Platt Perspective on Business and Technology

China and its transition imperatives 11: facing and confronting the core, most fundamental challenge 2

Posted in macroeconomics by Timothy Platt on July 18, 2014

This is my eleventh installment to a new series on China and its recent Party and government leadership transition, looking back over the past year since that formally and officially took place and to now and China’s current situation, and forward (see Macroeconomics and Business, postings 154 and loosely following for Parts 1-10.)

I began in Part 10, a discussion of how growing access to and interconnecting use of cell phone and the online experience, are bringing the diverse peoples of China together and in ways that are not always amenable to control or oversight by their central government or by their one Party system. And I began a discussion of how this creates both grave challenge, and great potential opportunity for China’s new leadership if it seeks to address their country’s challenges through meaningful change. Then at the end of that series installment, I said that I would:

• At least begin discussing the role that China’s burgeoning private business sector can play in this.
• And I said that I would least offer some speculative thoughts on the potential for crisis that fundamental disconnects here could bring about. In this I mean disconnects in expectations and sought after goals as they are already arising between public need and public perception of need on the one hand, and what government and Party can allow on the other and certainly if they only seek to follow their same current course in managing and leading Chinese society.
• And perhaps more importantly I stated that I would at least offer some thoughts on how this potential for crisis could be used as a lever in reframing and arguing a case for enacting real, more fundamental change and even perhaps in their one Party system itself.
• But I also see need to at least take note of some recent events that have if anything exacerbated these challenges and both for China and her peoples, and for their new leadership. So I I have a goal for this series of making note of that too.

And I begin all of this with the first bullet point, above and with the private sector business example set by the much anticipated Alibaba Group initial public offering (IPO), as is set to take place in Western stock exchanges.

• This business news event holds potential for launching China in the public mind and imagination as a leading powerhouse, worldwide, in online and social media technology and in its effective globally-connecting use.
• But at the same time, the leadership and the policies and practices of their One Party only system, threaten this success by raising concerns as to both business practices allowed in China and personal information security practices in place.
• Put simply and in perhaps stark terms, news about China and news coming out of it regarding governmental policy and practices, raise serious questions of reliability and accountability, and both for non-Chinese businesses that would work collaboratively with new and emerging Chinese business powerhouses,
• And for members of the global online public as they decide how and even whether to use China-based communications and information sharing resources.
• In this, I include everything from local favoritism offered by Party officials in support of “their” businesses, and at the expense of both other Chinese owned enterprises that seek to operate out of their personal local government fiefdoms, and foreign owned businesses that seek to enter their markets or operate facilities in their areas,
• And I include as cause for concern China’s national policies where government owned businesses, and businesses owned by politically favored Crown Prince Party members are offered special treatment and special rights over all others.
• Bribery and the requirements of offering bribes and special deals to Party officials and to the politically favored are always an issue in China too, and certainly when doing business in the provinces.
• And of course any such listing of potential friction points coming from Party control has to include acknowledgment of China’s national cyber-policy too, with its Golden Shield Project and its system of online surveillance.
• But these simply represent known long-term ongoing sources of friction for doing business in China and certainly when, for example, the focus for that last bullet point is placed on how China’s government watches their own citizens and their own businesses online.
• China’s increasingly active, government sponsored, internationally focused information gathering initiatives have significantly added to the friction here too, reducing opportunity for Chinese businesses in global markets, and creating greater uncertainties for them with the cost potentials that that creates. And with this, I have also at least touched on some of the issues that I noted in my second bullet point of the four at the top of this posting. And I have also at least started taking note of the third as well. If Party and government policy and action create friction for Chinese businesses and risk for outside businesses that would seek to work with them and participate in growing the Chinese economy, this weakens all participating businesses, and reduces their competitive profit making potential and on all sides. This creates very real incentive for China’s growing private sector business community to push back, as the as-is status quo is already costing it and its members much of what they would risk from speaking and even acting out.
• And of course in their search for absolute control and absolute security, China’s government and Party are reaching out past their own national boundaries in an effort to gain controlling influence too. And this brings me to the fourth bullet point of the list that I started this posting with.

I will end this posting with that last point, simply noting that it is where this series converges with the point of discussion that I have reached in my series: Learnable Lessons from Manning, Snowden and Inevitable Others (see Ubiquitous Computing and Communications – everywhere all the time 2 as postings 225 and loosely following) and particularly in its Part 25 end note, and its Part 26 where I begin to discuss China’s cyber-policy and activities from a foreign national and global impact perspective.

To clarify the point of connection that I am drawing here, the relevant text to that connecting end note is:

As an update, added May 25, 2014: I am currently writing and uploading my blog postings on the order of a month and a half in advance. And approximately 10 days after I finished and uploaded this posting (n.b. Part 25 to the above cited series), the Obama administration and its Justice Department brought formal charges against a group of individually named members of the military of the People’s Republic of China, charging them with industrial espionage cyber-attacks against American businesses, and against US government online resources.

I will continue this discussion in a next series installment from, among other issues, that point. Meanwhile, you can find this and related postings at Macroeconomics and Business.

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