The Chinese mirror - one-way, two-way or a three-fold mirror?

I am trying, in between my attempts to study pre-war Japanese society, to get to grips with the huge conundrum that is China today.  To that end I have just read an article by Gordon G. Chang (who has figured on this blog before) in Forbes Magazine.  In it, Mr. Chang maintains that it was not the CCP (Communist Party of China) that permitted the growth of free enterprise capitalism in China but the disobedience of ordinary people supported by local bureaucrats who turned a blind eye:

Deng [Xiaoping] began his tenure as China’s paramount leader by adhering to orthodox communist economics and trying to implement a ten-year plan. Yet early failure to meet goals forced him to back away from command-economy tactics and permit individual initiative.

Peasants on large collective farms, for example, were allowed to form “work groups” to tend designated plots. Central policies, however, specifically prohibited these groupings from including just one family. But Beijing’s policy did not last long: Families started to till their own land--and local officials condoned the clear violation of central rules.

Subterfuge on the farm was followed by subterfuge in the towns and cities. Private industry was strictly prohibited, but entrepreneurs flourished by operating their businesses as “red hat” collectives and enterprises--private companies operating under the guise of state ownership. Deng’s reforms succeeded only because the Chinese people disobeyed Deng’s rules.

The current leader, Premier Wen ­Jiabao, took fright in 2008 and ordered a massive stimulus policy.  According to Mr. Chang, those particular chickens have now come home to roost in the form of inflation, wild stock market fluctuations and an eye-watering property bubble:

China now has all the high-speed rail lines to nowhere and “ghost cities” it can handle. And the country has more debt than it can pay back, ­especially at the provincial level. As economist Lang Hsien Ping says, every province in China is Greece. The country’s debt-to-GDP ratio is about the same or worse than America’s, depending on how Beijing’s “hidden debt” is counted.

As I have remarked before, my own, utterly trustworthy, gut-instinct is not to believe a single piece of Chinese government economic data!  Particularly as Mr. Chang brings bad news:

Today, however, China’s leaders are on an antireform kick as they seek to bolster the prospects of massive state enterprises and restrict opportunities for foreign investors and domestic entrepreneurs. Especially since the middle of the last decade they have blocked ­acquisitions of local businesses by foreigners, increased state control of enterprises, employed predatory tactics against multinationals and diverted credit away from private enterprises. As they say in China these days, “The Communist Party is now the economy.”

I would not, because I could not, argue with Mr. Chang's more expert knowledge of Chinese affairs but my impression from other news sources was the opposite, that the Chinese government was making moves to integrate further into global financial and trading systems.  But what do I know?  Don't answer that!

 

Comments

[A K Haart]

"As I have remarked before, my own, utterly trustworthy, gut-instinct is not to believe a single piece of Chinese government economic data!"

Me too, but where does that leave you? I would like a better understanding of China, but it isn't easy. The disobedience angle is interesting though - I wonder how that will pan out if even partly true?

[David Duff]

Well, AK, the Chang site is worth looking at although he is a product, I think, of the old 'China lobby school' so you need to take that into account. Also, history indicates that there is always a potential centrifugal force at work in China. If the centre weakens, the periphery flies off!