Change Management 1/3
China has changed dramatically in the last forty years. Business writer and thought leader Bob Yovovich tells us that China urbanized in half the time it took the US and with ten times the number of relocations. Such rapid change must have induced complex interlocking social shifts and costs - customs broken, institutions abandoned, social ties destroyed. Now, wither China? Wither CCP?
Three questions in three posts -
Thesis #1 The Central Committee is composed mostly of technocrats, mostly engineers and finance people at the top. Will CCP have problems mitigating social change problems that arise as China modernizes?
Thesis #2 Can a communist regime support innovation in the long term? CCP is doomed because ability to innovate will fade with lack of political and moral freedoms. And #2a - a follow-on – if innovation slows, what of it?
Thesis #3 Will Mr. Democracy eventually overpower Mr. Science in Chinese culture? A democratic future must come with modernization.
Post #1 - The Central Committee is composed mostly of technocrats, mostly engineers and finance people at the top. Will CCP have problems mitigating social change problems that arise as China modernizes?
To follow -
Antithesis #1 – not American-style politicians, but politicians nevertheless
There are many millions of Chinese who remember the 1950s as a time of famine, persecution, starvation and misery and are now sophisticated world travelers with command of at least one other language and family and contacts around the world. By that measure, change seems to have been managed pretty well.
All those terrible outcomes did happen in the first thirty years of CCP. Confucian thinking was destroyed as a model for family and social relations. Families were destroyed. Many millions murdered or starved. The Four Olds to be eliminated - Old Ideas, Old Culture, Old Customs, and Old Habits were to be replaced by loyalty to CCP.
Chinese lived through plenty of complex social shifts and costs by the time they got to the second thirty years of CCP. I’ve seen intricate wood carvings and sculptures that were once hidden in mud or cement as a way of preserving them from the madness of Red Guards during the Cultural Revolution. Perhaps adaptation to change for the positive is just easier.
But questions remain. China is run by communists. There is no god but CCP. There can be no opposition and free expression is not allowed. Communism wants rationality, the science of science and economics. In particular, CCP is run by technocrats not politicians. We remember what Isaiah Berlin told us about Political Judgment – that good judgment is an art, not a science. Aristotle said the same thing - that political judgment is phronesis – practical wisdom. Can communism – almost always run by technocrats who want to find technical solutions to social problems – thrive in a modern world?
There is plenty written on these questions, in journals from science to sociology. Too often I think the questions get muddled and answers default to some version of emotivism – that our expressions of truth really amount to little more than personal preferences. With apologies to Alasdair MacIntyre, we get Hooray for the US! or Hooray for democracy! and Boo on communism! without much concrete analysis. Each question is worthy of book-length answers, which I will not provide here. I do want to separate the questions and point toward answers.
The argument is that CCP has no politicians, only cadres. CCP is sclerotic, run by leaders trained in engineering or finance, not public administration. No leader is ever subject to a vote of the people. Leaders have been able to keep their fingers in the dyke holding fast against freedom of expression and human rights, but the pressure on the great firewall is building and leaks continue to spring up anywhere. The western rights movements – civil, women, minority, LBGT - that have been disrupting politics and governments in the west are noticed by the people of China. The arc of history points toward freedom and we can now see … if not the beginning of the end, perhaps as Churchill said, the end of the beginning. CCP has had a good run – the oldest communist party-state and oldest authoritarian regime still living. But this latest Chinese dynasty will come to an end, like all the others in the last two thousand years, sooner rather than later for its blind spots about human nature.
Evidence?
CCP has always had a relatively large share of engineers in top leadership positions. Today’s leaders are mostly trained in finance or economics, but either way they have sophisticated models to provide ways of looking at real world problems. (I’ve always said that social problems could be easily modeled with a variation on a heat transfer model).
Engineers, it is said, want engineering solutions, even to non-engineering problems. That can be true. When I look at big old trees lining my street, I wonder how many 2x4 and 2x6 I could get from each one …. Finance people want to reduce social problems to a rate of return analysis. You can put faith in things you can measure. Its easier to find technical solutions if you just ignore people.
It was an overly rational mindset driven by ideology that created the Great Famine in 1958-62. The South-North Water Transfer Project and the Three Gorges Dam could be built without much concern for relocation of hundreds of thousands of people and environmental damage. Any “rights” that farmers might have to their land can be easily swept aside when a big real estate project is in the offing.
“Build, build, build” has been the mantra for forty years and is nearly the only Chinese government response to faltering GDP or increased unemployment. This economic and finance model is called “supply-side” stimulus rather than demand-side, which would entail getting more money into the hands of ordinary citizens. In 2023, even as net exports decline, the government response is to build. Engineers and finance people Understand real estate and infrastructure in a deep way. Inputs are eminently measurable. Its bright and shiny. It can last for decades. You can have grand openings. Its – in a word – manly. Stimulating consumption - fixing pension systems, health care, education and social services - not so much.
There are environmental impact statements required for construction of any major public facility. But these reports are of no value, consisting of a few pages of comments from experts and often completed after construction has already begun. Again, the argument goes, an engineering mindset driven by ideology.
My own university in Hangzhou – admittedly, not at the same level as top schools in China – is a science and engineering school. The largest major is business, but the school offers no majors in history, psychology, philosophy (other than the required Marxist philosophy), logic or world affairs. What need would engineers or business people have for such courses?
More evidence is in wealthy Chinese moving money, families and themselves abroad, protests and increasing difficulty controlling social media and young Chinese who no longer believe the government when it says “trust me.” Business owners worry that their investments are at risk not from the economy but from CCP. Dynasties could get away with imperial power dynamics but now the power of the people is both too diffuse and too insistent. In philosophical terms, the looming natural crises – global warming, the melting of Himalayan ice that supplies the Yellow and the Yangtze, the demographic bust – portend that CCP has lost the mandate of heaven.
There are myriad CCP miscalculations on the will of the people. In 2015 five young women were arrested in Beijing for “picking quarrels and provoking trouble” protesting harassment on the subway in Beijing and Hangzhou. It took an international outcry – international, mind you, not domestic – and the five were released more than a month after arrest.
No question but that there are daily stories of threats and arrests of people making what we would consider innocuous comments online. No question about rule of law or proper representation in court. Courts and judges work for CCP. CCP is the god, and Xi is the prophet.
For policy guidance from CCP, we need look no further than John Garnaut’s 2017 Engineers of the Soul - Ideology in Xi Jinping's China. Quoting Xi Jinping in 2014 quoting Mao quoting Stalin - “Art and literature are the engineering that molds the human soul; art and literary workers are the engineers of the human soul.”
Fundamentally, CCP is doomed because it only wants to respond in technical ways to social problems. Excess concentration on engineering, finance or economics models – things that can be quantified - doesn’t help.
Antithesis #1 – not American-style politicians, but politicians nevertheless
I contend the thesis grossly misunderstands China and CCP. Academic training has value; and it can be used inappropriately. But the demands of CCP internal politics makes academic training as valuable as it is for any senior executive of a major American company – which is to say, not at all.
As to fears about too many engineers - The easy answer is that good engineers think about all the consequences of their designs. The mad-scientist-cum-engineer is really a fiction, even in China. In the 19th Politburo Standing Committee, Xi Jinping was the only one of the seven with an engineering degree. Only two of the 25 members of the Politburo could be considered technocrats. James Palmer in 2019 on China's Overrated Technocrats - The current crop of leaders is distinctly lacking in engineers; Xi is the only member of the party’s seven-person standing committee with an engineering or science degree. That is in line with a steady trend: Among high-ranking officials born before 1948, who made up the majority of the leadership before this current generation, around one-third had engineering degrees. But for those born after 1948, including China’s so-called “fifth generation” of leadership, only 1 in 7 were trained as engineers. The ratio continues to fall; legal or economic training has become far more common.
While some senior leaders in decades past actually worked as engineers before assuming leadership positions, few of today’s leaders have engineering work experience. Mr. Xi never worked as an engineer. In some (many?) cases advanced degrees in engineering, sciences or law were obtained while the student was also working full time for CCP. That is impossible in a serious academic program. I have personal experience of a couple of my Chinese government students from Illinois Institute of Technology who told me they were obtaining a PhD a couple of years after returning to China. Again, while working full-time. In many cases, these degrees are purchased, someone else attends class as a proxy, and dissertations are plagiarized or ghosted. The point is that these are not technocrats by academic training.
The focus on measurable outputs is a relic of a communist system in which all should be rational and scientific. James Palmer –
… advocates for China’s supposed technocracy are not only wrong about the background of Beijing’s current leadership. They are also fundamentally mistaken about how their training shapes policymaking. China’s leaders today—including President Xi Jinping himself—have been molded less by their education and more by the need to consolidate control and prevail in the brutal internal power struggles of the Chinese Communist Party.
The 20th Party Congress does include five new members (of 13 new members in the 24 member body) on the Politburo who have engineering training. Wu Guoguang at the Asia Society - Aerospace Engineers to Communist Party Leaders: The Rise of Military-Industrial Technocrats at China's 20th Party Congress. And these five have serious experience as managers in engineering or technology SOE. They come in as experienced business managers rather than as hide-bound engineers, more as business school graduates than as engineers. In any case their first loyalty is to CCP, not to any professional organization or even engineering models of the world. (As an aside, my business school students in Hangzhou had no technical training at all before or during college. I wanted to make a point in my econ 101 course. I told students we were learning the equivalent of E = ½mv2, but much later they could learn the economics equivalent of E = mc2. The model was lost on them, since they had heard of neither).
About a third of the new Central Committee members could be considered technocrats, meaning they had work experience in engineering, sciences, or economics. This is a much higher percentage than in recent years. But again, these men come in as experienced business managers, some of international SOE. Some differences with old and new technocrats in the Central Committee –
Source: Cheng Li, Director, John L. Thornton China Center, The Brookings Institution. Chinese Technocrats 2.0: How Technocrats Differ between the Xi Era and Jiang-Hu Eras. At https://www.chinausfocus.com/2022-CPC-congress/chinese-technocrats-20-how-technocrats-differ-between-the-xi-era-and-jiang-hu-eras
In any case, a decade or two of reckoning are in store for leaders and the Chinese people, as excessive investment must necessarily give way to greater attention to consumption and social services in the economy. Michael Pettis has been laying out the necessary policies for a decade at China Financial Markets. The engineers and finance people will adjust, as will the Chinese people. Adjustment is likely to be painful for some leading sectors, but China will adjust as the US has at times over its economic life.
At the highest university levels, students now are exposed to more than just technical courses.
Today all Peking University students, even in its Guanghua School of Management, take multiple courses in the liberal arts, including literature, philosophy, and history. The university also boasts an elite liberal arts curriculum in the Yuanpei Program, named for Peking University’s famous German-educated chancellor of the early 20th century, the philosopher Cai Yuanpei. Across the street, Tsinghua’s School of Economics and Management has implemented what is perhaps the most imaginative program in liberal arts and general education in any Chinese university.
This is from, curiously enough, the 2014 HBR article Why China Can't Innovate. Nevertheless, that article closes with language reflecting the frantic horse race concerns for GDP and innovation - But can China lead? Will the Chinese state have the wisdom to lighten up and the patience to allow the full emergence of what Schumpeter called the true spirit of entrepreneurship? On this we have our doubts.
Perhaps this is a bit too much, but current CCP engineer/managers-as-political-leaders are closer in temperament to Jimmy Carter than to the evil mad scientist or engineer. CCP still wants to measure output of social work in many way we would find silly. But local stability – the satisfaction of the people – again, partly evidenced by their lack of filing of xinfang - complaints and letters – is a key element in determining promotion of cadres to higher posts.
We cannot ignore the politics of promotion and relationship and guanxi within CCP. We may think of it as social relations or comradery, but it is far more than that. Competition for positions and in-fighting are standard, as are the evenings of drinking and shmoozing that create and cement bonds. The internal politics can be brutal. At the highest level, it is characterized as all or nothing – “I live, you die.”
One’s future can be tied to the future of a leader and cultivation of relationships is part of the politics of jobs at almost every level. Successful cadres have to be politically astute, perhaps not of the wishes of the people but of the extraordinary intricacies of CCP politics. In other writing I have compared politics within CCP to a hotly contested high school election for homecoming queen or social chairman. Friendships can be fickle and enemies can turn into friends. It is a tough and uncertain road. Quite honestly, it is not clear to me which is more difficult – being a politician in the US or in China.
Some more discussion is part of Thesis #3.
