The Reality Behind the Olympics Coverage

My advice while you're watching the coverage of China that will start this weekend is, prepare to be dazzled, and prepare to be skeptical. Beijing and Shanghai are probably the most modern cities in the world, especially in their city centers, and they appear to bespeak a country as prosperous and advanced as our own, or nearly so. That's not the case. The national average income in China today is less than $150 per-month, and more than half of Chinese live on less than half that. No more than 20 percent have any health care coverage, and in a system that many Chinese call "pay or die," those that don't have coverage have to fend for themselves. (That's the main reason Chinese families save 30 percent of their small incomes.) China's economic progress since 1990 is truly stunning, with GDP and incomes more than doubling each decade, and exports growing an astonishing 20 to 25 percent a year for a generation. A new model of development has driven this extraordinary progress, in which China invited the world's advanced corporations to transfer entire business operations to a country that promised to soon be one of the world's biggest markets and is already home to the world's largest, low-cost skilled workforce. The result, in less than a generation, is that China has gone from being an economic backwater to one of the world's leading production and assembly platforms. That also means that while the spectacular architecture on display in the Olympics is all made in China, most of what's modern in the Chinese economy is still either foreign-owned or clones of foreign operations. It will be another decade or more before native Chinese companies can compete with their Western counterparts.

There's also a big "if" hanging over China's future. Everywhere else in the world, great economic progress has spurred demands for more political rights by those making the progress. China's leadership has always responded harshly to such demands - Tiananmen is only the best-known instance in which the government harshly put down political protests, with large losses of life.(Human rights groups estimate that China executes 10,000 to 15,000 people each year, and a significant share have likely been convicted of political crimes.) China also acknowledges that every year, at least 70,000 protests of more than 100 people occur, and the real incidence is probably quite a bit higher than that. The quandary for China is the almost certain collision sometime in the next decade of large scale popular demands for more political rights, and very small circle of leaders determined to maintain their monopoly on political authority. Thus far, the leadership's strategy has avoided such a collision: Preserve central authority by delivering extraordinary economic growth and progress. But since China shifted to market-based policies in the 1980s-with wrenching dislocations for hundreds of millions of people- it has never experienced an economic downturn. China may be facing at least a moderate slowdown this year and next: With high oil prices and financial problems here and in Europe, manufacturing orders and export growth have both fallen sharply for the first time. A serious slowdown may not happen this year or next, but it will happen - and the world will watch to see if the Chinese leadership will permit at last initial moves towards greater liberty and democracy.

To learn more about China's development and economy, read Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work, by Robert Shapiro (St. Martins, 2008).

China Surpasses US in Internet Users

Thought this was interesting:

China said the number of Internet users in the country reached about 253 million last month, putting it ahead of the United States as the world's biggest Internet market.

The estimate, based on a national phone survey and released on Thursday by the China Internet Network Information Center in Beijing, showed a powerful surge in Internet adoption in this country over the last few years, particularly among teenagers.

The number of Internet users jumped more than 50 percent, or by about 90 million people, during the last year, said the center, which operates under the government-controlled Chinese Academy of Sciences. The new estimate represents only about 19 percent of China's population, underscoring the potential for growth.

By contrast, about 220 million Americans are online, or 70 percent of the population, according to the Nielsen Company. Japan and South Korea have similarly high percentages.

China and Climate Change

Ooops ... The Financial Times reports today that China and India once again have rejected a cap on CO2 emissions -- and without these countries and the other large developing nations that will follow their lead, the world cannot seriously address the threat of climate change. China and India's response should be no surprise: as fast growing developing economies, their appetite for the energy that produces most of the CO2 increases sharply every year. Moreover, their modernization programs are concentrated in the most energy-intensive industries around - basic manufacturing and energy-intensive agriculture - while most of their own domestic energy supplies lie in coal, the most climate-damaging fuel. One way to move forward is to give them an alternative to a CO2 cap. Carbon-based taxes should be more appealing, since China and other fast-growing developing countries need more revenues to support the basic public goods of modernization -- infrastructure programs and greater access to education and health care. But that won't be enough: we will have to make it worth their while economically to join us, Europe and Japan in a global campaign to address climate change. That will mean offering them better and cheaper alternatives to the hundreds of coal-burning electricity plants they plan to build every year into the indefinite future. Better alternatives for the climate are widely available, for example, in hydropower or natural gas-fueled generating system, and perhaps soon, in solar and wind as well.

In the end, however, the United States, along with Europe and Japan, probably also will have to make those alternatives cheaper by providing large technology transfers at cut rates. And the United States is the only country that can make any of this happen, at least regarding China. As the largest foreign direct investor in China, its largest export market, and the guarantor of the sea and air lanes across which all of China's trade and oil supplies travel, China's leaders recognize America as the indispensable economic and military power for China's own progress. All we need is a president and administration prepared to use that position to advance the global agenda on climate change.

New Politics in China: Prime Minister Wen Jiabao on Facebook

Following the massive earthquake in China, there was much discussion of the new media and communications technology that Chinese were using to spread news and opinions about the earthquake and the response to it. It seems that this earthquake and the use of this new media and new political tools has lead to the emergence of a new politics in China. From Nicholas Kristof’s op-ed in the New York Times last week:

In the aftermath of the great Sichuan earthquake, we've seen a hopeful glimpse of China’s future: a more open and self-confident nation, and maybe — just maybe — the birth of grass-roots politics here.

In traveling around China in the days after the quake, I was struck by how the public and the news media initially seized the initiative from the government. Ordinary Chinese are traveling to the quake zone to help move rubble, and tycoons, peasants and even children are reaching into their pockets to donate to the victims.

"I gave 500 yuan," or about $72, a man told me in the western city of Urumqi. "Eighty percent of the people in my work unit made donations. Everybody wants to help."

Private Chinese donations have already raised more than $500 million. That kind of bottom-up public spirit is a mark of citizens, not subjects.

This political cycle in America, the Obama campaign has revolutionized fundraising through the internet by enlisting supporters as partners in the campaign, not just voters. Just as American politics has changed, so too are Chinese taking politics into their own hands through individual giving. As Kristof argues, China is going through a fundamental change, as its people think of themselves as "citizens, not subjects." Kristof continues:

China may claim to be Marxist-Leninist, but it’s really market-Leninist. The rise of wealth, a middle class, education and international contacts are slowly undermining one-party rule and nurturing a new kind of politics.

Prime Minister Wen Jiabao is hard-working and blessed with nearly a photographic memory, but he also may be the second-most boring person alive (after his boss, President Hu Jintao). Both Mr. Hu and Mr. Wen rose through the system as classic Communist apparatchiks — Brezhnevs with Chinese faces. Yet Mr. Wen has seen the political landscape changing and has struggled recently to reinvent himself. When the earthquake hit, Mr. Wen flew immediately to the disaster area and appeared constantly on television, overseeing rescue operations.

Heroic tidbits seeped out. Mr. Wen fell and cut himself but refused medical attention. He bellowed directions to generals over the telephone and then slammed the handset down. He shouted to children buried in a pile of rubble: "This is Grandpa Wen Jiabao. Children, you’ve got to hold on!"

Mr. Wen’s conduct is striking because it’s what we expect of politicians, not dictators. His aim was to come across as a "good emperor," not to win an election. But presumably he behaved in this way partly because he felt the hot breath of public opinion on his neck.

Yesterday, the world (and Mike, who tipped me off to this) was shocked to find Prime Minister Wen on Facebook. That’s right,, the social networking site started by Harvard students and spread through America’s universities, is now impacting Chinese politics. As of this posting, Wen had just surpassed 16,000 supporters.

China's transition from a compltely closed society in the three decades ago to one in which individuals are coming together to develop civil society - in large part with the help of these new tools - is indicative of broader change happening in that country. Kristof predicts that within two decades, the Chinese Communist party will transition to a "a Social Democratic Party that dominates the country but that grudgingly allows opposition victories and a free press." Indeed, there is already evidence of this in the aftermath of the earthquake, as the Chinese government realizes a free but professional press is of great use to them in that it provides important services that free-wheeling and unaccountable media cannot.

In this short period of time since the US chose to normalize trade relations with China, there has been much improvement in economic freedom. China's economy is moving toward a free market model and many sectors are extremely entrepreneurial and open. There can be no doubt that the liberalization of relations with the west and the opening of China and its markets to American goods, services, and ideas has worked. Time will tell if a market of ideas, that ultimately leads to a more democratic and liberal China, takes hold, even if that process does begin on Facebook.

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