Several prominent libertarians, such as Peter Schiff have gone on record suggesting that China is more free-market than the US. Others such as Jim Rogers (2010 Schlarbaum laureate) has stated that “America is more communist than China” (video) and that “China isn’t communist” (video) and that “China is not going to be communist ever again” (WSJ).
What evidence do they have of this utopic land of milk and honey? Or as Carl Sagan would say, extraordinary claims require extraordinary evidence.
My current employer is within the EFL industry and has a number of offices here in Shanghai. It is both privately owned and independently run (e.g. not a JV with a local SOE). I was recently sent a copy of a new employee handbook and found something of interest to those who buy into the belief that classical liberalism is alive and well in the middle kingdom:
Now before you get all self-righteous and lambast me for working at a firm that has this in their manual I should point out that this is par for the course out here. In fact, last year I worked at another private, independent EFL firm in Guangdong. During the height of the “Arab Spring” all of the foreigners were required to sign a document saying that we wouldn’t discuss the events with the students — wouldn’t discuss “democracy,” “human rights,” and “censorship.” Though on a professional level, I would really question why you would need to even talk about this stuff in an EFL course. Run out of other things to discuss?
This summer the ISIL is hosting a conference in Shanghai. I wish them the best of luck. But this little blurb on their site was a head scratcher:
This symposium is not affiliated with any government institutions in China. Therefore it is not registered with the Chinese government, but it is totally safe. Li just returned from a two-week planning trip to Shanghai where she met with many of the libertarian activists and academics. The Chinese label this summer symposium “a private intellectual dialogue, aiming to help China to grow.”
If AIDS awareness and sex-ed meetings are still being shut down, gay parades are canceled and homosexual clubs are raided — would a convention filled with Star Trek geeks preaching free-markets end up rocking the boat a little too much for the Guoanbu and the MPS?
Oh but those other groups were all real deviants right?
The fact of the matter is, China is run by the Family, the Sinomafia. It is a gerontocracy — nepotistic, opaque and shows no signs of reform let alone collapse. Sure Mao Yushi has won the 2012 Milton Friedman prize and hasn’t been shoved down the memory hole (yet) — but Liu Xiabao won the 2010 Nobel Peace Prize and has been “disappeared” for nearly two years now.
Legal opposition does not exist and I think it is foolhardy for foreigners to come here at this time and risk deportation over something much bigger than them. The state has only grown larger since the financial crisis with no real signs of abating.
For a clearer illustration of just how large the state operates in China, this is just a small part of a new infographic from CNpolitics:
As Minxin Pei, Mark DeWeaver and other have noted elsewhere: the top 38 companies in the country are SOEs, 63% of the top 500 companies in China are SOEs, the top 10 most profitable business in China are SOEs. Yet even the suggestion of privatization by outside sources results in uproar. The ironic thing of course is that the nationalist Chinese protestors at the World Bank press conference could never do in China what they did to Zoellick…
Professional protesting class
I am not sure what laowai, what foreigners can accomplish by giving speeches out here. I personally would not put my neck on the line, I would not be that guy who runs across Tienanmen Square, unfurling a Tibetan flag (because they accomplished so much change!). Why not pool resources, capital and skilled labor to develop and maintain software proxies for Chinese denizens to use? Why not combines the monies you would have spent flying out here and put together translations of free-market texts? Why not hold conferences in the West, creating blue-prints for actual transitions from SOE -> privatization. Economists such as Yuri Maltsev and Murray Rothbard noted that when communism suddenly collapsed following the Velvet Revolution, very little literature was actually available for showing how the new leadership should transition from socialism to open markets.
How about direct your energies towards the governments you have a passport with? Right now the conservative wing in the CCP has ample amounts of ammo to use as excuses and justifications for any kind of intervention: in the past decade alone the West has invaded three Arab countries, disappeared hundreds of innocents, bailed out every company that cried ‘Uncle’ — what hope is there for any reformers to say “hey, practice what the West is doing?”
If you want the biggest bang for your buck, if you really want to make a difference, I would argue that you should borrow a page from the Left: regime changes starts at home. Use a Krushchevian shoe, influence economic policy in the West and “bury” the East economically by outproducing them. The PRC can’t subsidize companies forever, after all, socialism in every form always runs out of other peoples money.
Not a minute too soon
There is one more story that should be addressed in all of this. Not to pick on Stefan Karlsson but I know several other people also hold his view that “Demography Won’t Slow Down China Anytime Soon.” He was responding to a recent piece in The Economist about how the demographic dividend is ending here in the East.
It’s not that everyone has stopped making babies here in China, it’s that the fertility rate is no longer matching the replacement rate. And there is no immigration to make up for it. This is already impacted the recruitment at manufacturing plants which are either moving inland to provinces like Sichuan and Henan or outward to ASEAN. And while the US may arguably have a less than 2.1 replacement rate, immigration more than makes up for whatever doesn’t go bump in the night. In fact, while the rest of the OECD might actually contract, the US is actually going to increase its population by 50% in the next four decades.
In contrast, within 20 years India is projected to replace China as the country with the largest population. China’s population will then begin to decrease and follow a decline similar to what Japan and South Korea are now facing.
Thus the demographic dividend that helped China so much in the past will be non-existent in the future, as one worker will have to support multiple retirees. Or in the words of The Economist, China will grow old before it becomes rich. Heck, Westerner’s may even become an “dying” species in China (we only make up .1% of the population as is).
So get your engines going, start a company, become rich(er) and help promote free-markets in the West. ASAP.
Irony-o-meter
Aside from the fact that the ISIL setup a WordPress site to showcase their upcoming China symposium (WordPress is blocked in China), what is even more ironic: I had to use a proxy server just so that I could download the pictures I used above from my Gmail account. Yes, ignoring a kill-switch — along with Youtube, Twitter, Facebook and all the rest of the useful web — Google Docs is also blocked out here. Or as Bill Bishop says: one world, two internets.
Tim Swanson is a graduate of Texas A&M University. He has worked in East Asia for more than 5 years and currently lives in China. He is the author of Great Wall of Numbers: Business Opportunities & Challenges in China
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One aspect of China that is more libertarian is that they have limited welfare and social security, so their society is not burdened with unfunded liabilities like the West is. This also forces the Chinese to save more which provides more capital for investment.
Jeffrey, thanks for stopping by, however the claim that China has limited welfare systems is not correct. I address the claim here: http://libertarianstandard.com/2012/07/23/myth-273-in-china-at-least-they-do-not-have-social-security/
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August 31, 2012