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The model has again become a subject of media speculation because many people have been puzzled, unable to find a satisfactory and convincing explanation for China��s economic growth over the past three years. I support the view that the pre-June Fourth ��China model�� should not be confused with the one that followed it. The earlier model was a bold attempt at self-renovation by the totalitarian leaders, responding to public opinion in the specific political environment created by the chaos of the Cultural Revolution and the death of Mao. Facilitated by breakthroughs that the victims of change themselves created, and making use of economic globalisation, the later China model was a product of the struggle of the power group, shocked by June Fourth upheaval and the disintegration of the Soviet Bloc, to preserve the totalitarian system. While it was one and the same totalitarian state, the spiritual and moral state of those in power in the two stages were very different, and so therefore was the nature and consequences of economic growth. The puzzle with the ��China model�� is about interpreting China's economic growth following Deng Xiaoping��s 1992 southern tour. Economic growth in the 1980s was clearly of a ��liberating�� kind, i.e. setting free civil and local autonomy, while the rapid growth of the 90s became more and more predatory. How then was this predatory economic growth achieved? I would argue that by taking the Ponzi scheme as the model of the game, we can gain a deeper understanding of China's economic growth over the past two decades. A Ponzi scheme has two basic elements: firstly the investment recruiters�� knowledge that this is an immoral and hence unsustainable game; secondly, their ability to make a sufficient number of investors believe in the likelihood of large short-term profits. In the absence of either factor, no Ponzi scheme can be set up. Such schemes take no responsibility for their investors, but they don��t exclude allowing some of them, especially those who invest first, to profit temporarily��otherwise the game couldn��t go forward. But whether or not investors profit from the game, the recruiters themselves are without any faith in its sustainability or moral basis. This ensures that it will end badly. The ��China model�� of the last two decades is a special Ponzi scheme, because it is managed, not by an individual, but by a totalitarian state. Classically, Ponzi schemes mainly use late�Ccomers�� investments to pay dividends to those who came first; it can carry on so long as the rate of growth is fast enough. We see that a totalitarian state-sponsored Ponzi scheme makes overdrafts on its citizens�� welfare and future to attract foreign investment. Attracting foreign investment is not in itself a bad thing, but the Chinese authorities on the one hand struck the banner of socialism, while on the other shifted clearly to the right giving foreign investment access to huge profits with labour, social and environmental policies that disregarded the long-term, and paid no heed to the consequences. People such as Gordon Chang, who predicted China��s collapse, saw through the Ponzi scheme nature of the ��China model��, but a Ponzi game maintained with all the power of a large country of over a billion people has awesome powers of mystification. China��s hard-working people did after all create a real economic miracle in the process. And as Xu Zhiyuan says, mixing up the regime��s opportunism and manifold mismanagement with the economic success of China��s people and call it the ��China model��, in fact contributed to the deceptiveness of the scheme. [1] China is now in a stage in which local governments and even the underworld imitate the Central Government in developing various kinds of Ponzi scheme, to an extent that the centre is now unable to control. These scams continue to cause disasters large and small. The recent drought in the Southwest, and a string of mining accidents are without exception closely related to age-old Government abuses and grassroots disorders which the Ponzi schemes covered up. The drought in the southwest is on the surface purely a natural disaster, but it��s already been pointed out that human factors lie behind this disaster, whose root cause is in fact the CCP��s erroneous water policies as well as the eagerness for quick success in forestry development in recent years. As for the mining tragedies, they fully reveal the chaos that China��s grassroots levels have descended into, and which creates tragedies every day.[2] The Ponzi scheme forming the greatest threat to China's economy and society is the soaring price of housing caused by local ��land finance.�� Recently, the Xinhua News Agency published an unusual group of five articles, denouncing the high prices manipulated by local corruption, a sign that the central authorities have noted the problem. Once the real estate Ponzi game crashes, it is likely to lead to more such collapses, which will not only bring disaster, but as well give the ��China model�� a very embarrassing meaning. [3] * Liang Jing, ����Zhongguo moshi�� yu Pangshi pianju�� [The ��China model�� and Ponzi schemes], Xin shiji xinwen wang, 10 December 2009 [�����������й�ģʽ��������ƭ�֡�����������������2009��12�� 10�� ( ** [1] Xu Zhiyuan, ��Cong Zhongguo tese kan Zhongguo Moshi (er)�� [The China Model in terms of Chinese characteristics (2)], Financial Times (Chinese ed.), 11 February 2010 [��֪Զ: �����й���ɫ���й�ģʽ����������FT ��������2010��2�� 11�� ( [2] Jiang Xun, ��Jiang xun: qian shuili buzhang Qian Zhengying jiemi Zhongguo hanzai huogen�� [Jiang Xun: former Minister for Water Resources reveals roots of China's drought curse], Gongshi wang, 4 April 2010 [��Ѹ�� ����Ѹ��ǰˮ������Ǯ��Ӣ�����й����ֻ������� ��ʶ����2010��4�� 4��( [3] ��Xinhua she lianfa wu wen pi fangdichan shichang, tongsu fubai niang gao fangjia�� [Xinhua fires off five articles criticising the property market, denounces corruption causing high housing prices], Yangzi wanbao, 9 April 2010 [: ���»����������������ز��г� ʹ�ⸯ����߷��ۡ��� ����������2010��4�� 9�� ( © Copyright 2010 by Boxun News Top of Page |
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