Feb 25/05 - On the differnces between post mao China and the Bolivarian "revolution"...thanks to Andres Oppenheimer

PMBComment: when one read the impression China had on Andres, one can only wonder what it was that Chavez’s meant when he said “I have always been a Maoist”. China today is the antithesis of what the Bolivarian Revolution espouses and aspires to. Anyone willing to guess where Mao’s picture will finally hang? In Hugo Chavez’s jail cell is my guess. PMB

THE OPPENHEIMER REPORT | China's development dwarfs Latin America's

BEIJING -- I came to the People's Republic of China for a 10-day visit
to find out how Latin America could best compete with this
economically booming country. It took me about 30 seconds to know the
answer: Unless it undertakes dramatic reforms, it can't.

From the minute one lands in Beijing, even before one has a chance to
be stunned by the capitalist fever that is gripping this country, the
monumental dimensions of Beijing's newly remodeled,
38-million-passengers-a-year airport shocks even the most skeptical
visitor.

My plane pulled in at Gate 305 -- an eye-opener for someone used to
arriving at Gate B-7 of Miami International Airport, which has only
107 gates. But that was only the first surprise.

On the way to my hotel, I saw more high-rise construction cranes than
I've ever seen anywhere, let alone in Latin America. There are 5,000
high-rise construction sites in the Chinese capital today -- so many,
that the latest joke making the rounds here says you should never
blink while in this city, because you could miss a new building's
inauguration.

PRESTIGIOUS NAMES

At street level of some of the ultra-modern skyscrapers, there are
dealerships of Rolls Royce, Maseratti, Lamborghini, Mercedes-Benz, BMW
and Audi, next to Rolex, Armani and Louis Vuitton stores.

I asked my taxi driver to stop in front of some of these car
dealerships, convinced that they were representative offices to sell
jet engines or tractors to the Chinese government. But no: They were
selling luxury cars to rich Chinese. Last year, Mercedes-Benz sold
12,000 cars in China, BMW 16,000 and Audi about 70,000, the
government-run China Daily reported recently, with obvious pride.

China's average 9 percent a year economic growth since it began its
economic opening 25 years ago is producing a rapidly growing wealthy
elite and an expanding middle class, lifting about 250 million people
from poverty. If economic growth continues, China's middle class will
double by the year 2020, to about 40 percent of the population.

And it shows on the streets, from the glitzy Changan Boulevard to
working-class districts.

While 80 percent of China's 1.3 billion population lives in misery in
the countryside, city-dwellers in Beijing, Shanghai and other big
cities are better dressed than in most world capitals, thanks in part
to a thriving black market of pirated brand goods. The Chinese have
replaced the Mao uniform with the imitation Armani suit.

What is China doing that Latin America has failed to do? I asked every
Chinese official and foreign diplomat or businessperson I met here. I
heard many answers, but they all boiled down to one thing: China has
become competitive in the world race for investments and exports,
while Latin America has not.

One striking example: I read in Asian newspapers that Venezuelan
President Hugo Chávez's government had closed down that country's 80
McDonald's restaurants for three days because of alleged tax law
violations, while Chávez was denouncing ''savage [U.S.] imperialism''
during a visit to Argentina. Just shortly before, China's official
media had triumphantly announced that the board of directors of
McDonald's would visit Beijing, meet with top government officials and
announce that the company would expand its current 600 stores in China
to 1,000 by next year.

In a world where developing countries compete for a limited pool of
private investments, China is clobbering Latin America: The $54
billion in foreign direct investments it got last year amounted to
about $5 billion more than what all 32 Latin American countries got
together, according to United Nations figures. Less than a decade ago,
Latin America was way ahead.

While Brazil, Argentina and Venezuela are benefiting from soaring raw
material exports to China, companies here are displacing Latin
American exporters from the much more lucrative global market of
finished goods. Mexico, for instance, has lost significant market
share in the United States to China.

Contrary to the generalized belief that multinationals are descending
on China just to benefit from its cheap labor -- the often slavelike
conditions condoned by the Communist Party in the name of economic
progress -- several U.S. business people told me that they had moved
here instead because of China's production quality.

One U.S. executive I met in Beijing told me his company had moved from
Mexico because its Chinese partners, unlike the Mexicans, reinvested
most of their profits in their companies and produced increasingly
better goods. Another one I met in Shanghai told me this country's
love affair with the market economy is making people work harder, and
better.

The fact is, multinational companies are bullish about China because
-- ironically -- this communist country is embracing capitalism with a
passion. To an outsider, the Chinese government's proclaimed
''socialist market economy'' is a face-saving rhetorical gimmick, or a
good way of justifying an economic opening without giving up its
one-party totalitarian rule.

In an interview at his office, Zhou Xi-an, deputy director of China's
powerful National Development and Reform Commission, told me that 30
percent of China's economy is still in state hands, 10 percent is in
collective hands and 60 percent is in ''nonpublic'' hands, China's
euphemism for the private sector.

''The private sector has become the main driving force for economic
development, and the major source of employment,'' Zhou told me.

Recalling a figure I had read recently, I asked, is it true that you
will privatize another 100,000 state-owned companies within the next
five years? ''No. The figure will be much higher,'' the official
responded, matter-of-factly.

DIFFERENT MODELS

Jiang Shixue, a top academic of the Institute of Latin American
Studies at the Chinese Academy of Social Sciences, a think tank for
the Chinese government, told me he has recently completed a book
comparing the development of East Asia and Latin America, and
concluded, among other things, that ''the outward model'' pursued by
East Asia for the past several decades ``is superior to the
inward-looking model.''

''Theories should be updated from time to time,'' Jiang told me. ``The
dependency theory [of blaming U.S. imperialism] was very popular in
the 1960s, but now we can see that it has become outdated.''

My conclusions: China is in the midst of a capitalist revolution.
Granted, many things could go bad in China. The country's 800 million
poverty-ridden peasants may rise up in anger over the growing gap
between rich and poor, or the fragile Chinese banking system may
collapse, taking the country down with it.

And even if there is no such calamity, it's dubious that the second
generation of today's Chinese capitalists will be as willing to work
as hard as their parents. But in the short term, unless Latin America
takes drastic steps to open up its economy and become more
competitive, China will widen its lead.

COMING THURSDAY: What is China after in Latin America? Several things:
access to raw materials to reduce its dependency on the United States
and the Middle East; South-South political alliances to counter U.S.
influence, and a backup route to export duty-free to the United States
if Washington puts restrictions on Chinese goods.


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