A Reaction to James Fallows' Interview

Hongqing Chen

Note from Leslie Forman: I asked Hongqing to react to my previous post, about James Fallows' interview with Terry Gross.  Given her vast experience in finance, roots in Jiangxi Province, and excellent posts for this blog, I knew that she would be able to analyze this more closely than I could.  Here's a part of an email that she sent to me, which I have shared with her permission.  We look forward to hearing your comments.

Chinese government leaders, current and past, are all masters of the political power strategies documented and illustrated by Sun Tzu, The Book of History (史书), and many classic novels such as The Three Kingdoms, Dream of the Red Chamber, Legends of Water Marshals, etc.  It is easy to understand why China has invested so much in the US once you look at this from military strategy or power accumulation perspective.

In short, business people are short-sighted as they are trained to focus on the bottom line and short-term profit.  Intellectuals (including perhaps James Fallows) tend to be idealists, who want to find the good in anything.  Almost everybody can be used as tools, as they are easily fooled and persuaded.  Those who know how to play the game of power, however, are the masters of chess board who use every piece to advance their overall objectives.

So, why do I still want to work for the masses who are at the Bottom of the Pyramid?  It's because I am also an idealist and a believer in equal rights for all.  Amid all these games, those who have suffered the most deserve to be helped in any way possible.

Comments

[Daniel Shi]

Great stuff Leslie, Hongqing!.

My thoughts on where microfinance fits into China's agenda:
I think microfinance can also be approached from a purely pragmatic view. I don't know what the list of the biggest headaches for the Chinese government is. But I'm willing to bet that somewhere in the top five is going to be:

- Social instability
- The widening income inequality
- Developing the Interior and Western regions

And I think microfinance will have a big role to play in all of this. The MFIs Wokai works with are opening up the door for the rural poor to get access to investments. The hope, I'd imagine, is that this will help alleviate the income gap. Furthermore, I'd imagine this would open the doors for new industries and enterprises to spring up in inland provinces like Qinghai or Inner Mongolia. The poorest places that need it the most.

And I think ultimately, that will be linked to issue of social stability. Based entirely on armchair analysis, we've been seeing a lot of "mass incidents" in China, and a lot of the times they are linked to inequality - inequality of wealth, inequality of rights, inequality of social standing, etc. Social instability blocks economic development, and that's the government's number 1 goal.

So Microfinance can be a strong policy tool as a part of soothing inequality and reducing instability for a more "harmonious society".

[Leslie Forman]

Great synthesis, Daniel! I like the way you've connected microfinance to China's overall stability. It reminds me of the video I posted here: http://wokai.typepad.com/my_weblog/2008/10/chinas-development-policy-goes-rural.html

Keep up the good work and see you soon!