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Wednesday, Apr 01, 2015

Reiniers: A look at the scrutable Chinese


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No - not the inscrutable, but the scrutable Chinese. They are thoroughly comprehensible - not that difficult to understand. The communist leadership realized some years ago that the traditional communist/socialist economic model was a failure. Last month they made a paradigm shift.

The Chinese have been playing catch-up for the past three decades, experimenting with elements of market capitalism with positive economic results, and they are now poised to become the largest economy on the globe.

Although China is one of the oldest civilizations on the planet, it went through a gazillion dynasties until the Qing dynasty, which ended in 1911 when it was overthrown by Sun Yat-sen to become the provisional government of the Republic of China, which ultimately became the Communist Party of China.

Finally recognizing that big-government central planning never works, China opened up its economy to become what its leaders labeled "Socialism with Chinese characteristics," or a socialist market economy. Nevertheless, it was still a breed of state capitalism.

Ever sensitive about labels and trying to engender national pride with communist underpinnings, Beijing English news reported earlier this year about a speech to the Central Committee given by Xi Jinping, their newly minted general secretary of the Communist Party, in which he "urged efforts to uphold and develop socialism with Chinese characteristics."

He went on with the caveat - and realize he was addressing the communist big-wigs - that as reforms continued, there were "potential dangers and risks," saying, "Which path to take decides the life of the party."

He went on to say - and note this is being reported by state-controlled media, which is seen and heard by the burgeoning educated middle class - that the "CPC (Communist Party of China) should deepen reform and opening up, make discoveries, innovations and progress."

Here's a leader warning the party leadership that reform poses risks, but he keeps that carrot out there for the millions benefiting from a market economy, while warning them they have to toe the line and "embrace the ideal of communism." And he's trying to pull this off in a country with millions of Internet-savvy young people who, in spite of state control of the Internet, know all about the lifestyle and freedoms young people have in Western democracies.

To add to the risk, more than 800,000 Chinese are studying abroad - the majority in the United States, and others in England, Australia, Hong Kong etc. - and are being exposed to those countries' media.

The most significant event in communist China in decades was the Third Plenary session of the Communist Central Committee, which just ended in Beijing. ChinaDaily USA reported that one unexpected move was the establishment of a national security committee "to perfect the state security system ."

This is clearly a move to centralize power away from outlying "existing power-holders," one China watcher said. The party has become "increasingly wary of all sorts of fractures in society." No wonder. Yet the Third Plenum put no clamps on Chinese travel - particularly for the wealthy - or on foreign investment. And then there are those aforementioned 800,000 students around the globe being exposed to all sorts of ideas before they return home.

Paradoxically, the published record of the Plenum reads: "We should let labor, knowledge, technology, management and capital unleash their dynamism, let all sources of wealth spread and let all people enjoy more fruits of development fairly."

And this is a communist country?

This theme could easily be construed as taken from JFK's 1963 "A rising tide lifts all boats" speech. The current Obama administration doesn't even believe that wealth is unleashed by the "dynamism" of "management and capital." They believe wealth is redistributed by government.

It seems counterintuitive that Jimpimg and the communist hierarchy are sticking to Glasnost-like economic reforms. (At the same time, they centralized security because they must know pressure for democratic reforms has to be on the horizon and will need to be managed.)

Moreover, their economy is getting far too complex for top-down government micro-management, so the leadership has, as a practical matter, abandoned state capitalism by actually saying - and in writing - that the private markets should play a decisive role in allocating resources. (Our own government - the current Obama administration - doesn't subscribe to this policy.)

Think about it: Chinese communists are saying the private market should play the decisive role.

This Plenum represents a paradigm shift in many areas (shifting from exports to domestic consumption to grow the economy, judicial reform, easing of the one-child policy and others), and it is consensus driven - another irony in comparison to the Obama administration, which embraces identity politics: class envy, race and sectarian warfare - not consensus - as a strategy that has been and remains counterproductive in a democratic republic with 50 sovereign states.

The Chinese government also knows it needs consensus from the people as well as the leadership. They are not a democracy. So it makes no sense for politicians to practice divisive politics in an already diverse country that has 56 ethnic groups just to pander to certain groups. The Chinese people cannot vote. And the government realizes its population is too large to be micro-managed from Beijing. This is a country with 292 languages and a population of 1,384,000,000. Take away the first number and what remains is still greater than our population at 320,000,000.

Economy of scale is a useful rule in economics - not management, where span of control rules. Governance of countries with smaller populations seems to be more effective. (How often does Denmark make the news?)

Progressive liberals have not learned the lesson of what it means to be a democratic republic of states as our founders envisioned. They still insist on a Washington-centered economy and culture, and yet communist China is rethinking a Beijing-centered country.

I have no idea how the Communist Central Committee thinks they can pull off reform in the long haul. Liberalization might work in the short term, but ultimately political change may be demanded by its people as China becomes more enmeshed in the global economy.

Maybe I'm wrong, and the Chinese are inscrutable after all.

John Reiniers is a retired lawyer and regular contributor who lives in Spring Hill.

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