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Why Should I Care about the Power Transition in China?

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The 18th CCP Congress is going on right now in Beijing, I was lucky enough to be invited to BBC TV and BBC radio to comment on this once-in-a-decade power transition. Before that, I was asking many ordinary people around me about what this moment means to them. Some cannot care less, as they feel they have zero influence on the outcome. Some are watching it as a “Gong Dou Drama/宫斗剧” (Fights-in-the-Palace Drama) and found pleasure in all the conspiracy theories and the tabloids about power elites’ in-fights . Some are busy interpreting and deciphering the formulaic and predictable official announcements, and looking for so-called signals of future policy directions. Some are making their wish-lists of what reform they hope to see under the new leadership. I happen to think that it is futile to try to peek into this black-box of CCP meeting, but it is an interesting moment that triggered a lot of important public discussions about what China did right and what it did wrong in the past decade.

In BBC TV’s program, I had a mini debate with Martin Jacques, author of When China Rules the World, who was known for championing the so-called “China Model”. Our debate was so short that I left out some key points, so allow me to make up here. Right before this Party Congress, Mr. Jacques wrote an article saying that the Chinese leaders are more legitimate than the US president coming out of an election. Well, the Chinese government certainly did not show much confidence in its own legitimacy, otherwise we should not having so much problem accessing the real Internet, buying kitchen knives, or letting our pigeons fly.

Jacques argues that unity is the core value of Chinese civilization. I find it offending that he feels comfortable to assume the huge population in China composed of diverse communities share one value. And he certainly ignored the fact that the value systems in China changed many times throughout the history.

But is unity currently a sufficient source of legitimacy for the Chinese government? What about the high percentage of rich Chinese trying to emigrate out of China? What about the peasants who are protesting against some local governments’ forceful land grab? What about the middle class who held protests against environmentally dangerous industrial projects run by state owned enterprises? It seems people care not only about whether the government holds the nation together with strong hands, but also about whether they can feel safe and free under the government.

Mr. Jacques likes to emphasize China’s economic growth in the past 3 decades as a proof of the superiority of the “China model”. But even President Hu in his speech on Nov.8th acknowledged that China’s current economic growth is “unbalanced, uncoordinated and unsustainable”. Also what about the fact that China is still a poor country in terms of income per capita? What about all the costs of nominal GDP growth, from environmental crisis to corruption to unjust wealth distribution?

I am not saying that all that growth is illusionary, but we cannot forget that it was the shift away from authoritarianism that initiated the economic growth thirty years ago. Mr. Jacques suggested that the lack of democracy contributed to the efficiency of China’s economy. Following that logic the centralized economy under Chairman Mao should have been the most efficient. Even today, the local governments and state owned enterprises are misallocating resources to the extent that wasteful and low-quality infrastructure projects are becoming a liability rather than an asset, real estate bubbles in places like Erdos and Wenzhou are busting, and so-called innovative projects heavily sponsored by tax payer’s money, such as solar or cloud computing, turned out to be technological disasters and hotbeds for corruption.

Mr. Jacques’ view has won him popularity among the power elites in China. But even the leaders of CCP have stated many times that “reform” is urgently needed to make the people more satisfied, evidently they are aware that economic growth and nationalism no longer can bring them the desired “stability”. Meanwhile, the increasing exposure to the outside world has changed the Chinese public’s expectation of their government fundamentally, although few of them are calling for a whole-sale adoption of western-style democracy, many are calling for more openness and transparency of the government and more rule of law. If China manages to overcome the current challenges, which is certainly my hope, it will not be the victory of the “China Model” that Mr. Jacques extolled, rather it will be a result of the Chinese public’s success in “reforming” the government.

 

 

Squeezed Middle Class in China

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How strong is China’s middle class? This is a topic in vogue inside and outside of China these days. On one hand, there are optimists who believe the increasing consumption power of China’s middle class will keep propelling China’s economic growth till it becomes a super power, some even think that China’s middle class will be a force that facilitates the political reform of China. On the other hand, the pessimists are saying that middle class income will diminish along with the hard landing of China’s economy and middle class discontent may even breed social instability. Even my friends and I, considering ourselves part of China’s middle class, often swing between extreme optimism and pessimism about the outlook of our career, life quality and the stability of Chinese society. As a media researcher, I have also been tracking what people say about China’s middle class on social media, again I found a lot of confusion and anxiety.

What does being middle class mean in China?

There is no clear-cut definition of Chinese middle class. Various institutions, from the Chinese government to the World Bank to market research firms have proposed different standards of middle class in China, but the meaning of middle class is multi-layered to the public. The most commonly used criteria is income, for example, Goldman Sachs in one of its reports set the bar for Chinese middle class at 9000 USD per year, while in 2005 an official report from the Chinese government said that anyone making 60,000 yuan to 500,000 yuan per year should be considered middle class (By either standard, less than 10 percent of the Chinese population fit in). But in my research I find most people think being middle class means much more than a certain level of income. Unfortunately many of the Chinese people who meet the income criteria don’t think of themselves as middle class, because they feel that the burdens of life are so heavy that they are still surviving rather than enjoying life, they lack sense of security and they are pessimistic about upward social mobility in our society.

The major concerns of Chinese Middle Class:

First of all, living cost is rising fast in China. In big cities like Beijing, Shanghai and Guangzhou, typical middle class consumer products, from Starbucks coffee to Levis Jeans to iPad, are usually at least 30% more expensive than those in the US. Even IMAX movie tickets are about the same as those in the US. So obviously not many Chinese can afford the Western-standard middle class life style, as the average income of Chinese white-collar workers is only one sixth of that of their American peers.

Enough has been said about the high prices of apartments in China’s big cities. In my city Shanghai, an average apartment costs more than 20,000 yuan per square meter (the downtown area costs several times more), while an average white-collar worker here makes less than 10,000 yuan a month. But not many people can choose not buy an apartment. As I have written before, home ownership is not only the primary store of wealth, but also a spiritual needs, an ends in itself and the ultimate pursuit in today’s Chinese society. Owning an apartment, however tiny, is the foundation of love and the premise of marriage. Disputes over property are also breaking up many relationships and families. For Chinese young people, choosing not to buy an apartment involves being seen as a loser, an untrustworthy, unstable and even unloved person.

But once you buy an apartment, you and even your whole family probably will become “the slave of the apartment”. With all your savings gone and heavy loans to pay back every month, you can hardly afford to spend or play.

What makes you feel worse is the perception that even if you work hard and keep improving yourself, you will have little chance to move upwards. That is the sentiment I often observe in many Chinese young people. They call this the age of “father competition” (拼爹), meaning that only those from the right families can succeed. I don’t think it’s too pessimistic to say that the uninhibited marriage between power and wealth has almost eliminated fair competition in our society, for example, many companies I know prefer to hire children of government officials, you know why.

Sometimes the basic sense of security is missing even in the young professionals of China. Most of my peers are now in their thirties and already have a good career, financially they are much more secure than the new college graduates who can hardly find jobs, but they are worried about health care and the care-taking cost of their aging parents. The parents of us “single child generation” are getting old, in a few years most of them will retire, that means each young couple of “single child generation” will have to take care of four parents. With the miserable health care and social safety net in China, how dare the young middle class consume rather than save?

Reasons to be Optimistic

The main reason that I still see hope of a growing Chinese middle class is that the conditions cannot get any worse. Consumption’s share in China’s GDP has been decreasing in the past ten years, it is as low as 35% right now (while in the US it is around 70%). Wage’s share in GDP has also been decreasing in the past ten years, it is standing at around 40%, much lower than the 50% 10 years ago. These things cannot go any lower.

The wealth and power of China’s middle class might not have increased as that of the oligarchy and crony capitalists, but their knowledge and skills have increased tremendously thanks to their integration into the global workforce and new sources of information online. I don’t see any skill gap between China’s young professionals and their Western peers, yes sometimes they don’t seem very creative, but it’s usually due to the environment rather than their lack of creativity. Precisely because I observe how China’s middle class struggled in an extremely extractive economic system in the past several years, I’m optimistic about their ability to adapt to the tough years ahead and make things better.

 

Shanzhai State of Mind

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The literal meaning of Shanzhai (山寨) in Chinese is “stockade village on the mountain”, many factories of Shanzhai products indeed started as small underground workshops in marginalized areas. But Shanzhai has evolved from the synonym of low quality copycat to a mode of production so efficient that even the global tech giants have to take it seriously. Culturally Shanzhai is no longer just a symbol of the inferior and laughable, it often refers to anti-establishment parody, creative remix, sometimes even the “Ugly Duckling”.

Recently I came across an article reporting that the best selling phone in India is actually a Chinese Shanzhai brand called GFIVE (基伍). I had no idea that the “stockade village on the mountain” has gone so global! According to this article, in 2010 GFIVE has a 21% market share in India, selling around 35million phones a year. The company that has the second largest market share in India is Nokia, but it only has 13%.

One of GFIVE’s biggest hits in India and in the Middle East is a phone that features super-sized speakers. I was quite impressed by the story of how Mr. Zhang Wenxue’s (张文学), the founder of GFIVE, came up with this idea of “phone+large speakers”, no matter it is true or not. According to Zhang, when he was doing research in Dubai, he joined the local’s barbecue parties in the desert, but he observed there was no good device that can play music for the parties in the desert where an electricity outlet is hard to find. That was where Zhang got his inspiration. GFIVE is a good example of Shanzhai manufacturers, who are known for their quick response to local demands and the diverse line-up of their products. But this story also reminded me that the Shanzhai phone is more a toy than a tool for its users.

Some of my lawyer friends still use Nokia and Blackberry because they need to make calls and check emails. But for the working class young people I interviewed, phones are more often used for text messages and QQ. Besides, the mobile phone is probably the only toy that they can afford to carry and play in their busy and fluid lives. They also want to appear cool and fun in front of their friends, that is why phones like the following have became legends:


I know such phones seem a little silly, but their fans are certainly aware of it. These phones are called jiong/囧 phones: phones that cause “mixed feeling” in people. And in reviews they are often associated with the comic style of Stephen Chou （周星驰), the king of parody and spoof in Chinese cinema.

Certainly not all the irony of Shanzhai phones is intentional. In those wicked TV commercials for Shanzhai phones, sellers are seriously trying to mislead people when they throw the phone hard onto the ground or drive trucks over it to prove its tenacity.  But the whole trample-your-phone gig is now a favorite move in all the theaters of the absurd online and offline.

The Shanzhai producers often confuse originality with ever more excessive functions, like cameras, flashlights, multiple batteries or sim cards, but when this excess is pushed to such an extreme, it is again great material for humor. Look at these fictional Shanzhai phones that netizens made up:

The term Shanzhai is used to describe not only products but also cultural content. Now parodies, spoofs and mischiefs are also called Shanzhai. Some manufacturers have already realized that such cultural association is actually a good way to distinguish themselves, which even give them some edge over the established brands. So here is a Shanzhai phone’s ad slogan:”You have to sell your kidney to get an iPhone? You can get our phone by being a prostitute just once“. (Referring to the true story that a young man sold his kidney to buy an iPhone. Being a prostitute? For each set of sexual service, sex workers in China typically earn 500 yuan, the price of many Shanzhai phones).

Shanzhai, stockade village on the mountain, actually has another layer of meaning in Chinese literature. It is where the heroic outlaws in ancient China lived, where the Chinese “Robin Hoods” had their adventure and fun. I know I must be over-romanticizing the culture of Shanzhai. But I am in the Shanzhai state of mind right now, I cannot help fancying a phone that can run Symbian, Windows, IOS, android and porn all at the same time!

 

Red Hacker Alliance and Chinese Nationalism in the Documentary “China: Triumph and Turmoil”

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In the documentary China: Triumph and Turmoil, just aired in UK on Channel 4, Niall Ferguson stated that the Internet and China’s integration into global economy didn’t really spread democratic values in China, instead, they facilitated a growing “unofficial nationalism”, particularly among young Chinese. The prime example of nationalist youth in this documentary is a young man from the red hacker alliance, who claimed that they attacked the websites of anti-Chinese institutions.

Ferguson says, “It is one of our comforting and enduring myths that as China becomes more modern and sophisticated, more like us, it will come to adopt our values. I’m not sure it’s going to be like that. [Chinese students during the Lhasa riots in 2008] were very hostile to the criticism of the Chinese government. The key insight for me is that rather than pro-democracy feelings increasing as China grows economically, it is a radical, shrill nationalism that is emerging. There is an enthusiastic embrace of the economic benefits of the market but resentment of Western cultural hegemony. The attitude is: if we make it economically, we don’t have to kowtow to you culturally.”

There is plenty of China-phobia in the West right now and Ferguson’s discussion played right into it. In another interview, he even talked about the troubling parallel between today’s China and Germany before WWI, on the ground that both had “rapid economic growth, self-confidence and increasingly a rather shrill nationalism”.

I have been studying nationalism in China for years, and like Ferguson, I found the nationalist sentiment among young people very unnerving. But Ferguson certainly exaggerated the power and social influence of radical nationalists in China, maybe just to make his documentary more sensational.

Yes it is true that there are some young people who are forming online communities that circulate xenophobic discourses, some even organized hacker attacks, but there are also many Chinese NGOs and individuals who are using the Internet to initiate cross-cultural dialogues.

It is also true that the government is relying on nationalism as a main source of legitimacy, but some top leaders are aware of the danger that radical nationalism could destabilize Chinese society and ruin China’s relationship with the International community. That is why one of the most influential nationalist website, Utopia/乌有之乡, was shut down recently for its speeches that defend the Culture Revolution and criticize the government for being too soft in China’s disputes with Asian neighbors over resources in South China Sea.

Also, the power elites are too invested in the current system of state capitalism, which is dependent on the global market, that it will not risk a show-down with the West. Many of our leaders, including the recently indicted Bo Xilai, have been storing their wealth in the US, and their family members are already US citizens. Are there such things in Germany a hundred years ago?

Many of the nationalist young Chinese, despite their resistance to so called Western values, fully embraced individualism and consumerism. I interviewed some leaders in the nationalist community, and I noticed that they are very fond of iPhones and LV bags, and they are even hoping to use the money they made from publishing nationalistic books to emigrate to the West.

However, nationalism has indeed become the main obstacle for domestic reform. It has worked well as a justification for the current status quo and local injustice. For example, nationalism has been used to justify internet censorship on the ground of national sovereignty in the cyberspace; and it was used to defuse media exposure of social problems, with investigative journalists being labeled “traitors” and “guides of Western imperialists”.

Overall, I believe Chinese nationalism is a bigger threat to the democratization of China than to global stability. Few nationalists in China are actually shouting “let’s conquer the world”, but many are telling the repressed in China that “you don’t need those Western values such as democracy, freedom of speech, equality or human rights.