Is your perception of Asia a cuisine, a political culture, an aesthetic style, an economy?

“Asia” is actually a Western concept, and people who live in “Asia” don’t readily identify themselves as such, except over and against folk from other parts of the world. They view themselves as Japanese, as Thai, as Mongolian, as Vietnamese. And of course, Asia is far more diverse culturally, religiously, politically, socially than any other region in the world.

In Britain, they understand Asians principally to mean people from Pakistan and India. Probably here, it might be recognised most commonly as referring to people from south east and east Asia.

Life isn’t – and conferences like this aren’t – meant to be simple.

But there is value in using such shorthand, in order to help us, Australians, measure our relationship with our neighbours. And what is Asialink linking with except of course… Asia.

20 years ago, a lively debate emerged in Australia about whether we were an “Asian” country or not. On the whole, conservatives followed the lead of John Howard in arguing that we shouldn’t have to choose between our history and our geography, that we both were and weren’t. While those more on the left tended to stress Australia’s “Asian-ness.”

Much of the edginess of the debate hung up on the concept of “Asian values” and an “Asian way” – as pre-emptively defined for the rest of the region by Lee Kuan Yew and his eager ethical acolyte and regional political adversary Mohammad Mahathir. They claimed that this Asian way comprised a version of authoritarian capitalism infused with a very partial version of Confucianism. Fortunately this project has since slowly collapsed like an air cushion with the stopper out, although a few latter day advocates like Singaporean Kishore Mahbubani still flail around with it.

Within Australia, the brief Pauline Hanson phenomenon followed, but then she sank first into failure even as a celebrity dancer, and now worse, she’s a migrant to Britain. The Asianists effectively won, and we can almost say, “we’re all Asians now.” No one seems to cavil when I write about the Asia-Pacific as “our” region (and please forgive me; I do like to bring the Pacific in to this equation). When Australia’s soccer team shifted in to the Asian league, I can’t recall anyone saying “but we’re not Asian.”

Eighteen months ago, I travelled to New Delhi for a dialogue between Indian thinktanks and Asialink based at Melbourne Uni. Our “team” included an Australian then living in Beijing – myself – and several people from south-east Asia with strong Australian connections. This surprised and pleased our Indian hosts, who had not yet themselves developed as strong “Asian” networks.

So what has this process involved, this steady defusion of the concept of “Asia” as a challenge, and a characteristically unsystematic Aussie embrace of it as a term that now includes us? At the same time, we don’t yet tend to view ourselves as “AsiaN.” But that is starting to matter less and less, as we rapidly become a more ethnically diverse nation anyway, and one which is being accepted into the important regional groupings. We have a 13 year old son who was born a Hong Kong Chinese; he identifies more strongly as an Aussie than does our older blonde daughter who speaks reasonably good Chinese and loved our stay in Beijing. Which of them is more “Asian”?

The perceptions that shaped our country a century ago at its birth, were caught up in the widespread racial anxiety in Western nations about the spilling over of a collapsing China. Right through to the downfall of the Soviet Union, we were subject to a residual security-driven fear of an Asian form of communism thrusting south. Our most recent Defence White Paper obliquely expressed concern about the rapidity and opacity of China’s military modernisation.

Such strategic issues continue to shape some perceptions. But if you’re a security analayst or a defence expert, your career depends on identifying threats.

Travel also shapes perceptions – though mostly in the opposite, positive way. Australians have always been indefatigable travellers, and they tend to find things to like about places they visit. Thus the love of Bali, and the refusal to blame Indonesia for the terrorist bombings there; thus Fiji in the top few places in Lowy Institute polls, despite the military coup of 2006.

I fear that our educational institutions are failing to keep up. Our schools include little about Asia in their curricula. Universities’ expertise on Asia has been shrinking. And most critically, Asian language skills are rapidly declining. In 2008, just 240 students from a non Chinese background studied Chinese in year 12, in the whole country.

Despite the healthy figures in our trade with Asia, our business connections remain aloof. Apart from Mike Smith at ANZ – whose company has by no coincidence one of the few cohesive strategies for Asian engagement – we have almost zero chief executives or managing directors of our top 100 companies, or even board members, who have lived and worked in Asia. They employ Asia managers, but they give briefings and then are almost invariably out of the room when key decisions, say about investment, are made. Business may like the idea of Asia, but in my view largely doesn’t really get it. Nevertheless, in recent years our business media have learned reasonably quickly about how Asia – meaning chiefly China – works. Thus it was impressive to see how quickly iron ore billionaire Clive Palmer got done over a few weeks back, when he set up a very spurious claim about a deal with a Chinese partner.

Compared with many countries, and because we are comparatively so small and economically open, yet have such massive savings, we have become reasonably financially literate. This has provided a crucial element in our increasingly positive perception of our neighbourhood. Many realise that China and Japan alternate as the number one buyer of Australian goods, with South Korea number three. This is reinforced by the number of Australians – especially young Australians – who are accelerating their experience (and their earnings) by working as accountants in Kuala Lumpur, say, or as lawyers in Shanghai. They are learning the best way, by living there, about Asia. And large numbers of Australians gain from the ripple effects, by visiting them, or even by being related to them.

Our elite arts are increasingly strongly enmeshed with Asia. Through the patronage of organisations like Asialink, and through personal networks and experience, and indeed aesthetic taste, our fine artists have – led by the wonderful example of Ian Fairweather – provided us with cross-cultural experiences often more successful than fusion cuisine has been. A friend of mine, the Sydney based artist Tony Twigg, one of Ray Hughes’ stable, spends half of every year living and working in the Philippines and Malaysia. Peter Sculthorpe and Anne Boyd are among those composers who have consistently introduced Asian themes into their music. Christopher Koch and Nicholas Jose are the most important of the Australian writers whose work is focused on Asia. Some wonderful films made by Australians have been set in Asia – for example Phillip Noyce’s The Quiet American, shot of course in Vietnam. And Bruce Beresford’s bio-pic about Australia’s highest paid inspirational speaker, the former dancer and stockbroker Li Cunxin, “Mao’s Last Dancer,” has become one of the highest earning Australian films. All of the above cumulatively play a role in shaping our perceptions, naturally.

Our film distributors believe, however, that moviegoers don’t like or maybe can’t read subtitles. So short of excruciating dubbing, we don’t hear – or thus see – many Asian people on our movie screens. The most brilliant film made so far by the Taiwanese master director Ang Lee – Lust Caution, set in Hong Kong and Shanghai in the 1930s – failed to get a general release here despite the Western accolades and the Oscars won for much inferior works like Brokeback Mountain.

And what of the media? The input of the “new media,” chiefly the internet, is modest at best. Because the English language content of this media tends to be dominated from North America and Europe. Their reference points are chiefly domestic. And as this medium settles down, it is also becoming clear that much of the blogging, and the responses to blogs, is coming from older, more conservative sections of the community whose experience of and interest in the neighbourhood is modest, and most prone to be critical. The responses on our own newspaper’s web site to stories I’ve written, by people who read them online, are routinely, depressingly xenophobe.

Our Australian mass media diverge greatly in the extent to which they influence a perception of Asia. The commercial TV and radio stations that most Australians watch and listen to, do so, chiefly to the extent that they tend to ignore the region except during disasters. They do not employ journalists to cover Asia, and action footage is often difficult to obtain. The English language shows that they buy in, come from the US or Britain; their reference points mostly ignore Asia altogether. The people, events and places that preoccupy comedians or actors or singers or other so-called “celebrities” in our mass media, are also in the US and Britain. So in a way, the world we view through these popular media tends to be stuck in a time warp; it’s as if the US and Britain are still the dominant economic and cultural forces in the universe, which of course they no longer are.

The picture is different when it comes to some of our more serious newspapers and public radio and TV. The ABC has quite a network of excellent reporters around Asia, in addition to the good work being done for a different audience by Bruce Dover’s Australian Network. Naturally – it is part of its mission – SBS gives a strong priority to news from and about the region. The Fairfax newspapers have correspondents in Beijing, Jakarta and New Delhi, though sadly our chief competitor, the AFR, which once had nine foreign correspondents, now has just two, Washington and China – oddly, in Shanghai. My paper, the Australian, has full time staff journalists in Beijing, Jakarta, New Delhi and Tokyo – as well as employing me to write from the home base about regional issues and stories. When I was China correspondent – until the start of this year – my friends from media in Europe or North America were envious about the space and the prominence we gave and still give to China stories, not just in the world and business sections but in all parts of the paper. Most of those other Western media are actually winding back their Asian coverage for cost reasons, even as Asia is taking centre stage economically and in time I suspect politically too.

One answer to the cost question, is to dispel with correspondents sent from the home base and to use copy from locally hired freelances – say, a student who goes to Beijing to teach English as a foreign language, then wants to hang around and looks for journalistic work. One inevitable result of this trend is that, while such people may have reasonable insights into local culture, they have mostly not had any journalistic training or experience, and more importantly, have as their top priority being able to stay just where they are. This means, in the case of China, for instance, writing positively as a “friend” of Chjina.

We have accumulated, through our deployment of journalists in Asia, an amount of expertise. But most of that vanishes swiftly on return. Writing on international affairs is not, in general terms, a recipe for success, or even for employment, in Australian media. As in business more broadly, few journalists with Asian experience achieve the top jobs. My friend Mark Baker has come near as damnit at The Age, our own Nick Cater is editor of the Weekend Australian, in an earlier era Jeff Penberthy, Frank Devine and Max Suich, all Japan hands, reached the top. But the flow is diminishing. And as in business, the record of Australians is better within Asia itself, with Barry Wain having edited the Asian Wall Street journal, and my mate David Lague now running the South China Morning Post. And Robert Thomson, a China hand formerly of The Age and the FT, is now Rupert’s editorial right hand, editor of the Journal. My experience of Asia-knowledge in Australian media includes… when in PNG, cover earthquake in Irian Jaya. And the murder of the mother of the Chinese giel names as Pumpkin, grandparents live in Hubei, named Liu.

Our mass media still rely, for sound reasons, on their concepts of the angle and of the story to attract audiences. This naturally makes it hard to convey the essence of what is happening in a society, a community, in Asia – which often takes place through a drawn-out process rather than through a dramatic incident. It can also be a challenge, to convince editorial decision maker that our audiences might be interested in Asia for its own sake, without requiring an Australian angle. I was relieved when covering the awful Sichuan earthquake of two years ago, never to have been asked even to investigate as to whether there were any Australian victim. 80,000 Chinese victims was deemed sufficient. It was great, generally, being in China at a time – which persists – when anything Chinese aroused intrigue. It is instead frustrating to arouse interest in stories equally important in Indonesia say or Korea.

Our own Asian communities are naturally being influenced by media from home, and by media in Asian languages available here. This was especially palpable in building the hostile response within the Chinese community to the visit of Uighur leader Rebiya Kadeer last August, and in 2008 to the demonstrations surrounding the Olympic torch relay. This has also played a role in the Indian students’ campaign over crime in Melbourne and Sydney. Thus they have an impact, but this is not yet capable of flowing into the broader mainstream Australian community – although this is the strong aim of the propaganda department of the Chinese communist party, which is channelling billions of dollars into CCTV, Xinhua and other vehicles in an attempt to establish media with a global influence.

But the Asian media outside China, Japan and India employ very few journalists overseas. The Asian take on the rest of the world, including Australia, thus depends heavily on travel and on TV and movie shows made there.

People’s perceptions of Australia thus range hugely of course. In China, the initial response is often “ah, dai shu” – pocket mouse – meaning kangaroo. Our fauna, featured on countless wildlife TV programmes, are our best known feature by miles.

Growing numbers have been tourists here, or have studied or know students here. So there are first hand impressions, which can be quite quirky. Many Chinese students, for instance, live effectively in ghetto worlds while here and have only tangential contact with Australians.

The media accounts of Australia that get a run in Asia are, like those run in Western countries, often about weird and whacky events, about Alice Springs’ Henley-on-Todd Regatta in a dry river bed, or about tourists consumed by crocs. And they are usually derived from wire stories, which are themselves often written by journalists in Sydney who have followed up yarns in Australian domestic media.

Often, when Australians use the English language media in Asia as a proxy for what Asians really think of us, what we are really seeing and hearing is material created by expatriates – perhaps Australians – for those English speaking audiences in Asia.

There are only a handful of Asian foreign correspondents in Australia (or anywhere else in the world, including within the rest of Asia, for that matter). There are local freelances, but that’s a different matter. This reinforces the importance of Australia’s own media building an audience in Asia. That’s not easy; we don’t have the size of diaspora of the Indians or Chinese who can build on them as a core market, or the natural curiosity about Australia that exists in Asia about America, say. It has been a bold and welcome stroke, then, for the federal government to have invested in a decent Asia-focused TV service, Australia Network, relayed through the region. TV as a medium retains great influence and prestige in Asia. It’s important that it remains focused on the region, though; a global Australian service would fragment it and see it lose the focus and the relevance that makes it stand out today; it would become a pale shadow of a service like insipid and flavourless CNN or BBC World.

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It is now 50 years since a 31 year old Australian Anglican missionary in Papua New Guinea, William Gill, and 37 parishioners and staff made the best attested and least explained sighting of unidentified flying objects in the long, otherwise cooky history of the genre.

The day before the celebrated encounter of a mystifying kind, Gill had written a letter to the Rev David Durie, the acting principal of St Aidan’s College that trained teacher-evangelists at Dogura, the then headquarters of the church in PNG.

Gill – who was priest in charge at Boianai, a large village on the mountainous north coast of Milne Bay province, about 25 km west of Dogura – told Durie of a UFO sighting by Stephen Moi, then an assistant teacher.

He wrote: “There have been quite a number of reports over the months, from reliable witnesses. The peculiar thing about these most recent reports, is that the UFOs seem to be stationary at Boanai or to travel from Boianai” – a beautiful location brilliantly captured by pioneer Australian photographer Frank Hurley in 1921.

“I myself saw a stationary white light twice on the same night on April 9… The assistant district officer, Bob Smith, and Mr Glover have seen it. I do not doubt the existence of these ‘things’, but my simple mind still requires scientific evidence before I can accept the from-outer-space theory. I am inclined to believe that probably many UFOs are more likely some form of electric phenomena – or perhaps something brought about by the atom bomb explosions etc.

“That Stephen should actually make out a saucer could be the work of the unconscious mind, as it is very likely that at some time he has seen illustrations of some kind in a magazine. It is all too difficult to understand for me; I refer to wait for some bright boy to catch one to be exhibited in Martin Place.

“Yours,

Doubting William.”

The following day, he wrote again:

“Dear David,

Life is strange, isn’t it? Yesterday I wrote you a letter, expressing opinions re the UFOs. Now, less than 24 hours later I have changed my views somewhat.

“Last night we at Boianai experienced about 4 hours of UFO activity, and there is no doubt whatsoever that they are handled by beings of some kind. At times it was absolutely breathtaking. Here is the report.

“Cheers,

Convinced Bill
P.S. Do you think P. Moresby should know about this? If people think it worthwhile, I will stand the cost of a radio conversation if you care to make out a comprehensive report from the material on my behalf!!”

What had Gill and his parishioners seen?

The notes he made following his encounter, describe a bright white light appearing in the north western sky, approaching the mission station, and then hovering about 100 metres in the air.

Gill, Moi, another teacher, Ananias Rarata, and 35 other people who all later signed a confirming document, together watched what they described as a large, disc shaped, solidly constructed object, with a wide base tapering up to a higher deck, and with what appeared to be four legs beneath, and four brightly lit panels in the side. It occasionally emitted a shaft of blue light at a 45 degree angle.

Then what they described as “men” emerged onto a deck on the top – four at most, but in various configurations. Clouds, which were at about 600 metres, then eventually obscured the vessel as it drifted higher. It had been stationary through most of the 25 minutes of this encounter.

Gill then wrote his letter to Durie. That evening, the visitation returned in an extraordinary manner. He first saw it at 6.02pm, as the sun was setting.

Gill’s account states: “We watched figures appear on top – four of them – no doubt that they are human. Two smaller UFOs were seen at the same time, stationary. One above the hills west, another overhead.

“On the large one, two of the figures seemed to be doing something near the centre of the deck – were occasionally bending over and raising their arms as though adjusting or ‘setting up’ something (not visible).

“One figure seemed to be standing looking down at us (a group of about a dozen). I stretched my arm above my head and waved. To our surprise the figure did the same. Ananias waved both arms over his head then the two outside figures did the same.

“Ananias and self began waving our arms and all four now seemed to wave back. There seemed to be no doubt that our movements were answered. All mission boys made audible gasps (of either joy or surprise, perhaps both).

“As dark was beginning to close in, I sent Eric Kodawara for a torch and directed a series of long dashes towards the UFO. After a minute or two of this, the UFO apparently acknowledged by making several wavering motions back and forth.

“Waving by us was repeated and this followed by more flashes of torch, then the UFO began slowly to become bigger, apparently coming in our direction. It ceased after perhaps half a minute and came no further.

“After a further two or three minutes the figures apparently lost interest in us for they disappeared ‘below deck.’ At 6.25 pm two figures re-appeared to carry on with whatever they were doing before the interruption. The blue spotlight came on for a few seconds twice in succession.”

The situation remained unchanged, and so Gill returned to his regular routine and went to have his dinner at 6.30. By 7pm, the main object had moved slightly away, and the observers went into the village church for evensong, as usual.

By the time they emerged, at 7.45pm, visibility had become very limited with the sky covered in cloud. At 10.40 pm, Gill wrote, an “earsplitting” explosion woke up the mission station inhabitants. Gill said it did not feel like a thunderclap.

Later, Gill said, he was always asked why he had reverted to his usual routine when there was a flying saucer apparently hovering overhead. This was partly because, he said, “there was nothing eerie or other-worldly about any of this. It was all so ordinary, as ordinary as a Ford car.

“It looked a perfectly normal sort of object, an earth-made object. I realised, of course, that some people might think of this as a flying saucer, but I took it to be some kind of hovercraft the Americans or even the Australians had built. The figures inside looked perfectly human.”

Gill’s report caused quite a sensation at the time, when PNG was an Australian colony. A Liberal federal MP from Western Australia, E D Cash, asked the then Air Minister questions in parliament, without receiving a substantive answer.

The Defence Ministry deployed two RAAF officers to investigate. Although they found Gill “a reliable observer,” they attributed the sightings to “natural phenomena,” the result of cloudy, thunder-prone weather and light refraction from Jupiter, Saturn and Mars.

Gill was educated at Trinity Grammar School in Melbourne, and then studied theology at St Francis College, Brisbane, and education at Queensland University. He was ordained priest in 1950, and then worked in PNG in parish work and as a teacher and education administrator. In Port Moresby, he also did some radio broadcasting.

After returning from PNG, he taught at Essendon Grammar, Camberwell Grammar and St Michael’s Grammar, all in Melbourne, and undertook sociological research at La Trobe University. He died aged 79 in 2007.

Gill appears an exceptionally unlikely figure to have been readily caught up in the flying saucer craze, at its most intense in the 1950s. Few phenomena would have appeared more remote to high-church Anglican missionaries in PNG, many with considerable educational attainments.

Among those most intensely interested in the sightings, was Englishman Norman Cruttwell, an outstanding exemplar of the long tradition of priest-botanists, who discovered and named – after his mother Christian – a rhododendron in PNG, and had an orchid named after him in tribute.

Gill wrote to Cruttwell, who was also running a parish in northern Milne Bay: “Here is a lot of material – the kind you have been waiting for, no doubt; but I am in some ways sorry that it has to be me who supplies it. Attitudes at Dogura in respect of my sanity vary greatly, and like all mad men, I myself think my grey cells are O.K…”

Among the hypotheses later considered to explain Gill’s sightings, was that he was pulling Cruttwell’s leg. But if so, when Cruttwell became excited, and helped inform the world about the events, Gill might then have been expected to stay quiet and wait for the embarrassment to pass.

Instead, Gill accepted invitations to speak widely about what he had seen, with no apparent reluctance.

Australian author Randolph Stow, who worked at an Anglican mission station for Aborigines in north-western Australia and then as assistant to the government anthropologist in PNG, where he was based in Milne Bay, framed an acclaimed novel in 1979, “Visitants,” around the Boianai sightings.

“Be not afeard,” Stow cites from Shakespeare’s the Tempest: “The isle is full of noises…”

*The writer knew both Norman Cruttwell and Stephen Moi – by then a priest – when he worked in PNG. Cruttwell famously missed out on a sighting of bright lights over his own mission station, because he was ensconced in the “smallhaus.” The following day, he had the roof replaced with a clear glass panel, just in case…

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In terrible economic times like these, governments, families, individuals, businesses, institutions like AusAID, naturally reconsider what they are doing, their aims, their principles, the way they behave.

That process is a plus. But most such introspection leads to a scaling down, to a narrowing of horizons, to safety first.

And when you’re dealing with other people’s money, that has been especially hard earned, that’s all the more understandable.

But Murray and Richard invited me to roam fairly widely, in playing my part in this process. Which I’ll do.

I’m going to talk generally about our region, our neighbourhood in the broadest sense, and then about a couple of more focused ideas about how we might engage our neighbours in a helpful way.

The downturn. This began of course in the United States, with its well-attested finance sector failures. They inevitably infected Europe, whose own institutions had heartily incorporated many of the same uber-complex, opaque financial instruments.

But why Asia? Just over a decade ago, Asia had suffered a shock of its own deriving from institutional financial failure. But it has since then largely cleaned up its balance sheets and its act generally, and banks in the region did not join the money-trail mysteries that started unraveling in the US 18 months ago.

The region has suffered a failure, however. It sustained its excellent world-beating export manufacturing industry, which developed into a happy enough regional family, with parts, often complex, high-skill parts, being most often made in the neighbourhood – especially in Japan, Korea, Taiwan, Singapore, Malaysia – and then shipped to China for assembly and final export to North America, Europe and the rest of the world.

But the region failed to broaden its economy at the same time, so that its domestic consumption and its services sector could begin to play as prominent a part as they do in countries like Australia, where services account for about 68 per cent of the total economy. An important element of this, has been the failure to invest in developing adequate health, education and welfare systems accessible to all. No one wants to spend money that they may desperately need to pay for hospital treatment after a road accident, or for their children’s university education, or for their daily bread if they lose their job. And where the environment is routinely trashed and health and safety are mere abstract nouns. It was announced yesterday that deaths in China’s coal mines fell in 2008 to their lowest level since 1995 – chiefly because of the economic slowdown. Just 91,172 people died, compared with more than 100,000 in every other year since then. Any family with members involved in coal mining, as a result, is going to keep much of its income in the bank or under the mattress.

Thus Asia, despite the size and the flexibility and the optimism of its population, largely didn’t have a plan B to fall back on. Chinese manufacturers, for instance, can’t just conjure up new local markets for the products they sell overseas. Instead, they sent millions of their workers home early for the big annual spring festival that began on Monday. In many cases, they won’t bring them back. They’re stranded in villages that can no longer provide them with a living. China’s leaders have essentially failed to move beyond the rhetoric about shifting from the pace of growth to the quality of growth – in part because the system has failed them. Strange but true. A one-party authoritarian state has less control over its officials than Lu Kewen, Kevin Rudd, has over most of the people in this room. Because it lacks true legitimacy, and is constantly anxious for this reason, it is hard to implement change in China – especially involving the tougher reforms now overdue – without first garnering an unlikely consensus of the key players.

Nevertheless, China has over the last 30 years grappled with its challenges, it has changed, and it has begun to win, inch by inch, the war against poverty. It has become the centre of gravity of the great enmeshed Asian economy. And it has done so while maintaining its imperial structure of governance, a structure its leadership has little intention of changing this century. The soft power – a phrase coined by Joseph Nye, whom Obama is said to be planning to appoint as ambassador to Japan – projected by China naturally has immense appeal for elites in Asia and beyond: get rich without giving up control. Like us.

We are likely, as the dust settles from the current economic downturn, to see Asia emerge comparatively stronger, Europe comparatively weaker, and the US perhaps in a similar position – in part because of its own soft cultural power, in part because its demography is more youthful than that of China or Japan, and, in part because of its resilient economic culture and its high creativity.

Unusually, we are seeing three centres of considerable power at the same time in Asia – Tokyo and New Delhi as well as Beijing. This is a positive aspect of Asia’s rise. They will continue to work to a degree as rivals, but also complement each other. It has been one of George Bush’s rare successes, to have helped foster the growing confidence of all three on the world stage.

For all the present problems, and despite the limits on liberal democracy in much of the region, Asia’s steady surge out of poverty remains one of the great global stories of the last few decades. This process has helped resolve some key conundrums of development. It’s mostly about stability, growth, jobs, and the government services that act as the lubricant helping the rest to happen.

The focus – or rather the rhetoric surrounding Australia’s aid effort – has inevitably swung with the development fashions. I worked for 11 years in PNG, with a locally owned media organisation, and we depended in the early days substantially on donors – largely from Europe. Luckily we had good friends in the key organisations, who would tip us off: the focus this year is shifting from the environment to women, can you redraft your funding proposal accordingly? No worries. A lot of time and effort went in to presenting and re-presenting what we were doing, to suit the needs of Western aid bureaucracies’ for ever changing templates. We lacked access to the credit we needed locally, and had little choice.

Naturally, AusAID has itself tended to reflect those shifting focuses too. When Gordon Bilney was in charge, governance was crucial. And he was right. The Pacific and Indonesia, at centre stage, were grossly corrupt – and that appeared to be the main obstacle to their development. Later, Alexander Downer, especially after 9/11 and the Bali bombing, focused on security, and the need to prevent the “arc of instability” – remember that phrase? – from undermining its own economies and infecting us too.

I’m not sure what’s next. The environment’s in there, of course. Gender fairness too. So many worthy goals, but sometimes it must seem like overload even to the deliverers.

I’d like to suggest two ways in which we might do things differently.

First: in the case of the Pacific and of still developing areas of Asia including many parts of Indonesia, we need to encourage their integration within the region’s networks of success.

For far too long, the Pacific has been isolated by its failure to understand its Asian neighbours, and thus its failure to relate to them and to gain advantage from their success. Indonesia too has often isolated itself and looked west, if anything, rather than north.

We should encourage academic, media, cultural, and above all business connections between areas of successful development, with their liquidity and skills and management and appetite for investment, and those that remain isolated and bereft. Language skills are an important part of this process of course. Such links are less likely to happen if left only to the private sector, or to ngos. That’s why it should be considered as a legitimate goal for government aid.

It may indeed be, that the very concept of “development” as a paradigm, might have be wearing down. The word has come to be associated with often passive processes of receiving aid. Certainly in the way in which the media tend to recognize issues and report them, “development” is placed to the side, a bit like a minority sport, like say basketball, a subject of special interest. Development is a process, and processes are especially hard to capture meaningfully in the mass media.

In comparison, economic news, however, has become utterly mainstream. When I reported from Beijing on trade, investment or jobs in China, the stories might run at the front of the paper or certainly at the front of the Business section. Stories on aid projects would inevitably be much harder to place anywhere.

The other area I’d like to mention – besides focusing on jobs, and on making better connections within our region between struggling areas and people and companies that have been good at creating jobs – is the vitalo task best described as engagement – which requires a whole-of-government approach.

China is a classic case, maybe the classic case. It is clearly in our national interest to engage China through technical cooperation and exchange. The country hasn’t moved quickly enough, as I said earlier, on a new round of reforms. Parts of China, parts of Chinese society, are extraordinarily prosperous – other parts are astonishingly poor. As the new focal point, the model, for our whole region, it’s especially important that China is exposed to international experience. Australia has much to offer, including from our own reform process. We can help with pilot projects and reforms. Our economies are already linked closely by trade; we need to build on this to encourage a closer people to people link, of the sort that failed to grow out of our burgeoning trade with Japan four decades or so ago. China is looking to stimulate domestic consumption, to build a national safety net. We can help. We are indeed helping. If we do not continue to play a role, we will not retain our hard-earned seat at the table as the country’s structures and even ethos are discussed and agreed. The same also applies to our relationship with other countries in the region, including especially Indonesia.

This is not “aid work” as it used to be perceived. It is, rather, engagement – beyond what traditional diplomacy has done. It involves spending some money of course. It is essential for several of our key institutions to be involved together in this work. And AusAID is the institution that has the remit and appears to be assured of the resources to persist with such programs.

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China is changing. But it helps, it especially helps in China’s case, to get its story right. There are always different takes on history. If you read my review in last weekend’s Australian of the ground-breaking new book The Age of Openness, China Before Mao, you will have seen how China’s modern history has been written, by the victors of course as usual, from the templates in this case of revolution and of centralization. As the author Frank Dikotter says: “The era between empire and communism is routinely portrayed as a catastrophic interlude… (but) the extent and depth of engagement with the rest of the world was such that we can see closure under Mao instead as the exception.” Thankfully, the communist party has turned back to openness in order to secure its legitimacy through economic growth: the golden chopsticks instead of the old iron ricebowl of a job – of sorts – for life. That shift is inspiring big celebrations in Beijing this month. But they should be accompanied by a rueful and apologetic backward glance at what was lost when the civil war was won in 1949.

China suffered immensely from the three Maoist decades that followed. It remains far behind Japan, South Korea, Taiwan and Hong Kong in terms of living standards, ordinary freedoms, and the rule of law. But in respect of the former, in terms of living standards, its people have at last, in the last 30 years, started to catch up – and are indeed insisting that this continues.

The big question now, for the central committee of the party especially, is… what happens if that marathon race towards economic security slows to a walking pace, or even slews to a halt. What then is left of that legitimacy? The party has a natural aversion to such open questions, and is seeking to help cement its legitimacy through its grasp towards a harmonious society, and through a carefully constructed nationalism.

Here’s the history of the People’s Republic from the viewpoint of its rulers, in four short sentences:

1949: only socialism could save China. 1979 (following the cultural revolution): only capitalism could save China. 1989 (after the Soviet demise): only China could save socialism. 2009: only China could save capitalism.

This is a week in which China is looking back – to 30 years ago, when Deng Xiaoping launched the kai fang, the open door, era.

The opening meant some price signals, foreign investment that brought with it new technology and new management skills, and most importantly for its early success, liberating farmers from their enforced communes to return to family-focused plots. Not any meaningful political role for the masses. Power still comes from the top down, while revenues are expected to come from the bottom up. When I talked with a Chinese friend about how I had made contact with the taxation office and negotiated a monthly sum, he said I must be mad. No one he knows pays tax, he said – and anyway, it’s immoral; why give money to people when you have no say in how it’s spent?

China’s top leaders have been praised for the country’s modernization, and applauded for their apparent capacity to enforce change by diktat – with some foreign admirers forlornly wishing that democratic societies could be directed with such decisiveness.

But much of China’s rapid change can be attributed to the determination of its “masses” to carve out better lives for themselves and their children come what may, with the party’s legitimacy relying on its capacity to shift its tactics, even its values, in response to demands from below.

The Tiananmen demonstrations of 20 years ago served as a wake-up call to the party. While with one hand it cracked down on the demonstrators themselves, with the other it responded by ceding more space in the economic realm. Progress has happened as a result of individuals seeking, finding and exercising steadily more space in which to move – in which to start, develop and expand a business.

Government has enough on its plate to meet the growing demands on its services as China transforms itself into a modern, chiefly urban culture, without fighting a rearguard action for every inch of its economic turf. And as it has conceded space for people to build businesses, this has become perceived not so much as a favour, an act of generosity on the part of a usually omnivorous authority, but more as a right.

This is new ground in China, whose communist dynasty constitution guarantees many rights, but has circumscribed them with so many administrative regulations and caveats that – especially since China still lacks independent courts – they have become like gifts handed down from on high, readily withdrawn again. In contrast, the space – the de facto right – obtained by its constant personal exercise by many millions of people, is all but impossible to withdraw. This is now inching forward, from the right to own private property, to the right to start a small business, to the right to personal expression – though still not, in this case, to disseminate that personal view widely.

And now, it seems likely after 100,000 volunteers poured in to Sichuan after the quake, we shall see more space open up as an appropriated right, for private charity and volunteering. This period of two nationalisms – one angry and anti-foreign, one positive and empathetic – is forming the rising generation’s version of a Tiananmen Square experience.

The setting appears benign, from the party’s perspective; it was praised for its quake response. But even without expressing out loud any demands, the actions of the volunteers articulated them: “We no longer view the party and the People’s Liberation Army as sufficient proxies for us, we want to be actors too, in helping the afflicted.” So centimeter by centimeter, civic space is carved out, just as was space to do business. The question now, is when and how the party will find a way to regularize this inexorable trend.

Many observers are awed by the apparent pace of change in China. And for the laobaixing, the ordinary folk, life has perhaps never been better; but the same can be said for people around the world. Despite the physical modernization, the core institutions of state have changed little if at all in 60 years. Will China’s next chapter see such change? I wouldn’t bet on it. Just as I wouldn’t bet on Chinese failure or implosion; that has been a losing bet ever since the kai fang strategy began. Inertia is a more likely winner.

It was not a promising sign, that just about the only prominent figure who appeared to be missing from the rows of leaders at the Olympic opening ceremony was the premier who secured both the Games and China’s crucial accession to the World Trade Organisation – the single-minded Zhu Rongji. Such outspoken figures do not fit today’s template. Zhu grasped the nettle of state owned enterprise reform, as we have seen, laying off millions of workers in order to save the sector that is now helping power the whole economy, along with the mostly privately owned and foreign invested manufacturing sector, and is starting to provide the government with crucial revenues to help fund its overdue welfare provisions.

Since Deng Xiaoping went to Mao – or perhaps to somewhere else, maybe to Adam Smith or Lord John Maynard Keynes – the party leadership has evolved from a charismatic figure to a collegiate group in which no single person tends to dictate policy. It appears that all significant party factions are consulted until a consensus eventually emerges. A strong voice, in this scenario, can veto or delay reform for years. The upside, for the leadership, is the smoothest transition process in Chinese history. We can now know, for instance, that barring a shocking turn of events, Xi Jinping will take the top job from 2012 until 2022, during which Li Keqiang will be Premier.

The present Hu Jintao-Wen Jiabao team have slowed the appreciation of the yuan to protect exporters, pushed state funds into the ailing share markets and earlier this year addressed inflation through capping prices, including of energy. In political administration, it is also a case of one step forward, one step back. Following recent riots in Guizhou over the handling of a rape case, and following the revelations in Sichuan after the earthquake that thousands of children died needlessly in “tofu” buildings in their schools – firm outside but squidgy inside – the government issued an instruction that local officials must listen to people’s complaints, “upholding legal rights and promoting social harmony and stability” – while denying parents access to legal redress. The same is now applying to the families whose babies have died or become severely ill in the melamine milk scandal.

The party’s top priority to date has been its very control of every area of national life, which it uses not in lieu of legitimacy but as a source of it.

But this is not to deny the move at the same time to broaden the ruling ethos from Deng’s “to get rich is glorious” to Hu’s “harmonious society” echoes Confucian humanism and noblesse oblige. China, while in many regions remaining poor, is also facing the challenges that come from economic success, including terrible pollution, and epidemics of the diseases that accompany a changing lifestyle including heart disease and cancers.

These are tests that would challenge any ruler. And the party is well aware of the many precedents for those who have overseen a spurt in national development, to face then – when they expect only applause – especially grave challenges to their power. Suharto in Indonesia, the military presidents in South Korea, the Kuomintang in Taiwan, are among the examples.

Thus the purpose with which the party has moved, since 1989, to co-opt the intellectual and business elites, making full use of the immense resources now at its disposal – although the 20th anniversary next year of the Tiananmen massacre will provide a challenge for it to steer through.

The party is extending its influence in the private sector, with branches being widely established in corporations, and entrepreneurs becoming party members. If you are invited to a banquet by potential business partners in China, pay special attention to the person who claims to have misled his or her name card. They haven’t, of course; no one forgets name cards in Asia. They are almost certainly the party rep, the person whose view counts for most. But because they don’t have a corporate title, may be dangerously neglected.

When Jiang Zemin, Hu Jintao’s predecessor as general secretary, led the redrafting of the party’s constitution six years ago to permit capitalists to join, many Westerners interpreted this as a sign that businesspeople were eventually going to take over the party, as part of the apparently inexorable shift of a modernising China towards liberal democracy. But no. China is not taking steps towards becoming a liberal democracy that might be recognisable in the West. And the party’s opening up actually served a different goal entirely: bringing the business sector more palpably within the party’s influence, with business leaders and employees becoming absorbed within party structures. I recently visited the extraordinarily opulent, park-like headquarters in Shenzhen of Huawei, now one of the world’s top four telecommunication equipment designers and providers, with the likes of Ericsson, Cisco and Siemens. It was founded by a former People’s Liberation Army officer who still runs what is often held out as China’s model new private corporation. Its shareholding is a little mysterious, but generally 80 per cent is said to be held by employees. How is the board appointed, and to whom is it answerable? Employee shareholders play a role, I was told by a suave public affairs manager. But who has the final say? Well, the manager said, the board also of course answers to the party committee – whose very existence does not appear in any of the company’s glossy, multilingual brochures.

The party schools in every province and major city – in effect, administrative finishing schools – are sumptuously appointed. Upwardly mobile young corporate managers are strongly advised, for instance, to invite their former professors to give lectures to their state enterprise or private company colleagues, for which the corporations are expected to pay the professors handsomely. A Hong Kong politics professor friend told me that his colleagues in mainland China now complain they can’t find any spaces left on campus to park their cars. Young educated Chinese are increasingly seeking jobs not so much with multinational corporations as with government agencies, because while the pay remains poor, the other perks – including the access to assets – can be immensely rewarding.

These young people – quite well educated, sometimes overseas in Western countries, maybe from privileged, party-loyal families – form the core of the “new Nationalists” whom the world saw surge forward to demonstrate against Westerners’ own protests over China’s governance of Tibet during the international pre-Olympic Games torch relay. We are likely to see more of this in China’s next chapter.

Wang Xiaodong, an intense leader of the China Youth and Juvenile Research Centre affiliated with the Youth League – the core power base of Hu Jintao – has become a widely published cheer-leader for this new nationalism. The younger generation, he told me a few months ago, “has more contact with the West, they understand it better. They speak more fluent English. They know Westerners are not really angels, they realize that they are different from us not only in ideology but in national interests. The younger Chinese have learned a stronger sense of individual rights from Westerners.”

He said: “Some Westerners are saying that Chinese must make an effort to make themselves accepted by the West, That is an out-dated opinion. The West must learn how to make itself accepted by the Chinese.” The new generation, he says, rejects Mao Zedong’s socialism but embraces his nationalism, while also tentatively re-adopting some traditional Chinese values. China’s current leaders are essentially administrators, he says – but when today’s students succeed them, “China will globalize its national interests, and this will affect not just our close neighbours but the whole world. It must gain the capacity to protect those interests.”

Wang’s views may seem extreme, but they are sufficiently mainstream in China for him to be granted widespread access to the mass media, especially frequently in Global Times, a more popular and raucous offshoot of People’s Daily.

The awareness of China’s rulers of the awkwardness of the period they are now entering, also helps explain their strong focus on introducing a safety net, a welfare system that also provides the confidence to consume rather than to save every spare cent, and thus helps the economy too, to rebalance away from over-dependence on exports.

Progress is being made, but it’s slow – and local leaders throughout China feel under contradictory pressures: maintain rapid economic growth, keep attracting investors, but also cut pollution and invest in social infrastructure.

The big event of the past week has been the publication of the ’08 Charter, by at first 300 then a further 400 leading figures – former party figures, retired newspaper editors, academics, businesspeople, others calling themselves peasants and workers.

Liu Xiaobo, a 53 year old philosophy professor from Renmin Daxue, was seized at his home a week ago for his role in drafting the charter, and his wife still has no clue where he is. Others involved have been hauled in for questioning, and later released.

The party is very worried. It does not at all like the charter’s appeal for federalism, for the rule of law, for democracy. But it especially fears its clause on the one-party state: “Public institutions should be used for the public. Realize the nationalization of the armed forces. The military shall be loyal to the Constitution and to the country. The political party organizations in the armed forces should be withdrawn. All civil servants including the police shall remain politically neutral. Discrimination in employment of civil servants based on party preference should be eliminated.” No wonder this last week’s big crackdown.

The party is the great constant in the China story today. It has become the world’s most powerful institution, – yes even more so than the Vatican, or Collingwood football club. China’s leaders now emerge almost entirely from within the party’s regional command structures, not from central government agencies.

Looking over the next dzen years or so, what do I see? The party will remain in firm control without significantly devolving power; that the commanding heights of the economy will remain in state hands, although this no longer means the Marx definition, ownership of the means of production, but instead, ownership of the logistics of control in the broadest sense, from airlines to telecommunications to banks; that China will continue to champion globalisation, but will increasingly wish to dictate terms, as it and India are doing over Doha and over the successor to the Kyoto Treaty; that it will maintain close relations with the USA – of which it holds $US 600 billion Treasury bills –  while also emerging as the leading influence in the strengthening big power group within Asia, with an important meeting held last weekend with the leaders of Japan and South Korea; that China will become an ever more attractive model for developing country leaders, while its own international model will remain Singapore; that its economy will evolve up the value scale, reducing its resource intensity per GDP kuai, but gradually, and while the soft landing persists for the next three or four years before we get a real pick-up – the 4 trillion yuan stimulus package is about 75% comprised of rebadged items from the current five year plan that ends in December 2010, and much of the cash has to be found by regional governments, with 1.8 trillion to be spent on infrastructure and only 40 billion yuan on social services, whose total share of GDP (health, education, welfare) remains below 6% of GDP. In 1997 the government promised to spend 4% on education, it remains about 2.8%. The  demographic convulsion (a one-child policy following populate-or-perish) will boost educational skills while causing grave economic challenges, requiring higher productivity and greater returns on capital at home and abroad; and Confucius’ come-back, signalled by party slogans using phrases such as “harmonious society” and dramatised in the Olympic Games’ opening ceremony, will provide some moral and philosophical content lacking since Maoism, though not Mao, were discarded. In general, one can anticipate not just the survival but the reinforcement, of what American sinologist Andrew Nathan calls “resilient authoritarianism.”

But as a new generation of urban middle class emerges, it is inevitable that they will feel less grateful for their comparative material comfort, that they will start to take this for granted, and that their concerns will move on. The environment is already a core concern among young urban Chinese, and it is likely to prove difficult for the party to keep their interests corralled safely within the nationalist compound. Younger Chinese friends were largely disappointed with the opening ceremony of the Olympics, saying that it represented the way the party views China – or would like it to be viewed – with thousands of young soldiers beating drums in absolute precision, but that it failed to seize the opportunity of presenting the human face, what they see as the true face of China to the world – the unkempt, ironic, chaotic, human China that has been mostly confined over the last few decades – except after the Sichuan quake – to private spaces.

This controlled pattern of development in the People’s Republic fits more closely that of Germany, Japan and Russia during the late 19th century than that of Britain or the US, says David Goodman, now of Sydney University, one of Australia’s leading sinologists, who has edited a fascinating new back on China’s New Rich: “In those countries, the state played a central role in industrialization, as opposed to the laissez-faire capitalism of the earlier European experience based on the protection of the individual outside the state.”

These include establishing a sufficiently dependable and nationally portable health and welfare system that counters the old houkou structure of local registration whereby migrant workers have been ineligible for government services, freeing up the financial system to give people a broader range of savings opportunities, and giving small and medium businesses the chance to borrow from legal financial institutions. And underlying everything else, is the big question of whether the party is able and willing to embark on the course Deng himself contemplated – and which party chief Zhao Ziyang began to implement before his meeting with students in Tiananmen Square triggered his downfall and house arrest until he died 16 years later: the start of the separation of the party from its direct control and management of the institutions and processes of government, including the courts.

The countryside is another source of concern for Beijing. It was from there that the Chinese revolution came, not from the urban proletariat as in Russia. It is in the countryside that tens of thousands of “mass incidents” have been reported annually, threatening destabilisation to a party whose top three priorities are control, control, control.

Hu Xingdou, an economics professor at the Beijing Institute of Technology, says: “The local government has become the front line of conflict. But there is no channel to allow people to express their will. They lack the right to speak, the right to organize and unionize to represent their interests, therefore they can only use an irrational way by demonstrating or rioting to solve problems.” But there are signs that local officials are starting to look to mediation of grievances rather than automatically sending in the wujing, the People’s Armed Police. Local government in China have been handed heavy burdens during this reform period.

Torrents of edicts have been issued from Beijing to local governments all over the nation of 1.3 billion: maintain rapid growth, attract new industry, boost the service sector, cut pollution and energy use, close old state-owned loss-making factories, reduce the demonstrations and protests by laid-off workers and by farmers who have lost land to industry.

In short, somehow create a Confucian “harmonious society” from a host of apparently contradictory priorities. And fund it all yourselves. The first 25 years of China’s kai fang or opening up were fuelled by Deng Xiaoping’s “to get rich is glorious” dictum. But today’s leaders, Hu Jintao and Premier Wen Jiabao, are placing a fresh emphasis on the quality of growth – on reducing the widening wealth gap and the worsening pollution. Failure in this next core communist party campaign would lead to eroding popular support.

More briefly, I’ll track where I see the current economic challenges coming from, and possibly also taking us:

China, while generally resilient and very liquid, is suffering from the simultaneous impact of two downturns. One well documented, triggered by complex and obfuscating financial instruments widely deployed in the Western world. The other distinctly home-grown.

This “fourth generation” leadership recognized early on, the social and economic dangers inherent in the narrowness of the base for China’s growth: investment and exports. It understood the need to broaden the sources of domestic demand beyond the eastern seaboard, and to develop its still embryonic services sector. But in its first five-year term as a government, from 2003-2008, it failed to translate sufficiently its rhetoric into policy and on to action. It enjoyed excellent circumstances in which to make the shift but it found itself caught, trapped by the political timidity that comes from being a ruling party lacking a confident sense of legitimacy, between reinforcing the export and investment base and moving on to a more modern economy. The gross export value to GDP grew from 22% in 2001 to 35% in 2007, and the net export contribution to GDP soared from 5-20%. From January to September, 56th companies closed in Guangdong alone – 27% up on 2007. Andy Xie points out: “Most of China’s exporters are OEM contractors that rely on price competition for business. They have no access to end users nor possess technologies. They are factories attached to multinationals and would have difficulties living an independent life. Their bargaining power versus their multinational buyers is minimal.” At the same time, it is likely that a low cost producer like China will gain market share during a global recession like this, even as absolute sales drop. While a lot of attention was paid to exports falling 2.2% in November (growth seems to have peaked two years ago, and softened with the US decline since then), imports also fell 17.9%, creating a record trade surplus. Michael Pettis says that thus China is forcing more overcapacity on the world instead of taking its share of the rebalancing. He sees this as potentially a cause of friction ahead.

While the banks were recapitalized by their owners, the state, this was largely done through enforced savings and usurous margins ensured by the People’s Bank of China, the central bank. They continue to provide policy loans to state enterprises, but scarcely fund any private sector development, and give inadequate support to consumer demand. Interestingly, this devalues and narrows the scope for monetary policy. It means that interest rate changes have only a modest effect, thus the persistence of direct intervention in exchange rate settings and in control of the capital account.

Lyric Hughes Hale, the founder of business and economic information service China Online, says: “The biggest challenges facing China’s capital markets are still those embedded in the socialist system. China in the past has been able to overcome systemic obstacles when it has had the political will, and when the government has been able to exert control. This time, however, huge amounts of authority will have to be ceded to the markets for China to integrate itself into the world of 21st century finance.” She asks whether “China has now reached a critical developmental limit, which is being played out in its no-longer buoyant stock markets.” The Shanghai and Shenzhen stock exchanges have rarely reflected the objective state of the Chinese “real economy.” The 136 million share investors, 70 per cent of them earning less than $A 10,000 a year, have lost 70 per cent of their investments in the last 12 months, even as the economy mostly maintained double digit growth.

Hale’s point is that without a return to the earlier, lively pace of reform, and especially without the party ceding some of its almost absolute authority, the economy will keep slowing. And even though China’s success has been built on ceding some space, as I said earlier, to the business sector to do its own thing, the monopoly of authority and accountability maintained by the party means that people will in turn blame the party and the government for just about everything and anything that goes wrong – including of course this slowdown. They have come to expect constantly rising living standards as their right. At Glamorous City in Hangzhou, young professional couples rioted recently because the developer was offering a 25 per cent discount to try to pick up sales that have fallen off the cliff. 8-0% of the property market is housing – but the price signals, especially in terms of land, are masked by corruption. Yet the average house price in Beijing reached earlier this year 15 times the average household income, compared with five times when the US bubble burst, and 5-8 times, elsewhere in Asia. The government, concerned about this, tried to slow the sector down and encourage more low end production, but appears to have hit the sector too hard. Thus the current downturn is most palpable in the construction sector where demand for heavy machinery is strongest, thus impacting immediately on commodity prices. Industrial production was still growing 5.4 per cent in November, but may go negative this month. 75% of electricity is used by industry, and steel industry produced 100m tones in 2001 up to 570 million in 2007, now falling back to a maybe more sustainable 400 million.

Generally, the tools at the government’s disposal are different from those that work in the West. The impact of fiscal policy and monetary policy are masked when few people pay tax (except VAT) or have access to credit.

Yasheng Huang, a professor at Massachusetts Institute of Technology, has written a new book, “Capitalism with Chinese Characteristics,” in which he views policy evolution through capital allocation. By this measure, he has found, by far the most liberal policy period in recent Chinese history has been the 1980s, after which the investment share by genuinely private businesses fell substantially. Private access to finance was easier in the 1980s, he explains, than in the 1990s, and especially in rural China, where reform began. He describes the evolution of capitalism in China as determined by the political balance between the entrepreneurial, market-driven, rural China against the state-led urban China. In the 1990s, the latter regained the upper hand, after the Tiananmen Square massacre.

There are some indications of a reconsideration of rural reform – which may become especially necessary if manufacturers’ margins and markets both keep contracting. Garment makers’ profits are now widely reduced to 1.5 per cent or so of turnover, and many owners, especially those from Hong Kong and Taiwan, have begun closing their factories.

If such jobs become less easy to find in the cities, the migration there – long taken as a “given” part of the Chinese social landscape – is likely to slow, so it will be especially important to help China’s 740 million rural people, about 56 per cent of the total population, find meaningful and remunerative work.

Bloomberg’s Asia business commentator William Pesek says: “Many say China’s slowing from 10 percent growth to 8 per cent isn’t a disaster. Yet if a government relies on rising prosperity to conceal domestic challenges – including the widening gap between rich and poor – slowing growth is a major problem.

“Nothing less than a drastic rebalancing will be required: More domestic consumption, a strengthening currency and greater investment in health care, pensions and education. Pulling that off quickly and with minimal disruption would be a feat like no other in economic history.”

Brian Klein – a fellow at the Council on Foreign Relations in the US, which publishes “Foreign Affairs” magazine – writing in the Far Eastern Economic Review, agrees with the above: “Although it is relatively unaffected by sub-prime mortgages and the credit crunch, China’s economy is actually facing a fundamental structural adjustment that has arrived much earlier than expected.”

He says: “Decreasing foreign demand for inexpensive manufactured goods, the misallocation of vital investment, and product safety concerns are straining China’s manufacturing base and challenging the tenuous linkages between continued economic growth and a rising middle-class.”

By the end of 2007 almost half of China’s growth came from exports and government consumption, a dramatic reversal from 2003 when growth was dominated by investment and private consumption.

Xu Xiaomian, a professor at the China Europe International Business School in Shanghai, is hard to contradict: “China needs to transform its economy through structural changes, as its traditional growth model is not viable any more.

“Its strength was built on being a low cost supplier,” but margins have been slashed so punitively with the commodification of manufactures, that there is no room for manoeuvre. “And current growth is too energy-consuming to be sustainable.”

The country was thus already heading into a cyclical downturn of its own making.

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A friend in this room told me yesterday that what’s happening right now between China and Australia is “quite amazing.”

It isn’t entirely unpredictable, I’d say, but yes, extraordinary.

So a few words first about what is happening.

Obviously, the context is crucial: both the global context, and that of the increasingly complex relationship and the history between our countries.

Neither of us are suffering for the same reason as the Americans and Europeans, whose finance sectors have collapsed. But both of us are applying the same solutions, local stimulus packages.

China is suffering as the world’s factory, because the world no longer has the money or the appetite to buy its products. It is also suffering because over the last five years and despite its leaders’ rhetoric about shifting from the pace of growth to the quality of growth, it has been unable to take the tough decisions and  implement the reforms needed to broaden the base of its economy, to build domestic demand and to create a services sector commensurate with its size; it is about 34 per cent of its economy, less than half the comparative size of Australia’s services sector.

ANZ’s chief economist Saul Eslake told me recently: The Chinese are giving serious thought as to whether re-creating that model of export-led growth is what they want.  It would be in the interests of the world as a whole if China concentrated on consuming more and the US concentrated on producing more.”

And prominent independent economist Andy Xie, based in Shanghai, says in China’s most influential business magazine, Caijing, that a full global recovery requires China and the US to complete sufficient structural reforms to create a sustainable growth cycle. He warns that the stimulus packages of the two countries, including inventory restocking, “will not address the structural imbalance within or between them. Indeed, the stimulus prolongs the unbalanced growth model that got us into trouble in the first place”. Xie says that “for the global economy to find a new and sustainable growth path, the necessary changes are that the US expands production and China expands consumption”. He says that the US is stimulating consumption again, and China investment again, because they have the systems to do so.

Australia is suffering from some similar challenges. Its governments, both state and federal, have in recent years failed to follow through earlier reform periods, and productivity has not improved adequately. Its export performance is inadequate. The drive by Austrade to boost the number of firms exporting, produced disappointing results. And of course we are suffering from commodity prices falling with global demand, including from China.

We have invested insufficiently in infrastructure, while China has been rushing since Deng Xiaoping ushered in 30 years ago the glorious kai fang, open door, era, to catch up in infrastructure and other ways with the rest of East Asia, to make up for those wasted decades under Mao Zedong.

Australia became, following its own kai fang epoch launched by Bob Hawke 26 years ago, an open economy thriving on trade. We still don’t do enough of it, but what there is, pushes our growth along.

And what we do with China, has come to matter crucially.

Asialink, the Melbourne Institute of Applied Economic and Social Research at Melbourne University, and PricewaterhouseCoopers have together developed an Asia engagement index, launched last Friday by Trade Minister Simon Crean, which starts to quantify such relationships.

The index assembles and calibrates data about trade, investment, research and business development, education, tourism, migration and humanitarian assistance. It is anchored in 1990, when the measures of engagement with the 25 leading countries in Asia and also with the rest of the world, are each assessed at 100 points.

Since then, Australia’s engagement with Asia has multiplied four times, that with the rest of the world three times, and that with China an astonishing 16 times.

This China connection is not totally new, of course. That cherished Australian expression “dinkum” may have derived from a corruption of the description used by Chinese miners, in the mid 19th century Victorian gold rush, for “real gold”: jin zhen.

It was these rushes that galvanised Chinese interest in the country, and forged a contact that ebbed and flowed over the following century and more, but has re-emerged, in momentous mutual interest.

In the last financial year, China bought 14.9 per cent of our exports, making it the second biggest buyer after Japan. And exports contributed about 20.7 per cent of Australia’s gross domestic product.

Commodities dominate our exports, especially iron ore, almost half the total $27 billion. We import $31 billion products on the other side, a more diverse menu with clothing, telecommunication gear, computers, toys and sports goods the biggest categories.

Treasurer Wayne Swan told senior cadres at the central party school, where I was present last year, that Australia’s mining output – “important as it is” – accounts for just 7 per cent of gross domestic product, about the same share as 20 years ago, while farm output comprises about 3 per cent.

Mr Swan said: “We also make fare machines for Beijing’s subways, we make synthetic turf for your sports fields, we make solar heating for your remote areas. We sell you cosmetics, integrated circuits, water treatment systems, piston engines and mining software.”

Our services trade is puny in comparison with our trade in goods, comprising just $4.4 billion exports, overwhelmingly students and tourists – vital components for our future relationship of course – and we import just $1.4 billion services.

If we were to lose a full 25 per cent of our exports to China, a terrible blow, after growth of 18 per cent in the last year, this would cost us about 0.6 per cent of our GDP.

HSBC’s John Edwards told me: “If we look at exports alone and China’s influence on us solely through exports, then exports to China have accounted for, say, 2.5 per cent of Australian output in the last three or four years. China’s contribution is primarily through the mining sector. But that has contributed only 7.6 per cent of output growth in the last five years, about the same as its share of GDP.” He says the story in export volume terms has consistently fallen short of expectations – underlining the need, I believe, for Chinese inputs now.

The main impact of China on our economy has come through pushing up the terms of trade – the ratio of the prices of our exports to those of our imports. It has pushed up the prices of exports and pushed down the prices of our imports. And China’s demand has also forced Japan, Korea, Taiwan and other buyers to pay more for the same commodities. Its competitiveness in manufacturing similarly forced other manufacturers to lower their prices. But now, Eslake anticipates, Australia’s terms of trade will return to what they were in 2004 or 5.

What of the investment front, now the focus of so much attention? Australia has only modest investments in China, $5.2 billion in 2007, making us the 14th largest investor. Our biggest single investment in the Chinese world generally, is the $1.2 billion Macquarie paid three years ago for 40 per cent of Taiwan’s third largest cable TV company.

Again in 2007, China had $6.2 billion invested in Australia, making it the 17th largest. This latter figure has soared, thanks to the investment in mining companies, principally in Western Australia.

Investment is increasingly the fulcrum around which other economic engagement, including trade, hinges. China needs to invest offshore for many reasons, including to set its capital to work to compensate for its growing demographic challenges due to the one-child policy.

A good example is the $750 million joint venture coal gasification project between Australia’s HRL – the successor body to the former State Electricity Commission of Victoria – and Harbin Power. They have proposed to develop together a 500 megawatt power station in Victoria’s LaTrobe Valley – a template for similar generators in China, and the first new base load station in Victoria since 1990. Four months ago, Zhang Ping, the immensely powerful director of the National Development and Reform Commission, spent a day in the LaTrobe Valley talking over the deal. Funding from Chinese sources is expected soon.

A recent trip to Australia by Lou Jiwei, executive chairman of sovereign wealth fund China Investment Corporation, at the invitation of the Future Fund, is likely to lead to some of CIC’s $200 billion assets being deployed here. And Chinese infrastructure investment in Western Australia is set to follow too.

Most of us in this room, are well aware of this drive. I’m a strong supporter of increased mutual investment. And I believe that this requires a calm and clear understanding of our overall relationship.

It has been characterized too much in the past as “complementary.” That sort of implies, in this case, that we are the source of raw materials and China of manufactures. But both of us have much more to offer than that. We actually compete of course in some areas; the important thing, is to set up an environment for fair competition, so the best supplier gains the bigger market share in both countries. We need to shift our relationship beyond complementarity.

As my friend Paul Glasson, based in Shanghai, told me yesterday: “Australia has the resources China wants, the quality is good, the prices are low right now. The countries are close, relations are good.” Clearly, China’s State Council believes it’s picked the bottom of the market, the optimum time to pick up distressed assets, and that may well come to prove true. We must hope so, because that means the pain will start to diminish.

But this is too important a relationship, and our resources too vital a strategic asset, to leave to panicked shareholders and financial institutions. For Australia is dealing here, essentially, not with diverse private firms with conflicting interests but with a cohesive state which believes rightly, as Deng said, that “development is the irrefutable argument.”

The Chinalco-Rio Tinto deal’s raison d’etre was explained in Global Times, owned by party mouthpiece People’s Daily, in an article by Professor Liu Jipeng and Liu Yan, a researcher at the National Development and Reform Commission: “Chinalco’s purchase has successfully prevented the merger of Rio and BHP, broken the monopoly of multinational giants, and protected our nation’s core interests.

“It has also explored a new path for the globalisation of state owned enterprises, illustrating the capacities of government business.”

It is crucial for Australia beyond the cognoscenti in this room to understand the nature of this “new path.”

Australia can do great things with China. But to build a full, considered partnership, Australia needs equivalent access in China. And Canberra can, if it chooses, play a central role in obtaining the guarantees that will keep Australia in the centre of the frame, not sidelined as a price taker.

That task of understanding, the building block essential for good, constructive relations, made harder, because except for ANZ, almost no major company has direct Chinese or even Asian experience on its board or top management. This is a challenge for those of us in this room who are shareholders or work in the corporate sector. This must change. The China expertise must be there at the heart of the operation.

Fortunately, we do have in Lu Kewen a prime minister with such experience and understanding. This should help the federal government’s own process of reviewing its China strategy.

And that is important because China indeed views this enmeshment as a matter of “core interests.”

Australia needs an informed national debate about where this vital relationship is heading, about where the national interest can be identified.

Such a national approach would likely include Australia’s seeking reciprocal access to invest in China – whether via the languishing free trade agreement talks or some other channel – not least for our vast funds under management.

Zhang Xiangchen, then China’s chief FTA negotiator, told me three years ago that at talks on the prospect of telecommunications investment access a Chinese vice minister said that if his country opened its market completely, ” Australia will kill our industry.” The Australian delegation leader responded, “We are too small to do that.”

Dr Zhang said: “That’s a typical dialogue” in this FTA round. Sadly, it seems to have got little further. Cuts in the Rudd government’s first budget led to the loss at the Beijing embassy of the position of an FTA staffer.

It became a frustrating feature of my recent life in China, to meet so many smart, often young, dedicated Australians who had invested all their savings and their lives in building operations there, chiefly in services – which is actually Australia’s main business strength – but had to remain below the radar, they could not grow, because there are too many non tariff barriers, too many obstacles, they lack the capacity to develop as the market and their talents would otherwise see happen.

But we also have so much on which we agree, so much in common.

In global terms, both our countries depend on open borders, on freeing up global trade, and we can fight on this front together. We need to be telling our friends in the US Congress right now that their ‘buy American’ campaign is futile and damaging, and telling our friends in India that banning Chinese toys for six months is similarly self-lacerating.

The final thing I want to say, is that what will underpin and strengthen crucially what I’ve been describing so far, a strong, mutual-interests based relationship, is to broaden it out and deepen it far beyond trade and investment.

I am here to tell you that I am unashamedly in thrall to the Chinese aesthetic. I believe that our peoples share especially closely, many human dimensions, including strong individualism and a certain sense of humour. It is crucial that we work on these person to person links, that we make them easier and more relaxed. We in Australia can contribute, for instance, by sending more of our children to study in China. And China can open its broadcasting to our excellent Australia Network TV station for Asia.

To return to Lu Kewen. We can overdo it, though he is himself careful not to. But he does present an especially welcome face and more importantly voice to our Chinese friends. I recall watching the last federal election on TV in Beijing, with a group of Chinese diplomats and academics. They were agog at the way it happened, the civility, the boisterousness of the crowds, the presence of the families on stage. One woman watcher gasped when Rudd finally appeared: “He’s so young!”

We can all celebrate, and build on, such connections.

The post Speech to China Business Forum appeared first on ROWAN CALLICK.

Virtually every Chinese garden features the clever design device called zhang jing – blocked view, or screened scenery – through which, even in a comparatively confined space, the stroller keeps encountering fresh, formerly hidden, vistas.

So it goes with China’s big landscape, its national story (and it’s even arguable, of course, whether China can be described as merely a “nation” in the sense understood in European languages).

You catch a glimpse – perhaps beguiling, perhaps rocky and to the Western eye alienating – of where China seems to be heading, and then the outlook swiftly changes, you lose focus, a fresh view emerges.

A rather over-neat but fun new encapsulation puts it like this: 1949: only socialism could save China. 1979 (following the cultural revolution): only capitalism could save China. 1989 (after the Soviet demise): only China could save socialism. 2009: only China could save capitalism.

Or as one of our leading sinologists, Geremie Barmé of the ANU, puts it, the classic Maoist anthem The East is Red sounds today more like The East is Rich. China intrigued the world as it hosted the great five ringed circus, the Olympic Games, in August, by somehow contriving – certainly striving – to be both.

Today it’s not as clear as it once seemed, where China has actually come from, let alone where it is and where it’s going. It is possible, though, to make some reasonably confident predictions, about the next dozen years or so at least, and they are mostly continuities: the ruling communist party, the world’s most powerful institution, – yes even more so than the Vatican – will remain in firm control without significantly devolving power; the commanding heights of the economy will remain in state hands, although this no longer means the Marx definition, ownership of the means of production, but instead, ownership of the logistics of control in the broadest sense, from airlines to telecommunications to banks; China will continue to champion globalisation; it will maintain close relations with the USA – of which it holds $US 600 billion Treasury bills –  while also emerging as the leading influence in the strengthening big power group within Asia; China will become an ever more attractive model for developing country leaders, while its own international model will remain Singapore; its economy will evolve up the value scale; demographic convulsion (a one-child policy following populate-or-perish) will boost educational skills while causing grave economic challenges, requiring higher productivity and greater returns on capital at home and abroad; and Confucius’ come-back, signalled by party slogans using phrases such as “harmonious society” and dramatised in the Olympic Games’ opening ceremony, will provide some moral and philosophical content lacking since Maoism, though not Mao, were discarded. In general, not just the survival but the reinforcement, of what American sinologist Andrew Nathan calls “resilient authoritarianism”; if you’re running the show and you’re receiving applause from all over the world, especially from the international business community, why change the system?

The standard story of China’s recent history, widely accepted in the West as well as there, is that foreign insurgency and greed combined with feudal arrogance and incompetence to lay the country low in the second half of the 19thcentury. In the imperial days, commoners were forbidden on pain of death even to look on the emperor, and court intrigues and secrecy seemed to form the very fabric of public life. Then “warlords” stepped in to the vacuum that followed the demise of the Qing dynasty in 1911 and the failure of Sun Yat-sen’s irresolute republican endeavour. Chiang-kai Shek’s Nationalists colluded with the Japanese invaders. Everything disintegrated. And Mao Zedong’s communist party saved the day.

But a growing body of research – including a tantalisingly brief but telling new book, The Age of Openness, by Frank Dikotter, is revisiting the rapid modernising and opening and decentralisation that took place in China in the first half of the 20thcentury. The history of that period has inevitably been written with the pen of the victor, the centralising party led by Mao. Curiously, even Westerners have until recently tended to view China through these same lenses: Mao rescuing a hopelessly corrupt, sick, starving country from disaster. A case can instead actually be made that this last chapter was quite different, that Mao instead set China’s modernisation and opening back, and that the rapid economic growth of the past decade amounts to a long overdue catch-up – with China still well behind Hong Kong and Taiwan, let alone neighbours Japan and South Korea.

Another surprising twist to the China story is that the present communist dynasty retains remarkable continuity with imperial rule, including its secrecy, and the utter separation of its leaders from ordinary life. Once elevated to the Politburo, you and your spouse will probably never again eat in a restaurant, stay in a hotel, fly in a plane or even drive on a road at the same time as any member of the public.

The party itself operates in an extraordinarily confidential manner. Its funding is secret. It does not release a budget or a balance sheet. It appears to own some massive assets, but no outsider – or ordinary party member – knows for sure. The manner in which its leaders emerge, is also secret – although the phrase “intra party democracy” has become a common mantra, and party members in some areas are starting to choose between some candidates for office.

Today’s communist party general secretary, Hu Jintao, is perhaps the least known top leader since back into earlier Qing days. Journalists, domestic and foreign, have unearthed remarkably little about him or his family, given that he is running the world’s most populous country for ten years, through to 2012. He and his peers work and, it seems – we really don’t know for sure – live most of the time in the Zhongnanhai compound just to the west of the Forbidden City.

When he was invited to an informal dinner with half a dozen people, including the economist Nick Lardy, at Bill Gates’ little pad in Seattle, he delivered a lengthy written speech to the dinner party as the soup grew cold.

There is virtually no proven anecdote about his life, which has been lived within the party’s capacious embrace, rather than in government roles. His only recorded joke came when he was visiting the US half a dozen years ago, just before he became general secretary. When the then governor of New Jersey James McGreevey told Hu – whose hair is jet black – that he did not look his then 59 years, Hu replied: “China would be happy to share its technology in this area.”

One thing is for sure: he is not a Mikhail Gorbachev.

Two years ago, all 74 million members of the party were required to watch a series of eight DVDs on the downfall of the Soviet communist party, and of course the lessons for their own survival.

The programs placed most of the blame on Mikhail Gorbachev for what the commentary called “the extinction of the party, which must mean the extinction of the country” after 74 years in power. By extension, the same equation may thus be applied to China: the end of the party’s rule – 59 years so far – will mean the fragmentation and collapse of the country. The party’s DVD presentation said about what happened in Russia: “Collaborating with nationalists, the so-called democrats within the party sped its split and that of the Soviet Union encouraged by concepts advocated by Gorbachev, including democratisation, openness and diversity of public opinion.” On Christmas Day 1991, it said, “the flag with the hammer and sickle, deeply loved by generations of people in the Soviet Union and around the world, sunk in the cold winter wind.” The DVDs concluded with the rhetorical question: “When strong ideology that unites the hearts of the people and party members is thrown away, can that party survive?”

In China, the chucking out has only gone so far. The party has drawn a line, and policed it.

Mao’s rhetoric has largely vanished. The word he inherited from the founder of modern China, Sun Yat-sen, to provide a Chinese equivalent for the Soviet tovarich or “comrade” – tongzhi, meaning the same intent – has become appropriated by China’s gay community.

But Mao himself remains on view, much of the year, in his ugly Soviet maosoleum that destroyed the harmony, the feng shui, of Tiananmen Square, under the gaze of his giant portrait on the Tiananmen Gate. The picture was defaced a few months back by paint thrown by an angry farmer whose land had been stolen by local officials. A replica was back on the gate within hours. An informal formula was devised by Deng, defining Mao as 70 per cent good, 30 per cent bad. Historian Xia Chun-tau, the 43 year old vice director of the Deng Xiaoping Thought Research Centre, one of China’s core ideological think-tanks, at the Chinese Academy of Social Sciences, stressed that “there is only one correct and accurate interpretation of history, and only one explanation that is closest to the truth. There is a pool of clear water, and there’s no need to stir up this water. Doing so can only cause disturbance in people’s minds.” This requires avoiding discussing in the media, much of modern Chinese history – such as the Cultural Revolution, or what is known as the Tiananmen massacre.

And in her new book Marketing Dictatorship, Anne-Marie Brady, of New Zealand’s Canterbury University, says: “China’s economic reforms in the propaganda sphere, especially since the 1990s, have been geared towards privileging partyinterests” and have managed to strengthen that apparatus. The party, she says, has re-emerged since 1989 and succeeding crises “re-strengthened and as dominant in Chinese society as ever.” This process has been reinforced by the state control of the airwaves and the net. The party has found ways to transform the new instruments of liberation, as they were originally conceived – the mobile phone and computer access to the internet- into instruments of control. Thanks to innovative and expensive surveillance technology – where China’s research leads the world – the government can reach into almost every Chinese home by keeping tabs on the family’s electronic devices. There are about 230 million regular net users in China. But each internet service provider must obtain the true identity card details of every person posting opinions online – on threat of losing their licence.

So, Hu may be little known but he is certainly no Gorbachev. Perestroika – restructuring – and glasnost – opening – that formed the kernel of Gorbachev’s Russian revolution evoke Deng’s “kai fang,” the opening-the-door strategy that Deng launched at a party central committee plenum 30 years ago next month. But under Deng the opening meant some price signals, foreign investment that brought with it new technology and new management skills, and most importantly for its early success, liberating farmers from their enforced communes to return to family-focused plots. Not any meaningful political role for the masses. Power still comes from the top down, while revenues are expected to come from the bottom up. When I talked with a Chinese friend about how I had made contact with the taxation office and negotiated a monthly sum, he said I must be mad. No one he knows pays tax, he said – and anyway, it’s immoral; why give money to people when you have no say in how it’s spent?

Beyond such quibbling, however, the underlying, unspoken contract that Deng agreed with the Chinese people still stands. After the Cultural Revolution, and again in an accelerated manner after the Tiananmen massacre of 1989, Deng knew that any residual ideological attraction had perished, that the party must seek a new source of legitimacy. Thus the party was to guarantee constantly improving living standards, while in return the people would allow it to continue to rule without impediment.

Since then, first Jiang Zemin and then Hu Jintao have played their parts in ensuring that even as areas of the economy are slowly liberalised, China’s polity stays essentially the same.

Hu’s nominated successor, Xi Jinping, is a “princeling” with a bit more of a story because of his background of a family in public life. But he is still scarcely a household name in China. A year ago he was selected, at the closing of the party’s five-yearly congress, to join the Politburo standing committee. It was a telling scene. We in the media were assembled in the West Hall of the Great Hall of the People. After a long wait, Hu led out the other eight members of the new standing committee, in order of precedence, all wearing dark blue suits with red ties. It was only then that the world learned that Xi had been chosen over Li Keqiang, and that Li would become instead the heir-apparent to Premier Wen Jiabao. Both emerged, as Chinese leaders now usually do, from senior party positions in the provinces, not from within the central government structure that implements policy shaped by the party.

Immediately after that announcement in the Great Hall, I asked people in a bus queue round the corner, what they knew of the heir apparent Xi Jinping. None had ever heard of him, but all knew and liked his wife Peng Liyuan, a famous singer of patriotic anthems who for years scored the top slot, approaching midnight, at the most viewed regular TV show of the year, anywhere in the world: the variety program on CCTV on Chinese New Year’s Eve. “Oh is THAT her husband?” they asked. Now the cover is being drawn over the song-bird as Xi’s public persona is promoted.

Since Deng Xiaoping went to Mao – or perhaps to somewhere else, maybe to Adam Smith or Lord John Maynard Keynes – the party leadership has evolved from a charismatic figure to a collegiate group in which no single person tends to dictate policy. It appears that all significant party factions are consulted until a consensus eventually emerges. A strong voice, in this scenario, can veto or delay reform for years. The upside, for the leadership, is the smoothest transition process in Chinese history. We can now know, for instance, that barring a shocking turn of events, Xi Jinping will take the top job from 2012 until 2022, during which Li Keqiang will be Premier.

The party is thus the great constant in the China story today. Whichever turn you take in the Chinese garden, wherever you look, the party is there. For instance, the People’s Liberation Army, Hu reminded everyone on its 80thbirthday last year, is “an army led by the party.” It is not the party of the government, or of China more generally. The party is extending its influence in the private sector, with branches being widely established in corporations, and entrepreneurs becoming party members. If you are invited to a banquet by potential business partners in China, pay special attention to the person who claims to have misled his or her name card. They haven’t, of course; no one forgets name cards in Asia. They are almost certainly the party rep, the person whose view counts for most. But because they don’t have a corporate title, may be dangerously neglected.

This provides a good example of how China’s story can confound viewers who believe they have seen one thing, but were in fact watching something quite different unfold. Earlier, in this way, the world widely believed that when Mao Zedong appeared on the Tiananmen Gate on October 1 1949 and inaugurated the People’s Republic, saying “China has stood up,” we were seeing a commoner stand at last in the place where only emperors had once stood. Of course, in hindsight it is now clear we were actually seeing the new emperor declare himself.

The same misperception occurred when Jiang Zemin, Hu’s predecessor as general secretary, led the redrafting of the party’s constitution six years ago to permit capitalists to join. Many Westerners interpreted this as a sign that businesspeople were eventually going to take over the party, as part of the apparently inexorable shift of a modernising China towards liberal democracy. But no. China is not taking any steps towards becoming a liberal democracy that might be recognisable in the West. And the party’s opening up actually served a different goal entirely: bringing the business sector more palpably within the party’s influence, with business leaders and employees becoming absorbed within party structures. I recently visited the extraordinarily opulent, park-like headquarters in Shenzhen of Huawei, now one of the world’s top four telecommunication equipment designers and providers, with the likes of Ericsson, Cisco and Siemens. It was founded by a former People’s Liberation Army officer who still runs what is often held out as China’s model new private corporation. Its shareholding is a little mysterious, but generally 80 per cent is said to be held by employees. How is the board appointed, and to whom is it answerable? Employee shareholders play a role, I was told by a suave public affairs manager. But who has the final say? Well, the manager said, the board also of course answers to the party committee – whose very existence does not appear in any of the company’s glossy, multilingual brochures.

Similarly, increased access to markets, at home and abroad, has not led to much greater sense of accountability, or significantly better governance. The sale of shares in state owned companies – including to foreign partners – has provided them with the capital to extend their domestic market share and global reach, without relinquishing control. I recall three years ago when the Royal Bank of Scotland, that’s recently needed a big bail-out from Gordon Brown, paid $US 1.6 billion for a 5 per cent stake in the Bank of China, the Britons were full of praise for the Chinese bank’s executive chairman, with whom they had negotiated and in whom they expressed full confidence. Within months, he had moved on, as a party politician, to a senior position in a province, maybe even party secretary. Promotion for him, puzzlement for the Scots rep on the Bank of China board, who had no idea what was going on until the announcement.

While the Shanghai, Shenzhen and especially the Hong Kong share markets were still running hot, last year and in the later months of 2006, the flotation of minor stakes in state owned enterprises became a fabulous and familiar route through which the party elite and their families were rewarded for their loyalty. In almost every case, the floats were hugely oversubscribed – chiefly because the stakes were limited in size – and of course the elite received special access to the shares, which for 18 months soared amazingly on their first day’s trading. Dynastic fortunes were made overnight. And of course further opportunities for the same, were presented by incessant, virtually unregulated insider trading.

Thus have state assets and wealth shifted into the hands of China’s elite – with a result that the wealth gap has widened rapidly. The 600 million urban Chinese earn on average 3.3 times the income of the 700 million rural Chinese, who in 2007 each earned $A 625. In the last decade urban incomes have increased 150 per cent, rural incomes 91 per cent. The Asian Development Bank said earlier this year that China’s gini coefficient – the degree of inequality in the distribution of income – is now 47, about the same as Nepal. India’s is 36, although the people in the bottom 20 per cent are better off in China than in India. In comparison, Australia’s Gini coefficient is just over 30, which would place it at the bottom of the 22 Asian countries surveyed.

The children of China’s leadership are helping construct dynastic stakes in strategic industries. Jiang Zemin’s son, telecommunications; Li Peng’s family, power; Zhu Rongji’s son, banking; Hu Jintao’s son sold to Beijing city government the new automated ticket machines it recently introduced for its rapidly expanding subway network.

Some Western visitors to China remark that the modernity and apparent affluence to be observed in major cities appear to lead China inexorably in familiar directions, presuming that an emerging middle class – or at least, their student children – will sooner or later be demanding political reform – maybe even back in Tiananmen Square as in 1989, defending the goddess of democracy.

One of Australia’s leading sinologists, David Goodman of UTS, where he is now deputy vice chancellor, says in his recently published book “The New Rich in China” that China’s transformation “is seen as hopeful by those who see an equation between industrialisation and economic development on the one hand and the emergence of a peace-ensuring liberal democracy on the other. The argument that these people are ‘just like us’ is very seductive, especially if it is delivered without any hint of irony.” Goodman is one of the top echelon of Australian sinologists – several are in this room – who have generally contrived to free themselves of the burden commonly placed on academics in other Western countries, of aligning themselves “for” or “against” the ruling party, or even for or against “China.”

He says that a parallel is often drawn between China’s development since its reform era began 30 years ago, and the period of industrialization in Europe and the USA. At first, he says, the bourgeoisie in the West were a new middle class created by the process of industrialization. As this process deepened, the modern state became more complex, producing managerial and professional classes who neither owned capital nor controlled the state, but derived income and status from service and management.

The demand for a widening of the franchise and the emergence of liberal democracy during the first half of the 19thcentury in northern Europe are often seen as necessary results of the emergence of the bourgeoisie, says Goodman. And the ensuing managerial revolution in the first half of the 20thcentury is “part and parcel of the development of mass society, mass politics and the welfare state.” The assumption of middle class behaviour, especially in patterns of consumption, “is to be expected as a function of globalised commercialism,” with Gucci, Loewe and Louis Vuitton brands targeted at the wealthy consumer in Shanghai and Beijing as well as in Milan and New York.

But Goodman insists that China’s “new rich categories of entrepreneurs… are less the new middle class than a future central part of the ruling class.” They are quite unlike the 19 th century European bourgeoisie in the extent to which they have emerged from and retain close relationships with the established political system. For this is not China’s first wave of modernization, by which some believe Deng Xiaoping conjured the country’s remarkable industrial machine from an imploded peasant nation.

The Republican era (after 1912) saw sustained attempts at modernization, Goodman points out, in various parts of China under both warlord rule and colonial influence. Much of this economic activity was externally owned or sourced, so that parts of the economy were considerably better integrated into the world economy by the early 1920s than they would again be until the 1980s.

The establishment of the People’s Republic then saw renewed and sustained modernization and industrialization. Managerial and professional jobs multiplied, so that during the 1950s the people who filled them became “the backbone middle classes” of the new party-state in China. Many were purged during the Cultural Revolution of 1966-76, but as they and their families were then restored, “so too middle class reputations rose again.”

And what of the entrepreneurs who have emerged more recently? Goodman highlights “the close associational links between the new entrepreneurs and the party-state, which seeks actively to incorporate them” through “family networks of influence.” Goodman says that the reallocation of state assets over the last couple of decades “sometimes left less than clear distinctions between ownership and management.”

In Hangzhou, he relates, an entrepreneur was asked if the state assets he now controlled, had been paid for. The response was clear: “There’s no need. These were previously the assets of all the people, and we are the people.” Goodman points out that business people in China, who tend to be incorporated in the party-state apparatus, enjoy “cost-less (to them personally) access to resources and effectively subsidized income not available to others.”

The pattern of economic development in the People’s Republic fits more closely that of Germany, Japan and Russia during the late 19th century than that of Britain or the US, he says. “In those countries, the state played a central role in industrialization, as opposed to the laissez-faire capitalism of the earlier European experience based on the protection of the individual outside the state.”

A common generational pattern, he says, is that leading cadres are recruited on intellectual merit from the peasantry, then as they retire their children become business people, just as we have seen with leading party families – “building,” says Goodman, “on the local relationships and networks of influence that their parents have developed.” Thus in China, “ownership, management and control are intertwined in ways that cut across previous analyses of middle (or indeed any other) class behaviour.” All China’s classes are increasingly portrayed as middle, for harmony’s sake. The rhetoric of class war has vanished. It’s just that some people are decidedly more middle than others.

Since 1989, then, the party has moved with purpose to co-opt the intellectual and business elites, making full use of the immense resources now at its disposal. The party schools in every province and major city – in effect, administrative finishing schools – are sumptuously appointed. Upwardly mobile young corporate managers are strongly advised, for instance, to invite their former professors to give lectures to their state enterprise or private company colleagues, for which the corporations are expected to pay the professors handsomely. A Hong Kong politics professor friend told me that his colleagues in mainland China now complain they can’t find any spaces left on campus to park their cars. Young educated Chinese are increasingly seeking jobs not so much with multinational corporations as with government agencies, because while the pay remains poor, the other perks – including the access to assets – can be immensely rewarding.

These young people – quite well educated, sometimes overseas in Western countries, maybe from privileged, party-loyal families – form the core of the “new Nationalists” whom the world saw surge forward to demonstrate against Westerners’ own protests over China’s governance of Tibet during the international pre-Olympic Games torch relay. We are likely to see more of this in China’s next chapter.

Wang Xiaodong, an intense leader of the China Youth and Juvenile Research Centre affiliated with the Youth League – the core power base of Hu Jintao –has become a widely published cheer-leader for this new nationalism. The younger generation, he told me, “has more contact with the West, they understand it better. They speak more fluent English. They know Westerners are not really angels, they realize that they are different from us not only in ideology but in national interests. The younger Chinese have learned a stronger sense of individual rights from Westerners.”

He said that the central event in Tibet in April was “the attack by Tibetan monks against Han and Muslim people.” Distorting this into the suppression of freedom loving Tibetans is “as if China praised the terrorists who drove the airplanes into the twin towers – it’s obviously unacceptable to us.” Wang believes this period of resurgent Chinese nationalism will have “a profound and long lasting significance, like the May 4 movement in 1919″ when students gathered at Beijing University to draft a manifesto against foreign incursions. He said: “Some Westerners are saying that Chinese must make an effort to make themselves accepted by the West, That is an out-dated opinion. The West must learn how to make itself accepted by the Chinese.” The new generation, he says, rejects Mao Zedong’s socialism but embraces his nationalism, while also tentatively re-adopting some traditional Chinese values. China’s current leaders are essentially administrators, he says – but when today’s students succeed them, “China will globalize its national interests, and this will affect not just our close neighbours but the whole world. It must gain the capacity to protect those interests.”

Wang’s views may seem extreme, but they are sufficiently mainstream in China for him to be granted widespread access to the mass media, especially frequently in Global Times, a more popular and raucous offshoot of People’s Daily. His version of nationalism, and that most commonly expressed in the broader Chinese blogosphere, is emphatic about the “sacred” nature of China’s borders, although of course these have shifted immensely over the last few centuries. That they contain Tibet and the Xinjiang of the Turkic Uighurs is non-negotiable. Yet at the same time, the “sympathetic community” that has emerged this year in China out of the aggressive nationalist demonstrations over Tibet, and their altruistic flipside, the outpouring of sympathy over the Sichuan earthquake in May, is palpably a Han Chinese community. Retaining all 55 “ethnic minorities” within the great wall is a given. Yet during China’s next chapter it is inconceivable that a national leader can emerge from these minorities, in the manner that Barack Obama, say, has done in the US.

It would be wrong to portray China’s emerging generation as entirely uncritical of the party-state though. Their views range over the spectrum.

One place to check on just what’s going through some of China’s younger minds is at Dashanzi, the giant, buzzing modern art gallery precinct carved out from Bauhaus style munitions factories in north-east Beijing, a popular hang-out for the city’s large clan of bohemians. There, the new theme attracting the biggest crowds this year on the eve of the Olympics was that of loss and destruction – typified by the razing of the entire “conservation area” that was Qianmen, the heart of old Beijing, and its replacement by a kitsch retail and restaurant zone “recreating” a version of Ye Olde Beijing.

A particularly crowded gallery at Dashanzi when I last visited, four months ago, was split by a crumbling brick wall surrounded by the poignant detritus of an abandoned home – broken toys, old family photos – with massive pictures of half-demolished hutong homes around the walls. Another venue featured Jiang Pengyi’s brilliantly worked photos of skyscrapers and other contemporary “signature” buildings – even including a famous statue, from Beijing University, of Mao Zedong – abandoned in heaps as landfill. The exhibition’s title: “All back to dust.” Thirty year old Jiang wrote that once he had reduced the grandiose new buildings to a tiny scale, “they are paid much less attention. It is a lot more enjoyable to look at them like this… As sacred Buddhist texts say, these grand objects… in fact are all just piles of dust.”

These were challenging images, and this was challenging talk. For the giant new edifices of Beijing, like the billion dollar China Central TV tower designed by Rem Koolhaas that strides like trousers, people say, across the Chaoyang business district, and the Olympic Bird’s Nest and Water Cube, were transformed into mystic temples dedicated to the New China – as was the Olympic torch, into “the sacred flame” as they called it of Chinese patriotism.

As a new generation of urban middle class emerges, it is inevitable that they will feel less grateful for their comparative material comfort, that they will start to take this for granted, and that their concerns will move on. The environment is already a core concern among young urban Chinese, and it is likely to prove difficult for the party to keep their interests corralled safely within the nationalist compound. Younger Chinese friends were largely disappointed with the opening ceremony of the Olympics, saying that it represented the way the party views China – or would like it to be viewed – with thousands of young soldiers beating drums in absolute precision, but that it failed to seize the opportunity of presenting the human face, what they see as the true face of China to the world – the unkempt, ironic, chaotic China that has been mostly confined over the last few decades to private spaces.

One of the best economic analysts of China, Arthur Kroeber, the Beijing-based director of economic research firm Dragonomics, has warned how attempts – even those of its own government – to define China typically founder on the reefs of the country’s size and its rate of change.

Thus, he says, “it is always possible to find some evidence in support of any generalization, no matter how outlandish.”

He says that all of the following common contemporary definitions, describe part of the truth, underlining the zhang jing experience, the blocked scenery effect that leads people to believe they are seeing the true China but then turn the corner and find a different truth. China, he says, is at the same time:

An emerging global economic and political power, like the USA and Germany in the late 19th century.

And a hub of the Asian regional economy, heavily dependent on foreign investment, technology and markets.

A communist despotism run by a disciplined technocratic elite.

And a communist despotism run by a hopelessly corrupt elite increasingly unable to manage the social tensions created by economic growth.

A post-communist state where the government has signed on to the most ruthless version of mid 19th century capitalism.

And a post-communist state whose government has pursued sensible, pragmatic policies that have raised millions out of poverty.

A highly centralized state where the national government ultimately controls almost everything.

And a highly decentralised state in which the central government is unable to enforce its writ on almost anything.

A civilization with a long history in which traditional Confucian values are gradually re-asserting themselves.

And a society unmoored from traditional values and unwilling to import Western values, so its material success is complemented by a spiritual vacuum.

Kroeber says that “Western critics tend to assume that political legitimacy can only be conferred by elections.” But in China, a regime’s legitimacy comes substantially from its ability to mobilize the country’s bureaucratic tradition. “The system’s ability to respond to a wide range of problems, to maintain social order, to provide a steadily increasing level of public services, and to increase China’s standing in the world, are all important contributors to legitimacy.”

Over the next few weeks in China, and into 2009, the feisty personality and the thoughts of Deng Xiaoping will also be promoted as important contributors to the system’s legitimacy – especially as the country faces economic challenges triggered by the global downturn but also deriving from unique local circumstances.

These include establishing a sufficiently dependable and nationally portable health and welfare system that counters the old houkou structure of local registration whereby migrant workers have been ineligible for government services, freeing up the financial system to give people a broader range of savings opportunities, and giving small and medium businesses the chance to borrow from legal financial institutions. And underlying everything else, is the big question of whether the party is able and willing to embark on the course Deng himself contemplated – and which party chief Zhao Ziyang began to implement before his meeting with students in Tiananmen Square triggered his downfall and house arrest until he died 16 years later: the start of the separation of the party from its direct control and management of the institutions and processes of government, including the courts.

At the heart of Tiananmen Square during the Olympics, a vast slogan celebrating the Games was matched by another of equal size anticipating the 30th anniversary in December – “a harmonious chapter,” it said, using Hu Jintao’s ubiquitous keyword – of Deng’s launch of his bold economic opening of China.

This anniversary – to be marked by conferences and research papers, and doubtless, special TV tributes – will also highlight the recent move by the leadership to free China’s farmers to lease out their land or use it as collateral.

It was from the countryside that the Chinese revolution came, not from the urban proletariat as in Russia. It is in the countryside that tens of thousands of “mass incidents” have been reported annually, threatening destabilisation to a party whose top three priorities are control, control, control.

Hu Xingdou, an economics professor at the Beijing Institute of Technology, says: “The local government has become the front line of conflict. But there is no channel to allow people to express their will. They lack the right to speak, the right to organize and unionize to represent their interests, therefore they can only use an irrational way by demonstrating or rioting to solve problems.” But there are signs that local officials are starting to look to mediation of grievances rather than automatically sending in the wujing, the People’s Armed Police. Local government in China have been handed heavy burdens during this reform period.

Torrents of edicts have been issued from Beijing to local governments all over the nation of 1.3 billion: maintain rapid growth, attract new industry, boost the service sector, cut pollution and energy use, close old state-owned loss-making factories, reduce the demonstrations and protests by laid-off workers and by farmers who have lost land to industry.

In short, somehow create a Confucian “harmonious society” from a host of apparently contradictory priorities. And fund it all yourselves. No wonder local officials are being blamed by the many millions still gazing empty-pocketed at the shop windows displaying the opulent goods the nation is producing for foreigners, and for its own nouveaux riches. They are having to create mini welfare states overnight, with scant taxing powers. And in Dalian, a coastal city I visited earlier this year in the north-east, they are doing so for a population similar to that of NSW.

The first 25 years of China’s kai fang or opening up were fuelled by Deng Xiaoping’s “to get rich is glorious” dictum. But today’s leaders, Hu Jintao and Premier Wen Jiabao, are placing a fresh emphasis on the quality of growth – on reducing the widening wealth gap and the worsening pollution. Failure in this next core communist party campaign would lead to eroding popular support and eventually, potentially, rumblings of a new revolution.

Dalian’s mayor, 50 year old former finance professor Xia Deren, told me: “Up to a dozen years ago, most people in Dalian were working in traditional industries – such as chemicals and ship building. At that time, the workers had hoped their employer would take care of them for life.” Suddenly, that burden was shifted to the city government, as it was throughout China. Local officials had overnight to find ways to provide the medical, educational, housing, pension and other needs formerly met by the state firms, whose workers lived on site.

But the central government did little to provide the resources for them to do so. No wonder that fees, commissions and other charges proliferated, further alienating may of their own residents. There is a very long tradition in China of people blaming local officials for everything that goes wrong, and praising the people at the top, who live in a remote and apparently caring, blameless world. People used to say, “If only the emperor knew…” Now they say, “if only grandpa Wen knew…”

In Dalian, the government had to introduce special budgets as welfare, health and education costs spiraled. The mayor spends much of his time trying to attract new industries. The evening after I met him he was attending two business banquets. He said he copes by eating alternate dishes. These new industries, he says, are supposed to consume less energy and resources. The key answer is jobs, he says. Besides looking after the army of older workers now redundant, the city has to attract businesses to employ the 80,000 young people joining the workforce every year, 30,000 of them graduates. Ultimately, Xia said, it is only “through healthy economic development that the government can meet people’s expectations.”

He presented me a copy of “The World is Flat,” a best-seller by Tom Friedman, a prolific champion of globalization – which he and other city mayors around China, especially on the coast, are grasping eagerly as their best chance to bed down the transformation from rustbelts into boomtowns. But the race against poverty and destabilizing resentment remains a marathon, and Mayor Xia is well aware that “outsourcing central” is only a way-station, not an ultimate goal.

Thus also the $US 586 billion stimulus package that Beijing is injecting into the economy as the labour-intensive export sector, for long the driver of China’s growth together with investment, faces massive job losses. The government has wanted for years to shift from over-reliance on this sector. But Beijing was too slow to do so, confronted by many local challenges, so it’s now been caught in this trap. What if it can’t deliver on its core source of legitimacy, continued improvement in living standards through constant economic growth?

My final take on changing China emerged from covering the Sichuan earthquake.

This period of not only geological but also human convulsion, opened an intriguing window on what Chinese people want for their own lives, and in which direction they want their country to go. Foreign businesspeople have tended to praise China’s top leaders for the country’s modernization, and to applaud their apparent capacity to enforce change by diktat – sometimes, by implication, forlornly wishing that democratic societies could be directed with such decisiveness.

But much of China’s rapid change can be attributed to the determination of its “masses” to carve out better lives for themselves and their children come what may, with the party’s legitimacy relying on its capacity to shift its tactics, even its values, in response to demands from below.

The Tiananmen demonstrations of 20 years ago served as a wake-up call to the party. While with one hand it cracked down cruelly on the demonstrators themselves, with the other it responded by ceding more space in the economic realm. Progress has happened as a result of individuals seeking, finding and exercising steadily more space in which to move – in which to start, develop and expand a business.

Government has enough on its plate to meet the growing demands on its services as China transforms itself into a modern, chiefly urban culture, without fighting a rearguard action for every inch of its economic turf. And as it has conceded space for people to build businesses, this has become perceived not so much as a favour, an act of generosity on the part of a usually omnivorous authority, but more as a right.

This is new ground in China, whose communist dynasty constitution guarantees many rights, but has circumscribed them with so many administrative regulations and caveats that – especially since China still lacks independent courts – they have become like gifts handed down from on high, readily withdrawn again. In contrast, the space – the de facto right – obtained by its constant personal exercise by many millions of people, is all but impossible to withdraw. This is now inching forward, from the right to own private property, to the right to start a small business, to the right to personal expression – though still not, in this case, to disseminate that personal view widely.

And now, it seems likely after 100,000 volunteers poured in to Sichuan after the quake, we shall see more space open up as an appropriated right, for private charity and volunteering. This period of two nationalisms – one angry and anti-foreign, one positive and empathetic – is forming the rising generation’s version of a Tiananmen Square experience.

The setting appears benign, from the party’s perspective; it was praised for its quake response. But even without expressing any demands, the actions of the volunteers articulated them: we no longer view the party and the People’s Liberation Army as sufficient proxies for us, we want to be actors too, in helping the afflicted. So centimeter by centimeter, civic space is carved out, just as was space to do business. The question now, is when and how the party will find a way to regularize this inexorable trend.

Many observers are awed by the apparent pace of change in China. And for the laobaixing, the ordinary folk, life has perhaps never been better; but the same can be said for people around the world. Despite the physical modernization, the core institutions of state have changed little if at all in 60 years. Will China’s next chapter see such change? I wouldn’t bet on it. Just as I wouldn’t bet on Chinese failure or implosion; that has been a losing bet ever since the kai fang strategy began. Inertia is a more likely winner.

It was not a promising sign, that just about the only prominent figure who appeared to be missing from the rows of leaders at the Olympic opening ceremony was the premier who secured both the Games and China’s crucial accession to the World Trade Organisation – the single-minded Zhu Rongji. Such outspoken figures do not fit today’s template. Zhu grasped the nettle of state owned enterprise reform, as we have seen, laying off millions of workers in order to save the sector that is now helping power the whole economy, along with the mostly privately owned and foreign invested manufacturing sector, and is starting to provide the government with crucial revenues to help fund its overdue welfare provisions.

The present Hu Jintao-Wen Jiabao team have slowed the appreciation of the yuan to protect exporters, pushed state funds into the ailing share markets and addressed inflation through capping prices, including of energy. In political administration, it is also a case of one step forward, one step back. Following recent riots in Guizhou over the handling of a rape case, and following the revelations in Sichuan after the earthquake that thousands of children died needlessly in “tofu” buildings in their schools – firm outside but squidgy inside – the government issued an instruction that local officials must listen to people’s complaints, “upholding legal rights and promoting social harmony and stability” – while denying parents access to legal redress. The same is now applying to the families whose babies have died or become severely ill in the melamine milk scandal.

Harmony, a classically Confucian term, is the keyword of this government. But which Confucius is the party now promoting? The core concept of harmony, for instance, has been re-interpreted by those in power – starting with imperial times – to mean that people should be obedient, and receptive of official instructions. Pierre Ryckmans, Australia’s leading sinologist, writing as Simon Leys, referred scathingly in his introduction to the Analects of Confucius, to Singapore’s founding father Lee Kuan Yew’s efforts to propagate “the magic recipe (supposedly found in Confucius) for marrying authoritarian politics with capitalist prosperity.” Singapore provides a compelling development model for today’s Chinese leaders.

Yet Ryckmans says that “imperial Confucianism only extolled those statements from the Master that prescribed submission to the established authorities, whereas more essential notions were conveniently ignored – such as the precepts of social justice, political dissent, and the moral duty of citizens to criticize the ruler (even at the risk of their lives) when he was abusing his power, or when he oppressed the people.”

Thus in part the rejection of Confucius by Chinese modernizers in the 20th century. In an indication of what kind of Confucianism the current leaders are espousing, this year, as the Olympics approached, the government banned all petitioners – people who, according to ancient Chinese tradition, appeal to the top leaders for redress against local officials’ corruption and cruelty – from the capital itself.

A leading analyst of Chinese politics, Willy Lam, says: “The contradiction between the party’s rhetoric and action, and the recent burst of ‘mass incidents’ heightens the Hu-Wen team’s need to do more to convince Chinese citizens as well as Western observers that their pledges about training better cadres – and giving more say to the oppressed under-classes – will last beyond the fanfare and spectacle of the Olympics.”

The party’s top priority to date has been its very control of every area of national life, which it uses not in lieu of legitimacy but as a source of it.

The move to broaden the ruling ethos from Deng’s “to get rich is glorious” to Hu’s “harmonious society” echoes Confucian humanism and noblesse oblige. China, while in many regions remaining poor, is also facing the challenges that come from economic success, including terrible pollution, and epidemics of the diseases that accompany a changing lifestyle including heart disease and cancers.

These are tests that would challenge any ruler. And the party is well aware of the many precedents for those who have overseen a spurt in national development, to face then – when they expect only applause – especially grave challenges to their power. Suharto in Indonesia, the military presidents in South Korea, the Kuomintang in Taiwan, are among the examples.

Thus the focus in China on introducing a safety net, a welfare system that also provides the confidence to consume rather than to save every spare cent, and thus helps the economy too, to rebalance away from over-dependence on exports.

Progress is being made, but it’s slow – and local leaders throughout China feel under contradictory pressures: maintain rapid economic growth, keep attracting investors, but also cut pollution and invest in social infrastructure.

Every aspect of China was on parade during the Olympics, the good, the bad and the ugly. But the battle for gold in the great game that is China’s development path as it emerges as a 21st century superpower, has only just begun.

Although the country has acquired – or re-acquired – an umpire, in Confucius, to whom decisions can be appealed, his verdicts are not always easily read, across so many centuries. That, of couse, suits the interpreters, of whom there are legion. But for now the final word still rests with the secretary-general of the communist party that once sought Confucius’ oblivion.

I have taken you down quite a few turnings in the contemporary Chinese garden. I hope some have surprised you, as the zhang jing, the screened scenery, is intended to do.

And this being his home town, I leave you with the rhetorical question that, if answered positively, would certainly lead us down somewhere else entirely. One of the more originally-minded Chinese bloggers, who uses the pen-name Liang Jing, asked plaintively at the end of a blog: “When will China have its own Kevin Rudd?”

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To answer these questions, it helps, I think, to have lived in Asia. People’s perceptions of Australia range hugely of course. In China, the initial response is often “ah, dai shu” – pocket mouse – meaning kangaroo. Our fauna, featured on countless wildlife TV programmes, are our best known feature by miles.

Growing numbers have been tourists here, or have studied or know students here. So there are first hand impressions, which can be quite quirky. Many Chinese students, for instance, live effectively in ghetto worlds while here and have only tangential contact with Australians.

The media accounts of Australia that get a run in Asia are, like those in Western countries, often about weird and whacky events, about Alice Springs’ Henley-on-Todd Regatta in a dry river bed, or about tourists consumed by crocs. And they are usually derived from wire stories, which are themselves often written by journalists in Sydney who have ripped them from Australian domestic media.

For there are only a handful of Asian foreign correspondents in Australia (or anywhere else in the world, including within the rest of Asia, for that matter). There are local freelances, but that’s a different matter.

This reinforces the importance of Australia’s own media building an audience in Asia. That’s not easy; we don’t have the size of diaspora of the Indians or Chinese who can build on them as a core market, or the natural curiosity about Australia that exists in Asia about America, say.

It has been a bold and welcome stroke, then, for the federal government to have invested in a decent Asia-focused TV service relayed through the region. Sitting between Bruce and Angelos, I am reluctant to say that Australia Network is unbeatable, but I can say it’s doing a terrific job, infinitely better than the woeful previous incarnations. And TV as a medium retains great influence and prestige in Asia. It’s important that it remains focused on the region, though; a global Australian service would fragment it and see it lose the focus and the relevance that makes it stand out today; it would become a pale shadow of a service like insipid and flavourless CNN or BBC World.

What message do we want to send to Asia? We want, essentially, to be noticed, to be counted in as corporate, cultural, political decisions are made. We want to be viewed as relevant. Warts and all is fine. Irrelevant is not.

Contribution to festschrift for Professor James Griffin on his 80th birthday:

“Jim’s role in this cornerstone of Moresby society – and indeed of the national polity, for several years – was to provide historical context and themes, to pull threads together, to make sense of the apparent craziness and indubitable corruption of that world. And, of course, to be the civilising genius. We all felt lifted into a better realm, a more humane and purposeful one, through Jim’s analysis of the meaning of this sacking or that deal…”

Jim at the heart of Port Moresby’s Great Game

I first met Jim in 1982, I think it was, when I dropped in on the Brashes’ place. Elton had just become vice chancellor. We were already engaged in conversation in the airy living room, the louvres wide open, when I realised that we were in the presence of another guest. It was Jim, having an afternoon snooze. Elton whispered that Jim wasn’t well, that was why he had come round. But he awoke suddenly, and almost immediately joined in the chat in a most animated and entertaining manner.

It was as if he had always been there, somehow, in that intense world crowded with colourful people – but as if for some reason I had not been consciously aware of his presence (I arrived in Moresby on Friday, February 13, 1976, after Jim and Helga had left).

The other inhabitants of the milieu beyond the campus into which we immediately lured an uncomplaining Jim, felt the same. He became almost instantly, a core element, his rare absence lamented.

This world was a PNG version, if it can be imagined, of the Bloomsbury Set salon enmeshed with a political rogues’ gallery from Mayor Daley’s Chicago, diplomats out of Evelyn Waugh’s “Scoop,” the odd corrupt businessperson, and journalists who would have loved to have been in Billy Wilder’s “The Front Page.” Among the more colourful characters were the journalistic doyen Sean Dorney, general hospital superintendent Damien Wolfahrt – who always told the most lurid and entertaining stories – and my “bro,” the brilliant Highlands columnist and observer of PNG quirkiness, Joe Koroma.

The top staffers for the prime minister and other leading politicians often turned up, as did ambassadors, high commissioners, visiting consultants, the whole town’s journalists young and old, and of course, academics led by “the Prof” – Jim.

The venue changed, but for the longest period, the golden years, was at Word Publishing’s functional renovated warehouse in Hohola, more or less at the geographical heart of the then city. Once the rest of the Word staff left after 5pm, there was a rush down to the liquor store at Gordon’s for a few slabs of SP from the cold-room. The Friday-night club – no membership required, just a willingness to talk, listen and laugh – would then start to arrive, contributing towards the drinks or bringing their own.

Given the frequency of fights under liquor in Moresby, it was an indication of the sunny disposition of grace that framed our sessions, that almost invariably, the Friday night crowd instead simply agreed to disagree.

As the evenings wore on, and the momentous political events of the week, the scandals and the gossip, were unwound and dissected, the hard core remained – including usually myself, for I had to lock up, and naturally, Jim. There would be a swift debate about which restaurant we should attempt to rush towards before it closed. Usually a Chinese joint in Boroko, their round tables aids to continued conviviality. Everyone would cram into the cars. Jim’s tiny two-stroke machine would be especially dangerously packed.

A tradition soon developed, that no Friday night would be complete without a song from “the Prof” – either at the main “club” session, at the restaurant, or even at someone’s pad afterwards, sometimes mine if there still seemed to be stories to tell.

Jim’s role in this cornerstone of Moresby society – and indeed of the national polity, for several years – was to provide historical context and themes, to pull threads together, to make sense of the apparent craziness and indubitable corruption of that world. And, of course, to be the civilising genius. We all felt lifted into a better realm, a more humane and purposeful one, through Jim’s analysis of the meaning of this sacking or that deal.

The most lovely aspect of this magical interlude in our lives, was that everyone felt – and was made to feel – absolutely equal, and more than that, capable of higher achievement. Our young reporters at Word Publishing, writing for The Times of PNG which had been launched in 1980 and was entering its heyday as a powerful influence on national life and on journalistic standards, and for the Tok Pisin paper Wantok (which survives today, splendidly), and for the youth magazine New Nation, viewed Jim as a mentor in generous living. He had time, he made time, for them. None more than the brilliant Frank Senge/Kolma, who has progressed – like others – from a great journalistic career to a failed political one.

This was a setting in which someone should have written PNG’s Canterbury Tales, or a rival to Graham Greene’s Our Man in Havana or The Power and the Glory. But they didn’t – or haven’t yet. Jim would be one of the core cast of characters. Who would play him in the film version though? Could Russell Crowe grow a sufficiently convincing beard?

Postscript: The sound of Jim’s voice has become a vital thread in the life of my whole family since then: singing Handel’s aria Where’er You Walk at the reception after our wedding, where he was our best man, singing the songs of the 1940s with my indefatigable mother Rose, now 92, and singing that deliciously sinister tune The Teddy Bear’s Picnic to our daughter Rose, which was recorded and is a favourite family video.

Is it possible that his voice might again be heard on his 80th?

China: The Next Chapter

“Immediately after that announcement in the Great Hall, I asked people in a bus queue round the corner, what they knew of the heir apparent Xi Jinping. None had ever heard of him, but all knew and liked his wife Peng Liyuan, a famous singer of patriotic anthems who for years scored the top slot, approaching midnight, at the most viewed regular TV show of the year, anywhere in the world: the variety program on CCTV on Chinese New Year’s Eve. ‘Oh is THAT her husband?’ they asked. Now the cover is being drawn over the song-bird as Xi’s public persona is promoted…”

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China’s national TV station CCTV9 interviewed me live a few weeks back on the international topic of the day: Australia as the bad guys.

The focus of the segment on the current affairs show, illustrates the pervasiveness of this line. It was on Kevin Rudd as the architect of a holocaust of camels.

China and Australia are battling over who gets to frame the terms under which their relationship – newly important for both sides – is conducted. That Beijing should even be bothered about the camel cull, underlines the effort it has been taking, to get on top.

This battle is vital for Australia because China is today such a massive economic partner – much more than the mere trading target it used to be. Chinese investment is pouring in, to revitalise Australia’s resource sector at just the right time – the global downturn, when our competitors are struggling hardest.

It is crucial for China because it cannot afford to give the impression, as it shifts gear into a global leadership role, that a country like Australia can gain the upper hand, or can get away with defying its injunctions against those it deems hostile – from business opportunists to “splittists.”

China’s media, diplomats, and others deemed as important in pursuing its “soft power” in the relationship, are required to participate in the pursuit of this cause which for a time sidelined the country’s vaunted “win-win,” mutual respect, formula.

That is a tribute of sorts to Australia’s bulked-up presence in the Chinese psyche, not least since the arrival of a Chinese-speaking prime minister. During previous periods of controversy, the hand-wringing has mainly come from Australia.

This time, following the stream of awkward events – the failed Chinalco-Rio Tinto bid, the Stern Hu arrest, the Defence White Paper, the Rebiya Kadeer visit – the volume of the debate has been as high in China as in Australia. And we have the visit of the Dalai Lama to come, in December.

The focus on the apparently enigmatic role of Kevin Rudd has been stronger in China – reflecting that the expectations by Beijing of Rudd were probably unrealistically high.

The Chinese party-state has tended to believe that people who truly understand China, also support what it says and does. That doesn’t always follow.

And in Rudd’s own case, since he has become leader of the Labor party he has not claimed for himself the “bridge” role often assumed for him, but instead originally sought that of “zhengyou” or true friend – a role which has now been clearly rejected by Beijing.

The broader hopes for the China relationship beyond the business world have for the present retreated to the safer ground of common interest, though the sheer volume of the person-to-person links today, including the 130,000 Chinese students in Australia and the Chinese tourists – 356,000 last year – indicate that the enmeshment course is inexorable.

China – confidently believing its system is now on the right side of global history – is testing whether it can lever its economic links to extract gains in the diplomatic and other realms, with Australia a classic testing ground. What is even more intriguing, is whether it also stands to gain better economic deals – by accident or Macchiavellian design – as a result of its pressure over diplomatic, strategic and cultural tensions.

The successive, and increasingly emotive, stand-offs between Australia and China have served a useful purpose – to educate people on both sides about the nature of those societies and especially their political and legal structures, neither of which is set to evolve nearer the other any time soon.

What are we learning about China?

It is on a winning streak. As with the USA’s new world order following the “end of history” as the Soviet Union collapsed 20 years ago, this hinges on a few rickety premises as well as some firmer economic and social realities.

Deng Xiaoping said that China should bide its time and keep a low profile in world affairs. But that was almost 20 years ago. Today, resurgent China is flexing its muscles, Deng’s world  a half-remembered phase of development.

Beijing is pushing with relish the boundaries of soft power, a favourite concept that it borrowed from US academic – now ambassador to Tokyo – Joseph Nye.

Hong Kong film director Wong Kar-wai and Chinese film-maker Jia Zhangke, hero figures for Western  moviegoers, renowned for their independence, have come to terms with the new cultural demands of China that are reaching into Hong Kong, too. They withdrew from the Melbourne International Film Festival, films they produced and directed – because the festival invited demonised Uighur leader Rebiya Kadeer as a guest.

From Beijing’s perspective, making a film about such a sensitive issue as Uighur identity and then screening it, comprises interference in its domestic affairs, triggering a bitter process of blame and counter-blame from which China, which claims never to have been a colonial power – unlike the West – exonerates itself.

Taiwan, whose Kuomintang (Nationalist) government has moved rapidly closer to Beijing since taking power 16 months ago, is also acknowledging that soft power. Wu Bo-hsiung, until recently chairman of the Kuomintang, and parliamentary Speaker Wang Ching-ping, issued warnings to the Dalai Lama to keep a recent visit to Taiwan non-political.

As China’s economic muscle and, increasingly, military and diplomatic power grows, it is starting to attract globally some of the vilification the US has suffered for being so strong. And at home, where the party-state claims credit for everything that succeeds, it also cops the blame for everything that goes awry.

For now, that doesn’t matter. China’s adversaries and detractors may whinge and wail, but they are the losers. China wins.

This is serenely understood as the country’s fated, just reward after 60 years of Communist Party rule during which Chinese children have been educated that their country’s ignominious 20th-century history was as the hapless victim of chiefly foreign devilry.

Yet the ways in which one can “offend the feelings of the Chinese people” are growing rapidly, as is China’s intent to respond to such offences. Every year, it seems, a new test is presented to China’s diplomatic and economic partners to assess whether they are truly friendly to what Beijing University professor Zhu Feng calls this “lonely rising power.” The response to US-based Rebiya Kadeer is the latest such test.

Even China’s most devoted friends and admirers in countries such as Australia find themselves lamenting the party-state’s capacity for alienating potential support, sometimes apparently needlessly, for instance over the Kadeer visit. But in doing so they fail to place themselves in the shoes of those Chinese officials, students and others whose careers and livelihoods are judged by standards remote from those of Western liberals.

Beijing’s mandarinate is an outcome-driven bureaucracy, and what counts is not what people may feel about the Chinese leadership, but how they behave in response, inside and outside China. This pragmatic approach is underpinned by extensive polling of Chinese society at all levels.

Even 60 years after the formation of the People’s Republic, the leaders of the 74 million-strong communist party remain anxious about its legitimacy, lacking electoral tests.

They seek to cement legitimacy from continued improvement in living standards, from a resurgent Han Chinese nationalism to counter dismemberment which the Soviet Union suffered in the 1990s when communism fell apart, and – the exciting new ingredient – from 1,500 year old Confucianism, redeemed from the purgatory where Mao Zedong had consigned it.

Challenging the sources of that legitimacy inside or outside the country, rings loud alarm bells, as we are discovering in Australia today.

Comparisons are being made between China’s rise and that of Germany in the late 19th century. Will China also seek greater elbow-room as it rapidly industrialises?

Perhaps this is what we are already seeing in its vast, comparatively empty western regions – now steadily being filled by migrating Han Chinese. No need to expand beyond the borders, there is room within.

The rulers placed in charge of those troublesome western regions, Xinjiang and Tibet, are old-fashioned party secretaries with little apparent self-consciousness about how imperialist their pronouncements about the native people of those regions, Uighur and Tibetan, may sound.

But such niceties are besides the point. Preventing the fragmentation of China is the point. Melbourne based academic historian Tom Bartlett says about the very name China (“Zhongguo”): “As to the perception that China is being encircled, what other psychological consequence is possible when one persists in calling oneself, and thinking of oneself as `Centralia’ (Zhongguo)?

“This outcome is inherent in the geometry. Where there’s a strong perception of `zhong’ (centre) there must be a corresponding awareness of `wai’ (other, in the current argot). That paradigm is at the core of republican China’s vastly ambitious project to extend and exercise intrusive sovereignty over the historical `border areas’ of the western region.”

The core sources of legitimacy do not work in those vast regions; indeed, they antagonise people.

For Uighurs and Tibetans do not view economic opportunity or progress as central to their self-understanding, which is fuelled more by complex, ancient cultural and religious drivers. They tend to feel locked outside that emphatic nationalism because it appears to them a Han Chinese more than a truly multicultural imperative.

This Han nationalism is steadily being extended even to ethnic Han who are not citizens of the People’s Republic – like Australian Stern Hu – but are expected to behave appropriately if they are also to enjoy the attendant material privileges.

And Confucius, the rejuvenated source of values being newly championed by the communist party, was never the ancestral hero of China’s 55 ethnic “minorities.” The adherence of Tibetans to Buddhism and Uighurs to Islam also gets in the way of their assimilation.

Thus do China’s sources of legitimacy and of today’s success, carry within them some of the seeds of its biggest challenges.

Even though it appears fated to win these challenges ultimately, Beijing will continue to be buffeted by inconvenient opponents, and it will be irritated – if not sufficiently to change tack – by the light shone on its arcane political structure because of the very way in which it seeks to impose its will, abroad as at home.

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Rowan Callick

Many Australian readers can list several great historians of World War II. Besides Winston Churchill himself, names in lights include A J P Taylor, Hugh Trevor-Roper, Alan Bullock, Ian Kershaw, Antony Beevor.

Their focus was or remains the war in Europe, with Hitler as the marketing key, the magnetically evil drawcard.

A few books about that same war in our part of the world, such as Peter FitzSimons’ big-selling Kokoda, and Peter Ryan’s Fear Drive My Feet – both set in PNG – have also captured many Australians’ imaginations.

These are all fascinating, not least in the latter case for what we learn about ourselves. But those encounters were with a Germany and Japan that have changed ineradicably.

Australians are mostly reasonably informed about the wars of the last century, even those fought in a remote continent. In comparison, what do we know about the framing of the most significant development of our day – the unremitting rise of China?

The country’s rulers constantly play on the unique continuum of China’s civilisation through millennia. History matters hugely. Speeches today are peppered with references to distant dynasties. Hundreds of millions of TV viewers tune in to long-running soaps set in the Qing or Ming eras.

Yet Australians appear today as mystified about China as ever, maybe even more so following the train of diplomatic and business rows this year during which our differences were highlighted.

We have mostly patched them up and re-emerged the other side as tentative pals again. But why does Beijing behave as it does? What drives China’s nationalist feelings, and its growing global reach? What does it mean, that China’s leaders work – and during most of the week, live – in Zhongnanhai, a huge compound immediately west of the Forbidden City, where emperors once held court?

The Australian education system provides little help. Tourism, and personal exchanges, offer a little more. But most people sense they’re at a standing start, intrigued but puzzled how to learn about this ancient, complex and vast land, 20 per cent bigger than Australia.

Don’t be dazzled by the thrusting steel and glass towers, or misled by the immense appetite for the new. More than for any other nation, it is impossible to make sense of China without knowing something of its persisting past.

Fortunately for readers in English we have a rapidly growing corpus of fine works on Chinese history. But the dean, the outstanding historian of China – and many peers in the US and Britain believe, the finest historian of our age on any subject – is Jonathan Spence, who has just slid into semi-retirement.

He continues to make sense of the present, and to foreshadow future patterns, through telling wonderful – and terrible – stories from China’s history.

Spence, an Englishman aged 72, began teaching at Yale University 44 years ago, and has been history professor there for most of that period.

His 15 books span the period from late Ming China, around 1600, to the mid 1980s.

A slim, bearded figure, he bears a passing resemblance to the only figure with whom he might be compared, in his mastery of such a massive field – adopted Australian Pierre Ryckmans, who writes, with extraordinary élan in English, his third language, as Simon Leys.

Spence’s books, unlike, unfortunately, some of Ryckmans’ masterworks, are all still in print. But Australians, bizarrely, may need some patience to obtain them. Besides “The Search for Modern China,” which is the core text, internationally, on late 19th and 20th century China, and which Australian publisher John Wiley thus keeps in stock, most will need to be imported.

This may indicate our failure to ask sufficient questions about China, our inadequate curiosity, beyond the price it will pay for our commodities. Such intellectual neglect will ultimately cost us dearly.

Susan Jakes, who now works on the China Beat web site, describes attending Spence’s History of Modern China lectures at Yale, whose largest auditorium had filled half an hour before the first lecture was scheduled to begin. Her account explains lucidly the dimensions of Spence’s appeal:

“A figure in a hooded coat slipped through the crowd toward the blackboard and began, silently, to fill it with a list of unfamiliar words written in slender uppercase letters. When he took the lectern, he made no sales-pitch to the assembled shoppers. He said only, ‘I’d like to start now’ and began a lecture he called, ‘Ten Things I Find Fascinating About China.’

“I’ve lost the notes I took that day – though I’m fairly certain the list included the Three Gorges Dam, the future of the one-child policy and the legacy of June 4 -but what has stuck with me, indelibly, is how quickly after Spence began to speak, I knew that anything he found fascinating was something I needed to hear more about.

“When the lecture ended, there was applause. I don’t how long it lasted because my roommate insisted we sprint to the bookstore a block away and buy the books for the course before they sold out. Which they did. Before we’d even left the store.

“Spence lectured three times a week that year, which meant he had about 40 lectures to span the period from just before the Manchu conquest to the present, or roughly a decade per each 50 minute class. The course moved chronologically, but it did so at what felt like an unhurried pace, with time for detours into art or literature.

“The lectures had the feel of finely crafted short stories, and at times full-length novels. They were beguilingly titled – ‘The View from Below,’ ‘All in the Translation,’ ‘Into the World,’ ‘Bombs and Pianos’ – and they built in intensity to end in startling revelations or quietly delivered lines of poetry.

“He always put individuals front and centre. No event worth mentioning was too large to be refracted through a single human life, and no life was too minor to have its humanity summoned up alongside its historical significance – the Kangxi Emperor advising a bondservant on his health, Ding Ling’s mother running around an athletic field on her newly unbound feet, a Boxer victim’s Steinway piano, Mao aboard his private train.

“He could ‘catch the essence,’ but he spoke casually, musingly, as if what he was saying was only dawning on him at the moment he said it. The effect was disarming. There was an open-endedness about the way he presented even the subjects he knew best, that invited us to feel a part of them

“Among some of my classmates this promise produced an almost instantaneous decision to reorient their studies or move to China. I came more hesitantly to the subject and the country, but I am sitting in Shanghai as I write this, quite as certain as one can be about historical causes and effect, that had I not found my way to that lecture hall, or if Spence had been lecturing on astrophysics or on Luxembourg, I would not be here.”

Spence has been loaded with honours by the American and British governments and academic worlds. He presented the BBC’s Reith Lectures last year – the model for the ABC’s Boyer Lectures – on the broad theme “Chinese Vistas.”

They were surprisingly disappointing, but this was the fault not of Spence but of the dumbed-down corporation, which reduced the talks to a few minutes in order to present often-odd questions from members of the audiences, who seemed to have been profiled as representative of a Beeb conceit of its world.

Some of Spence’s books – especially his magisterial “The Search for Modern China” – cover the great sweep of China’s history. Others, such as his most recent work, “Return to Dragon Mountain,” focus on a few exemplary figures whose experiences and writings throw light on a whole era. They include some intimate stories best described as detective non-fiction, others closer to tragic epics.

His Chinese name is Shi Jingqian – meaning “an historian who admires Sima Qian,” the archetypal Chinese historian who lived from about 145 to 86 BC.

Spence might be imagined as an English version of a Confucian scholar, a Renaissance man, whose interests and knowledge extend broadly, into unexpected and sometimes delightfully arcane areas. But like all great historians, he never lets the reader lose touch with the guiding narrative. He is a terrific story teller.

A colleague describes asking Spence, as they walked across the campus, what he was working on: “Jonathan’s eyes narrowed, as though he were looking into the distance. ‘I’ve discovered a marvellous source,’ he murmured. ‘About the murder of a woman named Wang: a body crumpled in the snow.’ ”

Later, his book The Question of Hu grew from Spence’s discovery of a hapless man from Foshan in China locked up like a lunatic in the asylum at Charenton in early 18th century France, shortly before the Marquis de Sade was also incarcerated there.

Of all the characters who crowd his books, the figure with whom he most clearly exhibits fellow-feeling is Zhang Dai, the historian of the Ming dynasty and of his own extraordinary family, the hero of “Dragon Mountain.”

Zhang describes a boat outing on Hangzhou’s exquisite West Lake, in the 1620s. China has an ancient saying, now transformed into a tourism marketing slogan: “Heaven is above, below are Suzhou and Hangzhou.”

Zhang writes, in Spence’s translation: “On the slopes of the hills, the house gates were all closed and people were sleeping deeply, one could not see the light from a single lamp. I laid out a clean mat in the boat so I could lie there and look at the moon; in the prow of the boat, one of my young companions began to chant a song.

“The drinking I had done blurred with the dream I was having, the sound of the song seemed to recede, the moon itself also seemed to grow paler… The boatman poled us back to the shore, beating out a rhythm with the pole to tell us it was time to go to bed. At that moment my mind was huge as the ocean… I could not grasp what this thing was that people call sorrow.”

In time, amid the dashed dreams and casual cruelty always triggered by the downfall of a dynasty – as the Ming were supplanted by the Qing, the Manchus swept in from the north-east, from beyond beyond the Wall, beyond the pale – Zhang was to grasp “this thing” only too clearly.

Spence generously acknowledges the work of other historians and writers in his books. But at their core, is immense original research of historical texts. And here he is a beneficiary of that Chinese continuity – its written language changed little for many centuries, until Mao Zedong introduced the “simplified” script that is now ubiquitous in the People’s Republic, and which may be on the verge of swamping traditional Chinese in Taiwan and Hong Kong too.

He also benefits from the immense store of original material that has survived even the invasions and civil wars of the 20th century. He draws, in his biography of the great Qing Emperor Kangxi, on the annotations the emperor made himself, in the vermillion ink only he could use, to communications from provincial governors, generals, and other officials.

This correspondence reveals much about the emperors – such as the instruction, written alongside information about the latest state of a regional silk market: “I don’t want to hear about silk! Your daughter is ill, focus your energies on helping her to recover.” The Palace Museum in Taipei, which contains many of the greatest treasures from the imperial Forbidden City, frequently displays selections of these letters.

Spence’s books combine history with literature. They refrain from moralising. Spence says in a long interview with Lu Hanchao for the Chinese Historical Review: “I try to let the structure of the work create the moral environment.”

He believes that “a kind of overstatement of a theoretical approach is somehow limiting… Simply to impose a social science analysis would not be appropriate, whatever it might be – whether it is deconstructional, or post-colonial, or post-modernist, or subaltern studies, or the ‘public sphere.’ Most of these are already passing us by… they are quite fleeting.”

His goal, he says, is “simply to encourage people to want to know more about China.” He wants the reader to think: “This is a really complex and interesting society. There are things here we haven’t thought about.”

Spence says: “We need to let the Chinese tell us their story; we shouldn’t be telling them what to tell us all the time.”

The books:

Ts’ao Yin and the K’ang-hsi Emperor: Bondservant and Master (Yale University Press/New Haven, 1966)

The story and milieu of Ts’ao Yin, hereditary bond-servant of the Manchu/Qing emperors who had enslaved his great-grandfather. His own great-grandson wrote China’s most famous novel, Dream of the Red Chamber.

To Change China: Western Advisors in China, 1620-1960 (Little, Brown 1969, Penguin 1980)

Out of hundreds of colourful candidates. Spence selected 16, who he says, despite the range of their expertise, “bared their own souls and mirrored their own societies in their actions, yet in so doing highlighted fundamental Chinese values… and speak to us still about the ambiguities of superiority, and about that indefinable realm where altruism and exploitation meet.” They range from the Jesuit pioneer Adam Schall to General “Chinese” Gordon to the Comintern agent Mikhail Borodin and the American General “Vinegar” Joe Stilwell.

Emperor of China: Self-Portrait of K’ang-hsi (Alfred A Knopf 1974, Vintage 1988)

Spence translates the original words of Kangxi (1661-1722) as his name is now represented, who is viewed as one of the greatest of the emperors. He brilliantly knits them together to form an autobiography that addresses us in a remarkably personal manner.

The Death of Woman Wang (Viking 1978, Penguin 1979)

The location: a corner of Shandong province from 1668-72. The actors: farming families responding to a series of crises, including “the decision of a woman named Wang, who was unwilling any longer to face an unacceptable present and chose to run away from her home and husband.” In the context of big h History, Spence writes, these crises were small, “to the people involved they were of absolute, fatal importance.”

The Gate of Heavenly Peace: The Chinese and Their Revolution (Viking, 1981, Penguin 1982)

Spence sets the scene for Mao Zedong’s declaration of the People’s Republic in 1949 by tracing China’s revolutionary ideas, and the people who promulgated them, including Lu Xun, Ding Ling, Hu Shi, Chen Duxiu and Li Dazhao, focusing on the period from 1895 through to the late 1930s.

The Memory Palace of Matteo Ricci (Viking 1984, Penguin 1985)

The Italian Jesuit Matteo Ricci (1552-1610) was the first Westerner to be permitted to live in Beijing. Spence compares Ricci’s two worlds: Counter-Reformation Europe and Ming China, “his classical past and his Chinese present.” The book’s centrepiece is Spence’s recreation of the “memory palaces” created by Ricci – by which he used imagined buildings, their rooms and contents, to remember vast amounts of information, including the scriptures and Chinese characters.

The Question of Hu (Vintage 1988)

The story of John Hu, a widower from Canton (Guangzhou) and convert to Catholicism whom French Jesuit Jean-Francois Foucquet engaged as his translator and assistant, before in 1722 bringing him back with him to France. Foucquet had set out to prove that Chinese religious texts were inspired by the Christian God. Hu began behaving bizarrely on the voyage over, and was eventually confined for two years in the lunatic asylum of Charenton, where the Marquis de Sade was later incarcerated. Spence uses French, British and Vatican archives to construct an imaginary log.

The Search for Modern China (W W Norton 1990)

Spence’s magnum opus, the 876 page essential history, from the late Ming around 1600 through to the massacre in and around Tiananmen Square in 1989, with great illustrations and maps. “The history of China,” Spence writes enticingly, “is as rich and strange as that of any country on earth, and its destiny as a nation is now entwined with all others in the search for scarce resources, the exchange of goods and the expansion of knowledge… There is no easy way to understand China, any more than there is an easy way to understand any culture, or even to understand ourselves. But the attempt is worth making…” The book’s closing words still hang in the air: “There would be no truly modern China until the people were given back their voices.”

Chinese Roundabout: Essays in History and Culture (W W Norton, 1992)

Here Spence has collected his own favourite essays, about Chinese and Westerners who tried to cross over into each other’s cultures, about Confucian theory and state power, about Chinese social history, about revolutionary China, and about spence’s own teachers and mentors – Arthur Wright, Arthur Waley, John Fairbank and Fang Chao-ying.

God’s Chinese Son: the Taiping Heavenly Kingdom of Hong Xiuquan (W W Norton 1996)

Probably the favourite work of Spence’s admirers. The Taiping rebellion of 1845-64 led by Hong Xiuquan, a failed Confucian scholar who believed himself to be Jesus’ younger brother, was the bloodiest war ever fought anywhere, leaving more than 20 million dead. The Taiping Heavenly Army seized the great city of Nanjing in 1853, established their New Jerusalem there, and came extraordinarily close to replacing the Qing emperors with Jesus’ Chinese dynasty. This story helps explain Beijing’s over-the-top attitude to the Falun Gong movement.

The Chinese Century: A Photographic History of the Last Hundred Years (Random House 1996)

This large-format book with great black and white pictures, co-authored with Spence’s wife Annping Chin, provides an alluring introduction to China’s tumultuous 20th century. The opening photo, of people gripping paper umbrellas crossing an ancient suspension foot bridge across a chasm between Tibet and the rest of China as the century opened, under lowering skies, sets the scene. Later, come Mao Zedong and Zhou Enlai in Yenan just after the Long March, a cocky couple with long hair and sideboards and peasant garb, looking oddly like members of Bob Dylan’s one time sidesmen The Band playing outlaws in a gritty home movie.

The Chan’s Great Continent: China in Western Minds (W W Norton 1998)

“One aspect of a country’s greatness,” writes Spence, “is surely its capacity to attract and retain the attention of others.” What he describes as “the sharpness of the feelings aroused by China in the West” appears as potent in Australia today as a century ago. His subjects, most of them writers, start naturally with Marco Polo and include Mark Twain, Ezra Pound, Eugene O’Neill, Franz Kafka, Bertolt Brecht, Jorge Luis Borges and Italo Calvino.

Mao (Viking 1999)

A 205-page canter through the life of the focal hero-monster of China’s 20th century, published in a series of “Lives” of figures ancient and modern. An important goal of Spence’s biography is “to show how Mao was able to rise so high, and sustain his eccentric flight for so long,” finally by adopting the mediaeval European role of a “Lord of Misrule” during the Cultural Revolution.

Treason by the Book (Viking 2001)

The web of intrigue surrounding treacherous attempts to displace the third Qing emperor, Yongzheng. At its centre lie the extraordinary direct exchanges between Yongzheng and the central conspirator, Zeng Jing, an aspiring scholarwho lived in Hunan in central China in the first part of the 18th century. It is a book about the power of rumour, about the imperial aspiration – no less resolute today – to control minds as well as deeds, and about the distance between a provincial village and the emperor’s court, “like the moon.”

Return to Dragon Mountain: Memories of a Late Ming Man (Viking 2007)

The world, especially the family, and the writings of Zhang Dai (1597-1680), who lived in the city of Shaoxing, south-west of Shanghai. Like many wealthy families, they had not long shifted from the countryside where they had been managerial landlords, as the population boomed and returns from farming diminished, per head. Aged 47, Zhang “had to face the harsh reality that the glorious Ming dynasty, in whose shelter he had lived so grandly, had sputtered out to an ignominious end, torn by competing forces of violence, ambition, desperation and greed.”

Break-out ends

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Rowan Callick

Richard Nixon first put on his makeup. Never again would the TV public be allowed to recoil from the 6 o’clock shadow that cast him a dozen years earlier as the villain in the debates with John F Kennedy.

This time of all times, the viewers of the news footage must be made aware they are watching a formidable leader seize a rare chance to shake up the way their world is shaped.

Then he walked down the steps of the Boeing 707 Air Force One, and into history in the most astonishing way. The glorious bright blueness of the winter sky – Beijing had yet to suffer its more recent “toxic growth” – matched the new livery of the plane.

Americans had taken the first lunar steps less than three years earlier. In its own way, this was a strategic version of landing on the moon.

Nixon was greeted on the tarmac at Beijing airport by Mao Zedong’s loyal, longsuffering and courtly lieutenant, Premier Zhou Enlai.

The People’s Liberation Army band played what travelling journalists – we have to find fault somewhere, even making history doesn’t give us the right to let such a show off the hook entirely – described as a toneless version of The Star-Spangled Banner.

The President and his wife Pat – who wore a red coat, traditionally the colour for brides – were accompanied by Zhou to what remains the state guest-house, Diaoyutai, set in a serene traditional Chinese water-garden in west Beijing.

That afternoon, on the very first day of their week in China, they went to meet communist party chairman Mao Zedong, who had been so ill until recently that there were fears he would not be well enough to meet Nixon. His doctor Li Zhisui – who was to write a remarkably frank memoir, The Private Life of Chairman Mao – said: “He was so bloated that he had to be fitted with a new suit and shoes. His throat was still swollen and he had difficulty talking. His muscles had atrophied from weeks of immobility, so we put him on an exercise routine a week before Nixon’s arrival.”

But on the day Nixon flew in, he went on, “Mao was as excited as I had ever seen him. He woke up early and immediately began asking when the president was scheduled to arrive. He had a shave and a haircut – his first in more than five months.” Li and his colleagues dismantled Mao’s hospital bed and moved the rest of the emergency medical equipment into the corridor connecting the study with the bedroom, hiding most of it behind potted plants.

Nixon was driven to Mao’s home inside Zhongnanhai, the vast walled zone immediately to the west of the old imperial Forbidden City where the leaders still work and mostly live. They talked for an hour.

Mao, Li wrote later, was delighted. “As soon as the president left, he changed back into his customary bathrobe. I took his pulse, which was steady and strong. Mao liked Nixon. ‘He speaks forthrightly – no beating about the bush’.”

Mao told Nixon “I like to deal with rightists. They say what they really think – not like the leftists, who say one thing and mean another.” Nixon responded that “those on the right can do what those on the left talk about.”

There were to be no more encounters with Mao, but several more lengthy meetings with Zhou, including banquets in the Great Hall of the People a short walk south of Zhongnanhai.

On the second day, the Nixons, Zhou and his wife Deng Yingchao, went to see a performance of the revolutionary ballet The Red Detachment of Women. They were accompanied by the chief architect of this high-energy proletarian myth-making, Mao’s third wife, former actress Jiang Qing – one of the notorious Gang of Four who drove the decade-long Cultural Revolution that was still ravaging China, and who was to hang herself while undergoing medical treatment in 1991 after being jailed for life. When Nixon asked her who had composed the work, she responded that it had been “created by the masses.”

Nixon, who was accompanied to China by a vast retinue, went on to tour the Great Wall, Shanghai and the nearby ancient city of Hangzhou with its famously scenic West Lake where they visited the Island of Three Towers Reflecting the Moon. Much of the visit was screened live back to avid TV viewers in the US. The Americans gave Beijing Zoo musk oxen named Matilda and Milton, and in return received pandas Ling-Ling and Hsing-Hsing.

The impact of the encounter was to be momentous. China, over time, helped the US ease its way out of the Vietnam War. The US immediately revoked travel and trade bans, and later went on to recognise the People’s Republic as the “one China.” They formed diplomatic common cause against the Soviet Union, ensuring the ultimate downfall that Russia might have avoided if the two great communist powers had marched in step. And after Mao’s death in 1976, Deng Xiaoping opened China to the world economically, laying the foundations for its extraordinary surge from poverty towards today’s comparative prosperity.

Nixon’s ultra-realist Secretary of State Henry Kissinger, who had set up the visit during a dramatic, secret foray of his own the previous year from Pakistan, told Nixon in a memo to prepare him: “Your meetings with the Chinese will be totally unlike any other experience you have had. The drama and colour of this state visit will surpass all your others… You

will have to resist being seduced by the charm of the hosts. These people are both fanatic and pragmatic.”

As a footnote, Australian audiences should be aware that Prime Minister Gough Whitlam visited China and met Mao both as opposition leader in 1971 and then as prime minister in 1973, when like Nixon they met in the chairman’s home.

Australia’s first ambassador to the PRC, Stephen Fitzgerald, who was the first Beijing based diplomat to see Mao for years, described Mao’s library, where they met, as “spacious and well lit with skylights at the four corners of the room. A bed is there on which the chairman takes rests. He appears to spend a great deal of time in this room.”

Whitlam and Fitzgerald found Mao sitting down, but he rose and came to greet them unassisted. Mao said: “My body is riddled with disease,” Whitlam asked the questions, with Mao providing single sentence answers so softly uttered and so heavily flavoured with his Hunanese origins that Fitzgerald, whose Chinese is excellent, found him difficult to follow. Fitzgerald concluded that essentially, “the scope of Mao’s existence… appears managed by Zhou and an extraordinary group of young women cadres.”

Now there’s a topic for a new commission for Victorian Opera: Whitlam In China…

*Rowan Callick is the Asia-Pacific editor of The Australian. His new book Party Time: Who Runs China and How has been published recently by Black Inc.

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