Home » Leadership & Strategy » Leadership » Understanding China III: Vision

Understanding China III: Vision

America is enmeshed in the most debilitating worldwide financial crisis since the Great Depression and, like it or not, to …

America is enmeshed in the most debilitating worldwide financial crisis since the Great Depression and, like it or not, to the degree it will be ameliorated, China will have to play a major role. Good, consistent bilateral relations between America and China are essential for the peace and prosperity of the 21st century. What’s more, if there is no strategic partnership, the outcome risks are worse than strategic competition. This is why American misperceptions are disturbing and dangerous. We must appreciate how China’s leaders think, especially President Hu Jintao.

Speaking to foreign journalists at the 2008 Beijing Olympics, President Hu summarized his vision: “The current dream of the Chinese people is to accelerate building a modern country, realize the great renaissance of the Chinese nation and, with the peoples of the world, seek peaceful progress, amicable co-existence and harmonious development.” At the same time, he added, “as China deepens reform of the economic system and achieves sound and fast economic and social development, we will continue pursuing comprehensive reforms, including reforms of the political system.”

To understand the thinking of China’s current leaders one must understand China’s history. After a century of foreign subjugation and humiliation, and decades of ideologically induced domestic oppression, in December 1978, two years after Mao Zedong’s death, Deng Xiaoping initiated revolutionary reforms. (China is celebrating the 30th anniversary of reform and opening up, a big deal across the country.)

Though political freedoms remain restricted, personal freedoms are arguably the most expansive in Chinese history. China’s greatest change is the mentality and spirit of its people— their attitudes and outlook, confidence in themselves and their country, enthusiasm to reach out to the world and, yes, their real-life personal freedoms. (Forty years ago, no one would have dared utter the political jokes disseminated today by text messaging on millions of mobile phones— not even in the privacy of one’s own bedroom.)

Yet, China’s leaders speak among themselves of “twin nightmares.” One is an economic nightmare of slowing growth and environmental damage, exacerbated by shrinking markets for their exports, energy shortfalls and unsustainable development. The other is a political nightmare of envies, tensions and fissures erupting from social disparities made blatant by the uncontrollable flow of information through media, mobile phones and the Internet.

Decades ago, when Chinese leaders ruled by fiat, they could solve problems peremptorily, whether by commanding the centralized economy, instituting political mass movements or appealing to emotional (even xenophobic) nationalism. But past patterns of state behavior are no longer viable. Since China’s economy is integrated into the world’s economy and the private sector generates much of the country’s growth, the government cannot wield arbitrary power without unacceptable disruptions. China is no longer exempt from the norms and practices of great nations.

President Hu acknowledged that: “The problems and contradictions China will face in the next decades may be even more complicated and thorny than others…with its social structure and ideological setup also in major shake-up.” Furthermore, he said, “Independent thinking of the general public, their newly developed penchant for independent choices and thus the widening gap of ideas among different social strata will pose further challenges to China’s policy makers.”

China’s fundamental problem is an addiction to growth, perilously combined with a widening gap between rich and poor, imbalances that the Communist Party calls China’s “most serious social problem.” China must grow because, with millions of workers laid off from moribund state-owned enterprises and with legions of young people entering the workforce, unemployment could threaten social stability. There are dramatic differences between eastern coastal regions and western inland regions, between urban and rural residents, disparities that are getting worse, driven by this need for growth. Optimum growth comes most efficiently from areas that are the most developed, and while such growth increases the vibrancy of the economy overall, it exacerbates the imbalances in society, which leads to social unrest.

President Hu is now faced with the natural consequences of the country’s prodigious economic transformation, which, along with China’s historic success, have spawned complex and interwoven issues, issues that are more complex than those faced by his predecessors. China’s leaders know that they must be flexible and innovative, consider diverse opinions and make measured decisions. In a word, they must have vision.

President Hu’s overarching vision is summarized by three slogans domestically—“Harmonious Society,” “Scientific Perspective on Development” and “Putting People First”—and by two slogans internationally—“Peaceful Development” and “Harmonious World.”

Harmonious Society is the goal, stressing social and political reform and seeking fairness and equity (if not equality) across China’s diverse populations and geographies.

Scientific Perspective on Development is the strategy for achieving the goal; it calls for integrated sets of solutions to arrays of economic, social, political and cultural problems— though always keeping economic development as the primary driver—and it seeks the rectification of economic imbalances and the requirements of sustainable development and environmental protection.

Putting People First is the reason for setting the goal, the underlying motivation that explains why the Harmonious Society is worthy of being China’s goal. In this sense, Putting People First is the most fundamental principle and on this foundation all else is built. (I list it third, rather than first, only because Harmonious Society and Scientific Perspective on Development are more prominent; in terms of logical flow, Putting People First does indeed come first.)

Peaceful Development conveys that no matter how strong China will become, China has learned the lessons of world history: It will remain a bulwark of stability in international affairs and it will never threaten its neighbors.

Harmonious World expresses the long-standing Chinese view that the world is “multi-polar,” its diversity should be appreciated and the rights of nations to choose their own systems without threat of intervention by others is sacrosanct.

President Hu’s description of a Harmonious Society is one that “should feature democracy, the rule of law, equity, justice, sincerity, amity and vitality.” It “will give full scope to people’s talent and creativity, enable all the people to share the wealth brought by reform and development, and forge an ever-closer bond between the people and government.”

The political philosophy of China’s leaders, generally expressed by aphoristic slogans, is normally dismissed by foreigners, even by China scholars, as just so much empty rhetoric or blunt force mass manipulation. This is a mistake. Much can be learned from analyzing and appreciating the slogans of China’s leaders, which characterize the issues and attitudes of the times.

Perhaps the primary policy-directing slogan is President Hu’s “Scientific Perspective on Development,” which optimizes multiple social, political and environmental objectives while maintaining economic growth as the primary objective. When one speaks to high officials, particularly in the provinces, it is abundantly clear that they take these slogans seriously. These local leaders know their careers will depend on how well they implement these policies (not just talk about them). For example, Scientific Perspective on Development sets sustainable development as a critical objective and thus marks the evaluation of senior administrators based on measures of efficiency, such as increasing provincial gross domestic product (GDP) per unit of energy utilization. I remember a lackluster meeting with a leader of a western province, which instantly turned exuberant when I inquired how he was applying President Hu’s Scientific Perspective on Development. If China’s officials take these slogans seriously in implementing policies, so should we in understanding Chinese policies and the officials who set and implement them.

What’s added at this new stage of China’s development are a host of other requirements for constructing a Harmonious Society, including (but not limited to): rebalancing wealth and standards of living among sectors and classes (i.e., rural vs. urban); an environment that minimizes pollution and allows people clean air to breathe and water to drink; access to quality medical care and old-age protections; human rights, expressed by the complete range of personal and social freedoms, such as freedom of personal speech (but not the complete range of political freedoms, such as freedom of public speech or freedom of assembly); the rule of law; democratic participation in the process of governance (through increasing transparency but not multiple parties); and equality for all citizens, rural and urban, in the human experience, such as in receiving quality education and access to cultural activities (if not yet in the possession of material things).

Scientific Perspective on Development is, in essence, an optimizing mechanism that recognizes multiple objectives simultaneously and seeks to generate the highest aggregate benefit of all objectives combined, “weighing,” as it were, all of them together at the same time. The result, if done properly, yields the greatest benefit of all objectives collectively, but is unlikely to yield the greatest benefit of any single objective individually.

China should be applauded, not only for its dramatic economic development but also for its new commitment to harmonize the diverse interests of society in creating optimum living conditions for its citizens. The task is far more complex than economic growth alone, and it behooves the international community to support and encourage President Hu and China’s leaders in their vision and maturity.

I am hopeful of China’s ultimate success, provided no exogenous world events are disruptive, but no one should underestimate the complexity and difficulty of this next large leap in China’s national transformation, moving from pure economic development to the structuring of a broad-based harmonious society. China’s success will be America’s success.

Robert Lawrence Kuhn, an international investment banker and public intellectual, is senior advisor to Citigroup and author of the forthcoming The Inside Story of 30 Years of Reform: How China’s Leaders Think and What This Means for the Future. His public television series, Closer To Truth, presents the meaning and implications of frontier science— www.closertotruth.com.

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.