A VOGUE word now in play is “decoupling”. It is shorthand for the view that China, and other emerging markets, will be the economic locomotives to pull the world through the global economic recession — the worst on record since the Great Depression of the 1930s.
The markets certainly reflect this sentiment: last month, for example the FTSE emerging markets index outperformed the developed markets index by 48,8%. Hard statistics support the disposition of the bourses. For example, China’s aggressive domestic stimulus saw its purchasing managers index surge above 50 , suggesting that almost alone, of the significant economies, it was enjoying growth while the world, especially the west, contracts. The equivalent index in the US measured 42,8 , while SA posted just 37,3 . Little wonder Goldman Sachs is predicting more than 8% gross domestic product (GDP) growth for China. Its extraordinarily low levels of household spending (less than 33% of GDP, about half SA’s, and a third of the US ), and its accumulation of more than 200bn in foreign reserves, suggest it has room for manoeuvre and expansion, denied to the overborrowed, underperforming developed economies.
Last week saw another instance of decoupling. Last Saturday, the Allied leaders of the US, Britain, France and Russia gathered in Normandy to mark the 65th anniversary of the D-Day landings in nearby Colville-Sur-Mer. History records this event as the decisive moment of Europe’s liberation from the Nazis. Two days before that, last Thursday, another anniversary was commemorated, or more accurately smothered at the site of its occurrence, the marking of 20 years since the Tiananmen Square massacre in Beijing.
While the events and outcome of the Second World War are beyond contestation, the import and consequence of Tiananmen Square remain contested. No figures have ever been released of the number of protesters shot and killed by Chinese soldiers on June 4 1989 — the figures range from hundreds to over 2500. In any event, the square itself was closed last Thursday — and Chinese officials erected what one wag called “the Great Firewall of China”, blocking internet sites, the BBC, and even the anodyne CNN, alongside Twitter, from informing the Chinese of the epic events of two decades ago, when student protestors confronted the fist of Chinese authoritarianism.
However, decoupling applies within China as well: the enclave of Hong Kong, which under its basic law enjoys civil liberties denied to the mainland, allowed hundreds of thousands of protesters to hold a candlelit vigil.
But 1989, the year of Tiananmen Square, was reckoned at the time to be a unique moment, the arrival of unipolarity, not decoupling. The fall of the Berlin Wall, the end of the Cold War and, here at home, the ascendancy of FW de Klerk and his reform agenda were famously — or fatuously — described by Francis Fukuyama as “the end of history”. The liberal, or Washington, economic and political consensus appeared ascendant and unchallengeable.
But China, and far less successfully Russia, challenged that consensus by adopting what Israeli academic Azar Gat describes as “authoritarian capitalism”. By shifting their economies from communism to capitalism, they switched to a “far more efficient brand of authoritarianism”. Ironically, the two defeated powers of the Second World War, Japan and Germany, with far smaller economies and with incomparably worse predations of human rights, had attempted something similar, and failed. But the ability of the west, in the wake of the current financial crisis, to continue to define and influence the course of economic and democratic events has been damaged. Globalisation guru Martin Wolf suggests that “the collapse of the western financial system, while China flourishes, marks a humiliating end to the unipolar moment”.
Last week, the New York Times thundered: “Beijing may be able to repress the memory of Tiananmen, but the yearning for freedom remains.” But, in fact, a number of influential commentators, who acknowledge the suppression of freedom, question this assumption. And it’s not simply the fact that, according to the World Bank, Chinese economic growth and planning have seen the fastest reduction of people living in absolute poverty in recent economic history, accounting for over 75% of the developing world’s total. James Kunge, who witnessed the events of 20 years ago, wrote in the Financial Times last week: “In a world of moral fluidity, Tiananmen is a gratifyingly fixed reference for our judgment of others... (but) I question the western assumption that the demonstrators were ‘pro-democracy’. The reality was less coherent.”
Perhaps in 20 years’ time, on the 40th anniversary of Tiananmen and the 85th commemoration of D-Day, we will know just how ascendant the Chinese alternative to liberal democratic capitalism has become.
*Published Friday 2 June 2009 in Business Day