Doubts cast over China model as growth falters

May 12 2012, 01:46 IST
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SummaryAfter the economies of Western nations imploded in late 2008, Chinese leaders began boasting of their nation’s supremacy.

Pegged as the guiding light for this century, experts say the whole thing was misguided

After the economies of Western nations imploded in late 2008, Chinese leaders began boasting of their nation’s supremacy. Talk spread, not only in China but also across the West, of the advantages of the so-called China model — a vaguely defined combination of authoritarian politics and state-guided capitalism — that was to be the guiding light for this century.

But now, with the recent political upheavals, and a growing number of influential voices demanding a resurrection of freer economic policies, it appears that the sense of triumphalism was, at best, premature, and perhaps seriously misguided. Chinese leaders are grappling with a range of uncertainties, from the once-a-decade leadership transition this year that has been marred by a seismic political scandal, to a slowdown of growth in an economy in which deeply entrenched state-owned enterprises and their political patrons have hobbled market forces and private entrepreneurship.

“Many economic problems that we face are actually political problems in disguise, such as the nature of the economy, the nature of the ownership system in the country and groups of vested interests,” said Zhang Ming, a political scientist at Renmin University in Beijing. “The problems are so serious that they have to be solved now and can no longer be put off.”

On Thursday, China released data that showed its economy was continuing to weaken. Many economists have been urging the government to loosen controls over the financial system, to support lending to private businesses while reining in state-owned enterprises, to allow more movement in exchange rates and interest rates, and to improve social benefits.

Such changes would curb the state’s role, lessen corruption and encourage competition. But making them would involve a titanic power struggle. Executives of Chinese conglomerates, army generals, Politburo members, local officials and the “princeling” children of Communist Party elders have little incentive to refashion a system that fills their coffers.

Another significant aspect of the China model is the growing security apparatus. Its heavy-handed tactics in pursuit of social stability have been called into question by, among other things, more than 30 self-immolations by disaffected Tibetans and a diplomatic crisis between China and the United States precipitated by the plight of a persecuted dissident, Chen Guangcheng. A well-documented uprising last winter against corrupt officials in the southern village of Wukan ignited a debate about how

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