China’s New Left seeks to rein in market reforms

Now, this is one hell of an article (thanks again, Martyn). I have to meet my parents in a few minutes (Father’s Day and all that) so I can’t write a lot about it, but the story speaks for itself. Let me just throw out some highlights.

This city’s soaring glass towers and giant neon signs make it seem like the new mecca of global capitalism. But behind the glitz lie rising inequalities and falling social services that are fueling the rise of China’s New Left.

This is a loose coalition of academics who challenge China’s market reforms with a simple message: China’s failed 20th century experiment with communism cannot be undone in the 21st century by embracing 19th century-style laissez-faire capitalism.

China is “caught between the two extremes of misguided socialism and crony capitalism, and suffering from the worst of both systems,” says Wang Hui, a professor of literature at Beijing’s Tsinghua University. His passionate denunciations of China’s market reforms in Du Shu, a magazine he edits, are partly credited with energizing China’s New Left intellectuals. “We have to find an alternate way. This is the great mission of our generation.”

Such grand visions notwithstanding, the New Left’s adherents don’t offer a coherent set of alternate policies. Some are hard-liners, who say they rue the violence of the Maoist years, but remain enchanted with the sociopolitical initiatives of that period, such as collectivization….

Wang says it’s time for people to understand that China’s problems are the result of “bad policies and bad governance,” not merely fallout from market mechanics.

Cui Zhi Yuan of Tsinghua University, a leading New Left thinker, says the crux of the problem is that “the government is more focused on helping export manufacturers than agriculture and rural welfare,” which affect far more people.

One of the largest expenses in the budget is not education or health care, he says, but tax rebates to exporters. So, the government is returning money to domestic and multinational exporters while cutting welfare programs.

Wang and Cui say that with businesspeople now allowed to join the Communist Party, a government-business cabal is looting wealth that rightly belongs to China’s workers, through the privatization of state-owned enterprises.

They depict reform of these enterprises as a wholly corrupt process, in which politically connected managers, in collusion with local officials and banks, strip enterprises of assets without any accountability, creating a might-is-right culture across the country.

…The degree to which the New Left’s rhetoric meshes with that of the government’s indicates that President Hu Jintao and his team are tacitly supporting the New Left. Part of Hu’s motivation is to discredit previous President Jiang Zemin, who committed the country to his awkwardly named Three Represents theory. Generally dismissed as a euphemism for Reaganesque trickle- down economics, Jiang’s theory, enshrined in China’s Constitution, is widely blamed for the deep inequalities in the country.

A recent confidential study of China’s 20,000 richest people found that only 5 percent had made it on merit, according to a report in the China Rights Forum by Liu Xiaobao. More than 90 percent were related to senior government or Communist Party officials.

Such nepotism and corruption led to more than 50,000 protests across the country in 2003, seven times the number a decade before, according to government reports.

Chen Xin, a professor of sociology at the Chinese Academy of Social Sciences in Beijing and a self-described New Lefter, says Hu realizes he must correct the imbalances created during Jiang’s term because although a democracy can balance extremes by throwing out of power a party or a president who’s gone too far, “in a one-party system, the party must have its own self-correcting mechanisms, or else it will lose touch with the people.”

Yet critics of the New Left, such as Professor Shi Yinhong, director of the Center for American Studies at the People’s University in Beijing, say the group has no real alternative to the current global economic system.

What the New Left is saying resonates with me. Jiang is most responsible for today’s wasteland of corruption that fouls so much of the country, resulting in a nation of obscenely rich cowboys riding roughshod over the people. Now, we have this situation in America, too, especially under our current regime, where might (i.e., money) makes right. But we do have controls for reining it in, as we saw when some of the more repellent aspects of the “Patriot Act” were rejected last week. ANd we’re sending the Tyco robber barons to jail where they belong. I think wherever you have capitalism, you’re going to have this situation to some extent; the owner-worker model lies at the heart of capitalism, making it, as they say, the world’s worst economic system except for every other system.

I would be happy to see Hu address this and show that at least in some regards he really is “the great reformer” we hoped for. If the New Left’s strategy and tactics were a bit less amorphous I’d be more optimistic. Right now, it sounds like a lot of ideas without much of an action plan.

I said I wouldn’t editorialize, but I guess it’s compulsive. I’m going to open up a new thread and then take off.

The Discussion: 51 Comments

Wow, this is really something.

It’s why I find the press crackdown so puzzling as you think an unmuzzled press would help Hu and the Lefties in their efforts. But again, as we have often commented, Hu may not be in control of that.

June 19, 2005 @ 5:24 pm | Comment

I don’t know where to start, too many points, my head is spinning. Are those statistics correct? Is that gentleman really saying those things in China?


This is too much, but I have to go to work. Monday morning and all that.

June 19, 2005 @ 5:44 pm | Comment

You know, I’d be happy with rule of law. Left, right, whatever. I think rule of law would be the best first step. the problem is, I think true
rule of law would undermine the power of the CCP more than anything else…

Might regret saying that, but i”m in a pessimistic mood.

June 19, 2005 @ 6:44 pm | Comment

“rule of law” is a nice concept, but to function for the people and aid stability requires a truly independent judiciary that has the power of oversight and review of all police and governmental matters.

The rather blatant politicisation of the judiciary will lead to corruption and cronyism of the sort that is notorious in China.

That said, it’s Jiang Zemin that should take the blame for the current crop of corruption. It’s the sense that to get rich is glorious, but only if those ruling the country {and their friends and families} get the richest fastest.

It’s not just the inequality wealth gap that is galling, it’s that the inequality has favoured those that can pull political strings to get bank loans for shoddy projects or government funding to bail out bad decisionmaking in the name of “protecting the livelihoods of workers”.

June 19, 2005 @ 7:23 pm | Comment

I also have doubt about the New Left movement. CCP can’t even take a polite contructive criticism well.

I do agree with professor Chen view point that China is now run by two extremes of social and economical philosophies. Capitalism can be predatory when left unchecked. Without an independent judicial system, labor union, anti-trust law, transparency in general, business men and politicians in China are taking the country to dangerous water.

Can the New Left right all this? I really hope so, but I am pessimistic.

June 19, 2005 @ 8:45 pm | Comment

I would rather use an old Maoist term, rectification, instead of reform for what the New Left is talking about. Semantics or not, reform is a loose word that really is not honored in China as far as I can tell.

Rule of law is in my mind the proper way for a country to try to operate, but it needs a lot of infrastructure and people with a deep belief and commitment in such a system. BTW I saw recently a GOP sponsored Bill submitted in the House that would in some cases strip the courts of their oversight on what is constitutional or nonconstitiutional government conduct or legislation. Won’t pass I predict, but it shows a mindset of some of those GOP knotheads and some of the public. If it did pass the US would be on the slippery slope away from rule of law and the checks and balances that have served the Republic so well for about the past 230 years.

June 19, 2005 @ 10:14 pm | Comment

I was talking about this in terms of the Shalan school tragedy – what I think it illustrates is the lack of a strong civil society in China, and no wonder. You had the traditional family first, Confucian bonds, an attempt to create lateral bonds and loyalties by the CCP and the Revolution, and whatever progress had been made towards that end was completely smashed to pieces by the CR and then by Jiang’s policies, which really do illustrate the worst tendencies of turbo-capitalism.

The rule of law is essential, but it has to be shielded from the corruption and cronyism that seem to be part and parcel of Jiang’s Sange Daibiao. It has to be a part of a real civil society, where people are able to trust institutions separate from their families and personal connections.

June 19, 2005 @ 10:42 pm | Comment

china’s new left

Oh dear, another ‘new left’ is emerging (via Peking Duck):This is a loose coalition of academics who challenge China’s market reforms with a simple message: China’s failed 20th century experiment with communism cannot be undone in the 21st century by

June 20, 2005 @ 2:39 am | Comment

Many would agree that any reining-in of turbo-capitalism (nice term Lisa) would be a good thing especially if it was coupled with a solid social policy agenda and anti-corruption checks.

I think “…fueling the rise of China’s New Left.” is misleading as the movement, if we call even call it that, is merely a loose coalition of academics.

Pete’s point above is a good one. All these guys are really advocating is ‘reform’ which Hu could carry out if he choose but I suspect he’s fearful og the consequences and also has far more pressing problems elsewhere.

Wang Hui’s quote about China’s problems coming from “bad policies and bad governance,” is fairly strong stuff as is Cui Zhiyuan’s point about massive export subsidies. This is also one of the reasons why some China-watchers say the economy is unsustainable.

Unless the ‘movement’ is actually allowed to agitate and gain popular support (which I doubt) then it will remain a think-tank and can be ignored at will.

I also doubt that Mr. Wang’s magazine Dushu contains phrases like “government-business cabal is looting wealth” and “reform is a wholly corrupt process”.

Mr. Chen Xin’s point at the end about the Party’s cadre class losing touch with the people is pretty accurate and that’s only going to get worse.

That China might produce a “New Left” movement is really too much to hope for. Like buying a lottery ticket, one remains optimistic but doesn’t really hold out much hope of winning.

However, we all, I think, nodded our heads in agreement when we read this article and I’m sure all the points made would receive hearty support from the real “people” in China.

June 20, 2005 @ 3:27 am | Comment

Mr. Chen Xin’s comment about the cadre class losing touch with the people reminded me of the Long Hair banana story during the last HK election.

Long Hair confronted one of the dapper and well-heeled senior politicians of the DAB (pro-Beijing)–I forget his name–by swinging a banana in front of his face and asking him the price of one catty (lb) of bananas in a typical Hong Kong market.

The guy obviously had no idea and slunk off appropriately.

I therefore wonder how many of today’s Beijing cadre class know the price of bananas?

June 20, 2005 @ 3:33 am | Comment

I’m going to boldly take this a step further! Boldly go where no man has gone before, at least on the thread!

Considering China’s rich and powerful (they are the same of course) are a tiny, tiny elite and China’s ‘have-nots’ number in the hundreds of millions. Then isn’t this New Left philosophy inevitable?

What I mean is, wouldn’t the majority of the population struggling to eek out a living and feed their families inevitably drift towards supporting the kind of reforms and changes being advocated by the three intellectuals in the article?

Look at what Hu/Wen have both said since coming to power about emphasing the importance of improving the living conditions of the common man, they are strikingly similar to what the New Left advocates.

Empty talk by Hu/Wen maybe but surely the direction that the New Left is advocating must surely be the next step for China to take?

Great article Richard. I hope we can keep tabs on the so-called New Left on this site.

June 20, 2005 @ 5:59 am | Comment

By the way, I myself am a proud ‘New Lefty’ myself! Always have been and always will be.

June 20, 2005 @ 6:02 am | Comment

Just a little historical perspective. Sun Yatsen was “new left” in his day. His 3 Peoples Principles were all about exactly this point: trying to take the best of the west and avoid the mistakes (as he saw them). There really is nothing new under the sun …

June 20, 2005 @ 6:15 am | Comment

Martyn, the politician that Long Hair dangled the banana in front of was James Tien of the Liberal Party (pro-business and pro-Beijing). That party is very different from the DAB (pro-labor and pro-Beijing). Those two probably will not sit in the same room.

Hong Kong is a case where the traditional or new notions of leftism/rightism is useless. In addition to the traditional capital/labor, there is pro/contra-Beijing. All segments are being served.

In my opinion, a honest person has to be non-denominational and look at each issue on its own instead of automatic reflex. Unfortunately, that approach means everybody hates you!

June 20, 2005 @ 6:36 am | Comment

Thanks for the corrections ESPN. I was too lazy to Google the story.

Great story though, don’t you think!? I’d love to see someone do that to a Beijing politician. Especially, the Foreign Minister Li Zhaoxing.

June 20, 2005 @ 6:44 am | Comment

You know, I’d be happy with rule of law. Left, right, whatever. I think rule of law would be the best first step. the problem is, I think true
rule of law would undermine the power of the CCP more than anything else…

Might regret saying that, but i”m in a pessimistic mood.

Posted by: Laowai 19790204 at June 19, 2005 06:44 PM

I approve Laowai’s comment,I think it is the intrinsic of democracy society,I hope for realzied it fully one day in the future.But I am optimistic of it because more and more chinese people have democracy thought so that the democratic and lawful society will be established by new generation of chinese,All will be realize gradually because of natural regualtion.

June 20, 2005 @ 8:14 am | Comment

Martyn, earlier you said:
“All these guys are really advocating is ‘reform’ which Hu could carry out if he choose but I suspect he’s fearful of the consequences and also has far more pressing problems elsewhere.”

don’t know the answer to this but how confident are you that Hu really can do whatever he wants?

I mean, talk about a consent-driven society: if all of the top CCP leadership decided overnight that Hu should resign, he’d go immediately, wouldn’t he?

Yes, that’s not a real scenario. But do we know that he has enough allies yet to do much his own way?

June 20, 2005 @ 2:36 pm | Comment

I doubt that he does, and in all probability a lot of the confusing, seemingly mixed signals are the result of this jockying for power and position behind the scenes.

June 20, 2005 @ 3:41 pm | Comment

Don’t forget the economic basis of new lefter. In other words, you have to produce a strong middle class with a massive purchasing power instead of a class of tycoon with its only desire being investment and maximizing its own the profits!
Without proper distribution of the wealth, domestic demand will never catch up with the fast growing supply. China may well copy the western 1929’s crisis in the near future. Then the next time, we won’t be here talking about new left, but new communists. (Speaking of tycoons, funny and sad enough, currently Chinese economic policy only produces overseas tycoon instead domestic tycoon, new taxation policy will rectify that a little bit hopefully)

I admit that right now the massive supply power of China is largely absorbed by the international demands; however other nations won’t let China continue so without limits. All kind of tricks already came out…. stronger RMB is one heck of them. Exported oriented policy can only be a temp remedy for a country as big as China.

June 20, 2005 @ 4:26 pm | Comment

I agree wholeheartedly with that Lin. Very good post. You’re right about the export economy which is why many people say China’s economy is very seriously flawed and not able to sustain itself long-term.

Now have to go to work!

June 20, 2005 @ 4:33 pm | Comment

Agree Lin’s comment.

June 20, 2005 @ 5:56 pm | Comment

Daily linklets 21st June

The I got to Manila airport 2 hours early edition: Harry cracks me up. How and why Wanchai’s sex trade remains strong. Hong Kong’s property addiciton and the lies told in its name. ESWN discusses income inequality in China. He echoes my point: The tric…

June 20, 2005 @ 8:27 pm | Comment

I see marxism is still alive and spouting the same old useless nonsense. Most intellectuals work for the government, either directly or indirectly. If one follows the money, one has an inkling why so many are statists, that is they want the state to confiscate wealth in the market place and make a political redistribution in which they are conspicuous recipients-that is the epitome of cronyism. There is nothing wrong with what Lin wrote, except that it is nonsense economics; and I am not sure what the problem is with turbo-capitalism, as the other Lisa commented with a legion of approvals. One significan problem with development is that there is not sufficient savings immediately to develop instanteously the infrastructure and skills necessary for everyone to pariticape in the market, but that will be the case no matter whether the market is left alone or the state intervenes. It was only when the lefties ruled and good marxist programs were instituted that Chinese died in numbers several orders of magnitude greater than died in the Japanese war.

June 21, 2005 @ 1:04 am | Comment

Lin – interesting points. But I’m interested to hear your next comments. You post about what is wrong / potential troubles for the future. So, what is your view on what SHOULD be happening?

June 21, 2005 @ 9:07 am | Comment

You’ve got the economics backwards. One must first supply to demand. China’s domestic problem is not lack of demand, it’s is because the currency is undervalued and therefore it makes economic sense for a business to export to earn a currency that is worth more than RMB. Plus the tax break for exporters. It is the investment tycoon who by investing in factories and new businesses raises productivity, which raises wages, which then in the end results in higher demand from workers. What do you do to get a higher income? Consume more or invest by going to college? Foreign countries will allow China to keep supplying more and more, because it frees up domestic capital to allow their economy to grow faster. Chinese suppliers are a part of the American economic produciton chain, and that is a benefit to the American economy, as well as Chinese.

The problem in China is one of law and one party rule. The state owned companies and the party are two kinds of monopoly that control the economy and the political market. There is no law to punish those who violate the law, and so there are growing cases of lawlessness as companies hire thugs to beat villagers, or villagers beat government officials and police. This was also the problem in the U.S. during the Gilded Age- a problem not of capitalism but of law. Corrupt judges were in the pockets of companies, and companies often fought in the courtroom instead of the market.

The party’s way around its leftism is economic growth by any means neccessary, because without the corruption to grease the wheels it is often too difficult to start a business. Other laws stifle innovation. The Chinese government is constantly cracking down on internet companies, who are returning some of the fastest growth in the economy. That is not capitalism. Capitalism is based on rule of law, private property, and freedom to buy or sell from whomever you choose, three things lacking in China. By bashing capitalism, the “New Left” will destroy China’s economic miracle. China is already leftist, the current rulers just allow one outlet of lawless capitalism to get around the problem of leftism. All other solutions mean reducing the power of the party.

The best solution is capitalism- real capitalism- which means freedom. All shares in state owned industries should be given to every family in China, so that ownership of the means of production will belong to the people. That’s a good first step. Then the people, the market, can choose who runs the companies. The next thing will be to choose who runs the government.

June 21, 2005 @ 2:06 pm | Comment

this is astonishing! not even the US has unfettered capitalism. don’t you think China might have had its fill of revolutionary ideology by now?

June 21, 2005 @ 3:34 pm | Comment

Well, as I often state, I support the reinforcement of the law, implement of personal freedom and to gain democracy step by step. That’s what SHOULD happen now and in the future. However I do wonder sometims if CCP is a real adaptive party. I hope it is.
By the way, I don’t agree with some other commentators saying that President Jiang did a poor job resulting in corruption and unemployed workers. What worries me most nowadays is: I don’t have much confidence on President Hu on economy. At least Jiang’s pro-business image is very clear, but Hu’s business image is a little hazy.

an very inspiring post!
Especially the following comments:

Because without the corruption to grease the wheels it is often too difficult to start a business. Other laws stifle innovation.

I have heard this one before, but I am really confused about it.

and this one:

Foreign countries will allow China to keep supplying more and more, because it frees up domestic capital to allow their economy to grow faster. Chinese suppliers are a part of the American economic produciton chain, and that is a benefit to the American economy, as well as Chinese.

a prerequisite? To keep this production chain, that US has to continuously upgrade to a newer economy to generate healthy demands? Otherwise if US keep this loop running forever, it will lose the game.

Finally this one

All shares in state owned industries should be given to every family in China, so that ownership of the means of production will belong to the people. That’s a good first step. Then the people, the market, can choose who runs the companies. The next thing will be to choose who runs the government.

This has been a huge headache for CCP since 1980s. There is no working mechanism right now. Zhao Zhiyang failed because he lost power since 6.4. The last Prime Minister Zhu failed…..Stock market fails….This is exactly what everybody’s worrying about. The earlier and ongoing transfer of SOE to private ownership generates a new class of tycoon instead of wealthier average city residents. They may kidnap or might have already kidnapped the political reform and generate a sick society. I remember Jeffery Sachs had a comment on this topic, but forget where to find it….
BTW: I don’t agree that new left means to bashing capitalism (if it does, I would strongly oppose this retraction). For me, new left voices for a better wealth distribution, and I don’t think higher investment will necessary lead to higher demand from workers.

June 21, 2005 @ 4:25 pm | Comment

agree, Matt swings to the right a little.

June 21, 2005 @ 4:28 pm | Comment

Lin, I’m not very satisfied with your reply. It’s not because I disagree with you. In general, I think those are good ideas for China. But I also think motherhood and home cooking are pretty cool. Can you be more specific about your solutions to the economic issues you talk about?

June 21, 2005 @ 10:55 pm | Comment

Let’s do a simple comparison. China’s swing from Communism to its current quasi-capitalism has seen several hundred million people lifted out of poverty in the space of a few decades, the fastest rise in history and far more effective than any number of trendy pop concerts. The current system is being compared to “19th century laissez-faire economics” but with no basis in fact. A consequence of capitalism is some do better than others. Here’s a newsflash for you: that’s because some people ARE better than others…some in art, some in music, some in tennis, some in commerce. It’s called being human. The problem with Communism is it doesn’t work because we are not all the same. Likewise efforts at artificially dealing with income inequality. If you force equality you simply drag 50% of the population down to the average in order to drag the other 50% up to it. Is that fair? I suppose it depends which side of average you fancy yourself. And if forcing equality sounds like a good idea, I suggest you read Hayek’s Road to Serfdom and come back to me.

What are we talking about here? The article Richard sites says:

the New Left’s adherents don’t offer a coherent set of alternate policies. Some are hard-liners, who say they rue the violence of the Maoist years, but remain enchanted with the sociopolitical initiatives of that period, such as collectivization.

This is what you’re all praising and lionising? A slogan in search of an ideology? A yearning for collectivization, the system that lead to massive famine?

If someone can define New Left for me, we can start a proper debate. In the meantime let’s call these people what they really are: reheated nostalgic Communists. Or from the article:

The degree to which the New Left’s rhetoric meshes with that of the government’s indicates that President Hu Jintao and his team are tacitly supporting the New Left.

Read it again. And again.

June 22, 2005 @ 3:49 am | Comment

China’s new left

The other day Richard had a post titled China’s New Left seeks to rein in market reforms. It links to an article called China’s inequities energize New Left, which is a more balanced view of this group. I’ve posted a comment on his thread (reproduced b…

June 22, 2005 @ 4:16 am | Comment

“Communists are people who have nothing, and want to share it with everyone” 😉

June 22, 2005 @ 4:22 am | Comment

Hayek is good, Mises is good, those are the writers one ought to read to understand economics well.

Lin, you base your economic analysis too much on mercantilism, a flawed and nonproductive theoretical structure. I do not quite understand your comment on the supply chain, let me posit a simple analogy. Beijing is and will be a net consumer, while, let us say Suzhou will be a net supplier. This economic relationship can go on for generations and generations, and the trade imbalance will not affect Beijing nor Suzhou in any real economic sense, all other things being equal.

All economic development comes from savings, not from governemtn fiat. If the government confiscates wealth from the market, then there will be that much less savings to invest. The mal-distribution of wealth is probably a temporary affair, maybe only three generations, as it appears historically to be the case. Looking at the United States, Europe, and Japan, that is what generally has happened. The large class of poor are generally speaking large groups of people just entering the economic market.

June 22, 2005 @ 6:33 am | Comment


solutions to the economic issues ?

God, if I know, I would be the Prime Minister of China. 🙂

JFS, and Simon, Matt, FSN9…..
Frankly, I am an amateur in politics and economics. I was trained to be an engineer. Thanks for the suggested readings, JFS and Simon.

Probably I didn’t say it clearly. By being only a consumer, US will lose NOT because of mercantilism.
Actually in the US-China supply chain, more than 3/4 of profit still goes back to the foreign investors and other parts of the supply chain outside China instead of chinese workers and government. No matter what happened in this world, capitalists always win! Especially overseas tycoon in China’s case. (This win-win situation of course is not based on the theory of mercantilism)

However without a newer economic structure, the profit won’t necessarily be going back from capitalists to the working class people (for instance in US). Without new jobs created by newer economic structure, US economy may lose its stability while outsourcing almost everything is still possible in the future. The statistics shows that new jobs created in the last year mainly are low-pay positions.(probably like walmart workers?) Be honest, without newly emerging computer based or new drug based pillar industry creating better positions, US will definitely lose in the long run. New economic structure is the only way that I see, which may help allocate profits back to working class, which then keep the demand strong constantly, and in the same time keep capitalists happy. Developed countries can’t win by only making capitalists plus a relatively small amount of white collar people (whose positions will still possibly be outsourced though) happy!

And I am boldly predicting:
Some of developed countries will succeed in upgrading their economy, while some others won’t and lose!

Correct me if I am wrong.

I just surprisingly realized that a lot of readers here belong to the right wing in term of economics. Am I right? But don’t forget, the shock therapy (I would imagine that well coincides with the Hayek’s theory) once strongly supported by the main stream right wing economists bitterly failed in Russia while China continues booming. Any theory exists? Thanks.

June 22, 2005 @ 10:33 am | Comment


Using Right and Left are not productive ways in thinking about economic or political theories, too much confusion evolves as who is right and who is left. Most of the professors who went to help the Russians, or the Bolivians, etc., really did not give them good advice, they still practice some form of corporatism, some form of government interventionism in the market place. Most ownership of American companies (and moving into non-American companies) is by 401K, pension plans, or mutual funds (all of these are where small guys pool their money, and that pooled money owns the capital companies). This in general is a good model. The present problem with European, American, and Japanese economic society is that it is a kind of “hypeindustrism”, that is where the government has entered into the market place and makes large transfers of wealth (mainly to teachers, bureaucats, and outsourced clients, etc.) which sucks up that savings that could have been invested into something useful.

June 22, 2005 @ 6:41 pm | Comment

JFS, you don’t think education is something useful?

June 22, 2005 @ 7:49 pm | Comment

I’ll reply to the rest later, but Lin you are wrong on several counts. What basis do you have for saying 75% of profits go offshore from China? China’s current currency policy renders that impossible. As for American job creation, have you really checked the breakdown of where those jobs come from or just spouted the conventional wisdom? The truth is 80% of new jobs in the US in the past 2 years have been from real estate and building related industries.

As JFS alludes, redistribution of wealth (which is what we’re talking about) by Government will fail just as most central planning fails. The market might not be fair, but it ends up allocating better than any cadre.

June 22, 2005 @ 10:32 pm | Comment

Why is everyone so dead set on blaming this on Jiang Zemin.
I’m no fan of the guy, but as I remember it, it was Deng Xiaoping who pushed for China to move to a market economy…remember “Socialism w/ Chinese Characteristics?”

And heck, the current system is absolutely the modern-day, Communist version of the Confucionist system, no? If intelligent, or able to study, you rise as high as your ability to memorize classical forms can take you…it’s just that now it’s Communist dogma instead of Tang poetry…and once you win a govt position through your intelligence/book-learning, you take care of your whole family (and your family expands as 5th cousins come to live on the gravy train).
The bulk of the Chinese population will remain satisfied as long as they feel they have a realistic chance to better themselves. If too many people feel the system is designed to keep them down (and in the case of rural residents, it is…but Hu Jintao is working on that), they’ll revolt, but at this time, enough people are getting rich that even the very poor are better off than they were 10, 20, and 30 years ago.

I don’t think Hu Jintao has assumed complete control, to tell the truth. Jiang Zemin still has some cronies on the Politburo Standing Committee. Once those guys are gone, we’ll see if Hu Jintao will follow through on his “Jiaozi in every pot” principle. And how he does it. I hope not with high taxation, because the class calcification that comes with redistributive taxation will piss the populace off far more quickly than an incited class jealousy.

Bottom line: Simon’s right.

June 22, 2005 @ 11:54 pm | Comment

Response to China’s new left

As I expected my piece on China’s new left (deliberately not capitalised) provoked mixed reactions. I hope to compose a rebuttal of the comments made both here and at Richard’s either today or tomorrow. I will update this post with the response once it…

June 23, 2005 @ 12:47 am | Comment

Bottom line: Nathan’s right. Must be our shared hosting.

June 23, 2005 @ 3:48 am | Comment

Lin and I don’t see eye to eye on a lot of things, but I do agree with him that this blog has taken a swing towards the rght. OK, I acknowledge that it’s a very fluid term, and means different things to different people … but since I’ve been following this blog, these has been a significant shift in recent days. I’m not sure I like it … I used to be the voice in the wilderness, sticking up for the “right” … but these days, there seem to be entirely too many people who agree with me. I kind of like the role of the neglected prophet, and the odd man out … The likes of Vaara etc seem to post here a lot less often … while Martyn, Gordon etc have replaced them as major commenters …

June 23, 2005 @ 4:51 am | Comment


I have been thinking about how I wanted to respond to this debate and I know it’s taking the easy way out [grin], but I definitely couldn’t have put it any better than you just did.

Nicely put.

June 23, 2005 @ 7:41 am | Comment


Instead of the education, I think one is better off talking about the educational system. The system in the US is not particulary good, especially as directed for minorities. I once lived in Oakland, California (have good memories, had good friends); yet, what did I read, over 50% of the students do not graduate. Very poor system. The main problem is that the customer does not get to buy the education they want, but have to take what some board (and government officials, etc.) have decreed they should get or what choices can be made, etc. Monopolies are bad, you pay high prices for shoddy products, and education is no exception.

If I were going to study Chinese politics, I would not assume that Hu or anyone else is omnipotent. but would study it in the same fashion one ought to study Japanese politics; that is attempt to understand the cliques and who is in what clique and how the cliques arrange themselves in what various posiitons.

June 23, 2005 @ 8:54 am | Comment

yes JFS, perhaps it itsn’t as simple either as saying that if Hu gets rid of Jiang’s men he’ll necessarily be unquestionably in charge: chinese individual leaders have got progrssively weaker: compare mao to deng, deng to jiang; so perhaps hu will be weaker still and yet more dependent on consensus among his high ranking colleagues?

June 23, 2005 @ 11:48 am | Comment

“The likes of Vaara etc seem to post here a lot less often … while Martyn, Gordon etc have replaced them as major commenters ..’

Filthy, sure, saying the blog has moved to right is a fluid term but can you use left and right to talk about views and opinions re China? It’s a difficult one as you say. I also see differences between not just Chinese/non-Chinese but also long and short-term China residents and those who live there and those who don’t.

When you mention Vaara, you mean that he’d often disgree with you before but Martyn/Gordon tend to share a lot of your views?

Do you prefer it before because you could get into plenty of heated debates?! I’m sure that’s what you mean.

June 23, 2005 @ 12:43 pm | Comment

Vaara is, like me, a liberal and he frequently sparred with Conrad and FSN9 over domestic US politics and, on occasion, Chinese isues. He has been on vacation the past several weeks (lives in Amsterdam, lucky bastard) and hasn’t been commenting. Also, as this blog has focused more on China and less on the US, I suspect he’s not as interested as in the past.

I know what FSN89 means. JR has gone, Jing has his own blog as does Bingfeng, so they don’t comment as often as they used to, and there’s a general chorus of agreement about China among many commenters. That means less fighting and screaming and indignation, which were all part of the fun of an interactive site. But there’s still enough diversity of opinion to make it all worthwhile, I believe.

June 23, 2005 @ 2:25 pm | Comment

China is a political island by itself, with the right and left paddling around confused. Marx and Von Mises were both classical economists, and actually agreed a lot as to “how the world works”. Obviously they have differences as well.

As for privatizing the SOEs, I think they should just create baskets of stocks, like mutual funds, all roughly equivalent in value, with each basket having a couple of winners, a couple of dogs, and give them to every family in the country. It would help to close the wealth gap.

Lin as capitalism evolves the production chains get longer and more complex. So as long as the US is investing enough it should maintain it’s place at the top of the economic chain. (Any country is free to join it if they develop. Economics is not zero sum.) More capital investment leads to higher wages. It is the story of every economic success story in the world. You can have malinvestments that lead to losses, as has happened in China because the investments are not responding to market forces (there was an article in Foreign Policy about this. China has so much savings and yet requires so much FDI, because the FDI is efficient), or in the U.S. in 2000 when the market was wildly distorted (thanks to the Fed, Asia crisis, and stock market enthusiasm all fueling the Internet bubble) But without investments, and the rises in productivity, wages will not rise. You can’t build machines and automation without capital investments. Why does a worker in the US with no more education than a worker in China earn 10 times the wages? The worker in the U.S. has maybe $1 million in capital behind him or her, the worker in China maybe has $10,000.

As for laws stifling innovation, my ex-girlfriend’s father wanted to start a coal business, but the government requires that he have 1 million RMB in capital, and he must hire 50 workers. End of that idea. I read Caijing, and China Newsweek, and both have had corruption stories on the northern provinces of Sha(a?)nxi, Heilongjiang, and Liaoning. I lived in Hebei, and people told me how the U.S. equivalent Governor of the province was put in jail after he was finally brought down, but not before running the province for his profit. Naturally it is one of the poorest provinces in China, even though it has within it’s borders Beijing and Tianjin. I think the north is more “Communist” or at least follows the rules, and so has more corruption. The south has more freedom in places like Shenzhen, and so corruption is less.
Shan Gao, Huang Di Yuan! Go south young man, go south!

June 23, 2005 @ 5:45 pm | Comment

All are splendid posts. But I can’t really catch up with you guys…..has to spend some time working for my boss. I believe a lot of commentators here have got better education in economics than I do. However one often missed point in western economics is how to calculate the price a society has to pay for a 100% free market. Especially when JFS says that high school education should be treated as a product, I can help thinking about the aftermath such as….a poor kid crying for the good education…..This is a reason why I am more interested in political economy instead of economics. I myself has some experience in math modeling stuff, and I know how far it is from the reality, especially for something as complex as economy.

June 24, 2005 @ 11:24 am | Comment

We calculate the costs, for instance pollution is a cost not included in a product. So economists came up with the idea of tradable emission credits that put the cost of pollution into the market. The point of a 100% free market is that you can know the true cost of anything. Once you know the real cost, you can make the right decisions. For instance, the government or charity can pay for the poor child’s education. In a non market economy, like US K-12 education, the costs are high and the quality is low. So really, the poor are worse off than in a truly free market, because in that situation someone will provide a quality low cost eduation for poor people.

The point is that the “cost” of a free market is less than any other system, assuming our goal is the highest living standard for every citizen. If our goal is to make people equal, then socialism is best.

June 25, 2005 @ 7:23 am | Comment

Matt: The Austrian School of economics is usually not identified as Classical, but then the whole classical thing was coined by Lord Keynes so as to discredit his professors without having to debate economics. There is some odd things going on right now in regards to the Austrian School. Paul Krugman, for instance, wrote a peice for the NY Times were he lambasted all the religous people, etc, as cranks and then he included in his list Dr. Hayek. I suspect that this is because there is more interest now in Austrian Economics. The Key point in Austrian Economics is that value is subjective and that there is a time preference to value, both of these concepts were missing from “classical economics”, including Marx.

Lin, as far as education is concerned, epecificially schooling, Confucius, as far as we know, established the first private academy in China. And even he took in students who were unable to pay for the education.

June 25, 2005 @ 6:56 pm | Comment

Yeah, Richard understands exactly what I mean. I cherish this blog for the diversity of opinion. It’s true, I sometimes react like an attack dog, and go for the throat, and gnash and growl … so, in a way, I guess I am responsible for chasing off those who hold different views. It’s a shame. I know I’ve been pretty rude to Lin on occasion, but I really hope he/she sticks around. Same applies to KLS, JR etc.

Apologies guys, it’s nothing personal. Right, now cease-fire is over … where’s someone to savage? grrrrrr.

June 26, 2005 @ 6:30 am | Comment

RSS feed for comments on this post. TrackBack URL

Sorry, the comment form is closed at this time.