Vol. 2, No. 1, July 2003
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China
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There
have been numerous discussions in Chinese and US American
academic circles about the future of China’s economic and
political development. Among other publications, two books
have been in the center of heated debates. The first was
published by Random House in July 2001. The Coming
Collapse of China was written by Gordon Chang, who had
lived in China for over two decades and had been a partner in
the international law firm of Baker & McKenzie and
counsel to New York law firm Paul, Weiss, Rifkind, Wharton
& Garrison. Gordon Chang, who is a practical man not an
academic, expresses his pessimism about China’s future in
his book. His main prediction is that China's political and economic systems are headed for collapse. A
collapse sparked by Beijing's failure to address three hidden
problems—a deteriorating banking sector, rising unemployment
and an underdeveloped agricultural sector. Chang warns the
West about a complete breakdown of the banking system caused
by some US$720 billion in non-performing loan obligations and
claims that foreign investors would make little profit because
of an industrial over-capacity in world markets. In an opening
statement before the US-China Security Review Commission the
author said that the “Communist Party of China [would] fall
from power within a decade,” and continued his speech with
the assessment that: “China is not prepared for accession to
the WTO. Its state-owned enterprises and banks are not
ready for increased competition. The economy, in
reality, is stalling, not growing fast enough. The
result is worker and peasant unrest. The central
government's finances are in bad shape, and one day the
People's Republic could run out of money. But before
that happens, the rulers of China will run out of something
even more precious: time.” In his book, Chang has much more
to say about China, but most is negative. The
second popular book on China’s future was written by Kenichi
Ohmae and first published in Japanese in November last year. Ohmae is a well-known author.
He has published over 140 books, many of which are devoted to
business and socio-political analyses. He has also contributed
numerous articles to major publications (e.g., Wall Street
Journal, Harvard Business Review, Foreign Affairs, New York
Times). For twenty-three years, Ohmae was a partner in
McKinsey. He is the founder of the “Reform of Heisei,” a
citizen’s socio-political movement established in 1992, to
promote and catalyze the fundamental reform of Japan's
political and administrative systems. Kenichi Ohmae is an
academic. He studied at Waseda University (BS), the Tokyo
Institute of Technology (MS), and the Massachusetts Institute
of Technology (Ph.D. in nuclear engineering). In his controversial book, The Emergence of the
United States of Chunghua, Ohmae makes two major
predictions about China. According to him, China will
disintegrate into six
economic blocs - Liaoning, Jilin and Heilongjiang in the
north-east, the Beijing-Tianjin corridor, the Yangtze River
delta area, the Shandong peninsula, the Pearl River delta
area, and Fujian in the south. Ohmae stresses in his book that
China has already started to split up into these six pieces
and that China is no longer a centralized nation.
Decentralization and economic prosperity is reality in China
says Ohmae and compares the current situation in China with
federalism in the US. His prediction is that there will be a
Chinese federation within this decade and here starts his
second—even more controversial—prediction, namely, that
Taiwan would be part of this federation. According to him, the
most likely year of unification will be 2005, or 2008 the
latest. Economic factors are cited in his book as the main
reasons for such a development. Ohmae foresees severe economic
crisis in the tiny nation-state, if Taiwan failed to reach
consensus with Beijing on the issue of unification by 2005. Who
is right? Ohmae
criticized Gordon Chang by saying that his book was based on
outdated data . He pointed out that several years ago he would
have made the same conclusions but economic realities had
changed. The 1998 reforms initiated by former premier Zhu
Rongji would have made a collapse such as the one described by
Gordon Chang impossible. Chang responded to Ohmae’s remarks
at a speech held in Taipei earlier this year by referring to
him as “Mr. Everything-is-ok-in-China.” He once again
spoke of a collapse of China and urged the Taiwanese not to
overlook the social and political risks involved of doing
business with China. Taiwanese business tycoons share the view
that both authors’ predictions are off the mark. Given
the fact that Ohmae’s book deals with the sensitive issue of
unification with China, his book faced far more criticism than
Gordon Chang’s book claiming that arch enemy China would
collapse. In academic and political circles, Ohmae’s claim
that more and more people in Taiwan have positive feelings
towards China and his prediction of an early unification
sparked heated debates and was considered nonsense. Taiwan’s
president Chen Shui-bian, for instance, rejected Ohmae’s
ideas by saying that Taiwan would be Taiwan in 2005 and would
never be another Hong Kong. Yin
Chang-yi, professor of Chinese history at Furen Catholic
University, looked deeper into Ohmae’s claim and emerged as
one of the most outspoken critics. In one of his recent
publications in a local academic journal, he strongly objected
to Ohmae’s claim that China would disintegrate into several
autonomous entities and to his statement that China had
already decentralized. Prof. Yin acknowledges that Ohmae is
good at analyzing economic trends but doubts his ability to
understand Chinese politics and history. Yin is certainly
right when he says that Ohmae’s prediction is based on
economic issues only and does not take political and historic
factors into account. His predictions, therefore, fail to
reflect the real world situation. Moreover, Yin argues that
the Chinese political ideal is to have one big nation: In
Chinese history, there has not been any political issue more
important than unification under a centralized government.
Recent developments in Hong Kong seem to support Prof. Yin’s
view. When Hong Kong returned to Chinese sovereignty in 1997,
Beijing was quick at emphasizing that the former British
colony would be ruled under the principle of “one country,
two systems.” As a matter of fact, however, the people of
Hong Kong soon found out that such a formula would never mean
real autonomy. Things turned worse when Beijing recently
instructed the Hong Kong administration to amend article 23 of
the Basic Law, Hong Kong’s constitution, allowing state
agencies to take repressive action against anybody voicing
concern about social, political and religious issues. About
half a million people took to the streets on 1 July this year
in protest and their message was clear: As to politics, there
is no such thing as autonomy or decentralization in China. In
other words: “One country, two systems” has already been
transformed to “one country, one system.” In
a recent speech, former Taiwan president Lee Teng-hui warned
the audience of Beijing’s “one country, two systems”
concept by citing Abraham Lincoln’s view that a nation could
not be both “half slave and half free.” Lee is one of the
most outspoken critics of unification in the tiny
nation-state’s political arena. He believes that closer
economic and political integration would only benefit business
people but would harm Taiwan’s middle class that tends to
defend values of democracy and freedom. There seems to be some
truth in his assessment that further integration with China
could cause an equalization of factors of production and
prices between the two states that would eventually lead to
falling real-estate prices, interest rates and salary levels,
and apart from that drastically increase unemployment among
local Taiwanese since Chinese university graduates and workers
would influx Taiwan. Lee’s opinion thus contradicts
Ohmae’s assessment. Although both books may not necessarily reflect “the real world situation,” they are worth reading and discussing, especially prior to next year’s presidential election—a period of time full of pros and cons surrounding a possible unification between one of Asia’s most democratic countries and one of the region’s most anti-democratic states.
Christian
Schafferer is an assistant professor in the Department of
International Trade at the Overseas Chinese Institute of
Technology.
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© 2003 by eastasia.at