Continued China thoughts

I am still musing on China, and have a couple thoughts about the way it can maintain both a (semi-)capitalist economy and a dictatorial Communist government.

Some aspects of China are amazingly capitalist. There are approximately two cultures there. The business world, especially technical business, is capitalist and cares little about politics, except to the degree that it might hamper opportunities. That is not to say there aren't smoked-filled rooms containing company presidents and government officials, but the corporate people, deep in their hearts, don't especially care what Chiang Kai-Shek did in 1949. The goal is very much to get rich, by any means possible.

The government culture is, of course, Communist/socialist. It's all about social order, control, security theater, telling people how much their factories should make, etc. There were lovely government signs all over Shanghai. Some exhorted people to "maintain good hygiene-- wash your hands regularly." This might be fine in a washroom or kindergarten, but they were the big ones that hang on lamposts beside a major thoroughfare. Some public places also had "rules" posted about how you were to behave in those places.

The two main cultures do intersect sometimes. There are regulations stipulating how much revenue companies can make in some cases, which means they adjust how many components to buy for their production lines depending both on price and on whatever is the government's latest whim. This throws a monkey wrench into the usual economics of supply/demand. (That and the fact that most large companies are freed from the requirement of actually making a profit, due to the aforementioned smoke-filled rooms).

Standing between these two cultures (which maintain an uneasy peace most of the time) are people like landlords, who use the fact that competition isn't quite unhindered to make lots of money. For example, Shanghai overbuilt luxury condos during the past decade (but hey, it made work for lots of construction workers). Now they stand with less than 50% occupancy. Nonetheless, it is extremely hard to buy one. They cost many millions of dollars, and mortgages are generally given only for 10-20% of the cost, not 80-90% as it is here. (China's lending and credit institutions are not very mature). But even people who show up with the cash can't actually buy one of these places unless they personally know the landlord or have good connections to his family. That's the famous "guan xi" needed to accomplish anything in China -- good relationships. I'm sure it was the same in the Soviet Union, and it is of course true in countless dictatorships around the world today. Landlords are very rich, since they parlay their absolute power (and freedom from needing profit-- the government absorbs the cost of all those vacant units) into their own advantage.

So it is not terribly surprising to run into a lust for money and business in China. You just have to remember that your intuition about how capitalism works in the US (and, largely, Europe) might not apply.

What did surprise me was the strong interest in a report I had written about intellectual property!