A few days ago, an assistant working for the Wall Street Journal in Hong Kong emailed me an inquiry, asking for my thoughts on the Weng’an story. They were working on a story about the significance of citizen bloggers like Zola, and were interested in my input.
Unfortunately, the version they finally went to press with is simply wrong. I usually am more politic on this blog, but I feel entitled to judge this article, especially after they asked me for my opinion. The title and introductory paragraph from the article tell you all you really need to know about the rest:
Chinese Bloggers Score a Victory Against the Government
Firings Indicate Growing Power; Exploits of ‘Zola’
Aggressive Chinese bloggers make an art of challenging Chinese government propaganda. This week, they can claim a victory.
…
That change in stance appears to be a direct result of pressure brought by journalists and Chinese bloggers such as Zhou Shuguang, a self-styled “personal news station,” who didn’t allow the issue to drop, posting to the Internet unofficial reports along with photos and pleas from the family of the dead youth.
.. what follows is an article focused on the exploits of Zola.
My thoughts on the Weng’an aren’t a secret; we’ve been discussing these topics for the past week. I thought the government had seriously slipped up in letting local Guizhou media/conservative editors dictate the media coverage, first. This early coverage provided a very sanitized view of the story, in which the rioters were described as either organized criminals or their victims, while local officials were diligently trying to clean up and bring the criminals to justice.
But I thought there were also signs of great progress; a government open to international journalists, that paid attention to online comments, and that tried to influence media not through control, but by providing information as quickly as possible. And the real blogger of note here is not Zola (while I appreciate his scanned petitions, which we translated here)… but rather wuhanpin, who was able to tell us Shi Zongyuan was reading from internet commentary and condemning local officials on the very first day he was in Weng’an. There was no change of heart from Shi, only in the official media portrayal of Shi.
Zola has played a critical role in past incidents, and arguably “aggressive Chinese bloggers” have forced China into making the reforms we’re seeing today. But he’s not the story in Weng’an; his presence didn’t make a difference to the final outcome of this story. Phoenix TV and several HK stations, the Associated Press, Southern Metropolis, Caijing all had reporters on the ground nosing around, writing candid stories and interviews. Frankly, I think that should be the story. Painting this as a battle of “bloggers versus government” is simply wrong and misleading.
Even though the Wall Street Journal didn’t particular agree with my opinions, this “aggressive Chinese blogger” will still share his take:
I think it’s a very interesting story. There are two aspects of this that I think are interesting.
First, If you can read Chinese, you might be interested in David Peng’s take here: http://david.pengfamily.net/?p=418
If you can’t, I’ll give you a brief summary. He talks about this being the “Hu Jintao model” for dealing with crisis. The primary steps are:
第一时间发布权威信息，提高时效性，增加透明度，牢牢掌握新闻宣传工作的主动权“。
– immediately issue authoritative information,
– raise responsiveness,
– increase transparency,
– and by doing all of these things, firmly assert the government’s role as being the primary distributor of news and views. (Sort of an inadequate translation… but you probably get the idea.)
I’d summarize this as just saying that Hu Jintao’s government has a better understanding of the modern “news cycle” than ever before.
If you take a look at what happened in the early days of this incident, the usual activist groups in Hong Kong quickly jumped out with press releases. The Falun Gong-associated newspapers overseas (Epoch Times) followed up with their usual, ahem, urgency on stories such as these. The *tone* of these stories quickly dominated both the Chinese and Western media: girl raped/killed by government-affiliated thugs, innocent relatives abused, and finally, mass uprising.
We now know these versions are at best slightly exaggerated, and at worst outright lies. But in the past, these stories would’ve been left unchallenged for… weeks? maybe even months… as the government struggled to come up with a sanitized, “official” story. And you can’t wait weeks or months; the public (both inside and outside of China) doesn’t have a memory that long.
So, within hours of the story breaking, Xinhua was asserting itself as an authoritative source. Even though the first paragraphs were sparse on detail (and probably generated by the Weng’an county propaganda office), they at least made it clear Beijing had something to say on the issue. And one day after that, we had early reports about Shi Zongyuan arriving in Weng’an. And even as other press impressively were given latitude to investigate the story (including Zola/AP/Hong Kong reporters), Beijing arranged a comprehensive press conference. etc, etc, etc. Credible or not, the sheer volume of details and candid talk from the press conference means nothing Zola or the Epoch Times can come up with would completely drown them out.
There’s been no room left for any *group* outside of Beijing to “control” the tone of this conversation. We are still left to debate the facts of the case, and many are still skeptical of the government’s version on the details… but at least Beijing is now firmly inserted into the story.
I think the second “interesting aspect” is what we talked about on our blog; I’m speaking of the very candid, very harsh analysis of the local government developed after about 3-4 days after the event. In doing so, it’s making clear that “saving face” is no longer the only priority, that “official protecting official” is no longer the standard way of doing business.
I’m still critical of the timing; I believe for the state media to be credible, it has to reflect the attitude of the masses… which right now tends to be skeptical of local governments first, and “evil forces” second. So, I think even the initial story from Xinhua should have taken a different tone: “How could this have happened? How did local government fail so completely that the people were so angry?”
As far as Zola goes… mmm, I don’t know. I think his effectiveness has been somewhat compromised by the government’s new openness. In one of his blog entries, he talks about going back to somewhere (Chengdu?) after leaving Weng’an, and meeting with reporters from Southern Metropolis and Caijing over dinner. They asked him for the phone number for the victim’s father; he wasn’t too anxious to share it (not that he refused)… and the reporters just shrugged and said, that’s okay, they have other ways of getting it.
The petition that he scanned was actually mailed (I assume by HK groups?) to a number of different sources, apparently. Fang Zhouzi, who is based in the US, talks on his New Threads site about having received an identical copy days before Zola published it.
I hope that helps! Thanks for reading, and always let me know if I or anyone else on the blog can be of any service.
…
Just realized you asked a question that I didn’t answer about China’s non-mainstream media.
Well, the best example (which I hope you’ll mention) is the private blog report that Shi Zongyuan read straight from harshly critical Internet comments as he met with local officials in Weng’an. There’s a photo of him holding a piece of paper that looks like its printed straight from Internet Explorer.
The tone of (surprisingly open) online discussions at Xinhua and Strong Country was very, very negative. Probably running 99%-1% in favor of those who didn’t remotely believe the “government version” (in actuality the county verson).
Coming these two facts, I’d assume this might have pushed the government in being harsher towards the county government.
Okay, I got that out of my system. This is probably the last post I’ll write on the Weng’an topic.
Charles Liu says
What ever happened to the initial accusation that the girl was raped and young men implicated had tie with local officials? Wasn’t the riot caused by these rumors?
WSJ could be right – if the bloggers were responsible for perpetuating the rumors, they definitely scored against the government.
Netizen says
To be frank, the standing of Western media foreign correspondents has fallen like a stone. I see many factors doubting their reporting. One is bias. Their biggest audience is at their home countries and so, tailed to its tasete, values and national interest. Second, laziness. They don’t dig deep enough. Third, their knowledge can be paper thin. Finally, they often have preconceived ideas.
In this case, I think the reporter preconceived what the story was and facts were no barrier to his preconception. WSJ readers don’t China and cann’t judge for themself, they would take it all in without knowing some of it might be wrong.
Charles Liu says
http://www.zonaeuropa.com/20080701_1.htm
And check out the photos in Roland’s blog on Weng’an. I’m sorry but the Chinese people are not ready for “democracy” – whatever that is. Rioting and torching the police station is not “freedom” or “democracy” in any ways we in the West would prescribe for ourselves.
Even if there’s been a lot of pent up anger and dispute over land use rights, eminent domain abuse (of course western media will never use such polite terms with China) this clearly shows the lack of necessary citizenship.
All this on a roadside rumor?
Netizen says
I think it’s politically incorrect to say Chinese are not ready for democracy. The correct way of phrasing it is that the Chinese should proceed with democracy in a gradualist fashion. I recommend a gradualist approach.
FOARP says
@Netizen – My understanding is that the phrase ‘politically correct’ refers only to that which is convenient for politicians to believe, and not to what is and isn’t actually true. If you believe that China is ready for democracy then say so, if not, then say so also – recommending a gradualist approach which only delivers democracy at some distant point in the future when we are all either going to be dead or in our dotage is the same as saying that China is ‘not ready’.
MutantJedi says
How about “ready to continue a gradualist approach”?
Steven says
All the information coming from many sources proved that government did nothing wrong and did not hide any information in this incident. So far, the evidences show that there was no rape and none of the kids involved in the incident had relationships with local officials. All the kids came from farmers’ families.
But the roits proved that the tension between the local government and people as the provincial officials acknowldged. That’s why almost all top officials in the county were removed from their positions.
up to this minute, I only see the victories from both people and the government. People got corrupted officials removed and government got credit since there was no corruption in this particular incident and the rumors from the internet were falsified.
Buxi says
@Steven,
I agree with you completely. Great summary, the people, the bloggers, and the government should all be considered victors here.
Steven Pomfret at the Washington Post said on his on July 3rd:
Dream on!? Pretty cocky, and fortunately, pretty wrong.
Any chance the Washington Post will show more sophistication in the future on distinguishing between the local and central governments…? I’d like to hope so… but maybe the answer there is, dream on, my Chinese blogging friends.
Charles Liu says
Has anyone seen any blogs initially perpetuated the rumors correcting themselves? I wouldn’t call it “falsified”, but New Media can be very irresponsible.
If that’s what the Chinese should rely on may God have mercy on us all. I’d rather the Chinese copy American media that reports pro-Iraq invasion news, help the regime form public opinion on “official enemies” like North Korea, Iran, China…
Buxi says
@Charles,
The rumors weren’t really perpetuated by any specific blog, in my opinion. I also don’t believe the blogs were responsible for the riots.
Although blogs are more and more important in China, the vast majority of Chinese (80%+) are still not connected. And in a place like Guizhou Weng’an, safe to say probably 90%+ of local residents have never been online. Instead, rumors spread the old fashioned way… word of mouth. And the fact that these rumors were so believable to thousands of locals shows why the local government leadership should be replaced. They’ve utterly failed.
And today, just about Chinese forum out there is still debating the Weng’an issue.
However, I do agree with you that this is more evidence that democracy, one-man-one-vote in places like Weng’an would be a nightmare. Right now, the locals are angry at the government. To be honest, I’m okay with that. With democracy, one faction of locals will become angry at another faction of locals. The resulting rumors, lies, electoral violence, and general ugliness will be right out of sub-saharan Africa.
JD says
The WSJ got it right, though China is not “open to foreign journalists” as Buxi claims. There are numerous reports at present at how China is clamping down despite promises made to open up. For the authorities, it seems the truth is dangerous. It’s nothing more than a short-sighted and backwards approach.
The Wengan riots prove nothing about democracy but do demonstrate that the present system is unresponsive. The powerful can not expect to have immunity for heinous crimes. If the people are smart enough to understand that, they’re smart enough to vote. Let Wengan choose its leaders, they can’t do a worse job than the status quo and wouldn’t have to riot for change and justice.
See FEER: “China’s Guerrilla War for the Web” for an explanation on why online discussions of China are often so misinformative and twisted towards the party line. The WSJ shows that, like Wengan, the citizens don’t buy it.
Paul Denlinger says
I have not been following all the details of the case so I will qualify my comments.
However, the administration of Hu Jintao is keenly aware that the greatest threat to CCP rule comes not from outside threats but from internal corruption, which would eventually turn public opinion against the center if it is not brought into check. In this scenario, the worst Beijing can do is to protect corrupt local officials who have refused to play by the new rules. When this happens, Beijing has to come down hard to clean up the mess, and restore faith in the central government as a responsive and clean government.
If bloggers play any role, it’s a relatively minor role to create more awareness about an incident. Then, the central government media co-opts the issue, pushing the bloggers aside. The bloggers are the pilot fish for the Beijing shark.
Everyone benefits except for the corrupt officials who are removed from office. In a way, this gives Beijing an excellent chance to perform some needed housecleaning, and removing cancers within its own body.
Now what’s so hard to understand about that?
Hemulen says
@Buxi
I appreciate that you may have your well-informed insights into the riots, but I feel that you are unnecessarily harsh here. The WSJ is actually giving the Chinese blogosphere quite good coverage – in contrast to quite negative reporting a while ago. Reporters do ask around for advice when they write a story, but at the end of the day they make their own judgement call which story to write and whom to believe.
Now, let’s say that I’m a WSJ journalist and consult two bloggers on the riots. One of them is a well-educated gentleman in the Bay Area who runs a articulate blog on things Chinese and has collated and translated some interesting coverage on riots. The other is a maverick blogger in southern China who publishes extensive commentary on on the riots and actually travels to the site. Now faced with a deadline and limited space, I have to make some tough editorial decisions and I may have to chose between the two of them. Who should I believe? To whom should I give most coverage? I don’t think any journalist anywhere in the world would hesitate.
In the same way, you unnecessarily harsh on Pomfret, who speaks fluent Chinese and has covered China for two decades. You may not agree with everything he writes, but he is hardly your typical ignorant journalist. You’ve got to cut the man some slack before you start finding faults…
Now, a sympathetic reading of the the paragraph you quoted actually shows that Pomfret is well aware of the difference between central and local governments, he just feels that some people have misplaced trust in the central government. Perhaps you don’t agree with him, but you can’t just say that he is “wrong”, that is wide of the mark.
werew says
@JD
I can’t read it. It requires subscription. Ignoring the extremely critical rightist tendencies expressed in all their articles, I already have many problems with the mere assumption that “50 cents party” is really sponsored by the CCP. Does that mean all posts that express a rightist view means that they are made by “internet spies”, bent on splitting China, supported by anti-chinese imperial forces? Most posts made by “50 cents party” could be just people with leftist view or sympathizers to CCP. These identifications are really the sad result of an overpopulated forum with an atmosphere devoid of intelligent debate.
Also, if you actually believe that online discussions of China are twisted towards the party line, then you definitely have the wrong impression and should stop reading so many “china threat” or “evil china” publications and start going on Chinese forums. The views there are definitely not the views CCP wanted. The mainland forums are sadly full of extremists. They are either CCP is the greatest or CCP is the most evil in the universe.
tommydickfingers says
so the fact fact that chinese rioted against a corrupt, unelected and unaccountable local government means they are not ready for democracy? like those pesky east germans knocking down the berlin wall. so not ready to be unified.
or am I missing something
matt little says
hmmm, this is a tangent, but the comment on the Epoch Times is unjustified from my point of view. Of course, I could be biased, because I do work there 😉 But as far as reporting on China goes, our track record is pretty impressive. We broke SARS and the coverup, we broke the officials suppressing warnings about the Sichuan earthquake, and that cover up, and we are quite frequently the only paper that uncovers the story behind the Chinese regime’s official line (which is notoriously untrustworthy). Yes, we are quick to pounce on official misconduct, but we are talking about a regime responsible for the deaths of some 65-80 million of its own citizens.
Netizen says
This blog is in trouble. Once you have pesky Fa Lungongers clinging to you. Your site will degenerate into total irrational comments and misinformation by these self absorbed members.
Buxi says
@Hemulen,
I appreciate your comments. My intention wasn’t to be harsh, and I’m not remotely upset that Zola got (much deserved in general) attention… hell, my translation of the family’s petition was based on the documents that HE made available. But I fundamentally disagree with the gist of the article, and I thought I gave very good explanations for my point of view. I would’ve understood an article that at least hinted at some of my basic conclusions, and I just don’t see that here. I think they completely missed the point.
On Pomfret, all I did was call him wrong… because, well, he was. He thought the central government + provincial government would cover things up, and those hoping for anything else should “dream on”. He was wrong; not ignorant or insane or out-of-touch, he was simply wrong.
You know, there’s nothing with being wrong occasionally… and I’m bothered by anyone claiming to have a single universal theory explaining everything China-related. Anyone who makes predictions about China with any degree of cockiness is likely full of *something*, at least himself.
Here’s what I said all the way back on June 30th:
JD responded in one of the first comments by saying that I have an “oddly misplaced confidence in Xinhua”. He could’ve been right, my track record isn’t anywhere near 100%. But in this case, I was right, I called the trend correctly.
If I had been wrong, I don’t see it as harsh for someone else to point out my prediction (phrased in a very soft way as a “belief”) as being overly optimistic.
EugeneZ says
Hey. This blog is starting to get some visibility ! Good work! This article below also referred to this site. See the link below.
http://www.huffingtonpost.com/jeffrey-wasserstrom-and-kate-merkelhess/digital-china-ten-things_b_111302.html
Unfortunately they missed the link, and when you type “blog for China” on Google toolbar, this site does not show up on the first page.
This brings up a point about the branding of this site.
Buxi says
@EugeneZ,
Good deal, thanks for the link from the Huffington Post! The China Beat makes for good reading, and that “top 10 list” is part of the reason why. I would agree with basically everything they said from 1-10… not only agree, but they’d be my top 10 list, too.
As far as the attention we’re getting… we happen to be filling a niche. The people who build the only bridge across a wide river gets to charge a toll. (That’s not a Chinese saying; that’s just a metaphor I made up!) I hope we get to the day where we won’t need to exist, so I can a) be more productive at work, b) know that both sides of the ocean better understand each other. By the way, click in the “About” page above, and look at my new “belief”.
As far as the branding issue.. take it up with the management. 🙂
MutantJedi says
From where I am, Fool’s Mountain comes in position 6 for “blog for China” – that’s not too bad.
Sage Brennan says
@Paul Denlinger: your comments are dead-on, as always. Politics is local, as my fellow Masshole famously said. In China, this means that all local cadres are expendable, and the center must pay razor-sharp attention to the local situation. Getting to ground-level quickly, in this case, allowed Beijing to get the most sensitive politics under control early and also thereby manage the media situation.
Also, note that the “rumor-mongering” atmosphere on China’s Internet BBS (and more broadly, in mainstream media both Mainland and HK) is a reflection of the role that rumor plays in China’s everyday life. Long before there was the (I)nternet, a very sophisticated (i)nternet guided conventional wisdom in China.
Chinawatcher says
@Buxi, who said: “I hope we get to the day where we won’t need to exist, so I can a) be more productive at work, b) know that both sides of the ocean better understand each other…”
ESWN’s Roland Soong too frequently says his blog probably doesn’t need to be around much longer. I think not. What Roland and you are doing in terms of “bringing China to the world” and helping others understand China is invaluable. I’d say it’s much more important than the day jobs that you both hold 🙂 I say this even though I don’t always agree with your views; but I’ve always enjoyed reading – and have gained immensely from – your perspective, and from those of others who comment here.
It’s a journey of a thousand miles, Buxi. Enjoy the ride. Don’t think of the end of the road so soon 🙂
JD says
Werew, interesting that you suggest the FEER is extremely-rightist. It may be true, I don’t know, but it has a recent and very interesting article characterizing China as a fascist state, so I guess the publication and Beijing can fight about who is more extreme. Unfortunately the fight is not fair as the FEER has been censored. http://www.feer.com/essays/2008/may/beijing-embraces-classical-fascism.
Yes, I do believe that propaganda plays a big role in communications, media, and information in China including on the internet. It’s not the product of “evil China” publications, but a simple statement of fact. Debate in China would be more reasonable and less biased if media freedom was respected and if private media were permitted. Why don’t you point me to a good example of an uncensored blog in China which has the “CCP is evil” view? I assume that if the authorities really found it objectionable they would block it, censor it, or shut it down.
Buxi, on Xinhua you missed the point. Xinhua is a propaganda agency, not a source of reasoned analysis and info, so there’s no point in relying on an explanation from Xinhua. Of course Xinhua will have a detailed analysis, though it has no value except that of fulfilling the agency’s main goal: supporting the party. Difficult to imagine an organization more biased than Xinhua – bias is its purpose.
Wahaha says
JD,
the link you provided :
http://www.feer.com/essays/2008/may/beijing-embraces-classical-fascism
That is one stupid article.
1) the comment “Recent events there, especially the mass rage in response to Western criticism, seem to confirm that theory.” is truely stupid, as the mass rage in last 3 months was by Chinese people, not by government.
2) The comment ” “endlessly summoned to emulate the greatness of its ancestors.” is another stupid comment.
Chinese government never said anything about how China will become a superpower, or on how China will regain its old glory.
3) Information control
The point made by this article showed the ignorance of the author about technology. With intenet, no way on earth Chinese government can control the information like the Italian dictator did. Chinese people in Shanghai may have trouble to know what really happened in Weng’an, but they have no trouble knowing what is going on globally.
JD says
Wahaha, it’s an interesting analysis in any case. Is China a fascist state? The melding of corporate and government interests and many other factors make it a plausible analysis. Of course, “fascism” is a loaded label and fascist systems of governance have a very poor historical record. In fact, there isn’t a worse model to follow.
One can only hope that China begins an intentional, structured move towards a democratic system based on the rule of law, respect for rights, a market economy, and a liberal media before it unintentionally morphs into a 21st century fascist state. I think everyone agrees, fascism is bad.
FOARP says
As I’ve asked before – what is the difference between the situation in China today and that of classic fascist states like Pinochet’s Chile or Franco’s Spain?
Wahaha says
FOARP,
I dont know much about Chile or Franco’s Spain, but it sounds ridiculous to me to compare today’s China to Hilter’s Germany, as government doesnt play any role in pushing for nationalism or idea of “big China”.
JD,
The 19th President of the United States, Rutherford B. Hayes, said once : “This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, and for corporations.”
Buxi says
I think the use of the term “fascist” doesn’t help forward the discussion, because it’s so loaded.
Like Wahaha, I’m not intimately familiar with the details of both countries. But frankly, at the highest levels, I think its very possible modern China is similar to Franco’s Spain or Pinochet’s Chile.
It’s certainly very similar to Jiang Jingguo’s Taiwan, Park Chung-hee’s South Korea, and Lee Kuan Yew’s Singapore. And to that I say… so? At least four of those five are doing very well today.
JD says
Wahaha, corporations are a good way to organize an economy. Of course, they require an appropriate legal/regulatory framework and separation from political structures. That’s not the situation in China right now.
Here’s a good article on nationalism http://www.cfr.org/publication/16079/nationalism_in_china.html, which includes this expert assessment “Lacking the procedural legitimacy accorded to democratically elected governments and facing the collapse of communist ideology, the CCP is increasingly dependent upon its nationalist credentials to rule”.
So I take it you’re against fascism and against virulent nationalism, if so I agree with you on both points.
Wahaha says
JD,
Without nationalist credentials, no government can rule long. and you should check is if it is the driving force in China. and it is certainly not.
Wahaha says
and corporations are good things for economy. but when the policy is made based on their requirement, it is no longer kind of democracy you are talking about.
If you claim that the policy in China is made for the good of elite in CCP, I dont see why policy in West is not made for a small group of elite.
JD says
That’s right, policy should focus on the framework that permits competition (which promotes an efficient economy) between commercial entities. Government authority shouldn’t be usurped by commercial interests, particularly monopoly interests, as a tool to make money. That’s institutional capture, the most harmful form of corruption.
For a market economy to function – if that is the aspiration – commercial/corporate mechanisms need to be separated from political/government ones. Of course, it’s a grey area and no country does it perfectly, but explicitly melding the two is a recipe for serious problems.
On nationalism, I hope it does not become the driving force. Mild nationalism is a good thing. If it’s a response to polarize the public in the face of controversy or instability however (we/them) it is a very high-risk approach.
Democracy helps ensure that an institutionalized elite don’t capture government. It’s not perfect, but there is a good degree of accountability and legitimacy.
Wahaha says
JD,
The current situation is exact the opposite of what you said.
The motgage crisis is cuz government refused to interfere into the money business. The economy you mentioned is run ” by default”, which led two economy crisis in 1990s. now it led to the economy crisis in America.
This kind of economy structure only works when foreign companys pose no danger to domestic economy. You will see the impact of current oil crisis on automobile industry in USA.
vadaga says
re: comment #15 above:
The Party School of the Central Committee of the CPC issued a report in February of this year which basically stated that China should reform its government to become more democratic or risk dangerous instability. Reuters did a report on it. The Chinese title of the original report is <>
vadaga says
攻坚：十七大后中国政治体制改革研究报告
Buxi says
@vadaga,
Thanks for bringing that to my/our attention. I’m a little embarrassed to say I’ve never read or heard of the report until now.
The English title is “Storming the Fortress: A Research Report on the Reform of China’s Political Institutions After the 17th Party Congress”. An English-language interview with the author is here
The premise of the book (as described here) is that China is in the midst of a 60 year reform process, started in 1979. 1979 through 2001 was the first phase, basic economic transition from planned economy to a market economy (ending with entry into the WTO, I assume). 2001-2020 is the second phase, the establishment of basic legal/political structures, continued economic development into a xiaokang/middle-class society. 2021-2040 is the last phase, actual democratic reform. This book analyzes how that third phase should/will happen.
Very interesting. The Reuters report is here. A brief quote:
JD says
Wahaha, you misunderstand both my post and the credit crisis. Regulation and laws should provide a strong framework for commercial entities to compete. It’s a valid question regarding the credit crisis whether the framework was sufficient.
In China’s case the division between government and commercial objectives is essentially non-existent and rule of law has yet to emerge. The framework is therefore very poor. That ensures corruption will remain a large and growing issue, and does little to promote competition which will provide a sustainable basis for an efficient, healthy economy (and promote technology development and adoption). Institutional capture is a major issue.
Personally, I don’t think national pride has anything to do with business, so seeing foreign companies as a “danger” is backwards. Better technology and know how is good, doesn’t matter where it’s from. Openness is therefore key, not nationality. The foreign bad/domestic good viewpoint is best expressed by autarky, a policy more akin to China’s past with regrettable results. If China wishes to reduce corruption and increase its technology level, your “foreign danger” policy is counterproductive.
perspectivehere says
@JD #38 You wrote,
“Personally, I don’t think national pride has anything to do with business, so seeing foreign companies as a “danger” is backwards. Better technology and know how is good, doesn’t matter where it’s from. Openness is therefore key, not nationality. The foreign bad/domestic good viewpoint is best expressed by autarky, a policy more akin to China’s past with regrettable results. If China wishes to reduce corruption and increase its technology level, your “foreign danger” policy is counterproductive.”
******
Actually, this is not the way the British government policies worked in the 18th century, or U.S. government policy in the 19th century.
British government policy under Walpole in 1721 was protectionist, encouraging exports and encouraging promotion of domestic technological industries. So was American policy, introduced by Alexander Hamilton, based on Walpole’s policies.
In “Bad Samaritans: the Guilty Secrets of Rich Nations & the Threat of Global Prosperity”, Ha-Joon Chang writes:
“The policies introduced by Walpole after 1721 were deliberately aimed at promoting manufacturing industries. Introducing the new law, Walpole stated,…’it is evident that nothing so much contributes to promote the public well-being as the exportation of manufactured goods and the importation of foreign raw material.’ Walpole’s 1721 legislation essentially aimed to protect British manufacturing industries from foreign competition, subsidize them and encourage them to export….These policies are strikingly similar to those used with such success by the ‘miracle’ economies of East Asia, such as Japan, Korea, and Taiwan after the Second World War. Polices that many believe, as I myself used to, to have been invented by Japanese policy-makers in the 1950’s – such as “duty drawbacks on inputs for exported manufactured products and the imposition of export product quality standards by the government – were actually early British inventions. Walpole’s protectionist policies remained in place for the next century, helping British manufacturing industries catch up with and then finally forge ahead of their counterparts on the continent.”
Other policies of Walpole included banning advanced manufacturing activities that it did not want developed in its colonies. For example, Walpole banned the construction of new rolling and slitting steel mills in America, forcing the Americans to specialise in low value-added pig and bar iron, rather than high value-added steel products.
However, by the beginning of the 19th century, with few exceptions, “British manufacturers were firmly established as the most efficient in the world….British manufacturers correctly perceived that free trade was now in their interest and started campaigning for it….In other word, Britain adopted free trade only when it had acquired a technological lead over its competitors ‘behind high and long-lasting tariff barriers’ as the eminent economic historian Paul Bairoch once put it. No wonder Friedrich List talked about ‘kicking away the ladder’.”
http://www.amazon.co.uk/Bad-Samaritans-Secrets-Nations-Prosperity/dp/1905211376
Some excerpts and reviews of Ha-Joon Chang’s work appears here.
http://www.tomhull.com/ocston/books/chang-bad.php
http://findarticles.com/p/articles/mi_qn4158/is_20070723/ai_n19387626
“However, just as children need to be nurtured before they can compete in high- productivity jobs, industries in developing countries should be sheltered from superior foreign producers before they “grow up”. They need to be given protection, subsidies, and other help while they master advanced technologies and build effective organisations.
This argument is known as the infant industry argument. What is little known is that it was first theorised by none other than the first finance minister (treasury secretary) of the United States – Alexander Hamilton, whose portrait adorns the $10 bill.
Initially few Americans were convinced by Hamilton’s argument. After all, Adam Smith, the father of economics, had already advised Americans against artificially developing manufacturing industries. However, over time people saw sense in Hamilton’s argument, and the US shifted to protectionism after the Anglo-American War of 1812. By the 1830s, its industrial tariff rate, at 40-50 per cent, was the highest in the world, and remained so until the Second World War. The US may have invented the theory of infant industry protection, but the practice had existed long before. The first big success story was, surprisingly, Britain – the supposed birthplace of free trade. In fact, Hamilton’s programme was in many ways a copy of Robert Walpole’s enormously successful 1721 industrial development programme, based on high (among world’s highest) tariffs and subsidies, which had propelled Britain into its economic supremacy.
Britain and the US may have been the most ardent – and most successful – users of tariffs, but most of today’s rich countries deployed tariff protection for extended periods in order to promote their infant industries. Many of them also actively used government subsidies and public enterprises to promote new industries. Japan and many European countries have given numerous subsidies to strategic industries. The US has publicly financed the highest share of research and development in the world. Singapore, despite its free-market image, has one of the largest public enterprise sectors in the world, producing around 30 per cent of the national income. Public enterprises were also crucial in France, Finland, Austria, Norway, and Taiwan. When they needed to protect their nascent producers, most of today’s rich countries restricted foreign investment. In the 19th century, the US strictly regulated foreign investment in banking, shipping, mining, and logging. Japan and Korea severely restricted foreign investment in manufacturing. Between the 1930s and the 1980s, Finland officially classified all firms with more than 20 per cent foreign ownership as “dangerous enterprises”.”
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Nokia was an domestic company in an infant industry protected by Finnish policies against foreign ownership. Could it have become as innovative and successful if it was bought out early on by a foreign company (like AT&T) and turned into a subsidiary for access to the Finnish market?
Of course, there are going to be some success stories and some failures under these policies. But these stories and a better understanding of the true historical source of the success of British and American economic and industrial development will enable
Frankly what JD is peddling is neo-liberal claptrap which has harmed more developing countries and helped. The IMF was chastened by criticism after its prescriptions in the wake of the Asian Financial Crisis of 1997 helped to bring down the government and destroy the economy of Indonesia (and led to the riots which left hundred of Indonesians, primarily ethnic Chinese, dead, raped, and destruction/looting of countless properties), while countries like Malaysia which refused to follow IMF policies weathered the storm.
These neo-liberal “advisors” may give advice out of misguided faith in certain economic theories, a misunderstanding of history, ignorance or self-interested malevolence.
Free trade, open foreign investment and democratic systems may be the right solution in the right situations. However, they can be disastrous policies if used in the wrong way.