Friday, March 04, 2005

The Latin Americanization of China?

We've all heard about China's new rich, we've all heard about the growth, and about the inequality. This is the first time, however, that I see somebody raising the possibility that there could be a "Latin Americanization" of China. George Gilboy and Eric Heginbotham write:
China’s economic reforms have created what Sun Liping of Tsinghua University calls a “cloven society.” The new rich and powerful now live in walled, guarded villas and modern apartment complexes, enjoying vast differences in wealth, power, and rights from the swelling ranks of the rural poor and urban dispossessed...

There are two possible outcomes:
The outcome of this ... crisis, though it will certainly involve increasing scope and intensity of conflict and confrontation, need not be endless discord or regime collapse. China’s tumultuous reform process could see the creation of new, more liberal legal and social institutions. Transforming migrants into urban citizens with equal rights and allowing social groups to organize and articulate their own interests would both improve the ability of the government to govern effectively and minimize longterm threats to stability and economic development.

But other outcomes are also possible. The statecould refuse to allow liberal institutional innovation and slip into a modern form of authoritarian corporatism in which political leaders might seek to channel social energies toward nationalist ends— the “revolution from above” about which Barrington Moore warned. Or alternatively, China could catch the Latin American disease, characterized by a polarized urban society, intensifying urban conflict, and failed economic promise. Indeed, despite aggressive efforts to make the state more responsive and adaptive, the speed with which social cleavages and conflicts are growing today arguably makes this last outcome easier to imagine than the others.
What if China were to go down this second route? You can say goodbye to the fantastic rates of growth, as the amount of resources that go into rent-seeking would sky-rocket.

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