Barak Obama has only to serve this final year of his presidency and then he can walk away and start putting together a presidential library in a city of his choice. Xi Jinping has gathered together the levers of power and may rule the Communist nation of China for at least the coming decade. Not only is he the President, but also the General Secretary of the Communist Party of China and the Chairman of it's Military Commission.
With that power comes the weight of office. The buck stops with the man at the top, and with China the future is far from clear. The China that Mao created was entirely free of capitalism and it's citizens fed from the " giant rice bowl " of state power, but today's China has a fast growing " middle class " that demand that the state serve their needs. One of the troubling questions Xi Jinping is facing is the need for China to adopt the " rule of law " to bring clarity to commerce.
The President faces a dilemma. There is massive corruption in the leadership and he has started to install change. The Constitution promises many freedoms that are ignored by the courts and yet Xi Jinping has made it clear that preserving the power of the Communist party will take precedence over all other matters. He has brought together the generals and the admirals of the People's Liberation Army ( PLA ) and told them that the task of the PLA is not to protect China from external enemies, but to maintain the power of the Communist party to govern the country. The " rule of law " will only apply where it does not come into conflict with the Communist party hold on power.
One reason for dissent is the " Hukou " system, which is really an internal passport. This growing middle class is clustered in the great cities while the poorer agrarian masses live a spartan existence in the countryside. When the " manufacturing miracle " began many flocked to the cities to get the better paying jobs, but the " hukou " prevented them bringing their children because without the correct hukou city schools would not accept country children. A pattern emerged. Mum and Dad worked in the city and the children remained back in the countryside, attending inferior schools and cared for by grandparents.
Now those manufacturing jobs are decreasing a new threat is emerging. Those with a country hukou are denied unemployment benefits if they are laid off and must return to their village to receive the much less form of compensation available there - and as a consequence they do not appear on the city unemployment statistics. It is highly likely that the supposed 5% unemployment rate is dodgy.
That is another worry for the Communist party financial mandarins. The whole Chinese form of statistical analysis is suspect. There has been a tendency for managers to submit returns that show what their bosses expect to see, rather than the real picture. The banks tend to hide their bad loans and the plethora of State Owned Enterprises ( SOES ) are feather bedded with extra staff and few make any sort of profit. They are a drag on the economy, but reforming them would set loose forces that would be impossible to measure.
Unfortunately, that SOES question is about to worsen. The President has ordered that the PLA be modernised and reduced in size and consequently 300,000 serving soldiers will be returned to civilian life. By decree, the SOES will be required to reserve five percent of their work force for these returning soldiers, hence the feather bedding situation will worsen - and ex soldiers are likely to have no value in the skills they bring to their new employer.
The biggest worry is the contention in many western minds that the people making management decisions on the Chinese economy have little appreciation on how market forces work in the real world. They are ruling over the ailing SOES content of an earlier regime that is now mixed with a flourishing market economy, constrained by the Communist party's fear that unfettered communications will bring pressure for change that they are unwilling to accept.
Hence the restrictions on Internet access and the steady weeding out of any form of criticism. Rule of law meets political repression head-on, and at the same time China is trying to integrate imports and exports with the rest of the world,.
The human being that is Xi Jinping is an enigma. His inner thoughts are shuttered and yet what he decides will have a profound effect on the world's economy, and this year will see a new man or woman elected to the oval office and square off against China's leader across the conference table.
The world will hope that Xi Jinping gets his economic decisions right and China achieves a smooth landing. If it all goes awry he may invoke nationalism and claim his country is facing an external threat to rally it's people around the flag. There are plenty of flash points in the South and East China seas - and of course that old perennial of forcibly reclaiming Taiwan.
The coming American presidential election will also be crucial. Barak Obama served two terms but his attention was centred on his country's internal problems and he avoided any new military adventures. When party nominees emerge we will have a clearer picture of their likely world outlook but it is possible that America may be more forceful in the years ahead.
At this present moment, the fate of the world economy rests in the hands of Xi Jinping because what happens in China will decide whether the world emerges from a lingering recession - or is plunged into another downturn that may create food lines that persist for decades ! It seems that the fate of the world economy rests in Chinese hands !
No comments:
Post a Comment