Journal of Political Risk, Vol. 6, No. 2, February 2018

WHAT’S WRONG WITH CHINA

By Paul Midler

227 pp. Wiley. $25.00

Paul Midler’s What’s Wrong With China doesn’t disappoint. Anecdotes, theories, and historical curiosities fall from its pages in answer to its titular question. Midler’s stories of caution are current, enjoyable, accessible, historically grounded, and witty. But the deeper importance of the book is that Midler, as a sharp and knowledgeable outsider to academic China studies, can criticize, revive, and develop theories in a way that staid academics would never dare. In a field careful about even mentioning sensitive topics like Taiwan, Tibet, and Xinjiang, Midler’s latest book is a bulldozer with bumper-stickers to offend almost anyone. Which is why it’s a great read. The field is being shaken up by President Trump’s tweets, President Xi’s disconnect with how his increasingly totalitarian government is perceived abroad, and now by Midler.

Sociopathy in China

Perhaps the most controversial of Midler’s theories is in his suggestion that China is home to a higher percentage of sociopaths. “Checklists for sociopathy — referred to also as antisocial personality disorder — read like a description of every factory boss I ever met,” he writes. Pointing out, as some have done, that China never really had an Industrial Revolution, he goes further, wondering what it is about China that never enabled it to have a more fundamental Scientific Revolution, or even Age of Reason.

I followed up with the author after reading the book, and asked if there is indeed a higher sociopathic strain in China, why that feature is not also present in Chinese cultures such as Taiwan or Hong Kong? He answered that Hong Kong, Taiwan, and even Shanghai were all to a great extent driven by foreign investment and influenced by foreign culture. “Mainland China is culturally distinct from Hong Kong and Taiwan,” he wrote in an email. “Hong Kong was of course formerly a colony, built up by the British. The foreign influence there remains significant, despite the handover to Beijing. Taiwan was of course also once a colony. Japan ruled the island from the late nineteenth century through World War Two. The Japanese built roads and created institutions that had a lasting, positive effect. Shanghai may be considered a Chinese city today, but it owes its successes to foreign involvement. In 1838, W. H. Medhurst described the place as ‘a city of the third rank.’ Shanghai was a third-tier city before the British, Russians, French and Americans turned up. In the post-Qing years—what was referred to as the Warlord Era—China had a difficult time organizing itself. ‘A sheet of loose sand’ was the way Sun Yat-sen had described his people. What eventually made growth on the mainland possible was the same … force that drove success in places like Hong Kong, Taiwan and Shanghai. Instead of colonialism or semi-colonialism, what you had was totalitarianism brought to you by the CCP [Chinese Communist Party]. Chinese do very well in small groups, managing their own affairs. They gravitate to informal arrangements and prefer systems that are autonomous. The secret to Chinese informalism is a heavy hand, which is either visible or else felt from afar.” The implication is that China succeeded, where it did, by adopting foreign culture, including that of the totalitarian variety.

Whether China’s long tenure of authoritarian politics might actually add to its sociopathy is not addressed by Midler. Ditto the effect of centuries of war and revolution. But how could a country with so much authoritarianism, war and internal turmoil not have a greater instance of sociopathy, especially among its leaders? These leaders are the type of person capable of thriving in such cut-throat environments.

Cowardice and the China Watchers

As the U.S., allies, and China come closer to military conflict in places like North Korea, the East China Sea, and the South China Sea, this book is well-timed. Midler suggests we do not have the resolve to address these issues, because we are afraid to discuss the subject of cultural differences in an open and objective manner. He points out that following World War II, academics sought to understand how the character of Germans and “Japaneseness” gave rise to their respective variants of fascism. But among China watchers today, there is “only cowardice when it comes to applying a similar treatment to the Chinese.”

“To show that you know China, you do not speak about it,” writes Midler. Though increasingly less so since the Trump administration arrived in Washington, my own dealings with professional China analysts, especially of the academic and think tank variety, bear Midler out. A chilling quietude that shades into complicity infuses public and even semi-public discussions among China analysts when it comes to human rights abuse and territorial aggression since the CCP took power in 1949.

“China watchers walk on eggshells, and any apparent courage displayed is limited to a discrete list of preapproved subtopics,” Midler writes. This list now includes pollution, wealth disparity in China, and official corruption. “Even though these are direct criticisms of the government, Beijing welcomes such chatter.” Midler suggests that while some China watchers may feel brave discussing these subjects, they are just playing in “state-approved discourse sandboxes.”

Midler left human rights off his list of pre-approved topics. And while many China analysts are indeed relatively quiet on the subject, it could as well have been added. China should not care much if China watchers complain about human rights. Visiting heads of state from democratic countries supposedly bring up human rights behind closed doors. Chinese state media, in turn, praise those Western leaders who supposedly fail to bring up the issue. But is this not a highly-scripted and totally ineffective, other than as theater for home audiences, diplomatic pantomime? Doesn’t China tell American and British politicians and industry titans, over drinks after deals are signed, that lack of human rights is actually good for business? If so, any human rights complaints will fall on deaf ears, or be welcomed as an effective advertisement for China’s friendly business environment.

Midler has a delightful chapter titled “The China Watchers,” by which is meant those foreign consultants, academics, think tankers, and other talkative classes who make a living on China analysis. Midler’s justifiably jaundiced analysis (how could one not feel ill when looking at today’s China) has been excluded from some China-watching groups. He writes of an inherent bias in the China-watching community due to sunk costs. “The fellow who dedicated himself to Chinese language studies was inclined to boast about the insight this afforded him into the great civilization.” Quoting sinologist Rodney Gilbert, he continues, “Even if he was disappointed with what he found, he was not likely to admit that he had ‘wasted his life burrowing into a rubbish heap.’ Quite the opposite. The foreigner was ‘inclined to persuade himself and others that his labors have been rewarded, that he has unearthed wonderful treasures.’”

Due to a lack of good published analysis from today’s experts, Midler drew upon books stretching back to the 19th century to complement his own insights into contemporary Chinese culture. Though an academic may be disappointed at the lack of footnotes, bibliography, or index, and the South China Morning Post calls the book a “drunken rant,” readers will be happy to know the book sports a great table of contents with unpretentious chapter headings like “The Pirate Ship,” “Nibble, Nibble”, and “Kleptoparasitism”. Midler recounts modern instances of these surprisingly deep concepts, and pairs them with historical examples to make his latest an in vino veritas interleaving of the author’s recent experience, with his reading of over one-hundred years of China analysis. The very title of the book is a nod to Gilbert, who published a volume under the same masthead in 1926.

China’s Stormy Past and Stormier Future

Midler’s reading of pre-CCP analysis led him to question many of today’s accepted truths among China watchers. As contentious as it may appear to modern historians, the iconoclastic author attempts to bust what he portrays as three centuries of myths surrounding the Opium Wars in the 19th century, the Nanking Massacre in the 20th century, and China’s high-technology achievements in the 21st century.

Midler argues that China was largely at fault for the Opium Wars. This interestingly follows from his first book, Poorly Made in China (2009), which focused on quality issues in China-made products. In What’s Wrong with China, Midler points out that dangerous adulteration of opium during the 19th century by Chinese traders was a leading motivator for China to rid the country of opium in its less dangerous natural form. “Historians are so hell-bent on blaming the West for everything that went wrong with China in the nineteenth century that they have no room for an investigation into the serious possibility that the nation may have actually poisoned itself,” Midler writes. “If adulteration caused more harm to health than opium, then we might see the government’s efforts to stop the opium trade less as an honest attempt to solve a drug problem and more as a desperate attempt to blame the British for what was essentially a Chinese failing.”

Midler goes on. The so-called “Century of Humiliation” is for him a “tribute to military victimhood, a concept created by propagandists in the mid-twentieth century” and an “exercise in misdirection.” The Nanking Massacre perpetrated by the Japanese in the 1930s, for Midler, is being hyped by China. “Chinese propagandists have worked hard to inflate death tallies,” he claims. “While credible sources have suggested that between 40,000 and 60,000 Chinese were killed at the hands of the Japanese in Nanking in 1937, Beijing has pushed the estimates to 300,000.”

Midler argues that many of China’s supposed high-technology achievements in the 21st century are actually due to a combination of theft and cheap labor, an observation that is unfortunately still controversial. “Chinese factories made money the old-fashioned way: They produced in large volume using slave labor and stolen designs,” he says. “China’s high-speed rail network is not so much a reflection of modernization as it is the fruit of an outmoded yet still successful way of doing business.”

There is not much optimism for the future of China’s economy in Midler’s book. “Chinese economists are claiming that they have solved the impossible trinity, a mathematical precept subscribed to by the world’s leading economists, which holds that an economy can succeed in controlling only two of three policy positions — a fixed foreign exchange, free capital movement, and an independent monetary policy,” he writes. “China considers itself so special that even the most fundamental laws of nature do not necessarily apply to it. When the whole ball of twine comes undone, we will look back in hindsight and realize that with so much clear evidence of magical notions, something was bound to go wrong.”

Midler’s first book focused tightly on business problems, and in 2011, President Trump named Midler’s Poorly Made in China as one of his favorite books on China. Members of the Trump administration also requested What’s Wrong with China, which should be reason enough to read the book whether you love or hate Midler, and whether you believe him or not.

Every Cloud, a Silver Lining

Midler fills several chapters with the deceitful practices of Chinese businessmen he has met during his 25-years of living in East Asia. This serves in part to buttress the claim of a higher degree of sociopathy in China. Midler speaks Mandarin, of course, and consults for companies that operate in the region, so is well-placed to hear negative stories. One might note that his work as a fixer may lead to a selection effect in which the negative, rather than positive, stories seek him out.

Because Midler’s books share an overall negative outlook on China, his positive comments on the country should be particularly persuasive. And these positives are salted away among his pages. “China has police, of course, but they are not often visible in an obvious way,” he writes. “Part of the reason for their limited numbers is that the Chinese are a civil people who require little direct supervision.” During the Ming Dynasty, only 100,000 officials governed 100 million people, he notes. “The people’s reliance on social networks and intermediaries further made such an informal world possible.”

This observation is welcome, but unless one appeals to an Arendtian or Milgramist sociopathy related to the banality of evil and following of authority, it contradicts Midler’s thesis that China is particularly sociopathic, or lacking in conscience. While one is tempted to conclude that China’s decent and informal lower stratum is lorded over by a sociopathic government and business strata, neither is this Midler’s message. Midler notes in the book that corruption infuses the lowest strata of society, and surprises us with an observation that Chinese centralization of power after 2008 was a rational response to lower growth. He predicts that centralization will reverse itself when it goes so far as to become inefficient. Centralization “made sense because during this period of lower growth rates, some regional economies actually shrank,” he writes. “Only a centralized approach guarantees that resources from better-off regions will be distributed to troubled areas.” Later in the book, Midler states, “Westerners today are quick to denounce Beijing’s absolutist policies, but the Chinese people largely recognize the cause-and-effect relationship between iron-fistedness and social order.”

Informalism and Cheap Labor

In the context of a discussion on mechanization, Midler notes that Chinese culture is more “humane” than is to be found in the United States, which again contradicts his argument on sociopathy. “Americans are driven by an instinct to remove people from every process in the spirit of making it ‘idiot-proof,’” he writes. “The Chinese harbor no such fantasies, as they rightly view people to be the most critical component of any organization or institution, in spite of inherent human weaknesses.” This observation does not torpedo Midler’s thesis of sociopathy in China if one subscribes to an argument that seeking the cheapest of labor is unconscionable.

Midler observes a stronger, more diverse, and more informal financial network in China than in other states. He notes that Chinese startups generally have greater diversity of funders than do their American counterparts. During crises, Chinese startups are able to reach out to a broader group of active investors, and so are more likely to survive. Midler argues that due to the same diversity of capital sources, Western economists’ fears of a debt crisis in China, extant since at least the 1990s, are overwrought. “Chinese financial networks operate like their grapevine does,” according to Midler. “The network is characterized by a greater number of nodes and capital flows more rapidly to where it is needed most. While the chickens will come home to roost on excessive lending at some point, in the meantime we can appreciate how debt ratios have been able to climb without risking immediate damage to the economy.”

Midler sees “informalism” as a glue that holds China together, without which there would be no “impetus for social cooperation.” Formalism thus has no future in China, as it would “destroy the long-lived civilization.” One wonders after reading the book whether the CCP is that new (since 1949) formalism, and whether such formalism is indeed destroying China.

Cat’s Paw Strategy

According to Midler, China, including the CCP, is driven by an “almost pathological” need to achieve public milestones. China does not want to take the lead, contrary to what many in the West think. Rather, Chinese leaders prefer the cat’s paw strategy of Jean de La Fontaine (published in 1679), in which a monkey uses a cat’s paw to draw an object from a fire. “China does not in its wildest dreams believe that the world would ever allow it to rise to the stature of global hegemon,” he writes. China’s leaders have instead simply wanted to brag about China’s accomplishments, such as the nuclear bomb, supersonic missiles, carrier killers, trade deficits that benefit China, and foreign leaders who beg for closer ties. “Beijing political leaders … figure that they can convince the Chinese people that they ought to remain the legitimate rulers of the country.” They seek not world domination, but “as many new symbols of national pride as possible, to establish tomorrow’s myths of yesteryear.” If so, let’s hope China does not surprise itself, and the world, with a success that is more than the sum of its parts. The CCP’s success with the 2016 election of a pro-China Rodrigo Duterte in the Philippines is the latest in a long string of surprising achievements since 1949, not only in influencing foreign countries, but in acquiring allies and territory, for example in Xinjiang and Tibet.

On China, Midler sums up his position towards the end of the book. He argues that our Christian charity towards the country, going back centuries, was seen as a weakness by the Chinese, to be scorned and exploited. “Much of what’s wrong with China is actually something wrong within us. We are too fond of this country. We are too forgiving. We willingly have amnesia on the basis that we care…. We are generous and forgiving when a wiser policy might have been to stand resolute and insist upon holding China to the same standard we hold other nations.”

What’s Wrong with China is required reading for all businessmen and diplomats who focus on China. Its lessons, however, are not unique to China, but apply to any hardscrabble negotiations where conscience is scarce.

Anders Corr is publisher of the Journal of Political Risk. JPR Status: Book Review.