Xi Consolidates: China Stagnates

If self determination is the criteria for growth, China and other praetorian regimes throughout the world are going to have a tough time managing open political regimes with econometrics resembling autocracy.  The capital flows of globalization threatens these kind of regimes because closed political economies consume the very thing they cannot openly procure:  renewed social capital.  If the American’s can get tax, regulatory reform we’ll be favorably positioned to engage the contested commons again.  As for the Chinese, Saudi’s and other praetorian regimes, they’ll be exhausted in the management of a janus like embrace; the financial, monetary components of free moving capital and domestic constraints emboldened by unanchored credit.  By any measure, the west remains precariously ahead.

The formulaic style of slogans is purely totalitarian.  Its a social rubric used to identify miscreants and dissidents.  Orwellian phraseology in the west is strictly a cognitive shortcut, a fast pace arrangement of positions accommodating the commands of limited cognitive bandwidth.  The twittering of consciousness has consequences.  Eastern modes are fiercely concentric towards a commanding center; western aesthetics abandoned commanding centers with the arrival of digitization, ours remains eccentric in mood, tone and effect.  Even still, what matters is political culture.  Witness the odd role reversal Xi has struck.  Having his ideals enshrined into the communist constitution (a famously vacuous term) reveals just have far China has moved from the days of Deng Xiaoping.  Having survived Mao’s death grip, Deng emerged in the early 1980’s with “socialism with Chinese characteristics.”  Xi’s contribution is utopian, “a new era.”

The new historic juncture would entail acknowledging a new social, political relation between the Han masters and everyone else on the mainland.  It would mean acknowledging the superior ethical sources of western culture.  Instead, what Xi reveals is vacuous prescription without any corresponding interior relation to the governed masses.  The French utopians used the term social contract; mercantile British dependencies went farther in acknowledging an ethical, moral basis to sovereignty in compact.  The difference between Pericles and Lincoln cannot be bridged by mere force; how else would the autonomy of reason suffice in acknowledging a moral relation distinct in the created order!  Xi has acknowledged no such moral ground.

The founder of a new era is left commanding without ever acknowledging antecedent worth.  To do so, he’d need to repudiate a world that was defeated in its engagement with the west.

Commanding diktats absent a feedback loop is China’s new normal.

While the Chinese Communist party utterly dominates its domestic political economy, the reality is far messier than often acknowledged.  The party struggles to monitor, to reform state owned firms and their political relation to a commanding center.  Witness China’s defaults on peer-to-peer lenders; its massive, unsustainable.  Chinese geography locked the nation into an inward brace whose only relief was movement toward its southern littoral.  Without having active price signals originating from functioning markets, Beijing runs blind.  As of this writing, Chinese state owned enterprises are increasing in their peer-to-peer lending and default ratios.

That’s because China isn’t a market based political economy.

The trick isn’t just to wean Beijing toward a taxable consumption based model.  Its about getting Chinese Communists to acknowledge a social, political, moral relation that remains anathema to doctrinaire authoritarians.

The fight of the century remains between Keynes & Hayek.  Beijing is ahead of the Islamists by about two centuries.  Getting the boys in Beijing used to working within the confines of a relation that cannot be commanded is Xi’s challenge.

By any measure, he’s failing.