- - Sunday, April 8, 2012

ANALYSIS/OPINION:

Authoritarian governments are paranoid, but just because they are, as the saying goes, it doesn’t mean they aren’t threatened. The Chinese regime is no exception. We see a demonstration in the shadowy but decisive action taken by a normally ultracautious regime to purge a leading member.

This political drama results from China’s pursuit of an alternative strategy from its original Soviet mentor: attempting modernization by integration into the world economy rather than through the pursuit of autarchy. But that pathway has come with a growing threat and fear of outside influences that accompany the strategy. It has been counterintuitive fear of internal implosion that has taken a higher priority.

Chinese leadership obsessed over the Ceausescu regime’s sudden demise in December 1989 - especially after Romania aped China by throwing over the Soviet model, even down to producing Bucharest’s own “cultural revolution.” The ruling Ceausescu couple’s fall demonstrated that competition within the Communist Party elite, rather than popular revolution, could destroy quickly a supposedly monolithic regime.

A generation later, the threat is still manifest. It will be years, if ever, before we know all the intricacies of the current party scandal. That’s despite a continuing and - from Beijing’s point of view - dangerous explosion of information and disinformation via the Internet.

But critical elements are known: Bo Xilai, a “princeling,” son of one of the “Nine Immortals” of the party’s legendary early years, and a rising party figure, has been summarily expunged. Mr. Bo’s spectacular rise as a successful executive with ostensible anti-corruption credentials was accompanied by the flamboyant use of Maoist propaganda and advocacy of the Great Helmsman’s repressive methods to meet dissension.

Increasing social friction has arisen, again contradictorily, as much from China’s success in becoming a major cog in the world industrial economy. For at the same time economic integration lifted living standards for tens of millions - if still a minority of the 1.3 billion Chinese - it has created sudden new appetites and vast regional and class disparities, including intensifying dysfunctional governance at the local level.

Inordinate waste, which as much as any other factor brought down the Soviet Union, also has characterized rapid Chinese economic progress. Market processes have not managed to weed out failed enterprises. Huge Soviet-style government behemoths, top-down planning and controls, unrestricted land and water use, stultifying pollution and unparalleled corruption have accompanied extraordinary economic advances, pumped up by exploited labor, foreign investment and technology and the manipulation of subsidies.

But vainglorious expansion of infrastructure and unlimited growth in markets for low-wage manufacturing for the U.S., European and Japanese markets, the two motors of Chinese success, are slowing dramatically. Further credit for building unlimited, unused capital threatens the whole system. Abroad, the U.S. and the eurozone’s crippling financial crises trim markets for Chinese imports. Growing competition limits transfers of intellectual property from the West, legal and stolen. Other lower-wage and/or more efficient producers from Vietnam to the U.S. have begun to compete more fiercely at a time when Chinese costs are rising.

The crisis of how to deal with this changed economic situation - including lower rates of growth for a still-growing population - now faces a new generation of party leadership scheduled to take over this fall. Mr. Bo’s jockeying for a role on that team produced his (at least temporary) political demise. But as with any player in the party’s power monopoly, his tentacles led in all directions - from a chief go-fer’s attempt to escape assassination through a failed appeal of sanctuary at an American consulate to a string of foreign and domestic “business” partners.

Accusations of corruption, however legitimate, are largely political weapons, however much publicly outgoing Prime Minister Wen Jiabao now appeals for political reform. Despite Mr. Wen’s warnings that continued inaction could lead to the kinds of fratricidal battles and chaos characterizing the Mao era, is there realistically any hope that the current regime’s basic characteristics could be changed quickly - if at all?

China has no democratic cultural grass roots on which to grow, such as those that helped the former Eastern European nations after liberation from the Russian occupation. Neither the Hong Kong takeover, ironically with its marginal freedoms from colonial times now at risk, nor Taiwan’s successful democratic experiment provides an alternative template acceptable to the masters of the mainland’s one-party rule.

The Chinese model probably will survive this immediate crisis, but the threat and its outcome are still to be determined.

Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net and blogs at www.yeoldecrabb.wordpress.com.

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