The dark side of China’s rise

April 19, 2006

Free Market Foundation

Beyond China’s prosperity lies rampant corruption, vast waste and an elite with little interest in making things better, says Minxin Pei of the Carnegie Endowment for International Peace. Though many experts predict the Chinese economy will be second only to the United States by 2020, if current trends continue, China’s political system is more likely to experience decay than democracy.

China’s problems include lack of economic freedom, corruption and a substandard health care system, says Pei:

In 2003, the state directly accounted for 38 per cent of the country’s gross domestic product (GDP), employed one third of the work force and controlled 56 per cent of the country’s fixed industrial assets.

In 2004, 170,850 Communist Party members faced implication for corruption, but only 2.9 per cent were subject to criminal prosecution.

Nationwide, 145,000 designated experts, entrepreneurs, and professors receive “special government stipends,” resulting in more allies for the government.

There has been a 50 per cent increase in income inequality since the late 1970s, making China one of the most unequal societies in Asia.

The World Health Organisation rated the fairness of the Chinese health care system below all countries except Brazil and Burma.

The Ministry of Public Security’s Internet and Security Supervision Bureau removes Web sites with dissenting political views.

China’s new leaders are only making modest efforts to correct the decay, says Pei. Someday soon, we will know whether such a flawed government can pass a stress test: a severe economic shock, political upheaval, a public health crisis or an ecological catastrophe. China may be rising, but no one really knows whether it can fly.

Source: Minxin Pei, The Dark Side of China’s Rise, Foreign Policy, March/April 2006.

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FMF Policy Bulletin/ 11 April 2006