Wandering China

An East/West pulse of China's fourth rise from down under.

The China8 Interviews: Pioneering Log with Bennett from China South America

Wandering China is pleased to launch the very first of the China8 series of interviews. China8 is where China’s perceived and presenting selves are discussed. This it hopes to achieve by looking closely at both China’s international and domestic coherence of its harmonious ascent. Ultimately, Wandering China hopes these perspectives will be helpful for anyone making sense of the fourth rise of the middle kingdom.

On close examination it seems the Chinese are finding it increasingly difficult to bide their time.

Laying low may have been the mandate in dealing multilaterally with the world from Deng’s point of view. However, without the superhero-charged idolatry of the monolith of party holding as much currency, legitimacy to rule China has for the first time in a very long while shifted to one that is based on performance indicators and this means that Chinese leaders now have both top-down and bottom-up pressure to perform. Sons of Heaven need not apply as China communicates a resurrection vaunted to be peaceful and harmonious. While Wandering China makes sense of China from afar, China South America is right in the thick of action being based in Shanghai. WC is pleased to glean first hand knowledge from fellow open source commentator Bennett, owner of China South America who is well placed to read between China’s rhetorical lines. We first met witnessing first hand the identity performance of the Shanghai Expo and it is a pleasure to exchange thoughts again.

For this first instalment, we focus on international relations and implications for trade with the world’s factory. Eight questions based on perceptions of China’s peaceful rise are posed to generate a wider range of open source perspectives in making sense of Chinese political rhetoric and intent.

Salutations and thank you Bennett for agreeing to this interview. First and foremost, Wandering China extends warmest greetings. Shall we begin with some background into how you ended up in China? What brought you here from America?

I first came to China in 2006 to study and work an internship at Reuters Beijing Bureau. I would have to define my original reasons for coming here as a broad mix of the following: curiosity to see and experience China with my own eyes, admiration for both Ancient China and its modern economic rise, hope that what I was reading from abroad about China’s growth could re-synthesized and applied in some fashion to help economic development in Latin America, and lastly to see how I could find opportunity as a Peruvian-American entrepreneur in the growth of China’s increasing trade with Latin American countries (or more specifically in South America).

China8.1: How would you describe China’s place in the world today? That said, how do you think China sees itself as an actor on the world stage?

Interesting question. I think it is impossible to universally generalize what China’s place in the world is. First, “China’s place in the world,” is still being defined. I don’t believe actors within China, in the developed Western world, or in other developing nations are themselves clear on what China’s place in the world is.  Nor are the thinkers around the world convinced if the role they hope China to assume is even feasible. In other words, everyone is full of hopes & doubts, making assumptions, observing, but in the end – no one is really sure.

If I had to take a position and offer my description of China’s place in the world today, I would do so from three different perspectives.

#1 Chinese people on the Mainland: Not counting the big politicos or business leaders, I don’t think the majority of the mainlanders give much thought to this question.  Yes, perhaps they have opinions, but they more often than not, these opinions reflect the official rhetoric of the state run media.  “The official” jargon being – China’s rise is peaceful, intended to insure a harmonious society for the people of China, and that China is still too poor to assume a global role of any major significance. 

China’s population weighs heavily on this rhetoric.  With 1.35 billion people China’s primary concern is economic development to insure a continuous rise in the standard of living of its still largely poor population. In my opinion, for China to achieve this requires an increasingly more active and high profile role around the world.  Chinese economic actors around the world cannot “maintain a low profile” anymore. Unfortunately this hasn’t quite registered in the minds of most Chinese people within China. They see China’s place in the world is one of a benevolent actor which is only doing its best to insure a “harmonious rise” of the Chinese people back home, and that this does not require China to assume a global leadership role or for the people themselves to investigate how this is being accomplished geopolitically.

#2 From the US:  From a US perspective, China role in the world is becoming increasingly confusing and difficult to define. On one side, politicians and business leaders see China’s rise as a threat and hope to check China’s influence in whatever way they can. China’s role in the world for this school of thought is currently a major political/ economic power which is trying to maximize its return within the current rules of the game in global system.  China does this without fully accepting the “rules of the game,” and always taking advantage when possible at the expense of other established powers. China can naturally defend this position to their own people considering the history of the United States and the major old Colonial powers of the EU.  Nonetheless, even in the context of history, this school of thought from the US believes the situation is still unfair because China does so without also assuming the responsibilities of being a major power.

The other school of thought views China’s rise as a natural development in the economic system of the world. They recognize China’s status as “the world factory,” a major holder of US and other sovereign debt, they respect China’s Ancient history of 5000 years, and accept China’s rise because it is after all an enormous and capable country.  Although this school of thought is not as alarmed as the former in the rise of China, they also feel China’s rise has not been accompanied by a parallel rise in responsibility.

#3 From a small commodity developing country (Peru):  In the early 2000’s China’s rise for the small, commodity rich countries of South America represented first and foremost – a new option. China offered a new market for their raw materials, allowing them to diversify away from US and European markets – indirectly empowering them to pursue their destinies more than ever before because the US (and Europe) would no longer yield the economic sway over them which for most of the 20th century was often translated into political sway.

Flash forward to 2012 and there’s an increasingly mixed view of China. China’s rise and place in the world as a major consumer of Latin American commodities has offered small commodity rich countries like Peru a new avenue for growth and this will continue to help China’s image for years to come. After all, without China, most of the small commodity rich around the world would have suffered far greater during the 2008 crisis.  However, it has become obvious (for better or worse) that China’s “Beijing Consensus” does not offer an all encompassing package as the “Washington Consensus.”  Second, China is not really ready to implement a “Beijing Consensus” that can be adapted to the needs of different countries. Third, China’s status as the #1 trading partner with many Latin American commodity producers (Peru, Chile, Argentina, etc) has not translated into a increased presence in real FDI in their countries – and when analyzing the FDI flows they are mostly in mining, agriculture or energy sectors.  Latin America is waking up to the fact that China’s place in the world will increasingly mirror that of what the US and Europe’s place in the world was before them. However, Latin American’s from the smaller commodity rich countries still see hope that because of the fact China too has suffered from Colonization, and is another fellow developing country, that there are ways to evolve their relationship with China so that the trade is more equal.

This statement can be supported by a recent paper published by the ADB which analyzed trade flows vs FDI between the Latam Region and China to support what I believe many people in Latin America are beginning to feel.    

China8.2: China’s peaceful rise or peaceful development? Which of these officially communicated narratives better describes China’s behavior in dealing with other countries? Alternatively, is there another way of looking at this?

I don’t believe either constitutes a correct way in defining “China’s Rise,” especially when development in’ China is inexorably linked to the following:

–       Large volumes of raw material imports from other countries AND

–       Continued expansion and penetration into new markets – specifically, developing markets in SE Asia, Africa and Latin America to make up for falling demand from the developed world.

Although China preaches a “peaceful” rise, from my years in academia studying China’s economy, journalism, and more recently business – I personally do not think a peaceful rise is a given. Consider the two points I mentioned above.  When Europe, Japan and even the resource rich United States found it necessary to procure raw materials from abroad to insure their own economic growth, none were able to do so without being accused of taking advantage of the countries in which they obtained their raw materials from. If history is any indication, China will eventually find it more common to be accused of doing so.

As China attempts expand their market share by selling cheap manufactured goods, or even more sophisticated goods & services in the developing countries from which they purchase raw materials from, developing countries are increasingly realizing that China is not investing in their countries because of some moral calling to help spur equal, sustainable economic development in “South-South Cooperation.” They are investing in order to insure their own developmental needs back in China… and if doing so means playing blind when it comes to following certain rules or taking advantage of a country with weak institutions and rampant corruption, China has no problem in doing so.

I have met many Chinese businessmen and woman over the past 3-4 years in the countries of Peru, Brazil, Bolivia, Paraguay and Uruguay. Of all these individuals I’ve met none have ever expressed to me even a superficial desire to have China’s investments or business dealings translate into a morally defined facet of “China’s place in the world,” or that their actions are to help “China’s peaceful rise or development.”  China’s rise and status is of secondary importance to either their personal vested interested, or even those of the big company they were sent to Latin America to represent. Chinese economic actors in Latin America have one thing in mind—the bottom line (profits).  I’m not about to raise the North American, European or Japanese  counterparts up on a pedestal, but all three regions have grown to accept that they must also present a social platform and develop a code of ethics when doing business abroad. This has yet to develop in Chinese business practice.

When Latin Americans feel they are being taken advantage of, Latin Americans are able to take to the streets in protest, form unions, and petition the international actors they feel have done them an injustice. Shareholders, pension holders, NGO’s, etc back in the home countries are then forced to listen. The same cannot be said for China.  If a pension fund in the US or France invests in a multi-national mining company which lets say for the example is contaminating a water supply, the employees whose pension funds own assets in that given company are more likely than their Chinese counterparts to demand change. Likewise, multi-national or national companies from the developed world are more familiar with how to deal with protest and complaints. Their PR and human resources departments have systems in place for handling such events. Chinese companies have far less experience in this field.

I would consider a better phrase to associate with China’s rise as being – “Accommodating the rise of China’s 1.35 billion people.” 

China8.3: That certainly puts things in a more pragmatic perspective Bennett. Now, China may have been careful to dispel possibilities of it behaving like a hegemonic force by weaving a meta narrative of non-intervention when it comes with other countries. Often citing its own experience by playing up its century of humiliation, are there any blind spots we should be aware of?

Yes, two come to mind:

#1 While China call its humiliation, Latin Americans and Africans I believe find it more appropriate to call it centuries of exploitation.  For thousands of years China was far more advanced in many respects than the rest of the world. It was not until foreigners forced it open that it began to experience the true yolk of “Western” domination.  Note, although the last dynasty of Imperial China, The Qing can be argued by certain historians as being an “outside” power, I personally do not consider it in the same light as being colonized by a Western (or Japan) power. So while China can preach it understands the plight of other countries which have suffered colonization, it’s not the same when there are thousands of years of proud history to look back to in which China’s was arguably the world’s most advanced entity /culture.

#2 It’s obvious from the recent kidnappings and murders of Chinese workers in Africa and to a lesser extent in Latin America, non-intervention is not working and is not being adhered. Think about it logically. Would it be possible to efficiently exploit energy resources in the Sudan (and South Sudan) without being mixed up with the affairs and desires of local leaders?  NO.

China8.4: Those two points were certainly food for thought, and a most poignant comparison. As mentioned earlier, it has been said that China’s top job is now to secure/accomodate the well-being of its 1.35 billion population, with the phase of getting rich fast now over. How true do you think this is, and what wider implications are there for the rest of the world if this indeed is their top focus? Is this something we should handle with care when doing business with the Chinese? Is this perhaps a prelude to Chinese exceptionalism?

No this is not a prelude to Chinese exceptionalism.

As I mentioned in detail in my prior answers, securing the well-being of China’s 1.35 billion people is one of the most significant reasons I see China’s rise as an increasing threat for the world’s smaller, commodity rich countries – especially the ones with weak institutions and corrupt leadership.

Consider how China’s brings in its own cheap manual labor force to work in the countries it invests.  When China builds a copper mine or petrol refinery, it brings more than just it’s highly trained engineers. It brings Chinese workers to perform the manual labor too. This is justified because more often than not a Chinese company finds Chinese workers are easier to control and deliver quicker results than working with locals from different cultures and following the local labor laws.

From my own experience in working in Tropical Timber trade – When a country implements new laws which prohibit the ban of a raw material in hopes of spurring local industry and jobs to first transform a raw material like tropical timber into sawn timber, flooring, future, etc, Chinese clients react in frustration that this is increasing the cost of the raw material and taking Chinese jobs away. In the global economy it is China’s right to seek resources in countries which don’t offer these restrictions or countries in which the rules are more easily circumvented. Paraguay is a perfect example of this. A country with weak institutions and rampant corruption, and which China still lacks official diplomatic ties with exports a great deal of tropical timber logs to China.  However customs officials are bribed and the timber enters China as an Argentinean or Uruguayan product.

Another example can be found in Bolivia. When Sino Latin Capital, a Shanghai based M&A company focused on cross boarder deals with China and Latin America, attempted to negotiate a deal for a Chinese company to develop Bolivia’s lithium reserves, the deal became too difficult to finalize because of bureaucratic problems of communicating with the “big boss in Beijing” who must approve every decision, and because Bolivia was demanding local refineries be set up to first process the lithium in Bolivia. The result was Korean and Japanese companies stepped in and are now negotiating contracts with Chinese companies to sell them the lithium which China was originally interested in developing themselves.

China8.5: It is plausibly difficult and perhaps naive to suggest changes for China when applying as if it were a monolithic entity. However, are there specific areas you feel the Chinese can do better in when it comes to trade, perhaps with smaller countries?

It is difficult. As a matter a fact extremely difficult. There are specific areas China could improve when it comes to trade with smaller countries but I view them as very difficult to implement in the context of current Chinese law and certain cultural tendencies.

During the past 10 years there has been an explosion of entrepreneurial spirit among young people Latin American countries.  Many desire to do business with China and other countries abroad. It remains far more difficult to do so with China because the majority of Chinese companies prefer to deal with the major state or private companies in Latin America, and overlook the small players. There is very little communication between the small to medium sized business class in China and Latin America… and it presents a very complex picture to change this. For starters, Latin American is a region where many social networks have become a standard means in which to communicate and establish relations with people domestically and internationally, many of these social networks remain blocked or infrequently used in China.

Another way to improve trade would be to improve transparency, something Chinese companies don’t seem to keen on doing.

Third, the Chinese corporate structure is very higharchial. If a Latin American importer or exporter wants to close a deal with a sub-division or a department of a Chinese company, the big boss of a given conglomerate needs to approve the deal even if he/ she is not directly involved with the day to day operations of that department in the company. Latin American companies, much like their North American or European counterparts delegate responsibility much more than Chinese companies do, and allow decision making to occur at different levels. It would help a great deal if decision making was allocated at different levels of Chinese companies.  Another area I don’t foresee happening in the near future.

Forth, China sees Latin America as one big region with little differences between countries. This is a major flaw in the way Chinese approach Latin America. However, this is also hard to rectify considering Chinese business first look at statistics and numbers. For a country like Peru with a population of 30 million, it appears to be a very small market. Even smaller if you focus on the major consumption center of Lima with 8 million people, and even smaller if focus on the population in Lima with real spending power – which would bring Peru’s most lucrative to a approximately 4 million consumers. So it becomes all too tempting to group Peru together with other markets like Ecuador, Colombia, etc. Different strategies and approaches are required for each market in Latin America.

On a positive note, the Guanxi system of Chinese business practice and tight knit “family structure” or sorts is more familiar to the average Latin American than it is to the North American or European. Unfortunately, I increasingly find this accommodating to an exclusive club of already established companies and economic actors in both regions – leaving out the small and medium sized players one again.

Returning to another part of your question – China’s monolithic identity (or lack thereof).  I don’t think China’s internal differences between regions, minorities, coastal vs central china, etc are a very important factor here. For when China ventures overseas, it is almost always under the guise of one unified identity – China.

China8.6: Despite its best intentions, China’s embrace of capitalism is increasingly nullifying its self serving narrative and model of socialism, as the increasing income gap would suggest. Does such a view hold weight in your opinion?

Once you visit China and see with your own eyes the income disparity it is obvious the model of socialism is extinct. Maintaining the view that China is a model of socialism and equality is incorrect and ignorant.  In my perspective China now embraces a more aggressive form of capitalism than most developed countries – certainly more than the “Socialist” countries of the European Union.

China8.7: On to more domestic matters, anti-foreigner sentiment seems to be rising in China, particularly in the developed eastern coastal cities. This naturally affects the fidelity of their harmonious society spiel. Has the foreign media been accurate with this? Are there any examples worth mentioning?

I live in Shanghai, which historically has been the accepting and open to foreigners. However, based on what my friends in Beijing tell me the anti-foreign sentiment is definitely on the rise.  I don’t think it’s totally uncalled for considering the way some foreigners behave, but the anti-foreign sentiment appears to me a reaction of ignorant envy and bitterness rather than legitimate racism. The 2008 economic crisis, and more recently the crisis in Europe have erased the notion of the foreign model as being superior. Chinese now are (rightly so) asserting more confidence in their own system.

My friend Sarah Ting-Ting Hou was recently assaulted walking home at 3am in the bar district of Beijing. Granted it was in the middle of the night on a Wednesday, which in most major cities would easily be considered a careless situation for a young woman to place herself in. She is a Chinese-American born in the US, and is 25 years old… Nonetheless, a few years ago this would be unheard of in China, but sadly this is no longer the case.

From my own personal experience in Shanghai, in conversing with fruit vendors, taxi drivers, co-workers, etc I get the sense there’s an increasingly hostile view towards Europeans and US-Americans. Although it’s directed towards the government and not the common person, and it’s often a regurgitation of what is read/ seen on the news.  Nonetheless, it is still a troubling development, especially considering that a similar view on the Chinese government is being promoted by major media in the developed Western world in much of the same fashion.

I personally find Chinese people opening up to me more when I tell them I am from Peru- another developing country, instead of the US. They empathize with Peru and begin to be more open in communicating the frustrations they hear about in the news.

China8.8: Thank you kindly for your thoughts Bennett they certainly open a unique window to China, and the primacy of your first-hand knowledge is much appreciated and valued. Any parting words for our readers?

China is an incredible country that I encourage everyone to visit and see with their own eyes. My thoughts and perspectives at first glance might paint a rather negative picture, but there is more than meets the eye. Everyone must give the Chinese people and the Chinese government the benefit of the doubt considering they are coming into their “global role,” in the context of economically volatile times and being forced to define their “global role,” at unprecedented speed. I fear the official rhetoric emerging from outside China, especially during election season in Western Democracies will inhibit the capacity for outsiders to approach China in a patient and understanding way.  Likewise, I fear the lack of access to certain social networks, freedom of speech, and a view “we should take care of our 1.35 people first” will inhibit China from doing the same when it approaches the outside world.  The future is not written in stone and it will be up to everyday people to bridge these divides.  It is possible to reach a sort of “middle ground,” but it’s not going to be an easy compromise.

People should keep their attention tuned to how the transition of power in China goes towards the end of 2012 and beginning of 2013.  China’s new leaders will be faced new and unique challenges of how reform China from within, and at the same time how to help guide China’s international foreign policy.  I view these challenges as being more complex than even the initial opening of China’s economy in the late 70’s. The world has changed, and so has China.

Bennett’s blog China South America is accessible here.


Filed under: Beijing Consensus, Bob's Opinion, Charm Offensive, China8 Interviews, Chinese Model, Culture, Domestic Growth, Economics, Government & Policy, Influence, International Relations, Mapping Feelings, Peaceful Development, Peru, Politics, Public Diplomacy, Reform, Resources, Social, Soft Power, Strategy, The Chinese Identity, The construction of Chinese and Non-Chinese identities, Trade, U.S.

3 Responses

  1. “China’s Rise” is becoming increasingly less peaceful after the belligerent stance that has been taken with the Spratly Islands — which is believed to have large concentrations of naturals gas. I fear that the insatiable industrial maw of the mainland will continue to bring diplomatic relations with Southeast Asia to the brink. Commodity grabs have been responsible for 18 major conflicts in this century alone (if my memory serve me right). In this sense, Bennett’s perspective on this topic meshes well with my own observations.

    However, I believe that how mainlanders personally identify with their new role in the world is a feeling they dithers with the whims of headlines manufactured by China’s Orwellian institutions. Often, tirades approved by censors over US tyre bans or Japanese foreign policy send large swathes of the populace into jingoist fits. This ripe cauldron of nationalism is actively contained by the government, for fear of open protests that would result from the opinions of largely government-sanctioned hotheads.

  2. ferylbob says:

    Hi Justin,

    Thanks for the insights, a very very fine balancing act for the Chinese to pull off its rhetoric as responsible international stakeholders. I would love to get in touch!

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