The 100 Year Anniversary of the Republic of China and Sino-US Relationship Trends

Today marks the 100 year anniversary of the Republic of China, known to most of the western world as Taiwan. October 10th, 1911 marked the end of traditional imperial rule in China, and the first attempt at democracy. Below is a promotional video from the event (Chinese), primarily discussing the history of the ROC and associating past figures and events with the freedom and prosperity seen in Taiwan today.

Prior to the 1970’s, the US recognized the Republic of China as the legitimate government of China, and actively worked to prevent the People’s Republic of China (PRC) from claiming a seat in the United Nations. At the height of the Cold War, the PRC were active combatants in the Korean and Vietnam wars. Nonetheless, in 1972, just 2 years after the end of the Vietnam War, President Nixon made a famous trip to China to normalize relations with the PRC.

PRC-US relationship normalization culminated in the Joint Communique on the Establishment of Diplomatic Relations in 1979, beginning US recognition of the PRC as the legitimate government of China in lieu of the ROC. At the same time, the US passed the Taiwan Relations Act, allowing for de facto diplomatic relations to continue with Taiwan.

While the Taiwanese economy far outpaced the PRC’s from the 60’s to the 90’s, the shift of PRC policy to the socialist market economy in 1978 has allowed the PRC to excel in recent years. With World Trade Organization acceptance of China in 2001, offshoring of American jobs to China have propelled the Chinese economy.

With the recent US economic struggles, many Americans have become increasing frustrated with perceived trade imbalances between the US and China. While have speculated about the resurgence of a red scare in response to economic pressures, others have been more vocal about denouncing China. However, the use of patriotism as thinly veiled racism is nothing new. Nonetheless, American policymakers have begun to combat aggressive Chinese economic policies with constructs like the recent China currency bill. At the same time, many US companies like Merck continue to move jobs overseas to China.

While relationships between the US, China, and Taiwan continue to be rocky, American corporations have tied the US to the hip with China. As the largest US bondholder, China has expressed concerns in US economic performance. Ultimately, US foreign and economic policy are supporting the continued shifting of jobs from the US to China. Measures like the China currency bill are too little, too late in the struggle to maintain US economic dominance. The wheels were set in motion when Nixon first visited China nearly 40 years ago.

While obviously, it is not beneficial for the US to normalize relations with Taiwan at this point in time, this is a stunning reminder of how US political rhetoric is often markedly different from US policy.

Chinese Consumerism – Death of the Knockoff Culture

A recent LA Times article explores the phenomenon of plummeting knockoff phone sales as the number of smartphones skyrockets. While this article examines the economics of this shift, it fails to capture the shift in Chinese culture that has led to this outcome.

Anyone who has visited China is familiar with the 山寨 (shan zhai) culture. The clothes that most lower and middle class Chinese wear are simply imitations of Western styles from 5 years ago, made in local shops and sold at significantly lower prices. Popular tourist destinations include places like the Museum of Science & Technology subway station in Shanghai. Here, vendors hawk row upon row of knockoff goods.

“Hello friend! We have special deal for you! Gucci, Prada, whatever you want, we have!”

The products they sell are as fake as their enthusiasm and English abilities. Out of curiosity, I purchased a fake IWC watch for $10. What a surprise it was, when it stopped ticking and the minute hand became dislodged less than a month later.

However, the Chinese knockoff culture extends beyond just fake luxury goods. It permeates throughout the Chinese lifestyle. Fake food scandals are seemingly a daily occurrence, with news stories about tainted milk and reused cooking oil dominating the news. When Chinese people encounter a good deal, it is assumed that the deal is fake in some form or fashion. The inevitability of these scandals in daily life is deeply rooted in the frustration of a populace unable to accomplish social change.

The shift from acceptance to avoidance of the knockoff consumer culture stems from the differing viewpoints of Chinese society. The younger generation, brimming with optimism from increased opportunities, is no longer willing to accept the fake culture their parents resigned themselves to. While the stratified social classes still promote the worship of big brand names, the willingness to accept substitutes has all but disappeared.

I traveled to Shanghai for the first time in 2010. During this trip, it was plain to see the awe on the locals’ faces when they saw my authentic iPhone. When I lost my phone in a cab, I was distraught. However, I was somewhat mollified by the recognition that the relative value for me was significantly lower than its value to whoever found it. For many (such as a taxi driver), the value of this item was equivalent or greater than an entire year’s salary.

When I returned in 2011, I noticed the googly eyes I once got using the iPhone in public had all but disappeared. Many of my friends in Shanghai had purchased their own authentic iPhones and looked forward to their next luxury purposes. One thing the LA Times article fails to capture is the level of sacrifice made by many of these people to afford these items. One lower-middle class friend of mine spent over 1/10th of her annual salary on an iPhone. This shouldn’t come as much of a surprise, as China’s GDP per capita was approximately $7,500 in 2010 according to the IMF.

While it is true that the relative price of smartphones has dropped over time, the insistence of the younger generation for quality over cost is a marked departure from Chinese culture which has dominated in the past. Expect the youth of China to affect social change in all of China over the next decades through traditional capitalist means, their wallets. As China continues to embrace consumerism and capitalism, expect a resurgence in use of the Chinese idiom,

一分錢一分貨。

Simply put, you get what you pay for.