Archive for December 11th, 2008

Thursday, December 11, 2008

China’s Challenge

A lot of things can wait in China. The country’s poor are long-suffering people. That’s what experience suggests, anyway. But when it comes to the effects of the global economic crisis on China, not everyone with a say appears to be phlegmatic.

“The redistribution of wealth through theft and robbery could dramatically increase and menaces to social stability will grow,” Zhou Tianyong, a researcher at the Central Party School in Beijing, wrote in the China Economic Times.

The BBC quotes forecasts which see a slowdown in China’s growth to 7.5% next year. (The Economist also comes forward with that number in this week’s printed edition.)

There’s a widespread belief – even a superstition – in China that growth needs to stay above 7% in order for social stability to be maintained, the BBC said in an online article of November 30. And Hu Jintao has warned recently that the economic situation was a test of the Communist Party’s ability to govern.

If lucky, the CCP’s abilities won’t be put to a test after all. 7.5% would be above the magical seven.

But that’s only for next year, and it is only a forecast. To make sure that wealth won’t be “redistributed through theft and robbery” after all, the Communist Party itself should do a good deal of redistribution.

But given the lack of control which the party leaders seems to have over its local cadres, and the apparent disdain of many rich and powerful “represents” within and without the party, the coming years could be about make-or-break. Platitudes like these won’t do if growth itself creates too little additional wealth during the coming years.

The effects of trickle-downs have always been moderate at best. If China’s competitiveness is really weakening as Hu Jintao suggests, there will be no alternative to a more energetic government role in re-distribution.

It’s often said that the CCP’s monopoly on power makes strong government more feasible. But only the party’s unity depends on the support of those who profit most from the status quo. The CCP’s legitimacy depends on the people – and if too many of them fall behind, dictatorship will become the weakest form of government.

Growth may once again solve the problem, and stabilize the status quo. But that’s less sure to happen than in the past.

This is a historic moment for China, says the Charter 08. Maybe it isn’t yet. But the moment may come sooner than we used to expect.

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