Some Thoughts On China, Past And Present

Your commentary, "The best way to change China is from the inside" (Special Report, May 17) could not be more wrong.

The commentary concedes that China needs most-favored-nation trading status and suggests that we continue it, but in exchange for what? Absolutely nothing. You acknowledge that China craves resumed military contacts with the U.S. and suggests that we resume them, but in exchange for what? The release of more political prisoners.

Evidently, you are entirely oblivious to China's long-standing practice of using advances in military technology to make its regime of terror ever more efficient.

In short, while piously mouthing the rhetoric of engagement instead of isolation, the commentary advocates throwing away our leverage without extracting substantial concessions from China.

A policy to induce real change might begin with an offer to continue China's MFN trading status when China agrees to allow international monitoring of its prisons and detention centers and to submit the question of Tibetan self-determination to binding adjudication by the International Court of Justice. It might then continue with an offer to resume military contacts when China agrees to separate its military and police forces and to verifiable prohibitions against using U.S. technology for internal surveillance.

Andrew G. Dulaney

San Francisco

When do business opinion leaders begin taking Asian economies seriously? Only when American trade deficits with them are nearing insurmountability? ("China," Special Report, May 17).

Your report on China foresees that vast, rapidly expanding nation as not competing "as directly with U.S. or European technology-based industries as Japan does." Sounds suspiciously like the underestimations made of South Korea, Taiwan, Singapore, and, yes, Japan itself in decades past.

With 1.2 billion people and double-digit economic growth, perhaps we should see China as a formidable future competitor, not just an immense market and low-cost manufacturing center.

Eric Chait

New York

Your story is consistent with most Western reporters' accounts. Most reporters, however, seldom travel beyond the Great Wall or the (admitted) miracle of Shenzhen. Amazed by the apparent "capitalism" of China, they miss out on a different sort of reality.

A few points to consider:

-- To raise standards of living nationally to Taiwanese standards, China would need to increase gross domestic product by $5 trillion in real terms. This will not happen within the next hundred years.

-- Growth is centered in South China, in Fujian province, and in some northern areas where Japanese and Korean investment has been channeled. It is not a universal phenomenon.

-- Right now, the Chinese propaganda machine is cranked up to convince foreigners that China is moving toward capitalism and everyone will get rich. This is intended to spur on renewal of most-favored-nation status, reduce pressure on China, and promote investment.

-- Export growth is enormously inflated by the value of goods that are imported from Taiwan, Japan, and Hong Kong and then reexported as "Chinese" products. China is providing a good way for Japanese, Koreans, and Tawainese to increase their exports to the West while hiding them in China's trade balance.

To be sure, China is changing. But its primary asset remains its labor--an advantage that the Chinese government is clearly using to challenge Japan's preeminence in East Asia. Paradoxically, this use of human capital is completely consistent with Marxist doctrine, which urges the use of the economic strength of the masses as a method for achieving political ends. Is it possible that Westerners have mistaken and misunderstood the fundamental goal of the Chinese government--to raise the overall living standard through methods that we would find abhorrent?

Timothy Gollin


Before it's here, it's on the Bloomberg Terminal.