Thursday, 7 November 2013

China, the next Giant North Korea?

"President Xi Jinping vowed last month that country would break free of the "middle income trap", the fate of countless states in Latin America and around the world after their catch-up booms in the 1960s, all failing to make the switch in time to a grown-up growth model.

The reforms will, in theory, break China's destructive reliance on investment - a world record 49pc of GDP - and allow the hard-working Chinese people to enjoy a less miniscule sliver of what they produce. 

Yet at the same time Mr Xi is tightening the grip of the Party, reviving the Maoist "mass line" and rectification campaigns of the Cultural Revolution. 

Qian Gang from the Hong Kong's China Media Project says it is an assault on China's fragile rule of law, warning that Mr Xi is "playing with fire".

What we see is a crackdown on the internet, the media, academia and even science. Mr Xi has studied what happened to the Bolsheviks when Mikhail Gorbachev began to open up the Soviet system, and seems to have drawn a grim conclusion. While I don't attach much importance to the six bomb attacks on Party offices in Taiyuan on Wednesday, or the Uighur attack days earlier in Tiananmen Square, this will strengthen the hand of the hardliners. A few cycnics even claim that is the purpose of such terrorism.

China experts are deeply divided. Minxin Pei says the reforms are skin deep and that the door is fast closing on a benign outcome. The rising risk is that the Party will try to retain power by repression, ultimately turning China into a "giant North Korea".

A joint report last year by the World Bank and China's Development Research Centre - brain trust of premier Li - warned that failure to ditch the old model would leave China languishing in the middle income trap, failing to join Japan, Korea, Taiwan and a rare vanguard of countries that have made it into the elite league and achieved vastly higher incomes per capita.

The only way for China to break out of this impasse is with a blast of Sino-Thatcherism and a sledgehammer blow to the Party apparatus that lives off the deformed structure. That is not on offer at the Third Plenum. Xi Jinping wants affluent Leninism, on his own terms. No such thing exists."

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