Bowling Alone … in China: The Foshan Incident and its Meaning


Morality is a hotly debated political and social topic in present-day China. Tongues click and heads shake as increasing materialism is blamed for what is perceived and openly described as low social mores.  I remember my Chinese tutor in Nanjing last year was never shy in lamenting against what she saw as rising selfishness in Chinese society.

The very popular dating show, “You are the One” (非诚勿扰fei cheng wu rao), had a widely talked about episode where a Harvard Grad declined to choose any of the female contestants. When he asked the two remaining female contestants what would they do if they won 10 million dollars, one answered that she would give it to her mother; the other answered that she would continue living the same way. He rejected both girls: neither apparently opted to donate the money or give back to society.

Last year, the string of attacks against kindergarten students and the number of suicides by migrant workers had the Chinese media talking endlessly about psychological stress arising from the contemporary economic rat-race.

The most recent incident occurred in Foshan, Guangdong. In this incident a two-year old toddler was struck by two vehicles and left – as it turned out – to die as 18 onlookers walked by without any effort to assist the toddler. Finally a garbage collector called for help. Netizens have roundly decryed the moral state of post-reform China.

But is the Foshan incident really a question of low morals in China? Was my tutor right?

To characterize the problem as an absence of morality neglects the fact that Confucius values deeply permeate Chinese society. Principles like Filial Piety, which demands respect for one’s parents and ancestors, still resonant with Chinese youth today. Responsibility to one’s family is particularly strong in China, whereas responsibility to the society and to fellow citizens is markedly limited.

Probing this dichotomy between Confucian values and the lack of community sensibility is far more interesting than declaring that there is no sense of responsibility among citizens. To cite modernization as the culprit misses the mark about the real lack of social capital in China.  The inchoate development of civil society explains weak social trust beyond the family unit and compounds the social consequences of economic growth.

Party officials have often combated what they saw as the social ills of free market capitalism. In the 1990s the campaign against Spiritual Pollution was launched to stop the flow of pornography along with remnants of western pop culture from Hong Kong. At the time, the Campaign was highly political as it reflected a faction’s opposition with the pace of reform. Today Party officials in different parts of China appear to fight crime and social malaise with two strategies; a revival of socialist principles and the revival of Confucius values.

In Chongqing, Party Secretary Bo Xilai has gained tremendous popularity with his campaign to tackle organized crime. He is also credited for the revival of Red Culture with the return of Red Songs and the replacement of commercial advertisement on Chongqing Satellite TV with social advertisements and public service announcements (PSA). In January 2011, a statue of Confucius was erected in Tiananmen Square, reflecting an attempt by Party officials to utilize China’s Confucius history to shape moral and social discourse. The statue’s removal to an indoor location a few months later reflects perhaps schisms within the party about its ideological identity.

Today, Communist ideology no longer shapes societal goals and values. And when the Party is split over its own ideological direction and struggles to find its relevance, it leaves citizens unsure about their civic responsibility.

Moreover the monopoly of power by the Party restricts meaningful development of the third sector.  There has been a proliferation of charities and non-governmental organizations (NGOs) to address a range of social problems: environmental degradation, HIV/AIDS and the plight of migrant workers. They have been accorded limited space as they provide services that assist the state. Volunteerism is also highly encouraged among Chinese youth. The 2008 Chinese Olympics attracted over 1.5 million applicants. Jackie Chan was also featured in a PSA that extolled the role of the Olympics’ young volunteers.

The Party accords limited political and social space for NGOs to operate; and it is willing to contract or eliminate it at will. After the Sichuan Earthquake in 2008, there was an outpouring of donations and young people flocked to the site of the disaster. However when it came to light that local officials were implicated in the poor construction of many of the buildings, there was clampdown on the work of civil society groups.  It was Ai Wei Wei’s attempt to account for the number of student deaths that got him in trouble with authorities.

When Robert Putnam wrote Bowling Alone: the Collapse and Revival of American Community, he talked about the erosion of social capital in the US; voter turnout, political engagement and membership to civic associations were on the wane. For Putnam, social institutions play a vital role in forging social trust and the norm of reciprocity. While western democracies seek to reinvigorate activism and participation, in China, social capital is weak as a result of the Party’s prerogatives.Restrictions on civil society limit the space for Chinese citizens to develop a sense responsibility to each other.

The Foshan case is less about a moral vacuum in China, as it is about a society in need of a stronger third sector and a hegemonic Party still unwilling to cede it.

Photo Credit: Palmo Tenzin

Sorting Out the G20 Role

The Airport is always a good place to collect one’s thoughts.  And I was struck by an op-ed by Canada’s Prime Minister Stephen Harper placed in Canada’s Globe and Mail prior to soon to occur meetings of G20 Finance Ministers and Central Bankers in Paris.

What Harper does right in my opinion is to sort out the actions that should be taken by different major actors in the global economy.  The key crisis point in the global economy right now  is the European sovereign debt crisis and the failure of European governments – particularly the French and the Germans – to take decisive action to deal with the sovereign debt crisis and the contagion that the continuation of the crisis threatens.

Again, rightly in my opinion Harper urges the Europeans to:

  • take decisive action;
  • increase the flexibility of the European Financial Stability Facility ; and
  • implement plans for debt and deficit reduction that are clear and credible to the market.

Then Harper urges action – indeed coordinated action – by the G20.  And here Harper urges the G20 to ‘stick to its knitting’ – that is to focus the collective efforts not  on the immediate sovereign debt crisis but on the medium term agenda that is the remit of the Leaders Summit.Get it done.

Thus, Harper encourages the G20 Leaders Summit to:

  • further develop the SSBG (Strong Sustainable and Balanced Growth Framework) Framework;
  • meet clear and concrete medium term debt and deficit reduction plans –  set, as he points out, at the Toronto Summit;
  • provide meaningful action to increase exchange-rate flexibility;
  • commit to implementation of the financial sector reform agenda agreed to at previous summits; and
  • to resist – the old G20 saw but still important – trade protectionism.

As Harper suggests

While the efforts made so far by the G20 are significant, more action by some is needed.  Only with a clear plan will the citizens of countries in crisis accept in crisis accept the painful compromises they are being asked to make for their nations’ future well-being.

Harper points out a needed leadership lesson. Focus on what you are called on to do; avoid the distractions that can undermine your legitimacy and effectiveness.


Stock Trade Volatility and the G20

I was surfing information today when I came across a small but very interesting piece – this in the NYT by Graham Bowley titled, “Clamping Down on High-Speed Stock Trade” (October 9, 2011).

The problem – computerized high-frequency traders – and the capacity for these traders to make market swings  in global markets much worse.  Regulators it seems are playing catch up.

What is the impact, according to Graham Bowley:

High-frequency trading took off in the middle of the last decade when regulatory reforms encouraged exchanges to switch from floor-based trading to electronic.  As computers took over, daily turnover of stocks rose to 8 billion shares in the United States from 6 billion in 2007, according to BATS Global Markets. The trading, done by independent firms or on special desks inside big Wall Street banks, now accounts for two of every three stock market trades in America.

Now several academic studies have shown that high-frequency trading tends to reduce price volatility on normal trading days.  Well then no problem.  No, unfortunately it doesn’t seem t work as well when you have abnormal nail-biting stock trading days and some traders employ questionable practices.  In particular one practice called layering is a technique that involves issuing and then cancelling orders that the traders  never intended to execute.  Pension funds and ordinary investors have argued that such practice makes trading by longer term investors more difficult and has raised questions of fairness by many.

The great fear among regulators – now taking greater notice – of these high-frequency traers and their practices is:

Perhaps regulators’ biggest worry is over the unknown dynamics of the computerized stock market world that the firms are part of – and the risk that that at any moment it could spin out of control.  Some regulators fear that the sudden market dive on May 6, 2010, when prices dropped by 700 points in minutes recovered just as abruptly, was a warning of the potential problems to come.  Just last week, the briader market fell throughout Tuesday’s session before shooting up 4 percent in the last hour, raising questions on what was really behind it.

Regulators are now on it thinking about international regulation.  And in fact the International Organization of Securities Commission (IOSC) is preparing a report for G20 Finance Ministers on possible market abuse from technological development.  Another stroke for global financial regulation.



Distratction or Priority

I took some real ‘heat’ last week at the Shanghai Conference on Asian and Pacific G20 Leadership when I suggested that Eurozone sovereign debt crisis was a distraction for the G20.

More recently one of my ‘policy buddies’, Thomas Wright, recently of the Chicago Council on Global Affairs, took me to task as well  Here is part of what he said in an e-mail:

The EU will not (and probably cannot) solve this crisis. What would work (transfer union) is not politically viable and what is politically viable (muddling through) will not work. This is not going to change. If anything it will get worse. Either the world acts in a massive and coordinated way to engineer a bailout or the crisis probably brings everyone down with it, including the US economy. More and more economists (incl Eichengreen, Rajan) have been making this point recently and calling for IMF/ G20 intervention.

Well I’m not yet prepared to cede ground on this.  First, what is the problem.  At its simplest Graham Bowley and Liz Alderman of the FT put it succinctly : “The problem – too much debt and not enough growth to ease the burden – could take years to resolve.”  The worst consequences that might arise from failure according to the two are not pretty:

If governments can’t agree on how to rescue Greece from its debilitating government debt, some fear the worst could happen – a collapse of the financial system akin to 2008 that would ricochet around the world, dooming Europe but also the United States and emerging countries to a prolonged downturn, or worse.

The major thrust of those encouraging G20 intervention and involvement in the sovereign debt crisis in the EU is the threat of contagion in terms described above.  And there is no question that the G20 countries including especially the United States should at least continue to press the leading powers in Europe – read this as Germany and France – to ‘suck it up’ and do the right thing.  These and other EU governments need to backstop both the European Central Bank to add the necessary reserves and to recapitalize German and French banks and they probably need to do this as well – establish an orderly default process for Greece.

Now why do I identify this major economic crisis as a distraction for the G20.  In part I argue this because there are growing signs  that the current host of the G20, France, and its President is in fact distracted in a major league way.  There is growing concern that the French are dropping the ball on agenda setting for the G20.  There are worries that the possible G20 deliverables are being delayed for the Mexican Leaders Summit in June 2012.  This raises doubts, especially among the global media, that the G20 is performing at all up to the steering committee function that observers keep looking for in the G20 Leaders Summit.  As Dan Drezner suggested in a blog post from the Shanghai Conference: “One of the takeaways from my conversations so far in Shanghai has been a sense of disappointment about what the next G-20 summit in Cannes will accomplish.”

As evidenced by this sovereign debt crisis, the G20 Leaders Summit is suspended between crisis and permanent steering committee.  And while this is unfortunate and untimely clearly the G20 is presented with a crisis and at the same time the G20 is struggling to make progress on the Strong Sustainable and  Balanced Growth Framework – which is a medium term policy issue.  The G20 cannot focus laser-like on medium term policy tasks – in the face of the turbulence and volatility of the global economy.  Nor can it be said that the leadership has rushed to resolve the sovereign debt problem.

Now this takes me back to the crisis and why this is a distraction rather than a priority for the G20.  Yes, President Sarkozy and his people are off trying to ‘plug holes in the dyke’ in the Eurozone.  But it is more than that.  And Tom Wright put his finger on it – the Europeans are unable to solve this crisis because what is needed is politically unpalatable to Germans, French and Finns.  But surely that failure doesn’t lead to the G20 to step in.  The G20 can’t pull Europe’s ‘bacon out of the fire’.

The G20 has much to recommend itself as a coordinating body for global governance.  But it is not to step in for Europe’s feeble institutions and growing popular unhappiness in the more efficient and productive parts of the EU for the crisis at the periphery.  The G20 needs to continue to cajole the Europeans to tackle the problem and the leadership needs to turn back to critical economic reform problems that appear to be going unaddressed.