US concerns grow over Chinese economy – FT.com
“Both China and the US are now at a critical turning point, where past approaches require a major change or they will face real economic dangers,” says Ken Lieberthal, a former White House official now at the Brookings Institution. “In the US it is our fiscal situation, in China it is the need for major economic restructuring.”
While China’s economy has recorded near double-digit growth for the past decade – transforming large swaths of the country and improving the lives of hundreds of millions – the emerging US view of President Hu Jintao and Premier Wen Jiabao is of leaders who have fumbled efforts to introduce economic and political reform.
Beijing has long talked about the need to shift China’s economic model from investment and exports more towards consumption and services. Politicians including Mr Wen have also talked about the need for a more open political system.
While there have always been some sceptics in the US about the Chinese leaders’ ability to push through such changes, that kind of pessimism about the prospects for reform in China has become more widespread over the past year.
During previous transitions, observers paid much attention to the biographies and personalities of the new Chinese leaders. This time, however, there is much more focus on whether the Chinese political system has become too clogged by special interests to tackle difficult problems.
“The issue is not whether the new leaders introduce reforms, it is whether they can implement those reforms,” says Stapleton Roy, a former ambassador to China.
Mr Roy says the success of a number of state-owned companies over the past decade has created a “Frankenstein’s monster” that the party cannot easily control.
“Their monopoly position has allowed them to acquire vast monetary assets that they can use to back their own agenda,” adds Mr Roy. “It sounds somewhat similar to our situation in the US.”