Unregulated capitalism in China? Think again. The Party gets quite a bit from foreign companies in exchange for the low labor rates and (relatively) low corporate taxes; lots of proprietary info is not secret from the Party. All contributes to empowering the Party further—and its military. Those goals are not capitalistic.
China doesn't do anything to generate low labor rates - they are a consequence of China's relative poverty, and are much increased from where they were during the communist era. They have overtaken Indonesian and Thai wages, neither of which has experienced the destructive rule of communism. On a GDP per capita basis, it appears that average Chinese wages are 4x Indian wages. China has adopted the Singapore model wholesale, which is part unregulated capitalism, and part authoritarian rule, starting pretty much after Deng Xiaoping met Lee Kuan Yew, now Singapore's eminence grise, but formerly Prime Minister who elevated the formerly backward city state to the point that its nominal GDP per capita, at $49K, narrowly exceeds ours:
Low tax rates are universal in China. Foreign manufacturers get an extra break, but that's pretty much the norm in Third World countries that want to encourage foreign investment. The difference between China and India, Indonesia and Thailand is that Chinese officials are less corrupt, and infrastructure in the form of power, clean water, roads and telecom is far superior, although nowhere near developed country standards. And that relative difference was all it took for China to vault from dead last in GDP per capita to the upper half of the list. As to the Chinese nickel-and-diming foreign investors for technology transfer, Korea, Japan and Taiwan are notorious for doing more or less the same thing. What none of these other countries did was let foreign companies get a commanding share of their domestic automobile markets (GM and VW are #1 and #2 respectively in China).ONE founded a tiny nation of two million, and succeeded in turning it into an economic powerhouse.
The other reformed a once-great empire of more than 900 million, and was trying to grow its economy after years of poverty and isolation.
One had grown up in an Anglicised family, spoke English better than he did Mandarin, and fought the Communists.
The other spoke only Mandarin, with a Sichuanese accent, and was a Communist leader.
Yet both men saw what was needed to create order out of chaos, and were not afraid to make radical changes to achieve what they wanted for their countries.
For this, they shared a mutual respect and admiration that cemented a ‘special relationship’ between Singapore’s founding father Lee Kuan Yew and China’s reformer Deng Xiaoping, according to a new biography of the Chinese leader.
By the end of Mr Deng’s first official visit to Singapore in 1978, says its author Ezra F. Vogel, the two men had developed a bond that, ‘like that between Zhou Enlai and Kissinger, enabled them to communicate with mutual respect on a common wavelength’.
Modern China’s first premier Zhou and then US Security Adviser Henry Kissinger were instrumental in taking the United States and China towards resuming diplomatic relations in the 1970s.
Likewise, Mr Lee and Mr Deng’s relationship paved the way for diplomatic and economic ties between Singapore and China.
In his newly published book, Deng Xiaoping And The Transformation of China, the eminent Harvard University academic Vogel reveals for the first time the depth of Mr Deng’s admiration for Mr Lee, and describes both men as having much in common.
They had come of age fighting colonialism, were both ‘straightforward realists, utterly dedicated to their nations’, and believed in the need for strong leadership.
‘Deng had close ties with many foreign leaders, but his relationship with Lee reflected a greater depth of mutual understanding,’ writes Professor Vogel. Only one other person, Hong Kong tycoon Yue-Kong Pao, he says, had bonded with Mr Deng the way Mr Lee did.
‘From Deng’s perspective, what made Lee and Y.K. Pao attractive was their extraordinary success in dealing with practical issues, their first-hand contacts with world leaders, their knowledge of world affairs, their grasp of long-term trends, and their readiness to face facts and speak the truth as they saw it.’
According to Prof Vogel, Mr Deng admired the Singapore leader’s accomplishments in the young Republic, while Mr Lee was equally impressed by how the Chinese leader was dealing with problems in the Communist giant as it tried to enter a modern world.
Prof Vogel, who has written a number of influential books on the rise of Japan and Asia, is best known for his 1979 book Japan As Number One: Lessons For America. Aware of Mr Lee’s familiarity with Mr Deng, he flew to Singapore to interview the former prime minister when researching his latest book.
Then Vice-Premier Deng and Mr Lee first met in 1978, when Beijing was seeking support from South-east Asian nations amid strengthening ties between Vietnam and the then Soviet Union. By this time, the two Communist giants had fallen out, and China was afraid that Malaysia, Thailand and Singapore would swing over to the powerful Soviets.
Prof Vogel says that when Mr Deng visited Singapore on Nov 12, 1978, both men were already ‘aware of the other’s reputation’, and made special efforts to bridge the cultural gap.
Mr Lee prepared a spittoon for Mr Deng and offered him an ashtray, knowing the Chinese leader’s habits. But Mr Deng, having found out Mr Lee’s views on smoking, made sure not to spit or smoke during their meeting.
When Mr Deng laid out his fears about the Soviet Union, he was surprised by Mr Lee’s frank reply that Asean nations were more worried about the ‘China dragon’ than the ‘Russian bear’, as Mr Lee recounts in his own memoirs.
But Mr Deng recovered quickly, and asked what was wanted of China – a question that ‘astonished’ Mr Lee, who recalled the meeting in his two-part memoirs, The Singapore Story.
‘I had never met a communist leader who was prepared to depart from his brief when confronted with reality,’ he wrote, ‘much less ask what I wanted him to do.’
Mr Lee too paid tribute to the Chinese reformer: ‘He was the most impressive leader I had met. He was a five-footer, but a giant among men. At 74, when he was faced with an unpleasant truth, he was prepared to change his mind.’
Indeed, their meetings – Mr Deng and Mr Lee met again in 1980, 1985 and 1988 – ultimately led to significant changes in the relationship between China and Singapore.
Up till then, Beijing and its propaganda had refused to recognise Singapore’s independence, and condemned Mr Lee as a ‘running dog’ of the West.
But, writes Prof Vogel: ‘A few weeks after Deng visited Singapore, this description of Singapore disappeared… Instead, Singapore was described as a place worth studying for its initiatives in environmental preservation, public housing, and tourism.’
Mr Deng died in 1997, at the age of 92.
While I believe the Chinese are a long term threat to the region because of their traditional expansionist territorial goals, they've been more than fair compared to our "allies" in the region as regards trade. It's a pity that we will eventually have to go to war with them once they start annexing stuff left and righ, given how they're already a much bigger market (50% bigger) for American goods than Japan, despite being a poor 3rd World country.