Outside the Box

China: Two Economic Models and the Ideological Divide in Chongqing

John Mauldin

May 17, 2012

There are political sides in America ... and then there are political sides in the communist state of China. Here, it's a matter of the right and the left. In China, it's a matter of private enterprise and strong foreign investment versus highly centralized and debt-heavy state enterprise.

According to the geopolitical analysis company Stratfor, the left may be losing ground in China, and Beijing may be headed down an economic path that focuses on private enterprise. If the trend becomes the national strategy in the long term, this could mean greater room for private business in China. You can read Stratfor’s complete analysis in the article below.

You can see why it's important to follow events like this. For those of you who don’t know Stratfor yet, it is a company, founded by my friend George Friedman, that provides daily reports and analysis on global affairs. I read them daily and have arranged a special discount on Stratfor subscriptions for OTB readers. <<Check out the offer here>> – it includes a new book on the geopolitics of the BRICS nations.

Your right hand always knows what the left hand is doing analyst,

John Mauldin, Editor
Outside the Box

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China: Two Economic Models and the Ideological Divide in Chongqing

May 5, 2012

LIU JIN/AFP/Getty Images: Bo Xilai (R) shakes hands with Chinese Vice Premier Zhang Dejiang on March 13

Summary

The new Party secretary for China's Chongqing municipality, Zhang Dejiang, has called on Chongqing to develop a more robust private sector using the "Zhejiang Experience," an economic model used in Zhejiang province, where Zhang previously served as Party secretary. Zhang's…

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Comments

Ronald Nimmo

May 19, 2012, 4:11 p.m.

To Gerry Lobdill: What on earth does Rush Limbaugh have to do with the definition of left and right in Chinese politics? I think Stratfor’s definition for China makes a lot of sense.
  As for the US, the left still is defined by Marxist proclivities and uncontrolled deficit spending. The problem is that these tendencies have become more of a mainstream cultural philosophy in the US, so that people like Gerry can claim they are not really that extreme.

Ronald Nimmo

May 19, 2012, 5:26 a.m.

To Peter Herford: Good research usually is derived from sources; therefore it is derivative. The important question is are the sources reliable and is the analysis penetrating. For Stratfor the answer is almost always yes. Most of us don’t follow the Chinese economy closely and articles like this are very informative. So the purpose of your comment is just to feel superior.

Paul Speer

May 18, 2012, 12:07 p.m.

Stratfor is good as far as it goes.  What must be included in any discussion is the role of the People’s Liberation Army—and Navy and Air Force.  The latter two have incurred huge capital expenditures for force and infrastructure development.  The nation is turning its expansion towards strategic goals which will involve sea control—that is to the west and south.  The PLA is the protector of the State through the Party and has subordinated itself to the Party.

Building highways and roads along the Pakistan-PRC border is small beer for an aggressive and well trained Army force.  Killing Uighers in the wild west of China is similarly uninspiring.  The ultimate protection of the government of the DPRK and the training of its army is also a time-biding experience.  One needs to look carefully at the at the Army’s reaction to this new National Political Strategy. 

There is a lot of pent up energy.  One wonders if Bo’s own energy and his desire to rely more on state capitalism might have led him to find like minded military leaders, who then turned him in.

Jerry Lobdill

May 18, 2012, 10:48 a.m.

Friedman writes:

“Thus, the contemporary notions of right and left in China began to take shape in 1989 and were crystallized when Hu took power and began to shift Beijing’s focus from the coast to the interior. In the Chinese context, “right” refers to economic decentralization, private enterprise and strong foreign participation in the economy, while “left” refers to highly centralized state investment-driven growth. The terms of debate derive from Chinese communist nomenclature: Right refers to those who accept some degree of social inequality as a temporary consequence of economic development. The left strives for equality, even at the expense of huge debt, wasteful SOEs and little transparency.”

This presumes definitions of right and left that are archaic—1950s concepts.  These definitions of both left and right no longer fit reality. Today the right is represented by Rush Limbaugh on the insane fringe and by neo-cons and fascists on the more pernicious fringe.  The left is no longer properly characterized by “communist” and idiotic notions about printing currency. Until both left and right start acknowledging the changes there will be no useful dialogue and no progress.

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