What was the optical starting point of the revolutions in the Middle East? – How its legacy will affect China in the years to come.
If it was too early to assess the impact of the French Revolution, as Zhou Enlai reputedly said, how much more foolish would it be to predict the fallout from the ongoing drama in the Middle East. But it’s safe to say that China will feel the impact of the dramatic events unfolding across the Middle East and North Africa in many ways. Beyond the demonstrations and regime changes are fundamental shifts in the role of the region and, of China’s involvement with it.
First, what are the lessons for China?
The most important lesson is that young people need meaningful work. Half of the 300-million-plus people in the Arab world are under the age of 30. Education opportunities have exploded. So there are more university graduates than ever before. But the jobs aren’t there. Aspirations of young people have far outstripped the ability of their economies to provide meaningful work. High unemployment is coupled with a large number of dead-end government jobs.
For China, like most countries (oil exporters like Saudi Arabia are an exception), most jobs and economic growth comes from the private sector. Governments should do what they can to encourage private sector job creation.
Like many countries in the Gulf, China has dramatically expanded its university enrollment. China now is grappling with increasing numbers of second- and third-tier university graduates. Most of these would-be workers are products of single-child families. Their aspirations, and the hopes of their parents and grandparents, extend beyond working in a factory, let alone on a farm.
Service sector jobs are the best places to employ these post-industrial graduates. There are millions of modest jobs in restaurants and karaoke parlors. But the service sector is comprised of so much more.
Think of FedEx. This seemingly-humble delivery company has been at the center of a supply chain revolution that has made the U.S. economy dramatically more efficient. China’s economy would benefit from dramatic productivity increases if its transportation and logistics sector were opened up. This would benefit economic growth and create jobs.
China is different from the Arab world in that its demographics are shifting dramatically. The number of new entrants into the labor force is peaking. Labor shortages in Guangdong factories are the stuff of everyday news. So the need to create jobs of any sort is disappearing in China. But the need to create better jobs is stronger than ever.
So the most important lesson from the Arab world is that China needs more jobs both for its own economy and for the aspirations of its new graduates. Continued economic liberalization, especially in the service sector, is the best way to create the millions of new jobs that are needed. These can range the gamut from the most menial to extremely lucrative – after all, corporate law, consulting, and investment banking are service sector professions.
A second lesson is that arbitrary power, exercised capriciously, can be as dangerous for governments as it is for ordinary citizens. Who would have imagined that a Tunisian vegetable seller’s frustration would have been the spark that set off this firestorm in the desert? Yet the death of a vegetable vendor who set himself on fire after his vegetables were confiscated became a rallying point for protestors who a month later swept aside the long-time president.
No one can claim that this sort of arbitrary behavior by authorities is uncommon in China. No one can claim that there are real checks on this sort of exercise of power. Petitioning or turning to the courts is largely ineffective. China’s leaders know they have a problem with abuse of power by lower-level officials. But they have yet to find a lasting solution.
Indeed, it is in the blogosphere where Chinese citizens have from time to time managed to publicize gross abuses. Here, too, the Arab world holds a lesson for China. Social media drove change, allowing opposition forces to quickly marshal their forces. New media is changing so quickly that it would be foolish to predict how this will play out in the future. But Egypt’s brief shutdown of the Internet could not be sustained. The cost to Egypt’s reputation and potentially to its economy, was too great.
The dramatic events in the Arab world could mean new opportunities for China, if it is prepared to take advantage of them.
First, and this is largely unrelated to the political turmoil, China is rapidly becoming a key customer – and sometimes partner – for the big oil producers. Demand in the U.S. and Europe for Middle Eastern oil is largely stagnant. Growth is coming from East Asia, above all from China. Saudi Arabia’s state-owned oil company, Saudi Aramco, accounts for about 10 percent of global production. Indeed, Saudi Arabia acts as a kind of global central bank for oil. When supplies are tight, it pumps more oil in order to reassure customers, as it has done in recent months.
Ties between China and Saudi Arabia have grown in recent years. Sinopec recently announced a joint venture in the kingdom. Saudi Aramco has committed to significant investments in China, most recently in Yunnan. The decision to keep the extraordinarily popular Saudi pavilion at the Shanghai Expo as a permanent feature mirrors warming political ties between the two countries.
China’s hunger for resources and the unsettled state of the Middle East opens up new opportunities for Chinese foreign policy. The U.S. is distracted. Its unblinking support for Israel coupled with a hesitant response to the Arab protests has created an opening for China. This needn’t mean trying to displace the U.S. But we are beginning to see the making of a more assertive China. China will likely find that its policy of simply relying on buying oil (or stakes in oil companies) and implicitly relying on the U.S. Navy to safeguard its delivery of oil won’t be sufficient going forward. China will likely be forced to take a more assertive role in the world – and the Middle East may be the first place where this is put to the test.
Originally published in Caixin. Can be accessed at english.caixin.com/2011-04-08/100246276.html