East meets West

China and the US are two countries as far apart historically and culturally as East is to West. To each, the other country remains an enigma, with fact and fiction merging and misconceptions rife. ‘The Land of the Free’ versus ‘The Communist Middle Kingdom’. ‘The Communist‘ versus ‘The Communist’. ‘The Consumer’ versus ‘The Manufacturer’.

Yet here are two great nations, tied together by trade and industry, moving forward and destined to become the two tallest towers in a global economy.

The world needs to start looking beyond these labels and sit up and take note of what China is achieving. As so many other now powerful nations have proved, it is not a country’s history that is relevant in the world today, but its future, and China‘s future is indeed bright. Few countries are on a more prosperous path with apparent unlimited potential.

So are the differences as great as would first appear? Both countries are run in the same authoritarian manner, ruled by strict controls and power. In the U.S, providing Americans with their freedom requires powerful leaders – the internal power that controls voters and drives each electoral struggle and the global power used to dominate the rest of the world.

Chinese authorities also use the tools of control and power; power to enforce political constraints and to hinder social developments. A different agenda perhaps, but the same tactics nonetheless.

The U.S is undeniably the primary superpower with the largest, most technologically powerful economy in the world with a constitution to protect the freedom and civil rights of every American. The U.S imports six times as much as it exports, making it the world’s largest consumer society.

But this has produced a culture of materialism, greed and financial gain, giving rise to a host of potential long term problems. High unemployment, low wages and debt are a continuing threat to the economy; one that already has inadequate investment in its infrastructure. Living life in the fast lane is taking its toll and the U.S will require vast amounts of foreign capital in the future to sustain its economy.

China is already the world’s second largest economy – measured on a purchasing power parity basis – but it is still a developing country. Continuing to operate within a political framework of Communist dogma, the leaders are not elected, instead those in opposition risk imprisonment and the population continues to be suppressed.

Conversely, in its economy, China is moving in the opposite direction, creating optimism and potential prosperity for many. Short-term benefits and a long-term strategy have been the goals. China has concentrated first and foremost on the development of its own country and economy, rather than spending overseas.

Business is booming due to the more relaxed economic controls, opening the doors to increased foreign investment and a new high in foreign trade – in the region of US$851.2 billion, in the last year. Now the world’s fourth largest exporter and its third largest importer, China has built up vast foreign capital reserves, enabling it potentially to be the one economy strong enough to help the U.S in the future.

Add this to the fastest growing GDP, soaring stocks and an undervalued Yuan and it seems that, on the surface at least, China has come up with the perfect recipe to become the economic global powerhouse of the future.

The upturn in the economy has also improved social standards and expectations. Consumerism of city dwellers has soared and the man in the street is ever more demanding. More choices in how he lives, better housing, more mobiles, bigger cars and a voracious appetite for electrical gadgets to boot.

Diet is also becoming increasingly western; there are now around 800 Kentucky Fried Chicken, 400 McDonalds and 100 Pizza Hut outlets throughout China.

The Internet is also a development ‘barometer’ which indicates that China is on the brink of its own digital revolution. In the next two years, China is predicted to have the highest number of Internet subscribers in any one country – a staggering 153 million Chinese online. In the last year alone, 22 million new surfers signed up, bringing the current total to 80 million, making them second only to the U.S.

”This number is increasing by a daily average of 50,000”, said Cai Mingzhao, Deputy Director of the Information Office of the State Council, China’s Central Government. Simple maths dictate that if China continues on this path, with a current population of 1.3 billion, they will have the sheer ‘people power’ to wrest the title of ‘King of the Web’ from the U.S.

The Chinese people are revelling in this newfound online freedom, opening them up to the rest of the world and allowing more freedom of speech. A survey conducted by the Social Development Research Centre, under the Chinese Academy of Social Sciences, in 12 major cities, shows that 71.8% of the surfers agree with the notion that “they have more opportunities to express their views online”. 72.3% also believe that “government officials can acquaint themselves with more public opinions through the Internet.”

Lu Zhongmei, deputy of the National People’s Congress (NCP) is doing just that. Using his personal, forum-based website – http://www.hongyu-online.com – he solicits proposals from website discussions on affairs of state. He believes that the openness of the Internet will encourage the ordinary citizens to express their opinions and will give them a better understanding on how government policies are implemented at the grass-roots level.

“Netizens are a special group of constituency who can express their will at ease on the Internet, and their activities will facilitate to some extent the development of democracy in China,” said Zhou.

But this openness is causing concern amongst China‘s leaders. They are concerned that the younger generation – nearly half of China‘s internet users – under 24 year olds, are spending too much time online, assisted by the countless Internet cafes that stay open 24 hours a day. The worry is that these impressionable young minds are being exposed to unsuitable political content in online chat-rooms.

Investors, experiencing a rush of excitement, are after a piece of the burgeoning Chinese economic pie and have been buying, some would say recklessly, into the Internet Stock market. Eager to invest, but limited by choice, they have shied away from the state-owned Chinese companies and have gone for safer stock options.

Privately owned Internet portals, Sina.com, Sohu.com and NetEase.com, have benefited and their shares on the Nasdaq market have tripled in value over the past 12 months. Some financial analysts are predicting a sharp drop in Chinese stocks, to match the fall of U.S Internet Stocks in 2000, but currently their words of warning are being drowned out by the noise of the stampede.

“The bubble is going to burst”, said Andy Xie, a Morgan Stanley economist in Hong Kong. “It’s going to be bad”.

The race to jump on board is not restricted just to the Internet. Gold rush fever prevails and China is currently the hottest place for privatisations, mergers and take-overs. Overseas companies appreciating the advantage of the state-controlled cheap labour and untapped markets are flocking to China in their droves, their enthusiasm hampered only by the problems caused when negotiating in an unfamiliar culture and market.

All of this is, of course, the upside which China is broadcasting to the world. Behind this success, the government still struggles to reduce corruption and other economic crimes that threaten its progress. It is fighting to sustain the large state-owned enterprises, maintain the weakening population control programmes needed to protect the future survival of its social system and endeavouring to address the growing problem of the deterioration of the country’s environment.

Success and problems aside, China undoubtedly has the capacity to become a substantially greater nation in the future. It is using this time of economic growth to assert itself, to expand and develop on what the West has already achieved and to learn from past mistakes.

With this in mind, surely it would be the right time to invite China to join the US, the EU, Japan and Canada and to give them more of a voice and a larger role in global economic management.

Without a little more thought to the implications and consequences of Chinas new economic expansion, history is likely to repeat itself, causing worldwide resentment and unease as happened, when Germany and Japan last upset the apple cart.

The world leaders needs to wake up, look around and accept that differences in ideas, principles and priorities are part of our global society and recognise that no one country holds the rights to a power monopoly.


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