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Stock Market Trend Forecast March to September 2019

China’s Long March To Saving Face. Part 1

Politics / China Jul 09, 2016 - 01:39 PM GMT

By: Raymond_Matison


It was a little over 800 years ago when the Venetian Marco Polo returned from China to reveal and author his wondrous travel experiences.  At that time, the North American continent was still undiscovered.  Principalities, nations or even empires could grow in one part of the world without much awareness of it elsewhere.  Thus it was that China grew, developed and expanded for over four thousand years largely isolated from the Western World.

Today, the population of China exceeds that of the United States, Canada, Europe, Australia and Japan combined!  Despite its lack of colonialism, its land based expansion over thousands of years has incorporated into its empire people of great diversity, similar to that found in the different countries and cultures of Europe.  Its land mass is nearly identical to the size of the United States, but the fact that its population is over four times that of America, makes it different from all other countries of the globe in the sense that it is militarily unconquerable from without – much the same way as the land masses and people of the United States or Russia are too large to be overrun or controlled by military might.

While the vast majority of its people identify themselves today as being Han Chinese, there is a very large minority population that combined would approximately equal the populations of Germany and Poland combined.  In his book “Understanding China” by John Bryan Starr, he writes:  “Han Chinese do think of themselves as ethnically distinct from the roughly 112 million people who are members of the fifty-five other ethnic groups (or minority nationalities, as the Chinese refer to them) that make up the country’s population. Those groups do have languages, customs, characteristic, history, and religions that separate them from one another and from the Han majority.”
Some of these minorities live along the periphery of China’s inland border.  Many of these minorities profess Muslim faith which has proven to be resistant to complete Chinese assimilation which appears to define today China’s outer limit to further land expansion and absorption.  

Effect of Confucius

Perhaps the greatest influence on the evolution of China came from Confucius, a philosopher and teacher, born in 551 B.C. - whose teachings were recorded by his students and compiled in a book named Analects, which over China’s several thousand year history became its most important book.  Its teachings emphasize moral virtue, reverence for family and elders, education, harmony in social relations, enlightened governance, and unity.  These principles inculcated by its leaders to its populace over many centuries created an advanced culture of its time.  

China’s society and its culture were based on the tradition of a multi-generational family led by its elders.  Parental authority provided clear moral guidelines which were not to be challenged.  This resulted in parents setting moral standards, high study goals for educational achievement and career expectations from their children – which can even be seen among Chinese immigrants in our U.S. schools today.  Thus parents instill in their children a concept of responsibility and obligation, rather than rights or freedoms, as might be the case in an American family.  Accordingly, people learn self-control and the concept of unity by their early yet firm teaching within the family.  In their large population, such values were learned unevenly as country peasants lacked many of the opportunities available to city dwellers.
Perhaps it was ruinous wars and despotic rule of the past that gave Confucius insight prompting him to develop a philosophy and principles for tolerant yet effective rule.  Perhaps it was Confucius experience that rulers once in power are usually less ruthless than they are in the process of war gaining that power to rule - which prompted him to promote unity.  That same understanding may have prompted people to accept dynastic rulers and authoritarian or even despotic rule, or government, regardless of their benevolence or evil, rather than seek confrontation with its attendant pain or destruction.  Its citizenry has been immersed in a long history of authoritarian rule such that it has become an ingrained part of their culture.  The Chinese people thereby have developed a trait for avoidance of conflict, and acquiescence and support of cultural unity.  These character traits have evolved such that most of their people value political and social freedom less than stability, continuity, and their traditional social order.

Over its long history, China like other regions of the world experienced many brutal military conflicts. In the 13th century it was overrun and defeated by the Mongols, and in the 17th century by the Manchus.  Conqueror respect and admiration of China’s advanced culture ultimately led to their being assimilated into China. Thus China, because of its strong Confucian inspired culture was able to expand its territory even when they had been militarily defeated - by absorbing its conquerors over multiple centuries into their own culture.  Chinese people’s patience and time horizons for their goals are much longer than those of Western Civilization.  As a result, waiting several hundred years to assimilate a conqueror, or waiting one hundred years to have Taiwan and its former nationalist Chinese to become a part of The Peoples Republic of China simply represents their cultural way of thinking.

Confucius’s system of a hierarchy of bureaucratic mandarins promoted education requiring applicants to pass tests to serve in the bureaucracy, and sought to elevate moral virtue. Over centuries the selection of bureaucratic elites became established through its imperial examination system selecting its best and brightest to become bureaucrats and regional leaders.  The system worked well enough that China kept expanding its land borders and the empire became known as the center of the world, or the Middle Kingdom.  Self-confidence in the superiority of their civilization as confirmed by growth of empire and tribute offered by neighboring countries fostered a view that no other cultures of countries were equal to China.  With its increasing empire, Confucius good governance philosophy became ever more important as physical force alone could not suffice to govern such a vast territory and populace.

Continuity of Rule

For the overwhelming majority of its population, China does not have an official religious practice or organized religion comparable to that of the West.  Constraints on their people’s actions are based on the concept of “loss of face” in their family or among peers, rather than the Western restrictions based on the concept of guilt or sin.  Hence there is no organized religion that carries with it a political influence, and accordingly this has not been a challenge to rulers or a source for war. 

Through wars and its Confucian based teachings, elites had been absorbed as a part of the bureaucracy, or destroyed in conflicts for power by the end of the first millennium.  These bureaucratic elites benefited from the patronage of the state, and enjoyed broad authority.  Additionally, China’s political system was dependent of the rule of men rather than laws, and good governance was dependent on the fairness and virtue of elite bureaucrats.  As a result, elites were not potential challengers to the existing order, since they were already a part of that order. 

China’s unique advanced cultural development and actual establishment and maintenance of a relatively stable empire over thousands of years has transcended nation or country norms, and evolved into a long-lived civilization. We can ascribe a Darwinian concept to this civilization for it has developed and evolved into something that has worked and persisted through changes in dynastic rule surviving thousands of years.  When in Europe kings and empires were breaking up with the rise of nationalism to form smaller independent countries, China’s sense of cultural unity and civilization quelled such compunction.  

China’s Loss of Face

In the 19th century England with its powerful galleons controlled global oceans, and with its small army colonized and ruled or influenced a large portion of the world. Its initial attempts to promote trade with China failed as its emperor dismissed it.  Ultimately Britain used its superior naval power to control ports and struck or forced trade agreements – among them the one hundred year lease of Hong Kong, and infamous opium trade from India to China with devastating consequences. 

As other countries sensed China’s military weakness they too went to China to get their share of the booty, and China was forced to recognize that its advanced culture was no match for the scientifically evolved military might of the Western world.  Even as its land mass and population were too large to be fully occupied, and therefore could not be completely colonized, many of its cities were, as its ruler effectively could not defend its ports nor its capital.  China lost its sovereignty and its bureaucrats had to endure humiliation.  Thus began China’s loss of face as the emperor of this advanced civilization could not defend against the invasion of what they perceived as foreign barbarians. China was not only humiliated by foreign occupation, but it also became increasingly impoverished as its partial colonialism spanning more than a century sapped its own economic wellbeing. 

By the time that China sought to contain its foreign invaders and usurpers with what was known as the Boxer rebellion in 1900, England, United States, Japan, Russia, and several other countries combined efforts to put down China’s defensive forces and the Boxer rebellion, marched on its capital and gained new concessions from the formerly great, but now increasingly shamed empire.  The loss of face magnified.  In 1895 China had lost Taiwan to Japan, but by 1945 additional large eastern portions of China were also overrun by these brutal conquerors.  Rather than being colonized itself, Japan had adopted Europe’s operating strategy of building a strong economy, military might, and becoming itself a colonizer.  The humiliation of this former great empire was now complete, which China identified as its “century of shame”.

Age of Communism

During the early 1900’s Communism was a growing influence around the world as kings, czars and empires were overthrown by a proletariat revolution.  Communism flourished in China – an immense population of mostly poor peasants which had lost its cultural superiority to outside forces.  A new nationalist government clashed with the growing communist movement which grew into a brutal civil war.  Mao Zedong’s “Long March” strategy of getting increasing support for its communist regime from villages, rather than from big cities, eventually forced the nationalist government to flee to Taiwan.  By 1949 Mao had reunited its people, evicted foreigners, and regained its sovereignty - under communism.

Mao was a convinced communist and a persistent revolutionary, whereby he had little respect for any historical or cultural values.  In his book “On China”, Henry Kissinger states: “Mao generated a pervasive assault on traditional Chinese political thought: where the Confucian tradition prized universal harmony, Mao idealized upheaval and the clash of opposing forces, in both domestic and foreign affairs.  Mao sought instant transformation and a total break with the past.  Traditional Chinese political theory held military force in relative disesteem and insisted that Chinese rulers achieved stability at home and influence abroad through their virtue and compassion.  Mao, driven by his ideology and his anguish over China’s century of humiliation, produced an unprecedented militarization of Chinese life.”

A lesson hopefully learned by western strategists is that China, while poor and militarily weak under Mao’s rule, was willing to confront or stand up to Russia and the United States, both nuclear powers.  It seems that China’s willingness to be controlled or influenced by military intimidation was foreclosed.  This becomes an important consideration as China grows in both economic and military strength during the 21st century.

Not more than a decade later China experienced a period of starvation (1958-1962) in which some 35 million people perished.  It was Jang Jisheng, a bright young communist youth who seeing his father die of starvation started questioning and researching official version for the deadly “health epidemic”.  As a party-approved journalist he had information available to him that was unavailable to the general public.  His persistent years-long research culminated in his Chinese language authored magnum opus of 1200 pages in 2008, a book that is still banned in China, but was translated into English in 2012 entitled “Tombstone”. 

In his book Jang Jisheng writes:

 “By the end of 1956, 96.3 percent of the peasant population has joined cooperatives, and the socialist transformation of industry and business is completed.  The abolishment of private ownership and the establishment of a comprehensive planned economic system allow the state to monopolize all means of production and all means of livelihood.”

“Communal kitchens were a major reason why so many people starved to death.  Home stoves were dismantled, and cooking implements, tables and chairs, foodstuffs, and firewood were handed over to the communal kitchen, as were livestock, poultry, and any edible plants harvested by commune members.  In some places, no chimneys were allowed to be lit outside the communal kitchen.”

“By controlling the communal kitchens, cadres were able to impose the “dictatorship of the proletariat” on every individual stomach, as anyone who proved disobedient could be deprived of food.”

There are many estimates of just how many people died in this1958-1962 period; but Mr. Jisheng exhaustive compilation estimates that 36 million people starved to death under Mao’s policies, and another 40 million people were not born, depleting the nation by some 76 million people.  What he does not estimate, because it is not possible to do so, is how many additional millions were starving but not deceased.  The shame of this starvation is that grain bins were full of grain, but kept for exchange of hard currency. Yang Jisheng writes: “despite food shortages, China exported more that 2 billion kilos of grain per year to obtain foreign exchange and pay for imported equipment.  This grain was snatched from the mouths of the peasants.”

Criticism to some of Mao’s policies started early:”Wang Ranzhong in 1960, the second secretary of the South Central bureau observed: “To see the masses dying, yet keep the grain locked in storerooms and refuse to distribute it; to watch the communal kitchens close down and yet not allow the masses to light stoves in their own homes, to refuse to let the masses harvest wild herbs or flee the famine; to deny canes to those crippled with starvation; to treat people worse that oxen or horses, arbitrarily beating and even killing them, lacking even a shred of human feeling – if these were not the enemy, what were they?”

Communism had been “presented as a system in which there would be no exploitation or oppression, and under which all contributed according to their ability, and took according to their need under conditions of complete equality”.  However, in its practical application the system devolved to “More food for more labor, less food for less labor, no food for no labor.”  Comprehensive household registration with restriction on population movement superimposed on strict food rationing made for complete control over the populace.

Following this unprecedented period of internal self-destruction, Mao’s policies were modified and augmented as chronicled by Robyn Meredith in her book entitled “The Elephant and the Dragon”.  She writes: “Following collectivization, in 1966 Mao introduced the Cultural Revolution, a bloody purge of potential political rivals and those labeled intellectuals or “capitalist roaders”.  In addition to the massive human toll, books were burned, Chinese art was destroyed, Temples and monasteries were smashed, and contact with much of the outside world as severed.  The nation’s universities closed their doors, a move that would cripple China for decades.  For more than ten years, the only education allowed was the study of Communist Party propaganda and of Mao’s Little Red Book.”

“Mao’s Cultural Revolution devastated the nation, crushing its intellectual, scientific, and artistic capabilities, eliminating China’s educational system, and ruining its economy. When Mao died in 1976, he left behind a nation of penniless peasants.” 

One of the characteristics of a communist system is endemic corruption.  This was visible in the Soviet Union and its peripheral countries, as it was in China.  People with power, quite naturally utilized it for their personal benefit.  However, in its previous empire age with its elitist bureaucrats, corruption also was an endemic phenomenon.  Given this history and current form of government, there is no shortage of corruption today.  To its credit government has been cracking down on excessive corruption with anticorruption programs.

From the world’s collective experience with communism/totalitarianism over the last century we have learned that while it is in power no one dare to speak the truth or challenge the system lest they be destroyed by it.   Mr. Jisheng notes: “By using the totalitarian system and class struggle to force and overly hasty application of Communist ideals, Mao and his followers brought about the Great Famine”. Thus it is not surprising that this former communist now states: “Totalitarianism is the most backward, barbaric, and inhumane of all systems existing in the modern world.”

When Mao Zedong died in 1976, his mausoleum was placed in Tiananmen Square in a place of honor, where it remains today.  It is a rather amazing cultural phenomenon, that since his death neither Mao nor his policies have been criticized or publically repudiated.  Arguably, Mao’s communist revolution created more upheaval and did more harm to China’s Confucian great civilization and its people than all of the Western countries century-long unwelcome trade and military incursion, as well as Japan’s bloody invasion combined. 

Perhaps it is government’s remaining insecurity over retaining power that requires them to publically honor Mao.  Early repudiation might move them all out of power bringing about the civilian internal revolution that emperors of the past have dreaded and carefully avoided. Since the Chinese are extremely patient with authoritarian rule, it may come to pass that in another one hundred years or so their historians will refer to the Mao period as one unfortunate diversion from their historical cultural development and advancement.

Predicting the Future

This short description of Chinese traits and underlying culture are important to describe here, for as China repeatedly lost face from foreign colonialists in the 19th century, becomes a communist nation in the 20th century, and eventually becomes a state practicing “capitalism with Chinese characteristics” we can better understand the rationale and response of their leaders and its people.  Even though it is likely that mere intellectual understanding of these vast cultural differences from that of the West is not enough, it will likely allow a Westerner to partially understand.   Also, as a general guide, one should consider that anything or any characteristic or concept that one observes about the Chinese is likely both true and false at the same time because of their incredible diversity and vast number of people.  But imperfect understanding is better than none.

More importantly, these cultural characteristics will allow the rest of the world and its leaders to better anticipate and understand foreign policy choices that China is likely to pursue with respect to trade agreements and cooperation with other Asian countries, establishment of competing financial structures countering the Petrodollar, its internal development in science and technology education, military buildup, and future global confrontation, and its own political evolution away from its recent communist past.  Lastly, understanding its culture, it will allow us to clearly comprehend that China once regaining face and its former leadership among the nations of the world - will never again permit its loss of face from an imposition of foreign “barbarian” invaders.

To the western mind, a larger population under the control of an emperor (Confucian, Communist, or otherwise) represents oppression and lack of liberty.   When elites become a part of the bureaucratic process and are a part of the ruling body, as China has already experienced for thousands of years, this in the western mind, represents fascism.  When people live, and starve, in collectivized communes that represents failed totalitarian communism.  China’s recent claim to moving away from communism towards “socialism with Chinese characteristics” is still socialism.  Unfortunately, single or several word descriptors for a type of government are always insufficient and grossly inaccurate; consider that China, Sweden, and Venezuela all are described as being socialist yet vastly different in governance, liberty, and economic achievement.  It may come to pass in the next century of historic reevaluation, that China will identify the nadir of their century of shame in the decade of the 1970’s.

It is clear that China’s established culture, leadership, and people were disrupted by the West’s incursion into their lives.  Loss of face, shame and decline persisted for over one hundred fifty years. Its nadir arguably ended with the death of Mao Zedong, and President Nixon’s insightful strategy of engaging China.

In Part 2 of this treatise on China we look at this country-civilization learning to embrace market economics, recovering its economic viability and improving its polity - as China recovers from its “century of humiliation”.  It projects a future in which China has “recovered face” and its once great civilization state again strives to reclaim it former  “center of the world” or the “Middle Kingdom” status in which other countries once more acknowledge China’s civilizational greatness.

Raymond Matison

Mr. Matison is a U.S. patriot who immigrated to this country in 1949. With a B.S. in engineering physics, an M.S. in Actuarial Science, work in the actuarial field, and as a financial analyst at Legg, Mason Inc., Lehman Brothers, and investment banking at Kidder Peabody, and Merrill Lynch provides a diverse background for experience.  First-hand exposure to fascism, socialism, and communism as well as the completion of a U.S. Army military intelligence course in the 1960’s have inspired a continuing interest in selected topics in science, military, and economics.  He can be e-mailed at
Copyright © 2006 Raymond Matison - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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