CHINA: WAITING FOR NEW GOVERNMENT AND MAJOR REFORMS

  • by Roberto Savio
  • Inter Press Service

A recurrent prediction of western politicians says that China, with its economic development, will inevitably transform itself into a democracy. Nonetheless, after five weeks traveling around the country, I have no doubt that if there were elections today, the Communist Party (CCP) would win elections with a wide majority, writes Roberto Savio, founder and President Emeritus of the news agency Inter Press Service (IPS).

Since the first Qin dynasty in China (221 BCE), emperors were deposed if there were famines or natural disasters, indicators that they failed in their function as bridge between celestial harmony and the earth. The CCP obtains its legitimacy through an exceptional growth process, which makes citizens hope that their living standards will improve. Only if this process enters a crisis will the CCP see its legitimacy questioned.

This is the CCP government’s support and at the same time its straitjacket. In order to keep up with poverty reduction the country needs to grow at a rate of no less than 8% annually. One lever of achievement is the so-called State Capitalism. Citizens’ savings in banks has a negative interest rate; for example, if the inflation is at 6% it only gets 3%. The State uses the difference to finance infrastructure projects by giving cheap credits to investors who will share their profits with state institutions.

Therefore, China has the possibility of changing the course, and the last congress of the CCP clearly indicated that they are conscious that there is a problem. But the transformation from State Capitalism into real capitalism, accompanied by measures to decrease the social deficit, is politically dangerous. The current government is about to conclude its mandate and the new one will assume power in 2012. Will it want­and know how­to carry out reforms with such profound implications?

(*) Roberto Savio, founder and President Emeritus of the news agency Inter Press Service (IPS).

© Inter Press Service (2011) — All Rights Reserved. Original source: Inter Press Service