The Emerging Capitalists of South China


January 14, 1992|By ALAN WOOD

BOTHELL, WASHINGTON. — Bothell, Washington -- Sooner or later, the pressure in Congress to revoke most-favored-nation trade status for China will provoke another major confrontation with the Bush administration. That is unfortunate. The target of Congressional wrath will be the jailkeepers in Beijing, but the people who will actually be hit are the emerging capitalists in south China who are exporting to the U.S. market -- the very people we ought to be supporting.

What they have accomplished, and how they have accomplished it, is a spectacular story.

In the old days crossing the border from Hong Kong to Guangdong was like crossing over into the Twilight Zone. The difference between the free-market razzle-dazzle of modern Hong Kong and the drab, backward panorama of the Guangdong capital of Canton (Guangzhou) was dramatic. Travelers to China found themselves going back in time even as they went forward in space.

No more. In the 1980s industrial output in the southern province of Guangdong (population 63 million) has grown at an average annual rate of 15 per cent. In 1990 one-third of China's total exports came from Guangdong. The sleepy town of Shenzhen '' on the Hong Kong border went from a population of 100,000 in 1980 to 2 million today. In effect the province -- where labor costs are one-tenth what they are in Hong Kong -- has become a manufacturing appendage of Hong Kong itself. The British colony, scheduled to be returned to China in 1997, is increasingly becoming a service center for all of south China.

Things continue to change at a dizzying rate. In the first three quarters of last year, industry in Guangdong grew by over 27 percent (and labor productivity by more than 18 percent). If some parts of the world are in a recession, Guangdong hasn't heard about it yet. The province already receives more than half of the total foreign investment of China.

How do they do it? By a shrewd formula of acquiescing in political matters to Beijing while demanding greater and greater economic autonomy. Guangdong manages to forward to Beijing only about 10 percent of all the tax revenue collected in the entire province (in the U.S. the federal government gets roughly two-thirds of the taxes collected in this country).

In politics, however, Guangdong has to be a bit more compliant. The Beijing leadership has declared open season on all manner of Western influences seeping into China. Dangerous counter-revolutionary actions like singing Christmas carols in public, or sending Christmas cards, have recently been banned in Guangdong. Other activities which have been known to bring down communist governments in the past, like kissing, hugging and holding hands in public, are also being discouraged.

Needless to say, the people of Guangdong are treating these exhortations with the contempt they deserve. (If Americans think we have a dim view of the tired old totalitarians in Beijing, the south Chinese dislike them even more.) But they don't say so.

Meanwhile, business booms. The long-term effects are already becoming apparent. For the last century the Yangtze River delta in central China has been the center of China's industry and trade. Now that has changed. The center has moved south to Guangdong, focused on Hong Kong. If this process continues, the power of Beijing to control events in south China will wane. A new and cosmopolitan middle class will be formed which will eventually do more for human rights in China from any form of pressure from the United States.

Congressional critics of China who are now outraged (justifiably, to be sure) at Beijing's mule-headed perversity should take note. By demanding that MFN status for China be revoked, they will be undermining the very modernization in China that they wish to promote.

In the end, the freedoms we all cherish cannot be imposed from the outside. They require enabling institutions -- such as a stable middle class -- which China is only now beginning to create, in south China.

If we really care about the welfare of the people of China, we should keep our markets open to legitimate Chinese products. We should also be joining in the international effort in south China to build the infrastructure of a modern economy. Telecommunications, highways, railroads, power plants, airports, all have to be built from scratch in the next few decades, and the capital to finance those projects can come from only one source: exports.

In the beginning of the 20th century, the revolutionary movement which toppled the Qing dynasty in Beijing originated in Guangdong province. (Sun Yat-sen, the grandaddy of all revolutionaries in China, was Cantonese.) Now at the end of the 20th century, China has gone full circle. Once more, Beijing has allied itself with a repressive past, and Guangdong with a revolutionary future. Congress needs to understand that better.

Alan Wood teaches Asian history at the University of Washington, Bothell.

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