The New China

After the tumultuous years of the opium wars and near the end of Great Britain’s quasi control of much of eastern China, the British wisely determined to keep one portion that would be the easiest for them to defend – and the most valuable. They colonized the island city of Hong Kong, and legalized their ownership by negotiating a long term lease with the mainland government.

As that lease approached its end in 1999, Great Britain’s negotiations with the emerging dragon of commerce, China, were going nowhere. Many of Hong Kong’s resident Chinese became alarmed. The new China seemed to be heading toward a free market economy, but to to guarantee their personal safety, many residents immigrated to Great Britain, other European countries, the United States, and Canada (Vancouver, BC being a favorite destination).

Many of Hong Kong’s capitalists decided to stay behind. In hindsight, they seem to have made the better choice, at least from a financial point of view. The early fears of strict mainland government control over local commerce have not materialized. In spite of the termination of British control, Hong Kong continues to reign as one of the most powerful financial centers of Asia, if not the world.

The Chinese government has long considered Hong Kong to be either a cancer about to metastasize and destroy their Communist system, or an opportunity to exploit. Both situations appear to be coming true.

However, the changes to China involve much more than just taking back Hong Kong. Having a beacon of free market capitalism end up on their doorstep, and knowing that the rest of the world was watching to see what they were going to do with it, surely played a role in the Communist Party’s decision to move all of China toward a market based economy.

The failure of the old central control model was also a major factor. For years, China’s Communist Party leaders relied on creative accounting for their production goals, along with their use of semi-controlled social upheaval (as during the “Cultural Revolution”) to distract the people from their plight. When these methods proved to have fleeting value, they finally considered the use of a freer market model. They slowly began to ease central control, giving more freedom for market participation to those willing to take risks.

How are they doing?

When we wanted to buy a few things for our trip, we were directed to the biggest store in Chengdu. Getting there required a two kilometer walk, broken up with a sidewalk lunch of pork pastries, chili sauce, and beer. We joyfully meandered through a market area where everything from fourteen cent sandals to pig snouts was being sold. During another aside while we searched for public toilets (because of the beer), we came across a quiet park where people drank tea and played mah-jongg and checkers.

This is the hidden China, off the main thoroughfares, where people enjoy both business and pleasure together in the inimitable Chinese way. They’ve used a form of mixed free market capitalism for years, using small markets to sell street food and many other products, no matter what gyrations the central government might have been going through. This is the China we love best.

But I digress. When we found the big store we were nearly overwhelmed by the size and number of products offered on just two floors. Their marketing ideas included having numerous employees, or representatives of product lines, give away samples and push products. Along one short thirty foot long aisle there were nine people, all selling products. At hand level along the moving walkway to the second floor, were hundreds of impulse buy products. Arriving on the second floor, we were met with more product demonstrators and hawkers in a non-food area. For instant gratification, with service being the order of the day, there was even a complete tailor shop located in the clothing area.

Downstairs in the food section, I was distracted by a familiar packaging design: Great Value, Wal-Mart’s private label.

“Look Claire,” I said enthusiastically. “They carry Wal-Mart products in this store.” But these were not products you would find in a U.S. store. Instead, we found hawthorn discs (we love them as candy and to settle the stomach), dried sweet potato sweets, and other uniquely Chinese snack foods.

Then I noticed one of those stations where you can scan a product bar code to check the price if the shelf label is gone – with a big Wal-Mart logo. This store didn’t just sell Wal-Mart products, it actually was a Wal-Mart – a symbol of western style capitalism if there ever was one.

While I was very impressed with the marketing, I also noticed that the same sandals that sold inside the store for 6.50 yuan could be purchased in the street market for only 1.0 yuan. So why were the Chinese willing to pay so much more? It was product variety, the people mover, everything being spotless and new, and personal attention from sales people. It was also proof to some, that they were finally becoming “wealthy” compared to their usual standards.

I looked hard for the “socialism” that has become such a political topic of late. Even in Communist China, in this store as well as in the street market, that concept seems well hidden. Where do you find “socialism” in a society where people work seven days a week for as little as 10 yuan a day, or $1.40 USD. Where is the “socialism” when pollution requirements on vehicles are far lower than in the U.S.? Universal education doesn’t exist in China, so where is the socialism in that fact?

The Communist Party is still the only political party ruling China. In small villages, and even in major cities like Beijing, there are few actual party members. Instead, there are a billion small capitalists who are increasingly gaining more influence and a larger voice in the direction of China.

We posted a video on our website early in our bicycle tour of SW China. It showed us riding our tandem bicycle in Chengdu traffic. I think the way Chinese behave on their streets is a metaphor for the way the people organize themselves – mostly ignoring authority in the commonplace aspects of life. I titled the video (shot by Claire from her stoker’s seat on the tandem), “Chaos Theory in the Streets of Chengdu.”

Although private cars are catching up in numbers, there are still more scooters and bicycles on the streets, along with large numbers of buses and taxis. The streets have separate lanes for small vehicles, and wider lanes for cars and buses. This arrangement sounds safe until you get to major intersections where chaos rules. Pedestrians, scooters, bicycles, loaded tricycles, cars and taxis are all crossing in different directions at the same time. Only when there is a critical mass of one group, and not when a traffic light changes, is when that group finally gets the right-of-way.

As scary as this as this arrangement might seem to us, it does seem to work for them, keeping their speeds lower than in highly regulated Western cities. When a pedestrian is hit by a car or scooter, the speed is fairly low. I doubt that anyone bothers to call lawyers or insurance companies after one of these accidents.

Traffic cops with red flags and whistles stand on the corners of most busy intersections, attempting to bring governmental order to the chaos. Seeing how little affect they have on what actually happens in front of them, the police might as well stay home.

I think this is how most Chinese deal with their government. The vast majority simply ignore it, and there doesn’t appear to be much the government can do about that attitude. The government has the ability to block Twitter, Facebook, Blogger, YouTube, and other social networking sites on the local Internet. They can probably read anyone’s email if they really want to do so. However, they seem powerless to stop anyone from stealing intellectual property or running their own business any way they want. They can’t even stop jaywalking.

So far they have been able to stop a few who seem to understand and want democracy – or demand their independence – like the Uyghurs and Tibetans. That fact may change eventually, but not soon. I believe most Chinese are so busy surviving or getting rich by their capitalism, that they care very little about the prevailing political system.

Let’s face the fact that the Chinese are different. That’s the way the world works, keeping it interesting. When democracy becomes something they want, they will have it either with blinding speed or slow evolution – but they will have it. Their government won’t be able to stop them, and we will not be able to help them. All we can do is just stand back and watch with amazement the power of a billion people.

I’m not saying that China is a pure capitalist country, any more than the United States actually is. Both have different blends of capitalism and socialism. Both ideas have been able to live side by side in both countries, which seems to work pretty well, since we are the two most powerful economic engines in the World, and have become highly interdependent.

We should study the people of China and their social and business practices; they study us. Like them, we should learn to worry less about the Chinese government, which has very little to teach anyone. Wal-Mart pays close attention to the Chinese people, uncovering their needs and desires. Wal-Mart has the right idea: just watch and listen.

We have much to teach the Chinese. They too, have much to teach us.