Sunday, October 25, 2009


Johan Galtung’s view from Europe: China and the Economic Crisis

Both economies are capital-oriented, but the Chinese economy is in addition human-oriented.  When the crisis struck reserves could be used for stimulus not for bailout, as Chinese financial institutions had been more responsible, possibly due to Confucian ethic.

China and the Economic Crisis

By Johan Galtung - 26 Oct 2009

    Chongqing:  The American Friends Service Committee (the Quakers) and the Chinese People's Association for Peace and Disarmament--a state-supported NGO like many in the West--had a conference 18-21 October on the economic crisis and social conflict and harmony.

    World experiences in conflict resolution and state-civil society cooperation were shared with Chinese experts; to handle the issues highlighted in Hu Jintao's speech to the 17th CPC congress October 2007: major social inequality, ecological breakdown and democracy deficits. The approach: dialogues, joint search for solutions.

    Violence by police and military, or terrorism, solves nothing. A road passes through Gandhi-King type nonviolence, but the state would be wise to enter dialogues earlier.  People are exploited and repressed; they should not in addition risk being killed.

    Very useful were radio programs for direct people-government dialogues (Cambodia, short-cutting the slow road via parties and parliaments), and training police as mediators in social conflict rather than violence and arrests (India, mohalla. Indonesia).  The Chinese brought in the old petition approach to local authorities for people with grievances (millions). But much more is needed.

    The background was the crisis with the misnomer "finance crisis" when a key factor is the disconnect between stagnant, even negative real economy growth (worst hit was Japan with -12%, then the USA with -6% first quarter 2009) and a skyrocketing finance economy.  Under that, a capitalism creating misery and death lower down and an enormous liquidity excess at the top heading for computer-based, split-second speculation.  And under that again, a decaying US Empire leaking resources that could be better spent than killing poor Afghans, Pakistanis, Iraqis and Palestinians.

    How does China fare under this "made in USA" crisis?  Of course it was a shock, causing unemployment, particularly in the export-oriented, coastal East.  But China is less vulnerable as 60% of the growth is based on increased domestic demand.  Lifting 400 million people from poverty into lower middle class buying power from 1991 to 2004 created the opposite situation of the USA, where maybe two thirds of the population has not had increase in purchasing power since the early 1970s.

    Both economies are capital-oriented, but the Chinese economy is in addition human-oriented.  When the crisis struck reserves could be used for stimulus not for bailout, as Chinese financial institutions had been more responsible, possibly due to Confucian ethic.

    At the privately owned Lifan car factory in Chongqing, which suffered a 30 percent downturn, another factor was mentioned: the company as a dzha, family, not firing anybody.  Life long employment in other words, probably inspired by the classical Japanese model that the USA managed to persuade a submissive Japan to destroy (Toyota refused, but now they may have Lifan problems). The factory got tax rebates and other assistance from the state, and uses the slowdown to train their workers to higher levels of production.

    Chongqing, the world's biggest city (30 million+) is a part of the Chinese Go West policy to reduce regional inequality, and may soon produce 1/3 of the world's computers.  Lifan will exhibit the first 20 electric cars in Shanghai coming March, planning major production. But the hybrid Toyota car may give even better quality/price, with carbon free being part of the quality concept.

    China just passed 10 million cars produced per year, like Japan and the USA, but may soon put these competitors behind.  Of course Chinese economic growth will decrease, but GDP may equal USA in 2030, double USA in 2050, and GDP/capita pass USA in 2100.(1)

    Back to Hu Jintao's three deficits: led by Japan, guided by Kaname Akamatsu's flying geese theory, Japan, South Korea and Taiwan managed them.  But the foundation was health, education and infrastructure.  [Keitel:  "Maoist China bequeathed to future generations high literacy rates and decent public health".]  For Japan close to 40 years were needed before economic growth, for China maybe 30.  People have to be in it, by it, of it, for it. Only that kind of people can constitute a strong civil society.

Regional disparities: caused by colonial, harbor-based trade; aircraft-rail-road can now easily move growth to where people are.

Environmental degradation: Japan was designated in the 1970s as the most polluted country in the world; with the minamata-itai itai syndromes causing untold suffering.  In spite of heroic nonviolence outside corporate headquarters and ministries it took much time, but civil society overcame and grew.  The Chinese may actually be more, not less, sensitive than the Japanese.

   Democracy deficit: Park Chung Hee in South Korea, Chiang Kai- Shek in Taiwan, and a de facto LDP dictatorship in Japan were compatible with high growth.  But this is the past, even Japan now looks like a democracy.  These countries are manifestations of the same underlying Confucian-Buddhist-Western model, the Japanese more liberal, money-inspired and the Chinese more Marxist, human- inspired.  National multi-party elections is another matter(2), but there will be democracy and dialogue and participation all over.

    Prediction: there will not be massive "social unrest" in East Asia, but state-civil society dialogue and in China massive uplift of lagging communities into high economic demand.  Nor will there be economies based on subsistence.  In countries dependent on export for real economy growth "social unrest" is likely.  May it bring about real change, IMF, World Bank and WTO notwithstanding.

(1 ) From Albert Keidel, China's Economic Rise--Fact and Fiction, Policy Brief 61, July 2008, from Carnegie Endowment, Washington; before the official start of the crisis with the Lehman Brothers demise 15 September 2008 (engineered by short-selling?) so it may be too optimistic about the USA.

(2) For a theory about this see Johan Galtung, "Democracy and Social Justice, The Case of China" in Galtung Scott, Democracy * Peace * Development, TRANSCEND University Press, 2008, see



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