Communist Party Needs to Loosen Its Grip in China





Turkeys don’t vote for Christmas, and the Chinese Communist Party is not exactly itching to release its iron grip on society and the economy.

But that is exactly what the party needs to do to prolong the fast economic growth that underpins its political legitimacy: Cutting state-owned companies down to size and opening up to private enterprise hold the key to sustaining productivity gains and redistributing income more equitably.

Coming from Western economists, such a prescription is standard stuff. What is striking is the urgency with which some prominent Chinese academics are making the same case.

“In the financial crisis, China seems to have performed quite well,” said Yang Yao, director of the China Center for Economic Research at Peking University. “But the problem is that government involvement in the economy has increased significantly.”...

The phrase “guojin mintui” — the state advances as the private sector retreats — has become common currency in debate about the Chinese economy....

Zhang Lifan, a liberal scholar and historian, goes so far as to argue that the retreat of the private sector was an underlying factor behind the collapse of the Qing Dynasty in 1911 and the 1966-1976 Cultural Revolution.

“History has proved that ‘guojin mintui’ is not sustainable,“ Mr. Zhang wrote in a recent article. “If we can’t curb the advance of the state sector, it will definitely have an impact on China’s future industrial structure and economic development.”...


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