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18 August, 2015 00:00 00 AM
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The Chinese leadership is, at least publicly, seeking a model that, though under tight central leadership, will try to rest on an autonomous, efficient and high-performing bureaucracy. This model also will almost certainly entail some level of legal protection for private and intellectual property rights at least those of Chinese citizens as a means to stimulate domestic consumption and innovation

Evolving economic dimensions of China

Muhammad Zamir
Evolving economic dimensions of China
Is China walking the talk in its economic transition?

The world watches every move made by China's leadership, analyzes the probable reasons for that country’s latest move and then tries to arrive at a conclusion. They also agree that an evolutionary process is underway that has an inter-mixture of politics and ambition. China is in the news everyday of the week.
In recent times, the focus has been on China’s significant anti-corruption campaign. It has captivated the interest of everyone interested in the role China’s judiciary is playing within the paradigm of political governance. The Supreme People’s Court statement accusing former Politburo Standing Committee member Zhou Yongkang, the highest-ranked official thus far implicated in China's ongoing anti-corruption campaign, of having "trampled the law, damaged unity within the Communist Party, and conducted non-organizational political activities" has drawn everyone’s attention. This has also been interpreted by analysts Rodger Baker and John Minnich  as a “bureaucratic speak” suggesting that Zhou and his former political ally and one-time rising star from Chongqing, Bo Xilai, had plotted a coup to pre-empt or repeal the ascension of Chinese President and Party General Secretary Xi Jinping. The Court’s language has consequently been interpreted as symbolical. The references on Zhou were quite surprising given the fact that Zhou was also at the top of the country’s energy industry and the domestic security matrix.
Consequently many now surmise that the present campaign by the Xi administration against corruption is also another format of political purge aimed at tightening the control of the new leadership over the Party, the government in general and military apparatuses and removing possibility of emergence of competing factions.
This has led some to suggest that in all probability the anti-corruption campaign might gradually be further energized and end up in general cleaning of the Party and all those who might become a source of challenge to the nascent authoritarianism within the current political dynamics. Such measures are also being taken, according to Sinologists, to be able to prepare the government in its efforts to successfully tackle any social or political disruptions that might surface because of a prospective Chinese economic slowdown.
President Xi knows that there has to be effective rule of law and less political preferential treatment if China is to safely move through the next few difficult years. This was clearly underlined during the Party’s Fourth Plenary Session last October.
The Chinese leadership has now made it clear that their anti-corruption campaign will center on 26 of the country’s largest state-owned enterprises. The focus will be resource mobilization efforts, construction, and heavy industrial and telecommunication businesses. The government’s pre-emptive warning in this context has been termed as clinical as far as state-owned sector efforts are concerned.
Some have concluded from this exercise that China is trying through this method to build flexible and adaptive governing institutions that will be able to overcome the socio-economic challenges that will arise in the context of urbanizing and industrializing measures that are being undertaken in some parts of China, away from its eastern coast.  
It would be important to note an interesting point at this juncture. China’s economy, according to available reports appears to have grown manifold since 2000. The country’s political structure has however changed very slightly in incremental terms. It is true that its governance structure has probably become more effective today than in the early 1980s, but at the same time, hints are being given that the consensus-based political decision-making mechanism is giving way to a more focused and centralized approach. This approach is evolving into place with regard to restructuring of the economy to a format that would rely on greater harnessing of
internal consumption and services in addition to increasing innovative high value-added manufacturing related to the export sector.
From that point of view, it may be seen as a change from the manner in which Chinese governance was carried out by Deng Xiaoping, Hu Jintao or Jiang Zemin over the last three decades.  
As such, after careful analysis Rodger Baker and John Minnich has concluded that the “the Xi camp's vision seems to be a political framework that could draw on elements of Mao's legacy — centralization of political power and nationalism, most saliently — while ultimately preserving the Deng model's promise of evolutionary, rather than revolutionary, change”. They believe that the “Chinese leadership is, at least publicly, seeking a model that, though under tight central leadership, will try to rest on an autonomous, efficient and high-performing bureaucracy. This model also will almost certainly entail some level of legal protection for private and intellectual property rights — at least those of Chinese citizens — as a means to stimulate domestic consumption and innovation.”
Many believe that China has for many years been carefully scrutinizing the impressive economic evolutionary process that has been taking place in Singapore. They have noted in this context that Singapore’s high performing bureaucracy has been a pivot in this exercise. China has also understood that there has to be an effective protection of property rights to support their quest for the required transformation to being an advanced industrial economy, similar to Germany or the United States.
The present Chinese leadership however realizes that as in all countries, the bureaucratic mind-set is not easily susceptible to change. Within that paradigm, there is also the question that sometimes, unexpectedly, raises its head- parochial interests, especially true, if one considers the vastness of China, in terms of territory and population.
During the Mao era, the revolutionary political leadership tried to contain any possible bureaucratic usurpation of
power by periodic shake-ups and transfers. Subsequently, Deng tried to re-assure the bureaucracy by introducing some balance within the competing centrifugal forces. This was a shift but it encouraged a gradual constructive evolutionary change in China.  
The Deng model as followed during Hu Jintao underwent some minor changes. Under Xi Jinping, it is being re-examined and modulated, if so found necessary. The influence of digitalization and the impact of the world economy outside China has become the driving force. Another factor that has become a catalytic factor is the careful examination of the prospect of re-allocating capital from the more economically advanced coast and the Yangtze River Basin areas to other parts of China.
As mentioned earlier, the world in general and the USA, Western European countries, Japan and the Republic of Korea have been carefully analyzing the progression of events in China. They are aware that major social changes arising out of political measures can affect internal security and lead to variations in China’s relationship with the external world. They are also monitoring how China’s central authority is handling the sensitive issue of economic stimulus for its rural-urban divide within its huge 1.4 billion population.  This assumes special importance given China’s efforts within its economic spectrum to ensure its transition from low-end manufacturing meant only for the world’s masses.
China’s evolving economic dimensions have acquired particular interest also because of its central role within the BRICS framework- attempting to emerge as mortar of a new world order where the western-dominated financial system, the International Monetary Fund and the World Bank will have a reduced role. China and Russia along with other countries in BRICS are unhappy that though this Group accounts for roughly 25 per cent of global GDP and 40 per cent of the world’s population, it has just 11 per cent of the votes of the IMF. This has urged them to affirm that time has come to refashion the world economic order and its architecture. The latest meeting of this Group held in Ufa, Russia underlined this proposition. Economist Joseph Stiglitz, an ardent supporter of BRICS and its financial initiatives has already suggested that China’s use of its US Dollar 3 trillion foreign exchange reserves might greatly influence the BRICS quest and their attempt to bring forth a new socio-economic order.
China’s aspirations towards a more central international role for its economic presence was also highlighted recently by the Chinese negotiators during their annual bilateral talks with the United States at Washington in June, 2015. For the first time Washington appeared to be more ready to support the major step of internationalization of the Chinese yuan and it being an underpinning of the International Monetary Fund’s SDR currency. This view on the part of the USA has emerged, according to US Treasury Secretary Jacob Lew after China agreed to hold off interventions in the foreign exchange markets to manage the Yuan’s value except in situations of disorderly market conditions.USA is still not ready to embrace China’s new Asian Infrastructure Investment Bank on the plea that it risks undermining social and environmental standards for loans as established by the World Bank. Nevertheless, it is clear that in strategic terms, the Chinese economic evolution is now being considered with greater seriousness despite US on-going complaints about some other trade issues, including cyber-spying and cyber-theft of secrets and intellectual property from US companies that is allegedly backed by the Chinese government.

 The writer is a former ambassador, an analyst specialised in foreign affairs, right to information and good governance.
He can be reached at <muhammadzamir0@gmail.com>

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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