Lessons in a modern enigmatic China
An insider's view on China, that it is not always what it seems, challenges Western thinking.
By Steve Blizard WA Business News
Consultant and English language teacher, Joann Pittman, has spent the past 28 years living in three major Chinese cities; Zhengzhou, Changchun, and Beijing.
Pittman has authored “Survival Chinese Lessons”, and trains her pupils to prepare for the challenges of cross-cultural living in China. Her insider’s view is revealing.
In a nutshell, in order to understand today’s China, she suggests a simple rule: nothing is as it seems.
This rule applies to nearly every segment of Chinese life, be it politics, the economy, social relationships, and even religion.
Another way of putting it is; whatever China seems to be at any given moment, it is in fact the opposite.
This can be a challenge for Westerners, because we tend to be dichotomist in our thinking, wanting something to be either this or that.
It is consequently, and understandably, difficult to comprehend the Chinese trait of this and that.
To illustrate her principle, Pittman highlights several myths or misconceptions.
Myth # 1: China is a communist country.
While the Communist Party of China (CCP) remains firmly in power, the reality is that China today is essentially a consumer society.
All human beings desire more stuff, and the Chinese are no different in their pursuit of accumulating wealth.
Myth #2: China is a capitalist country.
While private enterprise flourishes in China, many key sectors such as education, media, resources and transportation systems remain firmly under state control.
When the Chinese describe their system as "socialism with Chinese characteristics", what they are really saying is, "It means capitalism, but we're still uncomfortable with the word."
Myth #3: China is a wealthy, modern country.
Many Australians invariably only visit Chinese cities, usually leaving them with an overwhelming impression of wealth and newness.
However, excursions to China’s rural areas reveal a reality and that is poles apart from any initial preconceptions and conclusions.
Despite the gleaming towers of Shanghai, the monumental glass-and-steel sprawl of Beijing, the massive airports and high-speed rail networks; China remains a very poor developing land.
While it boasts many millionaires, more than a billion Chinese still earn less than RMB 2,000 (A$305) per month.
"China is in the process of developing from a poor country to a rich country," says Wen Hai, a Beijing University professor of economics.
"On the one hand you have the people on the coasts, and then you see the backwater."
Myth #4: China is a poor, backward country.
The nation displays extreme wealth, with only the United States exceeding the number of billionaires.
With more than 900 million mobile phone users and an ambitious space program, these characteristics do not normally typify a poor nation.
Myth #5: People live under severe oppression.
The Chinese people have many choices that were unavailable 10 or 15 years ago, including university education, jobs, acquisition of a home and car, and overseas travel.
The citizenry are allowed space and freedom so as to prosper, but they must not become politically active.
Pittman notes that the Chinese are a very patriotic people with a deep love for their country.
Niall Ferguson, Professor of History at Harvard University, and author of “The Ascent of Money”, has just produced a television series that focuses on China entitled “Triumph and Turmoil”.
During a year of filming, Ferguson realised that while managing to avoid a major recession, as experienced by the West, China has ended up with its own housing bubble that it is presently struggling to bring under control.
But simultaneously an unofficial Chinese nationalism has arisen among its young people.
Ferguson is of the view that China’s leadership, in order to deal with rising economic tensions, is fostering a combination of nationalism and expansionism to solve its perceived problems.
As a result, he’s concluded that those waiting for an implosion or China crash are engaging in wishful thinking.
Myth #6: People live in freedom.
While recognising the many freedoms enjoyed by the Chinese today, Pittman stresses that these do not extend to the political sphere.
China’s leaders are appointed and selected by senior party officials, with the citizenry unable to participate in their choice.
In conjunction with a weak legal system, and the Chinese government reserving the right to set the boundaries within which religious activities can be practiced, people can be subject to the unpredictable whims of unaccountable local political leaders.
Where to next?
Ferguson asks where China will go politically.
He believes the real question is will China move towards a form of representative government, like nations in the West, or will it use nationalism and expansionism to distract its people from domestic political change?
What is clear is that a large Chinese presence can be seen in sub-Saharan Africa, as part of their race to gain access to natural resources at bargain basement prices.
However, Ferguson observes that since 1978, the economic trend within China has continued to be away from the state, towards the market.
Influential economists in Beijing who appear to be having an impact upon Hu Jintao, the current president, believe China needs to further engage in market reform.
This could result in a fresh wave of privatisation, should the big state-owned enterprise be dismantled, including the People’s Bank of China.
Ferguson also notes that the Chinese are watching with concern as Europe lurches from crisis to crisis.
While they are resistant to any kind of open-ended Euro-zone bailout Ferguson believes that the Chinese have been quietly buying European bonds via the London market.
It's not in China's interests for the Euro to fall apart, as they are seeking to diversify their international currency reserves away from the US dollar.
China is increasingly keen to provide her own currency for the settlements of international transactions.
She views the dollar-monopoly as a significant security threat, which is why she has sought alternatives.
She is consequently cautiously promoting her own currency for this role and is developing an offshore Renminbi capital market in Hong Kong.
On March 22, the Reserve Bank of Australia entered a $30billion currency swap arrangement with the Chinese central bank, allowing convertibility between Australian dollars and Chinese yuan in the Chinese interbank market.
One of China’s key strategies through the Shanghai Cooperation Organization is to build a pan-Asian security and trade bloc in partnership with Russia.
It is thought that the last element of this 10-year old plan is to settle cross-border trade without using the West’s financial system.
To revisit my “factor X” prediction in January regarding Iran; for the first time in its near 40-year history, the global communication network, the Society for Worldwide Interbank Financial Telecommunication (Swift), was forced, in mid-March, to comply with European Union sanctions to totally isolate Iranian banks for their government’s failure to demonstrate to Western nations that it is not developing nuclear arsenal.
One can only wonder what China thinks about that.
Steve Blizard is an authorized representative of Roxburgh Securities.