washingtonpost.com  > Business > Columnists > Steven Pearlstein
Steven Pearlstein

China's Confounding Contradictions

By Steven Pearlstein
Wednesday, September 15, 2004; Page E01


To the first-time visitor, China is a country of fascinating and, at times, maddening contrasts and contradictions.

There is, of course, the stark contrast between the mean life of the countryside and industrial cities and the genuinely cosmopolitan prosperity of cities such as Beijing, with its modern glass and marble office towers, its dramatic new airport and efficient subway, and its glitzy hotels and shopping malls.

_____Past Columns_____
Choice Is Overrated (The Washington Post, Sep 10, 2004)
Getting Out Of Biotech's Second Tier (The Washington Post, Sep 8, 2004)
Hollinger Paid For Lord Black's Costly Hubris (The Washington Post, Sep 3, 2004)
Column Archive

And there is the delicious irony of a country run by a cabal of aging socialists in black suits who live, work and rule on behalf of the masses from an enclosed and secretive compound no different from the old imperial Forbidden City next door.

There is the generation of up-and-coming young Chinese officials who are so sharp and sophisticated you almost believe them when they say there is no such thing as a party line -- until the fourth or fifth one makes almost the same point using the same statistic or analogy or historical reference.

And there is the confounding contradiction of an economy that, in most ways, now looks and feels and acts like a market economy, except when it doesn't or the government decides it shouldn't.

If this were indeed just a market economy, then one would be hard-pressed to disagree with the assessment made at a conference here this week by Jeffrey Garten, the dean of Yale's business school, who predicted that China would be hit with a major financial crisis within the next five years. With nonperforming loans at Chinese banks now equal to half of the country's annual output, its currency misaligned, its economy addicted to vast and ever-growing inflows of foreign capital and outflows of finished goods, this has all the markings of a bubble economy.

And yet it is precisely because this isn't really a market economy that there is some hope that the heavy-handed "administrative measures" taken by the government might actually succeed in recapitalizing the banking system, restructuring money-losing state-owned enterprises and engineering a "soft landing" for the overheated economy.

For Americans trying to set the terms of engagement with this vast and resurgent economy, there is another, more maddening contradiction in the Chinese character that is at the root of our uneasy relationship.

There is the practical, hard-nosed, problem-solving China that acknowledges its strengths and its weaknesses, makes clever use of ambiguity and brings a long-term, strategic view to working out short-term disagreements.

CONTINUED    1 2    Next >

© 2004 The Washington Post Company