China’s Next Leap Forward: From Comrades to Consumers
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China’s Next Leap Forward: From Comrades to Consumers

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On June 20 of last year, two and a half months after disgraced former Chongqing Communist Party Chief Bo Xilai was dropped from the Politburo, another member of China’s elite 25-man decision-making body was all smiles in the southern city of Dongguan.

During a tour of the bustling factory city, one of the most overt symbols of China’s experiments with capitalism thus far, the then Guangdong province party chief Wang Yang waxed lyrical about his plans to tackle the province’s spiraling crime and economic malaise.

On the front page of the local newspaper the following day, Wang appeared opposite a table lined with bundles of 100-yuan bills, drugs, a handgun and carefully aligned machetes – the unsavory by-products of Guangdong’s recent rush towards prosperity. “Wang Yang strongly supports the ‘three crackdowns, two developments’,” read the headline in the Dongguan Times.

Despite a new campaign produced by the Discovery Channel in February, designed to rehabilitate the city’s unsavory image, Dongguan remains a by-word for crime, vice and everything bad associated with China’s manufacturing-led boom.

With little to offer except hordes of underpaid workers – the city’s population ballooned from 1.8 million in the 1980s to more than eight million today – Dongguan finds itself bankrupt, reflecting a wider troubling trend. China’s local government debt nationwide stood at 10.7 trillion yuan, about 27 percent of GDP. Meanwhile, many overseas investors are leaving for new, less expensive pastures.

Chen Sheng Fei, a mother of two who moved to Dongguan from southeastern Hunan province in 2007, left her job at a furniture factory in early March. She told The Diplomat that finding a new, decent employer is difficult.

“There are factories here that break the law, companies which never mention things like social welfare,” she said. “Too many companies here are bad.”

Despite its developmental woes, Wang remains the leading advocate of what has come to be known as the “Guangdong model” of economic liberalization, based on high growth and private enterprise. His recent career has been viewed as a litmus test of just how far the new generation of Chinese leaders is prepared to go with much-needed economic reforms.

Whereas Bo, a leading proponent of the neo-socialist “Chongqing model”, focused on social safety nets and state-owned enterprises, was disgraced and removed from office in the months leading up to the recent power transition, freewheeling Wang was made third vice-premier. His rise has only gone so far, however. Wang was not elevated to the all-powerful Politburo Standing Committee as many expected. According to some analysts, Wang’s limited rise was a sign that his radical agenda of major structural economic reforms remains in vogue in Beijing – though only to a degree.

As the latest generation of Chinese leaders begins its decade-long rule, speculation has focused on just how far Beijing may go in overhauling the country’s cautiously capitalist economic model. Despite initial grumblings that the leadership shake-up was not all that radical, there are growing signs that wholesale Wang-esque changes – including more focus on free markets, quality enterprises over quantity and greater worker wellbeing – will form the backbone of China’s blueprint for another economic leap forward.

Comments
3
Observer
May 10, 2013 at 14:57

Just look at how chinese treat their own kind, the poor folks that immigrated from rural areas. How they set up the two separate systems (hukou), how those immigrants could not use any benefits in the cities and how their kids could not go to schools while they shed their blood and tears to build china.

 

They get pay with minimum wages, how are they going to be consumers when they are barely have enough to live (in dirty and unhealthy slum areas)?

 

Tom F
May 10, 2013 at 07:50

Bo - “If the distribution of the cake is unfair, those who make the cake won’t feel motivated to bake it; therefore we can’t bake a bigger cake.”

Chief Bo, look where you and your wife are now. Fairness is not part of the equation for your old CCP comrades, as long as there will be a bigger cake to talk about in the propaganda press, that should be enough to keep the populous happy (as their hope they too may have a slice of the cake one day remains intact).

The CCP has studied the rise of Singapore and SoKor very closely, they know 'fairness' will put a halt on the fragile economy.  Fairly distributing the cake will likely drive inflation beyond acceptable levels, severly affecting growth (necessary to keep the CCP in power). The only way to have GDP growth and growth in income is for productivity to increase and 'always' have spare capacity in the economy.

There will be loosers as automation and mechanisation are introduced to boost productivity and maintain spare capacity in the economy (ie they will use machines to bake the cake). It will be very unfair, especially to low paid workers, but that is the cost the CCP is more than willing to bare/manage.

TDog
May 10, 2013 at 00:37

It's a balancing act for the PRC.  The CCP needs to ensure that the economy not only does well, but does well for as many people as possible.  The lack of direct citizen participation within their political system means that the people have no recourse except chaos when it comes to expressing their discontent and chaos has ever been the bogeyman of the Chinese government.

The question remains whether or not China's highly centralized government will manage the transition from an essentially Third World developing country to a modern developed nation better, relatively speaking, than other nations did.  After all, the transitions of most European nations and the US from agrarian to industrial were accompanied by wars, either civil or imperial in nature.

If China can pull it off, it will represent an historic change from the norm. 

From a domestic standpoint, it will be interesting to see if China embraces more socialism or pure capitalism.  The Chinese tend to save more than other nationalities outside the Far East and given the headaches most developed nations are having with their social welfare nets, I'm not sure China will be all that eager to add that to their budget.  In my opinion, social welfare is a luxury and sits somewhat higher on the hierarchy of needs than things like jobs, which are more fundamental.  Social welfare requires someone to pay for it and nobody will be able to pay for it if nobody is working.  Therefore jobs are of paramount concern right now and, in my opinion, calls for more social welfare in China are putting the cart before the horse.

The socialist dream may be dead in places like Dongguan, but for socialism to be viable in China, they will first need a strong capitalist system in place to pay for it.

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