A post earlier this month noted how well-connected state-owned enterprises in China were stymieing key economic reforms advocated by outgoing Premier Wen Jiabao and questioned whether the country’s new leader, Xi Jinping, would do any better given that the country’s 145,000 state-run companies are a gold mine of wealth and privilege for rent-seeking Communist Party elites. Indeed, as media reports (here and here) about the extraordinary wealth accumulated by Wen’s and Xi’s own families demonstrate, the economic system is so riddled with nepotism that even these putative reformers are not without serious taint.
Amplifying this point is a just-published Bloomberg News report finding that the most influential families in the party’s power structure have amassed sizeable fortunes through their control of state firms. According to the report, 26 members of these families ran or held top posts in state-owned enterprises that dominate the economy, and that three individuals either headed or still control companies with combined assets amounting to more than a fifth of the country’s annual economic output.
Reports like this make one wonder whether China’s new crop of leaders can ever muster the political will to reform the state-centric model of economic management that a new World Bank report warns will eventually derail the country’s high-flying trajectory. Their success or failure will go a long way toward resolving the debate between those who contend that China’s hegemonic dominance is all but assured and those (like this blog — see here, here and here) who believe the sources of U.S. global power are more durable. The coming decade or so will furnish some important tests about who’s right and who’s wrong in their predictions about the evolving world order. Stay tuned.
This commentary was originally posted on Monsters Abroad. I invite you to connect with me via Facebook and Twitter.
A few months ago, I wrote about the early stages of the conflict in Ukraine through the lens of Sun Tzu’s The Art of War. While it appears likely that the war will carry on into the foreseeable future, enough time has passed for us to make an honest assessment of each side’s relative […]
The Ukrainian Army has made dramatic strides in the last few weeks. Ukraine’s tactical commanders have outfoxed their Russian counterparts, and by issuing a feint towards the south the UA has been able to earn substantial gains in the north of their country. The impact of these efforts have been compounded by the steady stream […]
In mid-May the Irish political party, Sinn Féin, won the plurality of seats in the Northern Ireland Assembly. Many American readers might not fully understand the significance of Sinn Féin’s political victory- but rest assured that subjects of the United Kingdom and a wide range of political movements the world over have heard the message […]
The first wave of the Russian offensive in Ukraine has fallen short of Russian autocrat Vladmir Putin’s ambitions. Most analysts deduced that Putin had hoped to achieve a decapitation strike of the Ukrainian government- taking Kiev and replacing Ukrainian President Vladimir Zolinski with a pro-Kremlin voice. Kiev has been threatened repeatedly through the course of […]
On the weekend of March 26th, the notorious MS-13 gang went on a massive killing spree in El Salvador which left more than 70 people dead by Sunday. Even for a country where powerful gangs hold massive sway, this recent tragedy stands out considering that it was the bloodiest day on record since the civil […]
