The New Year — A Review

The end of 2014 came with sad news from Shanghai of a New Year celebration that went horribly wrong.

So much of the last 2 years has been spent on turning back the clock towards a less self centred focus, and towards a more moral and principled set of destinations.

China has attacked the corrupt pursuit of power and wealth, starting with the Party and Government, and it will continue to other sectors of the power structures that accompanied the export led boom.

In 1992 I expressed the view to the then Chinese ambassador, after experiencing the growing corruption – that the power of the chop ( the authorising stamp required for buying land and enabling new projects ) was of more value than the salary paid to those who held the chop. While this was the case, and in the absence of independent laws and justice, corruption would only grow.

This has been the problem for all advancing economies, and they have all had to resort to controls for accountability and laws and processes to counter corruption, or fail under the abuses.

All of the West show this, and Africa and many other nations.

Allow leaders and officials to avoid accountability, and allow corruption and your society and economy will surely fail.

And to be clear the counter to those ills has to be far more severe than any could expect. It has to strike deep and ensure that those who might contemplate corruption, should be very concerned about the penalties.

This is the story of the last two years in China. A campaign has begun which will last for many years to strike at accountability and corruption. We shall see it take many forms and turns as China becomes a mature and fairer society where the people can stand against government abuse, and those who would take private benefit will fail.

It will have Chinese characteristics. It will take its own forms. But, at the heart, is the parables spelled out by Adam Smith in The Theory of Moral Sentiments that greed is the powerful stimuli of capitalism, and if left uncontrolled, becomes more destructive that the original positive force of creativity that it engendered.

And in the process of moving against corruption, a political campaign has been at work to resolve the errors of those who tried to strike for power in 2002 onwards and most directly in 2012. The campaign has been to secure the original destination of China’s economic development by 2049 – a moderately prosperous nation based on socialist principles.

China will, between 2012 and 2035 build its economy on the basis of a market economy led by the Party, and a set of social values, also developed by the Party. The market economy will be regulated by regulators – much more effective than ours, by government action, such as to lower drug prices, and strategic shareholdings such as those to be held by welfare funds. These also have the positive effect of funding the welfare state and keeping much of the cost off the state balance sheet. The market will treble the size of the economy by 2030 but contained within a birdcage of the long term aims of shared prosperity.

As the media comments on property bubbles, interest rates and free trade zones, they miss that these are stops along the way to an economy designed for 2049. An economy which will build a new style distribution of wealth, ensure enough is enough, and that growth is related to the needs of the future and not merely the stomach of the present for yet new toys and baubles.

It is not a recipe for grey or equality. China’s plans recognise that those concepts of equality are generations away, but a capitalism based on debt and more is not their destination.

Look more to Northern Europe to see their ideas of values and adequacy.

They will always value and pursue innovation and development and reform. They will always value progress and change and progress.

To do it they must develop accountability, moral values , and forms of democracy that enable the people’s voices to be heard and employed.

Look to the destination of 2049 and you will comprehend the present better. And never doubt the role of the party in leading change.

China has studied rising nations and seen the risks of seeking hegemony and abstracting value from others for one’s own benefit. How that leads to an ever growing need for military power and control.

China’s route to the future is based on an intellectual appraisal of the past, and present, and seeks to build value and share wealth with its neighbours and build a new Asia and a new Eurasia all the way to Europe.

2014 has seen the land bridge to Europe laid out by President Xi in a series of speeches. The silk roads and belts and the high speed trains and new global development banks are all part of the new world that China is helping to build in areas long neglected by the West. From Beijing to Berlin, from Beijing to Sri Lanka and across the Indian Ocean and through South East, East and South Asia.

With Russia and Central Europe, from North to South and East to West Africa and through the South Americas.

It is all beginning to grow and take shape in 2015 as the development of global infrastructure starts with major new transport links. It does not challenge the West as it is, mainly, in areas we long ago forsook.

We need to see the new opportunities globally and participate in them. They are not a threat to us, but they are a big opportunity we ignore at our own expense.

China is rolling out a new set of global initiatives and reforming its own economy.

In 2015 we shall see that the attraction of inward investment from China grows, but a new openness starts in access to the markets of China. It may be that as in 1992 it is the Asians who see it first and take first move advantage. Western multinational leaders are still locked in short term demands of quarterly profits.

I hope the UK in a new special economic relationship with China, will be among the leaders and its companies invest in the new Asia, and the new land bridge to Europe.

Categories: China growth, Chinese Foreign Policy, Econonomics, Uncategorized

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