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Which path will China take?

Published: 19 Oct. 2014, 22:03

China recently faced two significant events simultaneously. One was a democratization movement known as the Umbrella Revolution in Hong Kong, and the other was a Chinese company’s purchase of the luxurious Waldorf-Astoria hotel in New York.

If the Umbrella Revolution would spread to Macau and then to mainland China, what would happen? Western media presented wishful predictions that China would be split. The rightist Wall Street Journal actually reported that China was fearful that the Hong Kong situation would bring about a chain reaction in other parts of the country. It appeared to believe that the democracy movement would fuel nationalism in Tibet and court Uighur violence. But it seems that the Western world is missing the joyful memory of the rapid weakening of the Soviet Union before it dissolved in the 1990s.

By contrast, China’s purchase of the Waldorf-Astoria in New York was symbolic that economic hegemony is being transferred from the United States to China. The first was perhaps an omen of a political crisis for China; the second was the rise of the Chinese economy.

Is China facing a crisis or is it sailing peacefully toward Pax Sinica?

If such a pessimistic interpretation is right, the Umbrella Revolution of China is not something that can be overlooked. Last year, the Chinese market comprised 26.1 percent of Korea’s exports of $559 billion. The United States, Japan, Hong Kong and Singapore followed with 11.1 percent, 6.1 percent, 4.8 percent and 3.9 percent, respectively. But the sum of the four is still short of China’s share. It is easy to imagine what will happen to the Korean economy when China collapses.

So, how should we interpret the two contradictory signals? In order to accurately understand them, we must take into account China’s unique situation. A simple example is the relationship between political democracy and economic development.

The Fuqua School of Business at Duke University has in its diversity statement: “The Fuqua School of Business appreciates and values differences inherent within our community. As an organization, we are committed to building and sustaining an environment conducive to capitalizing on the diversity within our community as a source of intellectual, personal and professional growth, and innovation.”

As promoted by Austrian economist Joseph Alois Schumpeter, the power behind economic growth is innovation through creative destruction.

Where can we find innovation? Scholars from Europe and America strongly believe that it comes from diversity. And there is various research that proves it.

But what about China, which does not even give its people the freedom to move residences? With such a suffocating grip on society, there is no possibility for creative innovation, based on Western belief. One of the strongest arguments that predicted China’s fall was the lack of diversity. And yet, reality progressed in the opposite direction. Since 2011, China filed the most patents for three consecutive years. Last year alone, China registered 400,000 patents, far more than Japan at 250,000 and the 180,000 for the United States.

Xiaomi, which introduced the low-priced mobile phone, was ranked third on the 2014 list of most creative companies by Fast Company magazine. China’s Internet search engine Baidu and online shopping mall Alibaba are also known as world-class, innovative companies.

How did this happen?

It’s because the Chinese system, where almost perfect freedom was guaranteed in the economic and industrial fields without a political democracy, worked successfully. For the Western world, which is used to Soviet-style Communism, a system in which politics is blocked but the economy is open is probably hard to imagine or understand.

Because of the lack of cultural understanding and the subsequent optical illusion, the argument for China’s fall has spread like a ghost over the past 30 years ago. It reached its peak when American historian Francis Fukuyama published “The End of History and the Last Man” in 1992 in the aftermath of the fall of the Soviet Union.

Declaring a complete victory for democracy, he predicted that all countries, including China, would have to follow suit. Since then, however, China has managed to maintain its single-party state system while keeping high-speed annual growth at an average of 8 to 10 percent.

As China managed to stay successful despite its internal contradictions, arguments were presented that it would eventually be divided. Analysts said minority groups, including Tibetans and the Uighur population, would rise and that China would be divided. Scholars with intrinsic approaches, however, say that division is also an unrealistic prediction. Even if the Communist Party is overthrown by a democracy movement, there is almost no possibility that China will be split, they say.

The biggest driving force behind the democracy movement is the Han Chinese, and they don’t want the country to be divided. Although 60 percent of China’s territory is occupied by minorities, they only comprise 8 percent of China’s population. After the Communist regime fell in the Soviet Union, Russians only comprised 70 percent.

Even if Hong Kong’s Umbrella Revolution spreads to the mainland, there is little chance that China will divide.

When the Western world looks at China, they often overlook its cultural background and insist on their framework of analysis. In Korea, many domestic experts and scholars studied in the West. If they cannot escape the rigid framework of Westernized thinking, they could make a critical misjudgment, and they must remember that at all times.

JoongAng Ilbo, Oct. 17, Page 32

*The author is a senior writer on international affairs at the JoongAng Ilbo.

by Nam Jeong-ho