From plan to clan economy [EDIT: a comedy]
The political system of the People's Republic is not in a the position to react to the economic changes [EDIT: this is why the country has done so miserably in the past 21 years, uninterrupted even by the success of TianAnMen :0] ]
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 bank system in the so-called tiger states collapsed together 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." [EDIT: the first speech has naught to do with the second, and who decided to listen to Courtis anyway?]
Today like then Courtis is not alone in its enthusiasm. The west is in a true 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 [EDIT: I think it be the old leaders that did the mismanagement, and the new ones that turned events around without apparent lasting harm to the economy or social stability], what China's problem is: exactly this leadership, 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.[EDIT: the leadership seems to be doing just fine, opening discussions for political reform and making further progress on economic reform, at a more rapid pace than many folks are willing to admit]
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.[EDIT: Surely 50 years of communism will leave some social baggage in China. The most recent example of a fix in progress - China Life bad debt will be guaranteed by the state and the company will be floated via IPO with the guaranty on old bad accounts. In the case of Japan, the bad debt is built up under a very different system of rule, with no fix in sight] 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 out 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 [EDIT: ancient history and all is forgiven]. 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 [EDIT: Budget deficit in the context of rapid growth is excusable]. 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 [EDIT: separating the governed from the governing in this way is a novel approach to objective analysis]. 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 [EDIT: maybe the time is not yet ripe for ‘stepping aside’?].
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. [EDIT: yup, the GM clan, the IBM tribe, the Intel gang, and the AIG crew ]
In the new China power is dealt for the economic advantage [EDIT: everywhere else in the world, power is dealt for the economic disavantage?]. The system has a "double bottom", as the German China expert Sebastian Heilmann man writes: behind the successful young private sector the country there's the reform-resistant state enterprises [EDIT: and the reform resistant disappears over time and are nearly all gone], which suck the country dry and which through political decrees get 70 per cent of all loans assigned[EDIT: ancient history, and what assigned loans there are now are to ameliorate the conversion of state-owned social baggage]. Behind one of the highest saving rates on earth stands the banking system that according to western criteria has become insolvent long time ago [EDIT: the writer mentioned banking already, even as the banks are about to be IPO-ed]. Behind dynamic, well trained young functionaries and managers stands the apparatus, paralyzed in its Leninist bodice [EDIT: who is Lenin :0], still governing still through censorship, obsessive hang for secret deals and repression [EDIT: oh yeah, how can one forget, all them crowds in the factories and malls are so repressed, a blood letting revolution is imminent]. Behind glitzy office towers you find corruption [EDIT: is the writer talking about Tokyo or New York?]. Behind the new, wealthy central layer of perhaps 150 million stands a much larger bitter-poor countryside population [EDIT: again, ready for revolt], which in the last years even had to accept income losses [EDIT: news, where did he get the number?]. Behind amazing progress in telecommunications and traffic stand a prosperity ravine, which is meanwhile even more glaring than for example in Chile [EDIT: Chile is so bad?].
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. [EDIT: OK, the writer provides a summary of his beliefs]
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 [EDIT: the writer presents the FLG as a bunch of Qigong practitioners either demonstrates his ignorance or betrays his bias]. 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 [EDIT: general impression of the population is actually favorable towards the new leadership for having reversed the old leaderships’ mistakes i/r/t SARS]. They did not know better themselves and started a brain washing campaign in the culture revolution format [EDIT: ancient history again]. It is correct: Many Chinese are free, wealthy and educated as never before [EDIT: by way of brain-washing, mind cleaning, and heavy handed repression in SARS infested wards]- 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 [EDIT: oops, now the well-to-do are ready for bloody revolution and regime-changing revolt, along side their poor and miserable peasant compatriots]. 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 [EDIT: gee, I guess the revolt will not be after all, since the armed police (SWAT), all one million of them will ruthlessly put down the few hundred million revolutionary wannbes]. 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". [EDIT: is the writer trying to tell us something we are not aware of?]
The party organization in the country is disintegrating [EDIT: so, we got disintegrating party organs, not enough SWAT teams, and simmering revolt by the rich and the poor, what is a country to do?]. At the basis the CP often reminds of "mafia organizations" [EDIT: that holds nationwide village level elections … those tricky communist mafiosos](Heilmann). The arrogant and hated local party cadre governs 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. [EDIT: I suppose the writer has a point. I much prefer corruption when it is connected with two-party rule]
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.[EDIT: my, problems, not enough SWAT teams, 200 mm unemployed, lots of loans all about, but all sucked up by the rapidly disappearing state sector, buying GM cars, IBM computers, and Avon cosmetics, readying to revolt]
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. [EDIT: minor misunderstanding or deliberate misstatement. Mr Sun ran an unlicensed bank, and if he is not challenged in court, I will start an unlicensed bank tomorrow]
China [EDIT: Yup, China, and China alone, where Hu Jin Tao got to be the boss because his brother in Guangdong did not help with counting chafed ballots] 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". [EDIT: the Beijing Review is a government operated magazine, and the sited article clearly demonstrates that the government is not at all interested in stamping out corruption]
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 [EDIT: the writer obviously lack imagination, thinking that the end of one party rule will actually come by way of an announcement, without preparatory moves and machinations paving the way]
Still the state affords itself an unbelievable misallocation of talent and energy for ever new absurd and endless Polit campaigns [EDIT: political campaigns? What campaigns?]. The reserves of the nation are being sacrificed to keep the old apparatus alive, that builds itself monuments like the three-gorge dam [EDIT: three-gorge dam is a monument, the highways and airports are large sculptures, and the factories and ports are decorations], the Transrapid as the airport connection or the manned space flight [EDIT: space flight is whatever and scientific curiosity must be stamped out]. At the same time however the country does not have sufficient money to build up the social, educational and health net [EDIT: obviously not, it all went into dams, airports, factories, highways, and ports, and don't forget, education of the smart and wealthy, and buying GM cars, while the sweatshops of Guangdong are filled to the brim with uneducated miserable repressed mold makers competing unfairly against German tool makers at unfair exchange rate regime].
Already soon [EDIT: oh good, the world is saved because China will disintegrate in a clam-bake of revolting ethnic tribes and warring legions comprised of the samrt rich and the ignorant poor] 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 more nicer - for the time being. [EDIT: quote taken out of context, demonstrating ignorance or bias. Cao was actually referring to the point ‘it must not be so’]
The causes for conflict in the country - social and ethnical tensions [EDIT: how can one forget the dangerous ethnic tensions in China, where the 95% Han clan is in imminent danger from 200 odd tribes making up the other 5%], 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 [EDIT: for someone so sure, the writer certainly hedges himself plenty]. 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. [EDIT: the writer must have been lurking on BBR]
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. [EDIT: China is a big country and lots of things happen, just like in Milan, Paris, Frankfurt, and Seattle] 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 eternally in its parallel universe, become 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.
[EDIT: I wish the writer told us something we didn’t already know] |
