Friday 16 November 2012

Xi must initiate new eco-reform wave (PO)

By M D Nalapat

The new General Secretary of the Chinese Communist Party (CCP), Xi Jinping, was exposed to both great power as well as great controversy. While he was still in his teens, he watched helplessly as his father - one of the heroes of the struggle against both the Japanese as well as the Kuomintang – was humiliated by the Red Guards set loose by Mao Zedong against the top echelon of his own party. Subsequently, Xi was again a bystander when relations soured between his boss Lin Biao (then Defense Minister) and Mao. Although Lin had ensured that the Chinese military, the PLA, stood foursquare behind Mao in the latter’s battle against party elders, his earlier closeness and familiarity with the USSR became a liability by 1970,when Mao decided that Moscow was an enemy rather than a friend. A year later, Lin was dead, killed in a mysterious air crash while reportedly en route to the USSR.

Although he has been almost totally expunged from the written annals of the CCP, the fact remains that Lin Biao was a hero, having defeated the feared Japanese Itagaki division in the 1940s,among other victories, all achieved despite having only ill-equipped, poorly trained soldiers under his command. Lin was the ideological progenitor of later Asian nationalists such as Mahathir Mohammad, who believed that Europe would once again decline relative to Asia. His famous theory was that the “villages” of the world (ie the poorer countries) would in time “encircle the cities” (ie the richer countries) and overwhelm them. In that sense, he deviated from Marx, who with his German heritage saw the developed countries of Europe as the hub of the future communist revolution. To the surprise of his followers, it was peasant Russia where the first communist state came into being, in 1917. Again, it was economically impoverished China where the first economic communist success story got scripted in the three decades following Deng Xiaoping’s full takeover of power in 1979.

While Jiang Zemin adopted the US Republican Party ideology of “trickle down” economics during his decade in power (1992-2002), his successor Hu Jintao sought a more equalitarian set of policies than the billionaire- friendly steps initiated by Jiang. However, the continuing influence of Jianf Zemin over the media, military and state-owned enterprises in China prevented Hu and Premier Wen Jiabao from carrying out a new wave of economic reform following the 2008 financial collapse in NATO-bloc money markets. Jiang saw to it that the monopoly privileges of state-owned enterprises continued, so that his numerous protégés continued to fatten themselves because of state privileges. Had Hu and Wen had their way, in 2008 they would have given the Chinese private sector more freedoms and rights, thereby sparking off a fresh wave of reform after the bold steps initiated by Deng Xiaoping in the 1980s and the reform of state-owned enterprises carried out by then Prime Minister Zhu Rongji in the 1990s. While Zhu was able to ensure that state-owned enterprises became more efficient, he was unable to ensure the complete professionalisation of management within them because of the hold that the new CCP economic elite had over the state sector because of the backing of their patron and protector, Jiang Zemin.

Had Hu and Wen been able to free the Chinese private sector from the constraints placed on them by policies designed to perpetuate the monopoly interests of state-owned enterprises, China would have been able to avoid the economic slowdown that it is now facing. Because of tight credit policies and the absence of a level playing field, several tens of thousands of private companies in China have gone bankrupt since 2008,throwing millions of people out of work. Fortunately for China, by 2011,the alliance of Hu Jintao and his successor as General Secretary of the CCP, Xi Jinping, has ensured that the elitist policies favoured by Jiang can no longer be thrust down the throats of the people of China, leaving 98% of the population underprivileged and 2% super-privileged, exactly as has been the case in the US, where the billionaire-centric Republican Party still controls the House of Representatives and seeks to ensure that policies favouring the top 2% rather than the other 98% continue despite the 2012 re-election of President Obama.

Now that the Xi-Hu alliance controls the CCP, it is possible for Xi Jinping and his effective Prime Minister-to-be Li Keqiang, to finally do away with “2%” policies in favour of “98%” measures. A start would be to give more rights to migrant workers, who till now have very few privileges and lead a difficult life. Also to ensure that the population get access to good quality (and inexpensive) education and healthcare, both of which were priced out of the reach of ordinary Chinese during the period when Jiang Zemin was the boss. Now that China’s population has stabilised, the One Child Policy needs to be relaxed, while private Chinese companies need to be given the same access to funds and benefits as state-owned enterprises. Should Xi achieve all this, he would put China on track to overtake the US as the single largest economy in the world by the time he demits power in 2022.

Xi Jinping is known to have a powerful intellect fused to a warm and very human nature. His wife is still among the most beautiful women in China, and a very popular singer. The Chinese, indeed the world, expects much from him, and all those who respect the great civilisation of China will wish him success as he begins the task of leading the second-most important country in the world.

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