From Atlantic Unbound:



Slideshow: "Our Man in China"
A virtual tour of China's skyscrapers, fashion trends, and beer festivals, with photos and narration by James Fallows.

Everyone wants to know how long the Chinese economic boom can go on. Will an environmental crisis stop it? What about the gap between rich and poor? And between big shots on the take and peasants kicked off their land? After all, a nearly unbelievable 87,000 “public order disturbances” took place in China last year, according to China’s own Public Security Ministry, up from an already alarming 58,000 in 2003. What about the contradiction between a rollicking market system and an intrusive, controlling, one-party state? And what about a hundred other concerns amply documented in studies from China and around the world?

These are all ways of asking: Can China continue to adapt? In adaptability, Chinese society as a whole puts the rest of the world to shame. Flower vendors and restaurateurs discovered that celebrating a Western-style Valentine’s Day increased their sales. Now the local florists promote one on the 14th of every month. One alley near our apartment is lined with shops offering turtles, fish, puppies and kittens, and birds as pets. On the next street over, most of the same creatures are offered as food. Whatever sells.

The Communist Party that sits atop this society has been both adaptable and rigid. In the nearly thirty years since Deng Xiao­ping introduced “Socialism with Chinese characteristics,” aka capitalism under Communist political control, party leaders have adapted their way around one potentially ruinous difficulty after another. Even what the rest of the world sees as their most grievous mistake—the brutal crackdown at Tiananmen Square—was, from the regime’s perspective, another success. Without it, they might well have been driven from power. And the international denunciation did not seriously slow the country’s economic growth.

China’s continued growth depends on businesses, both homegrown and foreign—but the conditions for the growth are still set by the commissars. Even in the relatively laissez-faire United States, the commissars of the Federal Reserve constantly try to find the interest-rate level that will let the economy grow without causing inflation. The equation the Chinese planners have to solve is much more complex, involving everything from pollution to currency controls to maintaining social order while exerting control.

As for pollution: How much can they allow without absolutely destroying the countryside? How much can they prohibit without hurting their big export businesses? Even if they want to clean up, can they enforce regulations that restrain polluting activities, when so many provincial authorities have so much graft to gain by approving the next freeway, toxic-waste dump, or coal-fired power plant?

As for trade frictions with the United States, the finance ministry has made a start toward wiggling its way out. By letting the yuan’s value rise very slowly against the dollar, China has held down the price it pays for oil and other imported commodities, which are priced in dollars—without overpricing its products in the U.S. markets. Senators Charles Schumer and Lindsey Graham frequently threaten to propose trade sanctions on China if it does not let the yuan’s value rise much faster. Several economists I have interviewed here say that being forced to raise the yuan’s value would actually be a huge victory for the Chinese economy. It would drive down import costs even further, and would not do much to reduce exports to America, since many made-in-China goods are simply no longer manufactured in Europe or the United States. Can the Chinese officials work this negotiation to their benefit? My guess is yes.

A Western ambassador to China said that the thoroughgoing competence of the seemingly rigid central leadership is China’s least appreciated strength. “They drive you crazy,” he said, “but they get what they want done.” The ambassador went down the list of fourteen countries bordering China and said: “In every case, they’ve built a reasonable relationship.” A similar systematic effectiveness has characterized—so far—most of the country’s economic and social policies.

Can the regime keep it up? Can China manage a giant-scale and much more repressive version of the social contract developed in Singapore? Lee Kuan Yew didn’t call himself a benevolent despot in Singapore, but that’s what he was. He offered prosperity and public order; he quashed dissent. That’s the deal the Chinese leadership would offer the public—if it thought it had to offer explanations. Some people I’ve spoken with—mostly older people, and mostly ones who’ve lived in the West—say that of course the country will become more liberal as it becomes richer. Others—mainly younger ones, and those who’ve never left the country—say it’s not necessarily so. “People get unhappy here when there are famines,” a graduate student in Shanghai told me. “Otherwise we’re not interested in politics.”

Some philosophers, idealists, and ordinary citizens in China are taking risks to prove the student wrong. No one outside the country, and probably no one here, can tell how this process will come out. It turns on the leadership’s skill, in the deepest sense: Can the leaders keep delivering what the country wants?

Holland has a culture, but it does not have a dream. There is no Canadian dream, or Finnish dream. If there is a Japanese dream, the women’s version seems to be to escape their salaryman husbands, and the men’s is to escape the offices where they toil for their salaries.

The two countries whose cultures can plausibly support the idea of a dream these days are the United States and China. The American dream covers something so elemental in human ambition that people from around the world think it applies to them. The Chinese dream reflects the unprecedented opportunities now open to at least some of this country’s 1.3 billion people.

But what exactly will the Chinese dream mean? In three of its aspects—for the individual, for the growing economy, and for Chinese culture and influence in the largest sense—the answer is not yet obvious, at least to me. How exactly the Chinese decide to define and pursue their dream will make a large difference to the rest of the world.

The question about individuals will be: Do they dream of anything more than making money? Americans I’ve met here tend to sound huffy about the total money-mindedness of today’s rising urban Chinese. (Example of what they mean: A flashy Shanghainese woman in her twenties says, “I almost feel sorry for men these days. If they don’t have an apartment, no chance of getting married. With no car—forget it!” Her bargaining position is strengthened by the ghoulish combination of China’s one-child policy and its strong cultural preference that the lone child be a boy. Six boy babies are born and survive in China for every five girls. The imbalance is obvious among children on the street and noticeable even for young people now in their twenties, who were born after the one-child policy took hold.) Americans might seem the worst-positioned people on earth to complain about others’ materialism. But I sense that beneath the tut-tutting is a question about what modern Chinese people are supposed to believe in at all. The years of the Cultural Revolution must have done something terrible to traditional family loyalties, and after the switch away from Maoist policies, there can’t still be many true believers in a socialist ideal. In dramatic contrast to the United States, China has not been a deeply religious society. This leaves, for now, material improvement as a proxy for the meaning of life. Any generalization this broad obviously will be wrong about many individuals. But what, if anything, tomorrow’s successful Chinese want beyond a bigger house and better car seems both important and impossible to know.

For the economy as a whole, the question is whether China dreams of matching the consumer-driven American model—or, like Japan before it, establishing a different model of long-term development. America’s policy really boils down to the steady effort to give consumers more and more for less and less: deregulation, expanding free trade, embracing Wal-Mart and other chains. Japan’s policy has boiled down to a steady effort to develop the country’s manufacturing base, even if that left consumers paying higher prices and investors getting worse returns. Different systems, different goals—and Japan, despite its supposed “lost decade,” has done a good job—by its own lights. Its current-account surplus, widely predicted to evaporate by the mid-1990s, instead remains the largest in the world in absolute terms. Toyota, which during the “Japan as No. 1” years dreamed of being the world’s leading automaker, will very soon be just that. American economists often scold Japan for its “foolish” emphasis on exports and surpluses at the cost of immediate consumer welfare. But no one who visits modern Japan will think its people look poor.

Based on the Maserati dealership around the corner and the amount of gold I see draped around rich women’s necks, China is a good long-term candidate for the consumption-driven American model. But based on the steady flow of new regulatory orders from Beijing, the central authorities may have other ideas. For most of recorded history, China was the strongest and richest country, not simply in Asia but in the world. Through sheer force of numbers, it seems likely some day to be the world’s richest again. Another suspiciously common slogan is that all China really wants is to achieve a “Peaceful Rise in the World.” We will see.