Google’s dispute with the Chinese government has taught us a lot about modern China. The disagreement was sparked by the company’s January decision to stop filtering Internet searches by its Chinese users and could lead to the closure of Google’s Chinese search engine, or perhaps an even more drastic withdrawal from China. (An announcement from Google could come this week.) (UPDATE: Google kept its earlier pledge and stopped censoring web searches in China.) The case has exposed the myth that China is a great place to do business for foreign companies. Google’s step also moves China closer to having a “different” Internet than the rest of the world, one dominated by Chinese companies and policed by the Chinese government.
China’s leadership doesn’t appear to care much about the impact of Google’s possible departure. But should they? The Google case begs a fundamental question about China’s future:
Is there a connection between human rights and economic progress?
Americans like me were brought up to believe that free enterprise and free societies are inseparable, that you can’t have one without the other. The demands of a successful market-based economy, we’ve always believed, require the open flow of information in order for investors, businessmen and bankers to make proper decisions. Civil liberties are the basis for the innovation and inspiration that make capitalist economies thrive. Curtailing personal freedoms – such as restricting people’s access to the world wide web – would eventually come back to haunt a country’s economic development, by disconnecting the economy from the rest of the world, stifling crucial information and hampering creativity. In other words, the traditional thinking on the relationship between politics and economics tells us that China’s stand on human rights could cause it to miss out on crucial opportunities necessary for its future growth.
China sees things very differently. Its leadership believes democracy is not a requirement for a market-oriented economy; instead, you can have economic success without political openness. That’s what the 1989 massacre on Tiananmen Square was all about. Deng Xiaoping, China’s most influential leader back then, believed political reform would undermine his efforts to develop the economy. Not much has changed in China’s thinking over the past 20 years on this issue. President Hu Jintao and Premier Wen Jiabao simply won’t believe that allowing Chinese citizens to surf freely on the Internet about sensitive topics — Falun Gong, Tibet, the Tiananmen Square massacre itself — will in any way enhance its economic prospects.
So far, it’s easy to say that China’s leadership is correct. After all, China’s economy has been the world’s fastest-growing for the past forever, and is likely to become the second largest economy next year (surpassing Japan, a democracy, no less). Meanwhile, the free democracies of the West weren’t saved from financial catastrophe by their free Internet policies; in fact, some would argue, the recent economic crisis was caused by too much freedom, and not enough government regulation and control.
At the same time, it’s notable that there are hardly any countries around the world that have regimes that severely restrict civil liberties and also have thriving economies. It is true that out here in Asia, most of the region’s rapid-growth economies were governed by dictatorships or something akin to one-party systems in their early years of development. (India is the glaring exception.) But that’s no longer the case. Just about everywhere, they’ve either become vibrant democracies (South Korea, Taiwan, Indonesia) or more politically open over time (Malaysia). The question to ask is: Are these economies better off because of democratization and the improvement of human rights? The only way to know for certain is to hop into a time machine, zip back to the late 1980s, engineer continued autocratic rule and see what happens. But it is intriguing that in the more advanced economies (I’m thinking South Korea and Taiwan here) there has been a tremendous improvement in recent years in product development and design, innovation, branding and marketing, and that these trends have coincided with the advancement of civil society and the arts – and the use of the Internet – under liberal political systems.
I’m not going to venture a guess as to whether China will or will not require political reform to keep its growth story going. Yet we’ll find out soon enough. The real test of China’s political and social policies will come as it attempts to shift from an economy that makes cheap stuff to one that innovates and invents advanced products and technologies. Only then will we find out if the government’s control of information and personal freedoms will hamper its efforts to catch up with the United States, Japan and South Korea. Perhaps then China will realize the importance of having Google in its economy rather than outside of it.