From The Financial Times, via A Glimpse of the World blog:
This is my last Asia column before I have to retire shortly from the Financial Times, after 39 years. It is an irresistible opportunity to draw together some lessons and impressions gathered while covering the region and to explode the odd myth. I shall also hazard a few predictions.
First, not all east Asia is an economic miracle: today, it is overwhelmingly a China story. China has generated more than half the growth in developing Asia, including India, this century. A surprisingly large number of other countries have performed disappointingly. Japan, the region’s largest economy, is still re- emerging from its lost decade. South Korea, the third largest, is floundering. Taiwan and Thailand are performing well below their potential.
Second, China has no grand master plan. Its one constant is the Communist party’s ruthless dedication to keeping its monopoly on power. In practice, the leadership’s claim to political legitimacy hinges on its ability to keep living standards rising for as many people as possible. The pursuit of that goal is essentially pragmatic and based on trial and error. That is a prudent choice, the political equivalent of portfolio theory, when, as is so often the case in China, there are so many unknowns, even to those in power. The biggest of all is where economics will ultimately drive the country politically.
Two other factors make governing China a tightrope act. One is the centre’s never-ending struggle to control headstrong local officials, who have taken all too literally the injunction to enrich their regions – and themselves. The other is the growing influence of vested interests that have asserted themselves more strongly under a less radically reforming leadership. Lobby politics is now at least as important in shaping policy in Beijing as in Washington, which is why it is often hard to read. [Full Text]
