Op-Ed Contributors
Diminishing role of US role model
By Tao Jingzhou (China Daily)
Updated: 2009-11-19 08:01
One way to summarize China's 30 years of reform and opening up is to say that China has been learning from the outside world, particularly from the US.
Over the past 30 years, English, as a business language, has become popular within the Chinese business community, and references to English acronyms, such as LBO, ABS, MBS, CPI and PPI, are frequently used in the Chinese news media, as well as in conference rooms across the country.
Over the past 30 years, the influence of the Anglo-Saxon legal system has also left its footprints across the development of the Chinese legal system.
The call to "move closer to the world" can be better characterized as "looking to the US". In effect, the US has been a mentor, or at least an "example", in the development of China's market economy over the past 30 years. The Chinese in turn, looked up to the US in awe like a student looking up to a teacher with reverence and adoration.
I can still recall the US criticism of China in the 1990s, demonizing China's failure to launch asset-backed securitization, and China's failure to provide a practicable legal framework for asset-backed securitization.
Nor have we forgotten how, during their visits to China, the many US officials who called on the government to reduce its national savings in an attempt to indoctrinate the Chinese with the idea of excess consumption.
The image of this US mentor has been significantly tarnished in the wake of the financial crisis which is now poised to threaten global economic growth.
While the Chinese were dipping their hands in the Internet business, the bursting of the Internet bubble in the US sent ripples through its high-tech sector, showing the Chinese how the US virtual economy was "unreal".
While the Chinese were talking about the superiority of the US accounting system, the surfacing of the "Enron" scandal showed us that even US companies "cooked" their books.
While we were designing financial derivative products for several Chinese banks, the bankruptcy of Lehman Brothers, which to me is one of the apparently few forefathers of globalization with "Brothers" in its name (my former employer, Coudert Brothers which was founded 150 years ago, was already bankrupt, and Solomon Brothers was acquired), turned our reverence into dismay, and we came to truly understand the term "Nothing is Impossible".
Only last year we felt the quakes of the financial tsunami. The across-the-board collapse of the four giant investment banks made us disappointed with the US financial system. The Chinese are wondering how the US could act so disappointingly when we are in need of a role model for financial reforms.
Unfortunately, the pain only seems to increase with the uncovering of the Madoff ponzi scheme.
When we think that the US Foreign Corrupt Practices Act has helped build a clean administration and business community, our belief is challenged with the discovery of the Pfizer scandal involving promotion of drugs for unapproved use and the Control Components Inc scandal.
The Bush administration's unilateralist arrogance also put the US in a confrontational position with the rest of the world, including its traditional allies. High (and maybe unrealistic) expectations are now put on the administration of Barack Obama, the first African-American president in US history. However, Obama's visit to China may not be seen as the triumphal arrival of a savant professor and mentor, and still fewer will be the lessons that he could possibly give to the business community. Rather, the Chinese are more than ever wondering whether they should still look to the US as a role model for economic development.
The author is a partner of Jones Day, and adjunct professor of Peking University Law School.
(China Daily 11/19/2009 page8)
