Gillard polishes Beijing’s jackboots

The vacuity of the Gillard government’s white paper, Australia in the Asian Century, is now being more widely comprehended as the more inquiring members of the media and the commentariat look past the political spin orchestrated by the PM’s office to the substance of the document. However, one vital area is not getting the attention it deserves, and this is the problematical nature of the regime in China, with which we are being encouraged closely to identify ourselves as Australia becomes Asianised in accordance with Gillard’s plan.

Authoritarian capitalism, state capitalism: these oxymoronic expressions are now the preferred ways to describe the system that has made China the world’s second-largest economy and the projected leader of the imminent “Asian Century”, about which the Gillard regime is currently waxing lyrical as it struggles to attach itself to some viable reformist narrative that can serve as its raison d’être heading into an election year.

The expression is oxymoronic because capitalism is based on liberal democratic institutions, minimal political interference, the rule of law, property rights, and free enterprise, all of which are antithetical to the politico-economic system that currently reigns in China, where brute force, corruption, nepotism, and patronage are the principle paths to wealth. Consequently, some 950 of China’s richest 1000 people are members of the Chinese Communist Party, while fratricidal conflict within the party over access to wealth and power is a never-ending source of scandal.

For example, the criminal activities of the one-time leadership candidate, Bo Xilai, and his wife’s murder conviction are well known, and now the CCP has announced an inquiry into claims that Premier Wen Jiabao’s family has improperly accumulated at least $2.6 billion in assets (even his 90-year-old mother owns a $119 million stake in a major insurance corporation). This inquiry follows revelations about the family’s wealth in the foreign press, and these were themselves most likely sourced from CCP officials ahead of the 18th Party Congress, which convenes on November 8 to carry out a once-in-a-decade transition of political power to the next generation of leaders.

The extended family of the next leader, Xi Jinping, who is expected to be anointed at the congress, also has extensive business interests, worth hundreds of millions of dollars according to the Bloomberg news agency, which investigated the matter earlier this year.

Such leaders emerge from the two main avenues to power in China. They may be “princelings” (children of previous generations of prominent party officials) like Xi Jinping, who, according to American diplomatic cables published by WikiLeaks, share a sense of political entitlement, feeling that the privileged offspring of exalted Communist revolutionaries deserve to rule China.

Alternatively, they may be successful apparatchiks who rose up from within the Communist Youth League. They may be reformers or hard-liners, but they will all be committed to “social stability” (Weiwen) – the ubiquitous but deliberately bland term for systematic repression on a mass scale, overseen by the one million members in the paramilitary People’s Armed Police, which now enjoys an annual budget of $110 billion.

This expenditure on internal security exceeds China’s official defence budget and indicates that the CCP sees domestic dissent and rebellion as a greater threat than external conflicts. Moreover, the massive PAP force is augmented by officials from some 10 government ministries, including the Ministry of State Security, the Ministry of Public Security, the Ministry of Justice, and the Ministry of Supervision, along with local militias, gangs of thugs, and shadowy semi-official entities such as the 610 Office. All of these agencies face accusations of systematic violence, illegal detention, and even torture (to say nothing of persistent rumours of illegal organ harvesting for the international black market).

Inevitably, the People’s Liberation Army leadership is seeking to further extend its influence under the incoming regime, especially over the PAP and the resources it commands. Consequently, it has manufactured some serious territorial disputes with Japan, Vietnam, and the Philippines, and in September it sponsored a large demonstration against the Japanese embassy.

At stake is power over China’s economy, which is increasingly being centralized in the hands of state-owned enterprises (SOEs) at the expense of private business firms, which have actually shrunk in number over the past decade. This policy to advance the state sector while forcing a retreat of the non-state sector was adopted after the Tiananmen Square and other mass protests in 1989, and is apparently meant to ensure that an economically and politically influential middle class (i.e., a ‘bourgeoisie’, in Marxist-Leninist terminology) cannot emerge in China to threaten the CCP hold on state power.

Under this strategy, the path to wealth, status, and influence lies through the CCP, the state apparatus, and the corporations they control or are aligned with.  At least 1900 of the 2050 companies listed on Chinese stock exchanges are majority state-owned, and there are now about 150,000 SOEs, strategically positioned in every major sector of the economy, including the vital banking and finance sector, along with energy and mining, property development, infrastructure, information and communication technology, and biotechnology.  These SOEs account for over 75% of all bank lending in China, while the 4.5 million private businesses make do with less than 10 per cent. SOE revenue has increased some 15-25% annually under the present regime while household incomes stagnate at around 2-4%.

The task of the PAP and its associated internal security agencies is to ensure that the Chinese masses do not become politically burdensome as the economy continues to be transformed to suit the interests of the CCP, the SOEs, and their legion of cadres and hangers-on. Certainly the potential for unrest should not be under-estimated. After all, some 500 million Chinese still live on $100 a year or less, while their premier has allegedly amassed $2.6 billion in personal wealth and CCP apparatchiks enrich themselves on a grand scale. Similarly, reputable studies indicate that since 2000 at least 40 million families have had their land confiscated for development without compensation. In September, a Chinese court heard a case against seven people who had the temerity to protest against such action by kneeling before a Chinese flag in Tiananmen Square: they were found guilty and sentenced to hard labour in a prison camp.

Such is the regime that Gillard and her advisors have entrenched at the centre of their vision for Australia in the Asian Century. Opportunism and desperation could possibly excuse their inability or unwillingness to perceive the true nature of the Chinese Miracle. However, the deeper concern is that Gillard and other Labor Party apparatchiks are quite comfortable with snuggling up to the Chinese regime, and simply see nothing wrong with a political system based on the mis-use of state power, patronage, corruption and nepotism. After all, that is the path that took them to power in their own country.

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