From plan to clan economy
The political system of the People's Republic is not in a position to react to economic changes
It was in December 1996 in Hong Kong. During a meeting of the Davos economy forum Kenneth Courtis, the chief economist of the Deutsche Bank at that time, held an inspired speech. Southeast Asia, he prophesied, "will soon become the locomotive of the world economy and North America as well as Europe will pull along". Less than half a year later the financial and banking system in the so-called tiger states collapsed and the Asia crisis began. A year ago Courtis participated again in the Hong Kong economy summit and gave another much quoted speech. "It is rather clear", said Courtis, meanwhile vice-boss of Goldman Sachs Asia: "The dominant factor of this century will be the ascent of China."
Today like then Courtis is not alone in his enthusiasm. The West is going through a real China intoxication phase, although in the rising country there's no lack of alarm flags, which let the future appear less rosy. The catastrophic mismanagement of the SARS crisis by of China new leaders in the spring showed clearly, what China's problem is: exactly this leadership, the prisoner of structures, from which it obviously can not or does not want to free itself. It is just that nobody wants to face it.
The great astonishment
An example: Chinese banking system is sick and suffers under a mountain of bad loans. It dwarfs, as Bloomberg recently wrote, the Japan gigantic banking problem. The densely populated country however looks splendid to the West. On the one hand this is due to the bleak economic situation in the rest of the world, after all the growth rates are nowhere as high as in China. Here, and this is a ground for astonishment, the genius of Chinese shines through: a clever, ready-to-learn, hard working, skillful people, who is capable of delivering astonishing things.
At the same time however the West ignores some fundamental facts. For example that the high growth rates of the last two decades are so high also, because the communist party had ruined the country before that. That growth is based to a large part on state investment and financed on pump: The budget deficit will reach the record height of 36 billion euro this year. That the other, actually realized part of the boom is not due to the leadership of the communist party (CP), but alone due to the fact that it went its own hard-working people a short stretch out of the way. And thirdly it seems at the same time that it is impossible for this party to step completely to the side: even today the everywhere CP would like to have the last word. It preaches change to its country and rejects it for itself.
It is a common mistake in the West, that the observer wants to measure China economics and its prospects with purely economic parameters. The production numbers and statistics are sanitized and bent by factory directors and local functionaries at all levels, so that it is not safe to assume the central government has a clear picture of the situation in the country: In China the politics still rules, also over the economy. What is going on there is under no circumstances a transformation from the plan to the free-market economy , it is a shift into the clan economy.
In the new China power is dealt for the economic advantage. The system has a "double bottom", as the German China expert Sebastian Heilmann writes: behind the successful young private sector the country there's the reform-resistant state enterprises, which suck the country dry and which through political decrees get 70 per cent of all loans assigned. Behind one of the highest saving rates on earth stands the banking system that according to western criteria has become insolvent long time ago. Behind dynamic, well trained young functionaries and managers stands the apparatus, paralyzed in its Leninist bodice, still governing still through censorship, obsessive hang for secret deals and repression. Behind glitzy office towers you find corruption. Behind the new, wealthy central layer of perhaps 150 million stands a much larger bitter-poor countryside population, which in the last years even had to accept income losses. Behind amazing progress in telecommunications and traffic stand a prosperity ravine, which is meanwhile even more glaring than for example in Chile.
The development, which the China party ordered, looks spectacular - however it is not lasting, neither politically, nor socially nor ecologically. Large risks for the future face successes of the last years. And they are growing with each passing day, without institutional reforms getting introduced by CP. CP still benefits from the fact that the city people are better off than ever before and that it merged many of the new successful as profiteers into the system and that the Chinese are afraid of only few things as much as they are afraid of a collapse of the state order.
The lacquer however is thin. How uncertain the Peking ruling powers feel, shows the brutal procedure against the Falun Gong sect: The party feels provoked by a group of Qigong practitioners. One could see how it boils under the surface during the SARS outbreak, when many citizens were astonished, how amateurish they were governed and how they were left in the cold: Cynical sayings and deep distrust for the rulers surfaced. They did not know better themselves and started a brain washing campaign in the culture revolution format. It is correct: Many Chinese are free, wealthy and educated as never before - however exactly this should be a reason for Peking to worry: These people can not be held any longer so easily on the rope, they are more demanding than ever before. This is why in the last decade the government let, parallel to the boom, retrain former soldiers for the "armed people police" , which is meanwhile one million men strong: they are to hold the own people in chess. With their Obsession for a visible "stability", for which it sacrifices any real reform, the CP achieved the opposite. The opinion of the sinologist and politics scientist Heilmann: "a durable internal stabilization of China is not on the horizon". The fundamental risks are "considerable".
The party organization in the country is disintegrating. At the basis the CP often reminds of "mafia organizations" (Heilmann). The arrogant and hated local party cadres govern their parishes as if they were princes. "I see no clear connection between the corruption and the one-party rule in China", said the Prime Minister Zhu Rongji, highly praised in the West, briefly before his retirement.
The capital is fleeing
The China economy needs support for private enterprises, which stand for hope for growth, innovation and promise of new jobs for those probably 30 million unemployed in the urban centers. In the country there are around the 200 million people without jobs. But the private sector has hardly any access to credits, because they usually flow into the sick state enterprises.
In Hebei the authorities put last week the outstanding entrepreneur Sun Dawu in the dock. His only sin: Sun, despaired over his company, accepted loans from his own employees and citizens of his town. The banks did not want to give him money.
China needs a genuine fight against the nepotism and the rampantly growing corruption. The government tagged the flight of capital from the country between 1997 and 1999 at 53 billion dollars, independent estimations speak at least of a double amount. And flight of capital out of China does not mean channeling the earned money past the tax trap. As Beijing Review wrote, the subject is "unlawful funds, obtained through the abuse of power".
Nearly all challenges of the country demand legal security and transparency, an independent justice and an independent press. But even under the new leadership there's no signs that the CP would be ready to end one-party rule thus the end of the entire system.
Still the state affords itself an unbelievable misallocation of talent and energy for ever new absurd and endless Polit campaigns. The reserves of the nation are being sacrificed to keep the old apparatus alive, that builds itself monuments like the three-gorge dam, the Transrapid as the airport connection or the manned space flight. At the same time however the country does not have sufficient money to build up the social, educational and health net.
Already soon however the country will get to a point, where those cuts, from which CP shrinks, because they endanger its rule and new profit interests, will be necessary. Peking is firmly stuck: Meanwhile the rulers talk a lot about reforms, but they do little. Meanwhile also German lawyers praise Chinese law system because of its often exemplary formulations. But in the Chinese reality all these laws carry less power than the word of a party official. The economic adviser Cao Siyuan, known as father of the Chinese insolvency law and an independent philosopher, said about the government activities, that they look to him, as if somebody would sprinkle straw and flowers over a mine field: Everything looks nicer - for the time being.
The causes for conflict in the country - social and ethnical tensions, farmers' problem, displeasure over corruption - are multiplying, at the same time the party is missing the mechanisms, which would allow it to confront the challenges. The system does not plan for political arguments, knows no valves, where the dissatisfied could productively let off steam. It knows only the repression as a response to unrest and disagreement. Therefore political collisions are probable. When the system hits against its limits; when the first wave storms the banks, in order to take their savings to a safe place; when one more real estate scandal leaves dwellers without home and saving; when the province cadre plunders one more village.
In the parallel universe
Due to these reasons the citizens in the last few years again and again hit the street, they usually demonstrated peacefully, sometimes they also set government offices to fire. The state repression apparatus still suffocates such protests in germ. However, what if the first large recession afflicts the country, which now for two decades knew nothing but economic growth? Will it then still be limited to small local unrests?
China cannot remain for ever in its parallel universe, sometime the laws of the economics will catch up with this country. Exactly because it is about to open. There's no doubt: China is in one of the largest turn-arounds of its history, and it will continue to change itself. But the road will still pass through deep valleys. Perhaps China will actually become the new economic power. But not with the today's communist party.
from SZ 253 p 22
sueddeutsche.de |
