Monday, July 8, 2013

Benjamin Herscovitch: Authoritarian China’s successes vindicate liberalism

China seems to offer an alluring alternative to the liberal orthodoxy of open markets and societies. With its combination of repressive one-party rule and state capitalism, the Middle Kingdom is expected to surpass the United States in sheer economic weight by 2018 and boast more middle-class consumers than Europe and the United States combined by mid-century.

Although this economic resurgence gives the Chinese model of enlightened authoritarianism a veneer of vitality, liberal reforms have underwritten its success.

When Mao Zedong died in 1976, the Chinese economy was contracting by 1.6% annually and GDP per capita was a paltry US$163.

Determined to dismantle the most suffocating elements of Maoist central planning, the reform-minded Deng Xiaoping decollectivised agricultural production and created business-friendly Special Economic Zones.

In the 35 years since Deng launched China’s real Great Leap Forward, the economy has experienced uninterrupted expansion and annual growth has averaged 10%, with GDP per capita now more than US$5,500.

Just as economic liberalisation has made China rich, a degree of political freedom has made China’s authoritarian system more adaptable and responsive.

Starting in the early 1980s, elections were introduced at the local level, with open nominations becoming national law in 1998.

Elected village leaders are unlikely to openly oppose central government policy, but they can delay or ineffectively enforce unpopular measures, such as the One Child Policy and the expropriation of land.

Village elections thereby provide citizens with some protection from Beijing’s edicts, while also ensuring that government spending better reflects local preferences.

With China’s authoritarian one-party system grappling with unrest in its ethnically diverse western provinces, chronic abuses of power by communist party officials, and the transition from an unsustainable debt-fuelled growth model, liberal reforms are still needed.

Xi Jinping’s presidential tenure might not produce major reformist initiatives. But just like its rise to date, China’s future success will depend on ever greater freedoms unlocking the entrepreneurial talents and ambition of the world’s largest nation.

Benjamin Herscovitch is a Beijing-based Policy Analyst at The Centre for Independent Studies.


Anonymous said...

What you miss is that doing business in China is actually easier and quicker - not to mention cheaper - than doing business in NZ, the UK, or the USA.

Sure in China you have to get a local party member or/and PLA officers onside. But once that's done, it's only a question of making some simple payments in obvious directions.

Compare that to NZ, the UK, the USA. Politicians at all levels of government. Vast amounts of local, state, federal, union, and international regulation.
In China there's no "second guessing" - no damn court system that works against the decisions the government has made. There's no damn protestors or pickets that interfere with your rights to development. And best of all, no unions actually mucking about with your business that you're starting on your own damn money.

China has none of this. Want land - pay, you get land. Want to build, you build. Want workers, you get workers. And that's it.

Compared to almost anywhere, China is a capitalist paradise.

Anonymous said...

PRC is just engaging in sneaky Communist dialectical materialsim, and has never resiled from its goal of world hegemony.

The analogy of an incoming tide is helpful in understanding this world view. Here, a wave sweeps up the beach, then recedes. The high point of each succeeding wave is a little further up the beach, until the sand is entirely swamped.

Lenin put it this way: "Push out a bayonet. If it strikes flesh, push further. If it strikes iron, pull back and wait for another day.

Following the example of Lenin, Communists awill ggressively roll back the status quo when it is enfeebled,and bank their gains in anticipation of further opportunities when it is strong.

Any apparent retreat is thus merely temporary and tactical.

PRC has always been manpower-rich and technology-poor. Its apparent U-turn away from a command economy was designed to lull the West into a false sense of security, affording PRC the opportunity to build up its military-industrial capacity using Western know-how and capital.

PRC remains a one-party state and anyone wanting to do major business in China must have a People's Liberation Army joint venture partner with full access to company technology, build a manufacturing plant in China, and put up half the capital.

After China apparently liberalised its economy, Bill Clinton (impelled by substantial PRC campaign contributions funnelled through a Malaysian Chinese bagman) removed PRC from the list of countries to which the export of technology with dual civilian/military capabilities was embargoed.

Over the next two decades, PRC acquired on the open market (amongst many other items) some 54supercomputers able to model ICBM trajectories, and rocketry and rocket fuel technologies.

PRC now has now caught up 40 years of technology deficit simply by pretending to have adopted free market capitalism. It now possesses the ability to target ICBMs on any part of the globe, including mainland USA, something it didn't have before.

PRC money is buying friends and influence throughout Africa and the Asia-Pacific Region, with locking in sources of raw materials, and gaining strategic naval and air bases.

PRC is the main financier of America's national debt, meaning anytime it wants to call in its markers, it can collapse the American economy.

PRC is exporting young students to any Western country that will take them, so that they can acquire local knowledge and become administrators once PRC takes over.

Peaceful member of the international community? You be the judge ...