Did you happen to notice this one? Just before last month's notorious purge of Bo Xilai, the populist Chinese Communist Party chief in Chongqing, World Bank President Robert Zoellick lectured the People's Republic that its economic model is "unsustainable," and it is in danger of falling into a so-called "middle-income trap" if it fails to reform. "This is not the time just for muddling through," Zoellick said at a late February Bejing conference. "It's time to get ahead of events and to adapt to major changes in the world and national economies." At the conference, the World Bank submitted a hefty report making policy recommendations—of course with special criticism for the state sector. (LAT [2], Feb. 27) Further details on the report are provided by the NY Times Economix blog March 5, via the Trade Reform [3] website:
SHANGHAI — When the World Bank and a Chinese research organization called on Beijing policy makers this week to scale back the power of state-owned companies, reform-minded economists offered praise. But not everyone is pleased. The 448-page report, "China 2030 [4]," urged China to rethink the government's role in managing the economy and move toward a more market-oriented system. According to Tuesday’s online edition of The 21st Century Business Herald, a respected Chinese publication, the State-Owned Assets Supervision and Administration Commission [5] sharply criticized the report even before it was released to the public on Monday. The commission, a powerful Beijing organization with oversight of some of the biggest centrally controlled state companies, sent a letter to the study's authors arguing that reducing state involvement in the economy would be "unconstitutional" and effectively "subvert the basic economic system of socialism."
The Chinese organization that helped produce the study is the Development Research Center, a tellingly understated technocratic name.
Two weeks later, as the National People's Congress opened its annual meeting in Beijing, came news that Bo Xilai—thought to be fast-tracked for the Politburo's nine-member ruling committee—had been purged. The purge was accompanied by a burst of red-baiting from China's "Communist" rulers. Premier Wen Jiabao told a press conference at the Great Hall of the People as the Congress closed that without political reform, China could face another tragedy "like the Cultural Revolution." Bo, meanwhile, had led a "red revival" campaign on his turf, promoting (at least) the symbols and music of the Mao era. In his crackdown on the Chongqing mafia [6], he was accused by critics of a "red terror." But it won him local support, as did his program of "social housing" projects that helped Chongqing's working class, hard hit by soaring rents and real estate prices (fueled by land privatization [7]). (SMH [8], March 27; Washington Post [9], March 16; Forbes [10], March 15; LAT [11], March 14)
In another bit of interesting timing, this whole affair broke just as it was reported that ExxonMobil has lost its crown as the world's biggest publicly traded oil company to PetroChina [12]. PetroChina reported that it pumped 2.4 million barrels per day previous year, beating Exxon by 100,000. Exxon remains the more valuable firm, with a market capitalization of $400 billion against PetroChina's $280 billion. But PetroChina's production is increasing, and Exxon's decreasing. (Galaxy Stocks [13], April 2; AFP [14], BBC News [15], March 29)
Note that contrary to some reports, PetroChina has overtaken Exxon only as the biggest publicly traded oil giant. There are several parastatals that are bigger than either—most notably Saudi Aramco, but also the company that spun off PetroChina twelve years ago, the China National Petroleum Corporation (CNPC [16]) (which has beaten the US to the punch in Afghanistan [17]). The China National Offshore Oil Corporation (CNOOC [18]) (which famously made a bid for Unocal [19] a few years back) is also in state hands. Sinopec [20] (with operations in US-occupied Iraq [21] and in US "backyard" state Ecuador [22]) is the publicly traded successor to the former state-owned China Petrochemical Corporation [23]. In the global struggle for control of oil [24], PetroChina's emergence is a top Western concern [25]—and increases the necessity for a conciliatory Chinese leadership.
Lest you buy the empty prattle about how economic "liberalization" will mean political freedom, note that one of the proud achievements of the National People's Congress meeting was a new law allowing police to hold political suspects for up to six months in secret detention facilities commonly known as "black jails." Political suspects are defined as those deemed to be threatening to the CCP. The bill passed with a vote of 2,639 delegates in favor and only 160 opposed. Human Rights Watch vainly urged China not pass the new law, calling it "a clear danger for government critics and human rights activists, and [places China in] clear contravention of [its] international obligations." (Jurist [26], March 14)
It is now clearer then ever. Whether you think Mao's China was (as the anarchists and dissident Marxists [27] have it) "state-capitalist" or (as the Trotskyists have it) a "deformed workers' state" or (as the Maoists [28] and Stalinists [29] have it) a "correct line" socialist state, it is clear that its legacy has been completely betrayed. The "People's Republic" is now even moving away from state capitalism to plain old Western-style (or worse) savage capitalism. And the emerging New Cold War [30] between the US and China is unburdened of the ideological baggage of the first Cold War. It is a plain old rivalry between capitalist Great Powers.
See our last post on China [31].
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