Teaching Comparative Government and Politics

Friday, August 28, 2015

It's not just the economy…

The American stock market is taking a bath while the economy is growing. What if the economy wasn't growing and the boss was in jail?

Fading Economy and Graft Crackdown Rattle China’s Leaders
[U]ncertainty… permeates the Communist elite as they contend with two unnerving developments beyond their control: an economic slowdown that appears to be worse than officials had anticipated… and a campaign against official corruption that has continued longer and reached higher than most had expected.

Driving decisions on both issues is Mr. Xi, who took the party’s helm nearly three years ago and has pursued an ambitious agenda fraught with political risk. Now, weeks before a summit meeting in Washington with President Obama, those risks appear to be growing, and there are signs that Mr. Xi and his strong-willed leadership style face increasingly bold resistance inside the party that could limit his ability to pursue his goals.

Mr. Xi has positioned himself as the chief architect of economic policy… [and] is making enemies with an anticorruption drive that has taken down some of the most powerful men in the country and sidelined more than a hundred thousand lower-ranking officials…

Mr. Xi has pledged sweeping market-oriented reforms to overhaul the Chinese economy for long-term growth, including plans to weaken monopolies enjoyed by state enterprises, to wean the economy from its dependence on inefficient state-directed investment, and to liberalize the nation’s financial markets, with the aim of making the country’s currency, the renminbi, a strong competitor to the dollar on world markets…

“Everyone understands that the economy is the biggest pillar of the Chinese government’s legitimacy to govern and win over popular sentiment,” said Chen Jieren, a well-known Beijing-based commentator on politics. “If the economy falters, the political power of the Chinese Communist Party will be confronted with more real challenges, social stability in China will be endangered tremendously, and Xi Jinping’s administration will suffer even more criticism.”

Some have asked whether the party leadership and its technocrat advisers are up to the task of managing a slowing economy after decades of experience with one that has only soared…

The policy adviser to senior party and government leaders said fears that the slowing economy could lead to social unrest prompted the Politburo in a July 30 meeting to approve a raft of measures to bolster growth, including the decision to devalue the currency. Other steps will follow, the person said.

Mr. Xi’s campaign against corruption enjoys broad support in a nation where the widening gap between rich and poor is attributed to the ability of a small minority to prosper by abusing government positions or using political connections. As the economy falters, though, the risks for Mr. Xi multiply, said one retired party think tank official.

“The main thing is the economy. As long as the economy continues to decline, people will have more and more objections, and there will be more and more pressure on the leadership,” said the person, who spoke on the condition of anonymity to freely discuss internal party politics. “And right now, the fact is that the economy is in decline.”

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