False Economy - Alan Beattie [141]
Putin did at least bring order, if not law, an improvement of sorts over the sometimes chaotic rule of his predecessors, Boris Yeltsin and Mikhail Gorbachev. Accordingly, and perhaps unfortunately for their future freedom and prosperity, Russians seemed to raise few objections to the centralization of power, though the absence of free media and fair elections has made it hard to tell. They don't miss real democracy, many would argue, because they have never had it. Corruption is rife, but that is just the way things are done. Elections are far from clean, but Putin and his supporters would probably get reelected even if they were. Yet even optimists are doubtful that Russia's nascent market economy can coexist and flourish with an authoritarian government intent on taking control of yet more of the levers of economic power.
That, though, is precisely the trick that China has so far managed to pull off. Its one-party state has not proved inimical to rapid economic development. Compared with Russia's, China's economic growth has been broadly based across the economy (though with the service sector still underdeveloped—a point we will look at later) and has involved massive gains in productivity. How has it managed to do it? The histories of China and Russia before communism reveal some similarities. Both had been aware of the influences of Western economies and Western ideas, and had turned away from them. So when they both started edging toward modern market economics, what were the differences?
Part of it might be the way they went about reform. In retrospect, Russia may well have done it the wrong way round. The collapse of the Soviet Union began in the 1980s, when Mikhail Gorbachev, then general secretary of the Communist Party, started with the political opening-up known as glasnost. Only later did he go on to economic reform, pere-stroika. In the meantime, the Russian state was collapsing. Since 1917, Russia's bureaucracy had been in a mutual embrace with the Communist Party. Civil servants at almost all levels took instructions from political bosses. With the party imploding because of political change, both institutions crumbled at once, and the civil service could not be transformed into a modern, workable bureaucracy. In other words, the Soviet Union started off by damaging the institutions it already had in place, diminishing the likelihood that they could be rapidly transformed into better ones.
By contrast, China started with economic reform, and has gone much further down that road than it has with political liberalization. The Chinese Communist Party does not look like it might be threatened anytime soon. So far, Beijing has managed to institute reform within the system, without destroying the system itself. It has retained the one-party political structure and restricted public opinion and free expression. The events of Tiananmen Square in 1989 showed the strict limits on political pluralism. Since then there has been no serious organized threat to the integrity of the one-party state.
Meanwhile, the organization of the Chinese state has enabled it to coexist with a limited form of market economy. For one thing, compared with Russia it has much more authority devolved down to lower levels. Local party bosses and bureaucrats compete with one another to increase economic growth in their regions, and have had considerable leeway to do so. The huge burst of foreign direct investment that has flooded into China since the 1990s has been lured in by local authorities offering tax breaks, infrastructure, power, and water supply. China's rapid growth was jump-started by several regional "special economic zones" in which China's restrictive business and labor laws were relaxed. A few republics attempted something similar in Russia, but Putin's government reined them in.
The Chinese Communist Party and the state bureaucracy have an intertwined relationship similar