Tag Archives: rule of law

To the People of China:

Author Gary Moreau, aka Avam Hale in fiction

On the occasion of the “two sessions” legislative conferences recently convened in Beijing, China, government officials reviewed the accomplishments of the past and the challenges and the opportunities that lay ahead for the people of China. As an American businessman who lived and worked in China for nine years (2007-2016), I would like to offer my humble advice for consideration by the people of China observing this discussion. Specifically, my thoughts relate to the American experience and what China can and should not learn from it. I will limit my comments to five critical areas.

Democracy versus Socialism

Americans refer to their political system as a democracy and insist that this is the only form of governance that leads to long-term economic development and the protection of human rights. History does not bear this out.

If, by democracy, we mean one person, one vote, America is a democracy. But voting is only a process. If, by democracy, we mean that the interests of all people are represented, America is not a democracy. It is an oligopoly controlled by, and operated for the benefit of, the commercial class of corporations and banks and the people who manage them and/or benefit from their wealth.

America has two political parties—the Republican and the Democratic parties—but both are built on an ideological foundation of individualism. The Republicans emphasize competition among individuals while the Democrats emphasize inclusion among individuals. Both, however, are defined by individualism and both, as a result, require a hierarchy that is ultimately controlled by individuals of wealth.

Socialism, by contrast, is a form of collectivism, built around the ideal of the common good. As a single party, the Communist Party of China (CPC) must assume responsibility for all Chinese; rich and poor, old and young, man and woman, Han or minority.

Capitalism versus Socialism

Americans believe we live and work in a free market economy. This, too, is a false conviction. The American economy is heavily regulated. The government sets the minimum wage and applies rules for overtime pay, child employment, and other labor issues. It also sets standards for worker health, safety, and environmental protection and strictly controls who can practice what profession.

The supreme economic regulator in the US, however, is Wall Street. It is the large private banks and the other owners of capital who ultimately regulate the US economy for their benefit. Washington, as a practical matter, provides little more than office space for the capital class to perpetuate the charade that the economy is regulated in the interests of all Americans.

The Chinese economy, of course, is also regulated. All hierarchies are. In China, however, the state is both the regulator of record and fact. Beyond the obvious benefit of transparency, the Chinese approach to economic regulation has two distinct advantages. The first is the fact that the government maintains a national industrial policy that guides economic development in a direction that maximizes the benefit for all Chinese. And the government provides specific regulatory representation for workers in an effort to protect their individual rights and adjudicate when any worker believes he or she has been mistreated or harmed.

The biggest difference is not in the amount of regulation, but its purpose. In China, companies are regulated for the benefit of the common good. In the US, while there are some minimal regulations to protect the environment and the workers, most regulations, including those that make it extremely difficult for workers to organize into collective unions for their personal protection, exist for the benefit of management and investors.

The First Amendment

Public information flows are famously unregulated in the US. In China, by contrast, they are openly regulated and censored by the government.

Information is power. Of that there is little doubt. But is all power good? And, if not, who gets to decide which is good and which is not? Is political disinformation good? Are fake news or alternative facts good? Is cyber-bullying good? Is revenge porn good? Does digital anonymity ultimately serve progress or destruction?

In China, at least, everyone knows who is censoring information and why (i.e. a perceived threat to political or social stability). In the US, by contrast, we have no idea what goes into the algorithms that Big Tech uses to determine what information actually enters the echo chamber and gets seen, and what information gets buried behind the mask of informational democracy.

Ultimately, information flows in the US follow personal fame, the human face of information. But fame is neither inherently good nor bad. It is, however, arbitrary. Are the famous gatekeepers of American social media any more responsible or informed than government officials? Both can obviously be compromised. But is fame or wealth a defensible source of political legitimacy? History would say not.

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The Rule of Law

This is a double-edged sword. The US boasts the largest population of incarcerated men and women in the world. And African-American and Latino men make up a disproportionate share of that population when, in fact, studies have shown that their involvement in the most common illegal activities, like drug use, are not fundamentally different than that of other ethnic groups.

The rule of law is more appropriately thought of as the rule of the courts and the judges that preside over them. There is little question that the judicial class in the US wields far greater power than its Chinese counter-part, which was only recently granted independence from the political hierarchy.

But the rule of law is only accessible to all classes of society in theory. In practice, it serves the interests of the commercial and political elite that largely control access to the courts. While the ‘jury of peers’ is often cited as a fundamental building block of the US judicial system, only 10% of all criminal cases and virtually no civil cases ever go before a jury.

The Fear of Authoritarianism

Americans have been trained to fear authoritarianism. The word itself immediately conjures up images of 20th Century Fascists and the Soviet gulags, images that the Western media is now using to criticize China’s decision to remove term limits for its top political office.

It is a false association. In its most important sense, authoritarianism is an adjective, not a noun. The length of a politician’s term is meaningless; only his or her impact really matters in the end.

The theoretical argument against extended terms of political rule, of course, are the temptations that such certainty creates for the abuse of power. It’s a legitimate point, but nowhere is it more impactful than in the US Congress, whose leaders inevitably rise out of the permanent political class, and the US judiciary, whose most powerful members serve for life.

As demonstrated by the 2016 Democratic primary process, moreover, it is the political establishment, whose power is not subject to the theoretical cleansing of democracy, that ultimately determines which candidates the citizens are given the option to choose between in elections.


My point is not to denigrate or glorify either China or the US. Both systems of governance and economy have their strong points and both have their weaknesses. The potential abuse of power is a universal weakness of all political and economic hierarchies that has plagued humankind since we walked out of the savannas of Africa. And that is unlikely to ever change. It is the nature of the hierarchies that all political and economic systems covering more than a handful of people must adopt.

Those hierarchies, of course, ultimately reside in the asymmetric assignment of power. That was, of course, the power behind the Third Reich and the Soviet gulags. It is, however, the same asymmetric power behind all racism, misogyny, and the oppression of the poor and powerless. And because the problem is not digital or binary, neither is the solution. Each resolves some of the problem some of the time.

But which is better? The simple answer is both and neither.

My advice, therefore, is really quite simple: Don’t listen to your detractors who have ulterior motives to sell newspapers, generate clicks, or sow fear. Pursue your own path.

What China has accomplished over the last three decades is nothing short of miraculous and is unmatched by any country or system of governance in the history of the world. You have every reason to be proud of yourself and your leadership.


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The Dragon Must Tame the Chicken

There is power in discretion. If you are in a position of power to enforce a rule or regulation, or to grant an authorization or award a contract, your power is inverse to the clarity of the rules and procedures in place to guide and control your actions.

That is one of the reasons why strong governments tend to write brief and imprecise rules and why liberal Western democracies often wordsmith new regulations to death. And why a strong, independent judiciary is considered essential to sustainable social and economic development.

As I have noted in the past, local politicians and regulators in China have historically enjoyed broad latitude to interpret and enforce regulations as they see fit. Or to award the spoils of government, such as public building contracts, without the transparency of strict checks and balances. While the Party has represented a political monolith the regulatory and legal tapestry of China has been extremely fragmented and localized. This both maximizes the control of the state (‘You are wrong when I say you are wrong.’) and allows for positive accommodation of local needs and/or interests (a good thing).

But in another variation of the Law of Unintended Consequences such local autonomy can both thwart the nation’s greater interests and opens the door to even greater levels of graft and corruption. Selling access and discretion occurs in every country in the world, including virtually all of the liberal Western democracies, who have simply codified the process and given it a benign name. But when even minor local officials wield extraordinary discretion the opportunity to introduce inefficiency into the governing process increases exponentially.

While the current Chinese government has amply demonstrated its willingness to cage renegade tigers (political jargon for corrupt high-ranking officials) it has also swatted the flies (corrupt low-ranking officials) who arguably do more damage to China’s civil and economic interests than the tigers themselves. There are obviously a lot more of them and they tend to touch the lives of the Chinese people in more frequent and direct ways.

While the world’s attention was on the APEC forum hosted at Yanqi Lake, a picturesque suburb of Beijing, officials in bordering Hebei province raided the home of Ma Chaoqun, former general manager of the State-owned water company in Beidaihe, a tiny city little known outside of the region.

Mr. Ma literally occupied the lowest level on the rung of China’s officialdom ladder. Yet in his home investigators found 120 million yuan in cash ($19.5 million), 37 kilograms of gold bullion, and the titles to 68 real estate properties. (If the cash alone had been in 100 yuan notes it would have weighed 1.38 metric tons.)

It is an extraordinary tale. This, after all, was a man who reportedly rode his bicycle to work and dined mostly on noodles. What is most extraordinary to me, however, is what this says about the potential magnitude of the problem, or, because I am an eternal optimist, the potential magnitude of the opportunity.

What if, as President Xi and Premier Li have promised, all of this money, at every level of government, is redeployed for the benefit of the citizenry rather than the governing establishment? The potential impact on the well-being of the average Chinese citizen is almost inconceivable. Even if it is not distributed in equal portions, the impact on the country’s general level of economic activity is almost unimaginable.

And this, I believe, is one of the reasons why the current administration is pursuing corruption with such vigor, why no ‘tiger’ has been spared, and why the 4th Plenary Session of the 18th Central Committee of the Communist Party of China recently held in Beijing was devoted to the rule of law. Whether you think of it as the rule ‘of’ law or rule ‘by’ law, the one inevitable result is that local government officials will have less discretion to interfere in or influence law, regulatory enforcement, and the granting of lucrative rights and contracts.

There is an old saying in China that ‘it is better to be the head of the chicken than the tail of the dragon.’ Said differently, the mayor of a 3rd tier city may live a better life than a vice deputy of a national bureau based in Beijing who is under a national spotlight and whose personal discretion is probably more limited.

This has created an entire industry of highly successful but largely local companies that, whatever product or service they provide, they ultimately excel in the business of government relations. They have excelled financially, but they have excelled, in part, because of the enormous benefits they have enjoyed from special access or selective treatment.

One such company with which I am familiar was recently rumored to have made a strategic decision to pivot out of a highly regulated industry in which it has prospered mightily into a completely unrelated industry in which they believe they can compete once the industry in which they currently compete becomes unregulated.

This, I believe, as is the government’s crackdown on graft and corruption at all levels of government, great news for both the country of China and the average Chinese citizen. Chinese companies are more than capable of competing in global markets without the aid of government largesse here at home.

By unleashing the economic energy and impact of the Chinese entrepreneur and small businessperson I believe President Xi and his supporters can create an economic engine unparalleled in modern history. With a strong cultural work ethic, a large domestic market on which to build, and the capital created by one of the highest savings rates in the world, a Chinese economy unfettered by the excessive manipulation of local Chinese political discretion can create enormous economic progress while remaining true to its compassionate Marxist ideals.

That, in the end, I believe, is the Chinese Dream so frequently referenced by President Xi. It can be a reality. To put it in uniquely Chinese terms, however, the dragon must first tame the chicken. There are many to tame but I believe this dragon is up to the task.

In China it is said that it is better to be the head of the chicken than the tail of the dragon.  But times are changing.
In China it is said that it is better to be the head of the chicken than the tail of the dragon. But times are changing.

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Copyright © 2014 Glassmaker in China

Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.