FacebookTwitterGoogle+RedditEmail

China’s Market Enigma

by PEPE ESCOBAR

“The focus of the restructuring of the economic system … is to allow the market [forces] to play a ‘decisive role’ in the allocation of resources.”

That’s it? The whole world was breathlessly waiting – and this is what the world got: an enigma enveloped in a riddle inside a Chinese box, in the form of a cryptic communique issued by the long-awaited Third Plenum of the 18th Chinese Communist Party (CCP)’s Central Committee.

To know who is ultimately responsible for this – the first serious policy blueprint unveiled by the new Chinese leadership of President Xi Jinping and Premier Li Keqiang – one just needs a glimpse at the photo: these are the seven members of the Politburo Standing Committee, the men who really rule China.

20-politburo-standing-committee

And what’s at stake could not be more serious; no less than the strategic choices addressing China’s inevitable ascension to the status of world’s number one economy.

One should always remember how the CCP works. The Plenum was supposed to “forge consensus” among the CCP elite and set the tone for the next stage of China’s breakneck development.

And yet anti-climax seems to have become the operative concept here. The media frenzy in China, pre-Plenum, had been relentless – of a “change we can believe in” variety (no, nothing to do with American-style billion-dollar political campaigns). After all, the number 4 in the Politburo Standing Committee, Yu Zhengsheng, had publicly promised “unprecedented” reforms, leading to a “profound transformation in the economy, society and other spheres”.

The frenzy was mostly generated by a reform road map published by the State Council’s Development Research Centre – the so-called “383 plan”. In trademark Chinese numerology, the road map delineated the “three-in-one train of thought, the eight key areas and the three projects of reform”. The secret of a successful reform would be “the proper handling of the ties between the government and the market”.

One of the authors of the report, Liu He, director of the Central Leading Group on Financial and Economic Affairs and a deputy director of the National Development and Reform Commission, actually became a superstar. And just before the Plenum, President – and CCP general secretary – Xi Jinping stressed, “reform and opening up are a never-ending process”.

I want my glasnost with ice, please

So what will this glasnost with Chinese characteristics really amount to? Chinese public opinion still has not had access to the details of the dragon enigma inside the riddle – or vice-versa – although everything about these reforms directly impacts the lives of 1.3 billion people. Actually the box containing the enigma is hidden inside a pyramid – reflecting a decision process monopolized by a wise and benign party elite. “Transparency”, here, does not even qualify as a mirror image.

Everyone was expecting party pledges to increase the independence of the Chinese judiciary system and to keep fighting corruption and social injustice.

Everyone was expecting a softening of the 33-year-old one-child policy – allowing more couples to have a second child; that’s natural, considering the CCP aims for a consumer-based economy just as the Chinese population is aging.

Everyone was expecting the tackling of land reform, directly linked to the new urbanization drive.

And for the record, this is the first time the CCP acknowledged that “both the public and private sectors are the same important components of a socialist market economy and the important bases of our nation’s economic and social development”.

In practice, this will mean the CCP breaking up state-sector monopolies in a few strategic industries. Private investment would be allowed, for instance, in banking, energy, infrastructure and telecommunications. This will also mean that many state-owned enterprises will cease to operate like arms of the government bureaucracy. In this case, expect fierce opposition from the proverbial entrenched interests – as in regional political elites fighting Beijing.

The CCP’s master plan is to expand the Chinese middle class to more than 50% of the population by 2050 (it’s currently at 12%) – equalizing more consumption with social stability. For the moment, the public sector accounts for 25% of China’s GDP. Most businesses in China are public/private enterprises already – but with 25% of all private enterprises having state-owned parent companies. Only 1.3% of Chinese workers are private entrepreneurs. Two-thirds of them previously worked in the party-state system. And 20% held a leadership position in their government or local party system.

The central role of the state should not be altered by the coming reforms. After all, 40% of entrepreneurs are members of the CCP. They made a handsome profit from housing privatization. They offer no political opposition to the CCP – and will certainly profit from the reforms. What they want most of all is a more efficient system and more social justice. They harbor no regime change ideas.

Watch these comrades rip

In the end, the absolute key problem for China’s next drive can easily be formulated Chinese-style; how to tweak the economy without any political reform. Even the Little Helmsman Deng Xiaoping – arguably the greatest statesman of the second part of the 20th century – repeatedly stressed that economic reform in China would not go very far without a political system reform.

In the short to medium term, it’s hard to see the CCP allowing the caprices of the Goddess of the Market to shake, rattle and roll the Chinese economy at will. More “market”, Western-style, will inevitably accentuate regional inequality to prohibitive levels – exactly when the CCP is trying very hard to ramp up the development of the poorer interior provinces.

The cryptic communique is of course only an abbreviated road map. It will take days, weeks and even months for its detailed implications to sink in. What’s certain is that the “decisive role” of market reform implies the CCP at the helm, monitoring every step of the process.

It’s like a ninja trying to tame a very powerful dragon non-stop. It will be an epic battle for the ages, to watch the CCP – an immense structural bureaucracy inbuilt in the Chinese government – perform this balancing act; matching its instincts for even stronger centralized control (not much glasnost allowed in the Internet, for example) with an explosion of social Darwinism caused by these “irrational” forces who couldn’t care less about employment and social stability.

Gweilos – or foreign barbarians in general – will underestimate Chinese resolve at their own peril. When the Little Helmsman launched his own economic reform – and brand of glasnost – in 1978, he turned the CCP upside down, all around, and squared the circle; breakneck economic development providing leeway to manage political problems, and some political changes allowing for even more breakneck economic development.

So what if Xi and Li come up with a Deng remix – like inventing a new concept of market with Chinese characteristics? The sky – or China back to where it was for 18 of the past 20 centuries – is the limit.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009). He may be reached at pepeasia@yahoo.com

This column originally appeared on Asia Times.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge and Obama does Globalistan (Nimble Books, 2009).  His latest book is Empire of ChaosHe may be reached at pepeasia@yahoo.com.

More articles by:
June 28, 2016
Jonathan Cook
The Neoliberal Prison: Brexit Hysteria and the Liberal Mind
Paul Street
Bernie, Bakken, and Electoral Delusion: Letting Rich Guys Ruin Iowa and the World
Anthony DiMaggio
Fatally Flawed: the Bi-Partisan Travesty of American Health Care Reform
Mike King
The “Free State of Jones” in Trump’s America: Freedom Beyond White Imagination
Antonis Vradis
Stop Shedding Tears for the EU Monster: Brexit, the View From the Peloponnese
Omar Kassem
The End of the Atlantic Project: Slamming the Brakes on the Neoliberal Order
Binoy Kampmark
Brexit and the Neoliberal Revolt Against Jeremy Corbyn
Doug Johnson Hatlem
Alabama Democratic Primary Proves New York Times’ Nate Cohn Wrong about Exit Polling
Ruth Hopkins
Save Bear Butte: Mecca of the Lakota
Celestino Gusmao
Time to End Impunity for Suharto’’s Crimes in Indonesia and Timor-Leste
Thomas Knapp
SCOTUS: Amply Serving Law Enforcement’s Interests versus Society’s
Manuel E. Yepe
Capitalism is the Opposite of Democracy
Winslow Myers
Up Against the Wall
Chris Ernesto
Bernie’s “Political Revolution” = Vote for Clinton and the Neocons
Stephanie Van Hook
The Time for Silence is Over
Ajamu Nangwaya
Toronto’s Bathhouse Raids: Racialized, Queer Solidarity and Police Violence
June 27, 2016
Robin Hahnel
Brexit: Establishment Freak Out
James Bradley
Omar’s Motive
Gregory Wilpert – Michael Hudson
How Western Military Interventions Shaped the Brexit Vote
Leonard Peltier
41 Years Since Jumping Bull (But 500 Years of Trauma)
Rev. William Alberts
Orlando: the Latest Victim of Radicalizing American Imperialism
Patrick Cockburn
Brexiteers Have Much in Common With Arab Spring Protesters
Franklin Lamb
How 100 Syrians, 200 Russians and 11 Dogs Out-Witted ISIS and Saved Palmyra
John Grant
Omar Mateen: The Answers are All Around Us
Dean Baker
In the Wake of Brexit Will the EU Finally Turn Away From Austerity?
Ralph Nader
The IRS and the Self-Minimization of Congressman Jason Chaffetz
Johan Galtung
Goodbye UK, Goodbye Great Britain: What Next?
Martha Pskowski
Detained in Dilley: Deportation and Asylum in Texas
Binoy Kampmark
Headaches of Empire: Brexit’s Effect on the United States
Dave Lindorff
Honest Election System Needed to Defeat Ruling Elite
Louisa Willcox
Delisting Grizzly Bears to Save the Endangered Species Act?
Jason Holland
The Tragedy of Nothing
Jeffrey St. Clair
Revolution Reconsidered: a Fragment (Guest Starring Bernard Sanders in the Role of Robespierre)
Weekend Edition
June 24, 2016
Friday - Sunday
John Pilger
A Blow for Peace and Democracy: Why the British Said No to Europe
Pepe Escobar
Goodbye to All That: Why the UK Left the EU
Michael Hudson
Revolts of the Debtors: From Socrates to Ibn Khaldun
Andrew Levine
Summer Spectaculars: Prelude to a Tea Party?
Kshama Sawant
Beyond Bernie: Still Not With Her
Mike Whitney
¡Basta Ya, Brussels! British Voters Reject EU Corporate Slavestate
Tariq Ali
Panic in the House: Brexit as Revolt Against the Political Establishment
Paul Street
Miranda, Obama, and Hamilton: an Orwellian Ménage à Trois for the Neoliberal Age
Ellen Brown
The War on Weed is Winding Down, But Will Monsanto Emerge the Winner?
Gary Leupp
Why God Created the Two-Party System
Conn Hallinan
Brexit Vote: a Very British Affair (But Spain May Rock the Continent)
Ruth Fowler
England, My England
FacebookTwitterGoogle+RedditEmail