Different facets of China

China Daily reported on July 31 that China had just overtaken Japan as the world second largest economy. Yet her per-capita income grows modestly to US$3,800 which is miserably small compared to US ($46,730) and Japan ($33,280). It is interesting to see a communist state which was a less developed country just thirty years ago has achieved the formidable status in such short time.

Her economic performance has baffled many economists, academics and politicians inside and outside China. Standard economic theories do not explain China model adequately. Many economists have predicted that her property bubble is going to burst with humongous damage the world has never seen. Yet she is still able to hang on to the property growth. Not so long ago there was still wide media coverage on the infamous poor quality in food, products and services. But now, some well developed countries are setting up tariffs to block some Chinese imports to protect their own industries.

Conflicting theories and hypothesis have been published to depict the China model on her success and failure. All seems to be true. Why is it so? I like to use the analogy of seven blind men touching different parts of an elephant and each claiming they know what an elephant is like. Yes China is so huge and diversified that you cannot find another country similar to her state of affairs.

The fundamental of her administration is a socialist system managing a capitalistic economy. She does not adopt all the western economic practices. The practices and theories are selected and customized to her needs. Even the communism which Mao Zedong preached was different from Russia.

Her exploded economic development with the high rise buildings, higher standard of living and the expensive cars on the road have led us to believe the capitalism is at work. The Chinese are very capitalistic indeed but not the administration which is a unique socialism that China has evolved it into. You do not find the local financial institutions behaving like their peers on the Wall Street across the ocean. Also when the state owned corporation chiefs want to overly compensate themselves, you will find a directive from the central government to curb the remuneration and bonus for these chiefs. The chiefs have to quietly adhere to the directive. President Obama has to fight acrimoniously in the Capitol Hill and with the media to push his course. Thus using the western yardstick to comment China is stepping on the wrong foot.

You cannot use Japan property bubble burst or even the recent Dubai case to explain China property phenomenon. You can use it if China is only Shanghai. Though the property price in some major cities is outrageously high beyond one imagine, China has so many other cities to lessen the impact. There are four forces in play and each trying to control the property development. Firstly the central government wants to curb the price increase so as to allow the low income group to own a home. The local governments rely on the sale of land for their revenue; while the property developers want to manipulate the market for their profit. And lastly the home buyers want to speculate to make hefty profit too by borrowing from a pool of relatives and friends. The collaboration between local governments and property developers against the central government will put up a spectacular show of who is mightier. The home buyers will determine the tip of the balance. That is, if more home buyers believe the price will keep escalating and flock to the sales office, the central government will introduce more drastic legislation to cool the market. The Chinese government needs to find alternate investment vehicles for her rich citizen in order to alleviate the heat on property speculation.

The major coastal cities are well developed with the standard of living comparable to developed countries. The western and some central regions are less developed and offer the same kind of opportunities and environment the coastal cities have provided two decades ago. Thus there is still ample growth opportunity for China. Many companies have moved inland to avoid the higher operating cost at the coastal cities. China has a combination of high tech industries and low cost manufacturing base. It is too early to foretell that many manufacturing companies will leave China for cheaper place elsewhere. Many companies had indeed left for India and Vietnam but also some of them had quietly returned to China too as there is no other place like China that could offer cost competitive environment plus a huge growing market. And also the competent and hard working workers at comparative low cost are another strategic leverage China has.

As for the Chinese, they are too large to be generalized. With 1.3 billion people, you can always find both extremes from the malevolence to most humble people on the street. There are many “Forrest Gump” everywhere complementary the unscrupulous people preying on the innocents. Many younger Chinese have adopted the western beliefs and way of living. But when it comes to distress and problems, they usually refer to the ancient wisdom for the solution. This is probably why some of the westerners are caught off guard with the Chinese reactions. There are no lack of heroes and generous donors during disasters. It is one of very few countries where the soldiers carry spades and rescue kits in the disasters instead of riffles to deter looters. On the other hand, one has to be very prudent with strangers on the street. Many foreigners have been cheated by them. Henceforth the good and bad experiences that the foreigners have encountered are just various aspects of life in China.

Looking at the hindsight, is not this situation similar in almost every countries? There are always the good, bad and ugly in every race and society. The Chinese is just like everybody staying next door and colleagues you either love or hate in the office.

Similarly, regions and ancient philosophies are also intertwined that they are far from the originals. Buddhism, Confucianism and Taoism are three most widely accepted religion and practices in China for thousands of years. You can find Taoist deities in the Buddhist temple and vice versa. Zen is often practiced by Buddhist and Taoist. Current Confucian teaching had been mixed with Taoist thoughts which in turned were borrowed from some ancient philosophies and suppositions. Most Chinese live by the principles and practices from these three teachings. Even the Muslim and Chinese Christians observed some of the Chinese rites. Foreigners are not familiar with these Confucianism, Taoism and some ancient teachings and thus they easily misunderstand the Chinese and the culture.

China has a facet in every angle. One has to be discreet when writing about the course of events in China or anticipating her moves. There are many self-opposing conditions, practices and thoughts which the western world is not familiar with. The Chinese has mastered the art of balancing the “Yin” and “Yan” and survival skills from thousands of years in war and conflict.

Welcome to China!

Aug 14 2010