[Editor’s Note: On September 20, celebrity financial expert Larry Hsien Ping Lang (郎咸平), now a professor of finance at The Chinese University of Hong Kong, wrote an essay for the Chinese-language Global Times in which he asked why Chinese continue to earn low wages in exchange for the world’s most grueling work hours, with wages largely stagnant for ten years. The first of his two answers is China’s exploitation at the hands of a selfish West. “The first reason,” he writes, “is our exploitation by Europe and America.” Lang’s arguments have, as has often been the case with his writings, sparked lively debate in China over the causes of the country’s stagnant standards of living. Su Zhenhua (苏振华) asked earlier this month: “Does Lang Xianping not understand, or just not wish to understand?” The following editorial is one of the most recent return volleys, this time from Guo Yukuan (郭宇宽), a veteran journalist and one of China’s most interesting columnists.]

“Lang Xianping and the Strange Logic of his ‘Theory of Exploitation’”
Guo Yukuan (郭宇宽)
October 20, 2010
Larry Hsien Ping Lang (郎咸平) is at it again. In a recent essay for the Global Times called, “European and American Exploitation Makes Life Tough for Chinese,” Mr. Lang writes of how Chinese live pitiable lives, and he places the blame for this on Westerners, who are, he says, out to exploit us.
He writes: “Take, for example, average wages. Average hourly wages in Germany are the highest, at about 30 US dollars an hour. China falls behind even Thailand, where wages are around 2 US dollars. In China the average is 80 cents an hour, coming last in the world. While Chinese wages come last in the world, Chinese work more hours than people in any other country, on average 2,200 hours a year. Americans work around 1,610 hours a year, and Holland is the lowest, with just 1,389 hours a year. Workers in China earn the lowest wages in the world, but work longer than the rest of the world.”
After laying out these facts, which are likely to resonate with many Chinese, Lang poses the tough question of why things should be this way. “Whether we’re talking about China’s entrepreneurs or its workers, everyone has it hard,” he says. “Why, then, do we earn the world’s lowest wages when we work harder than the rest of the world?”
Lang finds his answer in “our exploitation at the hands of Europe and America.”
Larry Hsien Ping Lang habitually highlights the originality of his arguments, and he once again does so here. He writes: “Many scholars argue as a matter of habit that China’s labor-intensive industries have low profit margins because they lack core technologies, and that solving the problem of low profit margins means transitioning into high-tech enterprises. This is just a tall tale. Is it really because traditional labor-intensive industries lack core technology? No, it is not.”
Then comes his curious argument: “Look at toy manufacturing in Dongguan, for example. Profit margins in China’s toy industry approach zero. But profit margins for American toy companies were higher than 40 percent in 2007. Mattel does not do manufacturing, but controls the rest of the entire industry chain instead, encompassing product design, raw material procurement, warehousing and transport, handling of orders, wholesaling and retailing. As a result, Mattel controls the pricing power. Mattel allows Chinese toy manufacturers just fractional cents of the profit, while earning 3.6 dollars per item itself.”
Pardon me, but isn’t this contrast between Mattel, which holds core brands and technologies, and labor-intensive Dongguan toy manufacturers sufficient itself to show that if you don’t possess critical intellectual property you can expect very low profits?
Larry Hsien Ping Lang fails to apply even the most basic logic to this simple issue. Chinese people aren’t intellectually stupid, so why is it that China can only fiddle around with its property market, the government selling off the land at a profit while ordinary Chinese toil away in low-paying jobs? And why is it that Europe and America have been able to develop knowledge based economies? Supposing local governments have monopolistic control over the bulk of local resources, which is the case in China, and that they profit simply by selling off land. What incentive do these local governments have to develop an environment that fosters innovation and a knowledge based economy?
Following this line of thought further, suppose the same regions have no protections for intellectual property, and that any and all products designed can easily be stolen and imitated by others. What choice do people in these places have other than working their fingers to the bone?
Larry Hsien Ping Lang never addresses these very basic questions.
Having read Lang’s work often enough, I have a sense for how he works. First of all, he tells Chinese they are poor, tired and pitiable, and this gives him some degree of influence among the ordinary masses — they feel he’s someone who dares tell it like it is. Next, he argues that the system in mainland China is great — better than India, better than the Philippines, and better than Africa. Third, he asks how it is that Chinese can live such tough lives under such an excellent system. The answer he comes up with is that we are exploited by Americans and Europeans.
Lang is routinely invited to deliver reports or lectures to this or that local government or property developer in China. A top notch economist, and he harps on the point of just how fabulous our system is in mainland China. Don’t Chinese know just how good they have it? The only problem is our ruthless exploitation at the hands of the West. So if we want to complain, he suggests, we should turn the finger of blame on Old America and Old England.
Larry Hsien Ping Lang insists it is a form of exploitation when Mattel makes 3.6 dollars on every toy and Chinese companies get only a fraction of that. I wonder if Mr. Lang realizes that every time he pockets one of his substantial “lecture fees” it is like all of those pitiable Chinese workers are the ones paying up. And has Lang ever considered this might be a form of exploitation?

In an open letter dated October 11 and posted to the internet on October 12, 23 Party elders, including Mao Zedong’s former secretary Li Rui (李锐) and former People’s Daily editor-in-chief Hu Jiwei (胡绩伟), called for an end to press censorship in China. The letter quoted Chinese Premier Wen Jiabao (温家宝), who said during an October 3 interview with anchor Fareed Zakaria on CNN that “freedom of speech is indispensable for any nation.”
The authors of the open letter argue that “privatization of newspapers and periodicals is the [natural] direction of political reforms” in China, and that without free and independent media it is impossible to “connect with the will of the people and attain true leadership.” In order to accommodate this goal, the signatories urge in Point Six of their concrete demands: “Southern Weekly and Yanhuang Chunqiu should be permitted to restructure as privately operated pilot programs [in independent media].”
The second of these publications, Yanhuang Chunqiu, is a journal (published since 1991) that is seen to reflect the views of more liberal thinkers within the CCP, and it has often over the years published relatively open views on Chinese history, politics and current affairs — frequently also drawing pressure from Party leaders. The journal has historically enjoyed the support of Li Pu (李普), former deputy director of Xinhua News Agency, and Li Rui (李锐), both signatories of the recent open letter, and other Party officials.
In the most recent issue of Yanhuang Chunqiu, Du Daozheng (杜导正), a former high-level Party official and aide to Premier Zhao Ziyang (赵紫阳), draws on recent public remarks by Premier Wen Jiabao to talk about political reform in China.
Du takes issue with the idea that Wen Jiabao is merely “putting on a show” in his attention to political reform, and also suggests that President Hu Jintao is a supporter of the Premier who has given him more license to handle a number of important issues in recent months.
The interview should also be seen as a rebuttal to recent remarks from leftist elements in the Party — such as this editorial in Guangming Daily — that argue that China must distinguish between the “false” democracy of Western capitalist nations and the “true” democracy of socialism with Chinese characteristics.

Democracy Should Not Be Divided Into Capitalist and Socialist
Yanhuang Chunqiu
October, 2010, p. 38.
Du Daozheng (杜导正), director of the editorial board at Yanhuang Chunqiu
In the history of China’s economic reform and opening, the special economic zone is an especially rich chapter. The [recent] commemoration of the 30th anniversary of the Shenzhen Special Economic Zone was something everyone, from the central [leadership] to the local areas, paid particular attention to. On August 20 and 21, on the eve of Shenzhen’s 30th anniversary, State Council Premier Wen Jiabao (温家宝) went to Shenzhen on an inspection tour and made a speech there. On September 6, in the midst of grand celebrations to commemorate Shenzhen’s 30th anniversary, CCP Central Committee General Secretary Hu Jintao (胡锦涛) also gave a speech. These two speeches from our Party and government leaders were hotly debated both inside and outside China. A number of us old friends have found it impossible to avoid discussing these issues when we come together. A number of my views have been gathered together by an old friend “spanning generations” in question-and-answer form. After looking it over I found it rather interesting, and thought it suitable to be published in concise form and presented in the interest of exchanging ideas among friends attending to these issues.
Q: Throughout the history of economic opening and reform, debates have never ceased. More recently, surrounding the commemoration of the 30th anniversary of the Shenzhen Special Economic Zone, we’ve seen what seems to be a new wave of debate. Many people are debating Premier Wen’s speech in Shenzhen. What are your views?
A: Premier Wen Jiabao’s speech has drawn attention, in my view, [principally] on the level of politics. Wen Jiabao mentioned political reform many times in Shenzhen, both in formal addresses and in informal remarks as part of his inspection visit, and he raised [the issue of] political reform to a new level. He said: Without the protection afforded by political reforms, we will lose the gains [we have made] through economic reforms, and our goal of modernization cannot be achieved.”
“We stand at a great new juncture in our history, and we must continue to liberate our thinking, searching bravely. [We] cannot stand still, and even less can we afford to step backward. Standing still and stepping backward will not only mean wasting the gains of 30 years of opening and reform and a precious opportunity for development . . . but these contravene the will of the people, and they are ultimately dead ends. On this major question concerning the fate and future of our country, we must not have a moment’s hesitation.”
Wen Jiabao refers to our present era as “a great new juncture in our history,” and I believe there is much sense in this. The history of opening and reform is 32 years long . . . and China’s economic reforms have brought achievements that command attention. But many problems have also emerged. Just as when Deng Xiaoping (邓小平) made his “southern tour,” the question of the direction forward for Shenzhen is actually a question about the direction China is heading. This demands that our Party clearly recognize the situation and the tasks that face us. I think Comrade Wen Jiabao, in placing the crux of continued advancement of reforms on the task of political reform, has cut to the heart of the issue. In recent years, our comrades in the Central Committee of the CCP have rarely paid such attention to political reform, nor especially have they [as Wen Jiabao has] elevated the obstructions to reform as “contrary to the will of the people” and as a “dead end” . . .
Q: In recent years, both in the political sphere and among the public, particularly on the internet, controversy over Wen Jiabao has never ceased. Some have said that he’s talked about things for years, but done very little, that he is “putting on a show.” What do you think?
A: I have something of a different view about the suggestion he is “putting on a show.”
“Putting on a show” is something one does before an audience of people, no? When you look at this more broadly, you can say that any leader, either before his people or in the realm of foreign relations, is acting in every instance in the manner of a performance. Now why do people say that Wen Jiabao is “putting on a show”? That’s because there are very few leaders in the Central Committee who have spoken as [Wen] has.
If we had more central leaders talking every day like this, putting on “shows” every day, that would be a wonderful thing. Sunshine governance, with a respect for the people’s right to know, would be immense progress over [the politics of] shadow and mystery.
Q: When people say Wen Jiabao is “putting on a show” this has another layer of meaning. His speeches are very fine, but they are rarely acted upon.
A: In my view he has always worked tirelessly for opening and reform. In terms of action, among the highest-level leaders in the Central Committee, he has not only made his position clear, but he has also worked very hard. His style and manner are about closeness and service to the people. During winter storms, earthquakes and floods he has appeared on the front lines at the first available moment. He has shaken hands with SARS sufferers and AIDS patients. He is also a living person, with his own thread of life, but he has worked without consideration for himself. This is not “putting on a show.” He is a very well read man, with a very good memory. I think that his manner and actions are based on his wide knowledge and the excellent traditions of Chinese culture.
On several occasions Wen Jiabao has openly spoken on the issue of political reform, and these I’m afraid were not incidental. In my view, he recognizes on the one hand the current predicament facing reforms in China, and on the other hand he has suggested that this is not [merely] his personal view. I personally believe that Hu Jintao supports Wen Jiabao. On a number of important questions this year, [Hu] has loosened his hand and let the Premier [take the lead]. Zhao Ziyang (赵紫阳）once said to me, “Wen Jiabao is a good person, and Hu Jintao is a sensible person.” I think this assessment is right on. I think Wen Jiabao should be given more support, creating the conditions enabling him to make use of his abilities. This would benefit the country and benefit the people. Protecting Wen Jiabao is about more than protecting an individual – it means protecting the claim to political reform, and protecting the forces [that might promote] political reform.
Q: Still, many people have noticed that contrary to Wen Jiabao’s speeches, Hu Jintao made little mention of political reform in his speech during celebrations [of Shenzhen’s anniversary], so perhaps these two have different views on this issue.
A: I’m not completely in support of this interpretation. I’m a Party member who has lived within this Party for some 70 years, and speaking in terms of the structural nature of the Central Committee, Wen Jiabao’s speeches should represent the spirit of the Party. The key points emphasized by Wen Jiabao and Hu Jintao can be different, but in [their determination to] unswervingly carry out reforms they are on the same page. Since Hu Jintao became General Secretary he has raised the issue of political reform and promoted democracy on numerous occasions. In his political report to the 17th Party Congress in 2007, Hu Jintao said: “In deepening political reforms, we must keep to the correct political direction, ensuring that the basis is that the people are the masters of their own destiny, and that the vitality of the Party and the nation are enhanced.” In 2005, Hu Jintao said to provincial Party cadres that the socialism and harmonious society that we need to build are ones of democratic politics, justice and fairness. We must actively and reliably promote political reforms [he said]. He was even so specific as to say during his speech commemorating Shenzhen that in the future reforms must be continued, that we must have the courage for innovation, “never becoming rigid, never standing still, not dreading any dangers, and not being distracted by any interference.” While he may not have spoken of political reform so openly as Wen Jiabao, toward reform and toward the SEZ’s role in striking out ahead [his remarks] have still contained much about political reform. Besides, Hu Jintao is the General Secretary, and when he speaks it is more wide-ranging, and it is natural that he accommodates all the various aspects of reform.
I recently saw a comment to this effect in one media: “Wen Jiabao is not a high-minded sermonizer, and nor is Hu Jintao an indecisive navigator. Many Chinese who are eager for reform are confident that Hu Jintao and Wen Jiabao share feelings for [former reformist PRC leader Hu] Yaobang, http://en.wikipedia.org/wiki/Hu_Yaobang meaning they are not laboring separately for their own agendas, playing their own political games, but are launching a converging attack, that they working together to slay the tiger that guards the road to reform, and together opening the door to change in China.” This sentence represents my own views very well.
Q: In the course of the development of the Shenzhen Special Economic Zone and the process of opening and reform in China there have been three major debates concerning reform. This latest [and third] time has corresponded to the anniversary of Shenzhen’s founding. We’ve seen the emergence again of fierce debate around the speeches of Hu Jintao and Wen Jiabao. How do you view this?
A: After the news came out of Wen Jiabao’s inspection tour in Shenzhen, there was an essay in one Beijing paper called, “Two Democracies of Different Natures Must Not Be Confused“, on September 4. The essay argued that on the question of “who should rule” and “how [they] should rule” socialism and capitalism had very distinct answers. Whether on the question of local experiments [in democracy], or in larger-scale moves, [the essay said,] we must begin by recognizing the difference between these two distinct forms of democracy. The essay talks about Shenzhen’s “separation of three administrations” [based on the idea that the functions of policy-making, enforcement and monitoring of the government must be separated], arguing that “concerning the separation of government powers, the understanding is somewhat fuzzy, and concepts even muddled . . . and the reason lies in that these concepts have not been clear about the line between socialist democracy and capitalist democracy, and rigid Western concepts are applied to Chinese realities.” I think its inconceivable that this idea represents the spirit of the Central Committee. Democracy is democracy. There is no division between democracy surnamed capitalism and democracy surnamed socialism. There is only real democracy and fake democracy.
Did you notice the language in Nanfang Daily? On September 6, Nanfang Daily, aside from having a special edition on the 30th anniversary of the SEZ, had a full page of editorials on political reform. It was called, “Political Reform: The Future Mission of the SEZ.” The headlines included, “The Deepen Reform and Opening We Must Keep to Marketization and Democratization,” “Using Political Reform as the Core in Promoting Other Reforms,” “Deepening Political Reform: The Breakthrough-Point for Future Reforms in the SEZ,” “In Realizing Justice and Fairness We Must Take the Lead,” and others. In concert with Wen Jiabao’s Shenzhen speech, they made concrete statements about political reform: “Political reforms and the building of democratic politics require that we liberate our thought, breaking through the news bonds of so-called socialist versus capitalist democracy, making use of the beneficial fruits of human political development and democracy building.” I think the language in Nanfang Daily represents the spirit of the Central Committee, and the will of the people.
Of course we support the views of Nanfang Daily. Moreover, I am confident that the Central Committee is as determined as ever to deepen reforms, and will be able to reach a new consensus on reforms. That consensus is that we must continue to break through these doubts about whether political reform is surnamed capitalism or surnamed socialism, just as Wen Jiabao has said: “[We must] bravely study and adopt the all of the civilized results of human society, and promote continued economic and social development in our country as we expand the process of opening.”