Yuen Yuen Ang

One of the strengths of Yuen Yuen Ang’s analysis of China’s phoenix-like rise is to distinguish what is and what is not uniquely “Chinese” about the economic miracle of the past fifty years.

And for the record, a lot of it has nothing to do with being Chinese or being an authoritarian regime.

Coastal provinces succeeded because of their proximity to other eastern powerhouse economies which themselves had become cost uncompetitive through their success.

Coastal provinces also succeeded because of their huge draw on really cheap labour from inland provinces.

In turn, as the coastal provinces lost their competitive advantages because of rising wages and rising land costs the inland provinces made their gains.

Indeed, Deng Xiaoping opened the door to experimentation, to price relaxation, and to privatization of commercial surpluses. Early on, the CCP’s predilection for somewhat vague policies also worked to their advantage. People could begin innovating on a local level with much less fear it would land them in prison.

But the leadership was also pretty clear on what success was supposed to look like.

Capital did not immediately begin to flow into China without a few tried and true methods used in other jurisdictions in earlier times, says Yuen.

Like early America before it, China used taxless financing to spur investment, issuing monopolies, charter rights, and land financing. And like America before it, there were big incentives for corruption at the highest and lowest levels of society.

Some things have changed, some have not. Even as stronger institutions have grown up in China to help accommodate growth, corruption while evolved is still prevalent. The definitions of success have become way more complicated and much harder to achieve, much like in other advanced economies.

The final chapter in this story has yet to be written. China, like America, is a huge polluter. Also, like America, a lot of its wealth is contingent on pushing off the real costs of environmental degradation to the hinterlands, somebody else’s backyard. Many of the elements for its success have moved offshore and real estate speculation has become a national catastrophe on so many levels.… (plus d'informations)

Today the world is awash in dirty money.

Money from drug cartels. Money from Russian oligarchs. And not a little money stolen under the nose of the President of China.

China is legendary for its corruption.

But why has China prospered when other states — Russia and Nigeria to name only two — seemingly fold in upon themselves.

That is the theme of this book.

The answer is twofold: on one level, that it rewards people in power to cut corners to get things done very fast. And to get rewarded for their success by those who stand to make the biggest profits.

The other reason is that China has 50 million public servants and many if not most of them officially earn a salary that is below subsistence level. It’s a system built with incentives to steal.

And steal they do.

A lot of that money flows out of the country with estimates ranging as high as $425 billion in 2014. Compare that with estimates of $800 billion taken by oligarchs out of Russia. But a lot of that money comes in the form of perquisites from interested parties, so a lot of it never gets counted.

President Xi has made it a hallmark of his regime to cut down on the graft, but according to the author he will never completely succeed because of the continued incentives to steal and steal big.

What makes a provincial official succeed in China? Economic success. And who can bring this kind of success to a provincial official? Entrepreneurs. Contractors. Financiers. And like Russia, the system is built on relationships from the very bottom to the very top. The little crooks have patrons above, and above them are bigger patrons, and on up the chain of command.

Xi makes noises about cleaning up the grifters, but Putin is so totally greasy himself you will never see him launching clean up campaigns like those you see periodically in China.

The author says the cost of the big type of grifting in China, much as in America and other western nations, comes in the form of recessions, real estate crashes, and systemic risk in the financial system.

China is not alone in its corruption among the world’s most powerful economies. American corruption comes through lobbying, old boys’ clubs, and political contributions.

The height of American corruption was a phase in its development, the so-called Guilded Age after the Civil War and pre-dating the rise of the progressives.

But China is not a very transparent society and for that reason it’s graft will never be cleaned up. And without a genuine commitment of the leadership to the the citizenry to transparency, much of the very worst corruption will not get better..

Whether this age is a passing phase for China has yet to be determined.

Call me old-fashioned but I don’t want my government acting for its own interests ahead of mine, and for that reason, if no other, do I not want China as it is presently constituted to possess the world’s reserve currency.… (plus d'informations)