Blog: China, Post Olympics

nf_beijing_logo_sm.jpgThe American media did a fine job of covering the Olympics in China this summer, but the really big story now is, “What happens after the Olympics?” And the American media has been largely silent on that subject.

 

nf_beijing_logo.jpg SHANGHAI — The American media did a fine job of covering the Olympics in China this summer, but the really big story now is, “What happens after the Olympics?” And the American media has been largely silent on that subject.

On the basis of a recent trip to Shanghai, I can report that the Olympics was the source of enormous pride for the Chinese and helped the Communist Party maintain a tight grip on dissent or large-scale demonstrations. The Olympics served as a unifying force politically speaking and also as a rallying point for the Chinese economy.

But now, it’s post-partum. There are very real stresses in Chinese society. The gap between the shimmering skyscrapers of Shanghai’s Pudong district and the rural hinterland, where some people still live in caves, has become starker than ever before. Class divisions are taking hold as Chinese elites buy cars and homes, and enjoy traveling to the outside world. Yet little has changed for the better for hundreds of millions of peasants. This stratification of income by region and by class is potentially explosive for China. It’s ironic that Chinese who have benefited from the country’s economic boom now worry about a new revolution, this one against the enrichened Communist Party, which itself once staged a revolution.

Economic issues also loom large now. The financial and economic shocks in the United States mean that it will not be able to buy as many televisions, computers and other gear that the Chinese manufacture. That’s been the basis of their 30 years of growth, ever since Deng Xiaoping normalized relations with the United States and launched the Four Modernizations. China’s costs have increased sharply, partly thanks to a 15 percent appreciation in its currency over the past couple of years. Labor costs are up and real estate costs are up. Some manufacturing is leaving the country.

The Chinese are going to have to learn to develop their domestic market and shift their trade patterns away from dependence on the U.S. market. Of course, the Chinese may be in better shape than the Americans in some senses. After all, they are sitting on nearly $2 trillion in foreign exchange reserves. But now that the Olympics are over, they will have to accomplish all this on the basis of a shaky social and political stability. Each year, there are tens of thousands of protests, as farmers demonstrate against the seizure of their land or workers at state-owned enterprises demonstrate against losing their jobs.

In short, the China story has just gotten much more interesting.