HONG KONG, TESTOSTERONE &
BIRTH OF THE ASIAN CENTURY
PAGE 5 OF 8

Deng Xiaoping didn't want China to copy the U.S. or Europe; he wanted China to copy Japan, Corea, Singapore, Taiwan and Hong Kong.

hina heeded Deng's call to glorious wealth with amazing success. Young Chinese of coastal cities like Shanghai, Shenzhen and Guangzhou came of age in a decade of 10-15% annual growth (compared with the modest but solid 3% for the U.S. and an anemic 2% for Japan) and are dreaming of a Hong Kong-style consumer society filled with cellular phones, designer labels, personal computers and, with some luck, private cars. With only 2 million cars on the road today (compared with 28 million in Japan and 10 million in Corea), China hopes to have 22 million by 2010. Expectations grow as private travel to Hong Kong grows. In all of 1996 only 4,100 Shanghai residents took self-funded trips to Hong Kong. That number jumped to 6,000 for the first quarter of 1997 alone--a sixfold increase in travel volume. The trend can only accelerate once Hong Kong is a Chinese city, though one with its own port authority. There are too the western-trained Chinese professionals recruited by Hong Kong firms at salaries of $70,000-$180,000--40-100 times what they might earn back home. These high-flying transplants numbering in the thousands dramatically inflate the expectations of the folks back home. The sight of their own Chinese cousins enjoying more wealth than the yellow-haired offspring of the west makes Deng's legacy throb with reality.
     More than anything else, it's the overwhelming success of Deng's legacy that has set China's bosses on course for a testosterone match with the west. On the global stage western powers have traditionally styled themselves the champions of democracy and capitalism. Western rhetoric has so consistently paired these two concepts as to declare that capitalism is a fruit grown only in the garden of democracy. This western cosmology was shattered when East Asia's so-called five tigers began enjoying the fruits of capitalism before planting the garden of democracy. That proved immensely threatening to the west, as evidenced, for example, by hysterical headlines denouncing Japan's mercantilist policies or its buying up of trophy properties. One might forgive western leaders for feeling threatened. Leaders of prosperous Asian nations who don't have to answer to the democratic process had the potential to accumulate more power than western leaders bound by the democratic tradition of serving the people's will.
     In Japan's case the sense of threat was quickly diffused by its extreme docility toward the U.S. Despite the book The Japan That Can Say No, the truth is, Japan can't really say "No" to yet the U.S. in political matters. Japan clings to a neutered Peace Constitution and hosts 40,000 U.S. troops on its soil. What's more, its current system can't produce a strong leader that can engage in tough action.
     On occasion one or other of the four smaller tigers gets a little testy, but they simply aren't big enough to be threatening to the U.S. What's more, politically, Corea and Taiwan are almost as docile as Japan. Feisty authoritarian Lee Kwan Yew refused to stop the public flogging of a young American for vandalizing cars in Singapore and raised a few American eyebrows. His constant heckling of departing Hong Kong governor Chris Patten irked Britain. But a city-state of 3.1 million with a miniscule, non-nuclear armed forces can hardly threaten the U.S.'s lord-of-the-earth self-image.

The upper half of the Beijing-owned Bank of China building towers over the Governor's House.

     But a nation of 1.2 billion that's outdoing the west in capitalist vitality while spurning cherished democratic notions is a threat of monster proportions. The east-west contest was never in doubt when it was framed in terms of communism and totalitarianism versus capitalism and democracy. But now that the east is rabidly capitalist and even mainland Chinese enjoy personal freedom in non-political matters, democracy is the sole cause remaining for the U.S. to champion, its last remaining rhetorical weapon. Stripped of the mystical--and, as it turns out, mythical--connection to capitalism and wealth, democracy holds no compelling attraction for the masses of Chinese or Asians in general. They're consumed with the glories of acquiring material wealth and are as likely to reject democracy as a potentially disruptive force as to embrace it as a stabilizing one. On balance, however, most of Asia's two billion simply don't care nearly as much about democracy as they do about enjoying the benefits of capitalism.
     Deng's get-rich dictum has let China's bosses steal the capitalist initiative and threaten the U.S. as a serious economic rival while neutralizing much of the moral authority the U.S. once enjoyed as champion of the free market and economic prosperity. Still, at present China is a long way from being assured of a dominant position in the Asian Century.
     Beguiling expectations fostered by growing contact with Hong Kong and the west contrast starkly with the realities of life for the other 82% of China's 1.2 billion--the billion peasants locked inside the heartland's dense poverty. Desperate to join the 20th Century, tens of millions sneak illegally to coastal regions in hopes of toiling in foreign factories. Most end up living on the streets, hiding from police. This glaring dichotomy between overblown expectations and mass reality is the two-headed monster China's leaders wrestle. With one hand they try vainly to hold back the swelling tide of needy humanity from China's interior. With the other they alternately stroke and shove industrialized powers casting greedy but increasingly jaded eyes on China's markets. Foreign factories built on naive early expectations and unfulfilled government promises are closing up; companies like Fiat and Peugeot are fleeing a decade of frustration. Half of China's economy rolls on creaky, money-leaking state-owned enterprises that need shuttering or selling off to those with the capital and the knowhow to make them self-sustaining. PAGE 6

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