I have just come back from holiday in China where I travelled over 2000 miles in 15 days. Our trip took in Beijing, Xian (Terracotta Warriors), Chengdu (Pandas), Guilin (scenery), and Hong Kong and we travelled by air, train and coach.
This is hardly a scientific appraisal of a country of 1.4 Bn people, were such a thing even possible but personal observations can be valuable.
We travelled extensively, admittedly, it was to and from tourist areas but none-the-less we got to see the country and its people. The Chinese people confounded my expectations; I had expected 2000 years of state repression and institutionalised informing to result in a people who were distant and suspicious but this was not the case. Without exception people were friendly and polite. The cities and towns felt very like English ones, people working hard and young people having fun. Even a small city had a couple of trendy nightclubs full of young people drinking expensive beer.
The Government of China pushes a key theme of “civilisation” and courteous behaviour. The police were ever-present, by which I mean to say you could almost always see a policeman. You expect police in railway stations but there were mobile police stations in shopping centres, theme parks, next to the Great Wall and every restaurant and hotel seemed to have a picture of their beat cop on the wall. This police presence was not at all oppressive, mainly they were asleep in the heat and they seemed very approachable. As a consequence China felt very safe for tourists. Even the inevitable pick-pockets are polite; after my wallet was stolen it and my credit cards were returned to my hotel sans cash.
My headline is “Old China has dissappeared” and this refers both to obvious Maoism, everyone is in T shirts now, not boiler suits and the land itself. I said that the cities felt like English ones but this is not entirely true. Everything is new; you walk on a new pavement, step into a new bus, travel to a newly built tourist attraction. The effect is discombobulating, as if you had suddenly walked into the set of a Sci-Fi movie but it was the size of a whole city. Everywhere we went has been totally rebuilt in the last 30 years, in the countryside nearly every peasant (as was) has a house bigger than mine.
China is a country that is used to rebuilding. Historically everything was built of wood and roasting hot summers and wet springs have resulted in every historic building burning down or rotting away. What little survived the ravages of history was destroyed by Mao’s Red Guards during the Cultural Revolution or knocked down by property developers. The new China’s solution is to build it again.
Everything from city walls to Buddhist temples has been rebuilt. One building labelled 1349 was entirely built of breeze blocks, although the National Trust would look askance at such practices in China it is both right and necessary. It is better to have a placeholder than nothing at all and tourists need something to look at.
There is no doubt that China is an economic miracle. The growth provided by free markets has raised 100s of millions of people from poverty, we saw not one hungry person and people were getting on with their lives purposefully with little fear of crime or unrest.
The contrast of authoritarian China with democratic India could not be greater. In India the Government’s “Licence Raj” and the institutional corruption it engendered has ensured that many of its citizens remain in absolute poverty and starvation and disease abound.
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
The Communist Party of China can be and undoubtedly is very pleased with itself. If as Locke argues the primary duty of government is to protect the “life, liberty and estate” of its citizens then it have manifestly achieved that. It is impossible to think of a Western politician (other than the blessed Mrs T) who could have had the scale of ambition and ability to achieve this. The Communist Party of China says that the first human right is to eat and they have delivered on that.
To avoid becoming utterly irrelevant, and perhaps out of genuine concern for the welfare of their fellow citizens the Communist Party of China has entered into a grand bargain with its people. Their lives will improve materially and they will benefit from economic freedoms but they must not question the principle of One China and the rule of the Communist Party.
This view is honestly held; the formation of China 2200 years ago ended the period of the Warring States and every Chinese government since has considered the alternative to centralised authoritarian rule to be chaos. There are few greater threats to life, liberty and the estate of citizens as great as civil war as the history of the Britain, the USA and more recently Yugoslavia shows us.
There is a problem, the new China has been built with borrowed money. It is actually not difficult to build a motorway, what is really difficult is to collect enough taxes over the next 20 years to pay for it.
Britain and the USA have over 300 years experience of banking and even with a highly trained workforce and diligent regulators we still suffered a banking crisis arising from bankers lending money to people who would not pay it back (NINJA loans – No Income No Job At All). In China it is state policy to make loans to big employers who will never pay it back so that the Party may maintain its part of the bargain. I cannot believe that all those peasants will pay back the loans they took to build their new houses.
I predict that China will suffer the mother of all crashes when the plates stop spinning. However I freely admit that I could be wrong, no-one have every tried to take 1.4 Bn people from a feudal to a free-market economy before so your guess is as good of mine. It could indeed be “different this time”.
To promote internal stability China will adopt the approach of authoritarian governments everywhere and invade somewhere. I predict a shooting war in the South Seas.
So what does this mean for a Brexit Britain?
When goods don’t cross borders, soldiers will
The tumultuous future of China argues for greater co-operation, not less. We should strongly encourage inward investment from China such a Hinckley Point for our mutual benefit. It will make our position stronger not weaker, it is often said “if you owe the bank £100 you have a problem, if you owe the bank £1M the bank has a problem”.
We should continue to push for freedom of speech and the rule of law in China. Not because “we know best” but because these are essential elements of a modern economy that China needs if it to avoid the chaos that it fears.
Liberalisation in India, in the early 1990s, actually increased economic disparity, killed off indigenous industry, and led to the rapid introduction of plastics (which could not be easily recycled). Isn’t China fairly protectionist, anyway? India needs regulation – just better regulation.
Dr James Bayley said:
I am not an expert economist but I have got grey hair and I have travelled a lot. Thirty years ago China and India were in a similar economic situation, both had highly planned economies and both were poor. China adopted free market principles and is now much richer than India – it is difficult to deny the evidence of our own eyes.
The problem with democracies is “regulatory capture” when domestic producers buy politicians and prevent any competition. In developing nations this makes the owners of the businesses rich but does not raise the income of their workers because there is pool of cheap labour in the fields. The most famous example of this in India is the textile industry. India has protected its textile industry for over 70 years. That means that for 70 years Indian consumers have been prevented by law from buying better or cheaper clothes from abroad while the business owners get rich. In the USA they have a similar issue with sugar. The USA taxes sugar imports because sugar is grown in Florida and to win the USA presidency you have to win Florida. The EU is famous for protecting its inefficient farmers.
We agree that India needs good regulation, I would simply argue that it needs a lot less of it so that Indian entrepreneurs can make their country rich.