China is woefully misrepresented, says a Harvard Business Review report. More people in China actively trade their shares than Americans, Europeans or Hongkongers; more than 93% of adults are homeowners; and citizens like their system and support their leadership.
The West badly misunderstands China at three fundamental levels—and the errors underlie the negativity towards the country, according to a report by two top academics.
Until the Western powers dramatically reshape their views on legitimacy, democracy and associated areas of governance in the giant East Asian nation, they “will continue to get China wrong”, say Elsbeth Johnson and Rana Mitter in the Harvard Business Review.
They say there are three key myths that distort the Western view of China.
“Until Western companies and politicians understand this and revise their views, they will continue to get China wrong.”.
Myth one – Western democracy is inevitable
The first myth is that Western-style system of liberal democratic governance will automatically grow in China as economic development takes place. Not true at all.
“In fact, many Chinese believe that the country’s recent economic achievements—large-scale poverty reduction, huge infrastructure investment, and development as a world-class tech innovator—have come about because of, not despite, China’s authoritarian form of government,” the report says.
“Its aggressive handling of Covid-19—in sharp contrast to that of many Western countries with higher death rates and later, less-stringent lockdowns—has, if anything, reinforced that view.”
This is important for the future. For decades, the West has implied that authoritarianism was incompatible with innovation. Yet today China is a global leader in 5G, AI, biotech, space exploration and other fields.
“Much of the technological progress has come from a highly innovative and well-funded military that has invested heavily in China’s burgeoning new industries,” the study says. “This, of course, mirrors the role of U.S. defence and intelligence spending in the development of Silicon Valley. But in China the consumer applications have come faster, making more obvious the link between government investment and products and services that benefit individuals.”
Loaded terms such as “reform has stalled” have compounded the misunderstandings. “In much Western analysis the verb most commonly attached to China’s reforms is ‘stalled’. The truth is that political reform in China hasn’t stalled. It continues apace. It’s just not liberal reform,” Johnson and Mitter explain.
Myth two – Authoritarian leadership cannot be legitimate
he second myth is that authoritarian political systems can’t be legitimate. “Seventy years on, many Chinese believe that their political system is now actually more legitimate and effective than the West’s,” the writers say.
China’s Marxist-Leninist approach to selecting leaders helps the Communist Party of China maintain its legitimacy “because to many ordinary Chinese, this approach produces relatively competent leaders.”
The fact that the Chinese leadership is not produced by a Western liberal democratic system leads outside commentators to brand official power as corrupt or illegitimate.
But in truth, you have to climb a meritocratic ladder in China, as elsewhere. People with leadership skills are identified by the CPC “and progress through the system by successfully running first a town and then a province; only after that do they serve on the Politburo. You can’t become a senior leader in China without having proved your worth as a manager,” the study says.
Other analyses have suggested that Chinese systems are more likely to produce people with actual leadership skills than photogenic populists with success as screen celebrities.
“China’s leaders argue that its essentially Leninist rule book makes Chinese politics far less arbitrary or nepotistic than those of many other, notably Western, countries (even though the system has its share of back-scratching and opaque decision-making).”
Social credit score
Take the “social credit score” system that is used to a lesser or greater extent in some parts of China. “For liberals (in China and elsewhere), this is an appalling prospect; but for many ordinary people in China, it’s a perfectly reasonable part of the social contract between the individual and the state,” Mitter and Johnson say.
“Recognizing that the authoritarian Marxist-Leninist system is accepted in China as not only legitimate but also effective is crucially important if Westerners are to make more-realistic long-term decisions about how to deal with or invest in the country.
Myth three: The Chinese make decisions like Westerners
The third myth is that the Chinese live, work, and invest like Westerners. Recent history has meant that Chinese people see life as far more inherently unpredictable than people who live in societies which have been more stable in the past half-century. For this reason, they move quickly to try to make the best out of their circumstances. They also look for security.
Mitter and Johnson envisage a typical urban Chinese 65-year-old as someone whose parents suffered during the upheavals of the 1960s, and who may have been a Red Guard herself as a teenager, before becoming a protester during the 1989 civil unrest in Tiananmen Square – but who would then have settled into a job in private industry and bought their own home.
The high level of unpredictability in their pasts make citizens want to make their futures secure as quickly as possible.
So, for example, observers might associate “playing the stock market” in terms of in-out share trading with the capitalist west, rather than the communist east.
The opposite is true. Surveys indicate that mainland Chinese investors are more likely to change their investments at least once a month, higher than the US or any Western country, and higher even than China’s supposedly ultra-capitalist city Hong Kong.
“The one long-term asset in which increasing numbers of Chinese are invested —that is, residential property, ownership of which grew from 14% of 25-to-69-year-olds in 1988 to 93% by 2008—is driven also by the need for security,” the report says. “Unlike all other assets, property ensures a roof over one’s head if things go wrong, in a system with limited social welfare and a history of sudden policy changes.”
And what of China’s future? Nothing is predictable. The country’s popular leader, Xi Jinping, has envisaged the development of what he calls an ‘eco-civilization’ built around solar energy technology, ‘smart cities’, and high-density, energy-efficient housing.”
It’s an ambitious target, but the country will certainly try to achieve it.
“Ambition like that can’t be realized without state intervention—relatively fast and easy but often brutal in China,” the report says. “By comparison, progress on these issues is for Western economies extremely slow.”
A full of this article first appeared in the May–June 2021 issue of Harvard Business Review.
Rana Mitter is a professor of the history and politics of modern China at Oxford.
Elsbeth Johnson is a senior lecturer at MIT’s Sloan School of Management.