February 9th 2017 marks the much-anticipated opening conference of the Leiden Asia Centre, the expertise centre for socially relevant and applicable knowledge on modern East Asia based in the Netherlands.
The conference focuses on Sino-Dutch relations and the relations between Europe and China at large.
One of today’s key speakers is British journalist and scholar Martin Jacques (@martjacques), the author of the global best-seller When China Rules the World (2009). One of his key arguments is that China’s impact on the world goes beyond economics, and that it will also have extensive political, cultural and ideological consequences.
“China is looking for the ‘cracks’ in the global system; that where it is at its weakest.”
In introducing Martin Jacques, Professor Frank Pieke, one of the three academic directors of the Leiden Asia Centre, first talks about a separate “global China”, that is different from Western patterns of globalization.
China is looking for the “cracks” in the global system; that where it is at its weakest. Its presence is growing in Africa, Latin America, and also in regions like southern Europe. China is not looking for challenges, but it is looking for space, Pieke says.
One of the reasons why this is happening, Pieke argues, is that China is hamstrung by the fact that within its own region it is often perceived as a potentially hostile power by, for example, Japan or Korea. It does not have its own sphere of influence from where it can expand into the world.
“China is not ‘like us.’ It has never been and it will never be.”
Martin Jacques agrees with Pieke in the sense that “China’s globalization” is different from “globalization” as it is often perceived in the West.
There is a fundamental problem with how China is framed and discussed in western media, politics and academia, Jacques argues, as it often come down to the idea that China should be ‘like us.’
“We are the ‘global leaders’ and we supposedly define what modernity is, and modernity is singular. And therefore modernisation is westernization, and therefore China will end up just like us. Well, this is complete rubbish,” Jacques says: “China is not ‘like us.’ It has never been and it will never be.”
Jacques stresses that the concept of ‘modernity’ is plural, and that there is not one modernity because it is not shaped in neo-liberal terms, but it is shaped by history and culture. And since China’s history and culture is profoundly different from that of any Western country, we have to understand China in its own terms – not in our terms. The main reason why Western media or politics got China “so wrong” in the last decennia, Jacques argues, is because they failed to do this.
The assumptions people have about China are therefore generally flawed, and have failed to predict how China would evolve in the future.
China is not a nation state, but a ‘civilization-state’, and is very different from any European nation state. It is a huge united country – and the fact that it is stable and unified is the country’s top priority. The key political values of the Chinese are influenced by this idea, and also fundamentally different from Europe.
Why China is politically never going to be the same as Europe is because its key political concepts of unity, stability, and order, based on its long history, are what have shaped and are shaping China.
“China has not followed anyone’s route, but has chosen its own.”
China has not followed anyone’s route, but has chosen its own, Jacques argues. “The idea that Chinese governance is going to be like Western governance is profoundly mistaken. China is not going in that direction. I am not saying they will not change – there have been large changes already – but it will change in its own ways.”
China is historically also very different from Europe in the sense that it has not colonized the way Europe has, and has been less aggressive.
“Consider that China from being dirt poor is becoming the world’s second economy, and this all in a relatively peaceful process.”
Jacques emphasizes that China is in the process of transforming the world. Not only due to its size, but also due to its difference, that is bound to going to project itself and bring its history, values, and traditions to the rest of the world.
“China is not the leader of globalization, but it is certainly true to say that China is shaping globalization profoundly.”
All discourse about China’s rise has always been economic – discussed within the framework of American hegemony. But Jacques wants to stress that the rise of China goes much further than economics alone: 1.4 billion people are in the process of transformation is all sorts of ways, which is impacting China and the world in numerous ways.
Jacques notes that China has sometimes been blamed for being a ‘free rider’ in the international society, or for not ‘contributing’ anything, but this is changing. Since Xi Jinping has risen to power there have been some extraordinary initiatives, such as the Asian Infrastructure Investment Bank. Jacques predicts that also through these kinds of initiatives, its influence is growing, and that those ever said China is not ‘contributing’ will be biting their tongues.
“It is not true to say China is the leader of globalization, but it is certainly true to say that China is shaping globalization profoundly.”
Jacques is pessimistic about the prospect of Sino-European relations. China is going ahead, and Europe is basically “stuck”, as it is increasingly turned inwards.
“Tencent, Alibaba, Huawei, Baidu, JD.com, Xiaomi, and other tech companies show that in many ways China is now ahead of Silicon Valley.”
Lastly, Jacques addresses the importance of China as a global power and crucial global influencer in various ways.
China’s online growth has shown it is the global leader in terms of internet commerce. Tencent, Alibaba, Huawei, Baidu, JD.com, Xiaomi, and other tech companies show that in many ways China is now ahead of Silicon Valley, with China’s online sales being well ahead of those in countries like the USA. Jacques also mentions that the functionality of apps like Weixin/WeChat is more advanced than its western counterpart Whatsapp – meaning that ‘the world’ will also be looking at China when it comes to its digital developments.
The country is also moving quickly in other ways. China is also the leader when it comes to issues such as climate change and foreign investments. He also mentions the ‘One Belt, One Road’ project (“it’s probably going to be extremely important.”)
“If Europe can’t hitch a ride with China in its transformation, then it will become marginalized.”
There is one last thing Martin Jacques wants to add to his speech, and it is about Trump, whom he calls “the most frightening president the US has ever had”, and how he will change the EU-USA-China dynamics.
Under Trump, he said, America will look after its own interests and will interact with the rest of the world in terms of bilateral relationships rather than from a plural, global position.
What will the Chinese do? “They will retaliate,” Jacques says. As China-US relations deteriorate, with China pushing America back, they will deepen the agreements with their own neighbors. The One Belt, One Road is an important part of this strategy.
Jacques foresees that the rise of Trump will also change Sino-European relations, as Europe -like China- also has little interest in Trump.
“I started off by saying Europe and China are very different, which is true,” he says. But despite his somewhat pessimistic views on Sino-European relations that find its roots in the western frameworks applied to China, there is also some light at the end of the tunnel: “Unlike the USA, both Europe and China have a long history. And there has been little rivalry with China. There is a logic for Europe to move much closer to China.”
Jacques stresses the importance for Europe to keep up with China. It is not China that needs to change, he argues – Europe does.
“China will keep marching on. China will keep its dynamic transformation. It will continue to grow. China is not the problem. Europe is. And we need to face up to that. If we can’t hitch a ride with China in its transformation, then we will become marginalized.”
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China’s “Most Famous Foreigner” Mark Rowswell: Ready for Dashan 3.0
He has been China’s most famous foreigner for nearly three decades: Canadian Mark Rowswell aka Dashan. On March 30, he talked about his life as a household name and his work as a comedian in the PRC at Beijing’s the Bookworm. What’s on Weibo was there to take note.
Canadian Mark Rowswell aka Dashan (大山) has been working as a comedian and media personality in China since the late 1980s. His excellent Chinese made him instantly famous when he starred in the most-watched televised show in the world, the CCTV Spring Gala. Since then he has appeared on countless Chinese TV shows and dramas, and has appeared on the Spring Gala a total of four times.
On Sina Weibo, Dashan (@大山) now has over 3.8 million fans. He might not be the most popular non-Chinese person on Weibo (Stephen Hawking gained 4.2 million followers since he joined Weibo), but he certainly is the most famous Canadian in China ever since Norman Bethune.
One of the reasons for Rowswell to talk about his work during a special talk at Beijing’s the Bookworm on March 30 (moderated by Asia correspondent Nathan VanderKlippe), is his upcoming show in Australia at the Melbourne Comedy Fest, where he will be performing in Chinese. It’s now all about the physical audiences for Rowswell, who says he’s disappointed with Weibo and the virtual world, and wants to do comedy offline – up close and personal.
THE BIRTH OF DASHAN
“I thought it was just an audience of 500 people; nobody told me there were 550 million people watching the show on TV.”
As Dashan’s career in China will soon hit the 30-year mark, the Ottowa-born performer is perpetually known as “the foreigner who speaks fluent Chinese.”
Perhaps surprising for someone who masters Mandarin so well, Rowswell did not speak a word of Chinese until the age of 19. He chose to study the language out of curiosity after the phrase “the next century belongs to China” started to make its rounds in Canada. From 1984 to 1988, he studied Chinese at the University of Toronto and then headed to China.
“We all knew that China was going to be a big part of the world, that many Chinese would come to Canada – but how many Canadians were going to China?”, Rowswell tells his audience at the Bookworm. He set out to the People’s Republic of China (PRC) to “ride the wave”, although he was not sure about his exact plans yet.
Within 3 months after starting his studies at Beijing University, Rowswell was asked to participate in a TV show and ‘Dashan’ was born. His Chinese name (that literally means ‘big mountain’) is a peasant one, which in itself already was a joke.
But the name Dashan grew bigger than Rowswell could have ever imagined when he later appeared at the national CCTV gala. “I had no background in performing, and I thought it was just an audience of 500 people; nobody told me there were 550 million people watching the show on television. The little skit that we did somehow hit a sweet spot somewhere, and it ended up being the most popular act of that particular show,” Dashan recalls.
Dashan performing at the 1998 Spring Festival Gala, the best-watched televised event in the world (appears at 3.00 minute mark).
Rowswell’s career soon set off and ‘Dashan’ became a national hype. For a long time, Rowswell did not see his work at the time as a goal in itself: “I thought of it as a stepping stone to get into Chinese society, and to get away from campus and my study books. I traveled with a Chinese performing group and experienced things other foreign students in China would never experience – I even went to places foreigners were not allowed to go.”
Although Rowswell at the time still aspired to work at the Canadian embassy or somewhere else, his work as a freelance performer eventually turned out to be decisive for his eclectic career path, that has brought him to where he is today at the age of 52.
DISAPPOINTED IN SOCIAL MEDIA
“I have trouble reading Weibo because I just don’t find anything interesting on it. It’s very hard to keep engaged on a platform that you don’t find interesting.”
Looking back on the past thirty years, Rowswell says he can roughly divide his story into three parts. “Dashan 1.0” is the foreign student who appeared on TV as a comedian and TV host. That first stage led him to the “2.0” stage, where his role as a freelance performer also grew into one of being more of a cultural ambassador.
Rowswell received official recognition for this cultural role when he was part of Canada’s Team Attaché during the 2008 Olympics, and later became the Commissioner General for Canada at Expo 2010 in Shanghai. After this period, he searched for a new goal and hoped to find it online.
“After 2010 I thought the answer was Weibo,” Rowswell says: “I really got into Weibo around 2010, 2011, 2012. But post-2012 or so, Weibo is really…I mean, I still maintain it, but I really have trouble reading Weibo now because I just don’t find anything interesting on it. It’s very hard to keep engaged on a platform that you don’t find interesting.”
Rowswell expresses his disappointment when he says he feels that “the promise of social media has not played out.” Although he says he thought that internet was the channel to lead the next stage of his career, “it did not work out that way.”
It is not just Sina Weibo that has not brought Dashan what he had hoped for: “I just think social media in general.. (..) We used to think technology was going to make it easier to communicate and that social media was going to bring people together but that has not worked; social media has unleashed the basic human tribalism and reinforced it.”
As Rowswell felt that the future of his career would not take place online in front of a virtual audience, he decided to focus on physical audiences and returned to the offline stage.
THE THIRD ACT
“Stand-up comedy is something that is closely tied to the rise of counter-culture and individualism in China.”
From foreign comedian to cultural ambassador, Rowswell reveals that he has always felt he was not truly doing his own things as a freelancer. “I was always doing stuff for someone else, doing someone else’s show. But where is my show?!,” he laughingly says.
It is stand-up comedy in which Dashan has found the next stage of his career, which he calls “Dashan 3.0” or “the third act.” Rowswell stresses that he does not want to be the foreigner in China performing solely for foreign audiences in expat bars. He specifically wants to connect with Chinese audiences; Chinese-language comedy is giving Dashan the stage and the possibility to directly speak to them.
As stand-up comedy (站立喜剧) is finding more channels and bigger audiences in China, Rowswell feels this is the right niche to explore: “It allows me to build on something new. It is not mainstream comedy here, but is something that is closely tied to the rise of counter-culture and individualism in China.”
Rowswell also finds that his eclectic career and experiences now give him the opportunity to take on some kind of mentoring role as a performer. The upcoming Chinese “Dashan Live” show at the Melbourne International Comedy Festival – where he will be the only “non-Chinese Chinese performer” – is an important part of this new journey.
“It takes time to find your own voice,” Rowswell remarks. As Dashan 3.0, he now has the opportunity to finally share his own experiences and his own stories, in his own Dashan show.
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The “Wild West” of Banking in China: Andrew Collier on China’s Shadow Banking
Shadow banking is a halfway house between state and private economics – its “the Wild West of banking in China.”
“If it looks like a duck, quacks like a duck, and acts like a duck, then it is a duck (..) But what about an institution that looks like a bank and acts like a bank? Often it is not a bank — it is a shadow bank.” This is how the concept of ‘shadow banking’ is straightforwardly explained by Laura Kodres in What Is Shadow Banking? The term was first coined in 2007 by economist Paul McCulley at a financial conference.
What does the growth of the free shadow banking market mean in a country that stresses “socialism with Chinese characteristics”? Collier discussed the status quo of shadow banking during a special event at The Bookworm, Beijing, on March 28.
Andrew Collier (@acollier) is an expert in China’s macro economy and the practice of shadow banking. He is the former President of the Bank of China International USA and is a business-focused journalist for, amongst others, the South China Morning Post. His book Shadow Banking and the Rise of Capitalism in China will come out in May 2017.
In simple terms, Andrew Collier explains shadow banking as “capital that is distributed outside the formal banking system” – which can be anything from small-scale lending shops to large-scale trust companies. That they are outside of the “formal” banking system usually means these channels lack a strong safety net and have a different (and lesser) regulatory oversight (Elliott et al 2015).
Although shadow banking only held a fraction of the Chinese economy in the early 2000s, its share in China’s current annual lending is more than substantial (nearly half of all China’s economy annual RMB 25 trillion / $4.1 trillion lending). Risky business? Yes. But since many companies do not have access to formal loans, the practice has become ubiquitous. Some reports also suggest it has an upside as it boosts economic growth by making financial services cheaper and more accessible.
On Sina Weibo, the topic of shadow banking (影子银行) has received a lot of attention lately, with some netizens expressing their worries about the phenomenon: “Shadow banking is becoming a chaos, there is an overflow of people lending money!”
Collier also reinforces this message at The Bookworm, where he shares his experiences with the ‘game’ of shadow banking in China; a messy business where one of the most important questions is: where does the money actually go?
“An enormous miniature park? I saw a lot of odd constructions everywhere – I looked around and I started to become very skeptical.”
Collier’s interest in China’s shadow banking started in the 2000s when he joined the Bank of China and went on many business trips within mainland China, during which he witnessed how huge amounts of money were being pumped into projects that were often dubious; sport stadiums that would only host one sports event in a year, or a miniature theme park spread over several acres of land.
“At the time it looked like a bit of a joke,” Collier says about his visit to the, ironically, enormous miniature theme park located in Sichuan province: “But it was not just this. Some investments might pay off in the end, but you would see a lot of odd constructions everywhere – and I looked around and I started to become very skeptical.”
His ample experience with China’s world of ‘alternative’ banking over the past decades fascinated him so much that he decided to dive into the topic, with the main focus on simply following the money – tracking where it is coming from and where is it going.
But the issue turned out to be not that simple, as many people did not even know what it was they were investing in (“Some kind of bridge somewhere,” one investor once responded to Collier.) Within a few years after Collier’s interest was ignited, the term ‘shadow banking’ first popped up.
“What actually is ‘shadow banking’?”, Collier wondered, and asked himself: “Is it a good or a bad thing for China?”
It turns out that a lot of the important data about shadow banking is simply not there. What ‘shadow banking’ actually means also strongly varies per country and system.
Collier stresses that what is now happening within China is not really the same as what happened at Wall Street in the 1990s, when there were huge amounts of retirement money in the financial system and banks took bad property loans and “put lipstick on a pig” in selling their mortgage products.
Despite all the lingering questions, one thing is crystal clear: shadow banking is big in the People’s Republic of China (PRC). Even if China’s leadership would not necessarily call it ‘capitalism’ (rather: “capitalism with Chinese characteristics”), Collier wonders if shadow banking is the tail that’s gonna wag the dog, with many things happening that might be dangerous for the Chinese economy.
“Few people actually know where the money goes and nobody cares. They’re taking a slice of something and have no idea what it means.”
So what is actually happening in China, if it is not the “putting lipstick on pigs” phenomenon of 1990s Wall Street? After China’s 2008/2009 economic stimulus, there has been a lot of money flowing through the system. But China’s ‘shadow banking’ was not necessarily a result of that, Collier argues, as it was going on ever since he first lived in China in the 1980s and saw how people were borrowing money from friends and relatives for grain and cotton – actually also a form of shadow banking.
Throughout the years, especially over the past decade, China has seen a huge growth of non-state lending from ‘mom and pop loans’ to huge state-owned bank trusts. It is a problem that mainly stems from a system that was not designed to handle so much cash and was under very limited control.
Collier explains shadow banking as an overflow of water that is trying to find new channels within the PRC, with capital flows going outside of the banking system – through land sales or by borrowing from private markets. Non-bank channels don’t only have lower requirements for capital and liquidity, they also do not have the same low limits on interest rates as formal banks.
In the 1998-2012 period, shadow banking had actually become so big that there was an 18 trillion RMB gap in local government revenues, of which shadow banking was a large part: “Basically it is an unsustainable financial system,” Collier says, with institutions scrambling to either lend the money or to receive it.
According to Collier, there are two main actors that play the main role in the shadow banking ‘game’; Trusts and Wealth Management Products (WMP). WMP are uninsured financial products that often have a high rate of interest. Trusts are basically “banks in disguise with hardly any regulatory oversight,” as Collier says.
“They are, in fact, regulated – but so lightly that western observers will call them shadow banks. They tend to have government (provincial) ownership, and have trillions of outstanding loans.”
Some years ago Collier met with a person from a renowned oil company, who said his job was “managing money.” Upon further talking, Collier realized this person was managing billions and was basically running his own bank; a new reality in present-day China.
A big problem that Collier repeats throughout his talk is that it is not just that important data is missing on shadow banking in China, or that few people actually know where the money goes, but that “nobody cares and everyone thinks it’s all fine; they’re taking a slice of something and have no idea what it means.”
“Socialism has become nothing more but a national ideology.”
Collier stresses that China’s shadow banking is all about different actors who are halfway in the middle: it is not about state versus private. In China, it is all about partly state-owned parties versus partly private actors.
The upcoming book and Collier’s Bookworm talk come at a time when China is cracking down on shadow banking.
The crackdown is part of the balance that is kept on shadow banking within China, as the central bank of the PRC does not want pressures to get out of control and attempts to minimize risks.
Experts tell Bloomberg that there is a possibility that the People’s Bank of China (PBOC) will directly inject funds into smaller banks if cash shortage continues.
When Collier asks the audience at The Bookworm to raise their hand if they think the system is going to collapse within the coming 5 years, nobody raises their hand. Apparently, many people don’t worry too much about the negative effects of shadow banking on China’s financial system in the years to come.
On Weibo, many netizens are more skeptical, not just because of the risks involved in shadow banking, but also of what it means in China today.
One commenter says: “In fact, China is not socialist at all when it comes to economics. Right now, it is actually a capitalist country – socialism has become nothing more than a national ideology.”
Sources and further reading
Collier, Andrew. 2017. “Shadow Banking and the Rise of Capitalism in China.” Palgrave Macmillan.
Elliott, Douglas, Arthur Kroeber and Yu Qiao. 2015. “Shadow Banking in China: a Primer.” Economic Studies, the Brookings Institution.
Kodres, Laura E. 2013. “What Is Shadow Banking?” International Monetary Fund (50/2): June https://www.springer.com/us/book/9789811029950#aboutBook [28.3.17].
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