foreigners were barbarians beyond the 
gilded pale who should not be allowed even to learn the art of speaking 
and writing Chinese.

When I first visited China in the autumn of 2003, such articles of 
Confucian faith seemed very far away, submerged by the lost wars and the 
26 humiliating treaties of the 19th century, subsequent communist 
revolution and now the economic growth to which Beijing's motorway rings 
and Shanghai's skyline are tribute. This was a new China that had 
plainly left behind obeisance to the canons of Confucianism and the 
later cruelties of Mao. More than three years and a book later, I am 
less convinced.

Article continues
All societies are linked to their past by umbilical cords - some 
apparent, some hidden. China is no different. Imperial Confucian China 
and communist China alike depended - and depend - upon the notion of a 
vastly powerful, infallible centre: either because it was interpreting 
the will of heaven or, now, of the proletariat. In neither system have 
human rights, constitutional checks and balances or even forms of 
democracy figured very much. As a result, China has poor foundations on 
which to build the subtle network of institutions of accountability 
necessary to manage the complexities of a modern economy and society. 
Sooner or later, it is a failing that will have to be addressed.

China is both very confident about its recent success and very insecure 
about its past, a potent mix that breeds a deep-seated xenophobia and 
shallow arrogance. China's economy in 2007 will be nearly nine times 
larger than it was in 1978 when Deng Xiaoping won the power struggle 
with the Maoists and began his extraordinarily sinuous, gradualist but 
successful programme of market-based economic reforms, groping for 
stones to cross the river, as he called it. China is now the fourth 
largest economy in the world - after the United States, Japan, and 
Germany - and is set to become the second largest within a decade. More 
than 150 million workers have moved to China's booming cities and 400 
million people have been removed from poverty. It is a head-spinning 
achievement.

China is the new factor in global politics and economics, and its rulers 
and people know it. It now has more than $1 trillion of foreign exchange 
reserves, the world's largest. It is the single most important financier 
of the United States' enormous trade deficit. It is the world's second 
largest importer of oil. Before 2010, it will be the world's largest 
exporter of goods. It is, comfortably, the world's second largest 
military power. Last year, the Pentagon's four-yearly defence review 
stated that China is the power most likely to 'field disruptive military 
technologies that could over time offset traditional US military 
advantages'. A new great power is in the making, but one whose pursuit 
of its self-interest takes the amorality of power to a new plane. It is 
not just the Chinese who should be concerned about its institutional and 
moral failings; all of us should be.

In China, you can almost smell the new self-confidence: it is in the 
skyscrapers built in months; it is in the brash and unashamed 
willingness to rip off and copy Western brands; it is in the 
well-groomed and inscrutable demeanour of the rich entrepreneurs, 
self-confident officials and assured academics.

I sat in a Beijing bar just over a year ago with a typical member of 
China's new class of rich businessmen who double up as members of the 
party, a combination of commercial and political power that China knew 
well as the old Confucian mandarinate, now strangely reproducing itself 
in a new guise after Mao tried to eliminate it forever in the Cultural 
Revolution.

In surprisingly fluent English and with his Mercedes waiting outside, he 
praised China's communist regime and its curious mix of capitalism and 
communism with all the enthusiasm of a Tory businessmen praising 
Thatcher. Chinese corruption? Think of Enron and party-funding scandals 
in London, he declaimed. Double standards between communist rhetoric and 
practice? What about the US and Britain's invasion of Iraq, and 
Guantanamo Bay? What I failed to realise, he insisted, betraying both 
assurance and insecurity, is that China will not surrender again the 
natural rank that it should never have lost. Western values, 
institutions and attitudes were being revealed for being straw men, 
blown away by resurgent China and the pragmatism of its communist leaders.

Yet Western values and institutions are not being blown away. The 
country has made progress to the extent that communism has given up 
ground and moved towards Western practices, but there are limits to how 
far the reformers can go without giving up the basis for the party's 
political control. Conservatives insist that much further and the 
capacity to control the country will become irretrievably damaged; that 
the limit, for example, is being reached in giving both trade unions 
more autonomy and shareholders more rights. It is the most urgent 
political debate in China.

The tension between reform and conservatism is all around. For example, 
the party's commitment now is no longer to building a planned communist 
economy but a 'socialist market' economy. The 26,000 communes in rural 
China, which were once the vanguard of communism, were swept away by the 
peasants themselves in just three years between 1979 and 1982, the 
largest bottom-up act of decollectivisation the world has ever 
witnessed. Hundreds of millions of peasants are, via long leases, again 
farming plots held by their ancestors for millenniums. China's 
state-owned enterprises no longer provide life-long employment and 
welfare for their workers as centrepieces of a new communist order; they 
are autonomous companies largely free to set prices as they choose in an 
open economy and progressively shedding their social obligations.

Equally amazing, China's communists have declared that the class war is 
over. The party now claims to represent not just the worker and peasant 
masses but entrepreneurs and business leaders, whom it welcomes into its 
ranks. The party refers to this metamorphosis as the 'three represents': 
meaning that the party today represents 'advanced productive forces' 
(capitalists); 'the overwhelming majority' of the Chinese (not just 
workers and peasants); and 'the orientation ... of China's advanced 
culture' (religious, political and philosophical traditions other than 
communism).

Party representatives say that the country is no longer pledged to fight 
capitalism to the death internationally, but, instead, wants to rise 
peacefully. China has joined the World Trade Organisation and is a 
judicious member of the United Nations Security Council, using its veto 
largely in matters that immediately concern it, such as Taiwan.

But for all that, it remains communist. The maxims of 
Marxist-Leninst-Maoist thought have to stand, however much the party 
tries to stretch the boundaries, because they are the basis for 
one-party rule. Yet the system so spawned is reaching its limits. For 
example, China's state-owned and directed banks cannot carry on 
channelling hundreds of billions of pounds of peasant savings into the 
financing of a frenzy of infrastructure and heavy industrial investment. 
The borrowers habitually pay interest only fitfully, and rarely repay 
the debt, even as the debt mountain explodes. The financial system is 
vulnerable to any economic setback.

Equally, China is reaching the limits of the capacity to increase its 
exports, which, in 2007, will surpass $1 trillion, by 25 per cent a 
year. At this rate of growth, they will reach $5 trillion by 2020 or 
sooner, representing more than half of today's world trade. Is that 
likely? Are there ships and ports on sufficient scale to move such 
volumes - and will Western markets stay uncomplainingly open? Every 
year, it is also acquiring $200bn of foreign exchange reserves as it 
rigs its currency to keep its exports competitive. Can even China 
insulate its domestic financial system from such fantastic growth in its 
reserves and stop inflation rising? Already, there are ominous signs 
that inflationary pressures are increasing.

These ills have communist roots. It is the lack of independent scrutiny 
and accountability that lie behind the massive waste of investment and 
China's destruction of its environment alike. The pace of 
desertification has doubled over 20 years, in a country where 25 per 
cent of the land area is already desert. Air pollution kills 400,000 
people a year prematurely. A hacking cough in the Beijing smog or the 
stench when the wind comes from the north in Shanghai are reminders of 
just how far China still has to go.

Energy is wasted on an epic scale. But the worst problem is water. 
One-fifth of China's 660 cities face extreme water shortages and as many 
as 90 per cent have problems of water pollution; 500 million rural 
Chinese still do not have access to safe drinking water. Illegal and 
rampant polluting, a severe shortage of sewage treatment facilities, and 
chemical pollutants together continue to degrade China's waterways. In 
autumn 2005, two major cities - Harbin and Guangzhou - had their water 
supplies cut off for days because their river sources had suffered acute 
chemical spills from state-owned factories.

Enterprises are accountable to no one but the Communist party for their 
actions; there is no network of civil society, plural public 
institutions and independent media to create pressure for enterprises to 
become more environmentally efficient. Watchdogs, whistleblowers, 
independent judges and accountable government are not just good in 
themselves as custodians of justice; they also keep capitalism honest 
and efficient and would curb environmental costs that reach an amazing 
12 per cent of GDP. As importantly, they are part of the institutional 
network that constitutes an independent public realm that includes free 
intellectual inquiry, free trade unions and independent audit. It is 
this 'enlightenment infrastructure' that I regard in both the West and 
East as the essential underpinning of a healthy society. The individual 
detained for years without a fair trial is part of the same malign 
system that prevents a company from expecting to be able to correct a 
commercial wrong in a court, or have a judgment in its favour 
implemented, if it were against the party interest.

The impact is pernicious. The reason why so few Britons can name a great 
Chinese brand or company, despite China's export success, is that there 
aren't any. China needs to build them, but doing that in a one-party 
authoritarian state, where the party second-guesses business strategy 
for ideological and political ends, is impossible. In any case, nearly 
three-fifths of its exports and nearly all its hi-tech exports are made 
by non-Chinese, foreign firms, another expression of China's weakness. 
The state still owns the lion's share of China's business and what it 
does not own, it reserves the right to direct politically.

Mark Kitto, a former Welsh Guardsman, has found at first-hand how 
difficult it is to sustain private ownership in China. He built up three 
Time Out equivalents in Beijing, Shanghai and Guangzhou but, after seven 
years of successful magazine publishing, learnt last year that he was 
about to become a partner of the state. The only terms on which his 
licence to publish could be retained was if he were to accept a de facto 
takeover from China Intercontinental Press, controlled by China's State 
Information Council, the propaganda mouthpiece of the Communist party. 
It did not matter that he owned the shares, wanted to retain his 
independence and had been careful to stay within the party's publishing 
guidelines. The party now wanted control of his magazines and simply 
took it. It is an example repeated many times over.

China must become a more normal economy, but the party stands in the 
way. Chinese consumers need to save less and spend more, but consumers 
with no property rights or welfare system are highly cautious. To give 
them more confidence means taxing to fund a welfare system and conceding 
property rights. That will mean creating an empowered middle class who 
will ask how their tax renminbi are spent. Companies need to be subject 
to independent accountability if they are to become more efficient, but 
that means creating independent centres of power. The political 
implications are obvious.

China's future is shrouded in uncertainty. My belief is that what is 
unsustainable is not sustained. Change came in the Soviet Union with the 
fifth generation of leaders after the revolution; the fifth generation 
of China's leaders succeed today's President Hu Jintao in 2012. No 
political change will happen until after then, but my guess is that 
sometime in the mid to late 2010s, the growing Chinese middle class will 
want to hold Chinese officials and politicians to account for how they 
spend their taxes and for their political choices. What nobody can 
predict is whether that will produce another Tiananmen, repression and 
maybe war if China's communists pick a fight to sustain legitimacy at 
home or an Eastern European velvet revolution and political freedoms. 
Either way, China's route to becoming a world economic power is not 
going to proceed as a simple extrapolation of current trends.

This book has been something of a personal intellectual odyssey. My 
hypothesis when I began was that China was so different that it could 
carry on adapting its model, living without democracy or European 
enlightenment values. I have changed my mind and now see more clearly 
than ever the kinds of connection I identified in The State We're In 
between economic performance and so-called 'soft' institutions - how 
people are educated, how trust relations are established and how 
accountability is exercised (just to name a few) - are central. They are 
equally important to a good society and the chance for individual 
empowerment and self-betterment.

Early in my research, I tried out the still-emergent thesis at a small 
dinner in Lan Na Thai, one of the restaurants in Shanghai's Ruijin guest 
house, a complex of refurbished old mansions and traditional pavilions 
in the French quarter where communist leaders reputedly once ate and slept.

Over stir-fried curried chicken and crispy fried flying sea bass, the 
Chinese guests repeated politely and persuasively that China was making 
up new economic and political rules. Afterwards, I chanced to have a few 
words alone with one of the local rising government stars as we walked 
out of the complex. He kept his eyes on the ground. 'Don't allow 
yourself to be dissuaded, despite what you have heard. You are right 
that China is not different. I want my children to see a China with 
human rights and democratic institutions. And I am not alone.' He jumped 
into a taxi and was gone.

I have often thought about that chance exchange. Britain and the West 
take our enlightenment inheritance too easily for granted, and do not 
see how central it is to everything we are, whether technological 
advance, trust or well-being. We neither cherish it sufficiently nor 
live by its exacting standards. We share too quickly the criticism of 
non-Western societies that we are hypocrites. What China has taught me, 
paradoxically, is the value of the West, and how crucial it is that we 
practise what we preach. If we don't, the writing is on the wall - for 
us and China.

China's quest for oil

China's foreign policy is increasingly driven by the need to feed its 
growing appetite for oil. General Xiong Guangkai, deputy chief of the 
Chinese general staff, has said that China's energy problem needs to be 
taken 'seriously and dealt with strategically'.

That means less reliance on the Middle East; less transportation of oil 
via sea-lanes policed by the US navy; more capacity for the Chinese navy 
to protect Chinese tankers; and more oil brought overland by pipeline 
from central Asia.

Over the past two years, China has pulled off a string of strategic oil 
deals. In April 2005, Petro China and Canadian company Enbridge signed a 
memorandum to build a $2bn 'gateway' pipeline to move oil from Alberta 
to the Pacific Coast. In Venezuela, President Hugo Chavez is to build a 
Chinese-financed pipeline to the Pacific coast through Colombia, having 
given China oil and gas exploration rights in 2005. Saudi Arabia 
surrendered to Chinese courtship in 2004 and accorded exploration rights.

In Sudan, a major source of oil, China's blind eye to human rights and 
mass murder if it hinders its interests is demonstrated by Zhou 
Wenzhong's comment when Deputy Foreign Minister about the situation in 
Darfur where more than 250,000 have died.'Business is business,' he 
said. 'We try to separate politics from business and, in any case, the 
internal position of Sudan is an internal affair, and we are not in a 
position to influence them.'

Wrong: China has substantial influence on Sudan if it chose to exercise 
it. It does not, a commentary on China's approach to foreign policy and 
an awesome warning of the future if an unreconstructed China became yet 
more powerful.

Tiananmen: the legacy

The image of a single student halting a tank in Tiananmen Square is one 
of the most arresting in modern history. But the protests spread well 
beyond Beijing for six weeks in spring 1989 to encompass demonstrations 
in 181 cities.

The party and army were divided over how to respond; 150 officers openly 
declared that they would not fire on demonstrators after martial law was 
declared, and at least a third of the central committee wanted to reach 
a compromise with the protesters. The party's then general secretary, 
Zhao Ziyang, proposed a partial meeting of demands for reform. Nobody 
should be killed.

That was not the view of Deng and the party elders - the eight 
'immortals', veterans of the Revolution. A 'counter-revolutionary' riot 
had to be suppressed. But before Deng could act, he had to leave Beijing 
to ensure that army groups 28 and 29, personally loyal to him, would 
provide the core of the force rather than the uncertain army groups 
based around the capital. Once in place, Zhao was then brutally deposed, 
remaining under house arrest until his death in 2005. Martial law was 
imposed on 19 May and a fortnight later the tanks rolled into Tiananmen 
Square. Official estimates were that 5,000 soldiers and police officers 
were wounded and 223 killed. Civilian losses - 2,000 wounded and 220 
killed - were lower. Many still languish in prison.

Tiananmen is the event that cannot be discussed in China; websites 
mentioning it are blocked. It was no 'counter-revolutionary riot' but a 
demand for freedoms that infected all China and very nearly succeeded.

Current leader Hu Jintao and his successors know they are not Deng and 
cannot command the loyalty of key elements of the army in the same way. 
Their best strategy is to deliver growth and jobs while trying to keep 
the lid on China's growing but still disconnected social protests. 
Whether the policy will carry on working is the open question asked 
daily in Beijing's inner circles.

· An edited extract from The Writing on the Wall: China and the West in 
the 21st Century to be published by Little, Brown on 15 January, £20.

©Will Hutton 2007