By Global Public Square staff
There's a powerful new voice calling for smaller and more market-friendly government. If you think it's a second coming of the Tea Party, you would be wrong. In fact, this call doesn't come from America at all. It comes from half-way around the world, from...the Communist Party of China.
Last week, Chinese Premier Li Keqiang made an unusually bold speech – rare for a Chinese leader. He said his government would loosen control of the economy and allow free market forces to blossom. A few days later, he made another speech, this time in Berlin. There, Li backed an ambitious set of specific proposals that included giving foreign companies the chance to compete on equal terms in China. This, in a country where the state controls – and manipulates – almost every major industry: finance, transport, energy, and communication.
Li's comments may sound radical, but they're part of a trend. For many months now, the two most powerful people in Beijing, Li and President Xi Jinping, have said that the state's command systems need an overhaul. In fact, this is criticism of their predecessors – Wen Jiabao and Hu Jintao – whose ten years in office were marked by passivity and a lack of courage to reform. Corruption flourished under their watch: China is ranked only as the 80th most clean country in the world by Transparency International in its latest corruption index. State controls, nepotism and a culture of bribery made it difficult to do business: the World Bank ranked China 91st in the world – behind the likes of Azerbaijan and the Kyrgyz Republic.
China has had remarkable growth, but the buildup of these conditions is beginning to show. Foreign investment is declining; trade with Europe and the United States is slowing. According to a recent survey, more than a third of U.S. companies in China say that their business there is hindered by state favoritism for Chinese companies. The same survey also reveals that the two biggest perceived risks in China are an economic slowdown, and rising labor costs.
In short, there is a strong case to be made for a round of serious reforms in China.
The question is, will any of it actually happen? Economic reforms everywhere are politically difficult. Beijing's leaders realize that reforms are necessary to boost long-term growth but some of them will actually address public discontent, on issues like corruption. But on the other hand, many reforms will face resistance – from political elites that run state-owned enterprises and local governments that make deals with developers.
So how Beijing navigates these waters will be fascinating to watch. Maybe this week, when Xi Jinping meets President Obama in California, we will learn some more.
Keep one thing in mind, though. China's new leaders want growth, modernity and all of that good stuff, but they don't want to become a Western-style liberal democracy. Last January, when Xi went on a speaking tour of the country, he claimed that his reforms do not equal Westernization. One reason why the Soviet Union collapsed, Xi said, was because it wavered on its beliefs.
So China wants to refine and reform its state capitalist model and maintain its political Leninist model. But if its reforms are actually implemented, they will create larger and larger groups of Chinese who think of themselves as middle class, do not owe their livelihood to the government, and seek greater individual autonomy and freedom. Eventually, that tends to produce political change.