Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Monday, June 05, 2006

Martin Wolf Wonders about China's Future

Mark Thoma reads the excellent Martin Wolf in the FT:

Economist's View: The Mountains Are High and the Emperor is Far Away: Martin Wolf discusses the political and economic future of China and the growing tension he foresees between the goals of those in power and the goals of society:

China's autocracy of bureaucrats, by Martin Wolf, Commentary, Financial Times: What happens when a communist autocracy presides over a dynamic market economy? Do they live together happily ever after or does one destroy the other?... [T]hese questions. But they have been bubbling in my mind since I read S.E. Finer's illuminating discussion of the history of China's government. What emerges from this masterpiece is how much today's party-state is just another imperial dynasty in twentieth century guise.

Finer summarised the contrast between the ideology of the Ch'in state, which unified China 2,200 years ago, and of the Greek and Roman republics, which are the west's ancestors, as follows: "Collective and mutual responsibility, not individualism; authoritarianism, paternalism and absolutism, not self-determination; inequality and hierarchy, not equality before the law; subjects not citizens; duties not rights." Who, reading this list, can fail to recognise its continued relevance?... "The mountains are high and the emperor is far away." This well-known saying captures what so often happened. When the emperor was weak, it became difficult to reach decisions. Officials looked after themselves and their families. Infirmity of purpose, corruption and an inability to protect the empire itself ensued. Sooner or later the dynasty fell, to be replaced by another, often after a period of chaos.

Using the analytical machinery of political science, Mr Pei describes today's "dynasty" as being in just such a period of bureaucratic ossification. He points to the emergence of a "decentralised predatory state", in which officials feather their nests at the expense of the state, the economy and the people. ... Tension is growing, he suggests, between the state and the society.... Pei argues, persuasively, that China's gradualism... is as much a political as an economic strategy. Its aim is also to generate rents for those with political power or those whose support the powerful need....

One vast difference between what is happening to China today and what has happened to it in the past is evident: its dynamic economy. By offering its cheap, hard-working labour to the world and investing almost half of gross domestic product, China has managed to lift itself from age-old poverty. The society now emerging is increasingly urbanised, literate and open to the world....

I envisage four possibilities.... A democratic, law-governed society then emerges smoothly over the next few decades.... An autocratic superpower then transforms the political balance of the world.... China becomes a sad case of failed development.... [S]lowing growth generates political crisis. Turmoil ensues. But a democratic regime finally emerges.... The last possibility is far easier to imagine.

I am forecasting neither a political crisis nor a sharp economic slowdown in the near future. The Chinese economy could continue to grow rapidly for years. But the combination of a market-led economy with a bureaucratic autocracy does not look a good bet for the long run. The market's irresistible force is meeting the party's immovable object. At some point, one of them must surely give.

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