Chinese Menu

by Dave Schuler on December 4, 2011

What is the fascination that the liberal intelligentsia has with China? For some time there’s been an undercurrent of it but recently there’s been a virtual tsunami.

I’ve complained here before about columnist Thomas Friedman’s admiration of China’s new roads, airports, and civil infrastructure. Of course China has new roads, airports, and civil infrastructure. They didn’t have them before and didn’t have the money to produce them or, due to the official policy of autarky which kept most of China’s population among the world’s very poorest people, the need. Now they do. It will be interesting to see what they look like in forty or fifty years since the heroic age of American infrastructure building is now roughly forty or fifty years ago. Should we slavishly imitate the Chinese? My minority view is that we need fewer highways and airports and much better traffic and air traffic management. Essentially, we should need fewer airports and roads rather than build more.

A few days ago Andy Stern, former president of the Service Employees International Union, a major union representing public employees, had an op-ed in the Wall Street Journal in praise of China’s economic system:

While we debate, Team China rolls on. Our delegation witnessed China’s people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader—Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily—including, our delegation was told, 700,000 units of public housing annually.

Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

This admiration is not merely misplaced, it is unhinged. Not only does a third of China’s population live below the the international povery line of $2 per day, in China there is no right to organize labor, no right of representation, no right to form a union. Were Mr. Stern to have engaged in the practices by which he earned his living until recently in China he would either have been imprisoned or placed in a mental institution.

My friend, Rick Moran, has commented on Mr. Stern’s op-ed at substantially greater length.

Now comes Steve Rattner, President Obama’s “auto czar”, with yet another gushing piece on China in the New York Times:

But after a recent visit to China, I remain staunchly optimistic that it will continue to be the world’s greatest machine for economic expansion. While developed countries bump along with little growth, China’s gross domestic product is expected to increase by 9.2 percent in 2011 and an equally astonishing 8.5 percent next year.

The country pulses with energy and success, a caldron of economic ambition larded with understandable self-confidence. Visit the General Motors plant on the outskirts of Shanghai and watch Buicks churned out by steadily moving assembly lines almost indistinguishable from those in plants in Michigan.

My own view of China is that we should have affection and admiration for the Chinese people and their country while despising its system and the authoritarian thugs who created it and control the country, keep too large a fraction of its people in poverty, and ensure that they and their families garner an outsized share of the country’s wealth.

As to the meat of Mr. Rattner’s op-ed, neither he nor I have any idea of what will happen in China. Its authorities have been unable to restrain inflation. Food inflation over the last year was around 14%. In a country in which people pay 50% or more of their wages for food that is serious, indeed. Housing prices are crashing. Nobody, probably including the Chinese authorities, really knows what’s going on in China’s famously opaque state-owned banks. Anything could happen.

Is there something about “system” that these people don’t understand? You can’t pick and choose among the features of a system; the system works as a whole. Would they prefer to live in a country that started from a very low base, has millions of people who are desperately poor, is still largely a command economy, controls the number of children you can have, and lacks nearly all freedoms we consider basic?

Shouldn’t we use the same analysis that the White House economists when talking about the effects of the president’s stimulus package on employment? How much more would China have grown if the country had abandoned its command economy entirely and engaged in complete political and economic reform?

I don’t recall whose wisecrack it was but somebody remarked that no American wants to live under a Stalinist regime but any number of Americans would like to run a Stalinist regime. Maybe that explains it.

{ 1 trackback }

Side-Lines
December 4, 2011 at 12:42 pm

{ 15 comments… read them below or add one }

Ben Wolf December 4, 2011 at 1:35 pm

No offense toward your friend, but Mr. Moran wrote a belligerent piece filled with name-calling making it difficult to listen to the more substantive parts of his argument.

Brett December 4, 2011 at 1:57 pm

I don’t recall whose wisecrack it was but somebody remarked that no American wants to live under a Stalinist regime but any number of Americans would like to run a Stalinist regime. Maybe that explains it.

I think it’s just easy for ignorant people to see catch-up growth and not realize that it only works like that because China is coming from a very poor base.

Icepick December 4, 2011 at 3:13 pm

I don’t recall whose wisecrack it was but somebody remarked that no American wants to live under a Stalinist regime but any number of Americans would like to run a Stalinist regime. Maybe that explains it.

I was going to comment to this effect on some earlier points in your column, but I see you got there in the end.

The fact that tens of millions are in abject poverty and that 1.3 billion are completely under the thunb of the few isn’t a bug to these people, it is tyhe best feature.

Its authorities have been unable to restrain inflation. Food inflation over the last year was around 14%. In a country in which people pay 50% or more of their wages for food that is serious, indeed. Housing prices are crashing.

Duh, Dave, if housing prices are falling then there is no inflation. Duh.

/ snark

Dave Schuler December 4, 2011 at 3:30 pm

The fact that tens of millions are in abject poverty

Only tens of millions would be a dramatic improvement. 3 to 400 million Chinese fit the international definition of poverty, i.e. incomes under $2 per day. That only 2% of Chinese fit their internal definition of poverty isn’t testament to how few poor there are in China. It’s a case in point for the vicious face-saving of the Chinese officials.

steve December 4, 2011 at 4:02 pm

Why is this a leftist POV? There are any number of people on the right who have said much the same thing. Bachmann’s recent bit in the debates being a notable recent example. Or, in last night’s debate claiming the need and ability to outgrow China.

If you believe in capitalism, I dont think you have much to fear from China. As Ben notes, it is mostly catch up growth. You also have little reason to admire its government. I think China is cartooned by pundits and politicians whenever they want to prove a point. The real China, while still remarkable considering the changes it has made, is not (now) a real threat or model for the US.

Steve

Dave Schuler December 4, 2011 at 4:11 pm

I have no interest whatever in Michele Bachmann but I do occasionally read the NYT and the WSJ. Ms. Bachmann will never be elected to anything higher than Congressman from her district.

Additionally, it’s the patent admiration that galls me not the interest or analogy. I don’t get that from right wing pundits and pols. Do you?

I’m more worried for China than I am of it. I also think that the apparently commonly held Pentagon view of China as a prospective near-peer high tech enemy is loony.

steve December 4, 2011 at 5:37 pm

“Additionally, it’s the patent admiration that galls me not the interest or analogy. I don’t get that from right wing pundits and pols. Do you?”

I dont read Friedman, and among those on the left I read, I dont really see it, but it is certainly possible (Singapore, Finland and Canada are used more frequently as role models). What I see on both sides is unrealistic assessments of China as an economic threat or military threat. I see pundits on both sides using China as a bogeyman to advocate for their preferred policies. Usually something to protect labor or promote the military-industrial complex.

Steve

michael reynolds December 4, 2011 at 5:49 pm

China is the all-purpose bogeyman. We always have one.

ponce December 4, 2011 at 7:34 pm

“It’s a case in point for the vicious face-saving of the Chinese officials.”

What’s with the unhinged China hatred, Dave?

China just increased its threshold for poverty, adding tens of millions of rural Chinese to the government assistance programs:

“Those newly classified as poor will be entitled to government help such as subsidies, job training, discounted loans and employment opportunities at government-funded rural infrastructure projects.”

http://www.bbc.co.uk/news/world-asia-china-15956299

Dave Schuler December 4, 2011 at 7:54 pm

Read more closely. China and Chinese officials are not equivalent. I have nothing but affection for China. I detest the Chinese regime.

ponce December 4, 2011 at 8:39 pm

Dave,

I think you are moving the goalposts.

You accused Chinese officials of deliberately undercounting the number of poverty stricken Chinese citizens…

“It’s a case in point for the vicious face-saving of the Chinese officials.”

…one week after they changed how poverty is measured, resulting in a huge increase in the count.

Dave Schuler December 5, 2011 at 6:04 am

Not at all. The international standard of poverty is $2 a day (the World Bank standard is $1.25 a day). By international reckonings and using that standard roughly a third of Chinese people, more than 400 million, are poor. That’s where my “goalpost” for that particular factor is, was, and has always been. No moving.

The historic Chinese claim of 2% poverty was obviously risible. That accounted for about 27 million people. The new standard acknowledges more poverty, nearly 100 million people in all, but not nearly enough, not nearly the 400 million Chinese who are actually poor.

Second, talk is cheap. So far what there’s been has been an announcement.

Third, the list of the Chinese regime’s crimes isn’t limited to its failure to acknowledge China’s actual problems and can’t be fixed by adding 80 million people to the official reckoning of the poor. Those that I did list weren’t inclusive. There isn’t enough space in a blog post to list them all, only to highlight a few failures.

waltj December 6, 2011 at 7:51 am

I though I’d highlight for Mr. Schuler’s readers some of the “benefits” of doing business in China. These include having your company’s proprietary information sucked dry by your Chinese “partners”, and then getting tossed out of the country (if you’re lucky) or in jail (if you’re not, or if you happen to be ethnic Chinese yourself) when you try to have a Chinese court enforce the terms of your contract. This has happened to enough of my business acquaintances in a number of fields that I have made certain promises to myself. To wit, I will:
a. Never do business in China itself.
b. Never sign a contract with a Chinese company unless a U.S. or other Western court has jurisdiction to enforce it.
c. Never disclose proprietary information to any Chinese firm beyond the absolute minimum necessary to complete the project.
d. Never deposit more funds than required to meet short-term expenses in any Chinese bank anywhere.
e. Never divulge source code. Not even a little, no matter how much the Chinese partner may beg and plead and threaten.

Rob Miller @ Joshuapundit December 7, 2011 at 11:22 am

China’s biggest problem, one not mentioned here so far is a demographic one. Thanks to the one child policy, in a generation or China will have an unsustainable percentage of it’s population in retirement age…or as one observer put it,China will grow old long before it becomes rich. Productivity ( defined properly as the value added by labor to the finished goods rather than the sheer volume) is fairly low. You get that with slave labor and low paid workers .

China also has the difficulty of its location. It has the historically expansionist nation of Russia to its north and the Muslim world ( Pakistan and the ‘stans) on its borders to the west, not to mention its own restive Uigher Muslim population.

Another problem is the widespread corruption in its financial sector, which several here have alluded to, not to mention the dangers of government confiscation. That’s why Chinese capital seeks outlets outside the country’s banks.

That said, Dave’s remarks about China’s poverty and catch-up development are spot on. And I likewise agree that they are not the military threat they are being painted as.

Dave Schuler December 7, 2011 at 12:43 pm

Rob, you might be interested in some old posts of mine:

China’s Time Bombs: Gray China
China’s Time Bombs: the banking system

I’ve posted pretty extensively on China over the years. In addition to what I wrote in the post above my general view is that we needn’t worry about China, either militarily, economically, or politically. I’m more worried for China than of it.

Leave a Comment

Previous post:

Next post: