What is this “China” that you speak of?
The FT has a story about the opening up of China’s financial sector:
The race to win a share of China’s fast-growing investment market entered a new stage this week after JPMorgan’s asset management arm acquired majority control of its mainland joint venture, the first foreign player to pass this milestone.
The deal was concluded despite a marked deterioration in relations between the US and China, a shift that has added new layers of uncertainty and complexity to the calculations of other international managers pursuing ambitions in China.
A useful reminder that while the dogs are barking, the caravan moves on.
Expect much more of this in the future:
Only last month, Beijing announced 11 new policy measures to open the country’s financial sector to foreign investments further. These included advancing the removal of limits on foreign ownership of fund management companies beginning in 2020, one year earlier than initially planned. Foreign ownership limits in other types of asset managers — including those set up by banks, insurers and pension investors — will also be relaxed.
“This is another clear signal of China’s determination to encourage greater foreign involvement in its investment market. Permission to participate in building China’s nascent private pension system will be a very significant development for international managers,” said Mr Aldcroft.
One of my commenters was recently shocked to discover that China engages in “spying”, and horrified to discover that I was not similarly horrified. Whenever I point to a positive development out of China, he assumes that I must be an apologist for “China”, as he visualizes the term. But his view of China is relatively cramped and narrow—just a few negative news stories that he reads in the anti-China media. I am almost as opposed to his China as is—I hate anti-Muslim authoritarian nationalism—but he fails to realize that his China is not my China. It’s not the country I am talking about when I discuss “China”. Or more precisely, it’s just one small piece of that country.
China is an enormous place encompassing an almost infinite number of contradictions. It includes the Chinese government, the Chinese people, and an often beautiful landscape. It includes stodgy state-owned enterprises and dynamic high-tech firms. There is a huge service sector that most westerners know almost nothing about. It includes brave Hong Kong protestors and delicious Sichuan restaurants. It includes a million political prisoners in Xinjiang and humanity’s greatest engineering achievement. It includes the best movie of 2019, and the worst movie of 2019. It includes my mother-in-law, Michael Pettis, and 1.4 billion other people.
The China in the mind of most westerners is a tiny thing, just a few images. Even I fall into that trap. Each time I visit China (and I’m going there again soon) I’m immediately reminded of the vastness and complexity of the place. China (and India) is not like Paraguay or Denmark. It would be more accurate to say that China is like the entire western world. If your dog is named Spot, then the term ‘Spot’ might be adequate for designating your particular dog. But the term “China” is not enough to designate China.
Most people understand that there is more to America than the NFL, Las Vegas, 400,000 people in jail for drug “crimes”, and the atrocities committed by our government in Yemen. I wish people understood that there is more to China that a few fleeting images of government atrocities and cultural icons that they might have imprinted in their brains. It’s not that those things are not real, or not important, or even not in many respects much “worse” than in the USA, rather it’s that there is so much more.
This post is not written to change any minds; people find comfort in being prejudiced. Rather it’s just something I wanted to get off my chest.
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12. August 2019 at 11:49
Let me quibble about the philosophy of language. “[T]he term ‘Spot’ might be adequate for designating your particular dog. But the term ‘China’ is not enough to designate China.” Dogs are very complex. Granted, they are less complex than China, but how about objects that are even more complex? ‘Europe’ (‘Asia’, etc.)? ‘The world’ (‘the universe’)? And where do you draw the line between China and Spot–the line where, as complexity decreases, single words as names become adequate? How do you like ‘France’, or ‘Estonia’, or ‘Rhode Island’, or ‘Loving County’ (in Texas)?
But, philosophical quibbling aside, a good, insightful post. You didn’t change my mind (about the main point), because I already agreed.
12. August 2019 at 11:58
“but he fails to realize that his China is not my China. ”
He failed to realize there are two countries called China?
Talk about a Hericlitean deflection.
12. August 2019 at 13:17
Another great post. And a wonderful film pick, again!
12. August 2019 at 13:58
I add that Tesla is allowed to operate in China without a Chinese partner.
12. August 2019 at 15:14
Philo, It’s certainly a matter of degree. My point is that people who use the term ‘China’ think about the subject in very different ways, and many probably don’t understand that. When a commenter says I’m “pro-China”, what does that even mean? That I hope the 1.4 billion Chinese have happy lives? I guess so. That I approve of the authoritarian Chinese government? Obviously not. That I support China’s position in the trade war? I guess so. That I support Chinese spying? No. That I worry about Chinese spying? No.
If I say I like my dog Spot, there is at least a bit less ambiguity, right?
12. August 2019 at 16:01
Godspeed and best wishes on your upcoming trip to China. Do keep us posted but also keep reminding the young Chinese that China needs world as much as world needs China. Keep spreading the neo-liberal gospel and more minds will change.
12. August 2019 at 17:14
Have you read the book “Inside the Mind of Xi Jinping”? It is very good on the current ideology of the regime, where it comes from, how it structures Chinese politics.
https://www.amazon.com/Inside-Mind-Jinping-François-Bougon/dp/184904984X
13. August 2019 at 02:28
And, China’s political and military leadership has to deal with the fact that a nuclear armed adversary is run by an orange haired, narcissistic lunatic.
13. August 2019 at 04:26
My related pet peeve is whenever some random person somewhere in China does something, people say “China” did it. It’s as if they think the 1.4 billion people in China are some kind of hive mind. The phrase “China did X” should refer to official acts of the Chinese government only. And this applies to other countries too.
13. August 2019 at 06:31
I believe I understand what you are saying. Because of my career, I have had the good fortune of meeting and befriending people from all over the world, including immigrants from China, including offspring from Party leaders before Xi. This means only that I know maybe a little bit more than zero.I do know the people are extraordinarily industrious.
I know also that the people tend not care as much about the style of rule, as they do about the ability to exercise their industriousness for their advantage. One might say HK proves the exception. But it does not. They prospered beyond belief under British rule. But China rule is seen as more oppressive. In the mainland, there is also the fear, almost a constant, for even those who are successful under the current regime, that China’s success can dissolve quickly. That is one problem with a history of rule that has broken down time and again and with a seeming tick toward authoritarianism that seems baked in to the ruling elites.
I am not sure what the current rules are, but to explicitly take assets out of the country, was a capital crime. The only reason you have that rule is clear. Yet, there are legal long term methods which are permitted. When Japan grew, its currency’s value increased from 360 to about its current level before it flatlined around a range about 20 years ago or so. China’s currency, if left to float, and if there were no restrictions on moving money, many Chinese believed there would be an initial run on the Yuan before it stabilized.
The massive, almost impossible to conceive, macro issue inside China is that almost 1 billion very poor people still work an agrarian economy that is incredibly inefficient—(US has 1-2%). Israel and the Dutch are astounding examples of what tech can do in food production. I don’t know why this is the case in China——but my standard “Trope” that they are running out of time feels frightening possible—-They need to subsidize a huge percent of the population just for them to eat—-and their belt and roadway plus their misguided attempt at de facto farming out side China is a capital draining strategy.
I am far from saying all or any of this could have been prevented——nor that their general current way may not have been the best. But I will say this instead. The counterintuitive method, so hard to see and understand, is what they should have pursued. That is, more freedom, less international obsession, less central party control and less obsession with control over international investment.
The Xi “takeover” is a likely disaster for them and the world. It is exactly the wrong direction. I have zero solutions because we cannot do much. I am glad companies are beginning to get 50+ % control in some recent situations. Perhaps they can permit foreign investment in the agricultural sector.
And yes, all countries are proud and many want to be top dog—-as does America. It is the nature of man I think. They have the cart before the horse. It is hard for me to be optimistic about China—-and if that is true—-it is bad for the world. It would be the largest opportunity cost lost, by far, in the history of the world.
Then there is us. Not sure what we can do——but it’s hard to believe we cannot do better versus China——although what I think is good for China they probably do not. Europe is a museum——useless in a forward moving world. My own little prejudice. I defend Trump quite a bit———but it is because what I see against him is worse——and just a more intense version of what is always said about the “right”. But I wish we had someone else in his position. And that we don’t is, to say the least, suboptimal.
13. August 2019 at 06:59
Your main point is fine. But actually there is nothing wrong with the name ‘China’. Almost everything we name is complex. ‘The universe’ takes the prize for complexity of designatum, but it is not at all defective.
But you should ignore my comment. You are a wonderful economist who, though he pretends otherwise, is not really interested in philosophy.
13. August 2019 at 08:55
Mark, Very good point.
Michael, You said:
“The massive, almost impossible to conceive, macro issue inside China is that almost 1 billion very poor people still work an agrarian economy that is incredibly inefficient—(US has 1-2%).”
Impossible to conceive because it’s false. The number is closer to 100,000,000. Don’t confuse “rural” with “farmer”. Much of rural China is densely populated and highly industrial. BTW, China is rapidly urbanizing,—now up to almost 60%.
Public opinion in dictatorships means nothing. I’d say 100% of what we know about Chinese views of political issues comes from HK and Taiwan, where views can be expressed more freely.
Philo, I wasn’t trying to say there’s something wrong with “China”, I’m saying there is something wrong with the way the term is used. I stand by that claim.
13. August 2019 at 14:16
Yeah I blew that one—-here is what I did—-first of all this site linked below (facts and details) claims that there are 425 million agricultural workers in China.(CIA.gov puts the number at 225mil) The number of “migrant workers” are about 275mil—which I lumped with agriculture (from Statista)—hence 700 million–clearly not the same. Assuming 70% of population works I got my $1bil dependent on agriculture.
So that was that! My main point holds however—re: subsidizing food for a large percent of population–and a wide disparity system.
I have seen nothing as low as 100mil you quote, however.
http://factsanddetails.com/china/cat9/sub63/item348.html#chapter-4