Austin Bay

In an October 7 speech given at the Asia-Pacific Economic Cooperation (APEC) summit, Chinese President Xi Jinping stated that a full and healthy global economic recovery from this century's great recession would be a "long and tortuous process." According to Xi, the global economy is experiencing a profound readjustment as the major economies struggle with their "structural problems." The Chinese leader advocated macro-economic cooperation among the world's leading economies.

"Structural problems" is a diplomatic expression for the numerous large-scale (macro) economic ills everyone bewails but that are just so darn politically difficult to correct. U.S. structural problems would include enormous public debt, aging infrastructure and increasing administrative compliance costs resulting from complex tax laws and proliferating business regulations.

Xi didn't mention a peculiar economic burden his nation bears: the Communist Party, of which he is certainly a member. In the heyday of Chinese Communism, the Party was the law and ruled by diktat. Rule by dictatorial whim is a form of lawlessness, a lawlessness strictly enforced with bayonets.

Though Communist Party cronyism and corruption may not quite fit an academic definition of a structural economic problem, in China's case their systemic effects are large. Corruption and cronyism are the foremost political and economic complaints in China. The Chinese people know that clever and adaptive Party apparatchiks tilt the economic field to favor apparatchik cronies. The worst violators use state power to gain control of resources or to threaten a business rival. That's corrupt.

At least once a year Beijing proclaims a crackdown on corruption. Occasionally authorities arrest and convict a particularly flagrant Party crook. China's disaffected hundred millions, however, contend the crackdowns are haphazard. Foreign companies operating in China report they still face undue difficulties when attempting to enforce a contract dispute. In China the Rule of Law is still, at best, fragile.

China's great economic renaissance began when Deng Xiaoping said that creating a modern China required "opening and reform." Deng hedged on the precise definition of "opening and reform." In 1989 he sent tanks and infantry to Tiananmen Square to demonstrate that the process had severe limitations.

Austin Bay

Austin Bay is the author of three novels. His third novel, The Wrong Side of Brightness, was published by Putnam/Jove in June 2003. He has also co-authored four non-fiction books, to include A Quick and Dirty Guide to War: Third Edition (with James Dunnigan, Morrow, 1996).
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