Understanding China – A Role For Ireland
Dr Eddie O’Connor, July 2020
In my time as CEO of Airtricity we considered entering the Chinese energy market. We constructed 27 wind speed measuring masts in Inner Mongolia. The wind speed was terrific, circa 9 metres per second. Inner Mongolia is an elevated area, quite similar to Texas in the US. It covers an enormous area of 1,200,000 square kilometres. with a low population of 25 million. It could have become the electricity generating centre of China using wind. If it were to be completely covered in wind turbines it could house some 12 million megawatts. Of course this figure is theoretical only, it would not be possible or in any way practical to cover any geographic area fully.
We however did no business in China. The price for electricity there is too low for any foreign company to make an economic return. I learned of one New Zealand company which had formed a joint venture with a local company to develop renewable energy in China. It didn’t succeed in making a profit and pulled out of the market. We closed the office in Beijing, but I remained in close contact with the turbine suppliers, Goldwind and Sinovel.
A fascination with the Chinese culture had taken a firm hold of my imagination. I began to read the Analects of Confucius. The Analects, is an ancient Chinese book composed of a collection of sayings and ideas attributed to the Chinese philosopher Confucius and his contemporaries, traditionally believed to have been compiled and written by Confucius’s followers. They form the basis of ancient and current Chinese culture and are radically different from the mainly Christian traditions of the West.
Confucius may have believed in ghosts or spirits but would prefer to keep them at a distance. There is, in the thinking of Confucius, no need to interpose a personal god into ones system of morals and behaviour. Confucius’ political beliefs were rooted in his belief that a good ruler would govern his subjects through education and by his own example.
“If the people be led by laws, and uniformity among them be sought by punishments, they will try to escape punishment and have no sense of shame. If they are led by virtue, and uniformity sought among them through the practice of ritual propriety, they will possess a sense of shame and come to you of their own accord“
There is the sense of mutual respect between the citizens and the ruler. They both have duties one towards the other. Much of this respect can be gleaned from another quote from the Analects. “Tsze-Kung asked, “Is there one word with which to act in accordance throughout a lifetime?” The Master said, “Is not reciprocity such a word? What you do not want done to yourself, do not do to others.” The similarity of this quote to the quote that appears in Matthews bible “do unto others as you would have them do to you” is striking.
Chinese civilisation has been around and flourishing for probably 3,000 years. This, in itself, is unique in world history. Part of the reason for its continuity and longevity is the relative remoteness of the country. There are great natural barriers to any conquest of China. The great wastes of Siberia, the Himalayas, the Hindu Kush, the Tien Shan range and mighty Pacific, allowed China to think out a political, social, cultural identity for itself. Once a culture got established there, it was able to become embedded in the popular consciousness without wars to uproot the people, and smash the cultural traditions.
There were always examinations to select the best brains to join the bureaucracy and run the country. China is the oldest meritocracy. This arrangement fits with the philosophy outlined in the Analects.
If one reflects on the nature of meritocracy, it throws up a conundrum. What if the brightest in society are from an unrepresentative elite? Will they not just rule in the interests of the top few? So it seems to me meritocracy without a firm set of societal values, could be a recipe for repression. That is the difference between the Chinese variant of meritocracy, and others. There is a firm reciprocity between the governed and the rulers.
Meritocracy without values is little better than theocracy, regency, or autocracy. This pact between the people and their government stands in sharp contrast to what is observed in the modern US for instance. Promises to “drain the swamp” in Washington was one of the effective slogans used in getting Mr. Trump elected. Leadership through populism is not unique to the US and is drawn from short term political gain.
The following quote from the Analects is all about societal order without the use of repression.
“Lead the people with administrative injunctions and put them in their place with penal law, and they will avoid punishments but will be without a sense of shame. Lead them with excellence and put them in their place through roles and ritual practices, and in addition to developing a sense of shame, they will order themselves harmoniously”
Chinese culture is so strong that it has survived indifferent Imperial rule, Japanese and English invasions, the nationalist struggles of the early 20th century, and finally the ascension of the Communists to power in 1949. Even throughout the great leap forward when millions died from starvation, and again during the Cultural Revolution, where ideology flourished over peoples livelihoods, loyalty to Mao Zedong remained firm. It is hard to imagine any other country where the transition to a new way (Mr Deng) of growing a country was so radically different to the one that gone before. And yet Mr. Deng never openly criticised Mao, even in spite of the fact that he had been banished to the countryside and worked as a fitter for 4 years. Also, his son became a paraplegic when attacked and thrown out a 4 story window by Red Guards.
Neither Mr. Deng or any subsequent leader criticised Mao.
I became interested in China, initially for commercial reasons. However, after becoming familiar with the culture, and full of respect for what was being accomplished in terms of economics growth, I made it a point of trying to explain it to myself. I now conclude that China is going to be the major force in the world for the next century.
Milestones along that path, have already been achieved. Their economy is nominally the second biggest in the world, but if economic size is judged in terms of what the people of a country can buy, in Purchasing Power Parity terms, China bypassed the US in 2017. China has demonstrated a unique way that great powers acquire foreign natural resources. They pay for them. This stands in sharp contrast to all other imperial powers, who, during their colonial phases, invaded countries and robbed their natural resources.
The Belt and Road initiative is Mr. Xi Jinping’s great $7 trillion achievement. It will set up diverse trading routes with Africa, the rest of Asia and Europe.
For a country like Ireland, the rise of China creates a unique issue. All of Irelands new found wealth is founded on foreign direct investment (FDI) by a large number of US multinationals. They couldn’t sell their goods to any EU country if they didn’t manufacture within one of the member states. Having studied each country they basically all decided to locate in Ireland. In addition to being a member of the EU, Ireland had a lower corporate tax rate than any other European country. There is a politically stable regime here. English is spoken. There is a big source of well educated graduates and the icing on the cake is that many of the managers and owners forebears hailed from Ireland. It is astounding that for many years Ireland received 90% of US FDI with merely 1% of the EU population.
Patents are one way of measuring the creation of new commercial intellectual property. In 2008 Chinese authorities received 204,268 patent filings, compared with 428,881 in the US. However, by 2017 China’s State Intellectual Property Office received 1.3m applications — more than double the number received by the US, according to statistics from the World Intellectual Property Organisation, the global forum for policy in the field. According to David McCormick, chief executive of Bridgewater Associates, and former Under Secretary of the Treasury in the Bush Administration, the US federal share of R&D spending hit a 60-year low in 2018.
We in Ireland should aim to be part of the Belt and Road initiative. This should happen whatever the attitude of the EU is toward China. It can be argued that as part of the Belt and Road programme, those countries which are connected to China can sell their produce there. Thus, US companies manufacturing here would have access to the biggest market on the planet. In that way we can use our neutrality, not in a negative isolationist manner but as an honest broker between two contending behemoths.
Dr Eddie O’Connor is the Executive Chairman of Mainstream Renewable Power, having been previously CEO of Airtricity and Bord na Mona. He holds a Batchelor of Chemical Engineering a masters in Industrial Engineering, a Doctorate in Business Administration as well as honorary doctorates from NUI Maynooth and a Doctorate of Science from the University of Hull. He is a Board member of the Irish China Institute.