China's Greatest Fear

The Danger of a Slowing Treadmill

The majority of China's population lives inland; most live in relative poverty. The China which most people in the West see and hear about is the "economic miracle" China, which is largely confined to the eastern sea-board.

The Chinese Government has embarked on a treadmill-like experiment which seeks to modernise China gradually, without social dislocation and unrest. It does not want a Chinese version of the French Revolution, where the masses revolt and, with little or nothing to lose, pour into the fields and villages, streets and hinterlands, in anger and frustration at their lot.

The experiment has called for vast investment in plant and capacity along the eastern seaboard to enable China to become a world manufacturing hub. Labour, particularly young labour, has been recruited from the hinterland, trained, employed, and paid. A good portion of the money earned has made its way back to the family and village of origin. Meanwhile, in order to get a permit to operate, many businesses had to agree to provide for their young unskilled workers by not just paying wages, but also providing accommodation, health care, clothing, and so forth--which in turn meant that most of their cash would end up going back home. The logic and pragmatic sense of the plan is clear.

By employing particularly young people from the hinterland, China has been providing a future and a hope to the otherwise hopeless and restless. By ensuring that a good proportion of earnings made its way back home to the villages the benefits of modernisation progressively filter back to the very poor areas, also lifting them up the next socio-economic rung.

Behind all this lies the power of the State ready to snuff out any social unrest or expressions of anger which could end up fuelling a wider revolution. The Chinese government reckons that its most valuable commodity is time--time to effect the economic miracle and achieve socio-economic transformation. The oppressive power of the State stands ready to buy time.

Once the raw and naked power of the State was used to crush ideological dissent against Communist doctrine. Now, the emphasis is fundamentally different. The Chinese government wishes China to become the most wealthy capitalist nation upon the earth (provided everyone shares in the benefits to some degree); the crushing of dissent has to do now with preventing social unrest while China modernises.

The radical difference of these doctrines can be seen in the policy and attitude of the Chinese government towards religion. Over the past ten to fifteen years the Chinese government has decided that religion tends to fulfil people, increasing their sense of well-being. It also links them to their heritage, and provides a vehicle for satisfying cultural expression. Therefore, the government has become far more tolerant of religion, including a remarkable and growing tolerance towards Christianity. Religion now tends to be seen as an aid to modernisation, not a hindrance. Religion helps buy time. It helps prevent civil unrest and discontentment.

There are exceptions. When Bhuddist monks protest in Tibet, or when Falun Gong promote their cause in the West, the government quickly concludes that such religions/groups have crossed the line and are contributing to the risk of social unrest, rather than reducing it. Notwithstanding these exceptions, the Chinese Government has become far more benign in its attitude toward religion in general.

There are remarkable accounts from China emerging now of how Chinese authorities are helping Christian congregations find, and even build Church buildings. In some instances they have even helped pay the cost of putting up churches. Where this will all end up is not clear. However, it does underscore the remarkable change which has occurred in our lifetime.

The present global economic downturn, however, makes the present time one of more acute tension. Hundreds of factories on the eastern seaboard have been closed down. Workers have lost jobs. The risk of social unrest is now greater than before. We would expect to see the Chinese government engage in some heavy handed actions, not seen recently, as a result. The treadmill has slowed down; people are falling off.

We expect that the government will be focused on speeding up the treadmill again as quickly as possible. However, whereas it could rely on insatiable global demand for its manufactures--albeit fuelled by debt--this will not be the case for the next year or two, at least--and maybe a good deal longer. Therefore, massive increased public spending on roads, bridges, buildings and the like is almost inevitable. Once thing the Chinese government does have in its favour is massive foreign exchange reserves which it can now call upon to keep the infrastructure boom going.

Remember, this will not be driven by economic or market necessity, but by a fear of social unrest. Therefore, building "Bridges to Nowhere" is not a problem--or at least less of a problem. In the end, it is just another way to transfer wealth--but at least it is wealth through work, which is far more sophisticated than the preferred Western option of wealth through welfare.