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China must invest in political reform

Good governance can end its dependence on foreign markets and investment

Gulf News

Popular demands for more political rights and better governance are an inevitable result of economic success as people try to throw off the shackles they perceive as restricting their ability to take advantage of new opportunities to improve their living standards.

This is the main challenge facing the new leaders of China’s ruling communist party, who take power next week under president-in-waiting, Xi Jinping. They must also find a way of boosting its economic growth which is slowing, in part because of the persistent crisis in Europe and the US — China’s key markets and sources of investment. While the Chinese economy is still expanding at about 7.5 per cent annually by some estimates — a blistering pace compared to most other countries — its large population and high levels of disparity mean it must maintain an even higher growth rate if it is to sustainably improve living standards.

There have been calls for the radical reform of the communist party and the Chinese political system. Despite growing social pressures, this is not likely to happen very fast. Even those in favour of reform in the communist party leadership prefer a careful, managed approach — and there are still influential blocs that oppose significant change.

In the absence of radical reforms, China must concentrate on getting the basics of good governance right: Eliminating corruption, ensuring the rule of law and holding party and government officials accountable for their actions. These will do much to address popular and international concerns and buy some time for the implementation of necessary democratic reforms.

China has grown to become the world’s second-largest economy by using its cheap labour to attract foreign investment and export goods to the rest of the world. But, as the global economy slows, it needs to get its own, huge population to invest and spend to replace foreign markets and investment.

Better governance will help convince Chinese consumers and entrepreneurs to invest in their country, rather than simply hoard cash or send their savings off-shore because they lack confidence in the future. China’s leaders have recognised the need for reform. Now they must back their words with actions.