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China Celebrates

An elaborate ceremony illustrates how China’s leaders think

Beijing: October 1, 2009. Today China celebrated the 60th anniversary of the People’s Republic with an outpouring of national pride unrivaled in Chinese history, perhaps in world history. I attended all the events.  

It began the night before at a state dinner in the massive Great Hall of the People in Tiananmen Square, where all national leaders and some 4,000 officials and guests heard Premier Wen Jiabao speak of China’s accomplishments and challenges. The day itself commenced with a celebratory, reflective address to the nation by President Hu Jintao, who was dressed in a high-style, pointedly non-Western, Sun Yat-sen jacket (often referred to as the “Mao suit”).  

Then came a massive military parade, showing off over a dozen new weapon systems, ranging from cruise missiles,  Dongfeng-21C anti-ship missiles (designed to interdict U.S. aircraft carriers) and Dongfeng-32 intercontinental nuclear- armed missiles to attack helicopters, amphibious assault tanks and unmanned aerial vehicles—all manufactured domestically. Military leaders stressed that a nation’s military policy, not its military weapons, is what matters. China’s weapons, they asserted, are only for defense—but it was a hard sell to wary foreigners near and far. On the other hand, the Chinese people, never forgetting the long century of foreign invasions, occupations, humiliations and depredations, were unalloyed in their pride that the Chinese people had finally, as Chairman Mao Zedong had promised six decades earlier, “stood up” in the world. Then followed the civilian procession, which featured 36 formations, 60 floats, and a cast of 100,000 (yes, 100,000; no mistake). Each province was represented, as were various sectors of society from space to sports. In the cool, clear evening, 60,000 performed Chinese music and dance amidst waves of intricately dynamic colors and kaleidoscopic shapes—topped off by a breathtaking fireworks display, twice the size of the Olympics opening ceremonies, that set the city aglow. Two gigantic LCD screens, each some 400 square feet, the largest of their kind in the world, afforded everyone a perfect view. 

Yet, China’s problems clearly remain serious. For the celebrations, Beijing was under severe lockdowns. Hotels and streets near the parade route were closed and local residents were forbidden to look out of their windows for fear of snipers.  Police were everywhere. SWAT teams with police dogs searched every room of every nearby hotel, my room not exempted. One Chinese minister noted wryly that if such draconian measures were required to assure the people’s safety, China today couldn’t be “all that glorious.”  

Nonetheless, astonishing itself as well as the world, China had transformed itself from national destitution, its people  in perennial poverty, and from international irrelevancy, a country ignored or ostracized by the community of nations, into an economic superpower involved with every major issue in foreign affairs and competing in every arena of human endeavor.  From trade, business and finance to diplomacy, defense and security; from science, technology and innovation to culture, media and sports, China has global impact.  

Some worry about a looming “China threat”—an aggressive, mercantile, expansionist empire that threatens American supremacy  in all sectors. (The planners of the military parade certainly did not have “mitigating the China threat” as part of their job descriptions.)  

Others laud an emerging “China model”—economic and social freedoms combined with single-party political control and limited political rights—as an alternative to America’s “Democracy model” for the developing world.  

What do China’s leaders, current and future, make of all this? We should appreciate how they think— not as portrayed in foreign media but as they sense and express it. For several years, I’ve had numerous opportunities to speak directly with many of China’s leaders. The best way to know China—the best way to do business with China—is to know what motivates China’s leaders and what drives their policies.  

History is backdrop. That New China’s 60 years was hardly all that glorious is no revelation. During at least 20 of its first  30 years, from its founding in 1949 to the beginning of reform in 1978 (two years after Mao’s death), China was dominated  by ideological extremism, mass movements and political oppression (1957–1976), which included harebrained economic  policies that induced the world’s worst famine (“Great Leap Forward,” 1959–1962, when 20–50 million people died, no one  knows for sure), and culminated in the decade-long, self-immolating insanity of the “Cultural Revolution” (1966–1976),  which oppressed the  Chinese people severely and virtually destroyed the county.  

Deng Xiaoping “emancipated the mind,” repudiated the old ideology and initiated reform to catalyze New China’s second 30 years. Former President Jiang Zemin stabilized the country, solidified reform and modernized the Communist Party.  President Hu Jintao set the goal of building a “Harmonious Society” through the strategy of “Scientific Perspective on Development,” which seeks to optimize multiple objectives such as fairness and equity in income, sustainable development and environmental protection, as well as to continue economic growth.  

Insight into President Hu is provided by Politburo member Liu Yunshan. “I am now serving my second term in the Politburo.  President Hu Jintao’s character is modest and low profile,” Liu told me recently. “We all have the highest respect and admiration for him—for his leadership, perspicacity and moral convictions.” Liu stresses that “Under Hu’s leadership, complex problems can all get resolved. It takes vision to avoid major conflicts in society. Income disparities, employment, bureaucracy and corruption could cause instability. This is the Party’s most severe test. In seven years under President Hu, the Party has successfully maintained stability while pushing forward with reform and opening-up.”  

“China’s development, at least in part, is driven by patriotism and pride,” says Xi Jinping, China’s vice president and odds-on favorite to become China’s next president in 2012. “The Chinese people made great contributions to world civilization.” Although “it’s fair to say that we have achieved some successes,” Xi continues, “we should never overestimate our accomplishments or indulge ourselves in our achievements.” He calls for China “to assess ourselves objectively” and to aspire to “our next higher goal,” which he explains is “a persistent and unremitting process.”  

Politburo member Li Yuanchao suggests that one of the real lessons of the global financial crisis is that economic imbalances between China and Western countries need redressing. He argues that “excess distribution” of assets and consumption of products in the West is a fundamental cause of world economic problems. “We have entered an era of globalized production, but world market systems, world financial systems, relations between countries, international  political relations and people’s consumption psychology have not yet properly adapted to it,” says Li, who is also head of  the Party’s Organization Department, which is responsible for the selection and training of government officials and executives of state-owned enterprises. “Wealth in the world is uneven and not in accord with new realities. We need to adjust relationships between people’s consumption and their production.” Li Yuanchao, who is expected to be a high  senior leader of the next (“fifth”) generation, stresses that China’s leaders are focused not only on boosting the Chinese  people’s consumption, but also on increasing the Chinese family’s property—for example, by means of speeding construction of low-income housing and broadening home ownership (a prime wealth-builder in most countries).He highlights the  government’s policy of subsidizing purchases by families in rural areas—covering, for example, part of the cost of  electrical appliances such as television sets and washing machines .Currently , Li notes, “most rural families have a house  but lack household items.” Li says that America and China should work together as partners, using the financial crisis to promote commonality of interests, so that “the distribution of assets and consumption of goods are more harmonious and sustainable.”  

I do not shy away from confronting China’s leaders with China’s problems. I target economic imbalances, environmental  pollution, unsustainable development, human rights, democracy, rule of law, media censorship, corruption, crime,  unemployment, migrant workers, minorities, ethnic conflicts, religious tensions, social instability, protests and  demonstrations, ideological shake-up, shifting moral and family values, death penalty, sales of organs from executed  prisoners, global confrontations, resource competition, military expansion and new competition in the wake of the  worldwide financial crisis. I find frank acknowledgement of the long road that China must still travel in order to realize President Hu’s vision of a Harmonious Society. But I also find a deep conviction that China must never repeat the errors of its past and a fervent expectation that the country’s long future is bright and ascendant. (Li Yuanchao stresses Hu’s commitment to political reform, transparency in governance and popular oversight of officials—beginning with “Intra-Party Democracy.”)   

That America and China, allied with common interests, must work together is not optional. This applies not only to the financial crisis, but also to threats of global terrorism and incessant local wars, and to stopping the proliferation of weapons of mass destruction, which would presage an era of unknown vulnerability.  

I have told leaders in China that they are no longer immune from crises that might erupt elsewhere. A terrorist or rogue- regime nuclear cataclysm many where would blaze everywhere— and because China’s domestic harmony among disparate classes depends on high economic growth, it would be devastated. Only collective, responsible action can prevent irreparable human catastrophe. For China and America to engage in geopolitical maneuvering, each trying to unbalance the other, is wildly archaic. 

Similarly, disputes over political systems, which were 19th century arguments that came to dominate 20th century politics, have become anachronisms in the 21st century. China’s leaders talk “socialism” in that they strive for fairness and equity in society but they make policies based on what they think works, not on ideology—“seek truth from facts,” as they say.  (Some U.S. congressmen opposed the American financial rescue plan by branding it “socialist.” They should learn from Deng Xiaoping’s famous aphorism that it doesn’t matter if a cat is black or white; if it catches mice, it is a good cat.) 

No one doubts that the financial crisis has shaken the prior world order and enhanced China’s relative position with respect to the United States, Europe and Japan. Though China suffered, it has recovered sooner and is playing an outsized role in resuscitating global growth. As a result, China must shoulder more weight in world affairs, a recognition that surprised China’s leaders when it dawned on them in late 2008 and early 2009. Their prior expectation had been that China’s time would indeed come, but it would take another 15 or 20 years, giving China’s leaders sufficient time to get their domestic house, with its myriad problems, in order. Suddenly the time was now and assuming additional responsibilities was mandatory. To no small degree, world peace and prosperity depends on the bilateral relations between China and America and this relationship depends on realism and respect.  

China’s leaders today devote a high percentage of their time to international affairs—a significant increase in recent years. As a leading Communist Party official told me, “Here in our research center, we used to read only People’s Daily and other Party publications. Now we scrutinize international newspapers and magazines and surf the Internet. Without global knowledge, it’s impossible to do our jobs.”  

As New China celebrates its 60th anniversary, consider the occasion as marking a two-thirds milestone of the Middle Kingdom’s epic modern journey. It is likely that the third 30 years will be China’s most dynamic but most uncertain period, setting the trajectory for generations to come as the most populous country on earth continues the greatest transformation in history


Robert Lawrence Kuhn, an international investment banker and corporate strategist, is a longtime adviser to the Chinese government. He is the author of How China’s Leaders Think, which features exclusive conversations with China’s senior political leaders, current and future, and with leaders in diverse areas of Chinese society.

 

About robert lawrence kuhn

Dr. Robert Lawrence Kuhn is an international corporate strategist, investment banker and expert on China. Since 1989, he has worked with China’s senior leaders and advised the Chinese government on matters of economic policy, industrial policy, mergers and acquisitions, science and technology, media and culture, Sino-U.S. relations, and a variety of international business matters. Dr. Kuhn advises leading multinational companies, CEOs and C-Suite executives, regarding formulating and implementing China strategies in a variety of sectors, including science and technology, energy and resources, industrial, media and entertainment, healthcare / medical / pharmaceuticals, consumer products, and financial services. He works with major Chinese companies on structuring their capital markets financing and M&A activities.