The Party's hold in China is as strong as ever

[marvenger]

For what its worth Peter Hartcher of the SMH has written an article on China that I'm in large part agreement with http://www.smh.com.au/opinion/politi...0607-xqrb.html

[touchring]

Re: The Party's hold in China is as strong as ever

For what its worth Peter Hartcher of the SMH has written an article on China that I'm in large part agreement with http://www.smh.com.au/opinion/politi...0607-xqrb.html

This is the Singapore model which China copied, but the difference is in the size, for China, we're looking at a gargantuan conglomerate with trillions of dollars in assets and maybe a trillion dollars in revenue.

http://en.wikipedia.org/wiki/Temasek_Holdings

Temasek Holdings is an investment company owned by the government of Singapore. With an international staff of 350 people, it manages a portfolio of about S$185 billion, or more than US$127 billion, focused primarily in Asia. It is an active shareholder and investor in such sectors as banking & financial services, real estate, transportation & logistics, infrastructure, telecommunications & media, bioscience & healthcare, education, consumer & lifestyle, engineering & technology, as well as energy & resources.

Temasek is one of a few global firms with the highest corporate credit ratings by both Standard & Poor's and Moody's, of AAA/Aaa respectively.[1] It has also consistently attained perfect scores every quarter on the US-based Linaburg-Maduell Transparency Index for Sovereign wealth funds, a measure of the openness of government-owned investment funds.[2][3]

In addition, the Government of Singapore has another investment arm, the substantially larger Government Investment Corporation (GIC), which invests primarily the country's foreign reserves.

In January 2002, Ho Ching joined Temasek as a Director; subsequently she was appointed Executive Director in May 2002, and Executive Director & CEO in January 2004. She is the second wife of Prime Minister Lee Hsien Loong and daughter in law of Lee Kuan Yew.

[marvenger]

Re: The Party's hold in China is as strong as ever

Communism is about industrialising. Only once you have industrial capacity can you have a socialist system. That's the theory anyway. In the Mao era - 1949-78 - they followed the soviet two sector growth model where the model naturally showed you had to increase the portion of capital in the heavy industry sector - that can make more machines (replicating themselves and making consumption goods capital) - as opposed to the consumption goods capital. This would increase the growth rate and once you were industrialised you could worry about consumption and socialism. The model is largely flawed however as draining the rural folk of surplus to invest in heavy industry meant there was little increase in rural productivity and you cannot extract more surplus than would take rural folk below subsistence. Therefore, growth was constrained by the surplus that could be extracted to support industry. China was still growing though, by 1978 they produced more steel than west germany. However, it was a system that could support demand from a well equiped military and 15% urban pop and that's about it - it would take too long to industrialise hence the need for reform.

The main point of the above is that while the initial strategy failed the party and many of its goals are still in place - industrialisation if not socialism. The party is still very much in control despite apparent free market reform. The party understands how markets can release sources of demand required for growth but markets are definitely not the end goal. I think Hartcher did a good job of showing how much control the party still has of the corporate structure of the industries it deems as most important to the country's industrialisation.