China reminds business leaders of its harsh realitiesMay 4, 2012: 1:38 PM ET
Global businesses have placed bets on China as a stable source of growth for the foreseeable future. Bo Xilai and Chen Guangcheng serve as unwelcome reminders: Don't assume anything.
By Bill Powell, editor-at-large
FORTUNE -- Secretary of State Hillary Clinton -- perhaps before she had gotten the hang of being a diplomat -- once said the United States had "bigger fish to fry" with the People's Republic of China than human rights. On Friday, one of the bigger recurring fish fries between the two countries -- the bi-annual "strategic and economic dialogue'' (SED) -- ended in China's capital, though one of the most tumultuous episodes in modern US-China relations was still unfolding.
All the best-laid plans of Beijing and Washington -- the high level, government to government chatter about level playing fields, economic reform and security in the Pacific-- were upended by the indefatigable Chen Guangcheng, the "blind lawyer" from Shandong province. Having, somehow, evaded layers of thugs in his home province of Shandong in eastern China -- where he has been under house arrest for two years, following a four-year imprisonment for the crime of trying to defend poor peasant women who were forced to have abortions lest they violate the PRC's one child policy -- Chen made it to the US embassy on the eve of the high level meeting. Chen's dramatic flight to the embassy, his quixotic insistence on then remaining in China, followed by his what-was-I -thinking, get-me-out-of-here moment, seized the world's attention, and rightly so. For years, Chen Guangcheng has been one of China's quiet heroes. By Friday's end in Beijing, the two governments seemed to have concluded that an acceptable resolution to the episode for both sides was to allow Chen and his immediate family to go to the United States, where he will study law. (A deft arrangement that is likely in part the handiwork of Jerome Cohen, one of the foremost experts on the Chinese legal system in the United States and for years one of Chen's most effective champions.)
Crisis averted. Now, get ready for the next one.
When Secretary of State Clinton's husband first ran for President, in the aftermath of the massacre at Tiananmen Square, he railed against the "butchers of Beijing." Once in office, he pivoted toward reality, and made the then fashionable argument that increased prosperity, open trade, and engagement would bring political change to China. By the time his wife became Secretary of State in 2009, all that was passé. We had bigger fish to fry. Human rights, the new Secretary of State said, needed to take a back seat to the global economic crisis, climate change and security issues.
She was right, of course. It has been 20 years -- the blink of an eye, historically -- since Bill Clinton became President and bowed to a reality that was then hoped for: China was going to grow, possibly (if all went right) boom; the world's largest country was going to join the global economy, and if all went right, that would be to the benefit of pretty much everyone.
Twenty years on, with Hillary Clinton trying to defuse the crisis brought on by the courageous Chen Guangcheng, China is already the second-largest economy on earth, and arguably the most important. Already it is the world's largest market for General Motors (GM) and BMW and Samsung. It is Apple's (AAPL) next frontier. For pretty much anyone in a C-suite anywhere, it is now the present and the future -- if, that is, all goes well.
And there lies the rub. Despite the massive bets placed on this place by companies across the globe, we can't assume anything about China. Chen's dash to the embassy in Beijing -- which, despite the government's best censorship efforts, millions of Chinese are aware of, thanks to social media -- comes amidst a year of extraordinary political turbulence in China; what was supposed to be a seamless once a decade transition burst out into the open when Beijing sacked Bo Xilai, the ambitious party secretary in Chongqing. Since then, it s been as if someone cut open a great white shark, its guts spilling all over the deck: Bo's wife is under investigation in the murder of a British citizen, who allegedly had murky ties to Britain's MI6. Bo's police chief and former right hand man turned on him and then himself fled temporarily into the arms of US diplomats in the central city of Chengdu; he surrendered to Beijing and hasn't been seen or heard from since. You choose which -- Chen or Bo -- is the more cinematic story.
The power struggle in Beijing continues, despite Bo's removal. How the Chen Guangcheng saga affects the senior leadership, and the transition, is very unclear. But it will affect it. The one thing that CEOs the world over have bet on, have assumed, have been reassured by any number of high ranking Chinese government officials on every trip they make here, is that China is stable. That what you've seen over the last 20 years is what you'll get forever going forward.
That's sure not what it feels like now.