In his inspirational model, "The political triangle of the world economy", Harvard political economy professor, Dani Rodrik, concludes that countries can only pursue two out of three deeply integrated objectives:- namely economic globalisation, national independence and democratic progress. Satisfaction of any two of the three is often at the expense of the third. This model is highly relevant to China.
To attract foreign investment and technology has always been a key intention of the Chinese government in order to open up the country to the global economy. It calculates that sustained economic expansion and improvement on living standards could transfer into consolidation of the existing one party political system. The road map for China's reform designed by the Chinese government does not include the element of establishing Western-style democracy.
However as depicted by Professor Rodrik, China's integration with the world will inevitably have profound implications for its national independence and domestic democracy. In fact, China's one party political system, currently the backbone of its national independence, has been subjected to serious challenges throughout the entire reform period.
Primarily, the problem originates from privatisation of the vast number of small to medium sized state owned enterprises, which is an essential step for the establishment of market economy in China and integration with the world economy.
Unlike the shock therapy deployed in Russia, the privatisation of state owned enterprises in China has been mainly coordinated by the government in a systematic way through forming joint stock companies or selling them to private investors. While avoiding major chaos and contributing to rapid economic expansion, this approach has scandalous side effects as public assets are widely and frequently sold, at prices under their real value, to insiders or other well-connected people. A small proportion of privileged people thereby become extremely rich through unfair and often illegal means.
Consequently, the Chinese society has become very divided: the poor versus rich, urban residents against migrant workers, Maoist left in opposition to liberal right. The expectation that improved living standard would transfer into reinforcement of the existing political control has never materialised. The discontent towards the government, both from the right and left, has always been there and sometimes runs high due to widespread of abuse of power, corruption, deterioration of social morality and polarisation of the society.
The social discontentment gives the liberals in China huge room for manoeuvre. They advocate publically that only way out for China is to adopt Western-style democracy and comprehensively privatise the state-owned economic sector.
For a long period, the main response of the Chinese government to the challenge has been pumping up the economy, in anticipation that improved living standard for all would reinforce the government legitimacy.
This government-driven economic expansion, despite of its positive effect in poverty alleviation and upgrading of infrastructure, has proven to be unsustainable in the long run. It has caused serious problems ranging from excessive money supply, severe overcapacity in a wide range of industries, formation of bubbles in the housing sector, rapid expansion of the debt level and to deep environmental crisis.
All the developments in China seem to be consistent with Dani Rodrik's model: China's participation in globalisation combined with privatisation of the state owned economic sector has awakened the democratic consciousness in the country and shaken the one party political structure to some extent.
Change of direction was happening when Xi Jingping took over the leadership in 18th National Congress of the Chinese Communist Party in 2012. Instead of pumping up the economy, the defence of China's national independence through upholding the one party political system has become the top priority.
This shift of direction does not mean China's retreat from the globalisation. Rather China will attach new meanings to the globalisation making it an effective tool for China's interest.
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