The forthcoming Party Elections in the People’s Republic of China seem to be posing more and more questions to the world’s leading investors about the economic future of the country as well as the possible future political scenario. And although the outcome seems to be obvious to many, the pre-electoral debate suggests that there may be a few possible unexpected changes awaiting the Communist state. The question is, how dramatic will they be?
It took China almost 20 years to gain admission to the WTO. When it joined in December 2001, many people hoped that this would significantly undermine the power of the Communist state, and Bill Clinton even suggested that China admission could have “a profound impact on human rights and political liberty”. Having quit GATT (The General Agreement on Tariffs and Trade-WTO’s predecessor), shortly after the communist revolution of 1949, China had to wait for 15 years before reapplying in the early 1980s. The price paid for re-entry was certainly high; the state has to cut almost 7000 tariffs, quotas and various trade barriers, but in the end of the day, their sacrifices seem to have paid off. China’s economy evolved faster than anyone hoped. At first many feared that such step-up would lead to severe foreign competition, uprooting farmers and destroying many industries. However in just under 10 years after entering the International market, it became the world’s leading economy with its’ dollar GDP quadrupling and exports quintupling.
And although China is believed to be the purest communism of our time, for the past 60 years its politics have been perforated by battles between two economic extremes; the left and the right-as they simply refer to themselves. And as the country awaits a change in leadership this year, the tension is becoming particularly acute between the two sides. The left is headed by Bo Xilai the Communist Party of China (CPC) Chongqing Committee Secretary as well as the party chief of Chongqing (deep inland province), who unlike most Communist politicians is believed to have a certain flair for publicity. His opponent-Yang Wang is the Communist Party chief from Guangdong province, advocates a more liberal style of governing which in his opinion could be a more beneficial way of running the country. Guangdong has long been considered as the most vibrant and economically liberal province of China, leading to the coining of the term “Guangdong Model” which has proved to be successful among newspapers and commentators. Its’ proximity to Hong Kong which in turn has over 100 years of trading and business experience, has certainly proved to be helpful. While Mr. Bo defends traditional socialist values, the importance of state-valued enterprises and launches sweeping anti-mafia campaigns, Mr Wang is promoting more open access to information on government spending, giving greater freedom to NGOs and highlighting the role of trade-unions and hence challenging the current Party’s cornerstones.
Both Mr. Wang and Mr. Bo will join the Politburo’s committee this year, when seven out of nine current members (including the current president and the prime minister) will step down. However many critics are worried over the presence of the two juxtapositions in one office. In response a Xu Lao, a researcher at Guangdong’s party School says “As a matter of fact, the two provinces are not in competition with each other, their main aim is to observe each other’s methods of governing and create the best environment for development possible. For example Chongqing is building the development zones to attract investors, while Guangdong is learning how to absorb more migrants from rural to urban areas. It’s all balanced.”
In support, experts are claiming that there is very little basis for worry. China’s policy makers have a long-standing reputation of conservative group whose sole claim to legitimacy is economic stability hence it’s considered to be unlikely that the changes brought in by the new government will be that significant. Last October, having visited several provinces of the country where entrepreneurs have suffered major losses from the financial crisis, Wen Jiabao, the prime minister, strongly advised the banks and local governments to offer their full support. Despite the fact that bank lending quickened the same month, the easing still remains subtle, which serves as another example that China’s policymakers are being very cautious about the changes.
Whether China is about to undergo a set of serious political and economic changes, we are yet to see. One thing the experts are almost certain about is that the Republic is currently hosting plans to modernise its economy, while remaining faithful to industrial policies, state-owned enterprises and promoting-home grown technologies. The only question remaining is whether the plan is possible to put into action without any political competition.
Maria Chetskaya - a post-graduate Economics student, part-time journalist and a building free-lancer.
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