The economic rise of China has already led to a multiple redistribution of global economic power: from South-East Asia to China, from Japan to China, and from Europe and the United States to China. Given that China is only a little over halfway through its take-off phase, with over 50 per cent of the population still living in the countryside, it is clear that we are only in the early stages of this process. [586] It is inconceivable that one-fifth of the world’s population, embracing all the various scale effects that we have considered, can join the global economy with — by historical standards — enormous speed without ramifications which are bound to engender tension and conflict. So far China ’s incorporation has been relatively conflict-free. But the present aura of win-win that has surrounded this process seems unlikely to continue. The political arithmetic will shift in the West as the number of losers rises, with the entirely plausible consequence that the West — the traditional proselytizer for free trade — will lead the charge towards protection and the end of the era of globalization that began in the late 1970s. [587]

These considerations have now been recast in a new context: the most serious recession since the Great Depression of 1929- 33. Global trade is rapidly contracting, capital flows likewise, and unemployment is rising steeply across the world. The present era of globalization has come to a shuddering halt — and gone into reverse. How far this process will go remains entirely unclear. Almost everywhere governments are seeking to provide forms of assistance and subsidy for their threatened industries. There are growing demands for protection, evident in the ‘buy American’ pressure within the US Congress. China, as the world’s second biggest exporter (just behind Germany), will inevitably be a key target of such demands. In these circumstances, a trade war, accompanied by a withdrawal into rival trading blocs, is a distinct possibility. [588] The world is in new territory. The global parameters of China ’s economic rise have, at least for the time being, changed profoundly.

7. A Civilization-State

Hong Kong used to be a byword for cheap labour and cheap goods. It lost that reputation when its employers started to shift their operations north of the border into the similarly Cantonese-speaking Guangdong province. Hong Kong had moved too far up the value chain: the expectations of its workers had become too great to tolerate miserable working conditions, indecently long hours and poverty wages. The old textile factories decamped north along with everything else that required the kind of unskilled labour which Hong Kong once possessed in abundance and which China, as it finally opened its borders, now enjoyed in seemingly limitless numbers. The checkpoints and fences that were thrown up around the new towns in Guangdong were eloquent testimony to the countless rural labourers who were willing to leave their villages, whether they were nearby or in a distant interior province, for the bright lights of the city and what seemed to them, though no longer those over the border in Hong Kong, like untold riches.

Guangzhou railway station was crammed with such bounty-hunters, a human tide of migrants, from morning to night, 24/7. This was the Wild East. No matter the pitiful wages and terrible conditions, welcome to the province of opportunity. Young migrant girls barely out of school, often hundreds, even thousands, of miles from home, would work crazy hours performing the simplest of repetitive tasks, making clothes, toys or fireworks for Western markets that they could not even imagine, and then retire for a few hours’ sleep in their floor-to-ceiling bunk beds in cubby-hole-sized rooms in drab factory dormitories before resuming the drudgery on the morrow. But for them it was far better than eking out a much smaller pittance working the land from which they came.

Just as Hong Kong had earlier climbed the value escalator and seen living standards transformed in just a few decades, the same now began to happen in Guangdong. The expectations of locals grew and their opportunities expanded. From the most humble of beginnings, people began to make their way up their version of the career ladder. Meanwhile, as China ’s own standards and expectations changed, there was growing unease about the merciless exploitation of unskilled workers and migrant labour. They enjoyed no legal protection, with the official trade unions shackled and ineffectual. After years of discussion and debate, a labour law was finally introduced in 2008. It was bitterly resisted by many employers, who claimed that it would make their firms uncompetitive and drive them out of business.

Hong Kong employers were particularly prominent amongst these. Astute businessmen, enormously hard-working and pitiless to boot, they did not cross the border to escape the rising labour costs in Hong Kong in order to find themselves hamstrung by an armful of new regulations and a clutch of new expectations in southern China. Of an estimated 90,000 factories in the Pearl Delta region, nearly 60,000 are Hong Kong-owned. Many mainland Chinese employers supported them. Dubbed the country’s richest woman entrepreneur, Zhang Yin, chairwoman of Nine Dragons Paper Holdings, one of the world’s biggest paper-making and recycling firms, complained that workers were being given an ‘iron rice bowl’, a reference to the workers’ contract under Mao. The powerful All-China Federation of Industry and Commerce joined the opposition, warning of more labour disputes and companies going out of business. American firms with factories in China expressed their concern; the reason why they had gone there in the first place, after all, was the dirt-cheap labour. The All-China Federation of Trade Unions finally found a voice and rejected any concessions to the employers.

The new law is a sign of changing times. China, just like Hong Kong, will not always be a byword for cheap goods, even cheaper labour and miserable working conditions. The universal desire to improve one’s lot spells the eventual demise of an economic regime based on the cheapest labour in the world, wholly unprotected either by trade unions or the law, and exposed to the most brutal market forces. China is in the process of moving to a new stage in its development and its political world is beginning to reflect this. Laissez-faire attitudes are being replaced by the recognition that workers’ rights need to be protected.

There is still a widespread view in the West that China will eventually conform, by a process of natural and inevitable development, to the Western paradigm. [589] This is wishful thinking. And herein lies the nub of the Chinese challenge. Apart from Japan, for the first time in two centuries — since the advent of industrialization — one of the great powers will be from a totally non-Western history and tradition. It will not be more of the same — which is what the emergence of the United States largely represented in the late nineteenth century. To appreciate what the rise of China means, we have to understand not only China ’s economic growth, but also its history, politics, culture and traditions. Otherwise we will be floundering in the dark, unable to explain or predict, constantly disconcerted and surprised. The purpose of this chapter is to explain the nature of China ’s political difference. It is a task that is going to occupy, and tax, the Western mind for the next century.