One More For Bill To Consider: 中国特色社会主义

Was it all mere window dressing? A con pulled by cunning Communists who needed to secure the collateral security of an intended transition toward the opposite direction? What a difference a few years makes, then, given how when Xi Jinping began his term in 2012 the word most in the West used to describe his agenda was “reform.” Every strongman carelessly throws the term around, but, we were told by all the “right” people, Xi was uniquely serious.

Beyond the reform plans of Deng Xioaping! That was how Pieter Bottelier, a senior adjunct professor of China studies at Johns Hopkins University’s School of Advanced International Studies in Washington, D.C, gushed over the Third Plenum of the 18th Party Congress held in November 2013. “This is by far the most ambitious, comprehensive reform plan that I’ve ever seen,” Bottelier added.

The specific word which had them all on the edge of their seats salivating over this presumed neoliberal adoption was “decisive.” The 60-point blueprint spit out by that particular 2013 Third Plenum – titled appropriately The Decision on Major Issues Concerning Comprehensively Deepening Reform – declared for the first time that market forces in China would play the “decisive function in resource allocation.”

Previously, under Xi’s successor Hu Jintao, markets were only one “fundamental” factor in economic management besides central planning. This particular language shift colored high-brow Western commentary toward proclaiming the Chinese as already moved closer to the rest of the world. Long-promised, many started to see China completing its promise to finally open up its economy.

The primary impediment, in a business sense, was how internally China’s system was dominated by State-owned Enterprises (SOE). Preferred politically as well as in the spheres of finance and law, for decades since Deng foreigners have complained futilely for the lack of competitive environment.

Suddenly, markets were going to play the “decisive” role and everyone thought that meant what it seemed to mean in its most straightforward sense. In the context of late 2013, with a world the same observers believed was about to break out of its post-2008 funk and re-join its precrisis globalizing trend, this was more good news to add to the pile.

It is a huge mistake to assume that the Chinese leadership, any of them but especially Xi, cares one bit about neoliberalism as anything other than expedience. There is no commitment to it beyond what might be useful to maintain the current political arrangement. What drives these Communists is the same hardcore ideology which drove Mao to his most self-destructive aims: Socialism with Chinese Characteristics (中国特色社会主义).

To the Communists, this is as China itself.

When Deng saw what Mao’s version of it had wrought for them, and in the wake of the Soviet Union’s painful failure and dissolution, Socialism with Chinese Characteristics came to represent (literally Jiang Zemin’s Three Represents) an uneasy alliance between market-led economic reforms and a tight centralized grip; not because they believed in freedom or Western-style notions of justice. Authorities had always feared freedom, but they absolutely feared repeating the late eighties/early nineties wave of oppressed peoples revolting against their authoritarian overlords more.

But what Communism cannot do – ever – is what China needed to do in order to avoid the same fate as their Soviet neighbors. They dollarized themselves and joined the eurodollar wave globalizing the entire global economy.

It was more than rudely interrupted by the first Global Financial Crisis (GFC1) and its Great “Recession” which the Chinese figured out (in any official capacity) before anyone else in the West (who officially remain clueless) how it hadn’t actually been a recession at all. Uncovering the distinct traces of the “impossible” unit root, this was a horrifying permanent shock whose eventual aim was more ominous than 2010’s “new normal” speak.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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Alexis Renault 4 weeks ago Member's comment

Would you please refer back to whichever article explains exactly how this whole 'Ask Bill' series began? You seem to use it to mean 'Context is T-Bills' but it's been a long time since this has been clarified....

Gary Anderson 4 weeks ago Contributor's comment

Interesting article. But China has faced this dilemma of external growth vs internal growth for awhile now. That nation will do Belt and Road. It will trade with Europe. It will spread wealth to rural communities. It certainly will try harder than the United States. We can be certain of that.

Richard J. Schwartzman 4 weeks ago Member's comment

How can you be sure they'll try harder than America?

Gary Anderson 3 weeks ago Contributor's comment

Because they work an average of 52 hours per week while Americans average 43 hours per week.