Sunday, November 11, 2012

Interview: Keith Bradsher on China

The following is a verbatim copy of an article I wrote for the Princeton magazine American Foreign Policy in its October-November 2012 issue.

Keith Bradsher GS ’89, the Hong Kong bureau chief of The New York Times, has covered the business, economic, and political affairs of China for the last decade and has been a staff writer for the newspaper for 23 years. A graduate of the Woodrow Wilson School’s Master in Public Affairs program in Field IV–economics and public policy–Bradsher has witnessed firsthand the rise of China to great international economic and political importance since his assignment in 2002. In an interview from Hong Kong with American Foreign Policy, Bradsher discusses the future outlook for China’s economy, society, and politics as well as the Sino-American relationship.

AMERICAN FOREIGN POLICY: Looking back, what do you see as essential themes that emerge from your reporting on China?

KEITH BRADSHER: China’s economic rise has transformed its role not only in the global economy but also in geopolitics, by turning it into a much more confident and even assertive nation that is spending heavily on diplomacy and on military upgrades. China has gone from being an afterthought for many corporations to being a centerpiece of their strategies. It has gone from being peripheral in many countries’ foreign relations to being as important, or almost as important, as their relations with the United States.

AFP: And, as a reporter, you’ve seen and interacted with this change in China at a more personal and anecdotal level.

KB: In city after city, the skyline seems to have changed every three years. I visit a couple dozen factories a year, and those have changed radically as well. They have gone from being very low-tech and staffed by mostly very young migrant workers earning $100 a month to a range of workers, although still under 40, using more sophisticated equipment, earning $300 to $600 a month. Practically every city has put in broad avenues, and so many of them have dug subways as well. Nearly all of those subways have gone in since I’ve been here, with more to come. Guangzhou, for example, had just opened a dozen stops of its first subway line a decade ago, and now has more than 120 stops and opens another 20 miles of subway routes a year. By contrast, New York City, has been working for decades to get a Second Avenue line started, and excavation for that subway is now proceeding slowly.

AFP: Looking forward, what do you expect the next ten years to look like for China? What change should we expect, in its broad outlines?

KB: The next ten years are likely to be deeply challenging for China. Growth will inevitably slow down because a lot of the easy gains have already been made and because the one-child policy is now starting to reduce sharply the number of workers in their twenties. In addition, the Chinese public has been accustomed to high rates of economic growth and has, to some extent, come to expect them as a trade-off for not complaining about extreme levels of wealth and income inequality and severe environmental degradation. The result is that China may have difficulty maintaining social stability and economic expansion in the decade to come.

On top of that, the rise of ultra-nationalism in China, combined with the country’s poorly-defined borders, greatly increases risks that China’s leadership will be distracted by international disputes, and possibly conflicts, at a time when it needs to focus on political and economic dilemmas at home.

Some Chinese scholars argue that China did not use its so-called “Golden Decade” of growth to tackle difficult political, economic, and social issues — and there’s a lot of truth to that argument. The political challenges involve increasing public participation in decision-making so as to increase the public’s willingness to accept difficult decisions. At the same time, there’s also a challenge in what to do about the many sectors of the economy that may not be very efficient but are dominated by politically-connected families who have not been eager to see greater market competition.

AFP: How does the presumptive new leadership of Xi Jinping and Li Keqiang figure into this change?

KB: We don’t know yet just how much they’ll be able to change the system that produced them. With each generation that passes after the Communist Revolution, the leaders have relied on consensus. That makes it hard to make decisions that challenge anyone’s vested interests. That, in turn, can be a recipe for political paralysis — but political paralysis is a bad idea if you’re facing slowing economic growth combined with rising public anger at corruption and inequality.

AFP: There’s been some comments—perhaps mere speculation—that the incoming leadership has demonstrated a leaning towards increasing economic liberalization.

KB: The problem about talking about economic reform in China is that practically everyone says they are in favor of it, at least at an abstract level. But in practically every sector where specific reforms might be made, there are vested interests with little enthusiasm for surrendering power and wealth. So the question lies in how willing will the new leadership be to crush the special interests of some of those who brought them to power.

AFP: What do you see as the most critical points of economic uncertainty—the question marks, if you will—for China’s future?

KB: China has strengths that have not been fully used, like its increasingly educated labor force and like its high-speed rail lines and superhighways that suddenly tie together cities and provinces that used to have surprisingly little contact with each other. Yet the rapid pace of demographic change in terms of an aging population and sharply rising wages and very high expectations mean that China needs to figure out a way to evolve away from lower-end manufacturing activities towards industries that will create more high-wage, white-collar jobs.

But the big challenge for the economy and for China is not economics. While economics has been the big story of the past decade, there are so many signs now that the political freeze is beginning to thaw. In the past 14 months, you have seen enormous street demonstrations block extremely large investment projects in northeastern China, east-central China, southeastern China, and western China. You have also seen violent anti-Japanese demonstrations across China. All of that is starting to raise questions about the investment climate, and the Chinese economy is overwhelmingly dependent on investment. China desperately needs to clean up its environment, but it needs to do so by persuading companies to build cleaner factories. The other scenario is a lot of capital flight, a slump in investment, and rising social instability.

AFP: The relationship between the U.S. and China is under stress, with leadership transition in both countries and lots of pending cases in front of the World Trade Organization. What are the major challenges this relationship faces, in your opinion?

KB: The tough part for the United States is that Americans have become accustomed to having a voice heard around the world. Yet in China, Washington’s views aren’t the first priority and indeed are far down the list of priorities. What happens in China will be decided by the Chinese — and American efforts, even to steer those decisions, will be resented.

AFP: What advice do you have for students of foreign policy, China, and economics at Princeton today?

KB: China has seemed to defy gravity in terms of economics for many years. It has seemed to boom despite what looks like inefficient capital allocation and an extremely large role for the political sector in guiding economic growth. How to understand economies with such a large state sector is a great area for economic research and public policy research. Another great area to study is China’s interactions with its neighbors in every direction. There are potential stresses in their relationships in almost all directions, from Afghanistan to Indonesia to Japan to Russia, and the countries in between. The European Union has a lot of economic problems right now but seems to have resolved political concerns in ways that have not happened in Asia. So China is likely to be at the center of the news, and at the center of foreign policy and economic policy, in the decade to come. It’s very good to study China but never to put all of your eggs in one basket. Studying the interactions across Asia provides a broader scope for future careers.

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