Discrimination in China: Systemic Issue, Granular Problem… or Both?

Here at ChinaFund.com, we have rather frequently presented studies and metrics (pertaining to freedom of speech, for example) which make it clear that China isn’t exactly the most politically correct nation in the world. While our team firmly believes that generation-defining investment opportunities lie ahead in China, we just as firmly believe in being straightforward and transparent when it comes to highlighting the less than ideal aspects that have to do with China and discrimination is most definitely high on that list.

Is discrimination a systemic issue?

Yes, for many reasons such as:

1. Throughout the history of the People’s Republic of China, “us vs. them” rhetoric which tends to be quite conducive to discrimination has been prevalent. Whether we are referring to the disastrous Cultural Revolution of 1966 (more information about it can be found in our article about Mao Zedong, which can be accessed by clicking HERE) or China’s economic as well as cultural isolationist tendencies of the past, case studies abound
2. The political status quo not exactly considering the issue of tacking discrimination a priority. On the contrary, a valid case could be made that the very existence (and especially future dominance) of the Communist Party of China depends on “fostering” precisely the type of climate that leads to discrimination
3. The fact that despite China’s tremendous economic growth, inequality looms and the systemic effects are not difficult to quantify. Even back in the days of Jiang Zemin, many Chinese citizens have criticized what they perceived to be China’s policies which revolved around securing economic growth at all costs and to this day, this represents a hot topic. While the Hu Jintao and subsequently Xi Jinping administrations have arguably done more than past administrations to tackle this issue, it still lingers

What about discrimination on a more granular level, discrimination when it comes to the average Chinese citizen… is that a problem?

Once again, the answer is unfortunately affirmative, for reasons such as:

1. Systemic mega-trends which inevitably end up impacting the average individual on a granular level. Stories about totalitarian regimes that nurture a climate of discrimination but average individuals who resist and embrace tolerance and oftentimes just stories. In the real world, “trickle down discrimination” is a more than observable phenomenon, with many average individuals ultimately ending up even embracing the Zeitgeist
2. The fact that a significant percentage of China’s population is still vastly under-educated. Understanding the many facets of discrimination and seeing fellow human beings as complex entities sounds easy enough in theory but let’s juts say that in the real world where functional illiteracy abounds, it would be a Herculean task to generate meaningful change even if the authorities wanted to. And as mentioned rather bluntly previously, they do not
3. Cultural opacity in some instances because, as mentioned previously, China has not decades or centuries but downright millennia of self-imposed isolationism (well before the Communist Party of China was even a concept) under its belt. As mentioned when referring to reason #1, this inevitably trickles down and generates significant effects on a granular level

When it comes to both instances (the systemic as well as granular dimension), the answer to the question which constitutes the title of this article is a resounding yes.

Can this change?

Of course.

Will it?

This tends to be a far trickier question because on the one hand, there are forces that are pushing China toward let’s say modernization when it comes to the issue of discrimination. For example, increased pressures from the international community, in some cases even associated with negative consequences that can be political and/or economic in nature.

While let’s say Mao Zedong’s China would have simply openly defied such international pressures because as a nation which wasn’t exactly connected to the worldwide economic system in a manner that can be considered meaningful compared to the West, it didn’t have all that much to lose. The opposite tends to be valid when analyzing today’s China, a country which has been a multi-decade economic growth success story partly or even especially as a result of being one of the let’s say spoiled children of globalization. In light of how important economic interconnectedness is to present-day China, it would be a stretch to state that it doesn’t care about international pressures.

Does it care enough to take action?

In some cases, yes.

Meaningful action?

Not always.

Therein lies the key to understanding the topic of discrimination from the perspective of today’s China. Despite multiple decades of economic growth and “modernizations” across a wide range of sectors since the Deng Xiaoping days, not enough has been done to tackle issues such as discrimination and various human rights-related ones in general.

It remains to be seen to which degree this can change. Perhaps as a result of increasing international pressures, maybe for endogenous reasons or… why not, possibly both. For now, we will limit ourselves to stating that the situation is anything but rosy from the perspective of discrimination for the reasons outlined in this post. It is ultimately up to you to include such variables in your economic equation as someone who is interested in gaining access to Chinese assets or managing a portfolio which includes Chinese assets.

As corny as the statement may be, this is why investing is as much an art form as an exact science. Should you be interested in picking the brains of a team of experts who have been around the proverbial block when it comes to “all things China” (good, bad and yes, even downright ugly), we are at your disposal here at ChinaFund.com and only one message away.