|
| Pranab Bardhan: A new arrogance in the Middle Kingdom | | The result of China?s speedy economic recovery, even as the advanced nations continue to reel, is a hubris that bodes ill for both itself and the worl |
| Pranab Bardhan / Mar 14, 2010, 00:53 IST |
|
Many have noted the increased assertiveness in recent months of the Chinese government in petulant gestures in foreign policy and border issues with nearby countries and in harsh punishment of domestic dissidents. The speedy recovery in the Chinese economy, even as the advanced capitalist countries are still reeling in the aftermath of the economic crisis, its increasing financial clout in the global economy, and the much-too-apparent dysfunctional nature of the two largest democracies in the world, the US and India, in matters of governance, have inspired a new arrogance among the Chinese ruling elite (quite palpable when you talk to them in Beijing or in international meetings) about their political-economic system of authoritarian state-driven capitalism being the strongest in the world, and certainly the most appropriate for Chinese society. This systemic hubris combined with a kind of preening nationalism that has replaced socialism as the social glue, does not bode well for either China or the rest of the world.
There is no question that what the Chinese have achieved in the last three decades is unparalleled in history and will make any nation enormously proud: sustained high rates of economic growth, the lifting from extreme poverty of the largest numbers of people in human history in a short period, dazzling feats in building highways, airports and high-speed railways, topping the global ranking in exports, car sales, national savings and foreign exchange reserves, surpassing most countries in Olympic medals as well as in the number of scientific articles published in peer-reviewed international journals, and in investment in energy-efficient technology. No less impressive is the massive organisational feat of steering this large country and economy so purposively across milestones of success by a professional leadership that has shown decisiveness as well as a remarkable capacity to adapt to changing circumstances.
So if all this has been achieved and the economy quickly stabilised in the face of a deep global recession, with the firm grip of an authoritarian state and a disciplined Leninist party organisation, the lessons seem clear for the Chinese, and, for that matter, for anyone looking for a successful “development model”.
Yet not all is well in the ironical world of today’s arguably most vigorous capitalism playing out in an avowedly communist country. There is a new political-managerial class in China, which over the last two decades has converted their positions of authority into wealth and power. The vibrancy of entrepreneurial ambitions combined with the arbitrariness of state power has given rise to particularly corrupt or predatory forms of capitalism, unencumbered by the restraints of civil-society institutions. At the local levels, the central leadership often finds it difficult to rein in officials as they collude with local business to commit some of the worst capitalist excesses (in land seizures, product safety violations or toxic pollution).
There is evidence that a substantial majority of the richest people in China are friends or relatives of senior party officials. Many of the successful state-owned enterprises are controlled by powerful political families. The state still controls the larger and often more profitable (high-margin, monopolistic) companies in the industrial and service sectors. The state’s role in regulating the private sector also goes far beyond the usual functions in other countries. Apart from state exertion of indirect control rights in private firms, during the recent global recession some state companies, flush with abundant loans from state banks, have taken over some of the financially-strapped small and medium-size private enterprises.
The large waste and corruption in some of this and the overstretching of bank credit are all currently affordable for China with its huge pool of savings, tax revenues and currency reserves, just as a fast-growing pie has made the increasing inequality in sharing it somewhat tolerable. However, as the case of Japan, the dashing leader in the world economy of the 1980s, shows, all this abundance may not be enough to stem the rot over the medium-to-long run, particularly with a fast-aging population, massive excess capacity, property bubbles, opaque governance and backroom deals among cronies.
The other problem in China is that party organisations — like Zhongzubu (the Central Organisation Department for personnel control) — that carefully screen for loyalists in all major appointments, insulate the leadership from bad news, and thus delay corrective action. The leadership today is much more alert and sensitive to popular grievances than, say, in the days of the Great Leap Forward (when delayed information caused disaster), but it has a chronic tendency to over-react to crisis, to demonise normal dissent and to act unnecessarily heavy-handedly. Even feeble movements for autonomy among the Tibetans and Uighurs are suppressed as sedition, thus potentially radicalising the opposition.
For all its pragmatism, the leadership in China is much clumsier in managing conflicts than that in more conflict-ridden but democratic India, where some degree of tolerance for diversity and dissent generally acts as a safety-valve (notwithstanding disastrous government failures in localised areas like Kashmir and Manipur). In the absence of institutionalised checks and balances, the chances of going off the rails in response to unexpected events are much larger in China. It is in this sense that the ostensibly strong Chinese government is actually more fragile in the face of a crisis than the messy-looking system in India, for all its weaknesses. The same disorderly processes of fractious pluralistic democracy that make decisiveness on the part of the Indian leadership difficult, make it somewhat more legitimate in the eyes of most people.
The Chinese government, on the other hand, has to derive popular legitimacy from ensuring rapid economic growth, a tiger a future leadership may find difficult to dismount. An equally delicate task for the leadership in search of legitimacy is to periodically stoke ultra-nationalist passions (portraying any external criticism as a slur on national self-respect) and yet modulate them before they get out of control. All this will cause considerable tensions in the coming years both inside and outside China.
The author is Professor of Economics at the University of California, Berkeley. His latest book, Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India, is to be published over the next three months or so by CITIC Press in Beijing, Oxford University Press in Delhi, and Princeton University Press in the US
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
