China's Neocapitalist Communism

...He was then appointed president of another major bank, where his misdeeds were so blatant Chinese officials could no longer look the other way...

...Its surplus from exports and imports amounting to $910 billion in 2003 was just $20 billion...

...This new wave of construction has swept overthe entire metropolitan region...

...We're subject not only to income tax, but to a turnover tax, as well as a separate 'business tax' . . . and work done overseas is taxable...

...Visiting the spacious offices in one of those buildings occupied by a Chinese-speaking German who represents a major manufacturing company, I asked about the realities of doing business in the People's Republic...

...My friend Gordon Chang, a professor of Asian Studies at Stanford, has predicted that the lawlessness of China's economy will cause a major collapse...

...Each can set your profit at anywhere from 10 per cent—that is, if you make a good deal—to 50 per cent...

...It could as easily have been called Jiutiandi (Old World), for it harks back to the cosmopolitan, pre-Communist Shanghai...

...The mythmakers of Beijing are not bothered by the fact that the Party actually first convened weeks earlier in a nearby girls' school...

...Among its attractions are restaurants featuring foreign cuisines, cafés, bars, and an inevitable Starbucks, along with art galleries, handicraft showrooms, and several pricey furniture emporiums...

...of millions of people along the coast and up the Yangtze Valley, as far as Wuhan and Chungking, are all living much better than ever before...

...Highly visible, too, are the factories and showrooms of Ford, Mercedes, Volkswagen, and General Motors...

...Even more massive edifices have risen in Pudong, an area east of the river that a generation earlier was the site of factories and slums...

...Its subject, the He Yi Electronics and Plastics Products Factory, a.k.a...

...Especially apprehensive are labor unions in the U.S...

...Even more worried are China's neighbors in Southeast Asia, who have for millennia alternately feared and suffered Chinese domination...

...This huge gap understandably distresses American politicians, but presents a misleading picture of China's global trade...

...For sure, it's not all bad...

...subminimum wage compensation (averaging less than 17 cents per hour...

...The Congress then moved its proceedings to a luxurious houseboat on a lake 50 miles south of the metropolis, where it ended the inaugural session two weeks later...

...All individual benefits are taxable—no deduction because they're necessary for doing business...

...When a firm submits abid, it's a matter of guesswork, since no one knows the tax rates, much less the basis of the assessments...

...Still, there are 2 or 3 million temporary laborers in Shanghai, most on construction work, getting starvation wages—if they're lucky...

...A long-serving Thai Prime Minister told me many years ago, "It doesn't matter who rules China— Nationalists or Communists, democrats or dictators...

...Domestic demand, particularly for autos and housing, is growing steadily, while exports have swelled by a third annually...

...And having started from a low base, only part of its vast territory and population have yet to benefit directly from its surge during the past decade or so...

...Some have argued that the growth of China's economy offers the best hope to workers...

...The many-colored, imaginatively designed skyscrapers set on broad open lots in the far reaches of Pudong seem warmly hospitable...

...and Europe, which foresee a sharp increase in unemployment and decline in wages...

...Now giant high-tech manufacturers are setting up plants and research centers in the Comprehensive Industrial DevelopmentZone, an hour's drive south of central Shanghai...

...There have been hundreds of instances, a dozen or more resulting in lawsuits...

...Thus it is committed to a neocapitalist, quasi-free market system at all costs, including the abandonment of Mao Zedong's strict working-class morality...

...andjapan...

...Not everything...

...It was in deficit with Northeast and Southeast Asia by over $ 100 billion...

...I believe that there will be a series of bubbles pricked, as significant companies or even entire sectors falter and fail, but that China's size will prevent a nationwide catastrophe...

...Robert S. Elegant, a longtime NL contributor, is a specialist in Asian Affairs...

...Those monstrosities are going bankrupt fast, losing billions of dollars producing the wrong goods for the wrong market—inferior goods no one wants...

...The authorities can find so many extras, so many items unaccounted for and questionable accounting practices that you'll have no time for anything else...

...After satisfying himself that neither he nor his firm would be identified, he spoke quite candidly...

...Throughout China's business community—and strikingly in Shanghai—what matters most is not the real state of things but how they appear...

...No deposit is safe, though some are obligatory...

...Major international companies are working here and throughout China on multibillion-dollar refineries and docks, factories, generators, and dams, making the country the third largest construction site in the world, after the U.S...

...One was an executive whose self-indulgent management of the Bank of China branch in New York earned him a $20 million fine from U.S...

...But it's not a good idea to sue in Chinese courts—not without powerful connections...

...The horrifying conditions in one factory in the heart of prosperous Guangdong Province, adjoining Hong Kong, are detailed in a recent extensive report by the New York-based National Labor Committee for Worker and Human Rights...

...It is telling, I think, that it took Chairman Mao Zedong 30 years of strenuous effort to destroy the existing social, political, and economic system—and that the devastation he wreaked was almost completely reversed after less than a decade...

...You can imagine the costs...

...Developed and built by Thyssen and Krupp of Germany, it provides the fastest scheduled land transport in the world, covering 18 miles from the Huangpu River to the airport in just eight minutes...

...There's no fixed rate and no timetable, so it's all incredibly complicated...

...The generation-long (1949-1979) interregnum of antimaterialist Maoist megalomania that detested both the West andfree enterprise is now called "the 30 wasted years...

...The plight of Chinese workers has not gone unnoticed internationally...

...Its total oil imports actually exceeded those of the U.S...

...The area was cleared in brisk totalitarian fashion: 40,000 residents were flatly ordered to move out with no convenient alternative quarters made available...

...Foreway Industrial China, Limited, manufactures toys for Wal-Mart, Disney, Hasbro, and other American merchants...

...In addition, workers often crammed 20 at a time into living spaces designed to fit six, are not permitted to resign from the factory, but must apply for a "voluntary automatic leave," forfeiting six weeks' wages...

...To the east of the main thoroughfares snakes the Maglev, the first magneticlevitation train to go into regular service...

...Besides, it's not a good idea to appeal against any decision, however arbitrary...

...The level of the underlying aquifers is reported to be falling because of the pressure of the buildings and increased water consumption...

...The Japanese have done very well making low tech products like washing machines, air conditioners and stereos in China...

...By 2005 it is likely to become the world's fourth largest economy, surpassing Britain and France...

...Economic development—constant expansion and ever growing revenues—has become the overriding purpose in itself...

...Indeed, the Communist Party has not given up its autocratic ways...

...Today the grandiose late 19th- and early 20th-century domed structures and many-columned facades palisading the Bund on the west bank of the Huangpu face Pudong's mammoth Orient Pearl Television Tower on the east bank, ablaze with twirling circles of light—one housing a huge revolving restaurant...

...Initially open only to pupils with foreign passports, they are practically guaranteed much wider opportunity very soon...

...Everything can, of course, be 'adjusted' if you have the proper connections...

...The most recent reliable figures, for 2002, have Japanese firms committing $4.2 billion to build facilities in China...

...After all, Shanghai has now turned into a wonderful place for 18 million people: full of theater, cinema, music, even original independent thinking...

...They were detectives nominally in French employ, but in practice loyal to a Chinese boss, the Green Dragon, who kept a tight grip on the city's underground goings-on...

...Running a kindergarten in Shanghai as a starter, Dulwich has just gained permission to set up several schools elsewhere that will go from kindergarten through high school...

...Also, anywhere from 150 to 200 million underemployed and unemployed are drifting around the country finding odd jobs—if they're very lucky...

...Its favorable balance of payments in 2003 was $124 billion on two-way trade with the U. S. totaling $ 181 billion...

...The paramount exemplar of this course is the port city of Shanghai, for centuries the industrial, financial and intellectual nexus of the nation, as well as Chinese civilization's main contact with the outside world...

...Called Xintiandi (A New World), it is a monument to Communism in the center of a mercantile extravaganza, complete with a brimming man-made lake...

...imports that previously came from Taiwan, Thailand, South Korea, or Japan now count as imports from the People's Republic...

...Nothing has materialized...

...Senior Japanese executives operating in the city are recruiting hundreds of highly skilled Chinese, including top scientists, engineers and master craftsmen, to work for firms like Sharp, NEC, Toshiba, and Sony...

...The municipality of Shanghai wants to ban the bicycle from the city proper...

...His account reveals a tangle of bureaucracies constantly inventing and reinventing rules, balanced by the leveraging of connections, and fed on bribes...

...Carmakers are eager to tap into the world's fastest-growing—soon to be second-largest—automotive market...

...On March 5, Beijing announced a series of intended reforms that include slowing the economy's growth to a rate of 7 per cent, the creation of 9 million urban jobs, and the extension of human rights...

...That means taking on local 'partners,' who have henchmen in authority, and it means you're going to be paying hefty bribes at every turn...

...Also tens...

...There'll be another 100 million or so in the same case when all the SOEs [state owned enterprises] close down...

...Construction workers used to be paid well, but there are just too many applicants nowadays...

...Overhead is a vague concept, not really considered...

...And transactions can take ages...

...And it's just the result of the authorities leaving more things alone, not trying to run everything...

...China is by far the largest exporter to the United States, having roundly surpassed Japan...

...Some estimates have China's gross national product growing more than 9 per cent every year since 1980, spurred on by foreign investment—more than $56 billion in 2003—and a virtually inexhaustible supply of cheap labor...

...Before so-called corporate audits—by overseas clients like Wal-Mart or Disney—workers are threatened, coached and bribed to lie if they are questioned...

...One registration procedure through the Industrial and Agricultural Bank took 10 months...

...These practices are extreme, yet they are not wholly unrepresentative, especially in less prosperous areas than Guangdong, and they persist in sharp contrast to the increasingly glitzy faces of cities like Shanghai...

...Orthatthe one meeting held in the row house, on July 9,1921, was broken up after 10 minutes by a goon squad known as the Green Gang...

...There's also an export tax, which is against the rules of the World Trade Organization...

...But in practice you have to make individual deals with each of the authorities—local, city, and provincial, as well as national...

...Maybe I'm going overboard," he mused...

...Its objective is to keep such workers employed, and its report admits, "The sad fact is that it is better to be exploited than to have no job at all...

...Foreign investment has returned...

...hundreds...

...mandatory seven-day workweeks in excess of 125 hours, with only 15 holidays per year...

...We're taxed on a flat profit or loss basis, and they alone define profit and loss," he told me...

...Their account highlights a stunning set of abusive factory conditions at Foreway, including all-night shifts that lasted more than 20 hours...

...during one month last year, and its continually burgeoning demand contributes to rising petroleum prices everywhere else...

...For a decade, he observed, the authorities have been promising new regulations: a set of standard business laws, a social security net, medical insurance, and a uniform code of business practices for the entire country...

...So rapid has been the erection of gaudy skyscrapers that the metropolis is reckoned to be sinking half an inch every year...

...Confronted by rising, often violent resistance to the extortion and virtual serf labor demanded by many of its corrupt local officials, the Party came to the conclusion that it could only retain power by providing a better material life for the people...

...But it is surely remarkable that this occurred in a nation ubiquitously beset by unabashed corruption, staggering inefficiency, undisguised theft, obvious forgery and widespread counterfeiting, intellectual hijacking, exploitative labor practices, and vicious infighting within both the public and the private sectors...

...In theory, it's all written down somewhere, or at least understood...

...Take the banks...

...China is also a prime consumer of crude oil from Africa, the Middle East and Southeast Asia...

...A strong China is bad for my country...

...Corporate income tax can't be deducted from profits either...

...It is not surprising that the entire world is deeply concerned about China's emergence as a major factor in the international economic equation...

...In Old Shanghai, or Puxi, which lies west of the Huangpu River and dates back more than a millennium, overbuilding threatens the architectural distinction that has long attracted visitors with its mix of Eastern and Western styles...

...regulators...

...Most imports from those sources are raw materials or half-finished goods delivered for completion by inexpensive Chinese labor...

...Nearby, the world's tallest building is going up amid upscale hotels, fanciful apartment blocks, spired banks, corporate boardrooms, government offices, supermarkets, department stores, and fast-food eateries...

...Scattered throughout are oldline iron mongers, bamboo merchants, paper-lantern makers, and shops serving noodles and dumplings, stirring a new blend of China and the West...

...By this logic the boom itself will bring with it greater order and improved human rights...

...The museum's legitimacy aside, it basks in the glamour of the new Shanghai as the focal point of a spacious shopping and amusement park that lures well-heeled, predominantly Chinese, tourists...

...The entire financial system is a morass of wholesale embezzlement and criminal collusion, punctuated periodically by the inexplicable disappearance of billions of dollars...

...Reversing Mao's Devastation China's Neocapitalist Communism By Robert S. Elegant Shanghai A narrow two-story row house on a street now named Hsing Yeh (Promote Enterprise) is home to a museum commemorating the initial meeting, on July 21,1921, of the Congress of the Communist Party that today controls the People's Republic of China...

...Since the final products are then exported, substantial U.S...

...But the pretentious museum and its opulent setting are part of a larger strategy...

...They happen to be three-quarters empty...

...They receive a "cheat sheet" and about $6.50—to memorize the "correct" answers...

...Not infrequently those partners will simply take your patents, your techniques, even your employees and open a competing factory across the street...

...As more can afford cars, the former vehicle of the masses is getting in the way— causing traffic jams, even gridlock...

...The human rights committee is calling on American corporations to push for reform in China, not to pull their business out...

...Britain originally occupied Shanghai not only because it made an ideal base for the opium traffic, but also for the scope of its native commercial and financial institutions...

...New to the scene, and on a different track, is Dulwich College, founded in 1619 in the South London community where former Prime Minister Margaret Thatcher has made her home...

...On a single day in February four senior Chinese bankers were variously fired, arrested, or sentenced to jail...

...Back then the road was called rue Borgeat and was part of the French Concession of Shanghai...

...No one can say for certain how China's internal expansion and external thrust will play out...

...Citing Japanese high-tech ventures, they maintain that as technical standards rise, the need to keep skilled staff becomes more pressing and conditions improve, albeit slowly...