Summary
Marking the 90th anniversary of the Chinese Communist Party last Friday, President Hu Jintao told colleagues the party's survival depends on the twin pillars of economic growth and social stability. While China undoubtedly needs both for the party to remain in power, the dilemma for the country's leaders is that the way China achieves rapid economic growth is increasingly the reason behind growing instability in Chinese society. In fact, loosening rather than tightening its grip on power is more likely to ensure that there is harmony rather than turmoil throughout China.
The key to understanding and resolving the dilemma lies in the nature of the Chinese political economy. The common wisdom is that China's leaders are doing a magnificent job building prosperity for the nation's citizens. After all, since Deng Xiaoping's reforms in 1979, Chinese gross domestic product (GDP) has grown more than sixteenfold. But it is how China achieves growth and who benefits from the growth that really matters. China has pursued a model of investment-led state corporatism since the mid 1990s. This was cobbled together after the 1989 Tiananmen Square protests to preserve the economic power and relevance of the party. But it is the country's state-led economic growth model that puts social stability at risk.See the full content of this document
Extract
; China's Exports Don't Fuel Boom
Many outsiders are unaware that the greatest contributor to Chinese growth since the 1990s has not been net exports but domestically funded fixed investment used to buy machinery or construct buildings and infrastructure su...
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