Will the Communist China win clear of the risks lying on its path and emerge as a superpower in this century? The authors of this issue of Pro et Contra share their ideas about today’s China, its internal life and its relations with the outside world.
The China Factor in the New Century
Chinese Puzzle
Vasily Mikheyev
The Communist party’s ability to ensure economic growth and social stability in the People’s Republic of China guarantees its legitimacy in the eyes of both the Chinese people and the international community, including the West, which is not interested in the collapse of a vast country already deeply drawn into the global economy. The challenge is, on the one hand, not to rock Chinese state boat, lest it capsize, while pushing the Chinese leadership toward improving the quality of governance in the country, on the other. This would imply promoting the development and consolidation of the middle class, supporting constructive elements within the Chinese political elite and welcoming democratic trends within the Communist Party of China (CPC).
Dangerous Denials
Minxin Pei
China’s government rests on fragile political foundations, little rule of law, and corrupt governance. Worse, it has consistently placed highest value on economic growth and viewed all demands for curbing its discretion and power as threats to its goal of rapid modernization. The result has been social deficits in education, public health, and environmental protection. This is hardly surprising, as promoting high growth advances the careers of government officials. So for those who wonder how, if China’s political system is so rotten, it can deliver robust growth year after year, the answer is that it delivers robust growth year after year in part because it is so rotten.
The Neosocialism of Hu Zintao and the PRC’s Modern Ideology
Olga Borokh and Alexander Lomanov
Income disparity, corruption, environmental and raw materials crises are now openly discussed in China. Chinese mass media may avoid blaming today’s problems on former leaders, but they publicize an increasing amount of worrying statistics. Chairman Hu faces the difficult task of replacing the 25-year-old reform model launched by Deng Xiaopin. This was the focal point of a communication released by the CPC Plenum of October 2005, which called for a “change of vision with regard to development” and “the creation of a new model of development”. As it undertakes “to reform the reforms”, the Chinese government puts special emphasis on two ideological fronts: propagandizing a new economic policy of social justice, and the fight against liberal ideology regarded as a challenge to political stability in the country.
Why is China Growing so Slowly?
Martin Wolf
China’s economy is still highly inefficient. The voracious maw of China’s state-owned enterprises accounts for much of this drag. Between 1993 and 2000, more than 60 percent of all loans went to these state-owned behemoths. The country’s notoriously high level of bad loans tells you how good an investment they have been: The Standard & Poor’s rating agency currently estimates that China’s banks have issued about $650 billion in bad loans, or about 40 percent of outstanding loans. If an economy growing at close to 10 percent a year generates bad loans on this scale, the misallocation of capital has to be gigantic.
Russia between China and the USA
Dmitri Trenin
The Beijing-Moscow-Washington “triangle” that first emerged in the early 1970s is once again taking shape. Yet, while thirty years ago the role of the initiator or the “solicitor” was played by the weakest party, Beijing, and Washington was the main beneficiary, today the initiative has been launched by the new weakest side, Russia, while Beijing may eventually gain the most. The idea of a “multipolar world” that was so popular in the Russian political circles in mid-1990s in practice implied Russia’s interaction with other “power centers”, first and foremost China, in order to counterbalance the US. However, even back then Russian policy-makers should have realized that in the Moscow-Beijing link the former would evolve as the led, while the latter was obviously set to become the leader. Thus, in 2005, Russia, after refusing to become a junior partner to the US, may play that role with respect to China.
A Trade Partner, a Military Ally
Alexander Golts
Articles
How We Ought to Diversify Exports?
Ksenia Yudaeva
The Russian economy is currently and will remain heavily specialized in energy exports. This does not make Russia in any way deficient or incapable of economic growth. On the contrary, Russia may as a result become one of the world’s wealthiest countries, with major influence on other national economies. However, as with any narrow specialization, a concentration on energy makes the Russian economy dependent on fluctuations in world prices for that commodity. In order to mitigate the effect of price variation, Russia needs to push forward with the policy of diversifying the financial assets of the Stabilization Fund. In addition, measures should be taken to reduce the reliance of the Russian economy on only one market, Europe, and further diversify Russia’s export markets.
Facing the Immigration Challenge
Zhanna Zayonchkovskaya
In the next two decades, as a result of the regional structure of work force supply, the shortage of labor will get worse the farther one moves westward across Russian territory. The center of the country draws population from all over Russia, and the far east yields its population to all other regions. This trend will persist for at least another twenty-five years. Unless there is inflow from outside, the center may absorb the whole of Russia’s migration potential, while Siberia and the far east will likely become the center’s main donors. The vicinity of China, with its enormous demographic potential, is the key labor resource for the border territories of Siberia and the far east, which may help maintain the population density of these regions at least at the current level.