Hi Don, Ooh, check this out, so very optimistic, nothing like all that gloom and doom stuff spewed out by the likes of the Gordon Chang and his ilk.
Chugs, Jay
China's chief asset: its people
focus.scmp.com
Friday, February 21, 2003
CESAR BACANI
Iam often asked why I am so positive on China. Have I not read Gordon Chang's The Coming Collapse of China? Or Joe Studwell's unremittingly dour The China Dream? Do I not know that the mother of all banking crises will soon strike down a communist regime whose supposed success in bringing about glittering gross domestic product growth would be proved to be nothing but hot air? My invariable answer: do not bet against 1.3 billion people. Even if China's rulers falter, the collective will of one quarter of humanity, now fired up with the possibility of a better life for themselves and their children, will see the country through.
Anywhere you go, the ethnic Chinese community does well for itself. Just look at Hong Kong, Singapore and Taiwan. In the rest of Southeast Asia, the leading business families trace their roots to China. In the US, Chinese immigrants excel in school and the professions.
Too often, commentators regard the Chinese people as mere bystanders in their country's transformation. In fact, they are the key actors in today's Chinese opera.
Why else would incoming president Hu Jintao spend the first day of the Lunar New Year shaking hands with ordinary people in Beijing instead of feasting at home? How else do you explain the decision to invite private-sector entrepreneurs - capitalists - to join the Communist Party? And home ownership for the masses, direct elections at the village level, protection for migrant workers and their children, agricultural land rights for rural households? This is the Communist Party acknowledging that China's citizens hold the real levers of power. It is not necessary to read tea leaves to know what they want: prosperity, a just society, a strong nation respected by the world, personal freedoms and representative democracy in the fullness of time.
Those who can convince they have the will and the skill to give people what they want will continue to govern. Those who fail will eventually be booted out, hopefully in a peaceful and orderly way.
I am not belittling China's massive problems. My own book has one chapter devoted to what can go wrong. China's problems are complex and cannot be tackled in isolation. Half measures can bring only temporary relief.
Take the frightening banking situation. The four state-owned banks, which account for about 90 per cent of the financial system, are weighed down by bad loans that outsiders estimate at close to half of their total lending.
The way out is for the Big Four to stop financing badly run state companies (70 per cent of lending goes to state-owned enterprises) and instead use the more than US$1 trillion (HK$7.8 trillion) in deposits they hold for private-sector credit. But entrepreneurs are in two minds about borrowing from the formal sector because they would need to reveal their assets. Who knows where that would lead if tax and other regulatory authorities start asking questions? The chances are that a private citizen who has accumulated wealth in today's China had got around some rules or operated in a grey area.
It is a tough conundrum to crack. China's rulers would have to upend communist orthodoxy once again - to explicitly recognise that assets can be privately owned and exploited for profit, and protected from confiscation even if they were accumulated without strict regard to regulations, at least at this stage of the country's development. In business and commerce, the private sector would be elevated to the same level as the state.
Meanwhile, the government must attend to the needs of citizens removed from their cradle-to-coffin, state-sector jobs, guard the rights of those employed in the private sector and head off social unrest from the rise of a newly empowered private-sector elite in a society that is still officially classless and egalitarian. All this because the banking crisis needs to be resolved.
The party set out to change feudal China and succeeded. But now it finds itself changing as well. It has no choice. Their eyes opened to the possibilities of the future, the masses - whose interest the communists purport to serve - demand nothing less. And that is why their country could well become the world's next superpower.
Cesar Bacani is the author of The China Investor: Getting Rich |
