China is an emerging economic and political superpower.  She represents a brave experiment – an essentially, even prototypically, capitalist economy with a totalitarian, communist, political system.  Many people would say this dissonance in the nation’s political-economic system cannot last.  My guess is that as economic freedom grows and strengthens in China, the political system will of necessity become freer.  But there could well be big setbacks along the way – one hopes not as savage as the massacre of Tiananmen Square.  Only time will tell.

Short of a political or environmental catastrophe, it is difficult to see China’s rapidly expanding economy hitting the wall, or even slowing appreciably from its decades-long growth at close to double-digit rates.  The latest 5 year plan, the first under President Hu’s direct supervision, pays particular attention to environmental matters.  Ray Block wrote in October 2005:  “The new Five Year Plan is re-orienting the economy away from virtually unrestrained growth regardless of the consequences to fast growth with sustainable development. The language is now one of putting people first with common prosperity, rather than the traditional one of making a few people rich. The leadership group under Hu Jintao has become acutely aware of the large inequality in income levels and the growing discontent in many provincial areas.”

We recently went with our kids (each of whom is now or soon will be learning Chinese) on a holiday to China.  I was able to keep in touch with my various business interests via the modern miracle that is the Blackberry.  It automatically found a new provider as we got off the plane in Beijing, and operated flawlessly except for 24 hour periods in each of Nanjing and Shanghai.  This period off the air was mysterious, as was the fact that the Blackberry could not reach e-mail addresses, or open websites, with dotau at the end.

One night in Beijing there occurred an incident that crystallised my ruminations on the effect of the rise of the modern Chinese superstate.  There was a pre-emptory knock on my hotel door.  I struggled to wake and answer the summons at a time I later learned was around 1.30 AM. At the door was an officious young woman in hotel uniform accompanied by a young man who I thought looked apologetic.

The young woman shouted something to me in Chinese.  When I failed to respond, she held up a bit of paper with Chinese characters on it.  Written below were the words "noisy generator".  "No noise here" I commented.  The young women pushed past me into the room.  She switched on the lights to reveal my empty single bed and two sleeping children, my own as it happens. Was this a failed paedophile bust? I asked myself, after a tip-off by someone on an adjoining room.  The young women seemed to me to be intensely frustrated, although my ability to read female body language has not always been infallible.  "Smoking?" she shouted.  "No, sleeping.  Smoking is a filthy habit."

The officious young women left, not without casting a baleful glance at my clearly inappropriate nightwear. In the cool light of dawn this is merely a trivial, slightly amusing, anecdote.  But it demonstrates an approach frequently encountered in China, one whose resolution offers great hope for the country's future.

My point is simple.  Passports are required when one gets on an aeroplane or train, or checks into an hotel.  The details are painstakingly recorded by hand in triplicate.  I like to think at least one copy goes to a vast clearing house somewhere, where the information so collected is plotted on maps and filed for future reference.
 
Everywhere there are signs of rampant inefficiency, especially in matters with an official aspect to them.  Highways are swept by people with handmade brooms.  Road gangs spend more time sitting around smoking than working; when they do work it is often with wheelbarrows and shovels.  The road rules, or more correctly their virtual absence, are another important example.   I thought of the road-using experience as participating in an intricate ballet involving cars, busses, trucks, small three-wheeled vehicles, bicycles, pedestrians and (in the outlying areas) animals.  Fun it can be, but efficient it is not.  The rule of law, comrades, is vital to any success, as I am sure China's rulers understand.  Getting this point accepted and applied on China's roads would be a great leap forward.  One could multiply these examples any number of times.

There is of course a vital corollary.  China has extraordinary opportunities to gain strength and influence even on its current course.  As the various inefficiencies we encountered, and many others we no doubt failed to notice, are remedied, the effect on productivity, both in China and more broadly as the invisible hand of global economic competition operates, will be immense.

Becoming a true man

A peak experience for all of us was a 12 kilometre walk on the Great Wall between two towns, Jinshanling and Simatai.  The Wall itself snakes up and down the steep hills, and at times one is climbing or descending 70 degree slopes.  The scenery is stupendous, and it is said “One cannot be called a true man until he has reached the Great Wall.”  I was a truly exhausted man after this experience, indeed relieved to have made it, but of course would not have missed this experience for the world.
 
The cost per person to do the walk is 30 Yuan, about $6.  At the half-way point we were stopped by several fellows in military uniforms, who demanded another 30 Yuan from each of us.  As they were carrying ugly looking rifles we did not attempt to argue, but we were later told this collection point was strictly unofficial.  Perhaps it also explains why the hawkers who had dogged our tracks from the beginning of the walk had departed a few minutes earlier.  “Easy now” they said, “we go back.”

The journey to and from the Wall was mostly on a vast highway, and we were impressed mightily by the scale and modernity of buildings, including vast new-looking housing estates.  More than occasionally we also passed by serious slums, or saw examples of primitive temporary-looking shelters on the outskirts of a new development.  Clearly there are extremes of poverty and wealth, as one is also reminded by large numbers of desperate beggars and persistent hawkers in many places.

Again we were amazed by the anarchic absence of rules of the road.  It was on this trip in particular that we were struck by the quantity and quality of the traffic.  Getting out of Beijing between 7 and 8 AM was a real battle.  The number of cars both in the city and on the highway was astonishing, far more than we recalled from our visit 18 months ago.  So too was their almost infinite variety, including jeeps, Beamers, Audis (very popular these), Fords, Mercs, VWs, every variety of Japanese car, some flash Chinese makes.
 
Our driver gradually loosened up a bit and we discussed cars and peoples.  "Japan car - good car, bad people."  "Americans - grakkkkkk" (He made a throat slitting motion.)  "Australians - very rich". The only breakdown we saw was a Ford, but our sample was small (well, smallish) and it would be unfair to generalise.  On the return trip we saw a very nasty accident, which of course reminded us that anarchy often ends badly.

The authorities are trying hard to improve behaviour on the roads.  There were editorials in the newspapers and we were there during a week dedicated, if we understood properly, as a “national-clean-up-the-act-on-the-roads-week”.  In Shanghai we saw a very angry policemen nab a guy on a motor scooter who did the usual right hand turn cutting a swathe through the pedestrian mass.  The most telling point was that the scooter driver appeared not to have the slightest idea of what he had done wrong.

China has a political system that in theory is totalitarian and communist, but with cheerful anarchy on the roads despite official attempts to impose order. Capitalism rules in the markets and massive disparities of wealth and income are evident everywhere.  This is an economy that has a massive export surplus and whose major companies are accumulating assets throughout the world.  Even the currency has seen its traditional fixity loosened slightly and if other country’s experience is followed this slight loosening will be followed by much greater freedom in due course.
 
"Communism has lost every sort of bearing," said Jonathan Eyal, the director of studies at London's Royal United Services Institute. "In China, it is essentially a mafia offering rising prosperity in exchange for political submission. In the West, it has given up all talk of seizing the commanding heights of the economy in exchange for a rearguard action against the sweeping advance of market forces."  (Quoted by Roger Cohen, the New York Times, 21 September 1997.)

China is already having a massive influence on the western world.  Its economic power is irreversible, and indeed it is part of the global “sweeping advance of market forces”.  What its eventual political impact will be is impossible to predict.  But our kids are all learning Chinese, with even more diligence now they have seen the mother culture close up and personal.

Background reading

Ray Block, “China’s Five Year Plan”, HenryThornton.com, 18 October 2005.

Roger Cohen, “To Deplore Capitalism Isn't Always to Fight It”, The New York Times, 21 September 1997.