Tuesday, 12 March 2013

CHINA:''Under new leadership'': The demons are still ''present''

Xi Jinping, the nation’s new Communist Party leader, assumes the presidency this March, and the country is hoping, albeit with considerable trepidation, that he will bring positive change. But China’s troubles—economic, political, social—are daunting. And as the full government transition approaches, these problems seem to be converging.

One significant symptom: Money is flowing out of the state at an alarming rate, a sign that wealthy Chinese have lost faith in the country. In fact, wealthy and successful Chinese aren’t just moving their money. Many are making plans to leave for the West along with their money, with America being the primary destination.

The wealthy who are moving to America most often use the EB-5 visa, which goes to foreigners willing to invest at least half a million dollars in a business that offers new jobs for at least ten Americans. The Chinese call that “investment migration.” And the China Merchants Bank, along with global consulting firm Bain & Company, concluded in a joint report that it’s “quickly increasing.”

While the wealthy vote with their feet, the lower and middle classes are in open revolt. In 2011 the Chinese staged more than 128,000 “mass incidents”—large local protests over corruption, land seizures, pollution, job safety, and a dozen other social ills. The numbers are certainly approximate. But they are almost certainly increasing. In 1993, the official number was 8,709. By 2009, that number rose to 90,000 mass incidents. Nearly all the protests are aimed at local authorities, not the national government. For many, the memory of Tiananmen Square apparently remains burned on the brain.

One of the people’s gravest grievances, the motivation for many demonstrations, is the nation’s growing income inequality. At year’s end, China has about one hundred and twenty-two million rural people living below the poverty line, meaning they earn less than three hundred yuan [$369] a year—or one dollar a day. Counting urban poor, the total number of Chinese living in abject poverty reaches almost fifteen percent of the population.

Meanwhile, China has more billionaires and millionaires than any nation in the world except for the United States. And when so-called hidden income—bribes and related graft—is counted, the income of the richest ten percent of Chinese is sixty-five times higher on average than that of the poorest ten percent.

China’s in deep, deep trouble, and its new leaders know it. The growth of the nation’s GDP has continued to slow every quarter since late 2010—though it did tick up slightly in the state’s latest quarterly report, published in January. But that’s just one of many problems.

One major threat often mentioned is the radical change in the nation’s labor pool. China has thrived primarily as a low-wage manufacturer of Western products. But as the nation has grown more prosperous, workers’ wages have risen radically—a very serious problem.  India, Vietnam, Cambodia, and other poorer states are now taking away many of these jobs, one big reason the Chinese economy is not growing.

Another big problem, China experts say, is the dominance of state-owned businesses and enterprises—one hundred and forty-five thousand of them that represent thirty-five percent of all business activity in China, according to official figures. And, by their very nature, they are overstaffed and inefficient since they face no true competition. Many are owned by government officials or their relatives, allowing entire extended families to line their pockets.

A variety of Chinese are quite pessimistic, foreseeing little if any significant change under the new leadership. I can personally foresee “change within continuity.” That means “continued reforms that have the purpose of keeping the party in power—in other words, not ‘real’ or Western-style democracy, including gradually ramping up the attempt to control (as well as to hide) corruption.

Even if Xi wants to bring change, no one can be sure that he’ll be able to pull it off. Since so many Communist Party officials are growing exceedingly wealthy under the current system, won’t they resist significant change? The Chinese legislature’s seventy richest members accrued vastly more wealth in 2011 than the combined net worth of all five hundred and thirty-five members of the US Congress, the president, and his Cabinet;  those seventy delegates now have a combined net worth of $89.8 billion, compared with $7.5 billion for the six hundred and sixty most senior people in the American government.

Despite all the pessimism, Xi has given some cryptic indications that he understands the extent of the problems. For one thing, he declared that widespread corruption will “doom the state.” And during his first weeks in office, half a dozen officials guilty of corruption so blatant that it could not be ignored lost their jobs—probably a record. Xi ordered even more arrests in the following months.

More significantly, the government now says it is going to pass legislation to rein in land seizures, endemic nationwide. Over the years, local officials have accrued almost $2 trillion in debt that is not on the national government’s books.

In addition, the government is talking about setting up a pilot project in one province requiring officials to disclose their income—an important step toward corruption control. The government has raised the idea of issuing deposit insurance for individuals’ bank holdings . . . and more. But Hu Jintao also promised reform when he took office ten years ago, only to do very little.

Unless Xi’s initial changes are real, not just sartorial, the public will not remain silent. China is confronting a perilous jump, one can neither hide from nor avoid-no matter what.There’s a potential crisis in China’s model of economic growth.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist

Photo-Credit : Wikipédia: Xi Jinping