COMMENT China: The center cannot
hold By Li YongYan
BEIJING -
The West has often referred to China as the Middle
Kingdom, in a mild mockery of Chinese emperors' illusion
that their land occupied the middle location on the flat
and square earth. Actually, the name has another, more
accurate interpretation that has escaped Western
observers: China also means central state. The "Middle
Kingdom" is a misnomer because the central authorities
don't know, or care, as much about the world outside
their empire as about the provinces within their
borders.
The central state functions like the
central nervous system that issues orders to outlying
localities on matters great and small. As the kingdom
grows larger and the number and complexity of various
affairs - military, administrative, economic and
judicial - become too large, some of the administrative
powers have to be delegated to local officials, starting
the perpetual tug-of-war between the central authority,
which fears losing control, and locals who want to have
more autonomy. When the "center" becomes weak due to
political incest, inaction, indulgence or just plain
incompetence, the provinces get increasingly aggressive
and keep pushing the envelope to expand their own
powers.
Yet the center has managed to hold the
state together. For the past two millenniums, dynasties
and regimes have succeeded one another, but the fact
that the central state has not disintegrated, except on
a few short occasions, is an amazing testament to the
strength of the glue, the political cement, despite the
diverse and often conflicting interests in the vast
land. The formula - punishing dissent and rewarding
loyalty - is no secret, but consistently effective. It
was then, and remains so today.
However, when
the central state issues a public warning against
disobedience, it can only mean one thing: the threat to
centralization is too strong to be ignored any longer.
On May 29, the People's Daily, the Chinese
Communist Party's official mouthpiece, ran an editorial
blasting recalcitrant officials for violating
restrictions on the continued investment in certain
industries.
'Cool down' decrees fall on deaf
ears What happened is that, with energy and
transportation sectors already bursting at the seams
under the deluge of investment in industries such as
steel, cement and real estate, and with bad debts piling
higher on banks' books, Beijing tried to rein in the
runaway enthusiasm, issuing a moratorium on further
investment in those key industries. The central state's
decree fell on deaf ears. Local governments kept pouring
money into these booming sectors. First-quarter
investment in infrastructure jumped another 47%.
Infuriated, Beijing resorted to the one method that it
finds most handy and proves most effective - it sacked
the party secretary of one city that is home to a steel
mega-project.
That would have been the end of
the story. By tradition, all officials, all newspapers,
experts and academics would sing along about the
"necessity and wisdom" of the center's decisions, until
the next wave of opportunities present themselves or a
new crop of enterprising, opportunistic officials grow
up.
But in a sign of changing times, some
newspapers have aired opinions criticizing the central
decisions as coming too late, being too arbitrary, too
simplistic and ill-advised.
China Business Daily
on May 9 reported that thanks to unstoppable rumors
about implementation of macro-policies, panic is setting
in and that damage has been done: in 17 trading days,
Shanghai's stocks index dropped 200 points. Commodities
prices such as copper, rubber and soybeans also lost a
lot of ground. Even the Hong Kong Hang Seng Index's dive
under 12,000 points was blamed on Beijing. The paper
went on to quote the president of the finance school of
the Northeast Finance University as warning against an
over-drastic adjustment under the current pressure of
unemployment and the reform of state-owned enterprises.
Dr Huang Jinlao, head of domestic financial research at
Bank of China, agreed, saying that administrative
measures should be avoided as much as possible, because
it is up to the banks to decide where to invest, free
from government intervention.
Local governments,
too, tried to make themselves heard through sympathetic
media. A Jilin provincial official told Economy Magazine
that some of the central government policies are not
very reasonable, because the decision-makers are too
high above, and too far away, to have a clear grasp of
everything at the grassroots level. The southern Yunnan
province believes its economy is lagging too far behind
the rest of the country. So investment into the
"western" area should be increased rather than
decreased. "The problem is that investment in our
province is not hot enough," the magazine quoted the
locals as saying.
In a May 11 article, the
Chinese Enterprise Association made a veiled criticism
of the "braking policy". It called attention to "two
disadvantages of the administrative measures" adopted by
the government: 1) The government is suspected of
returning to a command economy, contrary to its own
overarching market reforms. And 2) Government controls
may harm the healthy parts of economic growth and add to
volatility.
Scathing attacks on economic
policies The most scathing attack came in the No
18 issue of Beijing-based biweekly, Outlook, which
pointed out that macro-control measures aimed at
regulating the speed of the economy "missed the point"
because deceleration, like acceleration, addresses only
the rate rather than the performance and efficiency of
economic growth.
To outsiders, scientific,
economic and particularly political issues are all very
debatable. No government is stupid enough to step out
and tell the public that it knows best and always does
it right. But here in central state, the public has an
obligation to believe in the wisdom of the authorities
who make sure that the only voice it hears is its own.
So when Mao Zedong launched the Great Leap Forward,
media were full of testimonials by prominent scientists
confirming that grain production could increase 90 times
in one year. The same officials who only yesterday vowed
to "carry the Cultural Revolution through to the end"
would later condemn it as a wrongful purge after Deng
Xiaoping came back and took charge.
To dance to
the central tune was not only essential for advancement
but also necessary for survival. Of the handful that
voiced skepticism toward central policies, none came to
a good end. Mao persecuted his two defense ministers and
one president of China to death. Deng placed the
Communist Party's general secretary Zhao Ziyang under
house arrest from June 4, 1989, when he supported
pro-democracy protesters in Tiananmen Square. Former
president Jiang Zemin outlawed a quasi-religious sect,
the Falungong, for breathing differently. So this
unprecedented vocal disagreement with the central's
economic policies is truly revolutionary, testing the
limits of the current central state leadership that has
done nothing yet to inspire fear, and consequent
obedience.
The fact that people have been
ignoring the central state and have not lost their
freedom or lives will embolden further decentralization
toward not only more economic autonomy but also
political choices. Meanwhile, an increasingly endangered
central government will be forced to rely more heavily
on "administrative controls" to keep itself from
collapse. Until a federal definition of obligations and
rights is established between national and local
governments and the transition to a market economy is
complete, this war of attrition will continue.
Li YongYan is an analyst of Chinese
business, economics and politics.
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2004 Asia Times Online Co, Ltd. All rights reserved.
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