China: the Ancient Barbarians
There is a tendency for our politicians and public servants to be unduly impressed by Chinese self-presentation as an ancient, wise, populous and incipiently powerful civilisation. Amongst commercial entrepreneurs there is an even more unwise expectation of easy financial gain through dealings in or with China. In fact, much greater caution is required.The rate of China's economic growth is widely exaggerated, the repression of her people is delicately ignored and the manner in which China practises deception, through diplomatic and through commercial means, is not commonly understood.
It is useful to recall the analysis of Mr. Chris Patten, the last governor of Hong Kong.He summarised criticisms of China thus:1
"A brutal and corrupt Leninist clique holds on to power by locking up not only those who disagree with it politically but those who seek to inhabit their own private space through the practice of religious beliefs. It polices an inhumane family-planning policy. No longer Communist, Chinese society bears many of the hallmarks of early-twentieth-century fascism: the military is very powerful; the tentacles of the party (a clan of interconnected family interests, not an ideological movement) entwine every aspect of commercial life; nationalism and xenophobia have replaced moral zeal; the state is supreme. Using its easy assess to Western markets and Western technology, China builds up its economic strength, and uses that strength to bully and barter and break all customary rules of international trade. While pressing hard for entry into the World Trade Organisation, it still subsidises state industries through state-owned banks, controls trade, maintains high tariff walls, and refuses to recognise property rights. It continues to steal intellectual property despite agreements and reassurances. It has a huge surplus with the United States and most of its trading partners that enables it to pile up vast reserves, part of which are spent on modernising its military hardware through the purchase of Russian high-performance attack jets and guided-missile destroyers. It lies about the use of imported technology that, while meant for civilian purposes, is diverted to military manufacturing, while we pretend we do not know what is happening."
Mr. Patten noted, "It is the alleged uniqueness of China that most flaws comprehension and mangles policy making."2 This "alleged uniqueness" has been built largely on the mystique of an "ancient civilisation", which many Westerners accept uncritically, without recalling the persistent barbarianism of that civilisation, its oppressiveness to other races and indeed to its own citizens and the pervasive dishonesty of its leaders. This dishonesty continues today, as Mr. Patten shows. China's statements are unbalanced and in the nature of propaganda, and its promises are made to be broken.
China lacks a proper legal system, and corruption has become endemic. Lee Kuan Yew (former Prime Minister of Singapore) recently stated, "the most pernicious problem is corruption."3
"It has become imbedded in their administrative culture and will be difficult to eradicate even after economic reforms. Many Communist Party members and government officials in the provinces, cities and counties are not above corruption. Worse, many officials who are proposed to uphold and enforce the law — public security officers, prosecutors and judges — are also corrupt."
The mistake was ever to expect anything better from a flawed culture, which when the rhetoric is disregarded is little better (and in many respects worse) than those of Thailand and Indonesia, for example.
And why do Western countries (and particularly Australia) demonstrate naiveté when they invest in China? Premier Li Peng observed by way of understatement "that foreign investors were welcome to make money, but China's policy was to ensure that they did not make too much money".4 The real position is far worse. Bribes must be paid. Businessmen and officials change their minds whenever it suits them. And there is no effective court system: "rights" are in fact unenforceable.
Who would invest in China in these circumstances? Unfortunately many Australian companies have done so, only to find that promised profits have not emerged and that their capital has commonly been lost. Often they would have saved themselves much trouble if they had simply donated their money to Chinese officials; and in general the astute course has been to deal with Chinese without bringing capital into China and under strict contracts through which breaches can be protected against by appropriate rights of termination.
The dangers of corruption have been noted by Mr. Chris Patten:5
"Corruption in a developing country is a heavy tax on economic activity. It raises costs and blunts competitiveness. It distorts the management of the economy, making it more difficult, for instance, to gauge the exact consequences of investment, spending, tax and regulatory decisions. It also warps policy-making in other ways."
When corruption is associated with dishonesty — by far the most pervasive recent characteristic of China's dealings with other countries has been its dishonesty — extreme circumspection is required. It is not possible to segregate China's economic approach from its political approach. Both are functions of a cynical culture whose objects are to gain power and money. The same amoral methods are applied in relation to each of these ends. The brutality of Chinese thought has been well described by Mr. Patten:6
"Do I need to parade the horrors of China's repression of its own people: the arbitrary arrests, the beatings and torture, the mass executions, the regional repression, the organ transplant of criminals, the religious persecution, the suppression of free speech and union activity, the silencing of political opposition, the trading of dissidents, those terrible camps inhabited by the wretched and the desperate — all the horrors that defile Chinese communism? Perhaps some of the charges are deniable; perhaps, here and there, some amelioration may have occurred. Who really knows? Whatever may be adjustable at the margins, the full scale and weight of this odious abuse of men and women is a cause of shame for China, and shame for the rest of us that it happens and we do so little, think so little, speak so little about it."
Australians should be careful to remember all these matters in their dealings with China, whether on a political or financial level. China does not represent a great civilisation and culture, but rather behind its pretensions lies a cynical technique of obtaining political and financial advantages by courses of dishonesty. Those dealing in disregard of these facts have often suffered substantial detriment.
National Observer No. 47 - Summer 2001