I write about the political economy of China and its major industries Opinions expressed by Forbes Contributors are their own.
If ever it was possible to imagine what a rippling eruption of raised eyebrows across the landscape of China watchers might look like, the best chance at confirming that impression came a couple of weeks ago, as FT readers around the world cast their bleary morning gaze at the remarkable testimony of a businessman’s recent visit to the country. “A week in China is enough,” Michael Moritz wrote, “to persuade anyone that the world has spun back to front.”
Ostensibly, the piece was about how backward Donald Trump’s America was becoming, and how forward looking and adventurous China is by contrast. There may be some truth in this as a general proposition, but the evidence presented in the article focused on how open China was becoming to immigration, which stretches credulity way beyond breaking point for anyone who has the slightest experience of China’s “Entry/Exit Bureau.”
As a foreigner, it is relatively easy to live in China and work in some industries. As a journalist or academic, however, that really depends. It is encouraging to learn from Moritz that China “is considering the possibility of expanding [immigration rules] to include permanent residency. But it is however disappointing to see that contrasted favorably with U.S. treatment of Muslims just months after China banned Muslim names for the children of their Muslim citizens, including the name Muhammad.
Then there is China’s remarkable infrastructure: new high-speed railways, airports and more, which really are impressive, but come with the qualifier that, according to some research, only 28% of them “could be considered genuinely economically productive” and 55% were regarded as “unviable at the outset.” This while China’s debt load climbs ever higher, causing first Moody’s, and now Standard and Poor’s, to downgrade their credit rating.
I could go on but the original article was so widely panned that it inspired a spoof which appeared on the inimitable China Daily Show website and did the rounds on Twitter. Even more amusingly, the spoof was so expertly done some experienced China specialists mistook it for the the original.
Without being too hard on the author this kind of response to China is very common. You also encounter a reassuring pragmatism at every level which boils down to an acknowledgment that things aren’t perfect, but that with time they will move in the right direction. The psychological effect of this often engenders a cheery optimism on the part of the newcomer that takes time and many disappointments to displace.
The great polemicist Christopher Hitchens used to speak of a “Kronstadt moment” to describe the unmistakeable instance when the committed leftist lost his innocence and was obliged to admit — at least to himself — that the project he had been defending for years was, in fact, rather worse than he imagined.
It is probably a bit much to think there is a similar moment of existential realization connected to shifting perspectives on China, but it is true that you recognize in people who’ve been here a long time a certain resignation when faced with the latest speech promising the world in order only — it would seem — to claim it. That feeling is fully on display in this Fortune article, which identifies a kind of “promise fatigue” plaguing foreign investors in China. It can also be seen in the credit downgrades, premised as they are as much on the slowness of long promised reforms as on the problem of increasing debt in itself.
Right now, even pessimists maintain the view that nothing will change — or will not be allowed to change — until after the forthcoming 19th Congress of the Communist Party of China, slated for next month. However, the aftermath of this meeting will mark a watershed moment for China. Will they keep promising reforms and then not delivering? Will they keep kicking a larger and larger can down the One Belt One Road? Or will they start really delivering on the reforms promised at the 3rd Plenum back in 2013? It all remains to be seen, but the auguries so far are not good.
Fortunately for China, there are still many optimists around. Some think their debt problems are manageable although challenging, others see Japan as a model of sedate, managed stagnation that China will likely follow, which would be preferable to a potentially sudden correction. Still others see China’s plans for a hyperloop traveling at 4,000 km/h as evidence of exciting ambition, while conveniently forgetting about the straddling bus.
Fortunately, the FT is not only filled with puff pieces, as this very skeptical view on China’s — again long promised — SOE reforms attests.