China’s curse is to raise hopes and dash them

Marriage or travel required written permission from the office leader. Work was pointless, and no one had incentive to do more than the bare minimum, if that. Everyone had to spend Saturdays in “political study” discussing in what way their thoughts might not support the Communist Party. Food was so basic that a major topic of conversation was where some delicacy, sweet potatoes or fish, for example, could be bought.

The government delivered stacks of Napa cabbages to each home at the start of winter, and people would peel off a few leaves to stir-fry and eat with rice each evening, leaving the rest outside to stay naturally chilled – few families had refrigerators, and those who did proudly displayed them in their living rooms, adorned with a doily.

Cultural activities consisted of viewing patriotic films using tickets handed out at the office or exercising in the park. Lucky people with good connections might be able to see an acrobatics show once a year.

About a month into my tenure at the magazine, an office mate told me his father had died of tuberculosis. “But that’s normally curable,” I said. “Didn’t the doctor diagnose it correctly?”

The colleague laughed. “We are farmers; we don’t have money to see doctors.”

With one sentence, my belief in Maoism as the system that made people’s lives better was thrown into doubt. It was my first realisation that “socialism” in China was reserved for the urban privileged.

Family chores

I lingered in China, first to learn the language, then because I married there. In 1988, I told the Hindi translator I’d married that I needed to go back to the US to recharge. I was mentally exhausted by trying to ft in.

At the time, we had only one day off a week. I would look forward to sleeping in, but around 7.30 am each Sunday, my new in-laws would appear at the front gate (no one had telephones back then) ready to stay all day, cooking, napping, taking baths in my hot-water apartment, and watching TV. I was obliged to speak Chinese constantly, which made me feel stupid, as my vocabulary was very limited. I could never get titles right.

In China, when you arrive at a gathering, you need to say the title of each person you encounter in rank order, and the titles are excruciatingly specific – maternal mother-in-law, older brother-in-law, older brother-in-law’s wife, and so on down the line. I could never remember all the titles and would be tongue-tied for fear I might mix up words like bomu (a respectful title for an older woman) with baomu (housemaid). So we moved to Washington to rejoin what I viewed as the real world.

Then, in 1993, an investment association called the US-China Business Council invited me to head their China operations in Beijing. At the time, there were few Americans available who knew anything about China, so they were willing to hire a journalist-cum-magazine-editor for much more money than I had ever earned. The council, as we called it, had been a fairly sleepy DC association dedicated to improving US-China ties, but during my time there – 1993 to 1998 – foreign investment in China was exploding.

Having grown up in Washington, DC, I knew nothing about business. When the head of Ford automobiles came to visit, I mistakenly pulled the file on FMC (a chemicals company, which I mistook for Ford Motor Company). I had a vague idea that GE made light bulbs and Exxon (or Esso?) sold gasoline. No matter: staffers for CEOs coming through Beijing had to plug holes in the executives’ schedules, so they generally added “a visit to Anne at the council”.

I would sit there listening to CEOs talk about their business units’ struggles to enter the market. They told me far more than they would have told a journalist, and it was a fascinating glimpse into the mechanics of the economy.

A few months in, I figured it would be good for me to see the provinces, and I took a business trip to a trade fair in the ancient capital nestled in the centre of the country, Xi’an, where 2000 years ago, the first Qin emperor built his magnificent tomb, guarded by an army of terracotta warriors.

On my first morning in Xi’an, I walked the short distance from hotel to exhibition centre to attend the conference being held before the fair. Two ladies wearing red sashes ushered me through a door and up some stairs.

I thought it odd to enter this way – maybe I was late and everyone else was seated – but I was excited to hear whoever was going to speak, and I pressed on. I groped through the dark until I felt heavy velvet curtains, pushed them aside and found myself under the glare of a sodium floodlight. A Chinese voice came over a loud PA system: “Now Manager Yang Si-An [my Chinese name] will say a few words!”

In the glare, I could barely make out the audience, but I could sense there were a few hundred people there. They stood and applauded. I was terrified, but it seemed I was the keynoter, so I managed to stutter a few words about how much US investors welcomed China’s rise.

After my “speech”, I walked through the exhibits. There were bio-engineered seeds for a new type of apple, a ball-bearing that the inventor claimed was novel, some kind of circuit board, fertiliser made from charred wood, and much more.

Everyone was looking for foreign investment in order to scale up production. I had none to offer, and I worried these innovators could see I was a fraud. But then it dawned on me: my employer’s “host organisation” had fulfilled a favour to the factory managers by putting them in front of me; the factory managers had gotten a free trip to the provincial capital, and I had fulfilled an obligation to the host by coming. No one expected any actual business to come out of it.

Special treatment

In the early years of “reform and opening”, I was frequently treated as a prize zoo animal: any white person randomly appearing in a city was automatically seen as an avatar of business shrewdness and put on display.

At a conference in Henan, I was asked to sit next to the governor for a television interview: the other foreigners at the conference, from Africa and India, were seated out of sight in the back, since I was considered higher status; it was thought that white Americans and Europeans had the most investment to offer.

The whole nation mobilised to appear more hospitable to foreigners. Elderly leaders swapped their Mao suits for Western sports jackets. They went abroad and learned English. Within China, foreigners were the first to get phones at home and access to cable TV with English-language stations.

Foreigners had special licence plates and never got traffic tickets. They got privileged access to government leaders. A foreign visitor to a city in the provinces would be showered with gifts and feted at banquets. In the capital, the most lowly foreign factory manager could meet with a high official of state and be treated like Henry Kissinger, provided an official interpreter, and earnestly asked his or her view about the economy while beautiful young women replenished the jasmine tea in lidded enamel cups.

Everywhere, we were treated as special. Crowds would follow me if I walked through towns outside the capital, and children would chant “lao wei!” (foreigner). Chinese everywhere were charmingly open about the problems of their country and admiring of the West. When pushing my son around in a carriage in the early years, people would stop me on the street and say, “He will be very smart and very handsome. He has American blood!”

This sort of special treatment charmed and bemused foreigners, who failed to see that Chinese people viewed them as walking bags of money. Here was a government that had changed seemingly overnight from closed, suspicious, internally tyrannical, and externally belligerent to one that actively, disarmingly solicited foreign investment and trade and seemed to offer new freedoms to its businesses.

China was shedding the restrictions and prohibitions of the Maoist era like a suit of clothes in warm weather. It felt as if the entire nation had awoken from the Maoist slumber and wanted to make up for lost time.

The creeping capitalism following the “reform and opening” of 1979 took root in the mid- to late 1980s and made Beijing look like a film going from black-and-white to colour. Every time you went to the market, there would be something new – bananas from the Philippines, pineapples, peanut oil.

Dreary urban markets selling cabbage and potatoes burst into cornucopias of fruits, vegetables, and meats. Where timid customers once had to beg “comrade” store clerks to sell them long underwear or a shirt in the only available colour, pale blue, suddenly there were hypermarkets exploding with colourful knit sweaters and blouses.

People began to eat better, dress better, skip political study sessions, and even get Saturdays off. Ration coupons disappeared, and so did the ever-present fear of saying something the Party might not like. There started to be dances, music, real films, and books of poetry.

All of this change, choice, and freedom were intoxicating. It lasted a long time, and those 60 yuan pay packets got fatter, until Chinese people could imagine buying cars and electronics and going overseas for fun.

The rules that had kept people tethered to their employers were dispensed with, and people went looking for jobs they preferred with people they found compatible. Jobs were easy to find, at escalating wages, and parents saw their children moving far beyond their own stations in life. The rapid improvements lulled everyone, Chinese and foreign, into believing that China could never return to the bad old days.

That turned out to be an illusion. China’s open arms for Western business created a system whereby corporate managers, and later, bankers, could persuade the owners of capital to invest in China for “access” and “growth” rather than profit.

The self-interest of these financial gatekeepers merged with their belief that Chinese bureaucrats held the keys to the market and might withhold access if at all displeased. They lavished praise on China and its leaders. Their faith in China’s rapid progress was continually affirmed by the changing physical landscape; it was said that, in the mid-1990s, 20 per cent of the working cranes in the world could be found in the coastal “Tier 1” city of Shanghai. No one paid much attention to standards of health and education or to human rights: a rising tide floats all boats.

A dramatic confection

It took me years to understand that I was an unwitting player in an elaborate dramatic confection. This country, which had seemed so malleable, so interested in change, was actually a sprawling, ancient kingdom with deeply ingrained traditions indifferent to the proselytisers of capitalism.

Foreign visitors and residents stayed within the tiny foreign districts that nestled in Tier 1 cities like snow globes in the palm of a hand. Those zones contained some of the best hotels in the world and the best-paved roads leading to huge airports with the newest aircraft. Foreigners woke up on crisp white sheets and sipped freshly squeezed orange juice from lounges overlooking the city, then folded their copies of the Financial Times and headed downstairs to black chauffeur-driven Audis.

This was the China foreign investors visited and remarked on, but it was actually a brightly lit Wunderkammer, a cabinet of curiosities on display for a hand-picked audience of bankers and consultants, corporate executives, journalists, and diplomats who could open the door, have a glimpse, and report to the rest of the world that the Chinese cabinets were surprisingly well-stocked. After all, visas were hard to get, and backpacker types were not welcome.

Illusive though it was, the illuminated cabinet was an exciting place to live. It was easy to become an entrepreneur, and I started a publishing company, a CRM software company, then an online media company in rapid succession.

Foreign investors and clients welcomed these businesses as footholds in the vast and confusing local terrain. By then, as well as a husband, I had two children and an older stepson, a big extended family, a dog, a house, and two cars. Our family lived in a foreign neighbourhood that might have been “Mayberry” [a fiction American town], where we wheeled around on bicycles, stopped for espresso machiatto at Starbucks, and shopped at a grocery store selling foreign goods like Italian basil and dishwasher powder – unknown in Chinese households.

We roasted a turkey at Thanksgiving even though the imported bird cost more than our couch. We enjoyed the freedom to watch foreign movies (albeit pirated), attend church, and hold sports events – freedoms that Chinese people did not have.

Few foreigners ventured outside the bubble of Shunyi – the residential district for foreigners in Beijing – or Chaoyang, where businesses and embassies sit. But a Sunday trip just 50 kilometres west would expose a China unchanged from 300 years earlier.

Barefoot children in the Mentougou district were grateful for donations of pencils and schoolbags from Beijing’s foreign churches. In Chengde, a resort near Beijing, beggars would surround anyone ordering a bowl of soup at a local restaurant. Vacation spots north of the city offered filthy squat toilets, unheated interiors, and nothing to do unless one wanted to visit local prostitutes.

We rationalised the disparities because we assumed all the construction under way would gradually lift these places out of poverty. But rapid and stunning changes to the physical landscape did little to improve access to healthcare, education, or to provide social mobility for the great majority.

Culturally and legally, meanwhile, China was becoming darker and more limited. When the Olympics came around, the darkness could no longer be ignored. The 2008 Olympic Games were just the sort of event that would send the Chinese leadership into paroxysmal anxiety. The world would be watching. Every bureaucracy was warned there could be no mistakes, and the best way to avoid them was to limit all possible activity.

Hotels that had renovated in anticipation of visitors for the Games found they were not allowed to take foreign guests. Applications for visas were rejected. Internet controls were stepped up to an operatic level, such that news like the death of babies from drinking contaminated milk powder was suppressed, with the milk remaining available. Hundreds of thousands of people were deputised to monitor speech and patrol gatherings.

China is a sprawling country with weak vertical authority, and it often relies on quotas to achieve targets. This is true in law enforcement as well as the economy. In the run-up to the Olympics, police were given such high arrest quotas that they relied on third-party agents to help them find people to arrest.

This arrangement quickly morphed into a for-profit enterprise involving what amounted to an extra-legal kidnapping and ransom process with payments for release that started at around $US50,000. I personally knew a half dozen people arrested under this scheme. One couple sold their house to pay the fees, then quickly returned to the US for good.

A discarded experiment

The cultural environment was no less constricted. After 2008, arts events became high-priced performances by visiting artists whose concerts had to be approved at top levels and only for very short runs. The constricted availability of foreign films in cinemas contrasted with the wide distribution of pirated DVDs.

The Olympic experience brought me to understand that China had not changed institutionally, and that the post-1979 experiment with capitalism was just that: an experiment that, when deemed to be no longer useful, would be discarded. The Communist Party opened up to the providers of capital, and having collected enough cash, began to retreat from international involvement.

Just as China has turned away from its earnest wooing of the West, so the West has become disillusioned with China. Back in the early reform era, the Wunderkammer constructed by China’s political elite worked well to create a conceptual framework for the rest of the world. China was viewed as the Little Nation That Could, where a bright young brain trust was quietly transforming an old-time socialist economy into a capitalist one and acting as midwife to an emerging Jeffersonian democracy.

The self-interest of foreign-capital gatekeepers dovetailed with the Chinese leadership’s interest in keeping money flowing. From 1980 to about 2015, when capital flows to China slowed and started to reverse, the world applied an analytic framework to China that grew increasingly distant from the truth.

The West mistook Chinese reforms for an alteration of its governing system. Western nations’ hopes and anxieties were equally projected onto the Chinese screen. Those fears have emerged every few years around a different aspect of China’s “rise” and the economic and political threat felt by workers and companies in the US and Europe.

After China acceded to the World Trade Organisation, the West believed that China’s indigenous innovation drive might obliterate foreign technology companies. Endless conferences were held on China’s technological ambitions. Around 2014, as China was pitching to make its currency part of mandatory international reserves, economists worried that the renminbi would overtake the dollar as the preferred currency of world trade and investment.

Then, after Russia invaded Ukraine, analysts opined that China was building a new world order in competition with the US. None of these fears have been realised, yet two quite different constituencies internationally continue to stress the reality closest to their own interests: competitive, threatening China or admirable, co-operative China; one growing into a belligerent threat to world peace, the other encompassing a vast new market, which no foreign company can afford to ignore.

Actually, neither view is accurate. The fear of China as a competitor is misplaced. But understanding China’s effects on the world economy and governance has only just begun. Offshoring industries and manufacturing to China hammered prices in the West and reduced the negotiating power of labour. Whole cities in the United States and Europe have been hollowed out, with the predictable social problems that follow the departure of jobs.

Power before people

Western political systems have found themselves ill-equipped to govern companies operating outside their jurisdictions, and the massive profits realised by corporations and Western bankers in China, instead of being invested in needed infrastructure back home, have filled the pockets of corporate barons. The emergence of China as an economic power has been coincident with the rise of billionaire oligarchs. The West has suffered a crisis of faith in democracy and has tilted towards authoritarianism.

Without being China’s fault, all these international effects are associated with China’s emergence in the global economy. The story of the Chinese nation generally is one of hopes raised, whether by peasant revolution, the opening of foreign trade, or the communist vision, and then dashed, when a ruling elite secures its position and closes off the paths to prosperity and freedom for the majority.

In the early days, many people joined the Chinese revolution out of idealism, but idealists want a voice, and the dictatorial system that Chinese communism soon became does not brook even the most timid form of dissent. Euphoria characterised the early revolutionary period, but it wasn’t long before the Party, allied to Stalin, demonstrated that its own continued power was more important than the well-being of the people.

The tendency of an elite to cling to power is of course the Achilles’ heel of any political system, but a one-party system like China’s has no self-correcting mechanisms. That is why we see China now on a return path to poverty and isolation. The Communist Party seeks isolation from international pressure to implement institutional change because it wants unchallenged rule over its people.

The effects of China’s retraction into its historical state as a mysterious and recondite kingdom will be tragic for the Chinese people. And the effects on the rest of the world will be as momentous. Like a film being run backwards, as much as China’s integration into the world economy changed lives across the world, so will its shrinkage and retraction.

This is an excerpt of Wild Ride, A Short History of the Opening and Closing of the Chinese Economy, published by Bui Jones in London.