World-China Forum

Beijing's Favorite Capitalists

Today, the Communist Party has proven itself, in all but one particular, a friend to the urbanites and professionals who now prosper in China's cities -- socioeconomically, the very kinds of people it gunned down in Tiananmen Square. All it asks of them in return is that they not actively seek democratic rights. For their part, the hundreds of millions of beneficiaries of China's new prosperity have kept up their end of that bargain. Knowing that they'd face the brute wrath of the party and state if they did, they've made an understandable decision.

In the countryside, where hundreds of millions of Chinese still reside, the benefits of the nation's economic miracle are far harder to detect. For many, the backbreaking drudgery of peasant life persists as it has for centuries. Some Sinologists believe that one reason the urban Chinese haven't demanded more rights is their fear that in a democratic China, they'd be outvoted by a peasantry that would demand a more equitable distribution of the nation's wealth.

According to the nostrums of Reagan Age America, the current Chinese system -- in equal measure capitalist and authoritarian -- cannot actually exist. Capitalism spread democracy, we were told ad nauseam by a steady stream of conservative hacks, free-trade apologists, government officials and American companies doing business in China. Given enough Starbuckses and McDonald's, provided with sufficient consumer choice, China would surely become a democracy.

And yet, it hasn't. And this week, Treasury Secretary Timothy Geithner has traveled there to assure its government that America won't permit China's massive investment in our government's notes to diminish in value, even if that means we have to cut back on needed public programs. In explaining China's rise and America's decline, historians may well note that capitalism -- American capitalism, anyway -- far from spreading democracy, actually has played a key role in transforming China into an authoritarian superpower. (Harold Meyerson, Washington Post)

'Stress tests' for banks the latest sign of US crony capitalism

For 20 years, Americans have denounced the "crony capitalism" of Third World countries, especially in Asia. But, just as those regions have been improving their public and corporate governance, crony capitalism is alive and well in the United States, a country that the world long considered the gold standard of a level playing field in business. The recently completed "stress tests" of US banks are but the latest indication that crony capitalists have now captured Washington, DC.

The tests were supposed to reveal the true conditions of banks saddled with unaudited toxic assets in housing loans and financial derivatives. The reasoning behind the tests seemed unimpeachable. But the government had allowed bankers to "negotiate" the results, like a student taking a final examination and then negotiating the grade. It is no surprise that stock markets liked the results of the stress tests that US Treasury Secretary Timothy Geithner administered to America's big banks, for the outcome had been leaked weeks before. Indeed, most professional investors trashed the tests as dishonest even as their holdings benefited from a rising market. Even The Wall Street Journal, usually financial markets' loudest cheerleader, disparaged the tests' integrity. (Sin-ming Shaw, Shanghai Daily)