November 23, 2007


The China Model: How long can economic freedom and political repression coexist? (Rowan Callick, November/December 2007, The American)

From Vietnam to Syria, from Burma to Venezuela, and all across Africa, leaders of developing countries are admiring and emulating what might be called the China Model. It has two components. The first is to copy successful elements of liberal economic policy by opening up much of the economy to foreign and domestic investment, allowing labor flexibility, keeping the tax and regulatory burden low, and creating a first-class infrastructure through a combination of private sector and state spending. The second part is to permit the ruling party to retain a firm grip on government, the courts, the army, the internal security apparatus, and the free flow of information. A shorthand way to describe the model is: economic freedom plus political repression.

The system’s advantage over the standard authoritarian or totalitarian approach is obvious: it produces economic growth, which keeps people happy. Under communism and its variations on the right and left, highly centralized state-run economies have performed poorly. The China Model introduces, at least in significant part, the proven success of free-market economics. As citizens get richer, the expectation is that a nondemocratic regime can retain and even enhance its power and authority. There is no doubt that the model has worked in China and may work as well elsewhere, but can it be sustained over the long run? [...]

In the 1990s, a presumption grew that the crowds of well-connected young Chinese returning with their Ivy League MBAs would not acquiesce to the continued unaccountable rule of the cadres. But many of them instead joined the party with alacrity. A striking example is that of Li Qun, who studied in the U.S. and then served as assistant to the mayor of New Haven, writing a book in Chinese on his experiences. After his return to China, he became a mayor himself, of Linyi in Shandong Province in the Northeast. There, he swiftly became the nemesis of one of China’s most famous human rights lawyers, the blind Chen Guangcheng. First, Chen was placed under house arrest and his lawyers and friends were beaten because of his campaign against forced sterilizations of village women. Then, Chen was charged, bizarrely, with conspiring to disrupt traffic when a trail of further arrests led to public protests. He was jailed for four years.

Thus, best of all, in the view of many of the international admirers of the China Model, is that the leaders, while opening the economy to foster consumption, retain full political control to silence “troublemakers” like Chen. Indeed, the big attractions of China to capital from overseas has been that the political setting is stable, that there will be no populist campaign to nationalize foreign assets, that the labor force is both flexible and disciplined, and that policy changes are rational and are signaled well ahead. Economic management is pragmatic, in line with Deng Xiaoping’s encomium to “cross the river by feeling for stones,” while political management is stern but increasingly collegiate, the personality cult having been jettisoned after Mao and factions having faded together with ideology.

The CPC is replacing old-style communist values with nationalism and a form of Confucianism, in a manner that echoes the “Asian values” espoused by the leaders who brought Southeast Asian countries through their rapid modernization process in Singapore, Malaysia, Thailand, and elsewhere.

Nothing gets us capitalists to compromise our morality more surely than the appeal of "stability."

Posted by Orrin Judd at November 23, 2007 8:53 AM

Venezuela has "liberal" economic policies? Chavez has socialized industry, made the country a haven for international gangs, set up terrorist banks, booted out foreign oil investment, and closed down the media. If oil were not at $90 a barrel, he surely would have been killed by now.

And Burma has a virtual no-growth economy, because of international distance (except for China, of course).

China may look "stable" from afar, but we know better. And the author forgets that they will hit the demographic wall in about 12 years, when the transition to an aging population (and one with probably 100 million unmarriable men) bursts into bloom. What will China do to maintain "stability" then?

Posted by: jim hamlen at November 23, 2007 10:40 AM