China's Capitalist Revolution

Could a pro-market, pro-free trade, pro-civil liberties public figure become President of China? It certainly appears so.

The post of Vice Chairman, almost always a stepping stone to the presidency, has been filled by Xi Jinping. Xi is a corruption-fighting, market liberal who vociferously denounced the Tiananmen Square massacre, and whose father Xi Zhongxun was purged from Chairman Mao's regime for abandoning his socialist beliefs. Xi has kept quiet on a lot of issues, but his reformist leanings are a sort of unspoken secret that everyone knows. Choosing Xi allows the Chinese government to make a politically "safe" choice, while still moving in the direction of liberalization.

Xi's selection reflects a much larger trend in both Chinese culture and government policy. His rise to prominence also echoes that of a similar reform-minded leader from China's past: former Party Leader Deng Xiaoping. Deng, who had often butted heads with Mao's hardline communism, returned to the public policy sphere after the Chairman's death in 1976. He eventually took his open-minded, pro-business philosophy (immortalized by his saying, "I don't care if it's a black cat or a white cat, so long as it catches mice") to the top of the Party leadership, setting China on a completely new path.

Since Deng Xiaoping's leadership, government power has been significantly decentralized, contract-responsibility has been ingrained in the trade sector, subsidies have been slashed, the industrial sector has largely been privatized in all but name, and citizen entrepreneurship has been legalized and encouraged. Private companies are allowed to compete with state institutions, free trade zones have been established, and tariffs have been taken from a rate of 41% (in 1992) to 6%.

Up until recently China had no minimum wage (they now have one, though it is still one of the lowest in the developed world), Chinese citizens enjoy tax rates up to 30% lower than Americans, tax evasion goes largely unpunished, and there is minimal welfare or social security. Three years ago, the Chinese government passed strong pro-property protections, and lending standards remain very sensible, unlike in the United States, where the government interfered to demolish lending standards, helping result in a massive bubble.

The Chinese people also seem to appreciate this philosophy: they have put Henry Hazlitt's Economics In One Lesson, F.A. Hayek's Road To Serfdom, and CATO's Toward Liberty on their best-seller list. According to a 2005 Globescan poll of twenty countries, China has the highest proportion of respondents in the world who agree with the statement that "the free market economy is the best system on which to base the future of the world." Seventy four percent of Chinese said yes to this, while 71% of Americans agreed. A Chicago Council on Global Affairs survey in 2006 also found that 87% of Chinese people supported globalization (compared to 60% of Americans), while 65% of Chinese people wholeheartedly support free trade (compared to 30% of Americans).

These increasingly liberal sentiments and policies, combined with the Chinese people's industrious work ethic and prodigious savings rate, have caused virtually all economists to agree that China will soon become the biggest economy in the world. There definitely remain serious depredations upon economic and personal liberty in China (internet censorship, the government's monopoly on labor negotiations, and the fact that even though property in China is treated as private property, it is all still technically referred to as being "on lease" from the State, to name a few of the biggest ones), but Xi Jinping's almost inevitable nomination seems to indicate that CHINA is more and more coming to stand for "Communist Homeland In Name Alone".

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Published at RightOSphere.com.