Art of ‘Economic Crime’ Inflames China’s Wounds: William Pesek

Jasmine-phobia is leading China’s leaders to some imaginative places -- like the art world.

The detention of artist Ai Weiwei elicited the strongest international criticism since the crackdown against activists calling for Egypt-style rallies, China’s “Jasmine revolution.” It also put on display how China is getting creative itself.

China is investigating Ai for alleged “economic crimes.” What’s odd is that Ai is such a positive for China. He’s a hip, globally renowned innovator who helped create one of the coolest stadiums ever for the Beijing Olympics. That he’s seen as a threat sends a terrible message: If China is this worried about its stability, maybe we should be too.

The economy is going great guns. It overtook Japan as No. 2 in the world and while inflation is up, it’s not disastrous. Yet the widening crackdown on dissent suggests that behind the veneer of strength and $2.8 trillion of currency reserves, things are shakier than they look. It speaks of brittleness and insecurity, not confidence.

Investors now have more reason than ever to question the popular narrative of uninterrupted 10 percent growth. They also need to be mindful of an even bigger risk. By pushing too hard, Chinese authorities might create so much popular resentment that they provoke the very uprising they’re trying to prevent.

Over the Top

Take the over-the-top reaction last year when jailed dissident Liu Xiaobo won the Nobel Peace Prize. The bluster got more attention than the award itself, as did China’s bizarre campaign to talk governments from the Philippines to Saudi Arabia into boycotting the ceremony in Oslo.

Detentions are time-honored intimidation tactics. Taking out a high-profile foe makes like-minded activists think twice. Such strategies have more in common with the Cultural Revolution than a nation that shares the status of a “BRIC” economy along with Brazil, Russia and India. Sooner or later, authorities will go too far and there will be a backlash.

You would think Chinese officials have enough to do. Ensuring rapid growth to create jobs and maintain social calm must be the priority. To do that, they must slow inflation eating away at living standards of hundreds of millions of people. On top of that, China must reduce pollution and retool an economy that’s dependent on manufacturing for export.

Dissent Crackdown

The sheen is off the mercantilist model that got China where it is today. It must build a dynamic domestic market that cultivates entrepreneurs who create indigenous companies. This entails greater free speech, increased transparency, rule of law and ending the practice of favoring national champions. It’s a challenging transition and China’s leaders seems to think any dissent gets in the way.

In reality, the opposite may be true. This is a time for China to own up to the fact that its economy may be destined to become the world’s dominant power. It’s time to shoulder the responsibilities that come with that.

Ai’s arrest suggests that no such transition is anywhere in sight. His sin seems to be his Twitter page, which includes posts advocating more democracy and criticism of Communist Party rule. Twitter’s website is blocked by China’s government and can’t be seen by most of the country’s Internet users. Ai has about 75,000 followers.

Details have been sketchy since reports that Ai was taken into custody in Beijing on April 3 as he boarded a Hong Hong- bound plane. It’s all so unnecessarily cloak and dagger.

Only time will tell if Ai’s detention will rouse the masses. China clearly is taking no chances after people power inspired revolts from Egypt to Bahrain to Libya. Yet more information is slipping through the cracks all the time.

The irony is that China is making Ai a bigger celebrity than ever.

Touchy Situation

In the process, China is forgetting why it tapped his talent and vision for the nation’s huge coming-out party in 2008. The main stadium used at the Beijing Olympics is an architectural masterpiece. Ai helped design this postcard symbol that millions around the globe instantly associate with Chinese creativity and modernity. Now, China is in the touchy situation of explaining why it fears the guy.

Jasmine-phobia is the kind of self-inflicted wound China doesn’t need as it lashes out against governments, media and human-rights groups criticizing the Ai affair. It’s angry that German Foreign Minister Guido Westerwelle and departing U.S. ambassador to China Jon Huntsman are speaking out.

Different World

What China fails to recognize is that the world in April 2011 is much different from the one that existed at the start of the year. Since then, Egyptians have swept Hosni Mubarak from office, Libyans are fighting to oust Muammar Qaddafi and Chinese activists called for nationwide rallies. Even if China manages to silence Ai, other activists may step up and take his place.

Look, if Ai is an economic criminal, whatever that is, let’s hear why. Let’s see the evidence. Otherwise, China’s leaders should ignore Ai and the pundits and focus on what its 1.3 billion people expect: progress. That means narrowing the gap between rich and poor and making sure its economy develops in a healthy and sustainable way.

Clamping down on the likes of Ai may seem expedient and painless at the moment, but it’s a distraction from the big picture. And if China feels it must muzzle Ai, it might consider handling things a bit more artfully next time.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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