He may be right, but China's Communist Party seems unable to escape the paradox of its continued existence. ''Unless China can create a real middle class, it will be just another capitalist dictatorship.'' ''You over-privilege one sector like that at the expense of all the others,'' Professor Cui said. He cites one statistic to support his case: to encourage exports of manufactured goods, China now gives up more money each year in export tax credits than it spends on all social welfare programs combined. It needs to spend more on rural health care, to subsidize the poor western regions, to retrain workers fired by failing state companies and to improve education. Professer Cui said the test will be whether China's new leadership, led by the largely unknown Hu Jintao, a longtime party apparatchik, spreads the country's emerging wealth. Those two countries also tried to combine capitalist economies with strongman rule, but were felled by economic stagnation and corruption. The risk of such thinking, some critics say, is that China may aim to recreate the dictatorships of South Korea and Taiwan and miss, becoming Marcos's Philippines or Suharto's Indonesia instead. Capitalism has to blossom before it can be uprooted. But not in the primary stage, which could last 100 years. China, he argues, is still in the ''primary stage of socialism.'' Later on, contradictions between the working and capitalist classes may become acute and the poor will vanquish the rich. Jiang would not agree that his party has abandoned the poor. Jiang has closed the main leftist academic journals where criticism of his policies was being expressed, including the one that published Mr. Such views could be widespread, but it is hard to tell, since Mr. ''The economic elite love money, not democracy,'' wrote Kang Xiaoguang of the Chinese Academy of Social Sciences. Other critics say that opening the party to businessmen will delay a needed political reckoning. ''It implies that it is now time for the party to admit the unspoken truth and formally declare that it has become China's party for the rich and the powerful,'' he wrote. Bao Tong, a former top-level government official who lost his post after the Tiananmen Square crackdown in 1989, wrote a scathing letter criticizing Mr. Such statistics alarm some old-school party members and outspoken intellectuals. The gap between rich and poor has grown almost as fast as overall income, meaning that inequality is increasing nearly in lock step with the country's development.
In other words, it does not make rich people share their wealth. But by percentage of its economy, China makes the United States look profligate. It has also indulged in vanity projects, like a new $600 million headquarters for China Central Television and the grandiose Shanghai and Beijing opera houses, all designed by well-known Western architects.Īmong wealthy nations, the United States is considered stingy when it comes to social benefits and health care spending. Much of what the government does collect in taxes it uses to build roads, high-speed trains, telecommunications networks and air and shipping ports - tens of billions of dollars spent each year to support the infrastructure of commerce.
Rich people have only begun to pay income tax. All that money is flowing because the party has used its near-absolute power to create favorable conditions for capitalists.Ĭorporate tax rates are low. In fact, the state-run companies that once dominated here now make up, by many calculations, only a third of economic output.įoreigners have invested more money in China so far this year than anywhere else, including the United States. China's output is on track to grow 8 percent this year, faster than any other big economy, and private business has become the leading force for growth. They argue that the transition took 30 years in South Korea and Taiwan. The fact that those countries have long since become democracies does not disturb party officials. Jiang said repeatedly, by mimicking capitalist-oriented authoritarian regimes, like the old South Korea, Taiwan and Chile. This new strategy marks a calculated gamble to ''keep up with the times,'' as Mr. Jiang said, ''the fundamental interests of the people of the whole country are identical.'' The old China defended the working class against the capital class.
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