China's economic transition: saved from the brink by the WTO and the UN
Milan (AsiaNews) - The lack of economic development during the Mao era did not push the Communist leadership towards a form of economic transition. The system's inner coherence gave it a stability that no domestic dissident could ever alter. However, the Maoist economic system entailed extreme technological backwardness and thus permanent dependence on the Soviets. What is more, the economic management model was very cumbersome, and slow to react to outside stimuli. Thus, it was obvious that China was structurally vulnerable to the rest of the world; consequently, the regime apparatus itself was at risk.
Deng Xiaoping's modernisation in 1979 was primarily designed to protect the system and the regime, because he himself was a convinced Communist from the start. The post-Maoist leader's initial reforms, his "modernisation", did not change the social structure, legal system and especially the management and control apparatus of large companies, the only ones that counted.
In fifteen years, China's GDP grew significantly - but very unevenly, both geographically and socially. The result of not changing the underlying legal principles was that companies' current accounts were in a disarray, albeit well masked. Hence, not only was the economy's development was at risk, so was the whole structure and the regime itself.
After the fall of the Berlin Wall and the collapse of the Soviet Union, the implosion of People's Republic of China was a real possibility and would have had global repercussions. Starting in 1994 the biggest phase in China's growth began, that of turbo capital-communism. This became noticeable only at the start of the new millennium. At the beginning, it was unclear where this huge force of the reawakening and fast-moving Chinese giant came from. The trick was simple, devised within the WTO and other UN international organisations.
To prevent Communist China from imploding like the Soviet Union, a group of economists - such as left-Keynesian James Tobin, better known for his proposed Tobin Tax - and other globalist intellectuals developed a way to save it. They ensured that the WTO and other UN economic bodies would grant China, and only China, free access to world markets, with the elimination of tariffs - globalisation - without prior internal liberalisation and the abolition of overt and covert state subsidies. On top of that, China was allowed access with an artificially low exchange rate, undervalued by 45-50%. This extraordinary external aid, at the expense of the rest of the world, produced, of course, amazing results.
It made it possible to produce at costs of a Stalinist economy whilst reaping the benefits of selling at prices set by the international market economy. The resulting margins allowed for uninterrupted economic growth for almost two decades at staggering rates.
However, the invisible subsidy allowed much more, namely it allowed for example to upgrade and expand production facilities through self-financing. The subsidised exchange rate provided especially high profits for state and private enterprises without greater efficiencies. It also led to extraordinary capital accumulation, at home and abroad, which in turn helped the regime hide the big flaws in China's banking and financial system, like certain arbitrary, hare-brained and politically motivated investments, or the actual cases of embezzlement and theft, an unseen reality of which today's many scandals are but the tip of the iceberg. The whole trick led to extraordinary results, gradually turning China's economic system from that of a Stalinist command economy to one of turbo-capitalism.
The specific mechanism was the uneven, slow and ad hoc nature of the privatisation of state enterprises, which reflected the contingent needs of the ruling class linked to the Communist Party and, more generally, to the regime. In effect, the objective, which certain economists - Tobin and others - and influential and ideological groups close to the UN had set out in 1994, was achieved. China's transition saw the political and economic systems evolve without a change in regime or ruling class. The offspring of the old Communist leadership, with few exceptions, have become China's new industrial and financial elite, controlling companies and banks once owned by the state. Paradoxically, it would be as if the elite of today's Germany were entirely made up of the children, grandchildren or great-grandchildren of the Nazi leadership (see footnote).
Comparatively speaking, the extermination of six million Jews cannot be considered worse than that of more than 70 million Chinese unless we want to fall into an unacceptable form of racism.
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01/06/2005
