A Walk On The Great Wall: China’s Dream Weaver and His Reform Agenda

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By: Matthew Wisla

If your job is tough, and whose isn’t, you can save yourself some time by not dreaming about a cushy life as a Chinese government official.  The working life of many officials in China is no picnic nowadays.  And it’s getting harder for more and more of them all the time.  Ongoing changes and new challenges are signs of the times as the recently installed president intensifies the trend of putting the cadre corps to the test by raising performance expectations while simultaneously changing the rules of the game.  You can almost hear the nostalgic cries, “Back in the day, oh, the living was easy!”

These changes are for the better.  Xi Jinping became President in 2012 and from the outset cut a confident, determined figure while embarking on a reform agenda.  His initiatives include anti-corruption campaigns that are meaningful, or at least significantly more so than in the past, and reducing government perks.  In the early days of economic reform and opening in the 1980’s and ‘90’s China’s top leader Deng Xiaoping all but invented materialism in China by saying, “To get rich is glorious.”  You don’t hear that much around Beijing these days particularly where the government is concerned.

Matt Wisla

Matt Wisla

Xi wants to break down longstanding barriers by calling on officials to work harder to live more like and to better understand the populace.  In the waning days of 2013, pictures of Xi standing in the lunch line at a neighborhood dumpling shop in Beijing sparked a storm of positive commentary on Chinese social media and in the press.   In a country where for centuries leaders spent their days almost exclusively behind walled compounds surrounded by eunuchs and an imperial court in the past era and an army of servants and lower level ministers more recently it was almost scandalous seeing Xi lunching with, well, anyone and everyone at the Qing Feng Dumpling Shop.

In the past, government officials of rank received lots of special treatment as part of the daily routine of going about their jobs.  During the run-up to the 2008 Beijing Olympics I participated in a meeting where an upper-level Chinese Olympic official would preside.  At slightly past the appointed meeting time the doors of the conference room opened and a fast moving scrum entered with the official striding confidently at the center encircled by handlers.  Several smiling assistants guided him towards the center seat while others exchanged a flurry of files and papers.  When he arrived at his place an eager underling opened a leather briefcase and carefully, but with a certain flourish, produced a thermos of tea.  Clearly, it wasn’t the everyday green tea the rest of us were being served.  This style of treatment still occurs but is less common now.

Hear Me Now

For centuries, the will of China was determined by its rulers, either emperors or Mao Zedong.   An authoritarian state charted China’s course, and the views of citizens played virtually no role in setting policy or making decisions even at the local village level.  Among the tremendous Chinese transformations witnessed in our lifetimes is the pluralization of interests and opinions in society and their impact on Party and government decision making.  Increases in the number of constituencies is one result of opening and reform in China.  While the pluralization of interests and opinions doesn’t extend to the formation of groups, organizations or political parties that could threaten the Communist Party – that freedom continues to be denied – nonetheless Chinese society today bristles with opinionated voices and interest groups.  Labor opposes management, peasants lash out at developers, people advocate for better food quality, healthcare and environmental controls.  When disputes arise it is the local government official who is often charged with resolving matters.  Rather than always ruling by fiat local officials now spend a significant amount of time resolving disputes and being responsive to the public in ways undreamed of even a generation ago.

Writing in Foreign Policy magazine recently, the academic and author David Lampton predicted that in the future “China’s leaders will find it progressively more challenging to govern.  They already are.  In December 2011, for example, The Guardian reported that Zheng Yanxiong, a local party secretary in Guangdong Province who had been confronted by peasants angry about seizures of their land, said in exasperation, ‘There’s only one group of people who really experience added hardships year after year.  Who are they?  Cadres, that’s who.  Me included.’”

Another significant change that’s giving Chinese officialdom nightmares stems from the scale and complexity of their assignments and in how performance is measured.  The old model for evaluating officials had a single metric: growth.  Increasing economic performance in your province or area of responsibility was almost all that mattered.  Add a new factory, get a gold star and maybe a promotion.  Virtually no one asked how the contracts were awarded or whether operations pollute water used by the city or farms downriver.  Today, issues like food safety and pollution are high on the Communist Party’s agenda forcing officials to increasingly balance growth with other priorities.  So now not only are there more issues to contend with, but managing endemic problems like air quality pose substantial challenges.

While many officials still abuse their power and China continues to lack many of the institutional checks and balances found in the West, there is wind in the sails of reform and many positive improvements have been made.

Will Xi Jinping and the reformers ultimately succeed with these initiatives along with the new agenda of fairly aggressive economic reforms passed at a recent Party planning meeting?  As is often the case in China, the key will be what happens next.  The central government will need to demonstrate great resolve and ingenuity if it’s to turn the new trends into collective realities, and for the new mindset for government officials to become the new normal.  Those aligned against change in society and the Party, such as anti-reform hardliners, those with conservative Maoist ideologies, and the state owned sector of the economy along with the economic elite who have benefited greatly under the current system, will continue to need to be addressed.

We’re Listening

With many of the toughest battles with entrenched interests and anti-reformers still ahead the final outcome remains decidedly uncertain, but one new force for positive change has emerged.  Former US ambassador to China Jon Huntsman identified it in about 2011 as the “creative class” and the demographic has been growing in size and influence.  They are the small business owners, entrepreneurs, modern minded academics and college educated workers who like the trajectory that reform and opening set for China and want to see more progress, much more.

Measuring the growth of the creative class requires a big yardstick.  In the 1977-78 academic year the population of university students numbered about 400,000.  In 2010, it was estimated at 6.6 million.  Many people assume that state owned enterprises and the state sector of the economy is the dominant economic force in China.  But that’s a misnomer.  For example, in 1978 total industrial input controlled by the state sector was 78%, but by 2009 it had shrunk to 11% even though industrial output overall had grown tremendously in that time.  Today, the private sector continues to expand, while the state maintains a grip on key segments such as finance and energy, as well as, like most countries, defense.

Because the creative class generate ideas and invent things they want intellectual property rights and the rule of law strengthened.  They know more about the world than any previous generation in China and want more best practices and world class standards adopted.  They tend to care about popular trends, the arts and fashion.

The creative class has the government’s attention.  Their voices permeate traditional and social media, and their views are carefully tracked in the many opinion polls conducted by the government for its own use in deliberations and decision making.  As a result, the creative class has the power to deliver its message to China’s rulers making them a notable force that intensifies the pressure for reform.

Early in his presidency, Xi Jinping set out the idea of the “Chinese dream” as a national aspiration towards completing China’s rejuvenation.  Since then he has displayed a confidence and self-assured vision that appears in sync with the times and popular sentiments in modern China.  While government officials may dream of a simpler time, significant global economic development and stability rest on Xi’s reform agenda and its ability to continue moving China forward.

Matthew Wisla recently returned from nine years in China helping American companies succeed in one of the world’s most demanding and challenging markets. He co-founded the Marketing, Advertising and Public Relations Forum for the American Chamber of Commerce in Beijing and later served as the organization’s Vice President of Communications. Previously he worked in the US and Beijing for the leading global communications consultancy Fleishman-Hillard. His expertise includes brand building and managing corporate reputations, as well as issues and crisis management and policy communications (www.matwisla.com).

Email: matt.wisla@yahoo.com

2014

Moving ahead no matter what...

Moving ahead no matter what…

Recapping is a lot easier than forecasting. Looking back to see what has been accomplished is based on what is here. Looking ahead to see what will be, is based on a lot of assumptions, what-ifs, dreams and conjecture. The first is concrete, while the second is often smoke and mirrors as seen through a cloud of wishful thinking.

At a recent meeting with reader-advisors from Texas Contractor we unrolled a short list of what we thought would be hot topics for 2014. On a national level these items included:

  • Expiration of the Federal Highway Bill in 2014 and the loss of jobs as a result. The problem with short-term, stopgap bills is that they provide the states with the necessary funds to do more than stopgap maintenance. Serious improvements cannot become a reality. We are living with a transportation infrastructure that is decades old and in serious need of updating if we are going to remain commercially competitive on a global level. Additionally, the loss of construction jobs will, by some estimates, exceed hundreds of thousands.
  • Motor Vehicle Fuel Tax expiring in 2016. The impact of this equation is obvious: No tax dollars = no funds for transportation maintenance and/or updates. In early December 2013, Representative Earl Blumenauer (OR-03) along with leaders in the fields of transportation, labor, commerce, and construction introduced H.R. 3636 The Update, Promote, and Develop America’s Transportation Essentials (UPDATE) Act.  This bill would phase in a 15 cent/gallon tax increase over the next three years on gasoline and diesel.

“The gas tax hasn’t been increased since the beginning of the Clinton administration,” said Blumenauer.  “Today, with inflation and increased fuel efficiency for vehicles, the average motorist is paying about half as much per mile as they did in 1993. It’s time for Congress to act.  There’s a broad and persuasive coalition that stands ready to support Congress, including the U.S. Chamber of Commerce, National AFL-CIO, the construction and trucking industry, cyclists, professional groups, numerous associations of small and medium businesses, local governments, and transit agencies. We just need to give them something to support.” Scan below for full article.

  • Skilled labor shortages have been a problem for some time with the condition being exacerbated by the problem with immigration. Many contractors point out the facts that “illegals” are willing to work. They are reliable, they are skilled, and they are willing to do the work when no one else will. Contractors have commented that while they comply with current regulations and don’t hire anyone without green card or suitable papers, their competition will.
  • Creeping inflation and the resulting increase in prices for construction related materials and equipment. The lack of stability, especially with fuel prices, makes it difficult to project costs.

Contractors participating in the meeting voiced their concerns, which focused on:

Quality of workforce

Safety

Keeping the funnel full, i.e. the availability of work, especially transportation.

Workforce/immigration

Contract issues

Training

The workforce problem is more serious in different areas of the country and different segments of the industry. If the economy went into a rapid growth mode this situation would become more universal

FMI has recently released its 2013 report on U.S. Construction Industry Talent Development that is based on responses nationwide from a mix of general contractors and construction managers at firms of all sizes and specialties, including mechanical/plumbing and heavy/highway/civil. To view FMI’s full report scan below.

More than half of respondents report a shortage in skilled labor. As a war for talent begins, construction experts must evolve their methodology of searching for the best and brightest employees. First, construction careers must be made more appealing to women and minorities. Second, there must be an appeal to today’s youth through career counselors, career fairs and utilization of social media channels.

An industry, any industry cannot survive unless it has:

The need for its existence

The materials and equipment

The people trained and skilled to implement its execution

Construction is a very material, equipment and people intensive industry. Without any of these components its continued existence becomes jeopardized. Without construction the economy cannot grow and prosper.

What do you think? What concerns keep you awake at night? If you’d like to share your thoughts and opinions, please feel free to e-mail them to: GSitek@ACPpubs.com.

For fuel tax article: click here

For FMI’s full report:     click here

This article appeared in the January 2014 issues of the ACP publications

 

 

A Walk On The Great Wall –China and the Future of US Business

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By: Matthew Wisla

Richard Nixon.  The Watergate scandal is his legacy, but we also remember him as the president who opened China to the West.  Even in 1972 as final

President Richard Nixon

President Richard Nixon

preparations were being made, everyone knew Nixon was making history by going to China.  Witnesses say electricity was in the air as the president departed the White House mingling with throngs of lawmakers, administration officials, well-wishers and cameramen.  Some said it was something like the moon launch three years earlier, and aids describe the surreal experience of watching their own departure as Air Force One roared down the runway on live television.  The excitement was understandable, after all, they were flying all the way to China and Nixon was going to meet Chairman Mao.

What no one knew at the time was whether a trading relationship could ever be established with the Chinese.  The carefully planned visit would open diplomatic ties, Dr. Henry Kissinger made sure of that.  But could the relationship be broadened to include a commercial pillar?  Flying back to the US in 1972 when some administration aids started speculating about what we could actually buy from China there were blank stares and head scratching all around.  The best they could come up with was hog bristle brushes.  They thought the Chinese might be able to sell some of those to us.

Fast forward to the present and the answer is obvious.  Bilateral trade between the US and China is well in excess of $1.5 billion per day, with more than $403 billion in total goods sold between the two countries through September 2013.

Big Things to Come

While the current commercial relationship was beyond anyone’s wildest dreams forty years ago, today’s China can be a nightmare for US companies doing business there.  Top business challenges include rising labor costs, protectionism, an inconsistent regulatory environment, licensing barriers, shortages of qualified employees and managers, and corruption, according to the latest surveys by the US-China Business Council and the American Chamber of Commerce in the People’s Republic of China (AmCham China).

Regardless of its challenges, the appeal of the China market remains strong for American companies.  According to US-China Business Council estimates, China is currently a $250 billion market for US companies, and growing.  AmCham China member companies report that three-quarters of those responding to the survey have an “optimistic” to “slightly optimistic” two-year business outlook in China.

Chairman Mao zedong

Chairman Mao zedong

Yet in the early days of the economic relationship, only the Americans had a clear picture of what international trade was all about.  For the Chinese, Mao’s Cultural Revolution (1966-1976) was still gripping the country during Nixon’s visit meaning universities along with their business schools were shuttered and the very idea of capitalism was a state crime.  So for the future businessmen and women who lived through that time and into Deng Xiaoping’s era of reform and opening in the 1980-90s it’s hard to imagine what came to mind when they thought of international trade and capitalism.

The Nobel Prize winning poet Wislawa Szymborska once wrote about what it might be like reading poetry to the blind.  Through what frame of reference could a sightless person relate to the poet’s familiar use of colors and imagery?   American companies that made their way to China during those early years could probably relate to Szymborska’s poem.  They were encountering government officials and a small business class with little understanding of the outside world or business as we know it.  As Szymborska wrote, speaking of the poet, “He hadn’t guessed it would be so hard.”

China’s Role

Today, the Chinese business community has a well-earned reputation for savviness and American companies are a major presence on the ground in the China.  Most US businesses with any international exposure to speak of now have extended track records and expanding operations in China.

US companies like P&G, GM, Intel, Honeywell, Amway, United Technologies, Apple, Boeing and many others view China as a critical market.  Construction equipment manufactures like Caterpillar, Volvo, Terex and Oshkosh have significant investments and important, growing operations in the middle kingdom.  For example, Caterpillar has more than 20 manufacturing facilities in China.

Research and development centers of American companies in China regularly innovate new advances as well as working in concert with R&D centers worldwide to create the latest products.  It’s not unusual for new products to be launched in China before being rolled out to the US and rest of the world.  Institutional investors regularly question CEOs about their China operations, and some companies, like Honeywell, have relocated division headquarters into the region.

Gone are the days when China functioned solely as a low cost manufacturing base for companies looking to make things there for sale elsewhere around the world.  According to the latest AmCham China member survey, 71-percent of responding companies say their main goal in China is to produce goods for the local market.

Despite the global downturn, revenue and profitability are good in China.  According to the AmCham China survey, more than 40-percent of respondents say operating margins in China are better than the global average for their company.  That’s good news for American shareholders.

In early December, Vice President Joe Biden flew to China on what was originally intended as a trade mission.  Instead it focused mostly on regional security and the roiling dispute between Japan and China over a chain of islands in the South China Sea.  Nonetheless, Biden made time to discuss trade issues with the Chinese and met with the American business community at a gathering in the St. Regis Hotel in Beijing.   Biden said in his talks with Chinese officials he stressed the need for more legal transparency, bilateral investment, intellectual property protection and market-driven exchange rates.

Biden’s comments were well received by business leaders.  “We are very encouraged by the vice president’s visit to Beijing.  We believe there are numerous opportunities for companies in both countries to benefit from greater cooperation, in particular through open investment policies and transparent regulatory frameworks,” said AmCham China Chairman Gregory Gilligan.

“I was happy he (Biden) didn’t dance around the issues,” said Ken Lousberg, President Terex Corp. China.

Biden also commented on the connection between the diplomatic and commercial pillars of the US-China relationship.  “I believe that the shared prosperity that you helped create is part of the glue that will hold together this relationship,” Biden said.  “Your success strengthens the entire relationship.”

The China Imperative

Nonetheless questions are often raised in the US about the need for a business presence in China.  Beyond last quarter’s profits and some positive trends, corporate leadership as well as growing numbers of small- and medium-sized companies emphasize a range of strategic reasons for their China engagements.

Anyone who says – and it’s surprising to still hear this in business circles today – that companies are in China because it’s a big market is dead wrong.  CEOs devote significant time and energy to thinking about risk and growth.  The business rationale for China, and the imperative many companies feel for getting China right, has to do with scale.  Size is good, especially when it equates to more sales and revenue, but scale is a relative measure that takes competition into account.  And competitors can put you out of business.

Companies intending to remain among the Global Fortune 500 in the future or to continue as leaders in their particular niche look to China to hold or maintain their positions as China drives the global size of industries across the board to new heights.  At the same time, Chinese companies are growing strong at home before branching out to global markets.  As it turns out, rising completion is part of a global trend.  For example, by 2025 about 50-percent of the world’s leading companies are expected to come from China and emerging markets.  In 2000 only five-percent came from emerging markets.

Matt Wisla

Matt Wisla

With that in mind, US companies point to a need to compete with and keep tabs on their rising Chinese competitors on their home turf.  It would be a risky proposition for an American company to ignore China allowing competitors to gain scale and momentum there before challenging in the US.

China is of particular importance for capital intensive industries, like automotive.  Companies in those sectors know that missing in China means they won’t have the volume necessary to amortize the huge cost of developing new models and products in the future.  And not having the capital to innovate leaves the door wide open to the competition.

Finally, there are important growth drivers in China that are absent in the US.  For example, 60-percent of the world’s population are expected to live in cities by 2030.  China is an important part of this trend since 250 million people will move off the land and into Chinese cities over the next ten to 12 years.  That’s the equivalent of creating a Manhattan’s worth of new consumers every year.  What company can afford to miss that if they are in a relevant industry?  What answer would an American CEO give to investors after the company was eclipsed by European or Chinese competitors?

In 2011, New York’s Metropolitan Opera staged “Nixon in China” complete with a replica of Air Force One and a stage full of baritones and sopranos taking the parts of Mao, Nixon, Mrs. Nixon and a host of other historical figures.   John Adams wrote the musical score (a contemporary composer from New Hampshire, not our second president).  In the final act, Adams arranged the singers and music into a seamless woven texture connecting the Chinese and American characters.  It symbolized how everyone who participated Nixon’s visit, and those coming after them, were going to be forever intertwined.  As we look towards the New Year, there remains a powerful business case for our strong interconnection with China.

Matthew Wisla recently returned from nine years in China helping American companies succeed in one of the world’s most demanding and challenging markets. He co-founded the Marketing, Advertising and Public Relations Forum for the American Chamber of Commerce in Beijing and later served as the organization’s Vice President of Communications. Previously he worked in the US and Beijing for the leading global communications consultancy Fleishman-Hillard. His expertise includes brand building and managing corporate reputations, as well as issues and crisis management and policy communications.

Email: matt.wisla@yahoo.com

December! Not Again!

sitekHow many times have you said or thought this or something similar? Too many for me to state… Counting the years is not really important; each is only a milepost along the highway of life; a way of marking progress or lack of; another notch.

Actually it’s more than that. It’s a time filled with our biggest holiday; a time when we stop and look at tomorrow’s possibilities and yesterdays accomplishments and/or failures; it’s a time for celebrating and a time for planning. It’s a time that proves we humans are not very bright. Why would we create a situation of conflict that demands our time, focus and attention to do planning for tomorrow and celebrating?

As the final page of the 2013 calendar turns maybe we’d be better off focusing on the celebration and forgetting the planning. Unfortunately we can’t do that but we certainly can take the time to celebrate the good things in our lives and express appreciation and gratitude for all we have.

2014 will be a year filled with opportunities and challenges. At the beginning of the year we have CONEXPO-CON/AGG, which promises to be an interesting industry show filled with new products, new technologies and new manufacturer/suppliers. There will be several first-time Chinese equipment manufacturers entering the U.S. market that will add a new level of excitement to the show. The exhibitor list is greater than it was in 2011 and attendance is expected to set records.

At the tail end of the year will be the “Mid-term” elections and in between the expiration of the current fuel tax bill and the extended highway bill. What happens with these two pieces of legislation will probably have a great impact on our industry, commerce and the national economy. With a rapidly deteriorating transportation infrastructure it is critical that something positive be done to address this need.

What is the outlook for 2014? Looking at back on 2013 ahead to 2014, in a state of retrospective reflection, the first thought that comes to my mind is a line from an old Harry Belafonte song, Man Piaba, “It was clear as mud but it covered the ground
And the confusion made the brain go ’round.” There has been very little media coverage on these pieces of legislation it’s easy to forget that they come into play very soon. If it weren’t for the associations like AEM, ARTBA, NAPA and others, they would probably fade into oblivion.

There are all the other important issues that are of concern, like healthcare, the national debt, the debt ceiling, etc., etc., etc. but these are getting endless coverage by the mainstream media. We as citizens of this country need to become actively involved in the politics of our country. It’s time for us to stop thinking that our responsibility as a citizen ends when we have cast our votes; that this alone is the needed extent of our involvement.

In 2014 become involved in the issues and politics that will shape this country’s future and the legacy we leave our progeny. Don’t just vote, know who and what you vote for; understand the issues and let you representatives on a local state and federal level know how you expect them to represent you.

On that note, we at ACP wish you and yours a very Merry Christmas and a Happy New Year…

NOTE: This editorial appears in the December 2013 issues of all 13 ACP magazines.

A Walk On The Great Wall: China’s Internet Crackdown: Economics, Destiny and Government Control

Great WallBy: Matthew Wisla

The digital community in China has been put on notice.  A new government crackdown is severely impacting social media discussions and commentary which once blossomed in China.   The leadership has let it be known that anyone who thought the unpredictable, mostly unfettered communications of recent years would carry on forever was living a pipedream and, though there were clampdowns in the past, things are going to be very different from now on.  So far at least, the Communist Party has been true to its word and much to the detriment of free speech.

While China’s digital world was never completely free, Twitter, Facebook and numerous other sites are blocked as are many sensitive topics and search terms, citizens were able to criticize the government in very public ways and congregate in groups digitally as in nowhere else in society.  And they did so in droves.

Off limits topics included the three Ts: Tibetan freedom, the Tiananmen Square massacre, and Taiwanese sovereignty, but discussions focusing on official corruption, ill-conceived government policies and Party leaders, their families and mistresses, were mostly allowed.  Periodic clampdown campaigns and restrictions be damned, social media provided the Chinese people with the broadest, most open marketplace of ideas and discourse in their history.

At the heart of the crackdown sits a new law.  On September 10, legal provisions were made to punish online critics of the government.  For the first time, Chinese legal code expanded the definition of criminal defamation to include any digital posts that “seriously endanger the social order or national interests.”   The legal language is intentionally vague enough to allow the government to apply the law as it sees fit.  Terms like “seriously endanger”, “social order” and “national interests” are not sufficiently defined.  What the law is specific about is when it can be applied:  To the person responsible for any post viewed 5,000 times or more, or which is reposted at least 500 times.  Why those numbers were chosen as thresholds is anyone’s guess.   Apparently Chinese officialdom can comfortably tolerate 4,999 views, but not one more.

Brother Watch

Truth be told, the digital world has been both friend and foe to the Communist Party.  Yang Dacai is among the government officials who have been brought down by social media posts and pointed chat room discussions.  The head of the work safety administration in Shaanxi Province, last year Yang was seen in news photographs grinning while at the scene of an accident between a tanker truck and a bus which killed 36 people.  Incensed that an official could find anything to smile about at such a grisly scene, netizens began looking into his background.  Soon, picture after picture were uncovered of Yang wearing various high-end watches, each costing well beyond the means of someone in his pay grade.  The images were widely circulated online and Yang became forever known as Brother Watch.

In cases like this, the government hasn’t allowed its long standing concerns over the Internet to stand in the way of it capitalizing on opportunities to further its agenda.  Here, a local official’s penchant

World class architecture crowns the Beijing business district skyline.

World class architecture crowns the Beijing business district skyline.

for pricey timepieces fit right in with the central government’s current anti-corruption campaign.  An official investigation ensued and eventually Brother Watch was jobless and in front of a judge where he was convicted of one count of bribery.  His assets at the time were more than 5 million RMB ($802,000), which he couldn’t explain.

House Sister (no relation) is another recent example of a high-profile conviction resulting from misdeeds first revealed online.  In this instance, banking official Gong Ai’ai illegally amassed 44 properties in Beijing valued at about 395 million RMB ($64 million).  Four police officers were also reportedly swept up in the investigation.  Authorities were first put onto the case after a microblogger ignited an online firestorm of indignation.

What remains to be seen now is what future role the government sees for the Internet and how Chinese citizens will respond to that vision and the current crackdown.  No country can participate in today’s global economy and operate offline.  And, since the late 1990s when economic reform and opening became central doctrine, nothing was going to stop the Communist Party from growing China’s economy.   But what to do about cyberspace?  From the outset it was clear the Internet had an economic role, but its social dimension, the way everyone could openly participate, couldn’t be parsed out.

Censorship

It’s easy to imagine reformers within the Party delighting as China connected to the global economy and business content, conversations and transactions moved online, while traditional Party hardliners looked on in horror and mounting anger at the open participation the web afforded the citizenry.   For years the Party has wrestled with what course of action to take.  In a way the situation played out like a man working in his office who is disturbed by a fly.  At first, he tries to ignore it.  An unwelcome level of tension and annoyance builds as the fly darts freely here and there.  He’s concentrating on his work, but decides to take a swat or two at the fly.  The buzzing continues, could it be getting louder?  Eventually his attention focuses on the object of his aggravation.  Determined, he sets out to get the fly.

The Party’s frustration over Internet free speech was on display around American Independence Day, July 4, 2011.  That evening in China social media and the Internet lit up with rumors that former President Jiang Zemin had died.  The government was slow to respond and e-rumors flew at a fevered pitch for days.  Jiang had retired in 2003 but, as with all past leaders, remained an influential powerbroker within the Party.

Much of China's farm production still comes from independent farmers using traditional farming methods.

Much of China’s farm production still comes from independent farmers using traditional farming methods.

Censors quickly blocked Jiang’s name in online searches, along with ‘Hospital 301’ where Party leaders are often treated, the term ‘myocardial infarction’ and the word ‘death.’  Since jiang is also the word for river in Chinese, searches around ‘river’ were also soon blocked as netizens responded to the initial wave of censorship by resorting to code words and implied references to spread the rumor and discuss Mr. Jiang.  When the government did respond it did so awkwardly through a spokesperson who referenced a story in China’s official state media denying Jiang’s passing.  Asked again by local media about the general health and well-being of Jiang and his reaction to the situation, the spokesperson tersely advised reporters to read the official story.

By July 7 at least one group of social media users were comparing Jiang Zemin to Schrodinger’s Cat, the famous thought experiment built around the premise that a cat sealed inside a box could be at once dead and alive until actually observed.  A social media post seemed to sum up the government’s handling of the events, “Another classic teaching moment is before us.  It is a total failure of crisis public relations.”

With no official proclamation of his death the furor faded as netizens moved on to other topics.  In October Jiang reappeared in public and The Independent newspaper from the UK reported, “Thinner, balder and most assuredly not dead, the former leader of China, Jiang Zemin, made a rare public appearance yesterday to scotch a summer of speculation that he had died.”  This past summer he celebrated his 87th birthday.

End Game?

The crackdown is having an impact.  Posts by influential account holders on social media, those with verified accounts and large groups of followers, are down by ten-percent or more.  Countless people have gone back into their digital account logs and deleted controversial posts.  There have been arrests and intimidation by the government.

The future is uncertain.  If netiznes are unable to devise ways around the current situation and this new level of censorship holds, hardliners within the left wing of the Communist Party can score a win in their column under Internet control.  In the meantime, there are new initiatives taking shape for economic reforms and further opening of the economy.  Conditions that many expect to further heighten demand for personal freedoms in the long run.

In a final twist, rationale for the crackdown may have stemmed from some unexpected reasoning.  It appears to have had less to do with what was being said and more to do with what officials thought

China's next generation bike across a bridge in Souther ?China.

China’s next generation bike across a bridge in Souther China.

was missing.  According to comments by some officials and other reporting, the thing the Party coalesced around was the fact that in all the online clamor its voice was virtually nowhere to be heard.   The crackdown was issued with admonitions from the leadership for the ministries and local officials to get off the digital sidelines and into online conversations.  The Party’s idea of a perfect recipe seems to be subtract rumors and caustic speculation, and pour in more propaganda.

It remains to be seen whether that can actually happen.  Can government officials write interesting posts people want to spend time reading? Citizens reposting government messaging?  And what happens if local officials don’t participate or if they do and the online world turns a deaf ear?  No telling where this is headed.

mw_blueIMG_8247Matthew Wisla recently returned from nine years in China helping American companies succeed in one of the world’s most demanding and challenging markets. He co-founded the Marketing, Advertising and Public Relations Forum for the American Chamber of Commerce in Beijing and later served as the organization’s Vice President of Communications. Previously he worked in the US and Beijing for the leading global communications consultancy Fleishman-Hillard. His expertise includes brand building and managing corporate reputations, as well as issues and crisis management and policy communications.

Email: matt.wisla@yahoo.com