China’s Two Faces

Posted in China , Asia | 24-Nov-03 | Author: Dieter Farwick

The future of China with its more than 1.3 billion people will have a great impact on the whole world and is therefore of interest to all of us. Looking at present China, it is very difficult to predict the country’s future since there are mixed signals painting an ambiguous picture.
China has at least two faces.

The first and most obvious for observers is the face of modernity and dynamism, characterised by vibrant cities like Chongqing, Shanghai, Hong Kong, Tianjin and Beijing; by great projects like the Yangtse-dam, the Olympic Games in 2008, the world exposition in 2010 and the first Chinese cosmonaut, Major Yang Liwei; by the rapid GNP growth of more than 8% per year, strong exports, and new car production plants leading to about 40,000 new car registrations per month in Beijing alone.

Yangtse dam
(Photo Dieter Farwick)
In the bigger cities, people demonstrate a breathtaking Western life style. Clothing, hairdressing, music, youth behaviour and modern architecture do not show any major difference with their “peers” in Europe, the United States or Latin America. Even models in fashion magazines or in TV- commercials represent the “West”. For the German expert on China, Professor Dr. Oskar Weggel, that is the result of the “Re-normalisation” after the shock of the “cultural revolution” from 1966 to 1976. “Ancient China “ is hard to see. There is a small old quarter in Beijing which will not survive the next two years. In Beijing are the “Summer Palace” and “Emperor’s City” impressing symbols of China’s history and power. In Shanghai, the old China can be visited in what looks like an open-air museum where replicas from old houses host shops and restaurants. The modern face of China, however, exists only for a minority of people in the country.

The second face of China – representing about a billion people – has less appeal. That face is marked by bureaucracy, corruption (the mayor of Shenyang was recently sentenced to death and executed as a deterrence), massive violations of human rights, high crime rate (21,000 murders in 1998, 6,802 kidnapped women and 1,662 kidnapped children in 1999 according to “Spiegel-Almanach 2001”), drug problems (more than half a million drug addicts), energy shortages, lack of drinkable water, low wages and very low pensions, poor healthcare, huge numbers of unemployed (estimates range from 120 to 200 million people, with about 30-50 million in the cities), millions of displaced peasants infiltrating illegally the cities, and a dramatic rift between the have and the have-nots.

Which face will prevail?

The single most pressing issue is demography. Though the “one-child-policy” has reduced the birth rate, about 10 millions Chinese are still born every year. To compensate this population growth, the Chinese GNP has to increase by 7-8 percent per year. In the mid- and long-term, the “one-child-policy” might cause more problems than bring solutions. Less young people will provide less qualified work force for high-tech jobs. Less young working people will also have to pay for a growing ageing population – privately within the families or by higher taxes. The formerly rigid “one-child-policy” has already been abandoned. Ethnic minorities, families in rural areas and couples of single children are allowed to have more than one child – as well as rich people who can financially afford more children.

A related issue is unemployment. In addition to the above-mentioned figures, there is hidden unemployment in heavily over-manned factories, shops and the military. If more worldwide competition forces more rationalisation, millions of people would have to be made redundant aggravating the already pressing social problems. On the other hand, higher wages - necessary to rent or buy the apartments that are built in vast numbers or to buy cars produced in China - will force foreign investors to look for cheaper workforce in other Asian countries like Vietnam or Cambodia. Some observers believe that China might face a problem similar to the one that Japan has been suffering from for more than a decade. This problem is the boom in commercial and residential construction. In Beijing, already more than 40 percent of office space is empty, yet new buildings pop up like mushrooms. Driven by speculation, real-estate prices keep rising, offering an attractive return on investment. Banks have a large portfolio of real estate loans. If the present boom turns out to be a huge hype, China’s economy will be jeopardized. Many “yuppies” who bought attractive apartments in the cities on credit, would loose almost everything and will join the army of the have-nots or protest demonstrations.

Old quarter of Beijing
(Photo Dieter Farwick)
The Chinese family has lost a great part of its previous function to keep generations together and to mitigate social problems of individual members. Modern apartments in the cities, bought on credits, because they are too expensive to rent, can only house one generation. In rural areas, young qualified and flexible people quit the family and move to the cities.

Religion does not offer relief to about 80-90 percent of the Chinese population. There are no religious or metaphysical bindings, which could help endure the everyday problems. Obviously, there is no obstacle to worship. Buddhists (about 100 million) and Muslims (about 30 million) as well as 10 million Christians have their temples, churches and mosques and use them publicly for prayer. In contrast, numerous members of the sect “Falun Gong” - with about 100 million followers even among the communist party, administration and military - have been put in jail.

Education has two faces. In country schools, attendance is obligatory for at least six years but is not very efficient. Eight percent of men and 24 percent of women are illiterate. In the cities, where about 35 percent of the Chinese people live, education starts with the kindergarten. In the better and more expensive ones children start learning English at the age of four. That is in stark contrast with the poor foreign language capabilities observers meet everywhere, even in international hotels in the cities. The problem of education is obvious. Because both parents are forced to work in order to have acceptable living standards, education lies in the hands of grandma and grandpa, who still live in a different world.

The philosophy of Confucius, born in the time of long-lasting wars around 500 B.C., is gaining new ground after the so-called “cultural revolution” fought hard against it. Confucius puts the hierarchy and the community (“the net”) higher than the individual. He asks for self-discipline and life-long learning. The duties are more important than the rights. Thus, the philosophy of Confucius suits the aims and objectives of the leaders.

Communism is not a substitute for religion, though about 60 million are members of the communist party, which dominates China in close connection with the People’s Army numbering 2.5 million soldiers. The party, led by a fourth generation of leaders and accepting today entrepreneurs even in the Central Committee, is obviously undergoing a dramatic change. Its leadership allows as much freedom as necessary to improve the economy, but tries to keep people restricted the rest of the day. State controlled media deliver state propaganda and entertainment. More than 60 million Chinese have access to the Internet and get more information, but its use is still restricted. Just recently some people have been put in jail because they used the Internet to publish articles critical to the system. The Internet remains prone to a very subtle state control.

There is no sign of any opposition – neither in politics nor in the media. Whether the “Tiananmen Square” disaster could and would happen again is an open question. People who do not follow the rules are brought into so-called “re-education camps”.

Healthcare is another critical issue. There is no country wide insurance system. Big companies take some care of their workforce. A visit to the doctor requires cash.

The Great Wall
(Photo Dieter Farwick)
One should not forget that China lost millions of its elite during the last century. Invasions by France, UK and Germany as well as Japan from 1931-1945 and the loss of about 20 million during the “cultural revolution” put a huge toll on the country’s “human capital”.

Another problem is agriculture. Only 15 percent of China’s territory is useful for agriculture and 35 percent of it has to be watered. To put this in perspective: with 7 percent of the world’s areable land China has to feed 22 percent of the world’s population. Pollution, loss of useful land to growing deserts, and long distances to consumers in the cities make the task to feed 1.3 billion people extremely difficult, especially in a country where 30 percent of the territory is higher than 4000 meters. A new threat for the indigenous farmers is the membership in the World Trade Organisation which will result in more agricultural imports.

In sum, people get more and more disappointed and angry about the deficiencies they face on a daily basis. There is a rising number of country wide demonstrations against bureaucracy, mismanagement and corruption, which eats up 4 percent of the country’s GNP. Monetary compensations, for example, were designated for lost jobs as well as for moving to new housing areas after old houses were replaced by modern buildings or fell victim to the Yangtse project. Yet the money allocated did not get to the people affected, but disappeared in the bureaucracy. Chinese basic attitude and lifestyle "harmony" might might keep people quiet for a while.

The above-mentioned internal problems will absorb a lot of resources within the foreseeable future. For the outside world, a question of great importance is whether and when China will become a superpower and how it will use that status. China already plays today an important role as one of the five permanent members of the UN Security Council with the right to veto UN resolutions. In an increasingly interdependent world there is no place for the splendid isolation that China enjoyed for centuries. Energy and food supplies from the Gulf, the Caucasus and Central Asia bring Chinese interest in these areas. A further growing economy and improving welfare of the upper class will increase the country’s demand for energy from abroad. In a two-way-street China is interested in exporting its goods to those regions too.

China - as “country in the centre” has no tradition in “power projection” beyond the “near abroad”. On the opposite, China has experienced repeated invasions from the North (Japan, United Kingdom, France and, to a lesser extent, Germany), leading to the defensive “Great Wall” started in the 15th century.

Terra - cotta warriors in Xian
(Photo Dieter Farwick)
Tibet and Taiwan fall under the “one-China-doctrine,” which is popular and supported by ordinary Chinese. Without the United States backing of Taiwan this issue would already have been solved by China. Today, Taiwan is a very important trade partner and investor. Taiwanese people are welcomed to buy expensive apartments in China. Trade between China and Taiwan almost equals that between China and the EU. Is there a danger of a Chinese invasion in the light of the current sable rattling by China’s officials ? Most observers believe, that the “re-integration” of Taiwan is not a question of “whether,” but of “when” and “how ”. China does not seem to feel being under time pressure. It can wait. A Hong Kong style re-integration of Taiwan is perhaps the most likely approach.

There is not much hope for Tibet to get more than its people have today – a certain degree of autonomy. But Tibet and the autonomous Xinjiang province in the West are sources of concern for the Chinese leadership. China’s world image suffers from the suppression of freedom movements in those two areas. To justify its actions, China uses the label “anti-terrorism” and sees itself in a world wide “anti-terror-coalition,” even with the United States.

Another bone of contention is China’s hold of the Spratly , Paracel and Diaoyu Islands, which it claims are Chinese territory by law since 1992. That view is not accepted by neighbouring countries such as Vietnam, Malaysia, Taiwan, Brunei and the Philippines. It is not the territory of these islands itself that makes them interesting but their rich deposits of crude oil. The outcome of this territorial dispute is an open question.

Without any doubt China wants to be a global “indispensable power”, but “power projection” based upon military capabilities is not to expected for the foreseeable future. The American military “Blitzkrieg” based upon so far unseen military superiority must be a nightmare for the Chinese leaders. With their over-manned “old army” with outdated heavy armament and modern but almost useless nuclear weapons with far reaching delivery means, China is far away from any significant capability for major military interventions. It has to avoid any military clash with American forces wherever that might be possible. To compete militarily with the United States would mean to multiply the country’s defence budget, which would eat up scared resources needed to mitigate internal crises. China cannot have it both ways. It cannot solve its internal problems and finance a military build-up at the same time. “Muddling through” is a more likely scenario for the next decades than any “major jump” to face the United States eyeball to eyeball.

China wants to be taken as a serious and powerful member of the international community. Chinese people are proud of their more than 2000 years old history. The country will inevitable be a serious competitor beyond Asia. For these reasons, the United States should not regard China as a “natural enemy” but seize the “golden opportunity” to develop a cautious co-operation with China - strategically orchestrated with its allies and partners in the region – with the goal of stabilising the Far East. A positive example in this direction is the handling of the crisis with North Korea.

For all Western and Asian countries China is and will be an attractive market. It is in the interest of the whole world, therefore, that China does neither explode nor implode. Europe and Russia should not try to misuse China to solve their problems with the “Hyperpuissance USA” and China should not fall into this trap. In sum, the 55-nation country of China is a huge construction site. Nobody knows for sure how long it will take for that construction to be completed and what the final face of China will look like.