Hot, Flat and Repressed

China, in its present state of government will never be the global power that it wants to be.  The reign of the ruling Chinese Communist Party will only last so long as they have the energy for the Chinese people.

The unprecedented growth and industrialization of China is, by any measure, remarkable, and fuelling this growth is, well, fuel.  Specifically, oil.  China has little in the way of its own oil reserves – optimistic estimates say that there’s about 14 years of oil left given the trend of growth and consumption.  The government needs to import oil.  A lot of it.  The problem was that most developed countries that were willing to sell oil to the Chinese would always add the condition that one of the situations, be they the human rights situation, organ harvesting, censorship or any other of the distasteful activities that the CCP indulges in should stop.  The rather inventive solution to the problem was to invest in countries that didn’t have the money or the resources to drill for their own oil, and these are usually the countries that don’t have the best human rights situations themselves, so they’re in no place to pile criticism on the Chinese government.  The upshot is that the Chinese are ruffling more feathers in the human rights community, signing million dollar deals with countries that White House hawks would consider rogue states.

The big question that is asked by most young Chinese is: “When America and Europe were industrializing, they didn’t have anyone telling them they should use less coal or burn less oil, or pipe less gas.  They polluted with wild abandon and everyone in the west is rich and fat because of it.  Why can’t we do the same?”  The answer is: China can. Not only “China can”, but “China can and I want it to do so”.  Why?  Because the interest in renewable energy sources is gathering more and more momentum every day.  More tax dollars and more private companies are pouring money into solving the world’s energy crisis.  They’re not doing this in order to save the world, they’re spending money because they know that renewable energy will become, in the very near future, the next global market.  Holland exports its wind turbine technology, and Holland has 2% unemployment.  It’s no coincidence that they were one of the first countries to reduce their dependence on Middle Eastern oil to zero, while also becoming one of the first countries to seriously invest in renewable energy technology.  The more time that China wastes arguing with Japan about where it can drill for oil, the more time Europe, America and Japan (Japan, being the most energy efficient developed country, which will be able to exploit a market of 1.6billion people in China) have to be the first to make a product that everyone will be relying on.  Of course, I want this product to be designed and patented by a British firm, rather than a Chinese firm.

And if you think that this is all just prevarication, the bad news that this has already happened.  Pennsylvania train maker GE Transportation is selling energy efficient, eco-friendly train locomotives to Chinese rail and freight companies.  The American trains last longer, don’t use as much fuel (they have 10-cylinder engines instead of the Chinese 12-cylinder) and don’t break down as much as the older, more inefficient engines that China has been using for years.  Already an American company has a foothold in the Chinese economy.  All of this has been done while the Chinese are partying hard, singing Hu Jintao’s praises and raising a glass to Wen Jiabao.  While the officials are taking bribes and looking after their own, the Americans are starting to take over major Chinese industries, thanks to their clear regulation and inventive innovation.  Some money is going to the Chinese, it’s true, but the big money is going to the US.

How does innovation follow on from regulation?   When the auto industry in American was told that they must install all their cars with catalytic converters, only one company looked at how it could get around these rules that were, on average, adding $1300 to the production cost of every car.  The chairman of Honda told its engineers that they must look at how to reduce emissions before they got anywhere near the tailpipe.  The result was a new engine with a pre-burn chamber that reduced the toxicity of the gas/air mix before it went into the piston chamber to be ignited.  Honda not only created a solution that saved their company millions of dollars and helped to combat climate change, they also started licensing the technology to other automakers.

When the movie Kung-fu Panda was released worldwide, there were two camps in China that were critical.  The first crackpot camp claimed that the move exploited the memories of those who had died in the Sichuan earthquake.  The second group asked the rather more valid question of why hadn’t the Chinese movie makers themselves been able to produce a smash hit animated comedy set in ancient China?   Americans were selling Chinese to the Chinese.  With the government still in control of the TV and of movie production, this is the way that it’s always going to be.  China will always be the one picking up the crumbs, living off the pale imitations and pirate copies of things that other people produce.   Americans make movies that sell, the Chinese have to make movies that conform to a haphazardly enforced political and moral agenda.

There’s regulation in America, but there’s little in the way of censorship.  And look what has happened there – there are hundreds of companies now that actually sell people software that will censor the Internet for them.  Worried parents don’t want their kids to be able to access redhotanddutch.com, so they pay companies to give them software that will block pornographic websites or websites that can teach teenagers how to make pipebombs.  If the Great Firewall was removed, then it would free up a monopoly that Chinese companies would be able to take advantage of.  If there was an open list available and updated reguluarly by the government, then companies would be able to take that list and create filtering software around it.  Laws could be passed that made sure that whichever institutions the government wanted these filters to be installed at had the software properly set up.  It’s still censorship, but it’s honest censorship, the criteria would be in the open, and everyone would know where they stood.

What’s happened is that people are scared to develop and innovate, because there are no clear guidelines telling people what they can and can’t do.  Copies of existing works are being made because they’ve been around for a while and haven’t caused trouble in other countries.  What the Chinese Internet needs isn’t censorship and prison terms, it’s stable, reliable, open regulation.  With the regulation will come innovation, Chinese software engineers will be able to clearly see what they can’t and can do, and soon they’ll start creating rather than copying.  Copying is only a short-term stop-gap solution, sooner or later, foreign companies will get tired of having their products pirated, and they’ll start coming down hard on the Chinese manufacturers by imposing hefty taxes on Chinese imports.

So, let’s assume that there’s a rising middle class in China, and that incomes, on average, are going up too.  The money that’s generated from taxes collected from the wealthy middle class give the government a huge pool of money with which to effect massive social improvement.  There’s more money to get the best doctors in better hospitals which now have the best equipment.  The parks are clean, as is the water that’s piped into the apartments.  On sunny days, lovers may stroll in the many clean, quiet parks dotted around the city.  The public transport system is being overhauled with new subway lines and cleaner buses being introduced.  In short, there’s enough money going spare to pour into big, flashy projects that do two important things: they keep people happy, and they keep people from asking questions.  If you’re happy and you know it, then you’re less likely to demand accountability and transparency from your government. The CCP is still able to bank on the growing economy to keep people happy because the famines and the hardships that were endured during the Chinese civil war are remembered by people who are still alive, so it’s easy now to sing the praises of the CCP and the apparent economic wonder that they’ve orchestrated.   The trick of politics isn’t to make people happy, it’s to keep people happy.  In order to keep the Chinese people happy, and to keep the lucrative manufacturing contracts China now finds itself reliant on an unsteady foreign oil supply, and oil is a resource that is definitely close to extinction.

The fact that the CCP can so effectively crush opposition shows that the government has enough money to not only to keep the people happy on a superficial level, but they’re also able to spend large amounts of cash developing sophisticated internal intelligence services, and preventing groups that have an agenda different to that of the ruling political party from forming.  The rise of China’s middle class and the migration of ethnically Han Chinese to remote areas of the country has made it easier than ever for people to compare their economic status with that of others.  Needless to say, these people at the losing end of the equation are not happy.  Thousands found solace in the sword verses of the Koran, not because they found Allah, but because they were sick and tired of being the losers all the time.  The Muslim men that were unemployed and destitute in their home countries are the ones that migrated to the terror training camps, and they turned that dissatisfaction into a hatred so directed and so pure that they were willing to commit acts of mass murder.  There’s no billionaire oil sheik on the planet who feels he needs to sacrifice his life and kill countless others in order to enter paradise.  Wherever there are have and have-nots, there’s always terrorism.

The creation of a Chinese middle class has given the Chinese government access to a money pot deeper than it could possibly fantasize of, and so long as people are getting richer and are paying their bills, the more money the government has to strengthen its grip on dissidents.  The problem that comes is when the energy that is needed to finance the business ventures that enables the rich to get richer runs out, there’s going to be a problem.  More than likely, the CCP will be forced to do as Bahrain had to do – reform its basic, fundamental ideas of how society is supposed to be run.  People are not likely to give it all up and go through another North Korea-style great struggle; they aren’t going to trek for miles on the second Long March and dig for coal with their bare hands.  They’re much more likely to riot in the streets, and demand that the government fulfill their half of the bargain.

The balancing act that Beijing is faced with in unenviable.  While their yearly 8%/9% growth is spectacular, and the effect that this has on the nation’s millions that live on $1 a day has been a phenomenal achievement for a country that started its days 60 years ago bankrupt with no gold supplies, there is no question that this growth has to be sustained.  Or else.   What has been created now is a strange economic cycle where the economy grows, and must keep growing to satisfy the general population (and to help secure to continued governance from the CCP), in order to keep the economy growing, the country needs oil.  The country doesn’t have oil so it has to import from rogue states and at some point, that’s definitely going to come up at the next WTO meeting.  If you think this is a big problem, I haven’t even mentioned that America is going after the same oil supplies in order to sustain its own addiction to the black stuff.

After all the fear-mongering and doomsaying, for the first time in a long time, I have hope for China.  To put it more accurately, I have a little more hope than I did.  The hope comes in the form of the members of the very same middle class that are, according to one economic theory, helping the CCP stay in power, the ones who own the massive Chinese companies, and the ones who protested so vehemently about the absurd idea to install the Green Dam/Youth Escort software on all the computers that were to be sold in China this year.  It’s the biggest victory that the Chinese people have scored over their government in a long time.  One thing that is apparent after spending so much time in China is that people are able to tell you how great the country is, but the list of achievements is always in the past tense. China and it’s people must look to the longer term, they’ve got to turn their “did”s into “will”s, and the one thing that they can’t afford to do is to wait till later to clean up the mess, once they’ve become rich; they’ve got to clean up to become rich.