Saturday, December 13, 2008

Can the Chinese Government Withstand the Financial Crisis?

When the Soviet Empire started collapsing in 1989, like everybody else, I remember thinking it was all happening too fast. It was difficult to properly comprehend the situation. The Berlin Wall came down, those pictures of Ceau┼čescu in Romania with a bullet in his head. It was unimaginable, even a year before. Could we end up seeing this kind of chaos in China?

Marcus Gee takes a look at China and potential trouble for a shaky Communist government.

... But in its transition to the "socialist market economy," China remains in a halfway house, with far too much intervention by government. Beijing still won't allow prices for fuel or power to find their own level, its currency to trade freely on the international market or (despite recent, half-hearted reforms) its farmers to fully own the land they till. Inefficient state enterprises still control too much of the economy and banks are too tethered to Beijing's political aims.

The Communists know that the people relate the prosperity of the last 20 years to their reforms. If the economic crisis hits hard, the people won't have any reason to support them.

Unlike 1989, we don't have an all powerful United States to insure stability. If chaos is unleashed in China, there is little the Superpower can do these days, as worries pile up at home.

We live in interesting times.

1 comment:

  1. "Oh, and one more little thing: China needs democracy."

    Chairman Jintao: "I'll get right on that."