The China Dream by Joe Studwell
The China Dream by Joe Studwell
A tale of the money spent in China over the last decades. Just like any bubble, lots of winners and losers.
The 1980s -- Deng's real decade of power -- were an era of genuine, deep- rooted and under-reported change in China...
After the deprivation of Maoism came an end to rationing and the appearance of goods in the shops. Ordinary people could seek bourgeois solace in their first fish, a badly made wristwatch or a semi-reliable bicyle. It was as if a war had ended.
In 1984 ... They called it a 'stockholding co-operative'. Unlike family businesses, which were the only form of private company tolerated at this juncture, the stockholding co-operative was presented as a new form of socialist enterprise; it's designers claimed it was a derivative of the collective businesses promoted by Mao....
The locals referred to this ruse as 'dia hong maozi' -- or 'donning the red hat'.
Within weeks of arriving in Hong Kong, (Chris) Patten (British governor of HK) made it clear that the last five years of British colonial rule would not be like the previous 150. In 1993, he used a loophole in the Basic Law, the agreement governing Hong Kong's return to Chinese sovereignty in 1997, to create a far broader franchise for subsequent elections to Hong Kong's Legislative Council than the Chinese had envisaged. The prospect was that China would inherit a near-democracy in Hong Kong. The government in Beijing was livid.
Communist cadres and children of senior leaders who appeared able to influence the granting of contracts and operating licenses were hired on salaries that ran to hundreds of thousands, occasionally millions, of dollars a year. Retired political leaders from around the globe who had past dealings with China were called in for lobbying work. The likes of former international statesmen George Bush and Henry Kissinger were among those who benefited.
It was the misunderstanding of this reality that cost foreign businesses billions of dollars. The arrived with expectations of rapid deregulation, level playing fields for different actors and a profit-driven culture. What they experienced was fully functioning socialism, involving micro-management of existing economic activity and a determination to plan all future activity.
By the late 1990s, the most famous living economist of all, Milton Friedman, was exposing the Chinese charade more explicitly. In the 1980s, he had praised the country's early reforms, but after visiting Deng Xiaoping's Pudong New Area in Shanghai a decade later Professor Friedman changed his tune: 'The city is not a manifestation of the market economy,' he declared, 'but a statist monument for a dead pharaoh [ Mr. Deng had died recently in 1997 ] on the level of the pyramids.'
In 1978, when Deng Xiaoping came to power, there were 4.3 million bureaucrats on the government and Party payrolls; in 1990, the number had risen to more than 9 million and in 1998 almost 11 million. At the onset of reform, the Chinese government spent less than 4 per cent of its budget on administration; at the end of the 1990s the proportion was 15 per cent.
Standard & Poor's annual Sovereign Ratings Service report for China in 2000 stated bluntly: 'Non-performing loans are at least 50 per cent of total loans in the financial system.'
The latter phenomenon is known in China as 'guan chu shuzi, shuzi chu guan' -- 'officials produce number, numbers produce officials'. In other words, the report of positive data is how careers are made.
'zhua da, fang xiao' -- 'grasp the big, release the small'. lots can be made of this one ;)