Navigating the paradox of China's 'socialist market economy'

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  • July 31, 2013 - 7:47 AM


Downtown Beijing

Downtown Beijing

Communiqué # 3:  Minnesota companies taking part in China’s 30-year-old experiment with a “socialist market economy” face one of the most radical and perplexing transformations in history.

Even the Chinese seem to have a hard time making sense of it, which is why they often seem more comfortable talking about their past than the future. They also like to talk about paradoxes, and the need to move slowly – especially on the political front, which has not matched rapid pace of the nation’s economic expansion.
“To understand China, you have to learn to live with a certain amount of cognitive dissonance,” said Internet guru Kaiser Kuo, a spokesman for Baidu, a private Chinese search engine company that’s often compared to Google.
After a century of foreign domination, followed by civil war and revolution, China sometimes has an uneasy relationship with its past and the rest of the world.
“Stability is really our top concern,” says Zhao Yumin, a Ministry of Foreign Affairs official who met with a group of U.S. reporters in Beijing.
It’s popular to talk about reform, but it usually is in the context of aligning China with the global economy, not realigning its political system, which remains completely under the control of the Chinese Communist Party.
Not surprisingly, the Chinese see a certain PR squeamishness on the part of the foreign investment community, particularly foreign brands with Chinese suppliers and manufacturers who contribute to the nation’s trade surplus with the U.S. and the rest of the world.
“They’re really doing well in China,” said the China-United States Exchange Foundation’s founding chairman, Tung Chee Hwa, the man who presided over the historic return of Hong Kong to China. “Nobody talks about it.”
That squeamishness is matched by Chinese government officials like Zhao, who talks about national unity, balance, and the need for Chinese and Americans to get over their mutual mistrust over topics like human rights and Tibet and, well, just do business.
As for political modernization to match the inevitable aspirations of a new generation of Chinese entrepreneurs, crony capitalists or not, the consensus view seems to favor a go-slow approach – a retreat to caution, pragmatism, and tradition.
“China,” Zhao said, “has a strong cultural background of a feudal society.”

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