Every now and then something small starts me thinking about how different the US and China are with regard to the role of government in society: Recently I had the pleasure of listening to a presentation on contemporary film and theater by Jonathan Noble of Notre Dame. In the course of the presentation Jonathan mentioned that a Chinese film must get the approval of the Chinese government before it is submitted to an international film festival.
While I don’t endorse it, I understand the rationale behind Chinese government censorship at home, i.e., the need to protect the moral climate of the country and to “maintain stability”. But what is the rationale for controlling which films get submitted to international film festivals? Presumably the goal is to “protect China’s reputation” abroad. In other words, the government believes it has the responsibility to make sure that the prestige of an international film award is not bestowed on a movie that would give a negative view of China.
Think about how broad a role this implies for the Chinese government and how blurry the line is in China between government and non-government activity. In the US we see a clear distinction between government and non-government actors such that the government does not concern itself with the kind of image of the US that Hollywood is projecting to the rest of the world. The Public Diplomacy bureau of the State Department and other agencies work to explain US policies and introduce others to US society. But the US government does not see itself as the protector of the overall US image abroad.
As I said at the top, the issue of approvals of films at foreign festivals is a small thing, relatively speaking. However, as China watchers know, this expansive view of the role of government permeates many aspects of Chinese society.
I was in Shanghai when China entered the WTO and we ran a number of programs at the US Consulate to exchange ideas with local officials on implementation of China’s commitments. As implementation went forward, I heard the same interesting comment from more than one astute local official. They said that prior to China’s accession, they had assumed the major effects would be felt by Chinese firms. However, they had quickly realized that the biggest impact fell on the Chinese government which had to reduce its role in many areas of the economy and apply an outside set of international rules in others.
To me the most significant impact of implementation of China’s WTO commitments was a noticeable shrinkage in the role of the Chinese government in economic activity. This was one of the factors that has contributed to China’s dramatic economic growth in recent years.
Whether in the arts, trade, stimulating high tech innovation, or in building globally competitive companies, I remain convinced that over time the decisions of government officials is inferior to that of (properly regulated) market forces. I want to emphasize that I am not a libertarian. Market forces should play out within an appropriate regulatory framework. In fact, I believe that over the last 8 years or so we have reduced too far the US government’s regulatory role and we need reverse that trend in a number of areas.
But for China the opposite is true. China’s WTO accession resulted in a reduction of government involvement in the economy and an increase in competition in the market, to the benefit of Chinese consumers and economic growth overall. But the role of the Chinese government across society and the economy by any measure remains huge. China could move an enormous distance in deregulating its economy and still be nowhere close to the kind of excessive deregulation we have recently seen in the US.
Unfortunately, there are signs that in some areas deregulation in China is stalled or even reversing. Two recent examples are regulations on information security/encryption and the amendments to the postal law. I intend to put down some more detailed thoughts on each in future posts. But to put it briefly, I think in these and some other areas we are seeing the Chinese government, at the urging of special interest groups, implementing regulations that reduce competition and slant the playing field toward government-favored entities.
The heavy Chinese government intervention in certain areas worries some American business people because who feel their firms are being disadvantaged. I agree with that, but I believe that ultimately the biggest losers are Chinese consumers who wind up paying more for goods and services whose quality is not up to global levels.
Effective regulation is important in a 21st century economy. However, over the course of my career I never felt my colleagues in the government were particularly well qualified to serve as movie reviewers. I feel the same way about government bureaucrats deciding which technologies or firms should get special, protected status.China, Economy, Investment, Technology, Trade