Postcards From Tomorrow Square

Our man in Shanghai samples budget beer, survives subway scrimmages, and starts living the contradictions of China’s breakneck modernization

Twenty years ago, my wife and I moved with our two young sons to Tokyo. We expected to be there for three or four months. We ended up staying in Japan and Malaysia for nearly four years. We traveled frequently in China, Indonesia, Thailand, South Korea, and the Philippines, and we dodged visa rules to get into Burma and Vietnam. One year our children attended Japanese public school, which helped and hurt them in ways we’re still hearing about. After our family moved back to Washington, I spent most of another year on reporting trips in Asia.

Not long ago, my wife and I moved to Shanghai for an indefinite stay. You can’t do the same thing twice, and we know that this experience will be different. Our children are twenty years older and on their own. We are, well, twenty years older. The last time, everything we saw in Japan and China was new to us. This time, we’re looking at Shanghai to compare its skyscrapers and luxury-goods shopping malls with the tile-roofed shop houses and rundown bungalows we first saw here in 1986. The whole experience of expatriation has changed because of the Internet, which allows you to listen to radio programs via Webcast and talk daily with friends and family via Skype.

But it still means something to be away from the people you know and the scenes and texture of daily home-front life: the newspapers, the movies, the range of products in the stores. (Most of America’s ubiquitous “Made in China” merchandise is hard to find in China itself, since it’s generally destined straight for export.) And the overall exercise is similar in this way: the Japan of the 1980s was getting a lot of the world’s attention; today’s China is getting even more. My family and I saw Japan on the way up. During the first few months we were there, the dollar lost one-third of its value against the yen. On each trip to the money-changing office the teller’s look seemed to become more pitying, and on each trip to the grocery store (forget about restaurants!) we ratcheted our buying targets another notch downward. The headlines trumpeted the yen’s strength and the resulting astronomical valuation of Japan’s land, companies, and holdings as signs of the nation’s preeminence. The dollar’s collapse made us acutely aware of the social bargain that affected everyone in Japan: high domestic prices that penalized consumers, rewarded producers, and subsidized the export success of big Japanese firms.

China has kept the value of its currency artificially low (as Japan did until 1985, just before we got there), and because it’s generally so much poorer than Japan, the daily surprise is how inexpensive, rather than expensive, the basics of life can be. Starbucks coffee shops are widespread and wildly popular in big cities, even though the prices are equivalent to their U.S. levels. But for the same 24 yuan, or just over $3, that a young Shanghai office worker pays for a latte, a construction worker could feed himself for a day or two from the noodle shop likely to be found around the corner from Starbucks. Pizza Hut is also very popular, and is in the “fine dining” category. My wife and I walked into one on a Wednesday evening and were turned away because we hadn’t made reservations. Taco Bell Grande is similarly popular and prestigious; the waiters wear enormous joke-like sombreros that would probably lead to lawsuits from the National Council of La Raza if worn in stateside Taco Bells. Kentucky Fried Chicken is less fancy but is a runaway success in China, as it is in most of Asia.

Through my own experiment in the economics of staple foods, I have been surprised to learn that there is such a thing as beer that is too cheap, at least for my tastes. On each of my first few days on scene, I kept discovering an acceptable brand of beer that cost half as much as the beer I’d had the previous day. It was the Shanghai version of Zeno’s paradox: the beer became steadily cheaper yet never quite became free. I had an early surprise discovery of imported Sam Adams, for 12 yuan, or $1.50, per 355-ml bottle, which is the regular U.S. size. The next day, I found a bottle of locally brewed Tiger, which is the national beer of Singapore, for 7 yuan, or 84 cents per 350 ml. Soon I had moved to 600-ml “extra value” bottles of Tiger at 6 yuan (72 cents per 600 ml), then Tsingtao at 3.90 yuan (45 cents per 600 ml), then Suntory at 2.90 yuan (35 cents per 600 ml). It was when I hit the watery, sickly-sweet Suntory that I knew I’d gone too far. There was one step further I hesitated to take: a local product called REEB (ha ha!), which is what I often see the illegal-migrant construction workers swilling, and which was on sale for 2.75 yuan. One night, in a reckless mood, I decided to give REEB a try. It was weaker than the Suntory—but actually better, because not as sweet.

The signs of China’s rise are of course apparent everywhere. We can still see many parts of Shanghai that have escaped the building boom of the last two decades—the streets lined with plane trees in the old French Concession district, the men who lounge outside in pajamas or just boxer shorts when the weather is hot. But to see them we have to look past everything that’s new, and the latest set of construction cranes or arc-welding teams working through the night to finish yet more projects. From a room in the futuristic Tomorrow Square (!) building where we have been staying, I can look across People’s Square to see three huge public video screens, which run commercials and music videos seemingly nonstop. The largest screen, nearly two miles away, is the entire side of the thirty-seven-story Aurora building in Pudong, Shanghai’s new financial district. In the daytime, the sides of the building are a shiny gold reflective color. At night, they show commercials to much of the town. “People under thirty can’t remember anything but a boom,” a European banker who has come to Shanghai to expand a credit-card business told me. “It’s been fifteen years of double-digit annual expansion. No one anywhere has seen anything like that before.”

My family arrived in Japan just at the beginning of what is widely considered to be its collapse. About the strange nature of that “decline—one that left Japan richer, and its manufacturing and trading position stronger, than it was during its “boom—there will be more to say in later reports. But obviously it raises the question: Is this ahead for China? Have we arrived in time to watch another bubble burst? I don’t know—no one can—but as a benchmark for later reports, I will mention some of the things that have surprised me in my first few weeks, and I’ll do so via lists.

Numbered lists are popular everywhere—the Ten Commandments, the Four Freedoms—but they seem particularly attractive in this part of the world. When I first arrived in Japan, everyone was talking about the “Three Ks—the three kinds of work for which the country was quietly tolerating immigrant labor. These were what translated as the “Three Ds”: the jobs considered too kitanai (dirty), kiken (dangerous), or kitsui (difficult) to attract native-born workers in modern, rich Japan. During World War II, Japanese forces were notorious for applying a policy of “Three Alls” to occupied China: kill all, burn all, loot all. Memories of that slogan made for hard feelings when a Japanese-owned firm recently tried to register the trademark “Three Alls” (sanguang) in China; because of protests, the application was turned down. Early this year the Chinese government put out a widely publicized list of “Eight Honors and Eight Dishonors,” or more prosaically “Eight Do’s and Don’ts,” to express what President Hu Jintao called the “socialist concept of honor and disgrace.” For instance: Do strive arduously; Don’t wallow in luxury. I bought a poster with the full list at the local Xinhua bookstore.

In a similar constructive spirit, I now offer “Four Cautions and Two Mysteries.” These are meant to illustrate what has surprised me so far and what I am most curious about. It is also a partial and preliminary agenda for future inquiry.

To get into a talk with a Japanese intellectual or statesman is sooner or later to ponder the effects of World War II. When will Japan emerge from the war’s shadow as a “normal” nation, with a constitution written by its own people (versus the one created by Douglas MacArthur) and with a bona fide army, as opposed to something that has to call itself the “Self-Defense Force”? When will the Chinese and Koreans—and for that matter the Singaporeans and Filipinos and Australians—stop mau-mauing Japan with their wartime complaints? What special mission and message does Japan have for the world, as the first and only country to have suffered a nuclear attack? Will Japan’s view of America always be skewed into an inferiority/superiority complex, because of the U.S. role as conqueror in the war? The process is similar to discussions in Germany—except that Germans tend to be preemptively apologetic about the problems their forebears caused the world, and Germans make no special claim to suffering like Japan’s.

The process is not at all similar to discussions about the war on this side of the Sea of Japan. I put this item first because for me it has been the most startling. “Frankly, we hate the Japanese,” an undergraduate at a prestigious Chinese university told me, in English. The main difference between his comment and what I heard from countless other young people was the word frankly.

Why should this be surprising, given the centuries of tension between China and Japan? Mainly because of the people who expressed their hostility in the most vehement form: students in their teens and early twenties. They had not been born, nor had their parents (nor even, in many cases, their grandparents), when Japanese troops seized Manchuria in the 1930s, bombed and occupied Shanghai, and slaughtered hundreds of thousands of Chinese civilians during the Rape of Nanking. Wartime memories die hard, but you expect them to be most intense among actual participants or victims, and therefore to fade over time. Israeli teenagers aren’t obsessed with today’s Germans. I was not able to spend much time at universities talking with students when I was in China in the 1980s, but I don’t remember anything comparable to today’s level of bile.

The breadth of hostility surprised me for another reason. For years I have been skeptical of the idea of an anti- Japanese resurgence in China, viewing it as government-manufactured sentiment designed to deflect potential protest toward external enemies and away from the Chinese regime. In a new book called China: Fragile Superpower, Susan Shirk of the University of California at San Diego gives a detailed account of occasions when the Chinese government has deliberately drummed up anti-Japanese sentiment—or damped it down, when it seemed to be getting inconveniently robust.

In a country where media and education are as carefully controlled as they are in China, all public opinion is to an extent manufactured. “The students are excited,” a professor at a leading Chinese university told me. “They can be calmed down.” Still, I don’t view anti-Japanese sentiments as a ploy anymore. “You say anything at all about Japan [on a blog or computer bulletin board], and there will be 10,000 posts immediately,” an official of a Chinese high-tech firm told me. “The mob effect can get out of control.”

Partisans of Baidu, the main local search-engine company (which is listed on NASDAQ and has Americans as its main investors) recently ran a blog campaign touting it over Google. One illustration was Google’s supposed inability to return any results for searches on “Nanjing Massacre” (or “Nanking,” the older Western spelling) whereas Baidu returned plenty. There was a technical reason—Google’s servers are outside China and thus must cross the government’s “Great Firewall” to send results to users in China. The firewall routinely screens out references to “massacre,” as in “Tiananmen Square massacre,” and so it blocked Google’s results. Baidu’s servers and resources are all inside the firewall, and have been pre-scrubbed to remove references to Tiananmen and other prohibited topics. Google has since made adjustments so that it too can report on Nanking, but the episode showed the sensitivity of the issue.

The main trigger for renewed Chinese protest against Japan has been the (idiotic) persistence of Junichiro Koizumi, Japan’s former prime minister, in paying ceremonial visits to Yasukuni Shrine, in Tokyo, where fourteen Class-A war criminals from World War II are among the 2.5 million Japanese war dead the shrine honors. Koizumi recently stepped down after five years in office, but his successor, Shinzo Abe, has refused to rule out continuing the visits. When I’ve asked Chinese students what they want from Japan, they often say an end to the Yasukuni visits and “an apology.” Formal apologies have in fact been offered many times by Japanese officials, and even by the current emperor. If the Chinese are looking for something like German-style ongoing contrition, this is not in the cards. Twentieth-century history, as taught in Japan, holds that Japan itself was the ultimate victim of the “Great Pacific War,” because of Hiroshima and Nagasaki.

There is one tantalizing further twist to the syndrome. When I have asked young people why they should be so wrapped up with events seventy years in the past, the reply is some variant of: “We Chinese are students of history.” There are certain phrases you hear so often that you know they can’t be true, at least not at face value. Yes, China’s years of subjugation by Western countries and Japan obviously still matter. But the history that is more recent but less often discussed is that of the Cultural Revolution, from 1966 to 1976, when the parents of today’s college students were sent into the countryside and often forced to denounce their own parents. In an eloquent new book called Chinese Lessons, John Pomfret of The Washington Post recounts the ways that his classmates from Nanjing University, where he was an exchange student in the early 1980s, bore the emotional and even moral imprint of those years. They’d been made to do things they knew were wrong, and they found ways to rationalize away that knowledge. So far every student gathering I’ve been to has included a volunteered reference to the evil Japanese, and none has included a reference to the evils of Chairman Mao (whose picture is still on every denomination of paper money) and his Cultural Revolution.

Caution two:
Watch out, Olympians!
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.

If you’ve ever doubted the impact of big international spectacles, consider the examples of Beijing and Shanghai. Beijing will of course host the Olympic Games in less than two years; Shanghai will have a World’s Fair in 2010. In Japan, I often heard that the 1964 Olympics represented a turning point in world opinion. I saw a similar effect in South Korea during preparations for its 1988 Olympic Games. In the mid-1980s a countdown clock in Seoul’s main square showed the number of days until the Olympic opening ceremony. The clock was a dramatic sight during the antigovernment protests of 1987, when the number of days remaining was barely visible through drifting tear gas.

I’ve seen countdown clocks in Beijing, Shanghai, and Qingdao, the coastal city that gave its name (with a different English spelling) to Tsingtao Beer and where the Olympic sailing events will be held. China certainly seems to be taking the spectacles as a major turning point. Posters with morale-building slogans are everywhere—and the English versions that appear beneath the Chinese characters are often touching. (This is the place to say: While trying hard, I still have no working command of spoken Chinese, and rely on interpreters. I can generally read posters or newspaper headlines, because of similarities with written Japanese.) “If the world gives us a chance, we will return it many splendors,” says the English line of an Olympic poster in Shanghai. The English on Qingdao’s poster says, “Civilized Qingdao Greeting the Olympic Games.”

The construction and refurbishing under way for the Olympics and the World’s Fair are phenomenal. Shanghai has five functioning subway lines now—and functioning very well, with better features than I have seen on any public-transportation system anywhere in America. (Plasma screens in all stations show the seconds until the next train’s arrival; an advanced E-ZPass–style fare system lets you pay with one card for subways, buses, taxis, and ferries; LCD screens in the subway cars show entertaining short advertising videos; there is cell-phone coverage in the subways and just about everywhere in Chinese cities; etc.) The city is supposed to have thirteen lines by 2010. During several days in Beijing, I found it hard to look anywhere without seeing a road, sewer, stadium, or hotel being built.

Many aspects of the new, improved China will be up for the world’s inspection during the Olympic Games. But there is one little catch: the air. Unless something radical changes, I do not understand how athletic events can take place in air as dirty as Beijing’s. I am not a sissy: I grew up outside Los Angeles and have been to Mexico City, Bangkok, and other environmental hellholes. During the first few weeks my wife and I were in Shanghai, we wondered whether the pollution talk was all a big scare, since the skies were beautiful and blue. Then the typhoons that had been freshening the airflow over China (and drowning thousands of people in the southern provinces) petered out, and Shanghai developed a serious haze. But I’ve never, even in the worst ozone-alert days of my youth, seen anything like Beijing.

There are reasons for its problems—Beijing, like Los Angeles, sits in a sun-baked basin that traps pools of air. There are also solutions. Big industrial plants are being moved out of town, and everyone assumes that when the time comes for the Games, the authorities will do whatever they have to—closing factories, banning private traffic—to bring pollution down to an endurable level. On my first drive into the city from its Capital Airport, in the summer of 1986, I saw pathetic little rows of saplings. Now impressive stands of trees line that same route. Throughout the city, gardens and green spots have been created, and they appear to survive. Still. If the marathon runners, or even the archers, can finish their events without clutching their chests and keeling over, the Chinese authorities will have accomplished something special.

Caution three:
Watch out, America!
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.

One thing I have learned through travel is that every country is unhappy with its school system. The reasons for unhappiness in America are familiar. In Japan, China, and South Korea, the complaint is that memorization for national university-admissions exams creates a generation of unimaginative zombies who are so overstressed by the time they reach college that they sleep, shop, or play video games through the next four years. “America is heaven until you are eighteen,” a Chinese professor said, using a slogan I later heard from others. “China is hell.” Despite a memorization-and-exam system as onerous as any country’s, South Korea is enjoying a vogue right now as a source of creativity. Its cartoons, its televised soap operas, its clothing fashions, even its Samsung mobile phones are popular in both China and Japan. South Korea’s recent pizzazz, however it has been achieved, has only intensified long-standing and often-voiced dismay in China and Japan over how to make their students not just technically competent but also “imaginative” and “creative.” The distress is particularly acute in China, because, contrary to what most Americans would assume, the Chinese government spends so little on education, and so much of what it spends is concentrated on a handful of elite schools. Overall, China spends just over 3 percent of its gross domestic product on education at all levels, about half as much as the average for developed countries. “Most of the money goes to the top ten schools, and what goes to the top ten mainly goes to the top few,” a professor at one of the favored schools told me. This makes getting into the “best” name-brand schools—like Tsinghua and Peking universities in Beijing, and Fudan and Jiao Tong in Shanghai—all the more important, which in turn increases the need for students to cram for tests and the advantage for those who go to high-fee private high schools.

I think I’ve seen the answer to China’s education problem—and in a way, to America’s. It is to make sure that young Chinese people keep coming to the United States—some for college, and very large numbers for graduate school and for work.

It is possible to feel an abstract generational envy—oops, I mean a vicarious excitement—for educated Chinese in their teens through their early thirties. They know that their country is on the rise, and while its political problems are enormous, their prospects are brighter than for any previous generation in the long history of their culture.

Within this favored group there is a smaller set that seems particularly fortunate. These are the native-born Chinese who have spent a few years studying or working in the United States. An American software entrepreneur I met here (when he was visiting his company’s subsidiary in Hangzhou) explained his theory that modern economies and cultures are driven by “tribes” of people on the move. The tribe of Jewish scientists and intellectuals who fled Hitler transformed America’s intellectual life after World War II; the tribe of graduates from the Indian Institute of Technology is heavily represented in Silicon Valley and has greatly contributed to innovation and enterprise there. Young Americans who served overseas during World War II or in the Peace Corps in the 1960s had a lasting effect on America’s relations with the world—and the hordes of young Mandarin-speaking Americans I keep bumping into in China could do the same.

The tribe of “returnee Chinese” seems very important to today’s China. My impression may be skewed, since I have met so many of these people at universities and in technology or financial companies. But I think anyone would find them, on average, a formidable group. From growing up in China, they learned (apart from the language) how to operate in this culture. From being in the United States, many of them learned (apart from the language) traits still very difficult to cultivate in China itself. These include professional managerial skills; the idea of open academic debate, even with one’s elders; techniques for funding start-up firms and other organizational structures that encourage innovation; and a sense that bribery, petty or grand-scale, is at least in principle wrong.

And most of them seem to have liked the process. The African students who trooped to Moscow and Beijing in the 1960s and ’70s often returned grumbling about mistreatment and racism; Americans who spend time in Japan often come away with love-hate feelings because of that culture’s exclusiveness. Chinese returnees, based on all available evidence, are at least subconsciously pro-American. They have made friends and followed sports teams; many have raised culturally Americanized children. Despite obvious differences of culture and language, and despite obvious exceptions to the rule I am about to propound: on the whole Chinese people get along with Americans, and vice versa. Because returnees have usually been part of either a university or a company in the United States, when they come back to China they’re more likely to think of working with General Motors (a huge success here and the leading automaker, with the locally manufactured Buick its most prestigious brand) or UCLA than with the counterparts from Japan or Europe.

If I were China’s economic czar, I would recycle as many of the country’s dollar holdings as possible on grad-school fees in the United States. And if I were America’s immigration czar, I would issue visas to Chinese applicants as fast as I could, recognizing that they will create more jobs, opportunities, and friends for America than the United States could produce any other way for such modest cost. Many Americans will nod along with this point in principle. I would have, too, a few weeks ago. I’m saying that I feel it viscerally now, having met some of these people and begun to see their role in China. And to hear them say that their younger counterparts are going instead to Australia, England, or even Japan because of U.S. visa restrictions makes me want to say: America, wake up and watch out!

Caution four:
Watch out, everyone!
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.

It is too bad that “land of contrasts” is such a cliché, for there are situations in which it would be handy. Trying to make sense of the combination of rigid control and the near-complete chaos the newcomer sees in China is one of those.

I don’t mean to sound flip, because one side of this contrast, the regime’s repression and authoritarian controls, is a grave matter. Apart from its effect within China, it is likely to be the main source of friction between the United States and China for years to come. Every day’s paper since I’ve come to Shanghai, and every hour’s set of blogs, has brought news of some fresh assertion of state control. An internationally famous activist named Chen Guangcheng, blind since childhood, was convicted on charges of “organizing a mob to obstruct traffic” after he protested official misconduct. (Famous elsewhere, but not in China; I have found that few university students recognize his name, since Chinese media did not highlight his case.) Ching Cheong, a reporter from Hong Kong, was sentenced to five years in prison on apparently trumped-up charges of espionage.

Until I installed a “proxy server,” which allows my computer to tunnel under and around the “Great Firewall,” I was amazed at the parts of the Internet I could not reach from China., for no obvious reason. Wikipedia. Both sites were mysteriously unblocked in October, but then I had trouble with Google News. One URL I can always reach is the central government’s very useful official Web site,, which has an English page. Naturally it highlights the upbeat: a white paper on “China’s Peaceful Development Road” has as its first chapter, “Peaceful Development Is the Inevitable Way for China’s Modernization.” But, to its credit, it also includes announcements of the latest restrictions on commerce, banking, and the news media.

A list of the tensions between individual rights and the interests of the state could be very long. On the other hand: at least on brief exposure, urban China hardly feels like a hyper- controlled or over-policed society. You can arrive at the Beijing or Shanghai airport thirty-five minutes before a scheduled domestic flight without needing to break into a nervous sweat. Few police are in evidence at the airport, and the security lines are short. (This is not because air travel is such a rarefied, elite taste in China. Fares are relatively low, and the China Eastern Airlines shuttle flight I took from Shanghai to Beijing was a 747 with all seats filled.) Every instant of life in East Germany under the Communists or in Burma under its ruling generals reminded you that Big Brother was in control. Walking down Shanghai’s main shopping boulevards, Huaihai and Nanjing roads, makes you think you are in one vast bazaar. You can hardly walk a block in Shanghai without passing a vendor selling pirated movie DVDs, for less than $1 apiece. Viewing these has given me my first inklings of sympathy for the Motion Picture Association of America: I never have to spend much for a movie in China, but the versions of movies I can see are terrible. I missed The DaVinci Code in America and bought a copy here. The dialogue had been dubbed into Chinese, and then subtitled back into English—sort of. When Tom Hanks is told that descendants of Jesus and Mary Magdalene might still be alive, he asks incredulously, “BE? They on the hoof?”

I have not before been anyplace that seemed simultaneously so controlled and so out of control. The control is from on high—and for most people in the cities, most of the time, it’s not something they bump into. What’s out of control is everything else.

Often this is in a good way. On an evening walk down a side street that looked little changed since the 1930s, my wife and I started noticing that nearly every person we passed was running a business of some sort. This man was riding a bicycle with a towering load of flattened-out cardboard, meant for a scrap dealer. That old woman was weaving together rice straws for a broom, helped by her toddler granddaughter who handed her straws. A middle-aged woman sat outside her house working on a sewing machine. A vendor who looked as if he had just trudged in from the countryside tottered along with a heavy yoke across his shoulders, balancing two heavy baskets full of peaches. Another man was selling crickets in tiny individual straw cages. It makes you marvel at Mao’s delusion in thinking that China could be a centrally planned economy rather than a beehive of commerce.

One reason why Americans typically find China less “foreign” than Japan is that in Japan the social controls are internalized, through years of training in one’s proper role in a group, whereas China seems like a bunch of individuals who behave themselves only when they think they might get caught. As I took an airport bus from downtown Tokyo to the distant Narita International Airport for the trip to Shanghai, the squadron of luggage handlers who had loaded the bus lined up, bowed in unison, and chanted safe-travel wishes to the bus as it departed. When I arrived in Shanghai, I saw teenaged airport baggage handlers playfully slapping each other and then being told by the foreman to get back to work. In Japan, the controls are built in; in China, they appear to be bolted on.

A less attractive side of China’s social bargain comes in public encounters. Life on the sidewalk or subway may have been what Thomas Hobbes had in mind with his “war of every man against every man.” As technology, Shanghai’s subway is marvelous; as sociology, it makes you despair. Every person getting on a subway understands that there will be more room if people inside can get off. Yet the more crowded the station, the more certain that there will be a line-of-scrimmage standoff as the people trying to surge in block those trying to escape. In a perverse way, I was relieved when I read that China’s traffic-death rate per mile driven was nearly ten times as high as America’s: I wasn’t crazy in thinking that the streets were a reckless free-for-all. The writer Gwynne Dyer recently explained that such carnage is typical of cultures where virtually everyone behind a wheel is a “first-generation driver,” raised with no exposure to traffic laws, defensive driving, or the damage cars can do. As more Chinese travel abroad as tourists, and China prepares to welcome more foreign travelers when the Olympics begin, the government has launched a “mind your manners” campaign urging people to stop “hawking” (noisily clearing their throats) and spitting on the street, to stop cutting to the front of lines, and to stop yelling at each other and into their mobile phones. Good luck!

The climate is that of the frontier, with an erratically vigilant sheriff showing up from time to time to crack heads. The untamed energies of individual Chinese have obviously helped the country grow, but some people have argued to me that the lack of Japanese-style collective virtues imposes limits on China. “We have a huge economy,” the founder of a Chinese software company told me at dinner one night. “But we don’t have any big companies. Why is that?” Depending on how it’s measured, China’s economy is either the third-, fourth-, or fifth-largest in the world. But only three mainland Chinese companies are among the top 500 in Forbes's list of international companies, with the largest, PetroChina, at No. 57.

This man’s answer was that scale requires trust, and “there is no trust in China.” People don’t trust others outside their family, he said. “They don’t trust the Internet. Or doctors. Or the mobile-phone company to bill them honestly. Or, of course, the government.” Building a company beyond the family scale requires many layers of trust: in accountants, underwriters, the financial markets, the rule of law. “People are all looking for the profit in the next two years, so they cannot grow,” this man concluded. Would his company list shares on the stock exchange? “Ha!” he said. “The economy keeps growing, and the stock market keeps falling.” The big problem for the markets is what financiers call “lack of transparency—that is, the difficulty in knowing whether a given firm is making or losing money, and the suspicion that it is keeping several sets of books.

“Corruption, corruption, corruption!” another technology executive exclaimed to me. “You could knock off a hundred corrupt officials a day and you would not make a dent.” To take just one indicative example: High government officials have recently found it desirable to be “scholarly.” Thus universities have become accustomed to dignitaries who attend a few classes and soon get a Ph.D. Japan has always had its scandals—I was living there when police found gold bars and $50 million in the home and offices of Shin Kanemaru, a backstairs power in the ruling party. The most famous South Korean CEOs of the 1980s ended up in jail. But those countries—unlike Russia, the Philippines, or Indonesia—manage to keep their corruption within the “efficient” range, where it will not impede the growth of business. So far, China’s corruption must also have been kept efficient—how else could the country have come so far so fast? But I’ve been surprised to hear how often corruption is mentioned as a major long-term threat.

And now we confront Two Great Mysteries of China, which concern its leadership and its ideals. I’m not referring to a host of Minor Mysteries I hope to comprehend over time. For instance, the miracle of the malls: how so much of Shanghai’s showy new retail malls can be occupied by Prada, Armani, or Louis Vuitton stores—the real ones, not counterfeits—when there appear never, ever to be any customers inside. Who pays the rent? Or the miracle of the loaves: every run-down neighborhood has a bakery selling very good croissants and baguettes (though it is very hard to find cheese in China, which after all has no dairy-food tradition, and where a standard knock against Westerners is that they “smell like butter”). I am after bigger game.

Of course, it can seem preposterous for a newcomer even to raise such points, as if a foreigner in America observed that the country “is divided along party lines” and “has racial problems.” But here are two of the many themes I want to know more about.

The First Great Mystery of China: How skillful is the leadership?
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?

The second Great Mystery of China: What is the Chinese Dream?

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.