Government Control Over China’s Economy

FILM, MANCHURIAN CANDIDATE:

Allow me to introduce our American visitors —

PAUL SOLMAN:

When I was growing up, the monomaniacal Red Chinese were Hollywood's baddest actors.

FILM:

I must ask you to forgive their somewhat lackadaisical manners, but I have conditioned them, or brainwashed them.

PAUL SOLMAN:

In real life, Chinese Communism saved its greatest abuse for its own people. This was the Cultural Revolution of the '60s and '70s, but as recently as 1989 a protest against government repression and corruption was brutally crushed, leaving a thousand or more dead in Beijing's Tiananmen Square.

And yet on the surface, today's China looks about as menacing as a suburban shopping mall.

Behind the scenes, however, there still lurks Big Sibling.

As others regularly document, China remains, in many ways, a police state. As for our own experience, we were forced to hire government minders to approve and accompany every shoot: Very friendly; very present.

Our Internet access and e-mails were monitored. In our hotel, a CNN report about the Microsoft Network censoring Chinese bloggers was – censored — or at least, the TV went blank.

And just last month China ordered that all Internet news sites must be "directed toward serving the people and socialism."

At Tsinghua University the campus intranet is censored.

PAUL SOLMAN (to bystander):

Can you find out anything you want on the Internet?

PAUL SOLMAN:

And we ourselves were nearly censored, when we tried to ask about such restrictions without a minder.

BYSTANDER:

No, why you ask these questions?

PAUL SOLMAN:

We pressed on — but so did our bystander.

Someone reported us to the authorities and, warned not to stray, we called off a shoot with a pair of student journalists, mainly for fear of getting them into trouble.

PAUL SOLMAN:

But what does a culture of repression have to do with economics? Well, we Westerners assume that political freedom and technological innovation go hand in hand. And indeed, innovation is essential. For China to keep growing, it has to evolve into a more advanced economy; has to innovate because right now it relies almost entirely on exports, says MIT's Yasheng Huang.

YASHENG HUANG:

Japan is usually viewed as a country obsessed with export and foreign trade; the ratio is about 20 percent. The U.S. is a free trading nation; the ratio is about 20 percent. China has 70 percent of its GDP tied up in foreign trade.

PAUL SOLMAN:

Trade based on cheap manufacturing, cheap labor. But manufacturing is becoming more and more mechanized — in China like everywhere else. In fact, between 1995 and 2002, China lost 15 million manufacturing jobs, compared with a loss of 2 million manufacturing jobs in the U.S.

So who makes and designs the machines; comes up with the new products; the intellectual property? Who innovates? Not China. Not yet, anyway. Most factories here are foreign investments, using foreign technology, making foreign-branded goods — goods not really "made in China," — try to think of even one Chinese brand — but "processed in China."

Yes, it's impressive, says Professor Huang —

YASHENG HUANG:

But we are not talking about the kind of economic success that we saw in Korea and in Japan.

PAUL SOLMAN:

The spirit of innovation is instilled at an early age, says the head of China's biggest microchip company, which built its own more Western school for its employees. Richard Cheng.

RICHARD CHENG:

Chinese students, they work hard. But the, their own educating system pretty much emphasize memorizing things, and U.S. society from kindergarten already encourages to be innovative, to be, independent.

PAUL SOLMAN:

Jim McGregor, a Wall Street Journal reporter turned businessman who's worked in China for twenty years, says the classroom control never ends.

JIM McGREGOR:

It's hard to innovate and create in a society that controls the media, controls, controls thought in many ways at universities. Chinese people perform best out of China when it comes to research and development.

PAUL SOLMAN:

And those who stay in China to do R&D, like these employees at the company developing Tsinghua University's technology seem oblivious — or defensive — about thought control.

I told them about watching the censored CNN report:

PAUL SOLMAN:

So the story started and suddenly the TV was blank.

EMPLOYEE:

So your view is?

PAUL SOLMAN:

That somebody stopped the story — EMPLOYEE: Not necessarily; might be a technical problem from your side.

PAUL SOLMAN:

Well it was, somebody came —

EMPLOYEE:

This is a report you got only from CNN journalist, so the view might not be objective enough. In fact, China is much more open than you can imagine. We are doing fine and we are making progress every single day.

PAUL SOLMAN:

Wanting to ask about the effects of repression, I wound up debating its very existence. But why do young Chinese still look the other way?

DAVID MOSER:

Sometimes the people who are the youngest, the most well-educated, the most Internet savvy are the ones who are least likely to say anything against the government.

PAUL SOLMAN:

American David Moser is something of a celebrity in China, appearing on TV as a commentator, a talent show judge and occasionally, Confucius.

DAVID MOSER:

Remember another one of my famous sayings —

PAUL SOLMAN:

But it's only when he's off Chinese TV, and on PBS, that Moser can criticize uncritical Confucian authority worship, which also leads to a second economic problem he says: unchecked corruption.

DAVID MOSER:

One of the biggest problems with the evolving Chinese economy is corruption and that if you don't have a free flow of information you don't have a free press, you really cannot address the issue of corruption, right. That's one thing.

PAUL SOLMAN:

Right, because there's nobody to blow the whistle.

DAVID MOSER:

There's nobody to blow the whistle, right. And what you have now is a situation where a very small group of people in the government are making very, very massive and important economic decisions with virtually no public forum for discussion or for dissent.

PAUL SOLMAN:

For example, says Moser —

DAVID MOSER:

You've had massive social disruption as the one-child policy creates this generation of only children. You have all these parents and grandparents retiring that no longer have the, the guaranteed cradle-to-grave benefits they were suppose to get under, under Marxism. And yet, you don't have the public forum in which this stuff can be talked about.

PAUL SOLMAN:

And you can't raise that when you're on one of your shows? You can't kind of work that in, in some clever comedic way?

DAVID MOSER:

Let's see. How can I put this? No. (laugh)

PAUL SOLMAN:

So repression allows for corruption, for poor economic policy-making, and, it stultifies innovation. So why do cosmopolitan young Chinese allow it?

DAVID MOSER:

They've made a bargain with the devil here because they, the young people are the ones who are most set up to benefit from the economic modernization itself, right?

It's a little distressing to talk with them sometimes, especially during the recent anniversary of the Tiananmen Square Massacre. A lot of them are not really aware that, exactly what happened and they don't care. A lot of them really don't care.

HANDEL LEE:

A friend of mine described it as the anaconda in the chandelier.

PAUL SOLMAN:

Handel Lee is a very successful Chinese-American businessman who's opening a new nightclub in Beijing.

HANDEL LEE:

The anaconda may never come out, but it's up there. Sometimes you can feel it, and a lot of people say, oh, it's a communist. It's not communist. It's Chinese. It's authoritarianism that's very, very Chinese or Confucian.

PAUL SOLMAN:

Confucian, I thought Confucianism was a good influence on societies like China, Asian societies, with respect for the elders, hard work —

HANDEL LEE:

Well in Confucianism, you don't question authority. I mean, that's just unheard of in a Chinese household. Governments demand that same sort of respect.

PAUL SOLMAN:

So where is this unique blend of Communist Party dictatorship, Confucian authoritarianism and a free market free-for-all headed? Pessimists like Labor leader Han Dongfang fear that continuing economic growth simply sustain Communist Party oppression.

HAN DONGFANG:

We're basically facing the worst marriage in human history which is capitalist and communist; and the workers on one hand they have to deal with this evil critical power that make them cannot open their mouth; on the other hand you face this huge economical giant which is running around the globe.

PAUL SOLMAN:

But optimists like Liu Chuanzhi, who managed the Chinese buyout of IBM's personal computer business, claim that as the economics develops, so will the politics.

LIU CHUANZHI:

In China we have to first to start with the economic one and I think with that kind of person it will be reform in the political area soon. At the very beginning, it is up to one person, the leader to use his authority and his power and control the situation, but later on, when everything is okay, there's no need for the leader to do everything.

PAUL SOLMAN:

There remains a third possibility, however, one that we in the U.S. might find especially hard to swallow: that there won't be political reform in China anytime soon. Yet economic growth will continue, even to the next, more advanced stage of development, in which case, some might read a worrisome moral into the story of China's economic success: Perhaps growth can co-exist with corruption and soft authoritarianism. Maybe successful economic decisions can be made by a few at the top; and just possibly, maybe there can be innovation without representation.

DIGITAL TV AND THE WORLD reporter Kim Perry contributed to this report.

DIGITAL TV AND THE WORLD is a special project of the Graduate School of Journalism, University of California, Berkeley.

To view the full reports from the DIGITAL TV AND THE WORLD series see "Report from Shanghai" on the washingtonpost.com