China’s Growing Contradictions

Posted: October 19th, 2010 | Author: | Filed under: Economics, Foreign Policy, Politics | Tags: , , | 4 Comments »

My post at Foreign Exchange today is about the Chinese Communist Party’s latest five-year plan, which aims to reorient the economy to be more equitable and more consumption and service driven. I’m skeptical that this is going to work without the political reforms that the Party remains hesitant to make.

The economic part is easy. Of course an authoritarian regime has the ability to mandate changes in wages, to make dramatic shifts in managing currency and to reorient capital investment towards services. And it’s heartening that China is now interested in doing so after several years of other countries’ whining falling on deaf ears. But the political part seems impossible. How do you raise wages at the bottom to the point where you have a consumer economy without producing enormous pressure for democratization (something this five year plan has chosen to kick down to the road and which the Party elders still seem in denial about)? The mantra of consumer-centric, service-heavy capitalism is “What about me?” It won’t last long in a political culture of “Shut up and sit down.”

Go read it all.

4 Comments on “China’s Growing Contradictions”

  1. 1 Tweets that mention China’s Growing Contradictions - Instant Cappuccino -- said at 1:52 am on October 20th, 2010:

    […] This post was mentioned on Twitter by Maha, Larry Smith. Larry Smith said: RT @MahaRafiAtal: China’s Growing Contradictions: My post at Foreign Exchange today is about the Chinese Communist Party’s latest fi… […]

  2. 2 Lyle said at 11:50 pm on October 20th, 2010:

    What amazed me while I was in China was the amount of individual liberty there was… which looked like a lot. And more importantly the people, particularly the educated class, seemed to think they had plenty.

    One Chinese law student told me China was basically no different than Taiwan (not really true, but he’s never been to Taiwan or anywhere else of course). They had the internet he said and could read what we read… which was and is definitely true to some degree… but not with nearly the amount of freedom and not without having to first wade through all the propaganda coming from the Party and its news people.

    My impression is that until China’s government can’t keep the economic boom going, which it should be able to do for the next 20 years or so, most Chinese could give a damn about political freedom. The people are becoming more prosperous and the government allows them to enjoy that prosperity, and that’s the only thing the majority seemed to care about when I was there.

    We have yet to even see mass demonstrations by Han Chinese over political issues.

    It’ll come, I think, but it’s going to be awhile.

  3. 3 Maha Rafi Atal said at 6:11 am on October 21st, 2010:

    Lyle, I hear ya, and that’s definitely the view of a large number of very smart China-hands I know and talk to about this stuff. It’s in fact the view that I used to have. But I think that the changes in the economy introduced by THIS plan specifically will be game-changing. It’s possible to prevent mass demonstrations with growth if it’s export-driven growth, but consumer-driven growth has a radicalizing effect on culture, and has been having that effect since around 1850.

  4. 4 Lyle said at 1:15 pm on October 21st, 2010:

    Maybe… my guess is the government will bend, but won’t break like it has been doing since Deng Xiaoping and his coterie turned China toward’s capitalism.

    I mean there are still images of Deng all over China, yet he’s the guy who (okay, he was senile and dying) busted up the T-Square demonstrations in 1989. Mao is still consider a great guy by your average Chinese. The really educated, by default all party members themselves, definitely aren’t ignorant of China’s history, definitely talk politics, and laugh about the Communist party… but they have a stake in the system as is. And as long as they’re doing well in their own minds… I don’t see them doing jack to really change anything, but through incremental political reform, which is the status quo.

    Hope you’re right though. The sooner China liberalizes politically the better.

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