Thursday, June 22, 2006

Beijing Plans to Cut Local Leaders Down to Size

Foreigners investing in Chinese land deals and companies connected to powerful regional and local officials might want to reflect on a piece of vintage American advice: "Make hay while the sun shines."

Reason: China's central government is about to reassert itself and move in unexpected ways against out-of-control officials whose greed and corruption has helped fuel rising unrest and discontent in the depressed countryside. Reducing foreign investment in the rural areas--while dramatically boosting assistance from the central government--is reportedly a measure under consideration because it would deny local leaders access to overseas capital and thus help to cut them down to size.

Which is an important objective, because Beijing, in addition to being haunted by the specter of a massive rural uprising, increasingly fears the possible carving up of the country into economic ministates by a new class of moneyed officials.

This largely explains the regime's unusual candor regarding rural unrest and the related issue of massive environmental degradation, as shown by (a) this year's rubber-stamp National People's Congress meeting, which opened a rare window on internal debate over capitalist-style economic reforms, property rights, and the plight of the peasants, and (b) the steady flow of seemingly frank statements and articles by officials, think-tank researchers and Communist Party propagandists, complete with dire warnings and shocking statistics.

The ongoing discussion is apparently a setup for a policy shift and power play. In order to narrow the rural-urban wealth gap, the party leadership is said to be planning another revolution from above--but without the chaos and bloodshed of Mao's Cultural Revolution, which mobilized students to smash the party bureaucracy. This time around, the peasants will be used to pressure and rein in regional and local officials, who have grown too rich and too powerful in the eyes of the central government. Uprisings and protests by farmers and villagers will be tolerated--even encouraged to a degree--as long as the manifestations remain isolated and small enough to crush if they threaten to spin out of control. As a precaution, beefed-up security forces are being assigned to rural areas.

In short, managed peasant anger is perceived to be the key to creating a new "socialist countryside," without which, the regime reasons, the rural areas are certain to eventually explode; and refocusing resources on rural areas is seen as a way of strengthening the power of the central bureaucracy.

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