Will China’s Economic Engine Derail?

While many were questioning how to catch up to Japan’s economic peak, she entered a valley that has extended 20 years. After World War 1, the United Kingdom enterred a valley from its 19th century of hegemony and ceded the peak to the United States.  I question what will derail China’s economic engine.

Just as the United States has regional cultures; its fast paced, driven New York, its mercurial collegiateness in our nation’s capitol, its stoic yet heartfelt community of Iowans, and its new wave, multicultural progressiveness of California (I am ,with apologies, stereotyping), I saw similar threads in China in 1993. Hong Kong seared with international commerce. Guangzhou had the business mind of a Chicago. Inland provinces, with their peasantry, certainly seemed more agrarian than even poorer parts of Mississippi that I saw as a child. But Beijing?

I was forbidden to speak of Tiananmen Square while in the country, but I was able to freely stroll through this immense open ground. As I did, I could sense the eruption that had precipitated there just four years earlier. The backlash of the economic reforms begun in 1978 was that students and workers gathered in the square to demonstrate for social reform in 1989. The government of China, through the live fire clearing of that square, let it be known that reforms would be economic, not democratic.

Like in no other city or province that I visited, I saw many in the streets loyally touting traditional communist garb, expressing support of the regime that would carry on China’s dynasty. Even as China planned for the tremendous economic growth we have seen in the last decade, her leaders were developing a sense for how socialist politics would keep a firm grip on capitalistic economic reform, and how capitalistic economics would provide gradual relief from their authoritarian rule for her citizens.

It seems that China planned to carefully pace its economic reforms while raising Chinese walls between the differing social mores of its provinces. Beijing would be as a socialist chariot tied to its racing horses of capitalism, its coastal economic engines such as the city of Shenzhen. China’s leaders have managed to engineer success very well so far. And even as inflation seems to threaten their near term horizon, direct foreign investment continues to spur their economic plans, accelerating to new levels in the past year. I do not foresee a long term derailing of China’s planned economy with capitalism as its means.

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