China

Singapore Pundit on China (and India, and Singapore)

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(My good friend whom I’ll call Singapore Pundit is a businessman who speaks Chinese and has been in Asia, first Hong Kong, then Beijing, now Singapore for many years. SP read this post, and had a few comments. I pass on his thoughts with his permission.)

I read your post on the blog. It is a little like a University of Chicago dinner conversion in cyber-space.

China versus India? Well, I think that both the Chinese in power and the Indians in power both believe that economic development via free markets is the right path. They know that FDI and WTO are important. They also seem to agree that social and international stability are critical factors to economic growth. Interestingly, India has the Kasmir issue and China the Taiwan issue which are both lighting rods for the nationalist in their respective countries. A wrong step by either country over these issues could derail their economic development and unfortunately these issues are so emotional and sensitive that they could blow up.

I would observe that both China and India are very complex countries in all dimensions. Just think of the US and how complicated a place it is and add a few thousand years of history and triple the population and speed up the growth rate and social change and the place is wildly complex and difficult to fully understand.

So, both China and India are difficult to comprehend, hence I agree that the average American doesn’t have a good change to really understand what’s going on either place. Frankly, even the experts don’t agree on many points and have what are strange opinions and outdated views.

I have mentioned to you before that I don’t think that the central government in China and the party are that all powerful and in control. If they are unable to provide steady economic growth and the resulting prosperity and social stability, their reign of power is not going to last and they know it. They very much look to the west and other countries developed countries for models and experience to help them succeed. The big threat to the “Communist” is regional leader completely going their own way and destabilizing the whole country. The leadership in China must look at what is happening in Iraq in fear and cite it as an example of what could happen if they lose control. My impression is that debate and information is much more free in China than what people in the US realize. There is also I believe a desire in large parts of the government to get to more democratic institution and more open society. Deng Xiaoping completely changed China from a truly Soviet-style state to something that in the seventies the US government would identify as a free society (something like Korea, Thailand or Taiwan). Now all of the countries have become democracies with relatively little bloodshed (Taiwan didn’t have any major unrest, where both Korea and Thailand had their militaries killing a significant number of their citizens). This should give us hope. It is possible that China could behave like Germany and Japan in the thirties, but my gut tells me that leader don’t have that mentality.

Most of my Indian friends think that it is very difficult to get things done in India. If the government want to build a road, getting the rights-of-way is almost impossible so infrastructure needed for economic growth is not getting built fast enough. This is hampering economic growth. They actually like the way thing get done in China. It seems that India has a well developed legal system, but it is undermined by corruption.

I am going to slightly change the subject and try to rap up my comments. I saw the national day rally speech of the Singapore Prime Minister. I think you would find it very interesting. All kinds of stuff on being open and critical, taking risk, being Singaporean and patriotic. Singapore is a special one party state. And I suspect that both China and India are interested in what Singapore says and does. Perhaps this is a model of English institutes/ideas married with Chinese administration and politics.

Remarkable — and Harsh — Photos from China.

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The photos are here.

If there had been color film in the late 19th century USA we would have seen carnage like this as we began to climb the curve of industrialization, ordinary people routinely killed by trains, etc. Except we had democracy and were able to enact laws that led to greater public safety.

The Chinese have a long way to go before their economic take-off can become safe and clean as well as fast.

These images are remote indeed from the glittering skyline of Pudong.

I look at these and I think that the Chinese have a lot on their plate.

India and China

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This comparison is almost becoming a clich�. But, still, it is an interesting one and potentially enlightening, if handled properly.

This book Asia’s Giants: Comparing China and India got a good review in the current Foreign Affairs, which came in the mail today.

Palgrave’s catalog page: says this:

This edited volume reconsiders the conventional wisdom, which argues that comparative performance (in economic, social, political, as well as diplomatic arenas) of China has been superior to that of India. The book brings together ‘new paradigms’ for evaluating the comparative performance of two countries. Essays show that if not outright wrong, conventional wisdom has proven to be overly simplified. The book brings out the complexity and richness of the India-China comparison.

Any challenge to this conventional wisdom is greatly appreciated. The FA review says the issue of China’s unreliable statistics is addressed, and its about time, too!

“Complexity and richness” are nice buzzwords. I am waiting for someone to make the point that Jim Bennett has repeatedly made, e.g. here:

There�s a link between strength of civil society and civil society institutions and entrepreneurism and prosperity. If this is true at all, and it just seems to be overwhelmingly true, sooner or later India is going to overtake China in the nature and pace of its economic development, and I think shortly after it overtakes it, it�s going to far outstrip it.

I think that India�the rise of India is going to be one of the big stories of the 21st century and the relative problems of China, once they get another two or three decades down the road, is going to be another big story and one that a lot of people aren�t expecting. All you�re�people are mesmerized by the growth curves in China right now. They see pictures of the big skyscrapers in Pudong and, you know, they�re extremely impressed by this, but they�re not looking the fact that China is on the wrong side of a huge transition problem.

If you look at these transition problems in small countries like Taiwan and South Korea, which have very similar social structures, this was a big crisis. It was a huge crisis in Japan, which is not so similar, but had some similar issues, and it led to a, you know, major world war.

China�s got big problems. I hope they work through them peacefully, without an enormous amount of disruptions; but, you know, I�m not going to lay odds on that it�s anything like 80 percent chance of success there. I think they�ve got a 50-50 chance of getting through their democratic transition without major problems and disruption, which are going to be I think the big international crisis of the 2030 or 2040.

China is, as of now, still on the wrong side of a politico-legal transition that India has already made over the course of two centuries. Leaping that chasm is a problem that Japan and Korea, for example, have both made, and not without much turmoil. China will probably not be able to “scale up Singapore” and have developmental autocracy forever. The predation and corruption in this system will choke off growth unless the Chinese move ahead with real reforms at some point, that actually cede power from the gang that runs the place now. China has some major challenges ahead and everybody is just whistling and looking the other way. Meanwhile, India has hidden strengths which will, I hope, surprise the world.

An Offer to Our Readers in China

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Following Stephen Gordon, this blog makes the following offer:

If you are a Chinese user of Google who has received notice that your search has been censored, let us know. We will search Google from the United States and post the results here.

Feel free to contact us at the support email address located under the search box in the upper right corner of this page, or in the comment section of this post.

(We reserve the right not to search for porn or other topics that we think are out of character with the spirit of this offer.)

Lee Kwan Yew interview in Der Spiegel

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(Here.) Every single word is worth reading. He has brilliant comments on Europe, and the likely prospects for India and China.

I was most struck by this exchange:

Mr. Lee: About eight years ago, I met Liu Huaqing, the man who built the Chinese Navy. Mao personally sent him to Leningrad to learn to build ships. I said to him, “The Russians made very rough, crude weapons”. He replied, “You are wrong. They made first-class weapons, equal to the Americans.” The Russian mistake was that they put so much into military expenditure and so little into civilian technology. So their economy collapsed. I believe the Chinese leadership have learnt: If you compete with America in armaments, you will lose. You will bankrupt yourself. So, avoid it, keep your head down, and smile, for 40 or 50 years.

SPIEGEL: What are your reservations?

Mr. Lee: I don’t know whether the next generation will stay on this course. After 15 or 20 years they may feel their muscles are very powerful. We know the mind of the leaders but the mood of the people on the ground is another matter. Because there’s no more communist ideology to hold the people together, the ground is now galvanised by Chinese patriotism and nationalism. Look at the anti-Japanese demonstrations.

LKY is saying that China can peacefully dominate its region in 50 years if it avoids confrontation with the USA, and that it plans to do so. However, the leadership may not be able to hold this quiet course for that long, because as China gets powerful over the next decade or two and nationalism is the only thing that will give the government legitimacy. He puts the period of danger at circa 2020-25.

This is precisely the Kaiserian Germany scenario which I discussed here. In his classic assessment of Germany’s bid for world power, Ludwig Dehio argued that hegemonic challengers always launch their bid too early, they seem to be possessed by a “demonic power” when they feel that they are ready to take their rightful place in the world and are being denied the respect they are due and the voice in world affairs they are entitled to. Spain, France, Germany and Soviet Russia all attempted to achieve world power, and were thwarted in turn. Will China follow this path? I hope not.

Thomas Barnett cited to the LKY interview. Barnett focuses on the many positive assertion that LKY makes, which support his usual view that takes as given that the Chinese economic rationality will prevail over darker forces. This points up my most serious area of disagreement with Barnett. While I think there is a strong possibility that China will develop peacefully, it is also apparent that there are a lot of ways this could go wrong. Peaceful development of backward countries into major powers is not what usually happens. Also, Barnett is an American optimist who sees a world full of half-full glasses, or even empty glasses that can and should be filled. He sometimes seems to lack an awareness of the tragic dimension of international politics. Barnett’s likely response would be to point out that with nuclear weapons, any major power military confrontation is simply off the table, the old dynamic is gone. This may be so. I hope so. But counting on rationality in leadership, even in an age of nuclear weapons, is not the best bet.

The first phrase I learned in a poli-sci class was “the security dilemma”. Attempts to make yourself more secure necessarily make others feel less secure, which provokes responses from those other countries, which also ratchet up, which leads to a spiral of insecurity and military tensions and clashes. China may be acting “normally” by creating a large navy, just as Kaiserian Germany believed that it needed a navy to protect its overseas commerce. Of course, any navy strong enough to do that was a knife held to the throat of Britain, a country which otherwise was not interested in conflict with Germany. Similarly, any Chinese navy, precisely to the extent that it protects China’s access to Mideast oil threatens access by others. The only way out of this is for China to build trust embodied in agreements and divisions of responsibility, essentially buying into the existing order. This is the Barnett scenario, the happy ending scenario. It may happen, but it is not inevitable. I see that kind of thing emerging with Japan and India far more easily than with China, due to any number of factors. (Discussing those factors is a separate post, so I will for now simply point you to William Jenner’s troubling essay China and the Irrelevance of Freedom.)

We do need engagement with China, trade with China, lots of it … and hard deterrence. Carrots and sticks. Not either/or, but both/and. The kind of authoritarian rule that prevails in China is unlikely to be sustainable in the long run, no matter how competent it may be at delivering many public goods. And in fact, the Chinese regime has in recent years made extraordinary strides in doing so. This is well-described in the recent article in Foreign Affairs by Kishore Mahbubani.

If there is “regime change” in China, the process may not be orderly or even bloodless. The USA needs to preserve its deterrent in the region against any such scenario. That way if there is political turmoil in China a “Falklands option” will obviously fail and it will not have any appeal to the leadership when all Hell is breaking loose. This does not mean unnecessarily confronting China or assuming that a war is inevitable. It is not. China is not a new USSR and a new Cold War is not necessary. Unlike the USSR, China presents no ideological threat, it is post-communist in all but name and has shed its communist myths of revolution and warmaking, nor is its economy warped into focusing over-heavily on making weapons as the Soviet Union was. Nonetheless, making even the prospect of a war against the USA or its friends or allies, on its face, unwinnable, will help to keep the peace as China goes through the difficult decades ahead.