Читать книгу What Does China Think? - Mark Leonard - Страница 18

‘Big state bad, small state good’ was the mantra of the economists in the 1980s and 1990s. But the ‘New Left’ team of Wang Shaoguang and Hu Angang has done much to turn that debate on its head. This odd couple – who had a chance encounter at Yale University – emerged as a sort of Lennon and McCartney for ‘New Left’ economics in China. In an influential report in the early 1990s, they argued that the Chinese state had the wrong kind of power: despotic rather than governing. Its ability to restrict the personal freedom of its citizens was second to none. However, when it came to running the country in an effective way, China’s state was one of the weakest in the world.

They showed that central government’s revenue had steadily fallen as a percentage of GDP from 31.2 per cent in 1978 to 14.7 per cent in 1992. As the central state’s budget fell, the income of local governments grew and grew, creating a series of ‘red barons’ in the provinces who used dubious ad hoc charges to line their personal and provincial coffers and increase their power. By the end of the 1980s, the ‘red barons’ had become as powerful as the central government.

For the ‘New Left’, almost all of the problems hampering China’s reforms – corruption, overheating of the economy, bad investment, non-performing loans, low levels of domestic consumption and growing inequality – had come about because the central government was too weak, rather than too strong.

Hu Angang estimates that the combined costs of illegal bribes, tax evasion, arbitrary local charges and straightforward theft add up to a staggering 15 per cent of China’s GDP every year. He shows how, without democratic accountability from below or fear of sanctions from above, provincial leaders put their own interests above those of the people, spending most of their extra-budgetary revenue on themselves and their families: higher salaries, cars, air-conditioning, refrigerators and shiny new office buildings. The solution, according to him, was to centralize the collection of taxes in order to prevent the proliferation of arbitrary charges and to create central institutions to tackle corruption.

The ‘New Left’ made a similar argument about the expensive white elephants such as luxury hotels, skyscrapers, state-of-the-art amusement parks and giant stadiums which local governments have become addicted to building. These unproductive investments, which contribute to an overheating of the economy, are built with money from China’s banks which Deng Xiaoping had freed from central control.

However, their most powerful argument is that a stronger state could help stimulate higher household consumption which currently stands less than 40 per cent of GDP, the lowest of any major economy. The ‘New Left’ claim that China’s model of development is unsustainable because there is a limit to the amount of goods and services that the rest of the world will be able to buy, so China will need to start consuming more of its own products. In the future, China will quite simply need to spend more, and save less. The ‘New Left’ correctly argue that domestic consumption will only rise when Chinese citizens feel less insecure. As long as there is no welfare state to protect Chinese citizens from illness, unemployment or old age they will save their money for the future, rather than spending it as they earn it. The ‘New Left’ claim that only a revitalized central government can provide the social safety net which would give Chinese citizens the confidence to consume. Their words have not fallen on deaf ears. The percentage of central government tax revenue has been gradually increased since 1994, and – rhetorically at least – Hu Jintao and Wen Jiabao have committed themselves to rebuild China’s welfare state.