China’s Broken Dreams Of A “Virtuous” Development

Only the less attentive observers predicted extreme outcomes as a result of the admission of China to the World Trade Organization. The forecasts at the peak of the analysis were downright apocalyptic: China was going to destroy international commerce, driving it off course and out of control with poor quality products, low wages, and weakened social support. Competition from the Chinese would roll back the social gains of welfare programs and cause factories to shut down.
The other end of the spectrum – supremely specular in its fundamentalism – saw China as a validation of the benefits of free market liberalism. Sticking to its victorious principles, Beijing was making progress towards reforms, fair competition, and a system based on the rule of law. Everyone would have benefitted: consumers would get inexpensive products, business owners would have lower production costs, and emerging markets would finally be able to rise out of underdevelopment.
The reality has been much more complex, and it inevitably became evident. In 2004, the year in which Osservatorio Asia was founded, China presented a complex picture of difficult interpretation. Its identity was elusive, an industrial country with a traditionally agricultural past, an authoritarian regime with great entrepreneurial freedom, a backwards society with pillars of luxury and excellence. Observers of the phenomenon were not so naïve as to imagine a linear course for China, nor did they steep their convictions in cynical pessimism.
Osservatorio Asia believed that China would make progress through economic force, and the resulting prosperity would create a society more accepting of universal values, the same values that China aspires to as well. More than 10 years on from that momentous event, China has made progress but has yet to resolve all of its contradictions. An improvement has been made, but only the cold, hard numbers serve to embellish it. China has failed to build a more free or diverse society, and political reforms are repeatedly postponed. The rules of the game, although they have changed, still do not put China in line with international standards, and good business ethics have yet to assert themselves.
Particularly in this moment of crisis for the western model, one that is clearly not short-term, China could have taken seized the opportunity and proposed an alternative vision. Not only the fumbling economies of the industrialized world would have been grateful, but those of developing nations as well. Instead, Beijing remains trapped by a victim’s complex, as if it has to demonstrate its strength to everyone, imposing it as a bargaining tool of last resort.
Multinational corporations, close friends of China for decades, are now lamenting the decline of the business environment. Now that the initial phases of industrialization have passed, they are no longer needed and are left out of bids and contracts in preference of local businesses. Domestically, income inequality is on the rise and the same Beijing powers-that-be seem unable to bring their provinces, banks, and corporations fully under control. Development has had collateral effects that the country’s traditions have left it unable to manage, and these problems are no longer hidden by one-way information distribution.
A serious breakdown of the system is not necessarily imminent, but elements of instability are multiplying. That these elements emerge is not as surprising as the China’s refusal to confront them with modern instruments. China will need to abandon this stubborn attitude, for the good of China itself. The country has in fact raised a new generation of talented young people who are conscious of their origins, but are not afraid to confront the outside world, knowing full well that they will encounter inevitable, yet healthy, contradictions.