Cup of Cha
This is China

I’ll admit it: When I saw that David Brooks wrote a column about China today, I expected to hear the same silliness that I’ve seen from other journalists. I was prepared to be underwhelmed. Fortunately he did not claim that the world is flat, or that China is a time bomb waiting to explode. This theory instead was ‘corpocracy.”

To be honest, I thought a lot of what he wrote was thoughtful, so I don’t want to bash the guy too much. He captured something about the difficulties and strains of modern China in an elegant way, that many miss. He understands that being a Communist Party member is not exactly what Americans tend to think it means. Many times the brightest are plucked because they see the opportunities that it provides, and the doors that membership opens. (pause, pause)

But I do have to say that much of his analysis is more than a bit dated, and misses some key points. He seems to overestimate the importance of government in China, while underestimating it in the States:

You [as a Chinese elite student] are truly a golden child, because you succeed in university as well. You have a number of opportunities. You could get a job at an American multinational, learn capitalist skills and then come back and become an entrepreneur. But you decide to enter government service, which is less risky and gives you chances to get rich (under the table) and serve the nation.

In one sense, your choice doesn’t matter. Whether you are in business or government, you will be members of the same corpocracy. In the West, there are tensions between government and business elites. In China, these elites are part of the same social web, cooperating for mutual enrichment.

If you make some very minor adjustments to the above paragraph, wouldn’t it sound more than a little like Paul Krugman writing about America than Brooks discussing China? Doesn’t virtually every successful billion-dollar company in the US have lobbyists helping them cozy up to Washington insiders for mutual benefit?

The real problem with his argument is that the best and brightest, while they continue to be heavily recruited by the Communist Party, often don’t sign up for it. Sure it is risky to go into private enterprise, but there are not too many people who see government as a big payday in China anymore. In the 70s and 80s Chinese used to say that you always knew who the officials were by their girth. Let’s just say there are a whole bunch of fat people in China now, and most of them are not government officials (a lot are kids, but that’s a different story).

While he has an interesting, and reasonably complex view of Chinese society, he appears to have missed the mark by about a decade:

You work hard. You help administer provinces. You serve as an executive at state-owned enterprises in steel and communications. You rise quickly.

Nothing says success, circa 1997, than a job as a steel exec at an SOE. That 1997 date is actually a bit generous. In fact, the only SOEs that people would be excited to work in are the ones that aren’t really SOEs anymore. One of the big banks would be a nice catch, but they are all listed companies (on foreign exchanges), so it’s safe to say that they don’t exactly fit the old model, now do they?

Another aspect that Mr. Brooks has oddly ignored, is the number of Chinese students studying abroad. According to the New York Times in 2003, in the 25 years following the Open Door Policy’s implementation (1978) 700,000 Chinese studied in foreign countries. Over the last four years those numbers have clearly gone up, although some are going to Australia and Europe to avoid difficulties in US immigration policy.

Clearly some of these people studying abroad are Communist Party members, but not that many. Furthermore, in recent years, far more have returned to China as opportunities have grown. To ignore this development is to fail to understand modern China (look at Charles Zhang, founder of internet giant SoHu). Most of the people coming back are more likely to work for Merrill Lynch or Blackstone than they are to work for a steel SOE (I know people in both of these firms that fit the description).

One of the biggest pitfalls in Mr. Brooks’ analysis is that he wants China to fit into the same mold as the US. He seems to think that the Communist Party is just like Skull and Bones:

The Communist Party is basically a gigantic Skull and Bones. It is one of the social networks its members use to build wealth together.

This comparison in itself indicates a skewed point of view of America. While John Kerry and George Bush were both members of this elitist club, it hardly reflects the landscape of successful modern America. If you think of the most successful companies from the last 20 years (Google, Yahoo, Intel, etc), how many were started by Skull and Bones members? I’m guessing zero.

So I will give credit to David Brooks for recognizing certain aspects of China that not all do. He points to the high suicide rate at Chinese universities (although he fails to note that it is the only country in the world where more women kill themselves them men, perhaps a more telling point). However, he overestimates the value of going to the top universities in China, claiming that ‘1%’ go to the ‘best’ schools, while the remaining batch goes to “second-tier schools, at best,” calling these students ‘unfortunates,’ destined to lives in (ugh) the middle class.

The truth is that a lot of people that go to the best schools buy their way in, while some of the brightest go to less prestigious institutions, but rise to the top in the long-run. Ironically, many of these people are the ones who are creative and do not fit well into the system of memorization that Brooks correctly highlights. Look at Jack Ma, founder of Alibaba.com. He went to Hangzhou Teacher’s College, one of those ‘2nd tier, at best’ type of schools. These guys are [not] the exception, they’re the rule.

David Brooks has an interesting an insightful analysis of China. However, it would have been more accurate ten years ago.

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Tags: Business, charles zhang, David Brooks, jack ma, Ny Times
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