Thursday, October 22, 2009

Ryan Pyle Blog: The State of China's Economy


It would appear that Chinese tycoons and corrupt officials have hijacked the Chinese economy and manipulated it for their own ends, in a political-economic system that Mr. Wu Jinglian calls "crony capitalism".

Who is Mr. Wu, and why should we care?

Well, he is a 79 year old economist and has just been the subject of an excellent profile by David Barboza of the New York Times.

Mr. Wu, or "Market Wu" as he was known after advising Deng Xiaoping in the 1980s, has begun speaking out against China brand of Capitalism with Chinese Characteristics. While calling for an economic clean up, he has even gone so far as to push for a British-style democracy, advocating that political change in China is inevitable. And yes, Mr. Wu's sharp criticism has landed him in hot water with the current regime; so much so that he has been officially branded a SPY by Chinese state run media; although the actual authorities in China deny any investigations involving Mr. Wu.

Stories like this one, by David, offer an incredible and unique glimpse in to how China has progressed since 1979 and where China is headed. Mr. Wu clearly holds the keys to all the good economic gossip. Ten years ago, or even five years ago, men like Mr. Wu would have never spoken out for fear of retribution. But more and more Chinese folks with an insiders scoop or something unique to say seem to no longer be afraid of speaking their mind, or calling a spade a spade.

In Mr. Wu's case he is obviously in the twilight of his career and doesn't seem to fear anything; let alone retribution by the government. So what does this aging economic insider have to say about China? In a nutshell, that economic reforms in the early 1980s have been responsible for fueling growth and altering the course of an entire nation. But that rapid growth also opened the flood gates to official corruption. And that the government is prone to meddle in the market too often and this: widens the income gap, protects inefficient monopolies and as led to an air of cronyism between big business and politics.

Mr. Wu after being banished to the farms of Central China during the Cultural Revolution returned to reach the highest levels of influence, advising Deng Xiaoping and Jiang Zemin on macro economics and how to clean up massive State Owned Enterprises. Having always been quick to strike, Mr. Wu isn't holding back any punches indicating that China must really being to change it's ways or the country's future is far from guaranteed - global stock markets take note. Mr. Wu sees a traditional battle between Maoists and Reformers in the current government tearing this country apart, with Maoists pushing for central planning and Reformers wanted to line their own pockets. After seeing so much change since 1979 you might expect Mr. Wu to be an optimist, but he is not; indicating that cronyism and corruption are undermining the future of China.

The original article by David Barboza of the New York Times can be found by following this LINK.

Let's seriously hope people people like Mr. Wu start popping out of the woodwork; their stories are profound, historically important and make for a great read.

Ryan Pyle

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Ryan Pyle