Tuesday, April 17, 2012

What is going on in China?

This blog has kept out of the rather vague discussions about what might or might not be going on in China over the Bo Xilai affair, mainly because there is too much stuff being spoken and written about that country without any real knowledge, which I do not possess either.

However, even on the basis of the very slender understanding that is common or should be common to all who follow the news, talk to people who have worked in China or with Chinese companies and understands a little about Communism this blog has never accepted the idea that all is rosy there. China with its oppressive political system and an unspeakably corrupt crony capitalism that has not extended beyond the top layer has always seemed to be inherently too unstable to be the leading world economy for some time to come.

The scandal that is unfolding now demonstrates that instability and fills all of us with dread as to which way it might go. Bret Stephens attempts to pull together all that we know at the moment and tries to place it into the perspective of what the Chinese "capitalism" is all about.
But patterns of authoritarian behavior—particularly nepotism, corruption and rent-seeking—are hard to put down in the absence of the accountability mechanisms China so notably lacks: a vigorous free media, periodic elections, economic competition, a bias toward transparency, the rule of law. Instead, the only mechanism the regime has is the purge. It may work in the short-term for eliminating enemies or satisfying bloodlusts. It won't work in the long-term for shoring up the regime's waning legitimacy.
Meantime, China's economy is slowing as income inequality grows—historically an explosive combination. Foreigners in China report that trying to do business is often futile when it isn't outright dangerous. Wealthy Chinese are leaving the country in growing numbers, a de facto vote of no-confidence in an economy whose prospects are supposedly limitless.
Not a country on its way to economic dominance; instead it can cause a great deal of trouble.


  1. A neighbour, who is married to a Chinese lady, has recently returned from a stay of some weeks in China, staying with relatives.

    He says that the main thing which hit them between this visit and the last was the rapid rise in prices, unmatched by any rise in wages.

    There is also a property bubble. A great many residential developments are gated communities. Many are empty or with very few houses occupied. They are being beautifully maintained by somebody - the lawns mown etc but they have not been sold or rented.

    A couple of comments from earlier visits - He says that the Chinese like to feel that the government is strong and in control. They hope it will tolerable, not too draconian or too corrupt but do want strong control rather than chaos.

    At the time of the Japanese Tsunami and nuclear power station accident, the media were putting around the story that Japan had been conducting an illicit under-sea nuclear test which had gone badly wrong.

    His wife's family were confident (a) that the government would stand up to the Japanese and (b) that it would not allow such a catastrophe in China.

  2. Plenty of catastrophes do take place in China and often because of government actions but news of them filters out, often quite a lot later.