China’s “Harmonious Society” ?

By Sushil Seth

Interestingly, President Hu Jintao’s “harmonious society” is not featuring as prominently in the official Chinese propaganda as it did a while ago. It is not surprising, though, considering that China is experiencing considerable social unrest in different parts of the country.

And it is not just due to the current economic downturn, which certainly is making things worse. The economic slowdown, for instance, has worsened the employment situation, sending millions of rural migrants back to the countryside where things are even worse.

The diversion of resources from the rural hinterland to develop an industrial economy had already created a wide gap between the countryside and the urban areas.

Apart from arbitrary local taxes and entrenched corruption among party hacks, people in rural areas had their land taken away (with little or no compensation) to make it available for the needs of the industrial economy.

The diversion of water for urban use and/or its pollution from industrial chemical wastes further damaged rural economy and living.

It was such pillaging of rural assets to subsidize urban economy, which forced millions of rural migrant workers to flock to the urban industrial centers in search of jobs.

And since these workers were not entitled to social and legal benefits of urban residency, they were easy prey for employers and virtually anyone else powerful enough to screw them.

They were paid abysmal wages (and that too held in arrears in so many cases), with little or no recourse to any legal process.

That they still came in millions to work in urban ghettoes is a sad commentary on the state of the rural economy.

This is how China’s economy became internationally competitive, making it the factory of the world.

Commenting on the axis between the Party elites and developers, Zhao Ziyang (who was deposed as Party general secretary for opposing the 1989 Tiananmen massacre and then spent rest of his life under house arrest until his death) reportedly said (Zhao Ziyang: Captive Conversations by Zong Fengming]:

“The government seizes land from the people, pushing the price down to a minimum, then hands it over to developers to sell it at a huge mark-up…”

The result is: “…we now have a tripartite group in which the political elite, the economic elite, and the intellectual elite are fused.”

And it is, “This power elite [which] blocks China’s further reform and steers the nation’s policies toward service of itself.”

But popular resistance has been building up for a number of years now. In December 2005, for instance, a riot in the southern town of Dongzhou against plans to build a power plant on land taken without compensation, resulted in the killing of 20 people fired on by the security forces.

Lately, there have been instances of protests organized across some provinces, as in the case of taxi drivers’ strike against the high cost of renting their cabs. And many more which go unreported.

The cumulative economic and social pressures over the years, and the desperate need for some political outlet to air their grievances, is starting to even fray the tripartite bond between the “political elite, the economic elite, and the intellectual elite” of Zhao Ziyang’s description.

The most telling example was the signing of the Charter 08 last December by several thousand Chinese intellectuals and others seeking the end of one-party rule and its replacement by real democracy based on freedom, respect for human rights, equality and rule of law.

As usual, the Chinese government tends to further tighten the system to suppress dissent, while obfuscating the issue of political freedom with platitudes.

Its recent example is the so-called 2-year human rights action plan (National Human Rights Action Plan of China, 2009-2010) to make government more responsive to popular concerns about governance.

But the document is silent on the question of freedom, an independent judiciary and political plurality by way of competing political parties to challenge the monopoly of the ruling communist party.

The document focuses instead on improving the situation within the existing system of one-party rule.

The point, though, is that in theory the Chinese constitution already incorporates democratic provisions. But, in practice, it doesn’t work like this because the party interprets it to suit its own power imperatives.

The question then is: why would anyone believe that the new action plan (notwithstanding its specified 2-year duration) would work any better than the much comprehensive constitution of the country?

As an example, all the provisions of the constitution are easily nullified through the system of administrative detention without trial, imposing sentences like “re-education through labor”.

The arbitrariness of the system under one party-rule, where everything goes if the party or its minions so decree, has slowly built up resistance within the populace to corruption and capriciousness of the powers that be.

Li Datong, a Chinese political analyst, recently told a visiting scholar in Beijing, “The government has been skilful in convincing the middle class it’s futile to protest… but you only need one spark for that to change.”

Whether the present economic crisis would provide that spark is difficult to say. What one can say is that it certainly is another building block, and a significant one at that, in the growing social unrest in the country.

Because the political system is so top-heavy and unresponsive, there are no built-in safety valves to let off steam through mass protests. And there is very little transparency and accountability.

In a recent investigative reporting of China’s mining disasters with workers killed all too often, the New York Times quoted Hu Xingdou, an economics professor at the Beijing Institute of Techonolgy:

“We don’t have the grass-roots democracy; we don’t have independent labor unions; we don’t have checks and balances, we don’t have any system of official accountability.”

Hu’s observation sums up what is wrong with China in essence.

Which means that unless the political system develops grass-roots democracy, it will remain prone to periodic sudden shocks.

And in the absence of institutional democratic shock absorbers like popularly elected assemblies, a free media, independent judiciary and rule of law, China will remain a punters’ game.

Will China Revive Global Economy?

By Sushil Seth

As the global economic meltdown continues to defy any rational solution apart from what, sometimes looks like throwing good money after bad, there is some naïve belief that China might become the ultimate savior with its economic stimulation program.

Lately, the estimates of China’s economic growth vary anywhere between 6 to 9 per cent; not bad considering that much of the world is in a recessionary mode.

If true, it might not be long before China again is able to reach the double-digit growth that has characterized it in the last few years.

As with everything Chinese these days, there is a tendency to look at the rosy side of things.

And with the world in economic doldrums, the tendency is even greater to look for a glimmer of hope somewhere. China appears to hold that promise.

But to extrapolate China’s growth as a vehicle for global recovery is like believing in the tooth fairy.

Leave aside the world; even for China its present economic strategy is a bit dubious. The entire growth strategy of state directed largesse into infrastructure projects and the likes is a stopgap arrangement.

It is based on the hope that, as in the past global recessions, the world economy will soon recover to create demand for China’s falling export sector.

Until then, the generous state spending on infrastructure and other state directed projects would hold the fort, hopefully staving off growing social instability.

But there are problems with this line of thinking. Japan’s experience during its decade or more of infrastructure spending is instructive in this respect.

Japan tried infrastructure spending (some good but much of it dubious) to lift its economy during its long period of economic slowdown/stagnation, but with unflattering results. In the end, Japan was helped by its robust export sector.

In other words, because the global economy was healthy and growing, Japan could plug its export sector into it to keep ticking.

Besides, Japan’s domestic spending (even though sluggish) constituted a large proportion of its GDP.

But, in the case of China, the picture is quite different.

First, the current global recession is unlike the ones before it. The previous recessions were short-lived and the economies rebounded with greater vigor.

Therefore, China was able to expand its export sector, with only a short diversion at times into large scale infrastructure spending.

The current global recession, though, is systemic steeped in a mountain of private and public debt. It is, therefore, not going to be short-lived phenomena.

And if and when it recovers, it is going be slow and painful.

Which means that the world, particularly the United States with its seemingly insatiable demand for Chinese goods, is unlikely to pick up the tab on Chinese exports with the same alacrity.

And if China’s is looking for economic nirvana through a revived export sector after a relatively short global recession, it is likely to be disappointed.

At the same time, its state directed investments in infrastructure and bank lending are not a real solution. It is basically filler until normalcy returns, which is more like wishful thinking—at least in its old form-- than a hardheaded policy.

What it means is that instead of being a vehicle of global economic revival, China has to think more in terms of reviving its own economy in a more meaningful way.

The present infrastructure spending, as part of nearly $600 billion stimulus package, will help but it is not going to fix up China’s problems. Therefore, it needs to stimulate its domestic consumer spending.

It has successfully managed to depress or contain economic demand at home to produce exportable goods at cheaper prices with a skewed exchange rate. That option is now constrained because of the deep global debt crisis.

Therefore, it has to stimulate its domestic consumer economy. But there are two problems here.

First, China, both at the government and private level, puts great store by a high rate of saving of about 30 per cent.

From the government’s viewpoint, a high rate of saving with low interest rates for its savers, contributes to China’s low cost economy.

And with high private savings as a cushion against adversity, China has been able to manage with the minimum spending on social services and health of its people.

This must change. China needs to modernize its social spending to take greater care of its people’s education, health, old age and related services. This is long overdue.

The expansion of the social services sector will create domestic demand for a whole range of jobs and goods with a multiplier effect on the economy.

More than anything else, China badly needs to revive and upgrade its rural sector. It can no longer afford to use its depressed rural economy to subside urban industrial sector.

If it wants to create a broad based and sustained domestic economy, it needs to put more resources into rural economy.

This is necessary not only to bridge the urban-rural gap, but also to expand domestic economy through increased consumer demand beyond the urban middle class of about 300 million people.

It is important to note that nearly 800 million or more of China’s rural folks have been largely left out of China’s industrial economy.

An expanded domestic economy will also create demand for foreign goods, once China undertakes to revalue its currency to better reflect the international exchange mechanism.

There is need for China to shed its hoarding mentality of building up currency reserves, and large domestic savings for some sort of a rainy day. It is no longer vulnerable to foreign manipulation and occupation of the 19^th century.

A reinvigorated Chinese economy with a strong domestic base can play a useful role internationally.

But with its historical baggage of a “century of humiliation” and a Leninist political system, it might not be able to deliver.

COMMENT: CHINA THROWS ITS WEIGHT

Who thought that China and Australia would get involved in a diplomatic spat under Australia’s Mandarin-speaking Prime Minister, Kevin Rudd? He was supposed to be the good guy to put relationship between China and Australia on a special footing. What went wrong, then?

The immediate context is the arrest in Shanghai of four Rio Tinto employees, one of them an Australian passport holder. China has accused them of stealing state secrets to damage Chinese interests.

For China, Rio Tinto is becoming the symbol of Australia’s ugly side by not letting Beijing play a determining role in the pricing and supply of its much-needed (by China) raw materials, like iron ore.

China felt spurned when its bid to increase its stake in Rio Tinto was thwarted. It is chagrined further that Australia is not agreeable to about 40 per cent reduction in the price of iron ore as demanded by China.

China expected a lot from Kevin Rudd. But, instead, after coming to power, he politely told China during his Beijing visit to explore a dialogue with the Dalai Lama, compounding China’s fury in the wake of Tibetan unrest last year during 50^th anniversary of its occupation by China.

And China is not amused that Australia’s defense white paper seems to suggest that China’s rise and the consequent US decline could become unsettling for the region, particularly necessitating “fundamental reassessment” Australia’s strategic assumptions. 

COMMENT: XINJIANG UNREST

After Tibet, it is Xinjiang’s turn to experience the full wrath of China’s fury. Of course, the unrest in Xinjiang is not going to endanger the Communist Party of China’s hold over power. In some ways, it might even temporarily strengthen its position with the Han Chinese by playing up ethnic violence against the country’s majority.

But, in a larger context, it also shows that the Party is not omnipotent. Even with all its repressive instruments of control it still failed to anticipate the extent of Uighur resentment.

Of course, the Uighur population is going to pay a heavy price for voicing their anger over the killings of some Uighur workers in a toy factory in Guangdong province over the fake news of raping a Han girl. Already, the security forces have killed a large number of protesters and many more have been arrested.

The point to make is that the increasing use of state violence to control and repress its own people tends to further de-legitimize the Party’s rule. True, in cases like Xinjiang and Tibet, the Party tends to exploit Han chauvinism against its restless minorities.

But the sudden eruption of such popular violence, even with the Party’s monopoly power, does seem to expose it as a paper tiger of sorts. And with social unrest growing in different parts of the country due to all sorts of factors (growing unemployment, urban-rural gap, entrenched corruption and so on), Xinjiang and Tibet could become the mirror image of the Party’s waning control.

To put it succinctly, China is too big and too uneven for the Party’s perpetual control.

 

 

China’s “century of humiliation”

By Sushil Seth

 

There is no other power in the world than China with an obsessive desire to seek recognition and approval of its great power status. The recent Olympic bonanza was an exercise in this direction.

The problem, though, is that even the slightest critical scrutiny, as happened with the Tibetan protests on the eve of Beijing Olympics, tends to seriously rattle the composure and self-confidence of an otherwise resurgent China.

And Beijing blames this on the outside world, particularly the West (and Japan) for still conspiring to deny it its rightful place in the world; invoking images of China’s “century of humiliation” under Western domination and occupation.

The fact, though, is that China is increasingly getting its due acclaim as a rising economic and military power. But, like any other country, it also gets its due share of critical scrutiny on a host of issues for its blemishes and transgressions.

But China wants and needs uncritical acclaim to deal with its own historical insecurities. Which is not to deny its sufferings under colonial rampage and Japanese aggression.

As Chen Shi-Zheng, director of the film, Dark Matter (based on the story of a Chinese graduate student in the United States who went on a killing spree of his American thesis supervisors and a fellow Chinese graduate student in 1991), told Professor Orville Schell: “We Chinese carry the burden of our history with us and the question of Western humiliation is always unconsciously inside us.”

Elaborating, Chen said, “ Thus, we feel sensitive to any kind of slight and often have a very sharp reaction to perceived unfair treatment or injustices.”

Putting it in today’s context, Chen told Schell, “On an emotional level we cannot help but associate treatment in the present with past injuries, defeats, invasions, and occupations by foreigners.”

And he added, “There is something almost in our DNA that triggers automatic, and sometimes extreme, responses to foreign criticism or put-downs.”

In other words, China requires constant affirmation of its great power status without any qualification whatsoever. Which becomes a serious problem for its relations with other countries, especially in the West and Japan where China’s historical humiliation is embedded.

This deep sense of humiliation and outrage has shaped China’s politics, and continues to do so even today. Because in all China’s internal political battles, its humiliation at the hands of the West and Japan has been a recurring theme.

And when the civil war ended in communist victory, Mao Zedong proudly declared in 1949 that, “Ours will no longer be a nation subject to insult and humiliation” and that China has “stood up.”

In other words, Mao seemed to rate China’s communist victory, above all, as a nationalist enterprise to face up to a hostile world.

But in the process of creating a new revolutionary China, Mao personified all its contradictions and insecurities. He not only saw danger from outside but also from within the country and his own party.

Which led to an orgy of periodic purges, with the longest one of Cultural Revolution lasting a decade until his death in 1976.

And it was not until Deng Xiaoping glorified riches (‘to be rich is glorious’) that China found a steady hand with a new direction, however ideologically dubious.

And because it was an ideologically dubious proposition of moral vacuity in which making money stumped all other values, it created a movement opposing the growing linkage between the Communist Party hierarchy and the new business class it was sponsoring with a strong stench of corruption all around.

The democracy movement, led by students, challenged the Deng order seeking greater transparency and broadening of the political system. And as we all know this was cruelly crushed by the use of military force in 1989.

Under Jiang Zemin and Hu Jintao, the ruling junta has sought to broaden the social base of the one party rule by letting in people from the business class and other non-working class segments as party members.

(But it doesn’t include the vast mass of the rural population of about 800 million people. China’s rural sector has been held down to subsidize the urban industrial economy. But that is another story.)

Apart from greed, nationalism (often bordering on jingoism) is the guiding strategy/philosophy of this new class. And this is supposed to override China’s internal contradictions.

China has neither been able to resolve its external resentment towards the West and Japan, nor has it been able to sort out its internal political contradictions. The one continues to feed and reinforce the other.

Since the one-party rule is projected as China’s national nirvana for the foreseeable future, any attempt at creating an alternative political dialogue immediately becomes suspect and hence anti-national.

And in the process, the Party and the nation tend become indistinguishable.

The narrative of national humiliation has thus become the bedrock of China’s resurgence, with virtually no scope for any robust debate about a positive new direction, where past is important without being overbearing.

As Orville Schell says, in his review of the film Dark Matter and a few books on China in a recent issue of the New York Review of Books: “…despite China’s stunning [economic] accomplishments, few Chinese of my acquaintance, at least, have yet allowed themselves to be psychologically convinced by China’s success, to embrace a new national belief in China’s establishment as a leading nation…”

And they seem comfortable with, as William A. Callahan has noted, “…the national-humiliation narrative …painstakingly reproduced in textbooks, museums, popular history textbooks, virtual exhibits, feature films, dictionaries, journals, atlases, pictorials and commemorative stamps.”

It is not surprising, though, as the country’s ruling oligarchy finds in this narrative an important source of legitimacy.

As a result China finds itself in an endless quandary of feeling a sense of comfort and security (as well as anger) in a narrative of ‘heroic’ national humiliation.

Which isn’t allowing China to come out of its shell to take its due place as a responsible and self-confident power.

 This is not a hopeful augury for the future, with a sullen and self-absorbed China in a perpetual state of “China-as-victim syndrome.”

 

 

 

 

My latest article on China

North Korea is China’s Nightmare

By Sushil Seth

 

North Korea’s nuclear ambitions are proving a major headache for China. Pyongyang recently tested a second atomic device; with much higher yield that the one in 2006.

To compound matters, it is also perfecting its missile technology with a series of tests.

In other words, it is defying the world to pursue its nuclear course.

In the past, even though Pyongyang has gone its own way in pursing its nuclear ambitions, it has at least been not as dismissive of China’s concerns.

Indeed, by participating in the six-nation talks (till recently) in Beijing, it showed some consideration for China. And, by the same token, it expected Beijing to play a sympathetic role.

Just when it seemed North Korea might unwind its nuclear ambitions (it shut down its Yongbyon reactor in 2007), things started to go wrong.

North Korea has now restarted its nuclear program with greater vigor. And it has abandoned the venue of the six-nation talks in Beijing.

It has walked away from the 1953 armistice that ended the Korean War. And it has threatened to hit back at those contemplating any hostile action, especially South Korea.

North Korea’s brinkmanship is all the more dangerous now that China seems to be losing control over its communist neighbor.

In other words, North Korea has come to increasingly distrust China.

Why is it so? Because, from Pyongyang’s viewpoint, China has failed to deliver.

North Korea wanted a sequential deal and believed that the 2007 agreement was a step in that direction.

What it meant was that Pyongyang’s nuclear disarmament will be a step-by-step exercise with consequent action from the United States and others in terms of energy supplies, diplomatic normalization, aid and trade concessions and so forth.

And China was supposed to ensure its implementation as per Pyongyang’s interpretation.

But, in Pyongyang’s view, it wasn’t proceeding that way.  It felt that the United States simply wanted North Korea to abandon its nuclear program. Only then, and after full verification, it might become entitled to the advantages of the new nuclear deal.

Pyongyang had come to lean on China for a favorable (to it) conclusion of the six-party diplomatic parleys. Instead, it has seen Beijing join the US and others in castigating it for its nuclear and missile testing.

From Pyongyang’s viewpoint, it had no option but to ratchet up the tension by going ahead with its nuclear program and gain the attention of the world, especially of the new Obama administration.

This is obviously a dangerous game Pyongyang is playing.

The US response to Pyongyang’s brinkmanship is pointedly sharp. Attending a recent security conference in Singapore, the US defense secretary, Robert Gates, warned that, “We will not stand idly by as North Korea builds the capability to wreak destruction on any target in the region or on us.”

And he went on to say, “…we will not accept North Korea as a nuclear state.”…

The US is worried not only on account of Pyongyang’s emergent nuclear capability, but also because it could become the conduit for transfer of nuclear materials and technology (as it has done before) to others similarly disposed.

As Robert Gates said in Singapore, “The transfer of nuclear weapons or material by North Korea to states or non-state entities would be considered a grave threat to the US and our allies.” And for that, “we would hold North Korea accountable.”

In this nuclear chess game, Pyongyang is apparently playing for high stakes. But there is a method in this madness.

Considering North Korea’s overwhelming dependence on China for energy supplies, food, and trade, Beijing shouldn’t have much difficulty in reading the riots act to ensure compliance. But it is wary of this. And there are reasons for this.

The most important reason is that that China doesn’t have much leverage in North Korea’s internal polity. The country is hermetically sealed with the Kim dynasty controlling the levers of power.

With Kim-Il-sung, the great leader (now dead), his son, dear leader, Kim Jong-il, (the current ruler) and his presumptive successor, his youngest son, Kim Jong-un, (gaining currency as the young leader), the country hearkens back to the medieval ages of ghosts and goblins.

What it means for China is that short of bringing down the whole house of the Kims and the country with it by tightening economic and political screws, its options are rather limited.

And this Beijing doesn’t seem keen to do, because this might unleash all sorts of unpredictable and uncontrollable sequence of events.

First, of course, is the unthinkable. Which is, that faced with their destruction, the Kim Jong-il and North Korea’s ruling establishment might actually unleash their destructive weaponry on South Korea.

Which is likely to bring the US into the fray because of their alliance and the presence of US troops in South Korea.

How will China react to this chain of events is anybody’s guess?

China, in any case, is unlikely to become a party to any kind of cataclysmic change in North Korea that it might not be able to channel or control.

Therefore, it is unlikely to bring down the regime or become party to any kind of international action (through the UN Security Council or otherwise) that might push North Korea into desperation.

Even without a military conflagration unleashed by North Korea, its abrupt destabilization is likely to pour in a flood of refugees across the border into China. And this is not something China will want to trigger.

The point is that China regards Korean peninsula as its strategic zone. Even though South Korea is a US ally, its internal politics often has anti-American overtones centered on, among other things, the politics of the unification. Such internal divisions, as well as China’s economic weight, makes China an important factor in South Korean affairs.

But North Korea’s reckless and dangerous nuclear politics is not only making China look helpless, but also pushing South Korea further into the US fold when faced with threats of annihilation from Pyongyang.

No wonder China is hopping mad with Pyongyang’s nuclear brinkmanship.

But, at the same time, they seem averse to putting the squeeze on North Korea for fear of creating an even bigger disaster.

They certainly don’t like the idea of a nuclear neighbor, under a manic Kim Jong-il regime, right on their border.

And they fear that Pyongyang’s headlong embrace of nuclear weaponry is likely to push Japan into becoming a nuclear power too to counter-balance the threat from North Korea.

In other words, Pyongyang is seriously complicating China’s political and strategic regional architecture.

That is why there is a method in North Korea’s madness; knowing that Beijing might huff and puff but it will not blow down Kim’s Jong-il’s house.

Therefore, if the US is looking to China for any effective resolution of North Korea’s nuclear problem, it is likely to be disappointed.

The most China might be able to do is to reconvene another session of the six-nation talks.

But, in the present mode of Pyongyang’s belligerence, even that seems improbable.