Posts tagged with: china

To conclude the Acton Institute’s May 18 Rome conference, Family-Enterprise, Market Economies, and Poverty: The Asian Transformation, panelist Fr. Bernardo Cervellera reminded the audience of a fundamental principle to sustain the long term growth of any free economy: spiritually meaningful work.

Fr. Bernardo Cervellera, the outspoken missionary of the Pontifical Institute of Foreign Missions (PIME) and editorial director of AsiaNews (a leading Catholic news agency) recounted some controversial stories from his nearly twenty years experience in China as a professor of Western civilization and foreign journalist.

Fr Cervellera, author of Mission China: The Empire between Market and Repression, expressed his concern for the “conversion of China” before it can truly become successful economically in the long term (coincidentally on the same day the pope asked us to do the same for China during his Wednesday public audience. See also the video of the audience.).

During the afternoon session of the Acton’s international conference series dedicated to Poverty, Entrepreneurship and Integral Development, Fr. Cervellera followed the inspiring testimony and practical proposals of successful Christian entrepreneurs in Asia, including financial moguls Charles Gave and Michael Hintze and social venture capitalist Kim Tan, of Malaysian origin, who has financed successful businesses throughout the developing world.

The PIME missionary spoke frankly about moral-anthropological underpinnings to sustain hard working, enterprising economies while referring to a tragic case in the booming industrial province of Guangdong where the free market experiment is underway.

Fr. Cervellera told the shocking story of “a wave of recent worker suicides at Foxconn”, a leading manufacturer of electronic components for Apple’s iPhone, Nokia, Siemens, and Sony.

Within the last year, Cervellera said there has been about “about twelve or thirteen suicides at the company where, every now and then, another worker would jump from a window of the adjacent workers’ dormitory.”

He noted that the Foxconn employees enjoyed a nice housing perk in addition to decent wages of about 1800 yuan a month, much more than average pay in the Chinese manufacturing sector.

But they worked like cogs in a machine with strictly calculated bathroom breaks and were forbidden to talk to one another at work stations.

Cervellera explained that the string of Foxconn worker suicides could not be remedied by “professional counseling, 70 percent salary increases, …or even a no-suicide clause written into Foxconn employees’ contracts”.

“The suicides continued and only came to a halt only when the company added safety nets to under the apartment building’s windows.”

Cervellera said the Foxconn suicides was a clear indication of a widespread spiritual vacuum in Chinese business culture, as most companies do not inspire or foster meaning in their workers’ daily lives.

He forewarned the audience that China must seek a symbiosis between economic and spiritual growth, where a “ a boom in faith and economic production occur together.”

Fr. Bernardo Cervellera said that all human success, especially economic success, must flourish under protected religious freedom – “the freedom to seek and apply spiritual value in our daily work and enterprise.” Without this, such freedom to succeed at the workplace ends up being meaningless, hollow, without real human significance:

“What does this all mean?… Many Chinese businesses have imbalanced focus in production and profit, without giving deep value to work itself and to the person who labors in a unique, talented capacity”, Cervellera said.

At the end of the conference, Acton introduced the extended trailer to its new documentary – Poverty Cure – where some of the moral anthropological obstacles to an enterprise culture in developing regions are brought to vivid light.

Poverty Cure

Over at the Comment site, I review Dambisa Moyo’s How the West was Lost: Fifty Years of Economic Folly—and the Stark Choices Ahead. In “War of the Worldviews,” I note that the strongest elements of Moyo’s work are related to her analysis of the causes and the trends of global economic power. “Faced with the combined might of the Rest,” writes Moyo, “the West is forced to grapple with a relentless onslaught of challengers from all corners of the globe. And all these countries are growing in confidence, gaining in competence, and jockeying for a frontline position in the world’s economic race.”

A recently released World Bank report echoes Moyo’s sentiments, which are broadly shared by many forecasts. As Motoko Rich at the NYT Economix blog summarizes, “A new report from the World Bank predicts that by 2025, China, along with five other emerging economies — Brazil, India, Indonesia, South Korea and Russia — will account for more than half of all global growth, up from one-third now.”

One way of understanding these trends is that it is simply what you get in an age of global competition. Nations like China, India, and Brazil are increasingly able to make sustained GDP gains because of increased access to global markets, particularly the US. And the US is forced to adapt to remain competitive, and in many cases this hasn’t happened. It’s not clear at all why all this is such a bad thing. After all, it’s not that the US will cease to be affluent in the foreseeable future. It’s just that other nations won’t be as relatively poor.

Even so, Moyo can’t help but cast these developments in negative terms for the West: “…even while globalization could contribute to a rising tide for all boats, it is clear that the relative quality of life will almost certainly have to decline in the West to accommodate a rise in the Rest.” Thus the relatively greater quality of life enjoyed in the West will decline compared to the Rest. But why must this be so dire for the West?

The weakest part of Moyo’s project comes through in her attempts to provide prescriptive guidance for the West to avoid this “precarious path of forecast decline.” All you really need to know about her suggestions appears in this line: “there is, after all, nothing inherently wrong with a socialist state per se if it’s well engineered and designed and can finance itself.”

Moyo wants the US to adopt the Chinese model of state-directed markets because of the “the speed with which policies can be taken and implemented.” Deliberative democracy is just too slow, too cumbersome, and too captive to special interests. We need a lean, mean set of government committees to run the economy properly and efficiently.

What’s difficult for me to understand is why, given the West’s historical success by embodying “a fully fledged capitalist society of entrepreneurs,” we should abandon that model. Moyo should instead be calling the West back to its strengths, its foundations in “democracy and the sanctity of the rights of the individual elevated above all else,” instead of issuing the siren song of state-driven capitalism. If it is really a competition between state-run and entrepreneurial “capitalism,” it’s not clear at all (as Moyo seems to think) that the statists will win.

It seems to me that the West will only truly be “lost” when we give up our commitments to the inherent dignity and rights of the individual, the rule of law, freedom of association, exchange, religion, and expression. The thrust of Moyo’s book is a classic, “It became necessary to destroy the West to save it,” project, and that’s one that’s simply not worth fighting for.

A mere mention of North Korea brings to mind the repressive regime of Dear Leader Kim Jong-il.  Although Kim has been satirized in the West as an impish consumer of cognac and NBA paraphernalia, his grip on society is both chilling and inescapable.  The country frequently receives news coverage for its nuclear aspirations, unjust penal system, and horrendous human rights record.  However, a recent academic study by Stephan Haggard and Marcus Noland uncovers yet another facet of the North Korean case: the power and inevitability of markets in the face of economic despair.

Since the reclusive nature of North Korea precludes any serious study of public opinion and social change, Haggard and Noland pursued the next best sample: North Korean defectors.  In Witness to Transformation: Refugee Insights into North Korea, the authors describe the results and implications of two surveys, conducted between 2004 and 2008, completed by approximately 1,600 refugees living in China and South Korea.  While the study sample is not random, multivariate regression demonstrates that most of the findings are generally applicable to the North Korean population at large.  Simply put, this study gives us a unique look into the collective heart and mind of an otherwise impenetrable nation.

Before delving into the surveys, the authors provide a brief history of the North Korean economy.  Due to rapid mobilization of its labor base, as well as generous support from China and the Soviet Union, North Korea registered strong growth for the first several years of its existence.  But in the late 1980s, as famines set in and the Soviet Union disbanded, the North experienced profound economic pangs.  With famine at its peak in the 1990s, households came to rely on a range of coping strategies—limited consumption, barter, foraging, and purchasing food from emerging markets.  Though marketization was catalyzed by the need for food, it eventually became instrumental vis-à-vis a wide range of consumer goods, as well.  Indeed, the unofficial market became so significant during this time period that in 1994, it equaled 25 percent of the official output.  Military and state functionaries became covert distributors, and the government even decriminalized certain market activities.

Haggard and Noland offer, however, that even when the government seemed to pursue pro-market reform, those measures were accompanied by simultaneous efforts to “reassert state control,” including an administered price structure and higher wage levels for certain groups.  Such bipolar policymaking was unfortunately short-lived, as North Korea has since reversed a number of reforms that had been conducive to market activity.

It is difficult to imagine a situation more disquieting than the North Korea of today, where citizens continue to die of starvation and malnutrition due to dwindling supplies of food and insufficient work.  But just as they did during the 1990s, North Koreans continue to turn to the market in their times of serious need.  Instances abound: nearly half of South Korean respondents reported that all their income came from private business activities, while 69 percent said half or more of their income came from such activities.  More than 70 percent of respondents in that group were involved in trading.  In the China sample, 62 percent reported the market as their primary source of food, while 95 percent of non-farm respondents obtained some amount of food through the market.  Haggard and Noland call this phenomenon ‘marketization from below’—also seen in Eastern Europe—in which market growth is “primarily a function of state failure rather than a proactive reform process.”

It is important to note that, unlike many of us, who come to embrace free enterprise after starting a business or reading Hayek, North Korean engagement of the market is borne of extreme desperation.  After spending years under the yoke of a totalitarian regime that regulates almost every aspect of market and man, courageous Koreans have come to regard the market as a natural elixir to the malady of severe economic deprivation.

Unsurprisingly, involvement in the market often corresponds with other sorts of taboo activities, signifying a deep desire for personal autonomy.  “Taken together,” write the authors, “these results point to a kind of ‘market syndrome’ in which participation in market activities is associated with higher arrest rates, more consumption of foreign news, more negative assessments of the regime, a greater willingness to communicate those views to one’s peers, and a greater propensity to cite political motives for emigration.  On its own terms, the regime is right to fear the market.”

Given the persistence of harsh food shortages, as well as the delicate transfer of power to Kim’s youngest son, Jong-un, North Korea will attract increased attention and interest over the coming years.  Against this backdrop, Witness to Transformation uses refugee testimony to paint a helpful picture of this infamously opaque, but increasingly important country.

An interesting report in The Economist on the rise of flashy and free spending entrepreneur “gazillionaires” in India and China and how they are perceived:

In much of India, life is getting perceptibly better each year. Wealth per person has vaulted by 150% in the past decade, from $2,000 to $5,000. Many Indians think the nation’s entrepreneurs deserve some of the credit. In Dharavi, a slum outside Mumbai, an illiterate mother called Aruna sits in her tiny one-room flat, which is home to ten people. Asked how she feels about the rich, she says: “They have worked hard. And we must work hard, too.” Her eldest daughter has a job entering data at a bank. The next one is studying diligently. The family may be near the bottom of the ladder, but it sees a way up.

But this in China:

The perception that commercial success often depends on political ties makes inequality in China more galling. In the mid-1980s Chinese incomes were more evenly distributed than India’s—hardly surprising, since China was nominally communist and India is afflicted by a caste system. But now China is less equal than India, with a Gini coefficient of 0.4 to India’s 0.37. China has 800,000 dollar millionaires, but also 400m people who live on less than $2 a day.

In response to backlash from China for awarding the 2010 Nobel Peace Prize to Liu Xiaobo, one of the Middle Kingdom’s best-known democracy activists, Nobel Committee Chairman Thorbjorn Jagland penned a New York Times op-ed to defend the committee’s decision.  He begins:

“The Chinese authorities’ condemnation of the Nobel Committee’s selection of Liu Xiaobo, the jailed political activist, as the winner of the 2010 Peace Prize inadvertently illustrates why human rights are worth defending.”

So far, so good.  From scathing op-eds in government newspapers to cancellation of low-level meetings with Norway, China has not hesitated to express its fervent opposition to Liu’s newfound fame.  Through its hasty and abrasive response–which included a detention of Liu’s wife–China has vindicated the Nobel Committee in full.  Jagland continues:

“The authorities assert that no one has the right to interfere in China’s internal affairs.  But they are wrong: international human rights law and standards are above the nation-state, and the world community has a duty to ensure they are respected.

The idea of sovereignty changed…during the last century, as the world moved from nationalism to internationalism.  The United Nations, founded in the wake of two disastrous world wars, committed member states to resolve disputes by peaceful means and defined the fundamental rights of all people in the Universal Declaration of Human Rights.  The nation-state, the declaration said, would no longer have ultimate, unlimited power.”

Here Jagland’s argument begins to founder.  While the idea of an ultimately omnipotent world government is a tantalizing prospect to some, it is more the stuff of dreams than of reality.  Composing the ranks of United Nations leadership are Russia, which exercises ownership over more than half of all local newspapers and periodicals, Uganda, whose military dabbles in child-soldiering, and China, where administrative detention remains a potent weapon at the government’s disposal.  How is it that such countries are able to hold leadership posts within an organization premised on peace and progress?  Simple.  States have always been, and will foreseeably be, the primary units of the international system–hence ‘United Nations,’ denoting a unity (however tenuous) of various countries with disparate goals, priorities, and mores.  If human rights are to be promoted, the process must occur organically and locally, and not by international imposition.

Strangely absent from Jagland’s piece is a clear explanation as to why governments should respect their citizens’ rights.  At best, he seems to suggest that they should do so because, well, the Universal Declaration of Human Rights tells them to; and besides, it’s the right thing to do.  This, however, is a farce.  Oppressive governments are not going to pursue freedom because it is admirable or popular.  Rather, a higher purpose must prevail: the individual must be seen to possess dignity and worth that is divinely bestowed and eternally bound.  Finally, governments must be persuaded that genuine respect and freedom for the individual yields tremendous economic, political, and cultural fruit.  A more complex foundation is essential.

Freedom advocates like Mr. Jagland are without doubt our strategic partners in the great cause of liberty.  It is our duty, as those blessed with political and religious understanding, to communicate to them the true complexity of the battle we wage.

The Third Lausanne Congress on World Evangelization, also known as Cape Town 2010, was reportedly the target of an cyber attack. The official statement from the congress says, “The sophisticated computer network developed for sharing Congress content with the world was compromised for the first two days of the Congress.”

“We have tracked malicious attacks by millions of external hits coming from several locations,” said Joseph Vijayam, IT Chair of The Lausanne Movement, sponsor of the gathering. “Added to this was a virus brought into the centre on a mobile phone.”

Officials are holding off making public claims about the source of the attack. “We have a pretty strong indication, but one can never be absolutely certain, so we prefer not to share our suspicions,” said Vijayam.

But a prominent evangelical blogger, Andrew Jones, who is attending the conference speculates regarding the attack: “…now we have heard that 95% of these internet hits came from the country of China, and the 66 locations were also situated in China, and that account of a Chinese fellow taking photos of Congress participants before running away, and this has caused us to consider China at least as a potentially suspicious candidate.”

This is on the heels of roughly 200 Chinese Protestants having been denied departure from China to attend the congress. More on that story below the break.
(more…)

Liu Xiaobo

In the International Herald Tribune, Fang Lizhi points to the experience of Nobel Peace Prize winner Liu Xiaobo over the last 20 years as “evidence on its own to demolish any idea that democracy will automatically emerge as a result of growing prosperity” in China.

According to human rights organizations, there are about 1,400 people political, religious and “conscience” prisoners in prison or labor camps across China. Their “crimes” have included membership in underground political or religious groups, independent trade unions and nongovernmental organizations, or they have been arrested for participating in strikes or demonstrations and have publicly expressed dissenting political opinions.

This undeniable reality ought to be a wake up call to anyone who still believes the autocratic rulers of China will alter their disregard of human rights just because the country is richer. Regardless of how widely China’s leaders have opened its markets to the outside world, they have not retreated even half a step from their repressive political creed.

On the contrary, China’s dictators have become even more contemptuous of the value of universal human rights. In the decade after Tiananmen, the Communist government released 100 political prisoners in order to improve its image. Since 2000, as the Chinese economy grew stronger and stronger and the pressure from the international community diminished, the government has returned to hard-line repression.

Fang Lizhi, in the article “Liu Xiaobo and Illusions About China,” says Liu Xiaobo’s role in the publication of Charter 08 led to more trouble. Little wonder why. Here’s a line from the text:

… we stand today as the only country among the major nations that remains mired in authoritarian politics. Our political system continues to produce human rights disasters and social crises, thereby not only constricting China’s own development but also limiting the progress of all of human civilization. This must change, truly it must. The democratization of Chinese politics can be put off no longer.

The social strain is beginning to tell. In “How China is Weaker than it Looks,” Kerry Brown on The Diplomat writes:

… success means that Communist Party leaders once certain that they’d have two or three decades more of economic reforms to go before getting down to political changes have found themselves confronted with the need to do something far more quickly than expected.

China is on target to become a middle income country by as early as 2020. But while this transition may be welcome, it’s also a stage in any country’s development when various elites—whether business or political—will likely start to experience far sharper disagreements with each other. Lawyers and civil society groups, as the colour revolutions in the former Soviet bloc states show, start to gain much greater social traction, while entities that look and act like an authentic political opposition start to appear.

Acton has recently expanded the Chinese language area of its website. The section includes Acton’s Core Principles and biographical information on Lord Acton.

Lord Acton wrote, “Political atheism: End justifies the means. This is still the most widespread of all the opinions inimical to liberty.” Liu Xiaobo would understand.

This August 3 Wall Street Journal article is based on a Legatum Institute survey comparing Indian and Chinese entrepreneurship and raises important issues about the roles of the state and the family in promoting entrepreneurship.

The common elements between Indian and Chinese wealth-creators are their optimistic view of the future, compared to Americans (“Why I’m Not Hiring”) and Europeans (“Everything’s Fine With Greece, Just Ignore Some Facts”) presumably, and their lack of concern about the impact of the global financial crises on their businesses.

But Indians and Chinese differ widely on why they become entrepreneurs in the first place, where they look for capital, and whether they look to the state to support and encourage them. As the article’s subtitle puts it, “Indians believe they succeed despite the state. The Chinese say they succeed because of it.”

I draw two conclusions from the study: Those who favor freedom, creativity and self-employment seek limited government, while those who seek greater wealth for its own sake are seemingly indifferent about the size and scope of government. And greater trust in the family seems to go along with less trust of the state.

It follows that friends of freedom and the family ought to favor the Indian to the Chinese version of entrepreneurship.

Chinese Communism is no longer about ideology.  Now it is about power.

I reached this conclusion on the basis of six months spent in China and extensive conversations with my Chinese friend and fellow Acton intern Liping, whose analysis has helped me greatly in writing this post.

China began moving away from Communist ideology under Deng Xiaoping, whose economic reforms disassembled communes and created space for private businesses.  He justified these reforms to his Communist colleagues with the saying, “It doesn’t matter if the cat is white or black as long as it catches the mice,” implying that even “capitalist” policies were justified if they succeeded in bringing economic growth.  And they certainly did.  Since that time, China’s economic development has been tremendous, so now Chinese people overwhelmingly approve of the reforms.

Despite the success of the opening of China’s markets, the country has not completely embraced free enterprise.  The PRC’s 60th anniversary celebration last fall featured signs boldly proclaiming, “Socialism is good.”  The government still controls key industries such as oil and runs enterprises in many other industries.

Further, all land in China is owned by the government.  Home buyers are technically only leasing land for 70-year periods, a policy established assuming that by that time, the houses will need to be rebuilt anyway.  The government sometimes sells land inside cities to developers for vastly inflated sums of money, evicting the people who already live there.  The remuneration that these people receive is frequently less than the value of the house, forcing them to find inferior housing elsewhere.  These policies have made housing within cities prohibitively expensive for most Chinese people, forcing them to commute from the suburbs.

Despite these continued regulations, economic freedom in China has made significant advances compared to its previous completely collectivized state.  Enterprise is permitted and even encouraged, as is trade with the outside world.  As people come to recognize the benefits of free markets, more and more are becoming eager to participate, which will make it much more difficult for the government to restrict these freedoms again in the future.

However, this economic freedom does not imply political freedom.  Deng Xiaoping, the same leader who had spearheaded the economic reforms, was responsible for the Tiananmen Square crackdown on protesters for political reform.  That incident twenty years ago is only one of the better-known examples of the political suppression that still occurs today.

The government holds a monopoly on the media, dominates the flow of information, and censors any ideas it finds potentially threatening.  It blocks access to web sites that range from information on tense political issues to social networking sites like Facebook and YouTube.  When I was studying there, during a one-on-one session a teacher asked me what I knew about the Tiananmen Square massacre, admitting that due to censorship I probably knew more about it than she did.  When we had finished the discussion, she erased all relevant vocabulary from the board, saying that she didn’t want anyone to know what we had talked about.  Through the high school level and frequently afterward, students are indoctrinated with Marxist philosophy, and studies of literature are focused exclusively on nationalistic or patriotic themes.  Political dissent is strictly censored, and dissenters are often denied work or restricted from moving or publishing their work.

According to Liping, most new members of the Communist party do not actually believe in Marxism; they just see membership as a way to improve their chances of finding a good job.  Similarly, officials suppress opposing ideas, not because they are persuaded of the truth of Marxism but because they want to prevent dissent and opposition to their own party. Promoting Marxist ideas serves as a way to silence political rivals and to enforce popular support for their own rule.  The first Chinese communists sought power to serve their ideology, but today’s Chinese communists use ideology to preserve their power.

The expansion of economic freedom coupled with the continued political repression may seem like a contradiction, and indeed areas with more trade connections like Shanghai also have more political freedom than government centers like Beijing.  Yet fundamentally, this paradox exists because of the shaky foundation for what freedom they do have.

Deng Xiaoping’s justification for moving away from Communist economic ideology was based solely on pragmatic reasoning.  He figured that since the Communist system was failing miserably, changing economic systems might bring prosperity, a prediction that has been proven true.  Yet abandoning the one-party state did not have any such obvious benefits.  In fact, retaining a monopoly on political power was in the leaders’ personal interest.  They could even argue that it was good for the nation, creating what current president Hu Jintao euphemistically calls a “Harmonious Society” unified by common political beliefs.

In the West, arguments for freedom are closely tied to belief in individual rights which the government cannot legitimately violate.  These beliefs originated in the Christian view that people have special dignity because they are made in the image of God.  This foundation means that even if it would be expedient for the government to restrict freedom, it has no right to do so.  Officials may not always act to preserve the people’s freedom, but in violating freedom, they behave inconsistently with their own ideals.

In contrast, the Chinese Communist Party is consistent in pragmatically following policies that they think will be beneficial, whether they increased freedom or not.  Freedom can bring tremendous practical benefits, which is what one would expect of a concept based on a true vision of human nature.  Yet these practical benefits alone do not constitute freedom’s foundation.  The freedom the government gives pragmatically, it can take away when freedom is no longer practical, or when the benefits it provides are less obvious.

Thus, what China lacks is not merely policies that allow people to act freely but an understanding of the essence and importance of freedom.  Freedom cannot be guaranteed by government pragmatism, but only by a genuine understanding of the rights of the people within the country, coupled with leaders who are willing to restrain their desire for power in order to respect these rights.

It’s the end of the semester. A degree of giddiness creeps in.

My students and I have been working through the political systems of a variety of nations. Yesterday, we talked about China.

China is a wonderful subject because any professor not completely sold out to Marxist fantasy gains the license to speak judgmentally about Mao’s ridiculous policies of The Great Leap Forward (in which the nation stopped producing food and tried to manufacture steel in backyards) and The Cultural Revolution (in which Mao deputized snotty teenagers to force their elders into self-criticism for improper revolutionary thinking).

But the fun begins to subside as you approach the present day. I was explaining to the students that although the Chinese still have the Communist Party — and it is the only party permitted to operate — the nation has rejected communism. Instead, they engage in a form of state-sponsored capitalism.

I began to say that the U.S. embraces private capitalism versus this state-sponsored capitalism of the Chinese, but then I realized that would be inaccurate. The truth, I realized and said to the students, is that both nations engage in state-sponsored capitalism.

But there is a key difference.

The Chinese government owns companies that make a profit. The United States government only owns companies that lose money.

And that is why they are loaning us money instead of the other way around.