Erik Moberg ©:
The conflict between politics and economy in China
In the book I wrote (page 156) that dictatorship and a
fully developed market economy are incompatible and that China is an
interesting example. Thus “In my opinion we will soon–probably within ten years–see a transformation in China. Either the
market-driven actors will enforce considerable political changes towards
democracy, or else the dictatorship will strangle the markets.”
In my discussion about China I found the comparison
with India interesting and wrote (page 156): “The Chinese manufacturing industry
is to a considerable extent based on foreign enterprises–so called contract
manufacturing–and in many cases foreign enterprises have also invested directly
in China. The share of new foundations based on Chinese innovations is comparatively
small. In India the situation is very different. There the domestic innovation activity
is burgeoning and masses of small enterprises, based on innovations are
founded.” The market economy was thus much more developed in India than in
China.
Now things have however changed. China has–in the
respect mentioned–become much more like India. In a long and very interesting
article The Economist (September 23rd, 2017) describes a widely
spread and rapidly growing innovation activity in China and the creation, by
Chinese entrepreneurs, of new and initially small companies for the
commercialization of the resulting inventions. This means that China is rapidly
on its way to a fully developed market economy, or, perhaps, is already there.
If I am right this should reasonably sharpen the Chinese
conflict between politics and economy. And this conclusion is underlined by the
fact that the dictatorship under Xi Jinping
simultaneously (as documented here) has become more centralized and sharper. An
already unstable China has become much more so!
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