By G. Pascal Zachary, In These Times
Posted on December 8, 2005, Printed on December 14, 2005
Everyone I meet is afraid. The chief executive of one of China's largest hotel
groups is afraid to complain to the police about the hustlers who sell fake watches
outside the lobbies of his hotels. A Buddhist who runs a network of factories is
afraid to speak openly about the Chinese occupation of Tibet. A sports marketing
official, one of the agents for China's basketball stars, is afraid to speak out
against misguided policies of the national sports system.
What is unusual about these people is not that they are afraid; many people in
China are. What is unusual about these people is that they are Americans doing
business in China -- some even doing business successfully. What they fear, of
course, is the same thing that China's people fear: the arbitrary power of
government.
For Americans doing business in China, it is a short step between fear and
collaboration, as I recently found during a two-week visit to Shanghai and Beijing,
the two leading destinations in China for American "expats."
My first meeting in Shanghai was not with Americans, but with Chinese nationals
working for them. On a Sunday afternoon I sat in a shiny Starbucks near the city's
central park, tucked into the rear corner of the shop, drinking coffee with five
young people (three men and two women) who each work for a large American
company in China. They all agreed that working for an American company had
benefits over employment with a Chinese company. There was more openness at
work, more emphasis on performance and more room to take chances. But one
thing was the same: If they were caught criticizing the government, or even
breaking the petty rules that govern their social lives -- such as the ban on
meeting in formal associations that might touch on political and social issues -- the
American company would not intervene to help them.
A few days later, an American who used to work for Nike explains to me why he
won't stick his neck out for the Chinese or even his own principles: fear of
retaliation. The American has his own sports marketing company, organizes
amateur basketball tournaments throughout China and even advises China's
version of the NBA. He knows Yao Ming, star of the Houston Rockets, personally.
When talk comes around to the poor performance of China's international
basketball team, the American offers an explanation: China's government officials
are ruining Yao Ming and other top players by making them play year-round for
China's national team, often sacrificing time for much-needed rest and skills
building. The American knows of what he speaks, since he is the agent for the
country's leading point guard who, like Yao Ming, is a victim of the government's
sports policies.
I say that this is a shame, and the American agrees. But he isn't about to
campaign for better treatment of these stars. In his office we are surrounded by
posters of leading Chinese athletes. He points to a poster of Wang Zhizhi, a tall
Chinese man who backed up Shaquille O'Neal last year for the Miami Heat. Wang
rebelled against the Chinese government by refusing to play for the national team
at last year's Olympics. He is now persona non grata, not only to the Chinese
government, but the sports marketing establishment here. This American won't
touch him, nor will anyone else, out of fear of antagonizing the Chinese
government and losing lucrative deals.
Free Speech Be Damned
The sports marketer is guilty of keeping his mouth shut. But other Americans
actively assist the Chinese government in the maintenance of its repressive regime.
Even as I talk to the sports marketer, Microsoft is concocting an Orwellian policy for
its new Chinese version of MSN, a news site and search engine. Microsoft has
decided (and publicly confirmed this summer) that anyone in China doing a search
containing the words "freedom" or "democracy" will be shown a message explaining
that those words are banned and the requested search query will not be processed.
Now, Microsoft is one of the richest companies in the world and its founder Bill
Gates has spent billions of dollars on a foundation to reduce global inequalities in
health and education. And yet his own company is so intimidated by China's
government that terms basic to free expression are banned from its search engine.
American collaboration gets even uglier than that, however. In September Internet
company Yahoo admitted that its employees in China assisted the government in
making a case against a dissident journalist named Shi Tao, jailed since April,
apparently for revealing information about a crackdown by the Communist Party.
In response to a question about the journalist's fate at a Beijing Internet
conference in September, Jerry Yang, an American co-founder of Yahoo, confirmed
that his company had helped the Chinese government arrest and prosecute Shi
Tao. Yang didn't give specifics, but Reporters Without Borders, a Paris-based
advocacy group, has said that Yahoo officials in China helped the government track
Shi Tao down using the IP address from which he read his Yahoo e-mail account.
Yang said that Yahoo receives "a lot" of requests for information from the Chinese
government. "I do not like the outcome of what happens with these things," he
said. "But we have to comply with the law. That's what you need to do to stay in
business."
That kind of pragmatic attitude might pass muster in the United States or Europe,
where courts are independent and the line between business and government is
usually clear. But in China, the American who blithely assists the Chinese
government is likely contributing to a heavy-handed injustice.
During my trip, American business people were fond of telling me that they could
do more good being engaged with the Chinese than by openly complaining and
taking the sort of adversarial position against government that is common in the
United States. "The idea is to retain our credibility, our influence in China, so we
can work behind the scenes for the right thing," the sports marketer told me.
Naturally, there is some truth to this. In Shanghai, I visited the home of an
American who adopted Tibetan Buddhism as his religion some years ago. He first
came to China in order to help rebuild monasteries and temples in Tibet that were
damaged or destroyed during the '60s Cultural Revolution. His high-rise apartment
in a fashionable part of Shanghai is festooned with Tibetan artifacts, and he is
clearly pained by the hypocrisy of the Chinese government today, promoting Tibet
as a tourist destination while at the same time repressing any authentic
expressions by Tibet's people or religious leaders. And yet he tells me, "The price
of getting to restore Tibet's cultural heritage is staying silent about China's true
aims."
When I bluntly respond that he is a collaborator in China's occupation, he nods his
head sadly and says he is "resigned" to China's domination of Tibet. Speaking out
on Tibet would only draw the scrutiny of the Chinese government and, of course,
doom his growing business of supplying low-priced manufactured goods to
American chain stores.
Profits Not Worth the Price
Another troubling part about the collaboration of American business with the
Chinese government is that, even in narrow business terms, it is failing. The terms
of trade between the United States and China are ever-worsening. Chinese goods
are flooding into the country, and manufacturing jobs are still flowing out of the
United States and into China. U.S. exporters are selling an impressive $3.5 billion
worth of goods per month to China -- twice the amount of goods exported from
the United States to China five years ago, and nearly ten times the amount of 15
years ago. But Chinese exporters to the United States are doing even better:
Sales topped $20 billion per month this summer, and show no signs of slowing
down. The trade deficit in merchandise with China topped $100 billion in 2002,
$124 billion in 2003 and $160 billion last year. This year, the deficit will approach a
whopping $200 billion.
To be sure, the growth in China's domestic economy offers plenty of opportunities
for U.S. companies. For years, spending on China's infrastructure has been rising,
and now consumer spending is exploding. An estimated 350 million Chinese --
more than the population of the entire United States -- spend $10 per month on
cell phone services alone. For an American company, success in China, even with
products that are made in China, can be the difference between survival and failure.
Witness, for instance, the great boost that ailing General Motors has had in China,
where its cars are top-sellers.
On the other hand, Chinese copycats -- stealing everything from movies and
software to plans for machinery and chip-making equipment -- take unfair
advantage of the relative openness of American companies. The Chinese are also
frantically trying to nurture home-grown businesses that can compete with the
best from America. At the same time, the Chinese government has held down the
value of its own currency, making it cheaper for American companies to invest in
China -- and cheaper for American consumers to buy imported Chinese goods.
While recently the country slightly raised the value of its currency (and may do so
again periodically), most observers think that China's currency will remain artificially
low, or "cheap" in economic terms, for many years to come.
Because of the complex economic dance between China and the United States, the
combination of fear and collaboration is a toxic brew for even well-intentioned
Americans doing business in the country. As the New York Times editorial page
opined recently, "Because China is too lucrative a market to resist, American and
European businessmen have ended up endorsing the party line through their
silence -- or worse. They are not molding China; China is molding them." In short,
"constructive engagement" with China is a myth.
Some senior American executives of leading multinational corporations privately
fret that their Chinese experiment will end badly, and not the least because they
recognize that their investments in China have helped prop up an authoritarian
regime that may be incubating social revolution or worse. Underneath the
seemingly stable surface, dissent and unrest in China is rising. Even statistics from
the government's own police force show a troubling trend: The number of mass
protests reached 74,000 last year, compared to 10,000 in 1994.
With hundreds of unreported protests now taking place in China each week,
far-sighted American executives are beginning to ponder what will happen to their
investments if China implodes. One chief executive of a Fortune 500 company told
me after I returned from China that he has a wait-and-see attitude, but feels
increasingly doubtful that constructive engagement with China will bear fruit.
"We're capitalists and supposed to be running a business for a profit," he says.
"So you don't want to leave a big market. On the other hand, China has serious
political problems and the Chinese people lack basic freedoms. I'm not in China to
solve the political problems, but if they aren't solved, foreign companies are either
going to get kicked out of China, ultimately, or leave."
So, how should Americans respond to this situation?
First, Americans ought to squarely face their striking cycle of dependency with
China, its government and economy. The U.S. government's huge deficits are
partly financed by the Chinese government, which, through state-owned banks,
buys U.S. Treasury bills with profits generated from exporting goods to the
American market and the savings of ordinary Chinese citizens. The Chinese don't
need to invest all or even a large part of their savings in their own country because
American banks and corporations (as well as European and Japanese businesses)
are willing to finance a great deal of the capital needed for the expansion of China's
economy. Foreign investors do this because they believe that investment
opportunities in both public infrastructure and private enterprise are better in
China than in their own countries, and besides, European and North American
investors are awash in cash anyway. The Chinese government makes investing in
China even more attractive to foreigners by holding down the value of its currency,
the yuan.
Ultimately, however, the Chinese end up holding a huge amount of U.S. dollars,
leaving them vulnerable to sharing the pain of any American economic setbacks,
such as steeper declines in the value of the dollar. Moveover, because America is
the largest, most lucrative market for Chinese-made goods, China's business and
economic elite are trapped in a dilemma of their own making: Americans are now
hooked on cheap Chinese goods, while the Chinese are hooked on selling to
Americans. Raising prices could enrich Chinese producers, but also cause a collapse
in demand for their products.
This interdependency between the U.S. and Chinese economies means that
American business executives, government policymakers and perhaps even
ordinary citizens have more leverage with the government of China than they
realize. Consider this crucial question: Who can more easily afford a rupture? The
Americans, with their vastly diversified economy, or the Chinese, whose economic
empire is essentially built on satisfying one single, bargain-hungry customer --
America?
I don't know the answer to that question, but let me suggest that, for Americans
at least, the price of having principles may be to test China's resolve more often
and more pointedly. I am reminded of this possibility when I turned up at a Web
café on one of the last days of my recent visit. It was 8:30 and the café was just
opening. I'd been there three mornings running and a woman had helped me
navigate the Chinese keyboard and screen prompts so I could reach an English
interface. This morning the routine was different. There was a black vinyl binder at
the front counter in front of her. Inside was a sheet for foreign nationals who
wanted to use the Web. Before I could log in, I had to write my name and my
passport number and state the purpose of my visit.
I complained to the woman about the sign-up sheet -- she showed me to a PC
anyway. Before I sat down, a man appeared and he said that unless I signed the
book, I couldn't use the Web café.
I told him I refused to sign. He waved his hand angrily at me, showing me the
door. "American go home," he told me.
And that's what I did.
G. Pascal Zachary teaches journalism at Stanford University and is a fellow at the
German Marshall Fund. He is the author of The Diversity Advantage: Multicultural
Identity in the New World Economy.
© 2005 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/29237/
