Feminism in China

Feminism has had “a prominent role… in China’s revolutionary history… China’s ruler Mao Zedong famously proclaimed that ‘women hold up half the sky.’ Propaganda images in the 1950s and ’60s showed smiling, muscular female welders and factory workers laboring to boost industrial production.”  The importance of sexual equality was institutionalized in the law when China’s first Civil Code was released in 2020.  “Husband and wife are equal in marriage and family,” according to Article 1055.

But neither propaganda nor laws have changed the underlying cultural reality that China’s “deep-rooted gender roles often place the bulk of housework and childcare on women, making it difficult for them to balance work or study with motherhood.”  (Hmm… I wonder why this sounds so familiar.)

In 2015, a group of feminists planned a “multi-city protest aimed at sexual harassment on public transport.”  To the surprise of no one, five of the leaders – later called China’s Feminist Five – were arrested “on suspicion of ‘picking quarrels and provoking trouble.’” After an international outcry, they were released 37 days later, but were kept under nerve-wracking surveillance for several years.  According to Dr. Leta Hong Fincher , who wrote a book about the Feminist Five, this “marked the birth of [a] new feminist movement that has had remarkable momentum in the years since, in spite of a really brutal crackdown from Beijing.” 

Since then, China’s MeToo movement has been miniscule compared to that in the US.  But the fact that there have been MeToo cases at all can be seen as a huge breakthrough in a country that controls both social media and the traditional press.  The most well-known case to date involved international tennis star Peng Shuai.  On November 2 last year, she published a detailed social media post accusing Zhang Guoli of forcing her into sex three years before.  As one of the seven members of the Politburo Standing Committee, Zhang is one of the most powerful people in China.

According to the New York Times “state censors quickly restricted searches for Ms. Peng’s name on the Chinese internet and deleted the post, but… [the word spread and] in the following hours, netizens logged nearly seven million searches for the post.”  The day after the post, Ms. Peng disappeared from public view.  As explained in a follow-up Times article this February this “prompted a global chorus of concern for her safety.”  She reappeared in February at the Beijing Olympics.  When a reporter asked why the post had been erased within hours of her accusation.  Peng replied “I erased it… Why? Because I wanted to.”

Uh huh.

Beijing residents demonstrate against sexual harassment in 2020

While anecdotes like these give a flavor of the status of Chinese feminism, a more systematic way to see where the Chinese stands in relation to the rest of the world is by looking at “The Global Gender Gap Index… introduced by the World Economic Forum in 2006 to benchmark progress towards gender parity” in four categories: economic opportunities, education, health and political leadership. 

According to the most recent “Global Gender Gap Report”, China ranks #107 of the 156 countries in the study.  (Iceland is #1 with the smallest male-female gap.  The US is #30.)   

But when you look into the underlying data, China actually has the smallest male-female gap in the world in two sub-categories:  professional and technical workers (51.7% female in China) and enrollment in post-secondary education (55.9% female).  And they rank sixth in the world with one of the lowest gaps for “wage equality for similar work.”

That’s the good news.  The bad news is that China earned its low overall rating with scores on many other sub-categories, including the percent of women in ministerial positions (#147 of 156).  Despite the fact that “Chinese law states that women and men should have equal rights in all aspects of political life… [and] 30 per cent of the members [of the Chinese Communist Party] are women… [women] remain marginalized in politics.”  China’s central decision making body, the Politburo has 25 members, but only one is a woman:  Vice-Premier Sun Chunlan.  And “no woman has ever held a seat on the seven member Politburo Standing Committee.”   That’s where the real power lies, and women don’t have it.

An even more critical subcategory is sex ratio at birth, where China ranks dead last (#156 out of 156 countries) with just 89 women born for every 100 men.     

To some extent, this gap can be traced to China’s infamous “One Child Policy” instituted in 1980 to reduce population growth.  Given a cultural preference for sons, the policy made a bad problem worse by leading “to a rise in sex-selective abortions, with families often choosing to abort girls.”  For more about how this law trampled on reproductive rights and destroyed families and individuals, see my post in this blog entitled “How families are changing.”  Or better yet, watch the 90-minute documentary “One Child Nation” (streaming on Amazon). 

From the government’s point of view, the law reduced population growth too much, and it was revised to become the “two child policy” in 2016.  At that time, the government “told couples that it’s their patriotic duty to have two babies. They’ve dangled tax breaks and housing subsidies. They’ve offered to make education cheaper and parental leave longer. They’ve tried to make it more difficult to get an abortion or a divorce.”  When all that did not have the desired effect, it was replaced in 2021 by the “three child policy.”  

If future policies try to encourage four children, then five, then six or more, that won’t work either.  The problem is that Chinese society has largely become urbanized, and no law has been able to overcome larger cultural forces.  “Add into the mix a tendency among millennial women to delay marriage and have even one baby — or none at all — and it’s a demographic time bomb.”

None of the policy changes to date have reduced widespread anxiety “over the rising cost of education and of supporting aging parents, made worse [in China] by the lack of day care and the pervasive culture of long work hours.”  In short, as one social media user summed the up challenge of getting people to have more children: “Don’t [policy makers] know that most young people are already tired enough just trying to feed themselves.”

As a result of all this, according to the most recent census, there are about 35 million more men than women in China.  And the gap in marriageable age males continues to get worse as the “one child” generation grows up. From now until about 2060, “three single males [of marriageable age] will be competing for [every] two single females.”  

The surplus of young males has already caused an increase in sexual trafficking.  According to WION, an Indian TV station, “Women have been trafficking from northern Myanmar… [and] sold for anything between 3,000 to 13,000 dollars to Chinese families… Once bought, women were held prisoners and pressured into producing babies.”

Many solutions have been floated to try to solve the gender imbalance. One publicity hungry economist even wrote that China should consider polyandry.  The Washington Post called this the “two husband strategy” and quoted such outraged social media comments as “He wants to legalize sex slaves,” and “It made me throw up.”

Summing up these and other developments in a recent interview entitled “The state of Chinese Feminism in 2022,” Dr. Fincher concluded that there is a “glimmer of hope…that because there is much more awareness about widespread sexism and injustice towards women in China, that all of these attempts to push back against the Chinese government… are having an effect.”

One big advantage that feminists have, Dr. Fincher went on to explain, is that “the Chinese Communist Party itself was… founded on the basis of gender equality… [This is] one of the reasons that this feminist awakening continues…  The Chinese government does not want to appear to be completely intolerant of any discussion of women’s rights…”

The Chinese diaspora

More than 10 million people who were born in China now live in other countries, plus another 50 million or so descendants who identify as Chinese, according to the International Organization for Migration.  They are concentrated largely in Southeast Asia.  Indonesia, Thailand and Malaysia have the highest populations of Chinese, with the United States in fourth place at over 5 million people.

President Xi Jinping has “prioritized efforts to cultivate support of the diaspora as well as all of its citizens who study and live abroad, which state media has collectively referred to as ‘overseas Chinese’… [He has also] called for ‘closely uniting’ with overseas Chinese in support of the Chinese dream.”

There’s just one little problem. As Timothy Heath, a research analyst at the RAND think tank, put it “The Chinese diaspora, like those of other ethnicities, is a heterogeneous group with diverse views, values, and identities. Many regard themselves as of Chinese heritage but feel no allegiance to the People’s Republic of China.”

In fact, some of them hate China.  That’s why they left.

For example, in her bestselling memoir Beautiful Country, Qian Julie Wang wrote about moving to Brooklyn from Zhong Gui, China when she was seven years old.  Her father was critical of the government and had long faced attacks and harassment in China.   He moved to New York around 1990, and Qian and her mother followed a few years later, after he had saved enough money to pay for their passage. 

Life was not easy in the US.  Both of Qian’s parents were college professors in China, but in New York they were just two more undocumented immigrants.  The best jobs they could get were in laundromats, sushi factories, and a sweatshop where her mother worked 12 hours a day, cutting extra strings off shirts and pants.  She was paid three cents for each garment.  Three cents.  But no matter how hard and unpleasant these jobs became, Wang wrote, her father “would never forget what [the Party] did to him.  He would happily eat America’s shit before feasting on China’s fruits.” (p. 88)

Wang would probably not have found time to write a memoir if she had grown up to work in a sweatshop.  US streets may not have been paved with gold, but her parents’ values paid off, their economic situation gradually improved, and Wang ultimately attended Yale Law School, “where [she] could not have fit in less.” (p. 3)  This type of trajectory is not uncommon because “With a tradition of hard work and frugality, Chinese migrants tend to earn their place in society by saving their income and investing in property to tide them through economic hardship… [And] whether they are rich or poor, Chinese families abroad are willing to make sacrifices to ensure that their children get the best education possible.”

Some emigrants have a much more positive view of China than the Wangs.  According to a brief history of the overseas Chinese on a UNESCO website, many of them “continue to have strong ties to their home country. They believe that China is their homeland – an attachment that often lasts for generations. One of the main reasons they migrate is to be able to support their families and friends – they have a culture of making remittances to help those at home financially.”

Within the overseas Chinese, this sub-group is seen by the Party “as a tool of influence, not only for the promotion of China’s culture and language, but also for the facilitation of lobbying for business purposes, economic growth and diplomatic purposes.”

At a time of growing tension between the US and China, some of these efforts have dark overtones, as revealed in Hidden Hand, which one reviewer called “a remarkable book with a chilling message.” According to its authors — Clive Hamilton and Mareike Ohlberg — “An understanding of CCP influence activity in the West is impossible without an understanding of the CCP’s united front work, the objective of which is to induce, co-opt and coerce those outside the Party to form a ‘united front’— or coalition of groups that act in ways that suit the Party’s interests—and to undermine those it designates as enemies.”  (p. 24)

Two years ago in this blog, I wrote about China’s persecution of the Uighurs, “an ethnic group of about 11 million Sunni Muslims who live primarily in Xinjiang, the westernmost province of China.”  As a result of this persecution, a number of Muslim Uighur activists have left China, only to find that China’s malign influences do not end at the border.  According to Hidden Hand (p. 122) “Uighurs in Canada, Britain, Sweden and Germany have been told that unless they agree to spy on fellow Uighurs they will never see their families again.”  As one Chinese Canadian dissident and activist put “Some might think that once you flee China, you are free.  But you are never free.” 

Such threats can even extend into the classroom (p. 210).  “In recent studies, several professors across the US [have] reported that they assumed their Chinese students were reporting on each other. Some said that Chinese students had approached them directly with concerns about being denounced.”  While some of these reports are probably paranoia, others have been based on confirmed incidents.  For example, at “the Australian National University, a comment made in class by a Chinese student was reported to the embassy, and her parents in China received a visit from the Ministry of State Security, warning them about their daughter’s behavior. The Ministry of State Security visit [in China] came two hours after she made the comment [in Australia].”

In today’s post-pandemic age of globalization, the special challenges facing members of China’s diaspora are growing more complicated.  If you followed the Winter Olympics last month, you probably know about Eileen Gu, the first woman to win three freestyle skiing gold medals in a single Olympics.  The bi-racial 18-year-old was raised in California by her single mother, a Chinese immigrant.  Next year she will continue to live in California when she starts her freshman year at Stanford, but she chose to compete for China in the Olympics.  You can imagine the uproar in social media on both sides of the Pacific when she chose to compete for China, from horrified Americans to smug Chinese.

Olympic gold medalist Eileen Gu was raised by a Chinese single mother in California but chose to compete for China.  She has made millions as a spokesperson for both Chinese and worldwide brands.   

Growing up, Gu visited Beijing frequently and she is fluent in Mandarin. Gu has repeatedly refused to answer repeated questions about whether she had to give up her American citizenship to compete for China.  Instead, she would only answer cryptically “When I’m in China, I’m Chinese and when I go to America, I’m American.”

If Gu’s decision was based on business, it was an excellent one.  Before the Olympics, she had already earned over $35 million in branding deals with such Chinese brands JD.com, Anta, China Mobile, and the Bank of China.  These earnings are expected to skyrocket now that Gu is a star.

The challenges faced by Gu are dwarfed by those of the millions of Chinese emigrants who’ve never won an Olympic medal, or even a high school track meet.  Instead, they face a wave of discrimination that has only increased as our relations with China have deteriorated.

Since the onset of COVID-19… Asians of all ethnicities had been increasingly scapegoated, demonized, and physically and verbally assaulted… Stop AAPI hate [an Asian American Pacific Islander coalition formed in March 2020] reported over 9,000 racially motivated attacks on Asian Americans between March 2020 and June 2021.”

In an opinion piece for the Washington Post, Chinese American writer Frankie Huang summed up the diaspora challenge like this:  “In the United States, we’re often treated as perpetual outsiders who must constantly prove our loyalty…  [But] being Chinese American need not be considered a fractured experience: There’s no division between where the Chinese part of me ends and the American part begins.

The Rule of Law – China style

Last year, China implemented the first comprehensive legal code in its 5,000 year history.  The Civil Code of the PRC (People’s Republic of China) consists of 1260 articles regulating personal and business life, including property law, inheritance, contracts, torts, and much more.  (Note: It does not include criminal law, which was discussed in a previous post in this blog.)

Here are a few examples from the section on marriage and the family:

  • Adult children are required to financially support their parents. (Article 1067)
  • If parents die or are unable to raise their children, elder brothers or sisters… have the duty to raise their minor siblings. (Article 1075) 
  • Couples who file for divorce must observe a 30 day cooling off period. (Article 1077)
  • A husband may not file for divorce during his wife’s pregnancy or within one year after his wife delivers.  (Article 1082) 
  • Family members shall respect the elderly, take care of the young, help each other, and maintain a marital and familial relationship of equality, harmony, and civility. (Article 1043)

Wait a minute.  Could this really be the first comprehensive legal code in 5000 years of Chinese history?  Yes it could.

The Chinese do not have a long history of written laws or judicial precedents.  Instead, the  Confucian tradition “distrusted written laws and put their trust in people and innate human goodness.”

Relying on human goodness went much better some times than others.  It all depended on how good each ruler was.  In effect, for thousands of years “the law was whatever the emperor said it was, and there was no institutional body in China that could overcome his decrees.”

Western experts often refer to the Chinese system as “Rule BY law.”  In contrast, the Western system of “Rule OF law” implies “that there is a body of law that is superior to the current ruler, which constrains the ruler’s decision making… Traditionally, Chinese political philosophy emphasized an avoidance of conflict and maintenance of social harmony through deference to benevolent authority… Disputes were [handled]… on the local level by respected elders… Law and litigation were viewed as unnecessary [since]… government and society were fundamentally moral.”

Because of this tradition, a system that resembles Western courts has been slow to develop.  As late as 2013, China’s equivalent of the Chief Justice of the Supreme Court – Wang Shengjun – had no formal legal training whatever.  However, his replacement – Zhou Qiang, still President of the Supreme Court of China – had an M.A. in law and was part of the first generation of a dramatic expansion of law schools and graduates. 

The total number of lawyers in China increased from 2,000 in 1979, to over 522,000 in 2021, according to the latest report from China’s Ministry of Justice.  (By comparison, the US has 1,300,000 lawyers to serve a population less than ¼ the size of China’s.)

A copy of China’s first comprehensive civil code in 5,000 years.

Last year, the CPC (Communist Party of China) Central Committee also adopted its first five-year plan to continue to establish the rule of law to “help the state gain strength and prosperity. It states that the promotion of rule through law is necessary in order to ensure the resurgence of the PRC in the long term and to realize the so‑called ‘Chinese Dream’ of once again becoming a world power.”  In case citizens have any doubt about what this really means, the plan also contains a number of guiding principles, starting with “maintaining the centralized and unified leadership of the CPC as the most fundamental guarantee of the rule of law in China.” 

In every society, the purpose of laws is to maintain order.  In China, as Harvard Law Professor William Alford put it in “The China Questions” (p. 215), order is “defined by the Party [as preserving] the Party.”

The interests of the CPC are also considered more important than any law.  “The party decides what is part of the state legal system and what is ‘sensitive’. Sensitive matters are defined by the CPC and assessed outside the law and are therefore not under the control of the state judiciary.”

Several more five year plans will be required until the “socialist rule of law with Chinese characteristics… basically takes shape” by 2035.  The 2021 five-year plan also “rejects an independent judiciary and the principle of separation of powers as ‘erroneous western thought’. Beijing is explicitly interested in propagating China’s conception of law and legal practice internationally… and enforcing its interests through the law.”

The phrase “with Chinese characteristics” emphasizes the perceived importance of creating a uniquely Chinese system which is consistent with the country’s traditional practices, and which is aimed to increase the power of the Party.

Many of the most interesting aspects of the system are closely related to the characteristics of Chinese culture described in previous posts, including the relativity of truth, non-linear thinking, and saving face. 

For example, China’s traditional approach to the law includes both non-linear thinking and relative truth.  According to University of Michigan psychologist Richard Nisbett in “The Geography of Thought,” (p. 74) legal disputes do “not consist… of a contest between opponents… Typically, disputants take their case to a middleman whose goal is not fairness but animosity reduction… There is no attempt to derive a resolution to a legal conflict from a universal principle. On the contrary, Asians are likely to consider justice in the abstract, by-the-book Western sense to be rigid and unfeeling.”

This difference can be disorienting for Western businesses that bring a lawsuit in a Chinese court.  As boutique law firm Harris Bricken noted in an overview of “China litigation and arbitration,” “Chinese judges place more emphasis on the overall context and ‘fairness’ of the case and much less on legal technicalities than their American counterparts. For example, if a company executes a contractual obligation poorly because of an incompetent or uncaring employee, a U.S. court would almost certainly hold the company liable for all damages arising from the breach. A Chinese court, on the other hand, might either not find liability or severely limit the damages, believing it unfair to penalize a company for the incompetence of one employee.”

The concept of relative truth can also be seen, according to the China Justice Observer, in the fact that judges “attach the greatest importance to documentary evidence. The role of witness testimony and physical evidence is almost negligible… [because] false testimonies of witnesses and false statements of the parties are very common in Chinese civil litigation… [This] undermines the trust of judges in what witnesses and the parties say.” 

Another key cultural difference in China is that, again according to Harris Bricken, “settling a case is often viewed as losing face. The Chinese company you are suing may prefer to lose the case and blame it on the judge than to settle and be viewed as having been at fault.”

If a settlement is agreed to or a judge awards damages, the “winner” may have problems collecting the amount due.  “Chinese courts often lack the authority… to force collection on their judgments. In addition, Chinese companies sometimes find it more cost effective to avoid a judgment by shutting down and re‐opening under a new name.”

In other words, if you work for an American company that has a dispute with a Chinese partner, and you decide to take them to court, the result may be very different than you would expect.

In the future, we can expect more of the same.  According to an article in The Economist entitled “China is becoming more assertive in international legal disputes,” the five year plan also “calls on China to help shape international law, to turn itself into the first choice of jurisdiction when resolving cross-border disputes and to encourage the use of Chinese law abroad.”

This is quite troubling since the Chinese system “bears no resemblance to the Western understanding of the rule of law. Its objective is for the law to better control state actions, but without limiting the power of the party in any way.”

Thus, the future of international civil law is still another area where the rise of China threatens US interests.  No one knows exactly how this will play out, but, for us at least, it doesn’t look good.

Are the people of mainland China just like Americans? (Part 2 of 2)

Part 1 of this post listed seven characteristics of mainland Chinese culture which can complicate political interactions with the West, and discussed the first three:  a high value on order, collectivism over individuality, and saving face.  This post will explain the remaining four:  political patience, relationships as the key to success, non-linear thinking, and the relativity of truth.

Political patience is one of the most powerful weapons in China’s diplomatic and military arsenal, particularly against an impatient superpower like the US.  As Harvard Professor Graham Allison put it:  “Americans tend to focus on the present and often count in hours or days. Chinese, on the other hand, are more historical-minded and often think in terms of decades and even centuries… U.S. politicians take to Twitter or announce alliterative, bullet-point policy plans that promise quick solutions. In contrast, Chinese leaders are strategically patient: as long as trends are moving in their favor, they are comfortable waiting out a problem.”

Exhibit A for the application of political patience is Hong Kong.  In 1898, the British Empire obtained a 99 year lease to the island.  By the time it expired in 1997, the UK and China had negotiated an agreement for a 50 year transition period under the principle of “one country, two systems.”  This assured that Hong Kong would maintain its democratic government and capitalist economy separate from the mainland until at least 2047.

Danger signs began appearing within a few years, with Beijing pushing for more control and protestors in Hong Kong pushing back.  This peaked in 2019, when Beijing proposed a new law which would permit Hong Kong residents accused of crimes to be extradited to the mainland.  Half a million took to the streets of Hong Kong to protest.  When the extradition law was finally withdrawn after seven months of protests, activists said it was too little too late, and the protests continued.

In Hong King, protests like this disappeared in 2020 after Beijing passed a strict new security law.

By May 2020, Beijing had had enough and announced that its legislature was considering a sweeping new national security law to govern Hong Kong.  According to a New York Times report, the law defined “four offenses — separatism, subversion, terrorism and collusion with foreign powers — with penalties up to life imprisonment. It [also] demanded oversight of schools and media.”  (Maybe it was just a coincidence, but China put this policy into effect at a time when Washington was distracted by the coronavirus crisis, and a series of Black Lives Matter protests.) The law was passed on June 30, 2020 and went into effect the same day. 

In less than two years since then, over 100 of Hong Kong’s most well-known activists have been arrested, and the crackdown is still underway.  Just a few weeks ago “police arrested six current and former executives… [of] Stand News, one of the last independent news organizations in Hong Kong… in predawn raids, accusing them of a conspiracy to publish ‘seditious’ material.”

Fortunately, there are signs that the US is becoming more sophisticated about dealing with China’s political patience.  In January 2021, Rush Doshi was appointed director for China at the National Security Council.  Doshi is the author of a recent book entitled “The Long Game: China’s Grand Strategy to Displace American Order.”  While some scholars believe that China’s leader Xi Jinping is responsible for China’s current aggressiveness, Doshi argues that Xi’s actions are all part of a master plan based on political patience.  So we can only hope that the US will factor China’s political patience into its thinking… at least until a new administration disagrees. 

Another East/West difference which can complicate mutual understanding is the fact that in China relationships are the key to success.  The Mandarin term guanxi has become so common that it is defined in the Oxford English dictionary as: “the system of social networks and influential relationships which facilitate business and other dealings.”  But that definition is just the start.  The concept of guanxi is so complex and so critical that entire books have been written about it.

Confucianism holds that the basis of society lies in the family, and that proper behavior starts within the family circle.  One’s network of personal connections — and the importance of guanxi — builds out from there to include friends, friends of friends, and business partners. All of these relationships must be built over time, to assure trust and mutual respect.

In this context, the most important fact about guanxi is, as Richard Conrad put it in Culture Hacks (p. 166 and 187):  “China has one set of rules for conduct within the extended family or clan group and a much different set of rules for those outside of the group… When an official steals money from the state to help his family in China, he sees himself as being virtuous.”

If it’s OK to steal from fellow citizens as long as they are outside your network of connections, imagine how foreigners can be treated.  Conrad also wrote (p. 192) that after traveling to 31 of the 32 provinces in China, “[I] have never been robbed, though I have, from my Western perspective, been cheated in almost every province I visited.”  As James McGregor summed it up in his book One Billion Customers (Kindle loc 269):  “China has allowed foreigners in only on its own terms, and those terms are often opaque, contradictory and bewildering… negotiations can take forever and the resulting agreements can be promptly ignored.” 

When it comes to US-China communication, one of the most confusing and frustrating differences is the next on our list:  non-linear thinking.

When I earned a PhD in Psychology several decades ago, I spent five years learning to identify the underlying causes of human behavior using linear logic, in which A causes B and B causes C.  But (Culture Hacks, p. 112) “the Chinese believe the world is far too complex for simple linear logic. Rather than focusing on unifying rules or patterns, Chinese thinking became as complex as the perceived world.”

This difference extends even to the games we play.  In the West, chess is a popular linear game in which each move proceeds logically to the next.  In China and other Asian countries, a more popular game is “go,” which is played on a larger board with many more possible moves.  To win, one must surround the other player’s pieces, an art in which each move can be affected by the overall context of the board.

Go is a far more complicated game than chess.  Computers became able to beat skilled human chess players several decades ago, most famously in 1997 when IBM’s Deep Blue computer beat world champion Gary Kasparov in a six game match.  But for go, a comparable result required another two decades of research, until Google’s Alpha Go program beat 18-time world champion Lee Sodol in 2016.

This sort of situation-dependent complexity can be especially frustrating for Westerners when combined with the seventh and last trait from our list:  the relativity of truth.  “China is a relative society and doesn’t believe in absolute right or wrong… If one can get away with a crime and not get caught, then there is nothing wrong with it.”  (Conrad, p. 192)

Like so many other things in China, truth depends on context.  What is right in one context may be wrong in another.  This can be extremely confusing to Westerners.  For example, when Western bankers evaluate the financial position of a company, they look at statements such as “profit and loss” based on the records in a company’s accounting books.  But “Chinese companies will often have one set of books for public investors to see, one set for the government and tax authorities, and then the real set of books… they believe in different truths for different audiences.” (Conrad, p 122)

Even worse, “to the Western mind, once a bargain is struck, it shouldn’t be modified; a deal is a deal. For Easterners, agreements are often regarded as tentatively agreed-upon guides for the future.”  (Conrad, p. 196)

The political consequences can easily be seen in the case of Hong Kong.  In 1984, China and the UK signed the Sino-British Joint Declaration which guaranteed that the “one country two systems” approach to Hong Kong government would last until 2047.  But around the time of the first major Hong Kong protests in 2014, “The government began dismissing [the agreement] as a relic… a Chinese diplomat in London said the declaration was ‘now void,’ according to a British lawmaker.”  For Hong Kong, the “one country, two systems” approach began to be phased out in 2020, 27 years before the agreed upon deadline of 2047.

The US’s naïve belief that China would live up to its signed agreements is also behind a number of other diplomatic mis-steps, right up to the fact that, as a headline in Fortune magazine put it that “The centerpiece of Trump’s trade deal with China ‘failed spectacularly’.”

The seven differences described here unquestionably complicate today’s relationships between China and the US.  But on the positive side, as Nisbett noted in The Geography of Thought (p 227) there is “evidence that cognitive processes could be modified even after relatively limited amounts of time spent in another culture.”   If globalization continues to march on at its pre-pandemic pace, it is reasonable to expect that these cultural differences will gradually shrink and even disappear.

But until then, as Harvard Professor Graham Allison wrote in Foreign Affairs,  “misunderstandings are magnified, empathy remains elusive, and events and third-party actions that would otherwise be inconsequential or manageable can trigger wars that the primary players never wanted to fight.”

Are the people of mainland China just like Americans? (Part 1 of 2)

If you had been born in mainland China anytime in the last century, you, your parents, and your grandparents would have lived through a number of major upheavals including:

– The Chinese Civil War (1927-1949) between the Kuomintang government of the Republic of China and the Chinese Communist Party.

– The Japanese occupation of China in World War II (1937-1945).

– The great famine (1959-1961) in which more than 30 million died.

– The Cultural Revolution (1966-1976) in which Mao Zedong inspired youth to violent class struggle to root out the “Four Olds”:  Old Ideas, Old Culture, Old Habits, and Old Customs.  They did so with a vengeance.  The total death toll is unknown but has been estimated as high as 20 million.

– The fastest economic growth of any country in history (1978-present).

Mainland Chinese people from previous generations went through much worse.  Over the course of several thousand years of Chinese civilization, there has been a near constant series of wars between competing regional factions and warlords. In his thought provoking book Has China Won (p. 11), Kishore Mahbubani, former president of the UN Security Council, argues that “As the Chinese look back over two thousand years, they are acutely aware that the past thirty years under CCP rule have been the best thirty years that Chinese civilization has experienced since China was united by Qin Shi Huang in 221 BCE.”

Given the head spinning changes of the last century, it would not be surprising if mainland Chinese wanted a little peace and quiet, and placed a high value on order.  This is consistent with an ironic “Chinese curse,” usually translated as “May you live in interesting times.”  According to Richard Conrad, a researcher who lives in Asia, a more accurate translation from the original Mandarin would be far more forceful: “I’d rather be a dog in times of peace than a human in times of upheaval.” The high value that mainland Chinese place on order is also consistent with Confucius’ emphasis on hierarchy and harmony, as expressed in his “first imperative: Know thy place.”   (Culture Hacks, p. 120)

This is the first of seven mainland Chinese cultural characteristics which can have a major impact on political relations with the West:

– High value on order

– Collectivism over individuality

– Saving face

– Political patience

– Relationships as the key to success

– Non-linear thinking

– The relativity of truth

While others have proposed different lists (including one quoted in my first post in this blog), there can be little doubt that significant differences exist. If you are not convinced, simply Google a phrase like “doing business in China” and start reading all the books about how radically different it is from doing business in the US, based in part on Chinese culture. 

There is also a body of academic research supporting significant cultural differences.  In The Geography of Thought, social psychologist Richard Nisbett conducted and reviewed dozens of studies and concluded (Kindle loc 147) that “there are… dramatic differences in the nature of Asian and European thought processes.”  People think differently about the world as a result of societal differences that date back to ancient Greece and China.

But in today’s politically correct world, few Americans understand these differences or their implications.  And it can be politically risky to even talk about them.  Just ask Kiron Skinner.  In 2018, she was appointed Director of Policy Planning at the US Department of State, and given the task of overseeing the development of a new US policy on China.  But in April 2019, Skinner gave a speech which characterized the US-China relationship as “a fight with a really different civilization and a different ideology… It’s the first time that we will have a great power competitor that is not Caucasian.”  Among the political implications, Ms. Skinner argued that “it would be impossible because of cultural differences for the United States to make appeals based on human rights to Chinese and use that as a wedge against the Communist Party.”  

Skinner’s warning is based on the fact that for several decades China has been promoting a different definition of human rights, in which, as Foreign Ministry spokesperson Wang Wenbin put it in February 2021:  “China… Regards the rights to subsistence and development as the primary, basic human right.”  For the Chinese, if you and your children don’t have enough to eat, THAT is a violation of human rights that trumps all others.  Similarly, CCP officials often talk about events in the US like crime, riots and school shootings as violations of the security aspect of human rights, and signs of the superiority of their system     

Whether you think China’s definition has a certain common sense appeal or is an evil and convoluted twist of the very phrase, the gap in understanding does support Skinner’s conclusion that this issue is not a promising place to start negotiations.  But that is exactly what the US often seems to be doing.  For example, a few weeks ago the US announced a diplomatic boycott of Beijing’s Winter Olympics in February.  White House Press secretary Jen Psaki described the reason as “egregious human rights abuses and atrocities [of Muslim Uighurs] in Xinjiang”  (For background, see this previous post.)

Whatever their validity, Skinner’s comments about “non-Caucasians” led to a huge outcry over racism, just about everywhere except China.  There, Hong Kong’s South China Morning Post ran an article entitled “Culture and race can’t be ignored in US-China rivalry – American official Kiron Skinner is right.”  A few months later Skinner was forced out of her job, in part due to the public outcry over her “racism.”  Which is a bit ironic given that Skinner is herself African American.

Skinner’s views can be traced to Samuel Huntington’s highly influential 1996 book The Clash of Civilizations which argued (p. 20) that “culture and cultural identities… are shaping the pattern of… conflict in the post-Cold War world.”  Admittedly, among political scientists this is a minority view.  Most instead favor Francis Fukuyama’s  view that that the entire world would gradually converge on a single system: liberal democracy with free market capitalism, as explained in his book The End of History.

Fukuyama’s view has been widely accepted, Nisbett wrote (p. 220) “especially [by] Americans, who tend to assume that everyone is really an American at heart, or if not, it’s only a matter of time until they will be.”  I wish I believed Fukuyama, but I side with Huntington in thinking that the cultural split between East and West will be an important and continuing source of tension for the foreseeable future. 

The second cultural difference listed above is collectivism over individuality.  As one reviewer of Nisbett’s book put it “The key concept in East Asia is harmony, where collective goals are held as more important than individual goals.”  Or, in the more colloquial words of Conrad’s book (p. 201), in China “the emphasis is on avoiding disrupting the harmony of the group by being different, thinking differently, or being a nail that sticks out.”

From an early age, American children are taught to be individualistic while mainland Chinese children are taught the value of collective values and action.

Of course, this is in direct contrast to the high value Americans place on individualism.  In his fascinating Foreign Affairs article China Vs. America – Managing the Next Clash of Civilizations, Harvard Professor Graham Allison noted that “the Chinese term for ‘individualism’—gerenzhuyi—suggests a selfish preoccupation with oneself over one’s community. China’s equivalent of ‘give me liberty or give me death’ would be ‘give me a harmonious community or give me death.’”

As a result of this cultural difference, “A person from China is more prone to look at how their acts affect the whole instead of how [they] affect them personally. They are more willing to give up and sacrifice for the greater good.”

In the last few years, I can’t remember reading about many Americans who were willing to sacrifice their individual rights for the greater good.  If you have the slightest doubt about the value Americans place on individual rights, try having a conversation with somebody who disagrees with you on vaccination or gun control. 

The third and final cultural gap to be described in this post is “saving face.”  Americans are not fond of looking foolish, but in China this is much much more important.  “The Chinese prize face above all else, and will sacrifice money, honor, and their own health to gain it.”  (Culture Hacks, p. 124)

A lack of understanding of face is one of the many cultural traps that faces Americans hoping to do business in China.  There are many ways to go wrong.  For example, according to Conrad (p. 210): “Westerners can sometimes inadvertently cause someone to lose face by saying ‘no’ too directly, contradicting something someone says, not listening attentively to someone, interrupting them, criticizing someone publicly, not letting another pay for a meal, turning down a toast, or even not walking as far as possible when sending someone off.”  An article entitled 13 Major Cultural Differences Between China and the United States put it this way: “To prove a point and show yourself in the right, even over business issues, is considered shameful and should be avoided.”

In politics, the lack of understanding of face can cause more serious problems than hurt feelings or lost business.  One examples is described in Conrad’s book (p. 123), “In 1993, soon after becoming president, Bill Clinton bluntly told the Chinese not to conduct any more nuclear weapons tests. Given that President Clinton said this to the Chinese publicly, the only way they could save face and show that they weren’t in a subordinate position to the US, was by publicly testing another nuclear device. To make their point abundantly clear, the Chinese conducted two nuclear tests.”  

Oops.

Part 2 of this brief series will describe the other four cultural traits from the list above, and how to avoid gaffes like Clinton’s, based on a better understanding of US-China cultural differences.

China’s campaigns against laziness and video games

Is it possible to enforce guidelines against laziness?  If anybody can do it, China can.

“A happy life is earned through struggle, and common prosperity requires industriousness,” Chinese leader Xi Jinping said in an August speech about his “common prosperity” initiative (also discussed in my previous post.)  “We must resolutely prevent [ourselves] from falling into the trap of nurturing lazy people through ‘welfarism.’  We must… encourage industriousness and innovation as means to prosperity… with participation from everyone, and avoid… ‘lying flat.’”

The phrase “lying flat” first became popular in China last April after 31 year old LuoHuazhong published a social media post explaining “I have not been working for two years, just having fun and don’t see anything wrong in it… I [just] feel that many things are not worthy of my attention and energy… Do we have to work 12 hours a day in a sweatshop?”  Luo had previously held several jobs since dropping out of vocational high school, such as working 12 hours a day in a tire factory.  Then, he decided he preferred “doing nothing. He quit his job… biked 1,300 miles from Sichuan Province to [his home in] Tibet and decided he could get by on odd jobs and $60 a month from his savings. He called his new lifestyle ‘lying flat.’”

The phrase does not imply lying in bed all day every day, but is instead a state of mind of doing the bare minimum needed to get by.  Luo now eats just two meals a day – mostly noodles, rice, and eggs – and spends about 200 yuan ($31) per month on his minimalist lifestyle.  He supplements his income with occasional part-time jobs, including one assignment at a film studio “that he considered perfect – acting as a dead body in movies.”  Luo spends most of his time reading news and philosophy, and working out, and lives at home sponging off his parents. 

China’s lying flat (tang ping) movement produced many internet memes, including this one which was posted by a cat lover with the caption was “Finally, a social movement I can get behind.”

Government censors did not like the sound of this, and Luo’s original post was soon “scrubbed from the internet. However, copies quickly spread online, sparking lively discussions and videos – many of which garnered millions of views each… they, too, have since been deleted.” 

Despite the censors’ efforts, the concept spread like wildfire, and led to a national “lying flat” movement, complete with T-shirts that say things like “Do nothing lie flat youth,” and “Don’t buy property; don’t buy a car; don’t get married; don’t have children; and don’t consume.”

This concept fell on fertile ground in a country where many Chinese have to work a “996” schedule – from 9 AM to 9 PM six days a week.  But the payoff for all that work can be hard to see since, as David Bandurski, Co-Director of the China Media Project at Brookings put it in one of the best overviews of this movement, “skyrocketing living costs in China’s cities have meant that many young Chinese, even with elite college degrees, find it difficult to cover the basics, much less afford a life of conspicuous consumption.” 

The result, according to Bandurski, is that many workers are beginning to “balk at the Party’s high-minded calls for ‘continued struggle.’” Some observers interpret the movement as “a manifesto against materialism, some suspect it is simply being lazy, and others say this type of defeatist attitude is an inevitable result when people become so overwhelmed and dismayed by the notion of working themselves to the bone that they feel there is no other option but to give up.”

Whatever the interpretation, Communist leadership sees the movement as threatening the economy in two ways.  First, it reduces production by reducing hours worked.  Second, when practitioners spend less, it reduces the consumption which is expected to drive future growth.

Lying flat is just one of the many lifestyle patterns that China hopes to change through its loosely defined common prosperity initiative.   Of all the crackdowns to bring behavior into line with socialist values, the one which is likely to be least popular among teenagers is a new limit of three hours per week on playing video games.  And, oh yeah, the three hours per week must be between 8 and 9 PM on Friday, Saturday and Sunday.  (By comparison, last year the average US teenage boy spent about 21 hours per week playing video games.)

A few weeks before these new rules were announced, a state-run publication compared “video games to ‘electronic drugs’ and ‘spiritual opium,’ eliciting memories of the 1800’s, when millions of Chinese became addicted to smoking opium during the country’s Opium Wars with the United Kingdom.”

According to a New York Times article: “As a more paternalistic government under the Chinese leader Xi Jinping has turned to direct interventions to mold how people live and what they do for fun, gaining control over video games has been high on the priority list… Mr. Xi’s government has increasingly deemed games a superfluous distraction at best — and at worst, a societal ill that threatens the cultural and moral guidance of the Chinese Communist Party.”

The concept of limiting video game playing is not new, but the 2021 total of 3 hours per week represents almost an 80% reduction from the previous Chinese regulation, which limited children to about 14 hours of video games per week (three hours per day on weekends and 1.5 hours on weekdays). 

How could such draconian regulations be enforced?  In China, when people “sign into a game [they must] first provide a mobile phone number, state-issued ID, or even undergo a facial scan.” 

But since we are talking about teenagers, some have already found their way around the bans.  When one Chinese newspaper conducted a survey of parents a month after the new rules went into effect, one reported that his son replaced one bad habit with another, and is now “obsessed with watching others playing video games on streaming services.”  Another parent reported that her son had supplemented gaming with a new internet hobby: “he got hooked on short-video platforms instead, spending hours a day browsing clips and creating content himself.”

Still other teens borrowed a phone from a parent or grandparent.  And some entrepreneurial adults even began placing ads on ecommerce sites to rent their gaming accounts.  “By paying as little as 33 yuan ($5), under-18s could borrow gaming accounts from adult vendors for two hours of use.”

Despite pushback from the public on these and related crackdowns, there is every reason to expect more pressure like this in the future.  As Xi Jinping summed it up in his August speech:  “In our efforts to seek happiness for the people and continuously consolidate the Party’s foundation for holding power over the long term, we shall focus on driving common prosperity for all.” (Italics added for emphasis.)

But what if these two goals – happiness for the people and CPC power – find themselves in conflict?  The Party may find the situation unusually hard to control.  As an article in Hong Kong’s South China Morning Post put it, “quelling protests in the streets is one thing, but getting millions of individuals out of their beds and forcing them to engage in society is entirely different.”

Wolf warrior nationalism

When the US withdrew from Afghanistan a few weeks ago, China’s “wolf warriors” began tweeting highly critical comments like these:

— “Wherever the US sets foot… we see turbulence, division, broken families, deaths and other scars in the mess it has left.” – Hua Chunying, Foreign ministry spokesman

— “The failure of the U.S. in Afghanistan should serve as a warning to [the citizens of Taiwan]… who have to understand that they cannot count on Washington.  Afghanistan is not the first place where the US abandoned its allies, nor will it be the last.” – Hu Xijin, Editor-in-chief of the state-controlled Global Times

The phrase wolf warriors came from two “hugely popular movies in which elite Chinese special forces take on American-led mercenaries and other ne’er-do-wells. They are violent and extremely nationalistic in tone.  One critic dubbed them ‘Rambo with Chinese characteristics.’”

A poster for the first Wolf Warrior movie.  An alternate version shows the main character raising his middle finger with the slogan: “Anyone who offends China, no matter how remote, must be exterminated.”

The wolf warrior movement became more louder and more visible last year when diplomats and citizens responded to criticism over China’s response to covid with tweets like this:

— “Some US leaders have stooped so low to lie, misinform, blame, stigmatise. That is very despicable, but we should not lower our standard [in a] race to the bottom. They don’t care a lot about morality [and] integrity but we do.” – Ma Hui, China’s London Embassy

— “Faced with this suppression… we’ll never swallow our pride or stoop to compromise.” – Le Yucheng, a Chinese vice minister of foreign affairs

According to David Shambaugh, Professor of Asian Studies at George Washington University, one reason behind this type of nationalistic diplomacy is the view “that the tide of history has turned, and that China is becoming the world’s dominant power…Chinese citizens are deeply infused with uber-nationalism and a sense of national accomplishment — they take great pride in their government officials pushing back against perceived discrimination.”

Two years ago in this blog, I published a post entitled “Dueling Superiority Complexes: The US and China.”  I wrote there about China’s pride in its 5000 years of civilization.  “The Mandarin word for China – Zhongguo – is translated as Middle Kingdom, since… they believed their empire occupied the middle of the earth, surrounded by barbarians.”

While contemporary Chinese no longer see themselves at the geographic “middle of the earth,” the notion that all foreigners are inferior barbarians has not entirely died out.

In the 1800s, the Chinese had good reason to feel superior.  China’s Qing Empire was at its height, and its Emperor ruled “300 million people or about a third of the world’s population.”  Ancient Chinese civilization was responsible for a wide variety of inventions including papermaking, printing, gunpowder, the compass, iron smelting, porcelain, rockets, bronze, row crop farming, paper money, tea production, mechanical clocks, kites, the umbrella, and the toothbrush. 

China’s arrogance was challenged when maritime trade routes were opened to Europe and America in the 19th century.   Westerners had a huge demand for such products as tea, porcelains, and silk garments (whose weaving technology was “such a closely guarded secret [that] the West had to pay gold [for] the same weight [as] silks.”)

But China had little interest in European products or technology, and wanted to be paid only in silver or gold.  This led to a very unfavorable balance of trade for Western nations.  Then the British had an idea:  increase the cultivation of opium in its Indian colony, and sell it in China for silver, then use the silver to buy tea and the other Chinese products Westerners craved. 

This was a success for the West, but created a huge problem of recreational opium smoking and addiction in China.  In 1839, the Emperor tried to ban the trade in opium because of concern with its effects on Chinese citizens, not to mention his concern with the outflow of silver. 

This resulted in the First Opium War (1839-1842) and then the Second Opium War (1856-1860).  China lost both by a wide margin due to the vast superiority of Western military technology. 

Around this time, Westerners were often referred to with the Cantonese term “gweilo,” which can be translated as “foreign devil.”  Not a great foundation for positive relations. 

When the First Opium War ended with the Treaty of Tientsin, it forbade China “from using the character 夷 … (‘barbarian’) in official documents to refer to officials, subjects, or citizens of [Britain, France, Russia, or the United States].”

But that was the least of China’s problems.  By 1860, the Chinese had been forced to legalize opium, pay western powers about 500 pounds of silver in reparations for the cost of the war, cede large portions of Manchuria to Russia, give Hong Kong to the British, open about a dozen ports to western traders, and much more.

And thus began what Chinese call, to this day, its “Century of Humiliation.”  It continued with a long list of events, capped by the Japanese invasion of Manchuria (1931) and World War II.

Officially, the “century of humiliation” ended in 1949 when the Communist Party won its civil war and founded the People’s Republic of China.  But in the eyes of the Chinese, humiliation continued. 

Do you remember when “a U.S. plane accidentally bombed the Chinese embassy in Belgrade mistaking it for a Serbian arms depot, killing three Chinese and injuring several others” during the Kosovo War in 1999?  Me either.  But the Chinese certainly do.  Many believe the bombing was intentional.

How about the 2001 death of the Chinese pilot of an F-8 jet fighter when it crashed with a US spy plane in disputed air space?  Or the 2005 protests in China over publication of a Japanese history text that downplayed World War II atrocities?  Can’t say I remember those either, but these were big news in China, and boosted nationalism.

Westerners may see the Chinese reactions to these and other events as excessive.  But as one China expert summed them up, he noted “that incensed Chinese online reactions are often the result of deeply felt, shared emotions about historical experiences characterized by a great deal of suffering at the hands of foreign powers. The authorities stoke those emotions, and nationalists embrace them, but that does not make them unfounded.” (Italics added)

Wolf warrior diplomats are now building on this tradition.  It is important to keep in mind “that the diplomats are not speaking to a foreign audience, but catering to ‘domestic consumers,’ who – amid times of relative turbulence – are in search of impassioned, at times zealous, speech in defense of the Chinese nation… What cannot be underestimated here is the extent to which support genuinely emanates from the public.”

Chinese public opinion polls conducted by western pollsters support this view.  A “decade-long opinion poll released [last year] by the Harvard Ash Center concluded that 93% of Chinese citizens were ‘satisfied’ with their central government.”  Similarly, a recent “World Values Survey reported that 95 percent of Chinese citizens said that they have a great deal or quite a lot of trust in national government.”  And, at least in the opinion of sociologist Cary Wu, “what we know about citizen surveys in China… suggests that these results cannot be simply reduced to a misrepresentation out of political fear.”

Nationalist feelings run highest among “among Chinese born in the 1980s and 90s, a generation that has matured [with]… a nationalist education system, and a censored web. In their anti-Western and anti-Japanese attitudes, they often display the most xenophobic aspects of Chinese society… Distinctive to this nationalism is its raw, conspicuous character, which often manifests itself in calls for a more muscular foreign policy and public outrage in the wake of perceived foreign threats.” Australian diplomat Andrew Forrest has described this group as “an aggressively restless generation that expects to live to see China kick the United States out of Asia.”

According to consultant Jude Blanchette from the Center for Strategic and International Studies, the combination of Chinese ultra-nationalism and censorship has created “a really nasty echo chamber that I think will continue to drive China.” 

Hmm.  A “nasty echo chamber.”  Where have I heard that before?

In any case, according to Minxin Pei from the Carnegie Endowment for International Peace:“A very nationalistic public makes foreigners wary of China and harms China’s image.”

It also increases the risk of war.

Chinese media coverage of the US Capitol riot

When rioters invaded the US Capitol on January 6, the Chinese media could barely control their glee.

According to a headline in China Daily – the official publication of the publicity department of the Chinese Communist Party (CCP) — “The Capitol riot is a collective American failure.”  The article argued that the riot was “squarely rooted in the US government’s inability to tend to societal issues that have been simmering over the last few decades,” including race relations, income inequality, and social media that wrapped “people in their own cocoons of comfortable opinions.”

The article concluded that the US has been so “focused on waging wars and poking its head into other people’s affairs [that it] easily overlooked all these brewing tensions… the shining city on the hill has been decaying from inside for a long time.”

While US allies were horrified and disgusted by videos of Trump supporters attacking police, CCP propagandists saw these events as an opportunity to support their “narrative that democracy doesn’t work and that its authoritarian model functions much better.”

The Washington Post reviewed the coverage in an article entitled “China is having a field day with US Capitol chaos.”  It noted that “Beijing has long argued its restrictions on its people’s freedoms were necessary to prevent chaos, and the unrest in the United States under Trump has played into that narrative.”  The events of January 6, it went on, have provided “a convenient defense for its authoritarian policies and iron-fisted suppression of dissent.” 

When Republicans and Democrats were unable to agree on how, or even whether, to investigate the riot, the coverage in China continued. When a group of Republicans from the Senate Homeland Security and Rules Committee published their findings on “Security, Planning and Response Failures on January 6” in June, a China Daily editorial cynically concluded that “While the candy-sucking report declines to draw the conclusion, the Capitol riot was incontrovertible evidence of the failing governance system of the United States.” 

Given the way that the Chinese government controls the press, it is no surprise that articles throughout China took a similar approach.  According to Tracy Wen Liu in Foreign Policy, reporters in mainland China were issued guidelines on how to cover the Capitol riots. “Write on how democracy could be hijacked by a group of uneducated people and how democracy could only be realized when the population is highly educated—and that China’s current education level is not suitable for democracy.”  Reporters were also told to focus their January 6 articles “on how the United States’ global reputation would be damaged.”  Which is exactly what they did.

Another China Daily article argued that that the events were “squarely rooted in the US government’s inability to tend to societal issues that have been simmering over the last few decades…. [For example], the rich [have gotten] richer faster than anyone else does.”  Underlying political fissures can also be clearly seen in “the Black Lives Matter movement… [which] part of the country sees as a rightful decry of systematic discrimination while the other [part of the country] considers it a challenge to social stability.”

The article went on to say that “from Ukraine to Venezuela, from Syria to Libya, people have suffered as a result of the attention the US politicians have given to affairs that do not concern them… Intent on their mischief-making elsewhere, US politicians have ignored the mounting problems at home.” 

Still another piece went deep into American history, describing the US as “a country built on slavery, with land forcibly taken from indigenous populations. The first draft of the US Constitution —right below high-minded passages about ‘a more perfect union’ — deemed Africans property, three-fifths of a whole human being.”

US House Speaker Nancy Pelosi came under special attack.  On January 7, the Global Times, another newspaper published by the CCP, noted that “Chinese web users still remember the distress and anger they felt when they saw rioters in Hong Kong storming the Legislative Council Complex … US politicians hailed the ‘courage’ of these mobs … House Speaker Nancy Pelosi even called it a ‘beautiful sight.’”  The article came complete with a picture to underline this hypocrisy.

This photo appeared in a Global Times article comparing politicians’ responses to the 2019 riot in Hong Kong’s Legislative Council to the 2021 US Capitol riot.

However, a fact-checking article later rated this Global Times claim as FALSE. Pelosi did indeed use the phrase “beautiful sight to behold” on two occasions.  The first was during a 2019 congressional hearing when Pelosi was shown a picture of tens of thousands of non-violent Hong Kong pro-democracy protestors holding a candlelight vigil.  “It is a beautiful sight to behold, and I commend the courage of the people there for speaking out in light of China’s actions in Hong Kong these days …”  But both times Pelosi used the phrase “came before Hong Kong protesters broke into and ransacked the city’s Legislative Council complex on July 1, 2019.” 

Nevertheless, in China, as in the US, social media users are not known for caring much about facts or subtleties. “The phrase ‘beautiful sight to behold’ started to trend on Weibo (the Chinese equivalent of Twitter) on Jan. 7.”

“This is karma,” wrote one Weibo user. “The United States has been fanning the flames all over the world for many years, and now the fire of ‘freedom’ is burning themselves.  “There are no rules at all and no respect for the law,” said another. “This is the ‘democracy’ they boast about.”

A later China Daily opinion column entitled “Capitol Riots a Page in US Legacy of Violence” took the argument several steps further.  “The hordes who attacked Congress are the people who jeered students attending integrated schools. They’re the people who formed lynch mobs. MAGA and QAnon are just the John Birchers and Klansmen of yesteryear. Make no mistake: This is an old, abiding hatred with a fresh coat of paint… This reactionary rot, festering as it has for countless decades, was inflamed by the consolidation of capital and the monopolistic control of information through enormous tech companies.”

Foreign Policy’s analysis of Chinese coverage noted that “Beijing never misses an opportunity to glorify its governance when liberal democracies are challenged… The violence at the Capitol aided the Chinese government… by giving it another justification for arguing that control of speech is necessary.”

Ryan Hass, a senior fellow at the Brookings Institution think tank summed it up this way: “Chinese media outlets broadcast images of mayhem inside the American Capitol to a domestic audience to buttress a narrative of America as a country in descent, plagued by deep divisions and a broken political system. Externally, official Chinese media outlets used news of the insurrection to make the case that the greatest threat the United States faces is itself, not China.”

Let me repeat that: “The greatest threat the United States faces is itself, not China.” 

He’s got a point.

The Taiwan conundrum

Beijing is irrevocably committed to regaining control of Taiwan, an island about 100 miles off China’s coast.  But the US and its allies are committed to the opposite:  helping Taiwan maintain its status as an independent county.  Something’s got to give. 

To put the problem in context, Taiwan was part of China for over 200 years, until it was ceded to Japan in 1895 when China lost the first Sino-Japanese War.    Taiwan was returned to China at the end of World War II, but then taken over by the Nationalist Chinese forces after they lost their civil war to the Communist Party in 1949.    

As recently as a few weeks ago, Chinese Foreign Ministry spokesman Zhao Lijian told reporters that: “China’s position on the Taiwan question is consistent and clear. There is but one China in the world, and Taiwan is an inalienable part of China’s territory.”  

Zhao is certainly correct that the Chinese have been both consistent and clear.  Nearly 50 years ago, when President Nixon visited China in 1972 to reopen relations between the two countries, Chinese Premier Zhou Enlai’s “principal goal was to persuade [US Secretary of State Henry] Kissinger to agree to ‘recognize the PRC as the sole legitimate government in China’ and ‘Taiwan Province’ as ‘an inalienable part of Chinese territory which must be restored to the motherland.’”

In 2019, on the 40th anniversary of the US establishing diplomatic relations with China, President Xi Jinping gave a speech explaining how the need for re-unification with Taiwan remains critical. Xi also emphasized the need for a peaceful solution, repeating a line from a 1995 speech by former Chinese president Jiang Zemin that “Chinese will not fight Chinese.” But Xi also went on to say that Beijing ultimately “reserves the option to take any necessary measure,” and that the problem “should not be passed down generation after generation.”

Xi described the re-unification of Taiwan as part of the “great rejuvenation of the Chinese nation,” a phrase often used when referring to China’s “century of humiliation” at the hands of foreign powers, and its current rise to true superpower status. As a New York Times article summed up the situation a few weeks ago, “to Beijing, Taiwan continues to be a source of embarrassment, the island where the losers in the country’s civil war fled in 1949 and whose government is propped up by foreign powers.”

In his provocative book Has China Won? (p. 94), former president of the UN Security Council Kishore Mahbubani concluded that “the one issue where the Chinese leaders cannot bend and compromise is Taiwan… [this issue could even] trigger a war.”

The American position is quite a bit muddier.  In 1979 Congress passed the Taiwan Relations Act which stated in part that the U.S. will consider “any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States.” 

More recently, in one of his fist major speeches on China, Secretary of State Antony Blinken has warned that “when China uses coercion or aggression to get its way… We will push back if necessary.” 

Both statements are consistent with the US’ longstanding policy of “strategic ambiguity.”  As a New York Times article recently explained “Under a longstanding — and famously convoluted — policy derived from America’s ‘one China’ stance that supports Taiwan without recognizing it as independent, the United States provides political and military support for Taiwan, but does not explicitly promise to defend it from a Chinese attack.”

So, to sum it up, if China takes aggressive action on Taiwan, the US will consider it a matter of “grave concern” and we will push back “if necessary.”  Any questions?

I suspect that nobody knows exactly what the US would do in response to a direct threat to Taiwan, not even in Washington.

When the Senate Armed Services Committee recently reviewed the nomination of Adm. John Aquilino to lead the US military’s Indo-Pacific Command, one Senator asked was why the US should defend Taiwan at all.  Aquilino replied that “Washington’s credibility as an ally to places like Japan and the Philippines is at stake if the island were to fall to Beijing.”

In a Bloomberg opinion column ominously titled “A Taiwan Crisis May Mark the End of the American Empire” Niall Ferguson added several other reasons, notably that “Taiwan in recent years has also gained a greater strategic importance as one of the world’s leading producers of semiconductors — the high-tech equivalent of oil in the emerging supercomputing showdown between the United States and China, which faces microchip supply shortages.”

An article in Asia Times about the microchip shortage noted cynically that the US used to be a leader in “all forms of high tech, especially semiconductor chips, [but] now spends its time redesigning chocolate chips.”  Meanwhile, the Taiwan Semiconductor Manufacturing Company (TSMC) has become “pretty much the only place to get processor chips fabricated, unless you’re Intel.” 

Often missing from discussions of this diplomatic stalemate is a discussion of what the 24 million people who live on Taiwan want.  This is unfortunate since “it is the people of Taiwan who will suffer if American actions provoke military responses from China.”  (Has China Won, p. 98)

One way to answer this question is to look at the results of Taiwan’s most recent presidential election. “Taiwanese President Tsai Ing-wen won a landslide election last year on a promise of defending the island’s democracy and standing up to China.”  The Unionist Party, which favors re-unification with the mainland, got just 0.23 percent of the vote. 

The implication is obvious, according to Taiwan News: “the majority of Taiwanese do not believe Communist China can peacefully coexist with a free society, and voters rejected China’s ‘one country, two systems’ framework by casting a vote for the presidential candidate who opposes it.”

A few weeks ago, Taiwan’s foreign minister said that if China attacks “We will fight a war if we need to fight a war, and if we need to defend ourselves to the very last day, then we will defend ourselves to the very last day.”

What are the chances of winning?  One way of estimating this, and of refining military strategy, is to look at the results of simulated war games conducted by military officers.  According to David Ochmanek, a former senior Defense Department official who helps run war games for the Pentagon “the results are sobering and the United States often loses.”   In an article in Foreign Affairs, Fareed Zakaria was more specific “The Pentagon has reportedly enacted 18 war games against China over Taiwan, and China has prevailed in every one.”  Hmm.

And therein lies the conundrum:  What should the US do?  And when?

If Hu Jintao (President 2003-2013) or Jiang Zemin (President 1993-2003) or any of China’s other recent leaders were in power, I believe that they would try to bring Taiwan under control the same way that they gained control over Hong Kong, patiently and without major violence.  As Chinese general Sun Tzu wrote in The Art of War in the 5th century BC, “The supreme art of war is to subdue the enemy without fighting.”  The result has been, in the words of the Washington Post “Hong Kong’s fall from a relatively free, boisterous territory to an Orwellian place that resembles the repressive mainland.”

But current president Xi Jinping may be on a faster, more aggressive path with Taiwan.

Interestingly, Niall Ferguson has reported that, “I was told by one of Xi’s economic advisers that bringing Taiwan back under the mainland’s control was his president’s most cherished objective— and the reason [Xi] had secured an end to the rule that had confined previous Chinese presidents to two terms.” 

Since January, China has significantly increased flights of military aircraft violating Taiwan’s airspace, in “attempts to intimidate” the Taiwanese government.  Two weeks ago, China “conducted simultaneous military exercises to the west and east of Taiwan… [which] showed that the People’s Liberation Army is capable of surrounding the island of Taiwan, isolating its troops and leaving them nowhere to run and no chance to win.”

The clock is ticking.  When Adm. Philip Davidson, commander of the U.S. Indo-Pacific Command, was asked by the Senate Armed Services Committee about timing he replied that “The threat is manifest during this decade, in fact, in the next six years.”

Similarly, a New York Times article two weeks ago entitled The New Taiwan Tensions quoted Anne Applebaum of The Atlantic “that a Chinese invasion ‘could happen at any moment.’”  

The article’s conclusion was a bit more optimistic: “a military conflict still seems unlikely. Then again, military conflicts often seem unlikely until the moment they begin.”

Two problems with companies in China

There are two major problems with evaluating the performance of companies based in China:  the lack of transparency, and the near-absolute power of the Chinese Communist Party.

Do these problems affect you directly?  They might. 

Roughly what percent of your savings are in stocks in Chinese companies?  If you invest in mutual funds, you probably have no idea. 

China is currently a favorite among mutual fund managers and individual investors who are willing to take risk to maximize their long-term returns.  As one analyst quoted in a January article in US News and World Report put it:  “China is the only major economy in this COVID-pandemic era that’s actually on a growth path.” 

And “there [are] 217 Chinese companies listed on [the three big US stock exchanges – New York, American, and NASDAQ] with a total market capitalization of $2.2 trillion.”  So if you invest in certain types of mutual funds you almost certainly own a small piece of some of them.

If you’re not worried about the first problem – lack of transparency — consider the case of Luckin Coffee, the “Chinese Starbucks.”  When the company went public on NASDAQ in 2019, they had 4,500 stores in China, and reported $413 million in sales for the previous nine months.

The price rose quickly from $17 per share to $50 per share. and a lot of investors made a lot of money.  As long as they sold their stock near the peak.  Because in April 2020, less than a year after the company went public, “it came out that its COO, along with a number of other employees, had overstated revenue figures by some 40%.”  Within a week of this fraud announcement, the price per share dropped to $4.  By June, NASDAQ had delisted the stock.    

Luckin Coffee has agreed to pay a $180 million penalty to the SEC (Securities and Exchange Commission) and in February filed for Chapter 15 Bankruptcy.

Luckin Coffee’s stock price crashed when the company admitted fraud.

Could this type of fraud happen in a US company?  Of course, fraud is always a possibility when humans are involved.  That’s why there will always be accountants. 

But in the US, the PCAOB (Public Company Accounting Oversight Board) oversees external audits which greatly reduce the risk of fraud in publicly traded companies.  Chinese companies traded on US stock exchanges have agreed to be audited by the PCAOB.  But they consistently violate this promise.  Which is an excellent illustration of the first problem highlighted in this post:  Lack of transparency.

Indeed, in general “China’s economy [is] incredibly opaque, not only to foreigners but to the Chinese as well… [The government controls the flow of information including] the massaging of data, faking it outright, turning a blind eye to its misreporting [and] rationing its publication.”  Even worse, “its rules are fluid.”  (China’s Great Wall of Debt, p. 10)

China’s lack of transparency has been “a thorn in the side of the U.S. Securities and Exchange Commission (SEC) for a decade.”  Last year, the SEC issued a warning to investors explaining that “in many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse.”

What’s the SEC’s solution?  Be careful out there. 

Or, to use the governmental phrasing of the authors of that SEC report, investors should “consider the environment in which the company operates in assessing whether the company has sufficient controls, processes and personnel to address its accounting or financial reporting issues.” 

How likely is it that the average investor will find time to do intensive background research on each and every Chinese company listed in the prospectus for their mutual funds?  I’d say it’s roughly about 0%. 

And then there’s the second problem:  the near-absolute power of the Chinese Communist Party.

The Party has the greatest impact on state-owned enterprises (SOEs), which are partially or fully owned by the Chinese government.  (13 SOEs are traded on American stock exchanges.)  SOEs are designed to meet specific goals such as driving growth, maintaining employment, and increasing China’s technical expertise in areas that give the country an economic or strategic advantage, such as artificial intelligence, robotics, and green energy.  Note that making a profit is NOT one of their primary goals.  As a result, according to the World Economic Forum: “SOEs are highly over-leveraged and structurally less efficient than their private peers… It is widely argued that the SOEs would not survive in an innovation-driven market environment without the perks they currently enjoy.”

But even companies that are 100% privately owned must be very careful to support the Communist Party.  If you doubt this, just ask Jack Ma.  If you can find him.

According to Forbes magazine’s rankings of billionaires Jack Ma is one of the richest people in the world with a net worth of $38.8 billion.  His fortune grew out of co-founding online shopping giant Alibaba, sometimes referred to as “China’s Amazon.” 

Among many other things, Alibaba owns a 33% stake in Ant Group, an online payment service that resembles a supercharged Venmo plus PayPal, and is used by over 1 billion Chinese. Last fall, Ma was expected to become even richer when Ant Group was poised to offer the world’s largest initial public offering (IPO).  But then Jack made a big mistake:  he gave a speech in October criticizing China’s banking system.

Within days, the IPO was canceled and Ma disappeared.  For three months, journalists speculated that he was under house arrest or maybe even dead.  Ma reappeared January 20 in a video address for a charity event and was seen in February playing golf.  Nevertheless Ma is still keeping a very very low profile.

Another sign of the Party’s power over “private” companies, is its Military-Civil Fusion (MCF) strategy.  According to a US State Department fact sheet, the goal of MCF “is to enable [China] to develop the most technologically advanced military in the world. As the name suggests, a key part of MCF is the elimination of barriers between China’s civilian research and commercial sectors, and its military and defense industrial sectors.”

Do you remember my post on “The biggest theft in human history”  and its discussion of how the government “encourages Chinese who study and work abroad to copy or steal technology and rewards them when they do.”  That’s a natural outgrowth of MCF.

Critics have noted that “As a strategy, MCF is still in its early stages, and its success is difficult to evaluate.”  But there is no ambiguity in the law.  Article 7 of China’s National Intelligence Law reads: “Any organization or citizen shall support, assist, and cooperate with state intelligence work in accordance with the law, and maintain the secrecy of all knowledge of state intelligence work.” And Article 11 of China’s National Security Law states, “All citizens of the People’s Republic of China …. shall have the responsibility and obligation to maintain national security.”

I could cite numerous other legal examples, but you get the idea:  Every Chinese citizen is required to assist intelligence authorities.   

Would you invest in a company’s stock if you thought they prioritized China’s political goals over making money?  How about if you thought its sales numbers might be fraudulent?  Me either.

But there is a counter-argument.  Many financial analysts believe that China’s 1.4 billion consumers offer unique opportunities for growth, and that justifies the risks.  For example, consider these recommendations from three unrelated analysts:

Like everything else in the stock market, it comes down to the “risk-return tradeoff”:  the more risk you are willing to take, the higher your gains may be.  Not to mention your losses. My personal conclusion?  Before I started researching this topic, nearly 10% of my retirement portfolio was invested in companies in China and other emerging markets, based on the advice of our financial advisor.  But my parents lived through the Great Depression of 1929, and I am highly risk averse by nature.  So now that I know more, I’ve sold off almost all of that foreign stock and invested it in US companies instead.