Rolling the dice: The Chinese Communist Party bets it can beat the odds

Sol W. Sanders  

Perhaps more than Westerners, Chinese have a gambling streak.

Even during the darkest hours of Maoist oppression and pretended Puritanism, Beijing tolerated gambling on its southern flank in the Portuguese colony of Macau.

Now reincorporated into China, in 2012 the world’s largest casino, holding the country’s only legal gambling monopoly, raked in $38 billion. December record receipts showed the tide was up with 19.6 percent growth.

Macau skyline.

Next door, even old Mentor Minister Lee Kwan Yu has had to abandon Singaporean self-righteouness to welcome casinos to compete for Chinese tourists pouring into neighboring Thailand at a million a year.

But the biggest gamble in Chinese history is now on in Beijing as the regime heads toward a new generation of Communist Party [CCP] rulers. After months of soul-searching for “reforms”, in the tightly controlled media and with the help of China watchers overseas, it’s pretty clear there are going to be only cosmetic tweaks.

Basically, Communist leadership is gambling. Despite enormous growing problems, in no small measure arising out of its two decades of economic transformation, the CCP is hoping its two-decades old development formula will continue working.

That script was written by Maximum Leader Deng Xiaoping who in his dotage discovered Marxist-Leninist-Maoist economics didn’t work. Deng saw only by joining the world economy and attracting foreign capital and technology could China advance. And it has, becoming, as the cliché goes, “factory to the world”.

But success has brought growing new problems. The foreign investors’ export markets funded China’s relative prosperity – even feeding the deficits of huge state-owned enterprises [SOEs] inherited from its stagnant Soviet past while a smaller more vibrant private sector struggled. Now those exports growth has been hit by the downturn in U.S. and the European Union, by rising costs undermining their narrow margins and increasing cutthroat competition, and by new competitors in other low-wage countries. Some off-shore manufacturing is even returning to the US under the auspices of the digital revolution.

The other leg of China’s advance, an incredible gigantic over-expansion of infrastructure, while continuing for the moment, is facing a credit crunch. The huge “stimulus” which Beijing threw into the economy to ride out the 1997-98 world financial crisis cannot be repeated. Government banks, but even more, local governments, have huge debts threatening to engulf them.

All these and other problems have been dissected and re-dissected during the buildup to November’s 18th Party Congress and the passing of the baton to a new generation in March. There seems to be some scuffling: retiring Party Chairman Hu Jiabao has been given short shrift. Unlike his two predecessors, he has lost his seat in the Central Military Commission. That’s the heart of the Party’s power and where outgoing officials temporarily protected their following from a new team’s depredations.

But making any fundamental changes – for example, answering growing local “mass demonstrations” with more political participation or moving toward a consumer-oriented economy – would always have been enormously difficult. What has led to the Party’s stand pat attitude was a political scandal which broke on the eve of the Congress. It was – and still may be – the greatest test of the regime since the 1989 student and worker rebellion ended in the massacre in Tianamen Square.

Gu Kailai, the wife of Bo Jilai, a rising Party chieftain in the important southwestern city of Chungking, had a show trial – after her antics were advertised on the Chinese internet, an increasingly troubling phenomenon for the rulers. She was convicted of personally murdering a British businessman and sometime intelligent agent. He, and a Frenchman who seems to have got off the hook, were stashing the Bo’s filthy lucre overseas. The scandal broke when Bo’s police chief sought asylum in an American consulate, apparently frightened, he too, might be done-in by Ms.Gu.

Ms. Gu’s husband’s removal from the Politburo – and a secret trial for his police chief who had been turned back to the army by the Americans – have for the moment eclipsed the scandal. But it dramatized the regime’s growing fissures.

Always suspect statistics show a drop in the gross national product – a measure of all economic activity – below the 8 percent conventionally believed necessary for stability. But the CCP gambles it can continue with rapid economic growth as the rationale for a repressive and corrupt regime, a bet with long odds.

Sol W. Sanders, (solsanders@cox.net), writes the ‘Follow the Money’ column for The Washington Times on the convergence of international politics, business and economics. He is also a contributing editor for WorldTribune.com and East-Asia-Intel.com.

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