China: Political economy: Rich wary of acknowledging wealth, no middle class

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In a report from Australia, Sandra Hattingh cites China Studies scholars of that national origina and Australian media (SBS TV Insight programme "China's Boom—will it last?") regarding what kind of capitalism exists in China. And how people feel about the whimsy of the system. Jennifer Cheng, a former policy research consultant and financial consultant from China, gives this analsysis:

"The bigger picture is that nobody dares to make long-term business or investment plans in China; nobody feels that his wealth and social status are stable. Today you can be a billionaire, tomorrow you could end up in jail for whatever reason. Two things are sure: no big money is decent in China, and nobody is comfortable with being exposed to the public as being too rich."

"Wealthy people are fearful; poor people are miserable, who see no chance at all of getting anywhere in society, and who even have problems surviving. Middle class? There is no such thing in China. With everything subject to Communist Party whims, liable to change at any time, there is no political, social or economic environment for a middle class to be formed in society," she says.

"The bad debt of the banks may have well risen to somewhere between 40 per cent to 60 per cent, far above the 25 per cent bankrupt level by the international standard. Can we perceive such a society as stable? That's the real mind of China under this regime: not daring to face the world and tell people anything about their 'business'."

At the same time and in sharp contrast, the International Monetary Fund, composd of 184 countries, has "approved plans to boost China's voting rights and financial contribution to the body."

The IMF's main objective is to ensure global financial stability and to support the international financial system in times of crisis.

Its critics had argued that its lopsided voting system meant that it was in danger of losing credibility, with countries either ignoring its advice or turning to other sources of emergency funding.

Asia > China:

These governance reforms are tremendously important for the future of our institution, says Rodrigo de Rato, IMF managing director.

The IMF's existing structure, which effectively gives the US twice the voting rights of any other member, dates back to its foundation in 1945.

Reforms agreed in Singapore will see China, South Korea, Mexico and Turkey all gain greater influence within the IMF.

China will, in effect, become the IMF's sixth most powerful member behind the US, Japan, Germany, France and the UK.

China currently has fewer votes than either Belgium or the Netherlands, even though its economy is twice the size of the two combined.

Opposition came chiefly from Latin America and the Middle East, says BBC.

Any peaceful attempt to enter the political system to offer an alternative to ruling Party whimsy, which imperils the stablity of the economic system and the longevity of the boom, is met with fierce reaction by authorities. One such effort toward alternative political representation in China has historic roots.

Pan-blue Alliance was originally established online on August 18, 2004. It provides services to the party members of the Kuoming Tang in mainland China. The Alliance currently claims "Thousands of registered members distributed in more than 20 cities." Its core principles and ideology are to "negate Communism, promote the Three People's Principle, and resolve to unite the country through the Kuoming Tang (the National Party that ruled China during World War II and is currently one of the major political parties in Taiwan)."

One Pan-Blue member, Sun Buer,

was recently put under surveillance and followed by the police in Wuhan for running the local election for the Deputy of the People's Congress. He was forced to withdraw from the election because he was beaten so badly by the police that he should have been in a hospital. However, he could not afford it and he had to stay at home.

The police have detained many members in various places who are promoting freedom and democracy in China. Many of them are supporting Falun Gong practitioners, who are being persecuted through torture, forced labor, and execution via the removal of their organs, which are then sold for profit.

The utter dependence of the boom-capitalist economy on the whimsy of the corrupt Communist party, with no chance permitted toward the formation of even the smallest representation in the China-wide Chamber of Deputies of alternative parties to raise issues, debate policies, and keep the Communists on their toes and honest.

Under the surface, of course, their are factions and tendencies within the Chinese Communist Party, not only in the military where a cult of Hu Jintoa is being promoted, but also in the Chamber of Deputies itself. The regressive factions make the legitmation of the boom-capitalist system incomplete, unexamined, insufficeintly regulated, and dangerous not just for China but for the world's economy as it becomes ever-more enmeshed the Chinese matrix of political ecnomic volatility.

Just before posting this blog-entry, I double-checked my URL sources on China, and found this very important article by Sinclair Stewart and Geoffrey York, "The Chinese bank puzzle" (Sep30,2k6) Globe and Mail.

The febrile activity is easy enough to understand. The Chinese Economic Miracle is in full swing, and making a bet on the country's major banks is seen as one of the easiest ways to ride the wave. These are the institutions, after all, that are lending money to China's burgeoning industrial base, and that help to finance everything from new home purchases to the country's increasing need for foreign acquisitions. If you believe growth will continue at its double-digit clip, and that the country is serious about its privatization plans, the demand for Chinese banks stocks seems perfectly logical.

Lurking behind this infectious enthusiasm, however, is the bigger question of whether China's state-owned banks, riven as they have been by fraud, largesse, and hundreds of billions of dollars worth of bad loans, are stable enough to be foisted onto public shareholders. This is a country, despite its continuing reform efforts, where transparency remains dim, where ascertaining objective financial data can be an exercise in frustration, and where the state keeps a leaden hand even on the so-called "private" companies that have been spun off in the markets.

What there may be of a middle-class in Hong Kong, Shanghai, and Beijing would seem intent on putting its savings at the mercy of the whimsical Communist regime, not because these would-be investors are making wise use of assets, but out of the proverbial Chinese potential for gambling. Banking seems now to be rather much a huge lottery in China, where the assured winner will be the the Communist state.

-- Politicarp

Further Resources

Uigher woman nominated for Nobel Peace Prize
Declaration of Independence of China's colonies

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