THE PRICE OF FREEDOM AND DEMOCRACY: WHY CHINA WILL NOT BE THE GREATEST ECONOMIC POWER BY 2015

This essay is being written to all those China-lovers and sympathizers; to all those who declare that China will (and maybe even should) eclipse the United States as a world power and economic powerhouse. China is loaded with many serious problems. It's "destiny" is not exactly a sure thing, and it is not necessarily headed for the dominant economic power of Asia. Its arrogance is symptomatic of Communist contempt for all democratic nations such as Israel, India, the United States, Britain, Australia, and the other NATO powers. China is not out of the woods yet, by any means.

(1) The Communist Chinese Legal system is one of the most primitive and juvenile systems known in the world; it is a complex amalgamation of Confucian and Taoist custom, interspersed with statute, largely criminal law and rudimentary civil code that has only been in effect since January 1, 1987. New legal codes have been in effect since January 1, 1980. Constant and major efforts are being made to improve the civil, administrative, criminal, and commercial law. The concept of "stare decisis," i.e., that the law should remain the same, except for an occasional re-evaluation of precedent, is totally foreign there. In other words, the judicial system in China does not make any cogent sense. If any business needed some type of legal resolution, that convoluted judicial system would choke them. Not to mention that in any arbitration situation betwen China and another country doing business with them, the People's Republic of China ("PRC") could intervene, at any time, and influence the business decision to the adverse consequences of the unlucky company which did business with them in the first place;

(2) The Falungong sect and the China Democratic Party are considered serious threats and potential rivals to the People's Republic of China, and could seriously harm the stability of the government there, or any of the foreign businesses which find themselves unlucky enough to invest money there;

(3) Although in late 1978 the Chinese leadership began moving the economy from a sluggish Soviet-style centrally planned economy to a more "market-oriented system." The authorities switched to a system of household responsibility in agriculture in place of the old collectivization, but instead of democratizing the government, Communist China instead increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, even while declaring that they had "opened the economy" to increased foreign trade and investment. On the darker side, the leadership has often experienced, in its hybrid system, the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and stepped-up inflation). Thus only a handful of the political and moneyed "elite" control the entire infrastructure of the PRC, over one billion people. And they literally have the power of life and death over everybody there. Beijing thus has periodically backtracked, having to retighten central controls at numerous and unstable intervals. The government has had a hellish time (a) collecting revenues due from provinces, businesses, and individuals; (b) reducing corruption and other economic crimes; and (c) even keeping afloat the large state-owned enterprises, many of which have been shielded from competition by subsidies, and have been losing the ability to pay full wages and pensions. From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time and low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the rapid and massive levels of deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table, especially in the north. China continues to lose arable land because of erosion and economic development. Weakness in the global economy in 2001 could cripple growth in exports;

(4) Communist China has as many as 16% of its population below the poverty line (2000 esimate) - I thought Communism was supposed to take care of that completely? I mean, you ARE giving up all of your basic and fundamental human rights in exchange for economic security, aren't you?

(5) The Communist Chinese labor force is by far one of the least skilled forces in the entire world, and will be unable to compete with the modern technologically savvy Western world. - by occupation, the PRC forcibly divides its people into agriculture 50%, industry 24%, and services 26%. Where are your techies? Your geeks? Your innovators? Your artists? Answer: they are suppressed, jailed, murdered, or "re-educated;"

(6) The unemployment rate in the PRC is staggering for a Communist nation that supposedly can cure all of society's ills: urban unemployment is roughly 18%, and there is substantial unemployment and underemployment in rural areas;

(7) Although China's exports are $232 billion a year, it's imports clock in at about $197 billion. You may think that's just fabulous, but wait until you get a load of the fact that Communist China's external debt is a whopping $162 billion. Guess that eats into their profits a little bit, huh;

(8) The PRC's roadways are still primitive - highway total is 1.4 million km, but the paved ones are only 271,300 km, while unpaved dirt roads dominate the landscape at 1,128,700 km;

(9) The PRC seems to have a military beef with nearly everyone. They have more enemies than any country I have ever heard of, and each one of them wants a piece of China's hide. Some examples of these China-hating countries include (a) India - most of the boundary with India is in dispute, (b) Russia - there is a dispute over at least two small sections of the boundary with Russia that remains to be settled, despite a 1997 boundary agreement, (c) Tajikstan, where large portions of the boundary with Tajikistan are indefinite, (d) North Korea, where a 33-km section of boundary with North Korea in the Paektu-san (mountain) area is indefinite, (e) Malaysia, Philippines, Taiwan, Vietnam, and possibly Brunei involved in a complex dispute over the Spratly Islands, (f) Vietnam (man you are going to love those guys) with disputes in maritime boundary agreements in the Gulf of Tonkin, awaiting ratification, (g) the Paracel Islands occupied by China, but claimed by Vietnam and Taiwan, (h) claims by Japanese-administered Senkaku-shoto (Senkaku Islands/Diaoyu Tai), and finally, (i) Taiwan, which detests China;

(10) Another wonderful problem the PRC faces is the illicit drug market. The PRC is a major trans-shipment point for heroin produced in the Golden Triangle, producing massive criminal activity and murder, and Communist China has an unprecedented and growing domestic drug abuse problem. The PRC is also the world's leader in the supply of such illegal substances as chemical precursors and methamphetamine.

Conclusion: I do not think China will emerge as the major power of Asia by 2015, as is being predicted by many liberals, communists, socialists, opportunists, and other academic "schlup-schwanzes.". But it is important that we, as Americans, remain vigilant, and understand that it depends upon us, the consumer, to boycott Chinese products and services, and to force our democratically elected politicians, as well as our overfed and overpaid corporate CEOs, to do the same. If we need a consumer market, and if the powers that be respond with, "labor is cheaper in China," then counter with, "Why not India?" India is democratic, free, religiously, racially, and culturally diverse and tolerant, also has roughly 1 bilion people as in China, is closely allied to the United States, is a military powerhouse, shares borders with our greatest threats, Islamic Fundamentalism and Chinese Communism, has a clear common law based legal system, is predominantly English speaking, is technologically advanced, secular, and was once a British colony like Australia and the United States. There are Christians, Jews, Catholics, Hindus, Buddhists, and Muslims there, and they have lived relatively peacefully together for thousands of years. It has a deep and strong friendship with the State of Israel, and is struggling right now to make democracy work. It is the duty of every red-blooded and patriotic American to support them in their struggle, because their struggle is almost exactly the same as ours.

Freedom is not free, it requires constant upkeep and maintenance. If we no longer fight to maintain those freedoms, both physically and economically, we run the risk of no longer remaining free.

I agree with you whole heartedly. I believe the reason why we assist the Chi-coms the way we do is because, as a model, they most closely resemble the future of the NWO, more than any other country or system currently in practice on earth. China, with a little reform here and there, is the future. The kind of future people like Tony Blair and Colin Powell want to bring to us all. Like you said, we could beat them easily but we are not even trying, because, the real enemy is us.

Has anybody made money over there? I understand many have made money on export-import, but taking an American business into China, other than McDonald's?

Yes, many are - in manufacturing. While there have been several shakedowns by the Chicom govt (out right theft of technology, extortionate fees after plants open- stuff like that) there is no shortage of US companies willing to give it a try. Motorola has been laying off in the US but announced it will spent 6 Billion in China in the next few years. All of the automakers are ramping up parts procurement in China and building state-of-the-art parts and subassembly factories. US semiconductor and technology firms are building factories and development laboratories in China. I purchase electronic parts for my business from China, Korea, and Taiwan that are no longer available (made) in the US at any price. When we export tech development we build our own a bleak economic future.

Yes, I have been to China. My company also went belly-up because they were heavily involved in that legal and governmental cesspool of a country.

We lost tens of millions of dollars to the People's Republic of China because of their totalitarian mindset. I recommend that no one do business there. They are not a democracy. You basically deal with 10 guys who run 1 billion people, and if you don't please each and every one of them, they can ruin you. At least in democratic countries, you can always appeal to different political parties or freedom loving business-people for help, but in China, if you piss off the handful or so people who run things over there, you can kiss your entire investment good-bye.

A little bit about my company's experiences over there: Their legal system is a total failure, tailor made to please the PRC wherever, and whenever. You cannot win a lawsuit, no matter what, if they don't like it. The legal system is total farce and a fiasco.

If the PRC crew don't like you or your business, or feel that it is causing a rift in their power structure, they choke you off. It is totally anti-capitalist, and totally un-American. They literally can swallow your entire investment. If you try to arbitrate, you can't get a neutral judge to hear your side of the story.

While working there, you and your employees are constantly afraid for your very life, as well as your privacy, because the PRC watch every single move you make.

There is constant open street warfare by both the The Falungong sect and the China Democratic Party, and the rampant, open drug running is everywhere. It ain't what you see on the news.

I am ashamed of myself for having done business with these communists, and I discourage anybody else from doing so either.

Interesting info and thanks for the responses. I agree with most of the things said and have also experienced many personally. The only part that I think may be less than clear for those who have never been to China is the infrastructure issue. For the past decade China has invested heavily on roads, power/dams, telecommunication, etc. The scale of some of these projects is phenomenal. Though they don't build the way we build (bamboo scaffolding on skyscaper construcion comes to mind) the output is generally pretty good. This is one labor intensive issue that won't be a limiting factor for them for too long.

The potential problem for us as a nation is the same downside old corporations face when newer competitors enter markets. The new guys start smaller & slower but they start fresh. The old boys are entrenched but often have cumbersome legacy systems they must support. With cheap educated workers and new infrastructure these folks are a force to be reckoned with. The political issues will be the hardest to solve, but it is infrastucture, size, and natural resources of that will make the difference in the near term. Can we win economically versus China? I believe we can. I also beleive in never underestimating the ambition of the other guy.

That was an admirable and very intelligent post. But there is something more at stake here. I am all for making as much money as possible. But China is Communist. China is also expansionist. China has gone on the private and public record, thousands of times, denouncing the US and wishing it doom. China kills, maims, tortures, rapes, beats, assaults, murders, imprisons, and destroys every person who disagrees with their policies. China gives money and military supplies to our most dire enemies. China taunts the US. China steals our technology. China malevolently manipulates and perverts our governmental institutions, and our politicians, our elected servants, against us, the American people. China pours billions of dollars into the world against us each and every year, in order to defame, destroy, weaken, and eventually kill us, or enslave us, whichever they can get first.

Forget the fact that as a businessperson, you don't have a leg to stand on in a legal sense againt the Chinese Communists. Think instead about basic survival: about the ability to eat, sleep, procreate, and live. This is at stake here. Not who has the bigger Mercedes Benz.

Thanks! Well...I have to agree with you. Short of a regime change in China I do believe their expansionist tendencies will ultimately lead us to war. I've felt this way this since my first assignment there in 1989. Throughout the 90's their expansion into the Spratley's, Myanmar, Panama, etc seemed to assure its inevitability. If it happens, it will happen for the same reason we are in Afghanistan....they don't really understand us and will eventually overplay their hand. Either way, it would be better to have it out with them now than 25 years from now.

Hmmm, no not really. I don't find much disonance in the concept at all because I never said not to trade with them. I was agreeing with your points that they are a repressive, expansionistic regime. I believe that we should attempt to have good relations with China. Whether that happens through economic incentives or military action only time will tell. I think I would be more uncomfortable taking a positon of not trading with them and not expecting to fight them. One apprach seems proactive and the other seems naive, at least to me.

Ok, suppose for argument's sake we do trade with them. But we stipulate that they must change, fundamentally, in order for us to continue. These changes would have to include issues that would eliminate any of their expansionist principles, would honor human rights, would liberalize working conditions and markets, go along with some of our business deals, encourage innovation, and allow competition. After all, that's how we do business, isn't it?

Someone has to change so that we could meet eye to eye on the issues. I have news for you: China is not going to change. So then, logically, for the sake of the deal, we must change.

The question then arises, how long will those changes last, and what will become of us after we do? Are we going to resemble them, or are we going to maintain our national character?

The answer may surprise you.

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