Age of Ambition (23 page)

In the cab on the way to see the torch, I sensed that Tang Jie was uneasy about how fierce the conflict had become. “We do not want any violence,” he told me. What he wanted was to persuade his peers in China that finding the truth of the world around them was no longer simply a matter of accepting what they were told by the media, foreign or domestic. “We aren't limited to only two choices. We have our own media, too. We now have people with cameras and recordings. They have the truth.” He believed his generation had learned something vital that spring. “Now they know: I must use my own brain.”

From far away, it was easy to trivialize China's young nationalists as the pawns of the state, but up close, that image was less persuasive. The government treated online patriots warily because it sensed that they placed their pride in the Chinese nation, not necessarily in the Party. Their passion could swerve in unpredictable ways. After a nationalist website was shut down by censors in 2004, one commentator wrote, “Our government is as weak as sheep!” The government permitted nationalism to grow at some moments but strained to control it at others. The following spring, when Japan approved a new textbook that critics claimed glossed over its wartime atrocities, patriots in Beijing drafted protest plans and broadcast them via chat rooms, bulletin boards, and text messages. As many as ten thousand demonstrators took to the streets, hurling paint and bottles at the Japanese embassy. Despite government warnings to stop, thousands more marched in Shanghai the following week—one of China's largest demonstrations in years—and vandalized the Japanese consulate. At one point, Shanghai police cut off cell phone service in downtown Shanghai to prevent the crowd from organizing.

Xu Wu, a professor at Arizona State University, studied the rise of online nationalism. “Up to now, the Chinese government has been able to keep a grip on it,” he told me. “But I call it the ‘virtual Tiananmen Square.' They don't need to go there. They can do the same thing online and sometimes be even more damaging.”

As Tang Jie and I approached the torch-relay route, he gazed across the crowd and said, “Look at the people. Everyone thinks this is their own Olympics.” Vendors were selling T-shirts, headbands, and Chinese flags. Tang told me to wait until the torch passed, because hawkers would cut the prices in half. He was carrying a small plastic bag and fished around in it for a bright red scarf of the kind that Chinese children wear to signal membership in the Young Pioneers, a kind of socialist Boy Scouts. He tied it around his neck and grinned. He offered one to a passing teenager, who politely declined.

The air was stagnant and thick beneath a canopy of haze, but the mood was exuberant. Time was ticking down to the torch's arrival, and the town was coming out for a look: a man in a dark suit, sweating and smoothing his hair; a construction worker in an orange helmet and farmers' galoshes; a bellboy in a uniform with so many gold buttons and epaulets that he looked like an admiral. Some of the younger spectators were wearing T-shirts inspired by China's recent troubles: “Anti-Riot & Explore the Truth” read a popular English message. All around us, people strained for a better view. A woman hung off a lamppost. A young man in a red headband climbed a tree.

The crowd's enthusiasm brightened Tang's mood, reminding him that China's future belonged to him and to those around him. “When I stand here, I can feel, deeply, the common emotion of Chinese youth,” he said. “We are self-confident.”

Police blocked the road. A frisson swept through the crowd. People surged toward the curb, straining to see over one another's heads. But Tang Jie hung back. He was a patient man.

 

TEN

MIRACLES AND MAGIC ENGINES

 

Lin Yifu, the soldier who defected by swimming from Quemoy, was studying at Peking University in 1980 when the University of Chicago economist Theodore Schultz visited Beijing to deliver a speech. Lin was assigned to translate because he spoke English from his years in Taiwan. Schultz, who had recently won the Nobel, was impressed; he returned to Chicago and helped arrange a scholarship. Lin Yifu would, again, be a first: the first Chinese student since the Cultural Revolution to study for an American PhD in economics. If that wasn't enough to make him stand out, he was choosing to go to Chicago, the crucible of free-market thought. In 1982, Lin arrived in the United States, and it allowed him to reunite with his wife and children, who went there, too. Since his defection, he and his wife, Chen Yunying, had maintained occasional secret contact. She even sent him a poem that included the line “I understand you, I understand what you did.” Once in America, Chen studied for a doctorate at George Washington University.

While in Chicago, Lin embarked on the study of China's rebirth that would captivate him for decades, and his conclusions would prove controversial. After receiving their PhDs, Lin and his wife returned to Beijing in 1987, where he confronted a delicate problem. As a returnee from America, how was he supposed to explain Milton Friedman to socialists?

“I went to all the meetings and I didn't say anything,” he told me. Eventually, he found his voice. “They were surprised, because I said words in terms similar to theirs, in a language they can understand,” he said. For instance, when, in the late nineties, Chinese warehouses filled up with unsold televisions, refrigerators, and other consumer goods, many economists blamed low income for the problem, but Lin disagreed. “People didn't have the infrastructure for consuming those kinds of products,” he said. He became one of the most vocal advocates of heavy investment in rural electricity, running water, and roads, a proposal embraced by the Party in a package of reforms that it rolled out under the slogan “The New Socialist Countryside.”

The end of the Cold War, and the crackdown at Tiananmen Square, shook the Chinese establishment politically and economically. Zhao Ziyang, the reformist member of Deng Xiaoping's original economic brain trust, was blamed for not suppressing the demonstrations earlier; think tanks that he had created were dissolved, and several economists went to jail for supporting the protests. Zhao was put under house arrest, where he lived for fifteen years, hitting golf balls into a net in his yard and tape-recording a secret memoir, until his death. The Chinese government effaced him from the official history of the nation's success.

In economic terms, it was a reckoning point: in the two years after Tiananmen, economic growth slumped more dramatically than at any time since 1976; Deng saw his successes slipping away, and he put China's economists back to work. Reform resumed, but to prevent a repeat of Tiananmen, the Party offered its people the essential bargain: greater freedom in economic activities in exchange for less freedom in political life. It had the makings of a paradox: the Party was sparking individual ambition and self-creation in one half of life and suppressing those tendencies in the other. As an economic strategy, the approach put China at odds with the dominant economists in the West who recommended that the collapsing Soviet bloc undertake “shock therapy”: cut spending, privatize state-owned companies, and open borders to foreign trade and investment, a recipe that became known as the Washington Consensus.

In 1994, in a small office borrowed from the geography department at Peking University, Lin and four other economists founded the China Center for Economic Research, a think tank designed to attract foreign-trained Chinese scholars. He worked like a man possessed, often hunched over his desk until 1:00 or 2:00 a.m., and back the next morning by 8:00. Among colleagues, he was known as furiously driven and, on some level, unreachable. Over the years, he wrote eighteen books and dozens of papers, and he told his students, “My ambition is to die at my desk.” His research center expanded, and as it did, Lin acquired an influential voice, becoming an adviser on the government's five-year plans and other projects. He was not a member of the innermost circle of Party decision-making—he could never be—but it was a remarkable trajectory for a migrant once suspected of being a Taiwanese spy.

*   *   *

Year by year, Lin was becoming increasingly critical of the mainstream Western view—which had promoted shock therapy reforms in the former Soviet Union—and he became ever more convinced that the key to China's rise was the fusion of the market and strong government. In the decade after the Soviet collapse, much of Eastern Europe that had raced to the free market encountered unemployment, stagnation, and political instability, which weakened support for the shock-therapy approach. At the same time, in the 1990s, China's economy, a hybrid that fit into neither end of the spectrum, began to surge. It had unchecked capitalism in some areas and heavy government control in others. The focus on growth was relentless. Whenever the Party faced a choice between growth or the environment, growth won; between social security and growth, growth won. The costs of transformation were harsh. Health insurance and retirement funds evaporated; environmental pollution ravaged the landscape; urban real estate developers demolished large sections of cities to put up new housing. Public discontent grew, but the Party used force and the steady march of prosperity to keep discontent at bay.

Yet, the measurements were clear: In 1949 the average life expectancy was thirty-six, and the literacy rate was 20 percent. By 2012, life expectancy was seventy-five, and the literacy rate was above 90 percent. Columbia University economist Jeffrey Sachs wrote, “China is likely to be the first of the great poverty-stricken countries of the twentieth century to end poverty in the twenty-first century.” When China formulated a stimulus plan to combat the effects of the global financial crisis in 2008, so many new airports and highways had been built already that the planners could not immediately decide what else to build.

Lin was forming opinions about the role that political reform plays in economic success, and it was not a position that endeared him to Chinese liberals who called for democratization. He published
The China Miracle
, a book coauthored with Fang Cai and Zhou Li that zeroed in on the disarray produced by the collapse of the Soviet Union, and concluded, “The more radical the reform, the more violent will be the destructive social conflicts, and opposition to reform.” Lin promoted China's “tinkering gradualist approach.” In a lecture at Cambridge University in the fall of 2007, he pointed to “the failure of the Washington Consensus reforms.” He joked that the shock therapy policies ordained by the IMF seemed more like “shock without therapy,” and were destined to lead to “economic chaos.” He reminded people that the proponents of the Washington Consensus had warned that China's slow-reform approach would be, in his words, “the worst possible transition strategy,” doomed to “result in unavoidable economic collapse.” He had become China's most prominent evangelist for its own story of prosperity.

In November 2007, Lin received a phone call from the World Bank, which provides loans and expertise to combat poverty. Its president, Robert Zoellick, was coming to Beijing and wanted to hear Lin's take on China's economy. They met in Zoellick's hotel room, and two months later, the Bank called and offered Lin the job of chief economist. It was another first: he would be the first Chinese citizen—the first of any developing country, in fact—to serve in a post previously occupied only by high-profile Westerners, including the Nobel laureate and Columbia professor Joseph Stiglitz and the former treasury secretary and head of President Obama's National Economic Council Lawrence Summers.

Chairman Mao had considered the World Bank a tool of imperialist aggression, but now China was its third-largest shareholder and openly determined to acquire a greater say in international economic institutions. In June 2008, Lin and his wife moved to Washington, D.C. Everything he brought fit in two suitcases. They rented a house on the edge of Georgetown, with a patio where Lin could write in the open air. They put a treadmill in the kitchen. On business trips, when colleagues went out to socialize, he went up to his hotel room and worked late into the night.

*   *   *

When I visited Lin in Washington, on a broiling August afternoon, I found him in a roomy corner office on the fourth floor of the World Bank headquarters, a thirteen-story edifice a few blocks from the White House. He pushed back from his desk. He was at work, as always, on a paper. “How can a developing country catch up to developed countries?” he asked. It was the polarizing question at the center of his life's work, and he was now in a position to act on his answer. “We see a lot of failures and only a few successes,” he said. Lin had a staff of almost three hundred economists and other researchers, whose work helped the Bank and the governments of poor countries decide on strategies for raising income levels, a subject that had been riven for decades by ideological debate.

Within weeks of his arrival, the planet was hit by the most serious financial crisis since the Great Depression. The crisis posed a conundrum for Lin: Officials from the United States, Europe, and the IMF called on China to raise the value of its currency, to boost the buying power of Chinese consumers and make products from other countries relatively cheaper. Sen. Charles Schumer, Democrat from New York, told reporters, “China's currency manipulation is like a boot to the throat of our recovery.” But Lin saw the issue very differently. Forcing China to raise its currency “won't help this imbalance and can deter the global recovery,” he told an audience in Hong Kong, arguing that such a move would only depress U.S. consumer demand, because raising the value of the currency would make Chinese exports more expensive, and it would not help the U.S. economy, because Americans don't produce many of the things they buy from China.

The financial crisis was fundamentally altering the formula at the heart of China's boom: demand from America and Europe for Chinese exports was slumping, so, to ward off a slowdown, the government in Beijing tilted the balance toward investment. It pumped public money into railways, roads, ports, and property. The government lowered real estate taxes and urged the banks to lend, and the surge in loans in 2009 was larger than India's entire GDP. Among government officials, the construction craze unleashed vast ambitions: the city of Wuhan planned to build 140 miles of new subway lines in the seven years that New York City set aside to build 2 miles of the Second Avenue subway.