Waiting for Sunrise

Policy Review, December 2002/January 2003

Book Review of China Dawn: the Story of a Technology and Business Revolution by David Sheff (HarperBusiness. 301 pages. $26.95)

–By Ying Ma

Everybody wants something from China. American policymakers would like to see Chinese authoritarian rule undermined and democracy peacefully emerge. Chinese entrepreneurs from Beijing to Shenzhen want to found world-class companies that rival Western multinationals. Western businessmen salivate over the potential returns of investing in a market of 1.3 billion people. The Chinese government wants to develop a modern economy but maintain a backward, repressive political system.

When the information revolution caught fire in China in 1997, it appeared poised to grant everyone’s personal China wish. The revolution promised to spur the free flow of information, create a Chinese “New Economy,” attract foreign investment, and make people rich. Former president Bill Clinton called the internet “a harbinger of democracy” in China. Chinese president Jiang Zemin bragged to American audiences that Chinese society was rapidly becoming more modern through the internet and cell phones. Chinese companies regularly popped up in Zhongguancun, Beijing’s high-tech district, billed as China’s answer to titans like Microsoft, Yahoo, or eBay. Foreign companies — big names like Dell, Dow Jones, America Online, and others — rushed to invest in the new frontier of the technology bubble, banking on Chinese companies that promised a spot on stock exchanges in Hong Kong and New York. For a while, everyone was utterly giddy.

Far fewer are giddy today. Though the information revolution drastically changed the face of China during the past five years — connecting more Chinese than ever before with the outside world through the internet, wireless handsets, and broadband — democracy has not surfaced. The technology that was supposed to have a democratizing effect instead is controlled by government and private censors. The Chinese government has promoted the internet’s economic potential but has also labored assiduously to suppress its ability to free minds from authoritarianism. In the past few years, some Chinese entrepreneurs became rich, most foreign investors did not make nearly as much money as they had expected, and Washington is left wondering whether the information revolution can still deliver what it promised.

David Sheff’s China Dawn: The Story of a Technology and Business Revolution is the first comprehensive attempt to explain the giddiness and disappointment inspired by the information revolution in China. Shadowing top executives from successful high-tech firms in China over a three-year period, Sheff captures the it explosion in China from the perspectives of the players who made it possible.

Sheff, a friend of the movers and shakers profiled in China Dawn, offers a close-up account of the creation of the Chinese “New Economy.” Unfortunately, it is not an objective account. Enamored with the talents and success of his friends, Sheff fails to critically evaluate the business and political realities created by the Chinese government. Intoxicated by the excitement, uncertainty, and contradictions of modern China, Sheff confuses economic progress with signs of political liberalization and successful business leadership with political representation. As a result, the book offers an incomplete and naïve interpretation of the internet’s role in a complicated nexus between business and politics in China.

China dawn features venture capitalists, investment bankers, internet executives, telecom chiefs, and ordinary dot-com workers. It tells the story of Bo Feng, an investment banker for Robertson Stephens, who invested in the Chinese it industry long before Westerners knew or believed that Chinese citizens had computers. There is also Edward Tian, founder of the technology firm AsiaInfo, who helped lay the infrastructure for the internet when few in China even knew what it was. He would later serve as the chief executive of China Netcom Corporation, a state-owned telecom company that prepared the groundwork for Chinese citizens to access broadband. There is Wang Zhidong, founder and former ceo of Sina.com, who created the biggest and most popular internet portal in the Chinese-speaking world and brought the heartbeat of Chinese communities online. Smart, charismatic, dedicated, and savvy, Chinese like Feng, Tian, Wang, and other subjects of China Dawn were risk takers, pioneers, and entrepreneurs turned business leaders.

Numerous Chinese citizens — from those who had studied at prestigious Western universities and enjoyed fat family connections to those who started out with nothing but a dream — created a business revolution in the late 1990s. Instead of working at traditional state-owned enterprises, they joined the it industry as engineers, graphic designers, business development managers, sales representatives, marketing professionals, or executives of their own companies. They learned to secure venture capital, write press releases, draw up yearly marketing plans, sell products, and pool resources to build companies. This generation of Chinese became practiced entrepreneurs and respected professionals who pushed forward the Chinese economy’s march from communism to capitalism.

Unlike their counterparts in Silicon Valley, the Chinese tech entrepreneurs faced odds far more daunting and market conditions far less favorable. The tech revolution they pioneered occurred alongside China’s messy transformation from a planned economy to a market economy. As the government wrestled with how to pursue economic liberalization, it became an ever-present and uncontrollable factor in every business venture, imposing unpredictable regulations, creating political uncertainties, scaring away foreign investors, angering politicians in Washington. In May 1999, when Chinese students staged massive, government-condoned anti-American demonstrations in the aftermath of the nato bombing of the Chinese Embassy, Chinese and American businessmen worried that bilateral trade ties would be severed. In late 1999, when Beijing decided that foreigners would be prohibited from investing in the Chinese telecom industry, No. 2 carrier China Unicom had to engage in harsh legal and financial negotiations to disentangle itself from foreign investors. In 2000, when the Chinese government issued its first set of comprehensive regulations to censor the internet, the stocks of all three mainland-based, Nasdaq-listed internet firms — Sina, Sohu, and Netease — plummeted. Amid grave market uncertainty and relentless government interference, the Chinese internet generation nevertheless built a new economy.

The revolution they created was explosive and breathtaking. The internet population in China grew from a paltry 620,000 in October 1997 to 45.8 million in July 2002. Already, over 2 million of these users are accessing the web via broadband. China’s mobile telephone market, which included only a handful of subscribers a few years ago, now boasts over 180 million users and is the largest such market in the world.

The revolution was special, too, because the participants were driven not only by the desire for wealth, but by a commitment to create a more technologically advanced and modern China. Through their hard work, young people who had never stepped foot outside of their hometown were falling in love long distance over the internet, cities that never had telephones were wired for broadband, people who did not have personal computers were now trading songs and images on cell phones. Even when the bursting of the technology bubble in 2000-01 sent shockwaves through the industry in China, the subjects of China Dawn, along with other Chinese dot-comers, techies, and financiers, pressed on, motivated partly by the belief that their industry and their efforts would help China leapfrog from third- to first-world status.

But as the business and technology revolution swept through China, the much-expected political revolution never materialized. Though Beijing has facilitated the growth of the industry by cutting internet connection fees, supported national campaigns to bring government agencies, businesses, and homes online, and promised to permit partial ownership in domestic internet companies according to a World Trade Organization timetable, the regime has aggressively clamped down on what it considers subversive thought online. Internet content and service providers are required to maintain detailed records about their users, install software to record email messages sent and received, and send copies of any emails that violate government regulations to the relevant agencies. Internet cafés have been forced to install filtering software that blocks or deletes sensitive web content. Individuals seeking to spread democracy on the web have been arrested, websites that publish news and commentary critical of the government have been fined or closed, internet cafés that do not properly record their users’ online activities or filter out inappropriate sites have been warned or shut down.

China’s behavior on the world stage was similar: It has eagerly shaken hands with the West on everything from membership in the wto to hosting the Olympics, but it continues to suppress religious freedom, deny workers’ rights, brainwash its citizens, quash organized political dissent, torture and refuse due process to dissidents, and impose arbitrary and brutal government policies. Essentially, Beijing has applied to the internet medium the same approach it has used for economic liberalization: Promote technological and economic strength while suppressing dissent.

Sheff, much like other Western observers who measure progress in China according to the benchmark of its Maoist, totalitarian past, is all too willing to overlook political repression by pointing to rapid improvements in Chinese society for the past two decades. As a result, he views dashing, charismatic Chinese businessmen as wholly representative of China’s future. In China Dawn, not only are the high-tech types lauded for their business success; they are also trusted for their political opinions. When his subjects maintain that censorship can be bypassed by those who try and that China can no longer turn back progress, Sheff becomes a conduit for their optimism with such corny Chinese sayings as “Paper can’t wrap fire” and “Once you ride a tiger, it’s hard to dismount.”

To be sure, the information revolution has created ramifications far beyond business. It has liberalized social — if not political — discussion, exposed instances of policy failure and abuse, and pushed business closer to the rule of law. Top internet companies sue each other over plagiarism, inspiring extensive, heated arguments in court, in the press, and in online chat rooms — an indication that Western multinationals are no longer the only ones who care about intellectual property rights. Employees who were once told that all property belonged to the state now understand what it means to own a piece of a company through stock options. Sheff points out that the government mouthpiece People’s Daily even went so far as to solicit citizens’ opinions and criticisms of Beijing on its website.

However, Sheff’s overly optimistic interpretation of modern Chinese authoritarian rule confuses social and economic opening with signs of political liberalization. The two-pronged approach applied by Beijing to controlling dissent in Chinese society does not require the monitoring of every idea expressed online or in print; rather, the central government enforces its will by employing false propaganda, distortion, blackmail, incentives for self-censorship, and official intimidation. Accordingly, no commercial website in China can operate without a government license. Major content providers dutifully self-censor by deleting messages, warning users, and blocking entry points to more sensitive sites. Websites that fail to comply face punishment ranging from extraordinary fines to business closure. Those who seek to express political dissent online are intimidated by the arrests of online dissidents. On the anniversary of the June 4 Tiananmen massacre earlier this year, the government fined several of the largest websites for not having deleted sensitive political commentary about the occasion. Other commercial websites that were not fined took note and acted accordingly. In the internet age, even though some anti-Beijing voices have surfaced online, none has been allowed by the government to threaten its one-party rule.

Having failed to comprehend that control of information in modern China is more insidious than during the Mao era, Sheff also seems only vaguely aware that the yuppies he profiles harbor a sense of optimism not shared by many other Chinese who have fared far worse in the reform era. They include laid-off workers from state-owned enterprises who have been cheated out of their pensions, peasants who are taxed unfairly by corrupt local officials, teenage factory workers who get their limbs mangled in sweatshops, and labor activists who are arrested while seeking fairer wages and safer working conditions. As impressive as China’s tech businessmen are, they are not political visionaries who fight for abused Chinese citizens or who regularly search for more enlightened, more humane governance in China.

In fact, the nonchalance of the Chinese entrepreneurs toward government repression only reflects the triumph of government efforts to wipe out its citizenry’s political consciousness. Since Beijing opened fire on student democracy protestors in 1989, it has employed its massive propaganda powers to tout the precedence of economic reform over political freedoms. Not only have Chinese citizens been barred from political activism by force; they have also been bombarded with propaganda warning that political reform would create instability and endanger the success of much-needed economic reform. In a world where political activism is seen as wholly incompatible with economic progress, many citizens have adopted the government motto “To get rich is glorious” and shunned organized dissent.

Those Chinese who have not accepted the government’s rationale are barred from opportunities for business success. Jimmy Lai, a noted publisher and businessman in Hong Kong, has been more or less shut out of the China market due to his outspoken, critical views of the mainland regime. Media tycoon Rupert Murdoch found his business development in China thwarted when he touted satellite television’s ability to undermine Chinese authoritarian rule (he quickly relented). It is small wonder, then, when those who have fared well in the China market sound suspiciously similar to the government. Bo Feng, the suave venture capitalist, toes the party line and states that for China, “focusing on economics is human rights.” Other internet executives, not noted by Sheff, are far more gushing in their support of the regime. When Beijing announced that it would censor internet content in late 2000, chinadotcom, a Hong Kong-based, Nasdaq-listed internet company, congratulated the Chinese government for its vision and leadership. When asked about the nature of online censorship in spring 2002, the ceo of another popular Chinese dot-com proudly declared that the news content used by his company was “safe” because it had been prescreened by the government.

As Washington Post columnist David Ignatius keenly observed, Chinese yuppies seem “genuinely bored by the debate about democracy and human rights. . . . It’s hard to be angry when your stomach is full.” One day, the West may realize that the ultimate irony of the Chinese economic miracle is that its most Westernized, most successful representatives are not freedom fighters but businessmen who have made the compromises necessary to profit in a police state. Sheff oohs and aahs over his subjects’ achievements but is oblivious to their willingness to rationalize government repression.

The difference between American and Chinese reaction to online censorship reveals a fundamental gap between the two sides. While the Chinese sought everything from wealth to economic development, personal gratification to electronic thrill, numerous notable Americans like President Clinton and New York Times columnist Thomas Friedman hyped the internet’s awesome democratizing abilities to such an extent that Washington came to evaluate the success of the Chinese internet solely on its ability to undermine authoritarian rule. To the Chinese, information has always been controlled by the state, as is evident in Beijing’s control over everything from print and broadcast media to artistic expression. Wang Zhidong, Sina’s former chief executive, often explained to Westerners that the internet was a progressive medium and has faced far fewer government restrictions than traditional media in China. Yet to Washington, information represents the gateway to freedom of speech and freedom of thought. Many did not think that China would or could control the faceless, nameless, borderless information superhighway. When Beijing proved that it could, pundits, academics, policymakers, and human rights activists were not only surprised but also indignant.

The fundamental perception gap has created, on the one hand, observers like Sheff, who became starry-eyed over the political future of China and consistently underestimate the extent of government repression, and, on the other hand, Washington policy types who systematically ignore the fact that the internet, though not having brought about democracy, has nevertheless accomplished no small feat: It delivered to China an unprecedented amount of hope and excitement never dreamed of before. China Dawn, by its inability to address the political reactions to the Chinese information revolution, is itself an unwitting example of the yawning gap between Western political expectations and Chinese business realities.

In the end, the indignant policymakers in Washington and the Chinese entrepreneurs all in their own ways hope to bring about a better China through the information revolution. China’s internet experience teaches that a business revolution is not a political revolution, and the former may not necessarily lead to the latter. While Washington needs to recognize that ordinary Chinese citizens can still love a censored internet because their lives are not about all-democracy, all-the-time, observers like Sheff need to realize that his subjects and other flamboyant Chinese businessmen may not be the answers to China’s political pains. Regardless of the glamour of the New Economy, China’s political future will still have to be fought in unglamorous locations like labor camps, detention centers, courtrooms, and the streets, and on the pages of freewheeling newspapers and websites that dare to deviate from the government line.

The business and technology revolution in China deserves the world’s applause. But the world should never forget that a true “China Dawn” will never materialize until the political revolution is won.

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