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October 9, 2018

Why is China one of a kind?

Scott Stockdale

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As of 2017 China had 164 Unicorns - privately owned start ups valued at more than a billion dollars, for a total of $628 billion. The U.S. by comparison had 132 billion dollars plus start ups valued as $700 billion.

China has 338 billionaires, the second largest national total: the U.S. has 680.

On a recent edition of TV Ontario's The Agenda, three people accredited as being experts on China, acknowledged the increasing control the Communist Party - led by President Xi Jinping - is asserting over people's everyday lives, but this in no way deters them from being impressed with China's economic development, which has made them the number two economy in the world, while vying for number one, of course.

After moderator Steve Paikin, showed a short video of people in rural villages of China - who live without any of the modern amenities of life - purchasing items online through e-commerce, Diana Fu, assistant professor of Asian studies at the University of Toronto, and author of Mobilizing Without the Masses: Control and Contention in China, said about 40,000 of these e-market places have been set up around China - mainly in rural villages - and this has changed the villagers' lives, while at the same time making some entrepreneurs extremely wealth off the villagers' purchases.

“These are people in the hinterland of China. They don't have access to malls and, so before the digital revolution, they didn't have a range of goods that they could buy. Now if they go to the service centre, with a few clicks they can order the latest fashion features and the latest gadgets; and this is profoundly changing their lives. Opening up the rural market in China is like discovering a gold mine and it's made some people very, very wealthy.”

Meanwhile, David Mulroney, former Canadian Ambassador to China and author of Middle Power, Middle Kingdom: What Canadians need to Know About China in the 21st Century, marvelled at China's use of modern technology to service its retail market: in this case the rural village retail market.

“Instead of installing the telephone structure we have in North America they went cellular. Instead of having a Walmart in every village they've gone online; and they now have very sophisticated delivery services which will now include drone deliveries, so they've leapfrogged whole areas of technology to get out into the forefront. It's really remarkable.”

However, he added that the lack of regulation in some of these areas is problematic.

Although he marvelled at China's ability to “leapfrog whole areas of technology to get to the forefront,” Mr. Mulroney acknowledge that there is a darker side to this technological advancement.

“Social credit is something that is being implemented throughout Chinese society and throughout the economy. With facial recognition technology, you're handing the powers that be tremendous control over society; we're starting to see a really negative sinister application of this in the far west of China, Xinjiang where about a million of the Muslim Uyghur people are now in re-education camps. China is using this mix of technology and tracking people individually to exert a degree of control that we haven't seen before.”

Dr. Fu said social the credit system punishes people who are behaving badly and companies that are cheating consumers by deducting points.

She said this also applies to those who violate traffic laws or criticize the government online. 

While many people in the developed world would see these procedures as a violation of their right to privacy and freedom of expression, Dr. Fu said she was surprised that a recent survey found most Chinese people welcome it.

“A colleague of mine did a survey asking Chinese people what they think and a whopping 80 per cent of respondents actually support it. They don't see anything wrong with it. It's not surprising because most people are not political dissidents or activists. Most people are not concerned about not being able to go online to criticize the government. They're concerned about not being cheated, so the social credit system helps them.”

Michael Szonyi, a professor of Chinese History at Harvard University, and author of the book Radical Change & Radical Order:  Harmony Through Surveillance said one of the things a lot of people appreciate about the social credit system is that it's intended to create an incentive for good behaviour.

“One of the benefits, if you lose in a court case the social credit system penalizes you very, very heavily if you don't pay.”

However, he also expressed concern about the degree of control the Chinese government is exerting over the Chinese people.

“The really worrying thing is the use of surveillance technology and new forms of AI and big data for the suppression of ordinary Chinese citizens, as we're seeing in terrible ways in Xinjiang. It's a growing economic power with virtually no soft power. Nobody wants to live in a society that controls people this way.”

Mr. Mulroney said China has the world's largest middle-class and, although they seem to be quite content with an authoritarian regime; and he doesn't see a dramatic turnaround in the political system, the Chinese Communist Party is going to have to find a way to incorporate more diverse voices from an extremely complex, diverse society.

“I think that's the only route for their survival and I think that's exactly how they're thinking about it.”

Meanwhile, he said we're currently seeing a greater degree of oppression with controls over the universities, the media etc. And the longer the Chinese government puts off giving people more rights and freedoms, the messier the day of reckoning will be.

“I am not an optimist as I look at China's future. I think the Communist Party will remain in power for some time, but its end is going to be messy and chaotic.”

He added that the developed world, needs to find another way to engage China because the current one is not working. If anything, it's sending the Chinese government the message that it can continue to oppress the Chinese people and violate their human rights with impunity, due in no small part to the lucrative business opportunities China has to offer western countries.  While we hear of countries such as Iran facing economic sanctions, China seems to be immune to sanctions.

“We have to figure out the next strategy to engage China. We need to keep this competition of ideas. We need the courage and respect to confront China; to disagree and not be afraid to disagree and I think this is a particular challenge for Canada,” Mr. Mulroney said.

After listening to some of Mr. Mulroney's comments on China, Mr. Paikin read an excerpt from a column Mr. Mulroney recently penned for an American publication:

“When we talk about human rights, we're arrogantly insisting about adoption of an agenda that reflects the world view and biases of the secular west. Privacy and individual freedom are western values.”

After listening to Mr. Paikin read this excerpt from his column, Mr. Mulroney made an effort to clarify his position.

“Ideas like privacy and democracy are acceptable and should be protected wherever you live. People's rights to privacy and rights to a degree of political freedom are important and should be protected.”

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