Page 1 of 2 BOOK
REVIEW China and the 'enlightened'
West The Writing on the
Wall by Will Hutton
Reviewed by Tony Norfield
China's
booming economy has led to the publication of many
books about the economic and political
implications. This addition to the pile is worth
reading, nevertheless. The Writing on the
Wall has the advantage of being a
comprehensive review of the current relationship
between China and the West. It also highlights
some important dimensions of the more liberal
Western view of China's
position in the world
economy.
This book is written by a
well-known commentator in the United Kingdom - a
former editor of The Observer newspaper. The fact
that Will Hutton shifted focus from UK (and
Western) economic, political and social affairs to
spend a lot of time analyzing and writing about
China (over more than 400 pages) is a measure of
how important China has become for policy pundits
everywhere.
The book's main thesis, that
China's continued economic advance i
s not
sustainable within the current domestic political
framework, is not an original one. However, this
thesis is also used to make a set of broader
political points - for China and for the West -
that deserve fuller examination.
What is
striking throughout the book is Hutton's strong
advocacy of what he calls the "Enlightenment
values" of the West, in particular of the US. He
argues that without these values - democratic
pluralism, limits on monopoly power, a system of
checks and balances, accountability, the rule of
law - China will not be able to advance its
economy. Neither will the West, without a return
to these values, be able to handle China, "the
most important challenge of our times" (p 318).
The logic is as follows. First, Hutton
documents how China's economic growth has been
dramatic but also very wasteful. This does not
merely refer to environmental pollution and
corruption, but also to the fact that state-driven
growth has been inefficient. He cites a World Bank
study showing that while the annual growth rate of
China's gross domestic product (GDP) is high, in
the region of 10%, only very little is due to
technological progress (some 0.5% per annum - p
157).
The gap is largely made up by
massive, and usually inefficient, capital
investments (6.4 percentage points of total annual
GDP growth). The remainder is due to the migration
of the workforce from rural areas and growth of
the labor force. In line with this investment boom
is a banking system burdened by bad loans and an
economy that is still dependent on export-led
growth (with 55% of exports driven by foreign
companies that have invested in China). Even
China's massive foreign-exchange reserves are seen
as a sign of weakness, not strength, since they
reflect a distorted and over-regulated economy.
Given the scale that the Chinese economy
has reached in the global system, this cannot go
on at the same rate for much longer. But if it
does not, the threat of unemployment will produce
damaging political instability. External barriers
to further Chinese growth in the same manner
appear in trade (especially the surplus with the
United States), with more general barriers in
environmental problems and resource availability
(oil, commodities).
Most economists would
argue that China's pattern of growth should be
changed, in a shift toward domestic consumption
and away from investment. That would be part of a
needed rise in domestic living standards. It would
also reduce China's trade surplus. But this is
where Hutton argues that China's economic policy
of what he terms "Leninist corporatism" prevents
the growth of domestic companies and institutions
that can work to develop the economy.
State-owned enterprises still dominate
production, but these follow political directives
and are not capable of responding to market
demands in an efficient manner. At present, there
is not a lot else that has been built to take
their place, and Chinese companies do not often
make a mark in global-league tables.
To
build such alternative enterprises, the ruling
Chinese Communist Party needs to open up the
political and economic system. "Enterprise must be
let off the leash and allowed to move into a
self-sustaining entrepreneurial maturity, or else
there will be a sharp and destabilizing
deceleration in the growth rate" (p 120).
Since this book was published, the
National People's Congress has passed a law to
strengthen private-property rights for individuals
and companies. Perhaps this will go some way to
meeting Hutton's concerns. However, his strong
advocacy of liberal market capitalism suggests
not. While there are debates about how much of the
Chinese economy is still owned and controlled by
the government (the consensus is around 35% of
GDP), Hutton falls into the camp of those who
believe that the private sector in China remains
far too small.
Gunboat
enlightenment Throughout his book, Hutton
belabors the theme of the benefits for China of
"Enlightenment" values. But the concept is rather
slippery. Historically, the term "Enlightenment"
relates to a period of European (and US)
development, principally in the 18th century, that
saw the flowering of rational, non-religious
thought and inquiry and demands for equality
before the law, as opposed to previous autocratic
rule.
While this was an element in the
ideological and later practical development of
capitalism for this part of the world, it is
questionable how far it is applicable to refer to
such ideals as a guide to policy today. Liberal
market capitalism can be seen as
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s not
sustainable within the current domestic political
framework, is not an original one. However, this
thesis is also used to make a set of broader
political points - for China and for the West -
that deserve fuller examination. 
