»  National Review Online

December 16th, 2002

  Second-Guessing China

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You can get whiplash reading commentary about which way China is going. Here was Nicholas Kristof, in the December 3 New York Times with an article titled "Will China Blindside the West?" Kristof is a capable journalist who wrote a decent book about China in the early nineties, so let's see what he has to say.

Kristof revisits a village he knew twelve years ago. At that time the place had no electricity and was a two-hour hike from the nearest dirt road. The family he interviewed back then, in 1990, owned nothing, not even a change of clothes. Now, however, the village is all wired up, you can drive there on a metalled road, and that family he met has moved into a six-room house stacked with consumer durables. Kristof:

The lesson, for me, is that China's transformation is trickling even into the poor interior … When historians look back on our time, I think they'll focus on the resurgence of China after 500 years of weakness — and the way America was oblivious as this happened … For most of human history, China was the world's largest economy and most advanced civilization. Then it stagnated after about 1450 … Now … China is on course eventually to recover its traditional pre-eminence. And just as China at its peak was blind-sided by the rise of the West, we're likely to be blindsided by the rise of China.

Got that? OK, now here comes Joshua Kurlantzick in the current (12/16/02) issue of The New Republic. Kurlantzick is another heavy hitter, with years of reporting from Asia under his belt. His piece is titled: "Is China's Economic Boom a Myth?" Sample:

China's companies actually are becoming less productive … Parts of Pudong, Shanghai's newest commercial district, look like a ghost town. I ventured into several gleaming buildings that, having drawn no tenants, were just empty shells staffed by guards who spent their time alternating between marching in circles and conducting spitting contests … Ultimately, China's economic facade probably will crack. And, when it does, the consequences may be disastrous … Unlike Britain, Japan, or even Russia, countries with historical ties to the West, China shares little with the United States other than a desire for commerce. Lacking these shared values, if China's economy tumbles more, Chinese resentment toward the West could increase … The United States should be afraid.

So here is one China expert telling us that China is all set to bestride the world like a colossus, as she did in times past; and here is another one telling us the economic miracle is stalled, that the whole shebang is going to collapse in a cloud of dust, and that the Chinese, angry, resentful, and armed with ICBMs, will blame it all on us. These guys can't both be right. What's going on here?

First, China's boom. I have an even longer baseline than Kristof to work from. I first lived in China in the academic year 1982-3, when the people of that country were still emerging cautiously, blinking into the light, after the long nightmare of Maoism. I wasn't in one of the big metropolitan areas, either; my job was in Siping, a small town in the northeast of the country — a town actually closed to foreigners, except those who had some paid employment there. Nobody in that town had two nickels to rub together. As well as being uniformly poor, they were ignorant beyond belief. Older townspeople, seeing me in the street, would stop, frown, and ask: Su-lian-de ma? — "Are you Russian?"  The only foreigners they knew about were the Russians, who had left the country twenty years previously when Mao had a falling-out with Khrushchev. To survive through the winter months, everyone — including my colleagues on the faculty — had to spend a good part of October standing on line for a ration of cabbage, which arrived piled in the backs of trucks, from which the cabbage was thrown to them. (Good basketball receiver skills came in handy here. Also sharp elbows, to get you to the front of the scrimmage round the truck.) Peking was starting to wake up a little, but when I went to Shanghai in the spring of 1983, it looked exactly as it did in photographs from fifty years earlier. I spent most of my visit going round the stores looking for an ironing-board. I can report with confidence that there were no ironing-boards in Shanghai in 1983 — which means there were none in China.

If you go to Siping town now, you get the full Kristof experience. It's all gleaming office blocks, department stores bursting with appliances, stylish restaurants, and internet cafés. Nobody takes you for a Russian. The transformation has been truly astounding. Shanghai looks like the planet Krypton. I bet they have more kinds of ironing board than Campbell's has soups. If you remember the China that was, just a short time ago, you can't help but be impressed by the China that is.

Under the circumstances, Kurlantzick's question — is the economic boom a myth? — seems absurd. Of course it is not a myth. The evidence is right there in front of our eyes. Anyone can see that the great mass of Chinese people — there are a few pockets of extreme poverty still, as there are bound to be in a country China's size — are vastly better off than they were twenty years, or ten years, ago. Kurlantzick's argument is much stronger than his title, though. (The titles of journalistic pieces, by the way, are stuck on them by subeditors; the actual writers of the pieces rarely have any say in the matter.) The argument, in brief, is that China has done all the easy stuff, getting herself up to a decent standard of living from an extremely low base. To advance any further, China needs major systemic reform. There isn't much sign that the country's leaders are willing to countenance this.

Kristof's title is, if anything, even more wrong-headed than Kurlantzick's. Blindside us? Oblivious? Who's oblivious? You can't open a newspaper or magazine without seeing an article about China. Everyone has an opinion, most of them on the optimistic side of the debate.*  Interest in China is almost obsessive. With so much China-watching going on, it is highly unlikely that any blindsiding is going to be done. The contrary danger is in fact more acute: that with all this interest, and all this talk of economic miracles, we shall convince ourselves that China is much more important than she in fact is.

Kristof seems to have convinced himself of exactly that. His statements about Chinese history are misleading, and in a revealing way. "500 years of weakness"? There was nothing weak about late 17th-century China under the new Manchu dynasty. China's north-eastern border was established by the Treaty of Nerchinsk in 1689, and that treaty was pretty much dictated to the Russians from a position of Chinese strength. The Manchus conquered vast new territories, extending the borders of the empire deep into central Asia and Siberia. The main reason the Chinese court responded with such arrogant disdain to overtures from Western powers in the late 18th and early 19th centuries was not some incorrigible feeling of racial superiority; it was that they were filled with confidence from the successes of the previous 150 years.

As for Kristof's assertion that: "For most of human history, China was the world's largest economy and most advanced civilization," this does not bear very close scrutiny. China was missing in action for the first millennium or so of world history, sunk in illiterate darkness while empires rose and fell in Egypt, Mesopotamia, and the Indus valley. She certainly had a civilization going by the 5th century B.C., but that she was more advanced than the Greek city-states, or even than Achaemenid Persia, is highly questionable. For great stretches of time in the Middle Ages — from the late second century to the early seventh, for example — China was a collection of fragments, some under foreign occupation, with no central control and the Four Horsemen of the Apocalypse keeping population static or even declining.

I point these things out not to denigrate Chinese civilization, which has remarkable achievements to its name, some of which I have written about elsewhere with warm admiration, but to show how close involvement with China induces a wellnigh irresistible tendency towards exaggeration even in a level-headed observer like Nicholas Kristof. The tendency goes both ways: Kristof exaggerates both China's past weakness, and her past strength.

And what about Kurlantzick? Could he be exaggerating, too? He makes some good points about the economy. A lot of the numbers the Chinese authorities put out are just made up, often by officials out in the provinces whose main interest is in looking good to their superiors. That "eight per cent" growth rate you hear so much about is probably closer to five, and may be below four. That's still a pretty good rate of growth, but probably not good enough to let China "grow through" obvious looming problems with the banking system and the irredeemably unproductive state-owned enterprises. (The quality of China's economic statistics is explored in detail in a very good book by JoeStudwell.) China faces major systemic problems — economic, political, environmental, territorial and demographic — and this new crop of senior functionaries that surfaced at the recent Communist Party congress seem unlikely to provide the kind of imaginative, dynamic leadership that will be needed.

As between Kristof and Kurlantzick, I come out on the pessimistic side. I believe China is sailing into some choppy waters. A cratering of the economy is certainly possible. I'm not convinced, though, that China is really as important as either of these gentlemen think it is. I don't believe either the China-up or China-down scenarios will matter as much to the U.S. as Messrs. K. and K. are telling us. Even if China gets through her coming troubles intact, she will be no colossus. She has no tradition of good government, and shows not the slightest sign of acquiring one any time soon. The idea that sustained economic development will inevitably lead to consensual politics, as it did in Taiwan and South Korea, is an opinion, not a mathematical theorem; and in any case, as Kurlantzick and Studwell point out, the prospects for sustained economic development are not very bright.

I don't believe China will be a colossus in the foreseeable future; I don't think she will be an angry, disintegrating rogue state, either. The greatest probability, it seems to me, is that China will become a sort of larger version of Mexico during that country's 70 years of one-party rule: self-absorbed, just stable enough to hold together, with huge disparities of income but enough general prosperity to stave off revolution, ruled by a corrupt and incompetent political class — an "Institutional Revolutionary Party" — holding on to sufficient legitimacy to keep the bicycle moving uncertainly forward.

Two hundred years ago, the Austrian Chancellor Metternich remarked: "Russia is never as strong as she looks; Russia is never as weak as she looks." I don't believe China is as full of promise as Nicholas Kristof says she is; I don't believe she is as big a potential threat to the world as Joshua Kurlantzick claims. I don't believe China is important enough to be either thing, or ever will be until she abandons her imperial pretensions and embraces rational, constitutional government under a firm rule of law.

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* It is a curious thing, noticed by Kurlantzick, that Americans are much more optimistic about China than knowledgeable Chinese are. A few days ago, I had lunch with a visitor from China, an Assistant Professor at the Institute of Economics, Chinese Academy of Sciences. Sample exchange. Me: "What is the annual cash outflow from Chinese leaders to personal accounts in banks abroad?"  He, laughing: "You'd better ask the CIA. They probably know the answer to that one."  Me: "What do you think? A lot?"  He: "Oh, yeah."