China is a model success story of recent times. This, at least, is the dominant view. Some commentators even believe that it will be the power-house of the global economy in the years to come. Obviously, there is much hype in this. But it is not considered polite to spoil a good yarn. At the same time, it is dangerous to perpetuate a myth.
Take the economy, for instance. Despite China's impressive growth rate over the past 20 years (even though statistics in this regard are dubious at best), it is a very uneven picture. A significant proportion of China's GDP comprises goods produced by state enterprises with very little consumer demand. It is reminiscent of the Soviet era when production targets were met, whether or not there was a market for the goods produced.
China is pruning inefficient state industrial enterprises. But it has to reckon with the social consequences of large scale unemployment. The state banks are, therefore, encouraged to keep lending to these enterprises, which is compounding an already difficult bad-loan situation. By official estimates, China's state banks have 25 percent non-performing loans. Unofficial estimates go as high as 50 to 60 percent. If China were a corporation, it would be in liquidation. But, with the Chinese Communist Party in total control, the line between myth and reality is blurred.
Which brings us to the need for a politically transparent system. But Beijing is indeed working to reverse the process even in Hong Kong. It recently sought to introduce security laws in Hong Kong similar to those in China through its local subsidiary led by Chief Executive Tung Chee-hwa (
The political developments there are more important for what it might mean for China. It wouldn't at all be surprising, therefore, if Hong Kong were to invite some severe reaction from Beijing. According to pro-democracy leader Emily Lau, "Beijing could send in the tanks," like they did at Tiananmen Square in 1989. But she hopes it wouldn't come to that. Any loosening of the political control over Hong Kong will have its ripple effects. That is the last thing Beijing would want.
Some analysts tend to regard the new leadership under Hu Jintao (
This is a phoney argument. In the case of the Soviet Union, the communist state was already in terminal decline when Gorbachev tried to cure the patient. It was, therefore, only a matter of time before the end came. And it came sooner than expected. The right lesson for China would be to open up its political system before it reached the dead end the Soviet way.
China's economic growth is creating social dynamics disruptive of monopoly political control. It is happening at two levels. At one level, its growing middle class is creating a natural constituency to share power. But with the Communist Party determined to maintain its political monopoly, there are inherent tensions between a small ruling oligarchy and the country's new political class. How and when this might come to a boil will be interesting to see.
At another level, there are growing social tensions from an array of forces marginalized by economic changes: urban-rural divide, coastal-interior disparities, and the new rich-poor chasm. At the same time, growing unemployment and large-scale rural migration into the cities is compounding the situation. A more insidious phenomenon is a pervasive sense of injustice and loss of faith in the system.
China's governing elite has a severe image problem as a grubby, greedy and corrupt lot. China has lost any sense of ideological cohesion, apart from its creed of greed. There is a sense of drift overtaking the society, with no clear direction and goal. This is where the danger lies: a floating mass of humanity with nowhere to go.
The Chinese Communist Party believes that without its political monopoly, China will plunge into social chaos. It looks like, though, that by tenaciously holding on to its political monopoly, the party might succeed in creating the very situation of social chaos that it seeks to prevent. The absence of alternative political space is spawning a pervasive sense of frustration, which doesn't bode well for the country. Because when the inevitable explosion occurs, China will be without an alternative political and constitutional mechanism to channel and contain this phenomena. In a sense, the communist party is sitting atop a powder keg.
This might not tally with the current optimism about China's future, but to overlook it is irresponsible.
Sushil Seth is a freelance writer based in Sydney.
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