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The Myth of Chinese Efficiency

Posted by Ram Kumar Shrestha on October 3, 2012


image: Pedestrians stand before heavy traffic at an intersection in Beijing. The US embassy which has its own pollution measuring system, and which rates anything over 150 as unhealthy, was showing an index of 403, or 'hazardous' on this particular day.

ED JONES / AFP / GETTY IMAGES
Pedestrians stand before heavy traffic at an intersection in Beijing. The US embassy which has its own pollution measuring system, and which rates anything over 150 as unhealthy, was showing an index of 403, or ‘hazardous’ on this particular day.

Many people in the U.S. and Europe believe China is a model of modern transport and political effectiveness. They should try to live here.

On the road to Beijing’s international airport the other day, I noticed dark clouds moving in on the horizon. My stress level immediately spiked. Flight delays have become almost the norm here in Beijing, even on the brightest of days; a little rain would certainly spell trouble. As the drops began to splat on the windshield, I had dispiriting visions of getting stuck in Beijing and missing my connecting flight in Hong Kong — and my next deadline for TIME with it. My fears were confirmed when I arrived at the gate, where the departure time came and went. Though the sun had peeked through the clouds, the damage had already been done.

Of course, the trials of air travel are not unique to China. Just ask anyone brave enough to depart from a major American airport these days. But no one would ever call the U.S. airport system a model of efficiency. For some reason, though, lots of people think China is.

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One of the most persistent – and persistently bewildering – conversations I’m forced to endure with international businessmen (and especially Americans) is about their view on the marvels of Chinese efficiency. They paint China as a wonderland of quick transport, quick decision making, and quick-witted government officials. If only the U.S. operated like China, the argument goes, all of America’s problems could get solved.

My response to this is: Live here for a while. I can imagine pampered visitors thinking China is something it is not. If you fly into the nifty airports in Beijing or Shanghai, get whisked by a waiting driver to your snazzy hotel, have a few meetings, and then get escorted out again, China might appear to be a sparkling vision of modernity. But spend any time here, or try to really do anything, and the notion that China is an efficient place is rudely exposed as a myth.

The trouble with transport is the least of the problems. As I noted in a recent TIME magazine story, businessmen operating in China complain about the time-consuming and excessive bureaucratic hurdles they face – endless waiting for necessary permits and licenses, confusing and opaque regulation, and constantly shifting customs procedures. Even small companies have to designate staffers to do nothing but handle relations with the government. Many foreign businessmen, furthermore, think the bureaucrats are becoming more intrusive – in other words, less efficient. This is a function of China’s heralded “state capitalism,” in which the government still wields tremendous control over what happens in the economy and what private companies can and cannot do.

My own experiences with civil servants have only confirmed to me how inefficient the government is. Earlier this year, I had to move the visa that allows me to reside in China from an old to a new passport. This should have been a simple clerical procedure, since the visa was still valid for nearly a year. But instead, it ate up two full days of my time, running between offices to get necessary documents and simply figuring out what was required. The officials we spoke with disagreed on what forms and documents I needed. One contended (incorrectly, as it turned out) that I didn’t have to switch the visa at all.

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Yet those who wax poetic about Chinese efficiency believe it runs deeper than such mundane matters – to the supposed virtues of the political system itself. While Washington is gridlocked by partisan politics, China’s government, they contend, makes and implements decisions with clinical effectiveness. China’s government operates like a big company, the thinking goes, with a “CEO” at the top able to see the greater needs of the nation and act to meet them.

There is an element of truth here. While the U.S. can’t figure out how to refurbish its sagging infrastructure, China is able to construct new airports, bridges and roads at will. That’s what happens when you remove the vast majority of your population from the political process, and routinely beat up those who disagree with state policy. But even in this regard, China is not nearly as efficient at it appears. Sure, the government can dig up a bunch of farms and lay down a road whenever it wants. That’s because the idea that the government should spend lots of money on infrastructure is not a controversial one in China, as it is in the U.S. It’s the same with state industrial policy. While the case of government support for Solyndra in the U.S. has stirred vociferous debate about the state’s role in the economy, in China, on the other hand, Beijing is free to offer subsidies and protection for targeted industries because there is no ideological opposition to doing so. In other words, the Chinese government can act quickly when there is no disagreement.

In that way, the U.S. is much the same. America can spring to action with blazing speed when there is general acceptance of a certain policy. After 9/11, Washington was able to mobilize the resources and will to conduct a major military operation halfway around the world in Afghanistan in a matter of weeks. There was no significant opposition to going to war. Or look at how efficiently the U.S. stepped in during the depth of the last financial crisis to rescue the banking sector.

But Chinese policymaking is not nearly as smooth when there is no consensus on the direction of policy. Chinese officials know full well what the government needs to do to ensure that the country’s growth is more sustainable: Increase the role of consumer spending, strengthen its financial sector, and rein in state-owned enterprises. But the reforms that would achieve these outcomes are coming extremely slowly, if at all. There is no agreement among the senior leadership on these sensitive issues, and thus there is limited action. Factions within the government advocate different methods of dealing with China’s economic weaknesses. Some favor faster market liberalization; others want the government to keep a tighter grip on the economy. China has gridlock of its own. We just don’t see it, since the wrestling matches happen behind closed doors instead of on CNN.

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Nor is the entire political process in China any more efficient. We have been expecting a once-in-a-decade change of political leadership in China to take place late this year for quite some time, and we’ve known for a while who the top guy is going to be (Xi Jinping). But we only found out exactly when this change will take place (in November) last week. Nor are we well-versed in Xi Jinping’s views on the major issues facing China’s future – economic reform, relations with the U.S., civil liberties, the income gap, and so on. Xi doesn’t feel the need to share them. The electoral process in the U.S. might create uncertainty, but at least we know who’s running for office and what they might do if they win. In China, it’s a guessing game.

China will certainly become more efficient over time. We tend to forget that China is still very much a developing country and many of its problems — inadequate infrastructure, poor regulatory enforcement — are common in any emerging market. But before China becomes the paradise many in the U.S. think it is, the country will have to learn a bit from America. Without greater transparency and rule of law, China will never become truly efficient. Keep that in mind next time you’re flying to Beijing.

MORE: China’s Economic Slowdown: Why Stimulus Is a Bad Idea

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