What I think of the rising China

What I think of the rising China
Sam Chen, PhD
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University of Notre Dame
Jarvis Products, Inc
November 15, 2007

Most Americans of today think of China as a rising global power, a police state run by communists, world’s biggest factory and sweatshop, America’s newest debt owner, and America’s trade partner with a huge surplus. Average American’s feeling toward China is both reflected through the American mainstream media: suspicion, uneasiness, derision, curiosity, and awe. To America, China is a competitor, a potential threat, and a partner. I have many further thoughts on these.
China’s growth
China’s economy has been growing at a rapid speed. Its GDP annual growth rate ranged from 20% in the 80’s to 10% in the first decade of this century. Astonishing as the growth rate may be, China’s very low start point has made the number much easier to achieve. The 80’s economic reform was China’s start point and came only after Mao’s decades-long destructive era – the “Cultural Revolution,” which left China with no industrial and little agricultural foundation. People starved as much as the North Koreans do today.
The primary reason why China achieved such economic feat is most obvious: its government has reformed beneficial national policies and maintained a stable social environment for these policies to be carried out. Domestically, it privatized many of its economic sectors including agriculture and small businesses and by doing so liberated much of its labor from communal camps. This is decommunization. Internationally, it started active foreign trading and exchange – the so-called “Open Door Policy.” This brought in two great opportunities: China can organize its huge cheap labor into producing and exporting large quantities of goods; China can draw a lot of foreign investment and technologies to finance and engineer its economic endeavors. As these policies were in effect, China maintained tight control over social movement and did not allow any disruption of its economic course take place. This determination became firm as Chinese government saw that its citizens given limited rights duly demanded more rights. For example, the liberated peasants wanted to migrate to cities. The liberated workers wanted the rights to rid corruption (or in other words, they wanted to rid leaders they disliked and have leaders they liked; what a primitive sense of democracy!). China knows that as long as it organizes its huge labor to produce orderly, the nation will improve, progress, and possibly win in the end. Modern Chinese leadership believes in this strategy with one hundred times more certainty than Mao had in his plan for his red China.
Looking across America, Japan, Germany, Singapore, Malaysia, Taiwan region, as well as other well-developed countries, we can find similar golden eras for economic growth just like China. For example, the post-war era for America, Japan and Germany. China is no more extraordinary than any of them. Good economic policies plus a stable social environment in China paved the way to prosperity. But do not list China as one of those countries yet, for China is still placed as one the poorest countries in the world for wealth per capital. Further, China might be paying a higher price than what most of those countries did for their developments.
China’s trading with America
China is America’s second-largest trading partner, only second to Canada. Many Americans have the following impressions of their nation’s trading with China:
1. China has a large trading surplus over America and thus is the benefactor of the trading. China’s trading surplus is partially caused by its government-controlled economic measures such as fixing Chinese currency exchange rate;
2. China makes cheap, low quality goods and some of them are defected, the most notable case being the lead-painted toys recall in 2007;
3. China is the world’s factory. Its people often work in sweatshops;
4. China’s export is destroying American manufacturing industry. Much of American manufacturing industry has closed or moved to third-world countries such as China and Mexico.
5. Chinese companies disrespect intellectual property, pirate patents and operate without legal licenses.
Many of these impressions are true but they do not describe the entire picture and tend to mislead the audience. Indeed, China is the world’s factory and sells many more goods to America than America sells to China. But this is not certainly good for China or bad for America. Aren’t America’s lower- and middle-class people enjoying or even dependent on the cheap and usable Chinese goods in all the American departmental stores? Doesn’t it feel good to always find abundant Christmas decorations and ladies’ clothes without hurting the budget? After all, what China gets from America could become printed paper but what America gets from China is solid goods.
China’s huge manufacturing and exporting industry has generated a large amount of revenue, but does the majority of the money go to Chinese people? Despite that the average income of Chinese is increasing and an urban middle-class is emerging, the average Chinese people are still in poverty because the new wealth concentrates in the hands of a small class of people residing in the coastal and urban regions. Why? Aside from the unequal wealth distribution in China’s crude capitalism, China is only assigned to the least profitable link of the whole wealth-producing chain.
When a product is sold for a price, the money is distributed among many parties who contributed to this product. First, the inventor and designer, who is often owned by a corporation and represented by its brand name. Second, the manufacturer, who follows the design, buys raw materials and makes the product. Lastly, the seller, who finds the market, prices the product and distributes it. Generally speaking, the invention and design process is the most knowledge-based and least labor-based while the manufacturing process is the least knowledge-based and most labor-based. The invention and design process is the most active while the manufacturing process is the most passive. The invention and design process has the largest profit margin while the manufacturing process has the smallest profit margin. At last, the manufacturing process has the most complications: pollution, large consumption of energy and raw materials, dependence on foreign natural resources, human accidents, etc.
In the whole product cycle, China only has the control of the manufacturing process. The rest of the cycle, the invention and design process and the sales process are both controlled by American corporations, if the products are sold to America. Americans know and control all the sales channels and good brand names. Furthermore, the Chinese enterprises and factories are often financed by American or foreign investment, thus much of the profit from the manufacturing process goes to the American and foreign investors.
This hierarchy is clearly reflected on the tag of every piece of merchandise imported from China: it always states “Made in China.” It never states “Designed in China” or which Chinese company in which town made this piece. To consumers, the whole China almost takes on a vague image of a mega-factory that makes millions of copies of everything without even putting a brand name on them. If there is a brand name, it is often the brand name owned by a foreign company that often contracts or owns the manufacturing facility. It is bad for China because not leaving a brand name on the merchandise is no different from an artist not leaving a signature on his painting. The creator gets no credit and cannot use his current accomplishment to add credibility to his future endeavor.
What is natural is America’s transition from a labor-based economy to a knowledge-based economy. Human society started with agricultural economy, which was labor-intensive. As followed was industrial economy, which was triggered by new knowledge of science and technology and built up by labor. The new economy, as modern society is entering now, is the high-tech economy, which has much more reliance on new knowledge. Service-oriented industries, such as financial services, commerce, education, and legal services, are heavily based on knowledge and always have a high status in the society. America is leading into the high-tech economy and shedding its traditional manufacturing industry to the third world countries. China, still left behind in its industrial buildup, is willing to accept this shedding.
Then why do most Americans see China’s trading with America with suspicion instead of joy? They see China’s trading surplus as America’s loss and China’s advance in manufacturing as the America’s retreat in manufacturing. They do not see all the burdens and detriments China endures and the benefits and profit America gains. They do not see America’s shedding of its traditional manufacturing industry as ushering in a more technology-based economy. A primary reason is America is a nation of freedom. Under this condition, the human liking of complaints plays to its full nature. No matter what is taking course, most people are complaining since it is free and self-relieving. They get used to what they have and focus on what they have not. They can be so critical about their sacrifices for a win that they make it look like a loss. And they always diversify into so many opinions that there is never a unanimous agreement. Labor workers and factory owners who lose their jobs and businesses due to the influx of cheap foreign goods are tragic enough to make the population cast a negative light on the trading with China. In this respect, Americans are the smartest because they’ll never lose.
On the other hand, we have seldom heard complaint from China, either from the Chinese factory workers or from the leadership. The factory workers are often glad to join in the “Chinese new economy” and receive a “high” salary. China does not consider itself as being taken advantage of. Even when some Americans and Europeans criticize China of heavy pollution, China does not fight back. This comes back to China’s basic strategy: organize its huge labor into orderly production and maintain a peaceful environment at all costs. It is the industrialization China has to step through, the primitive capital accumulation. If not expanding its manufacturing industry and taking the world’s production orders, China has no better route to tread yet. The situation is as if China were an unemployed youth. Any job offered by the wealthy, even base and cheap, would turn this idle and desperate youth into an occupied power engine on the job.
China so far has been mostly making low-end products. However, its products quality and grade have improved dramatically since the 80’s. In the 80’s and early 90’s, China was notorious for its high export goods refusal-rate on foreign borders. Now not only China has assured most of its export goods quality but also it has stepped up high-end exports such as electronics and computers. Though cheap price is still Chinese products’ main competitiveness, people see Chinese exports following the same pattern as the exporting predecessors. For example, Japan is a country heavily depending on its foreign market. In the 60’s and 70’s when Japan started exporting goods to America, the quality was so low that Americans considered “Made in Japan” the same meaning as trash product, or one-time use product. But behold, today Japanese products mean superior quality and high-end. China is on the same path as Japan.
Chinese government has many economic measures that are not in tune with market economy. For example, it has long pegged its currency RMB (People’s Bills) on US dollars. It enforces this policy by illegalizing private currency trading and requiring exporting companies to turn in all their revenue in foreign currency. The American government has negotiated this issue with Chinese government many times because the fixed-rate currency undervalues RMB and gives Chinese export unfair advantage (making it cheaper.) Chinese government has made many concessions.
Another issue is intellectual property. Many Chinese companies operate without proper licensing of the product. But this, again, is prevalent when a country starts developing its industries. For example, Japanese companies dominate the industrial robotics market nowadays. Little do people know that industrial robot was invented by an American and developed by his company. However, in the post-war era Japan had domestic intellectual property protection but not international intellectual property protection. This allowed Japanese industries to copy international inventions and patents without liability while the domestic innovation activity is well protected. This is how Japan got ahead of America in industrial robotics field. And this is almost what Japan had to do. International intellectual property law was made by the developed countries and used to protect their interest. Many big American and European companies would patent every piece of slight ideas, tentative plans, and primitive products that they have abandoned. The purpose is to blockade other companies from researching in these directions though the company itself does not consider it pursuable. For the companies in developing countries, whose research has already fallen behind, it almost becomes impossible for them to catch up without infringing on the intellectual property owned by the companies in developed countries.
China’s future
There is no doubt Chinese government will lead Chinese people to follow the economic development route. The question is how effective it can be and how much sacrifice it can avoid, as well as whether China can surpass the developed countries.
Many people think that Chinese politics is one-party politics and Chinese government is a tenure system. Chinese government officials have less motivation and are more self-interested due to lack of outside criticism and competition. Thus Chinese leadership can never outwit American leadership, which campaigns regularly and face tremendous pressure and scrutiny from the public and media. Who would win if both sides engage in a competition?
Nevertheless, China has many advantages that most other countries do not have. First, China is a huge country, both geographically and demographically. America is too. Japan and India are huge demographically but not geographically. Russia and Canada are huge geographically but not demographically. Singapore and South Korea are neither. Being a huge country endows China with the many advantages such as:
1. China has enough human resources to engage in every conceivable industry and field. This gives China the possibility to be self-reliant instead of depending on foreign industries. For example, China has its own automotive industry (Red Flag), space program, aircraft manufacturing industry, nuclear industry and arm industry. China has self-designed products sold in domestic market in all these industries. It would be impossible for a small country to have developed all these big industries.
2. China’s huge population provides sufficient domestic market. Thus Chinese economy can run on a self-supply, self-demand basis. Unlike China, many small countries’ industries rely on exporting goods.
3. China’s huge land provides vast space and natural resources for its industries. Further, its size is deterrent to any foreign invasion.
4. Chinese people can be highly educated and trained to engage in science and technologies developed by people from any other countries. This has been proved by China’s accomplishments in its national education and Chinese international students’ ubiquity and high performance in American institutions. This seems to restore some of China’s old glory in the isolated ancient world when China had the most advanced technologies (but not philosophy and humanities.)
5. China’s totalitarian government can bring huge changes quickly to China even when they are against citizens’ will. When Chinese government’s objectives are correct, China’s forceful measures could concentrate resources, exclude opposition, and effectively bring in positive results. This governing style is similar to that of a small-claim court, which can resolve disputes in a fast fashion though the judgment may not be accurately correct.
Though Chinese government is not a democratic government, it is not a sardonic, dictatorial government in any sense either. Some people say it is close to an aristocratic government that is led by a group of elite who are experienced and accomplished. Is democracy urgent in China? To the most educated and informed, the answer is yes. But the majority of the Chinese people seem to accept their leaders’ priority: the most important thing is to increase people’s income, improve quality of life, and build up the infrastructure; the economic goals can be accomplished without democracy. Indeed, people care about corruption, pollution, mandatory birth control, limited religious and political freedom, but these issues only directly concern a small number of people and can be resolved or improved without a radical change of the entire political system. Switching to true democracy is like a person trying to jump onto a bolting train from the ground. If the person manages to cling onto the train, he is on the fast track to his destiny. But if he fails in his effort, he is certain to get bruises and injuries all over.
Another anti-democracy factor in China is the deep-rooted Chinese culture of subservience and elitism. Though ordinary people adore the elite and want to be elite, the way they strive for it is more to obey the elite rather than to imitate the elite, not to mention to challenge the elite. People have a strong inclination to trust their leaders in their judgment and go along with the harmony. Leaders tend to demand obedience before they consider promotion of their subordinates. This is not only part of the Chinese culture, but also part of the entire Asian culture. Most of the democracies in Asia did not come free but were products of forceful creations. For example, the Philippines, Singapore, Japan, and South Korea all formed democracies through colonization and military occupation. There have been a large number of Chinese students who study in America for the past two decades. Though all of them are quick to learn the American tactics, few of them learn the American principles. For them, America is more of a foreign shell surrounding but not composing their private lives. So long as they learn enough about the American system to get by, or counterbalance, their values stay.
Thus, if China succeeds in its current course, maintains its overall political system, and even surpasses most developed countries in economy, it would be a success proclamation of an ideology other than America-touted democracy. Just imagine how scary it would be to see what has been taken for granted as solution to most problems in the world and may be substituted in the biggest test case.
China is the biggest test case because it is the last communist regime of large presence on earth. It is also a huge country, which, supposedly, should have democracy. According to western political scientists, it is easy to manage a small country with any political form, but it is only possible to manage a big country with democracy, particularly when many strong democracies are already in existence. This is similar to how to manage a company. Someone can manage a small company case by case and person by person and may do it well. But if he has to manage a big company involving a thousand people, he has to make good policies and establish a complete and credible system in order to survive the everyday mayhem. Otherwise, he will definitely be overwhelmed or cannot help making mistakes.
As a country still trudging through industrialization, China has many advantages to its benefit: it is able to learn from developed countries’ lessons and avoid the detrimental side of industrialization; it can directly adopt the most advanced technologies and economical development models. In a word, it can speed up its industrialization with less pain. However, the key to all of these is to national education. Well educated people know the best solutions to problems and can adopt them. Poor educated people have to start things from scratch or resort to old ways. China cannot rely on an elite leadership to always make right decisions. It has to rely on the ordinary Chinese people to exercise good judgment in everyday’s life and work.
Chinese in America
Chinese population is one of the fastest growing populations in America. Together with the increasing Indian population, sometimes it impresses people as that America is going through Asianization. Actually there are only 1% Chinese in the total American population, though Chinese count as 25% of the world population. There are only 5% Asians in the total American population, though Asians count as 60% of the world population. Chinese, rarely-sighted in the countryside, mostly reside in urban areas, notably California, Northeast, DC, and West Coast.
America almost always had particularly stringent immigration policies against ethnic Chinese, from the early federal law Chinese Exclusion Act (neither Woodrow Wilson nor FDR changed it) to the visa and immigration quota system hostile to Chinese nowadays. The recent stringent immigration policies result from the always tense government relationship between China and America.
There are two groups of Chinese in America: America-born Chinese and Chinese immigrants. There are two groups of Chinese in Chinese immigrants: family-based immigrated Chinese, illegal Chinese, and Chinese students, scholars, professional workers. The latter group often is the most selective because they have to overcome numerous barriers to enter America based on their merits.
Chinese, as well as Asians, are well-known for their model minority status. They have the highest performance in American education system (20% enrollment at Ivy League schools, more than 50% in the UC system, about 40% in American engineering/science graduate schools in general), are said to have the highest incomes in America, and have the lowest crime rate as a race. In particular, the highly educated foreign-born Chinese scholars have become an indispensable part of the brain power American high-tech industry prospers from.
The Chinese scholars in America are here to look for a better living and better development opportunities. In generally they have superior basic training in science and engineering disciplines, such as mathematics, and can be educated to become highly scientific or technical professionals. By coming to America, they also lose vast opportunities both inside and outside their fields because of their racial identity and cultural barrier. Racial identity refers to their being Chinese and from China. Bear in mind one quarter of world population is Chinese and most Chinese in China enjoy the majority racial status. They view their culture as a significant culture of the world that deserves much attention. However, once in America, all of a sudden Chinese scholars become a minority race and start being framed with stereotypes, such as being poor, being communist, or even that men have braids and arranged marriages. Cultural barrier refers to the entire distinct culture Chinese grew up in. Chinese culture is the quintessential oriental culture and mother of almost all Asian cultures. American mainstream culture is the crossbreed and descendent of the major European cultures. These two cultures are as far apart as they can get. If a Chinese scholar in America did not go to college in America, the odds are he will be isolated from American mainstream culture for his entire life. As a common phenomenon, Chinese nationals immigrated to America are often held at bay by the language barrier if they try to start a career as journalists, salesmen, or managers that requires much speaking, writing, or effective communication. That is why they are often trapped in the fields of science and technology, research, programming, accounting, food preparing and hairdressing where effective communication and a good understanding of American culture are not required.
The relatively large number of Chinese technical immigration to America is a natural part of the global population migration. With the huge disparity between the rich countries and the poor, traditional borders cannot prevent people from leaving underprivileged countries for a better country, both legally and illegally. The effort of improving underdeveloped countries to the level of the developed countries has largely failed. People simply seek to change their lives by moving to a nicer place. Similar to the Equilibrium Law of Reaction in Chemistry, there is always a natural force pushing for the balance. If there is much disparity between the rich entities and the poor entities, there will be a natural force making them even. If countries are too rich or poor, migration of people from the poor countries to the rich countries is the manifestation of the force and is unstoppable. Many ex-communist countries tried to physically and forcibly cut off its people flow to the rich capitalist countries but unexceptionally failed (such as the Berlin Wall). The reason lies in that artificial blockade of the natural force will only make the force stronger. Nowadays, few poor countries restrict its people from leaving but it is the rich countries that are pushing against the influx of foreign nationals. In the Chinese case, Chinese students and scholars show a strong disposition in science and technology. America needs a lot of technical expertise to continue its technology lead while its native-born Americans have become less inclined to engage in science and technology. This circumstance has generated the Chinese technical influx in spite of the resistant immigration policy.
The America-born Chinese, the children of current Chinese immigrants, and other ethnic groups of Asians, will bear a different characteristic in their identity than most other racial groups or past racial groups in America. They are going to be the racial group that keeps a close tie with their kinship country.
Caucasian Americans were originally from Europe. They have been in America the longest since the colonial time. They have mixed up their races through marriage, assimilated into the common Anglo Saxon Christian culture, and started bearing the uniform identity of White. Most white people cannot identify a single country of origin, thus unable to claim an ethnic or national identity, or a language. African Americans were originally slaves transported here from Africa by slave traders. They were forced to assimilate into American culture and sever their African roots. Today they do not possess recollection of their specific origin, which could be a nationality, an ethnicity, a language, or a kinship. The immigrants prior to about 30 years ago were eager to assimilate into mainstream culture because of severe discrimination against non-Americans in America. They tried to imitate Americans’ customs and mannerism every way possible, for example, learn English, send their children to boarding school, go to Christian churches, rid their accents, butch their own names, and have a concessive attitude to native-born Americans. They could not wait to give up their ethnic identity, language, or cultural heritage for fear of discrimination and feeling of inferiority. In addition, often times their countries of origin were poverty-stricken, or politically unstable, or socially depressed. Thus they did not desire to associate themselves much with their home countries. At different times, Americans have always seen immigrants flux in from different countries. No matter which, the country must be in some trouble. The earliest were the puritans escaping from the religious-persecution state of Britain. Followed were the Irish, Germans, and Italians for economical reasons. This past century, every country that battled communism sent in their share: Cuban, Korea, Viet Nam, Taiwan, Laos … the new faces appearing on American borders signal the strife in another world’s corner.
Interestingly, the trend of unconditional assimilation reversed about 30 years ago. Americans began to emphasize the significance of ethnic heritage, racial diversity, and foreign languages. Being foreign and different gradually became a fashion, a beauty, or even an asset. That happened about time when large numbers of Asian immigrants came to America. Furthermore, as soon as Asians started pouring in, many Asian countries emerged as the new economically-prosperous powers, most notably Japan, South Korean, Singapore, Taiwan, and Malaysia. Asians began to feel proud of their origins and would like to stay in touch with their home countries, even with the first or second-generation Asian Americans. Americans became more interested in Asian cultures, after having to pay attention to Japanese autos, Asian economic clout, and rise of China. Lastly, Asians often find their original culture more comfortable than the mainstream American culture. Since they do not have the same pressure to sever their roots as many earlier immigrant groups did, they can afford to keep it alive and pass it on. All these factors brought recent Chinese immigrants and their descendents into close ties with Asian countries.
Taiwan issue

When speaking of Taiwan issue, most Americans uniformly support the independence of Taiwan. They think that Taiwan is a small democracy that is being constantly threatened by the communist China. Aren’t we freedom fighters? There is another side of the story.
The separation between China and Taiwan is a direct result of an unfinished civil war. The government in Taiwan was the same government ruling the entire China for about 40 years. However, it was defeated in the war against Chinese communists and retreated to the ocean island of Taiwan. The communists put up thousands of casualties trying to reach the island by sea but their effort was effectively crushed by the American navy.
Thus Chinese civil war comes to a stall that has lasted nearly 60 years, thanks to American intervention. During this stall, both Taiwan government and the Mainland government claim to be the legitimate government of China. One calls itself Republic of China and the other People’s Republic of China. Actually for the first 20 of the 60 years after the Republic of China retreated to Taiwan it was the country representing China in the United Nations.
It is clear that Taiwan island is a part of the whole China land. People living in Taiwan are Chinese and speak Chinese. Most of them have roots in Mainland. If they could, they would have taken over China and restore their land.
Thus independence of Taiwan means permanently splitting off a traditional piece of China. This directly violates China’s sovereignty, no matter which government is legitimate. Taiwan is always part of China and is only resided in by another government.
The unification of Taiwan and Mainland China must come since they should be in one piece. But it cannot be said that the democracy in Taiwan should demise for the coming of the Mainland Chinese government. It should stay alive and prosperous, more so than Hong Kong. And the Mainland government may use Taiwan’s democracy for its own government improvement and Taiwanese may participate in the national politics. There is a lot to do for the betterment of all Chinese people and all China, with the premise of unification of China.
Independence of Taiwan is a topic only because the Mainland China had been weak and backward for many years. Hawaii was taken unjustly and forcibly by Mainland America. It remained part of the US only because the US is prosperous and strong, and treating Hawaiians equally. If the US ever went weak, Hawaiians would make independence a topic too. Now the Mainland China is dramatically improving, with the potential to emerge as a superpower. If China ever became the richest country in the world equipped with the best political system, Taiwan would not hesitate to be unified.

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