China is obviously changing–the Olympics are not only the country’s modern coming-of-age party but also an apparent landmark in a shift from industry and manufacturing to an economy based more on “affluent” economic sources such as services, entertainment, and investment. The sign that the government, which has long been reluctant (and even defiant, internationally speaking) to do anything that might curb it’s manufacturing dominance, would choose to do so for the Olympics is a sign of this shift.

This change of economy, of course, is necessary if China is to continue developing. But what are the greater consequences of Beijing’s choice to forcibly reign in industry for other goals? The businesses affected by the industrial curbs in the capital, most of which are happy to oblige out of national pride (and the rest of whom are smart enough to know not to make a fuss), may be less supine if it turns out that the effect of the Olympics isn’t just to change the world’s view of China, but also China’s view of itself.

As Dongcha has mused before, who isn’t to say that, seeing the Olympics bring cleaner air and less traffic to the city, these won’t become amenities that Beijingers ask for on an ongoing basis, not just when white dignitaries are in town? Even without grassroots action, it seems plausible that, since curbs on industry around Beijing are already in place, the government keep them indefinitely–using the Olympic momentum to push the city in a new economic direction? This would, after all, be an easy way to further develop China’s capital city into an international center.

Of course, this change would be positive for many, but not the manufacturers. Groups of people and businesses getting left behind and becoming obsolete is inevitable in any major economic shift, but seems somehow easier when that shift happens naturally, without the hand of the government pushing it on. In those cases, the (typically) slow pace of free market change gives more people more time to adapt to the new economy, and adjust their lives to get by in it. Also, it makes it harder for the people who lose on the change to find someone to blame. If Beijing, then, does what seems sensible and rides the Olympic economic and social inertia into a more modern economy, they also risk isolating a large segment of people that will see themselves as being betrayed for doing their patriotic duty–first they became manufacturers to make China great, then they curbed their businesses to show the world how great China had become, and at last they found that the government had moved on to other things, without them.

Can they see what the future holds?

First, the Uyghurs. Homemade explosives killed 11 in hotels, supermarkets and government offices in the town of Kuqa. A few days earlier 35-year-old Mehmet Dursun Uygurturkoglu set himself on fire in front of the Chinese Embassy in Turkey, as part of a protest.

It seems, from reading what little is available on the Uyghur movement, that their thinking is the same as that of the Tibetans–if you want the world to really notice and take action, the time is now (when all eyes are on China for the Olympics) or never. Unfortunately, it may be the case that a redress within China to their plight, combined with a lack attention outside China, is fostering extremist elements in the once-passive Uyghur autonomy movement. China certainly won’t forget these slaps in the face, either, so things are likely to only get worse from here in the short term.

Then, there’s basketball, touted here as being a particularly strong medium for fostering Sino-American relations. This theory got put to the test on Sunday, when America and China faced off in what was, by some estimates, the most watched basketball game in history. American players, according to reports, played a far more aggressive game than their counterparts and quickly widened the point gap after halftime before winning. Even Bush got up and left the stadium at halftime. So: it’s a mixed result. The huge attention the game received is certainly hopeful, though, and it should be kept in mind that cross cultural understanding is a process–rarely a result.

Next, China’s sovereign wealth fund. An anonymous poster over at the China Economics Forum had this interesting response to the post on CIC, the national sovereign wealth fund, on that blog:

I thought your analysis of the CIC was right to highlight the corporatists risks created by large sovereign investments domestically. But the CIC’s ability to invest domestically is limited, as it primarily is a vehicle for helping to sterilize China’s rapid reserve growth and thus it has to use the proceeds of its rmb bonds to invest abroad (its purchase of Huijin/ recapitalization of the CDB is a bit misleading … there are limits to what it can do here if it wants to help move funds out of China and thus slow reserve growth). Moreover, it isn’t — unlike Alaska’s fund — financed out of a fiscal surplus but rather is financed by borrowing, and borrowing in rmb to buy $ produces losses, not gains in most scenarios. as a result, it isn’t a vehicle for creating wealth. And as it was created to manage the fx that China’s government is accumulating as a result of a policy of resisting market pressure for currency adjustment, in my view it represents a move away from capitalism, not a move toward it — China’s state is accumulating large funds and investing them (in ways that may or may not reflect state goals other than limiting china’s financial losses), reinforcing state power in the global economy as a byproduct of a government policy to limit the adjustment in a key market price.

We’re not entirely convinced of the argument, yet, but thought that its merits attention.

And, last–for those disappointed not to be hearing more about Beijing’s smog–it would appear that the reason is because it has lifted somewhat. Recently thunderstorms have knocked much of the pollution out of the air, giving relatively clear skies. Hopefully, it won’t be the last breath of fresh air the 2008 Olympics brings into China.

Obviously, this is a quick fix. The changes are short-term and, after the Olympics, we can expect Beijing to go back to its smog-churning ways (not to mention whining about how China is a developing country when richer nations ask for emissions to be cut). There has been no change in the governance, law, enforcement, political culture, or official party policy behind these cuts–they’re merely in place so that Beijing can put on a good face for the Olympics.

Communists have never liked looking at things in shades of gray.

But will there be a social change? Will Beijingers, seeing that some purposeful community action can make a huge change (assuming, of course, that the skies will clear up), get to have a taste for blue skies, once they see them again? Might this trial in Olympic face-saving make Chinese citizens more environmentally sensitive, and bring about a positive, long-term change?

It would be nice to give an optimistic “yes!”, but the Chinese people have proven to be a lot less predictable than that. The Western world thought, after all, that the democracy walls and Tiananmen protests would foster a similar long-term desire for democracy–hopes that were, infamously, dashed.

So, don’t hold out hope for anything more than temporary change: As a whole, Chinese people will go back to buying cars and redecorating their apartments and otherwise securing their own piece of the Chinese development dream. The government will go back to talking tougher on the environment than they can practically enforce. Developed nations will return to blaming global heating on cheap Chinese goods.

But, again, maybe that’s the much-vaunted Olympic spirit: to provide a glimpse of a bright, cooperative future set against a background of blue skies. Let’s hope that, however fleeting it may be, it’ll be an image that we can return to, and draw hope from.