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Ray · 12-22-2007, 00:28 AM

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Greater China
Dec 22, 2007

In China, tension and triumph

By Kent Ewing

HONG KONG - By most indicators, 2007 was yet another bang-up year for China. The country's economy continued to sizzle, and President Hu Jintao was re-anointed as Chinese Communist Party (CCP)general secretary for another five years.

In addition, a proud nation launched its first lunar probe, further staking its claim in space, and is preparing to host next summer's Olympic Games. In short, this year's events serve as a further reminder that China, after suffering a bloody and tumultuous 20th century, has arrived on the world stage as a nation respected by the developed world and envied and copied by the developing one.

So what is everyone so worried about?

It was Confucius who said: "The superior man, when resting in safety, does not forget that danger may come. When in a state of security, he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his states and all their clans are preserved."

While all is not exactly orderly in today's China, things are better than they have been since long-dead emperors turned up their noses at the rest of world, assured of Chinese superiority. Much of the past century's chaos and destruction has been banished for a vision of a nation that is not only a rising economic and military power but also a responsible member of the international community. And, while there is much evidence to support that vision, there is also cause for Confucian worry.

Hu's qualified triumph

But how many first-tier nations are one-party states afraid of their own people? The re-anointment of Hu at this October's 17th National Congress of the CCP may have been a triumph for the president and for the party, but it was a reminder to the rest of world that China, despite its slick new capitalist veneer, is still a totalitarian state. So-called "intra-party democracy" was one of the themes of the congress, which sounds promising enough.

As it turns out, however, the ideal of democracy has been turned on its head by Chinese leaders to justify continued authoritarian rule. Li Yuanchao, newly elected at the congress as a member of the country's ruling Politburo, made that clear in an article published last month in the party's chief mouthpiece, the People's Daily.

"While expanding democracy within the party," Li wrote, "we must also uphold the unity of the party, and we must conscientiously abide by the party's political discipline, always be in agreement with the central committee and resolutely safeguard its authority to ensure that its resolutions and decisions are carried out effectively."

In other words, democracy with Chinese characteristics equals one-party rule, and the congress served as a perfect example of this. Within carefully prescribed parameters, there were all the trappings of democracy - debate, elections, winners and losers - but none of the free thinking and spontaneity. This was a perverse form of democracy by script, with preordained results. And those results were good for the president, although not as good as he had probably hoped.

Hu succeeded in strengthening his rule by packing the 204-member central committee with allies from his power base, the Communist Party Youth League. He also saw his theory of "scientific development" enshrined in the party constitution, elevating him into the pantheon of Chinese leadership along with party founder Mao Zedong, paramount leader Deng Xiaoping and Hu's immediate predecessor, Jiang Zemin, all of whom have been so honored.

In a sure sign that the era of the strongman is over in Chinese politics, however, the president did not get everything he wanted. For example, he also no doubt hoped to see his much-ballyhooed concept of "building a harmonious society" emblazoned in the constitution, but the congress' 2,200-plus delegates consigned that piece of wisdom to the dustbin of history. Building a harmonious society implies living in a disharmonious one. That is not a point the congress wanted to underscore as the leadership prepares to tighten the screws on the economy, further dividing the haves from the have-nots in a country whose wealth gap is already cause for alarm.

Hu was also denied his choice of a successor. Of the new blood elevated to the all-powerful nine-member Politburo standing committee, Hu backed his protege former Liaoning party secretary Li Keqiang, to take over from him when his second term expires in 2012, but the choreography of the congress suggested that "princeling" Xi Jinping will be China's next leader. Xi's famous father, a hero of the revolution, and privileged party background seem to have trumped Li's close connection with the president. Xi is the son of Xi Zhongxun, who served as a senior party official before he was purged by Mao. Later rehabilitated by Deng, the elder Xi rose to become a member of the Politburo, an achievement exceeded by his son at the congress, where he was elected to the most exclusive and powerful club in China, the Politburo standing committee,

In today's more media-savvy China, the younger Xi's profile is further enhanced by his beautiful wife, soprano Peng Liyuan, who has won the middle-aged and older hearts of the nation with her renditions of folk music and patriotic songs, as well as her performances in Chinese operas. A Xi presidency would be different in that the president would have to share the limelight with his famous spouse. And the couple has a daughter named Mingze, which means usefulness, innocence and moral probity in Chinese. The threesome would be the first first family of China to offer beauty and glamour as a complement to dark suits and political slogans.

Fiddling while Rome burns

Of course, Xi must play his cards right over the next five years to win the prize - as must his rival, Li. At this juncture, however, insiders see Xi as president and Li as his premier. In the meantime, Hu and current premier Wen Jiabao face the mixed blessing of a booming economy that has brought great benefits to ordinary people but at the same time profoundly damaged the country's environment and led to rampant corruption in the provinces. Wen, who is responsible for keeping the economy on track, has taken much flak recently, even from within the party, for the ineffective series of remedial measures implemented over the last year. To sum up this barrage of criticism: "Nero fiddles while Rome burns."

But it is not just Wen who is fiddling. Half-measures are the norm in China. For example, while the central government's anti-corruption campaign nets a big fish - former Shanghai party boss Chen Liangyu - on charges of stealing US$470 million from the city's pension fund, the little fish (and a lot of other big ones) continue to swim in the culture of corruption among local officials. Lofty pronouncements on the evils of graft at the top are commonly ignored at the lower echelons of power, where there is inadequate oversight and follow-through on policy implementation.

The same is true of China's belated efforts to clean up the environment. The State Environmental Protection Administration names and shames a few companies, issuing fines and tough admonishments about future violations. Meanwhile, China's sky becomes darker with pollution and its lakes, rivers and streams more defiled.

The problem is not that nothing is being done to address the country's most pressing issues. Chinese leaders, for the most part, have talked the right talk and walked the right walk. But why are there so few results? Like everyone else, they seem to be holding onto a hope and a prayer that, after all these years of stunning economic growth and five-year plans, China's landing will be a soft one in 2008.

Trade tensions

Who can argue with nearly 30 years of soaring economic growth that now stands at 11.5% per annum? Indeed, for five consecutive years, the Chinese economy has posted double-digit growth. As a result, millions have been lifted out of poverty as the middle class expands and China's club of millionaires grows faster than in any other country. China's remarkable economic rise has been one of the biggest stories of the year for many years now. What is different about this year, however, is that there is much more tension and conflict in the narrative.

The Western world, especially the United States, has clearly become impatient with Beijing's version of the market economy. China-bashing has become a popular sport in the halls of the US congress and on the presidential campaign trail, where candidates try to win cheap votes with attacks on China's trading practices ahead of the key January 3 Iowa Caucus and the slew of primaries to follow. Now the European Union, usually less strident in its approach to China on trade issues, appears to be moving closer to the tougher stance taken by the Americans.

EU Trade Commissioner Peter Mandelson, in Beijing last month for a six-day economic summit, was downright confrontational. Mandelson called repeatedly for China to allow its currency, the yuan, to rise more freely against other currencies. Even though the yuan has risen by more than 11% since the Chinese leadership decided to abandon its peg to the US dollar in July 2005, critics say the currency is still undervalued by as much as 40%.

Mandelson also made pointed references to China's disappointing product-safety record, calling for the "tidal wave" of counterfeit Chinese exports to stop. "Some Chinese officials pointed out that less than 1% of China's exports to Europe had alleged health risks," he said in a speech at the opening of a forum on international food safety. "But Europe imports half a billion euros [US$750 million] worth of goods from China every day, so even 1% is not acceptable."

Mandelson's bluntness drew the ire of China's "iron lady" of trade negotiations, Vice Premier Wu Yi. "I am very dissatisfied with Peter Mandelson's speech," an angry Wu responded.

And that exchange pretty much set the tone for the summit.

Wu followed up this month by opening the latest installment in the ongoing economic dialogue between Washington and Beijing with a blast at US protectionism. Speaking in the resort city of Xianghe, where the talks where held, Wu alluded to "unharmonious notes" in the relationship between the two countries and expressed alarm over the "rise in the amount of congressional legislation against China, obvious politicization of economic and trade issues and tightening control on imports". Wu also complained that the American media's "exaggeration of China's food and safety problem has seriously damaged the reputation of China-made exported products and the country's image".

Visiting US Treasury Secretary Henry Paulson and US Secretary of Commerce Carlos Gutierrez tried to smooth over differences during the two-day colloquy, which concluded with a raft of minor agreements praised by both sides. But the underlying tensions remained and will not go away anytime soon. The undervalued yuan, the ballooning US trade deficit with Beijing, tainted food, massive recalls of Chinese-made toys and routine violations of intellectual property rights - all serve as red meat in Washington's China-bashing contest.

Like Wu, China's finance minister, Xie Xuren, has also complained openly about more than 50 bills raised in congress related to trade with China. In an interview with the official Xinhua News Agency, Xie said, "At present, the tendency within congress toward protectionism is, in fact, rather worrying," warning that passage of any of this proposed legislation would "seriously harm China-US trade cooperation and, in the end, harm America's own interests".

The good news is that most in Washington know that Xie is right, and much of the anti-China sentiment ultimately falls on deaf ears in the White House. But not always. The George W Bush administration filed a formal complaint against Beijing with the World Trade Organization (WTO)last April over copyright piracy and counterfeiting. The US has also complained to the WTO about what it regards as illegal subsidies of Chinese exports. So the danger of a trade war persists, especially with the subprime mortgage fiasco threatening to push the US into recession.

Meanwhile, China's economy is overheating, and the possibility of a meltdown is quite real. Because of the undervalued yuan, the country is awash in liquidity, with an estimated $40 billion a month pouring into the Chinese economy. The money supply has increased by 18.5% over last year, bank loans are up 18% and investment in fixed assets - such as new factories, machinery and office equipment - has risen by 30%. Property prices keep climbing, and the stock market bubble is as tight as a drum. In addition, inflation is humming along at 6.9% as of last month.

Something's got to give

If Beijing plans to introduce any economic measures that truly bite - steeper interest-rate hikes, for example, or faster appreciation of the yuan - these will have to wait until after the Olympics. Chinese leaders live in fear of the social unrest that could be prompted by tightening measures that truly tighten, and they do not want mass protests over the economy to sully the image of Olympic glory that the country presents to the world during this signature event, the biggest symbol yet of China's arrival as a first-tier nation.

So forget all the problems. Break out the champagne and the patriotism: the Olympics are coming.

Kent Ewing is a teacher and writer at Hong Kong International School. He can be reached at kewing@hkis.edu.hk.

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