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Red capitalists

By Ken Root

As we depart from Hong Kong, a bustling trade area, along the South China Sea, I feel like I understand communist capitalism a little bit better. Like any short term visitor, the amount I know about a country when I leave is less than I knew when I entered. The Chinese are following ancient paths and modern urgings at the same time. My premise is that they are in the game of economic growth for the long term. What we are seeing today is only the second bar of a hundred year graph of development.

China’s communist system is not their strength. Their strength is their people. But command and control government is their means to get the country moving in a single direction. Looking at the Chinese Dynasties, dating back 4,000 years, there was centralized control and oversight. Emperors chose the direction they would walk and the people built the path. The Great Wall of China is the classic example of a social culture that determined an objective that would take generations to complete.

China’s current dynasty started in 1949. Formation of the nation under Mao Zedong was a brutal time but it accomplished the revolution it intended and all Chinese were on their knees and facing the same direction at the end of it. In 1978, Ding Xaioping formed the first trade zone and pointed the way for capitalist development under the watchful eye of the Communist Party. We can say, today, that it worked. It took 20 years for the foundation to materialize but growth in the economy has been at a rate near 9 percent since the early 1980s.

The 21st century may be known as the “Era of Chinese Ascension.” In the new century, China has emerged as other nations have slowed their pace of growth. Japan was the most important Asian nation from 1960 to the end of the 20th century, but we hardly think of them today as China has eclipsed their economy in literally all measurements.

China has its economic problems but it determines direction from one steering point in government and there is no visible dissent. The Chinese currency is overvalued but they keep it that way because they can. China has had to infuse money into the economy but it has a lot of highways and other infrastructure to show for it while we used ours to bail out banks, insurance and car companies.

Handling dissent has been another hallmark of Chinese communism. The only show of rebellion was in 1989 at Tiananmen Square in Beijing. The government shut it down brutally and moved on. The people of China do not mention it. They determined the case for democracy can wait because life is getting better for most Chinese every day.

Food has been a key component of keeping China’s masses aligned with government goals. Expanded trade has brought a better diet as manufactured goods sold into export allowed more protein to be brought into the country with a positive balance of payments. There is government corruption and some politicians have enriched themselves, but the brilliance of the Chinese Communist system was to allow private individuals to enrich themselves and then praise them for doing so.

I recall reading an article in the early 1980s, published by the pro-government China Daily. It talked about a woman who was the first in her village to get a telephone. She had started a factory that made concrete blocks. Her rise in wealth allowed her to pay for a telephone line as the first symbol that capitalism was good and was to be commended.

Our host in Shenzhen during this trip, Zhu Kunming, is a similar success story in his communist/capitalist endeavors. He grew up in a peasant farm family as one of eight boys. He joined the party and worked for the government in an importing company. He had great ambition and was so aggressive that his superiors let him go. The government did not see his behavior as bad so they allowed him to go into business on his own. He took economic risks and used his intellect, savvy and high energy personality to motivate his employees. He hired his family and much of his village to work for him because he knew their background. The result, from our vantage point, is a man of wealth and power who has lifted China’s overall economy higher. People who know Zhu say not everyone likes him but that all respect him. He is the classic first-generation capitalist.

Now we move into the future. No market goes up in a straight line. There will be peaks and valleys for the Chinese but they are now the second largest economy in the world. They own a majority of U.S. debt. They are linked to us more than we know. They want and need our food production. What will they do to keep us, and other countries, exporting to them? It is a future that can go many ways.

China has determined that its people are more of an asset in the cities than on the farms. One percent of the population is moving from farms to cities each year. That is over a million people, who produced food, moving into an expanding ring of apartment buildings in metropolitan areas that are growing at an exponential rate. Those people have an expectation that life will be easier and their standard of living will to go up. The government cannot afford to disappoint them.

Will China’s population become a liability? That remains to be seen in the continuation of their “one child” policy. The unofficial Chinese estimate of their own population is one and a half billion. That is 200 million more than the census shows. The communist government knows that if it holds the line until 2030, the population will begin to decline. In ancient China, that would be a short time. In modern China, it may be too long to endure.

Chinese people today are more educated than ever before. There are more that speak English than the entire population of the United States. They are now taking holidays and being tourists in their own country and abroad. Chinese students are studying at universities around the world and going home with great hopes for the future. Will their exposure to democracy and freedom cause them to change their government in the next generation or will they see that more can be accomplished in the Chinese way? Will they reinforce long-term goals of a one party central government that enforces a social structure while encouraging economic, cultural and social achievement by the masses?

Assuming no catastrophic occurrence, we will witness the outcome in the decades ahead.

Editor’s note: Ken Root has been an agricultural reporter for 37 years. Root now does daily radio and television programming and is a columnist. He can be reached at kenroot@gmail.com.

Date: 4/1/2013

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