CHINA TODAY: YIN AND YANG: OPPOSITE POLES IN UNISON

China is a country of polar opposites in perfect harmony; but a brief delineation of the current situation with the Asian giant is nevertheless very revealing and very appropriate.

China is Taoism par excellence, one of the several philosophies embraced by its people. Taoist philosophy advocates the union of polar opposites, in the form of its two elements, the Yin and Yang, which although different complement each other to form a whole.

Indeed, China divulges its multiple facets, and tends to accept the duality of existence in general, and the aspects of economic and political life of the country in particular. About to finalize another five-year plan, China finds itself in a new phase of its development.

In the arenas of politics and international diplomacy, China wants to keep up the description which characterizes it, at the same time as strengthening its position. As it goes ahead representing ever greater interests on a worldwide scale, its diplomacy needs to move with the times and adopt a different strategy than the one it has been using thus far in order to demonstrate its interests in the affairs which dominate the “international arena”, as well as to take a more pro-active stance. The need to give up its philosophy of standoffishness in favor of a pro-active policy has imposed itself. Aware of this, the Chinese government started to roll out its “Creative Participation” idea, which consists of greater involvement in international affairs, imposing its own qualities on the debate of which modus operandi to adopt, and how to sort out external problems. Maybe it is an extension of its global “Soft Power” strategy whose chief goal is the resolution of conflict by means of “solutions where everyone’s a winner”, with innovative ideas which respect cultural differences and which allow for integration in such a manner as to enable peaceful co-existence in this world.

International aid is now a reality for China, and something it has agreed to keep up so long as a percentage of the GDP of developed countries is destined as a rule for said aid, given that China wants to go above and beyond being merely an averagely developed country to a fully- fledged one.

The Asian giant does not under any circumstances claim to be a prisoner of the “Middle Income Trap”, that’s to say the pothole that developing countries can fall into as a cost of policies which cheapen labor in the majority of cases; to earn masses of cash by bringing highly affordable products to market, without gambling on other more competitive advantages which sooner or later bring them to a level of advancement but without being able to break free of the “medium level” straitjacket.

Indeed, GDP growth in the People’s Republic of China went into double digits in 2010, but only reaches 7.5% nowadays, in line with the government’s objectives. This fall is due in part to the state, which set out a GDP growth level of 7% as an objective within the Five-Year Plan, to run from 2010- 2015.The government knew it would have to grapple with other problems which would arise due to China’s exponential economic growth; economic growth is no longer a priority, but rather the creation of internal structures of public services, and reinforcement of the financial system. If China does not now adapt its economic plan, although it might imply a fall in GDP growth, the future cost it will have to pay further down the road will be very high, and it will be faced with a severe problem: that of growing unsustainably.

The most recent developments (in line with current Chinese outlook) point to the following:

-from `1949 to 1978, the country’s biggest worry lay in feeding its people, and the law of “the bowl of iron rice” prevailed.

-from 1978 to 2002, China busied itself with increasing family income and private consumption. The figures it released to the watching world were truly staggering. In the last three decades “half a billion Chinese had emerged from poverty” Christine Lagarde, Director General of the IMF confirmed during the “China Development Forum 2012” which took place in Peking. In accordance with World Bank data, the number of Chinese below the poverty threshold fell from 490 million in 1981 to 88 million in 2003.

-from 2002 to the present day, China entered an era of relative prosperity. The state of social protection gathered pace. The Chinese government realized that it was too focused on economic growth, to the detriment of everything else. The desire for personal enrichment and for investment on an individual level replaced investment in the common good, and the state began to create mechanisms for the purposes of more sustainable growth and greater social equality.

This evolution through which China had to pass can be compared to the one passed on by Abraham Maslow by means of his pyramid of necessities. Maslow points out that priorities exist in respect of the level of human needs which can be transposed to country-size scale since the population as a whole is what comprises it.

In this way, China also arose from the bottom of the pyramid since its basic needs were already being satisfied (food, lodging, security) at higher levels, in other words, at social levels of esteem (education, employment, wellbeing, and personal appraisal).

Whether it is a case of “the Peking Consensus” or “the Washington Consensus”, both have their flaws.

Therefore, it can be confirmed that China’s development is very much down to its economic progress. Nowadays the Chinese demand that Deng Xiao Ping’s reforms stem from other economic programs which as yet have not been able to be set out clearly. It will come down to a type of mixture of the best of market capitalism combined with a state-run economy, since the world has demonstrated that neither one nor the other works fully on its own.

It should be stressed that China wants to evolve towards renewal and to be the brand leader of Taoism. It needs to find solutions for its class of nouveaux-riches, impoverished through the financial crisis of 2008, and not only by it. Let us look at the two main causes of the decline of the Chinese economy:

1º- The international crisis which began in 2008 and affected Chinese exports.

2º- The state brake on the “economic bubble”, asserting that growth couldn’t be based on cement and concrete alone. As a consequence, its associated industries suffered a downturn (construction and building materials, amongst other things).

To get exports back up to strength, China had two main options at its disposal. The first involved the reform of pricing policy and applying discounts to its products, something which would not prove to be easily given the antidumping policies already in existence which had been affecting its products. The second option consisted of reinforcing the position of Chinese businesses on a global level, in particular through mergers and acquisitions of other businesses. The immense global investment carried out by China is undeniable, just take a look at the case of Portugal

At the end of 2011, China Three Gorges acquired close to 21,35% of EDP, the Portuguese electric company. The aforementioned acquisition came about as the result of a long process of privatization, which numbered Electrobras and E. ON. amongst its participants.

In February 2012, State Grid acquired 25% of the REN business (Red Energética Nacional/ National Energy Network), and in January 2013, Fosun acquired 80% of Caixa Seguros’ capital. This acquisition accounts for around 30% of the national insurance market.

In March of 2013, the Beijing Enterprises Water Group acquired Veolia Water Portugal, which ensures the water supply to the neighborhoods of Valongo, Paredes, Mafra and Ourém, representing an investment of 95 million euros. On the same date, a Chinese company acquired a 35% stake in EDC Marbles of Alentejo for 24 million euros, an acquisition aiming at profiting from building site waste rubble and turning it into marble. 80% of production would then be exported to China.

The financing of Portuguese businesses also entailed the setting up of Chinese Banks in Portugal. This was the case with the Banco Industrial y Comercial de China (ICBC), which was set up in Lisbon in February 2012, followed by the Banco de China.

This is merely an instance of Chinese investment in Portugal, but the same thing is going on throughout Europe and the world. In its attempts to secure an ever-greater presence at international level, the People’s Republic of China will debut measures which allow for the production of assets of greater added value, with an ever increasing and sophisticated technological and innovative element.

Exports continue to fall, and as a consequence of which there has been a downturn in demand and the government is offering incentives to ease the downturn by trying to appeal to the internal consumer.

In short, it can be concluded that China is a country of dualities which manages its business with considerable aplomb. It is a mix of polar opposites which come together in economic, political, and social terms.

The economic tendency towards greater levels of internal consumption and a lower dependency on external demand, at the same time as continuing to highlight itself in order to put forward its position in terms of its international policy, is a current reality. The quest for an economic model which is based more on private initiative and the rule of law, is a staging post required by the government by means of the creation of social support structures, for employment, education, old age, and this is another reality.

These seemingly irreconcilable differences from the perspective of European attitudes are a constant feature of the Chinese world and an undeniable mark of Taoism, a way of thinking which doesn’t see day as the opposite to night, heat as the opposite of cold, or positives without negatives, and which insists on things being built this way, by dint of constant renewal thanks to the opposing poles of Yin and Yang.

In this way, they have managed to create a jigsaw puzzle whose pieces appear at first glance not to be able to fit together.

Published in the Portuguese Magazine for Asian Studies, edition nº19 (2015), Institute of Orient (Lisbon) by Anabela, Portuguese and Chinese translator of Sol Marzellier Traductores ^TM.

Translated by Andrew, English translator of Sol Marzellier Traductores ^TM.