<DIV> Beijing can't clean up the environment,
rein in stock speculation, or police its companies. Why the
mainland's problems could keep it from becoming the next
superpower<BR> <BR> when the bureaucratic
machinery of China rolls into action, it is a sight to behold. A
mayor announces a plan to reclaim hundreds of acres from the sea
and build a massive industrial complex. A few years later, busy
factories and roads stretch as far as the eye can see, families are
living in thousands of new apartments, and 10,000 workers have
launched Phase Two. <BR> <BR> This is the side of
China that awes the outside world. The mainland's extraordinary
ability to mobilize people and capital to accomplish daunting feats
in record time is the reason it has averaged annual growth of 9.5%
for three decades. It is why China is an export juggernaut in
everything from T-shirts to TVs, has the world's fastest-growing
consumer market, and has amassed enough wealth to snap up South
American mineral reserves, IBM's (IBM) PC division, and a big stake
in private-equity firm Blackstone Group. Will Beijing complete all
of the stadiums, expressways, and hotels in time for the 2008
Summer Olympics? Count on it. It's also a decent bet China will
achieve its goal of winning the most gold medals.
<BR> <BR> Why, then, is it so hard for this same
government to crack down on exporters of dangerously tainted
seafood, toothpaste, and medicine, despite years of warnings by
local and foreign experts? The relentless headlines about unsafe
products from China reveal a scary truth: Probe even a little into
the Chinese economic miracle and glaring administrative failures
abound. Product safety is just one aspect of Beijing's inability to
enforce needed regulation in everything from manufacturing and the
environment to copyrights and the capital markets.
<BR> <BR> The same Communist Party apparatus so
proficient at censoring the Internet can't keep peddlers in the
heart of Beijing from selling knockoff Callaway golf clubs and fake
iPods, despite solemn promises to Washington since the early 1990s
about enforcing intellectual property rights. Shanghai's stock
exchange may be one of the world's hottest and may boast a
state-of-the-art paperless trading system. But it was a casino when
it opened in 1990 with eight listings, and after years of flaccid
regulation it's an even bigger casino with 1,118. Beijing proclaims
all sorts of green initiatives, yet heavily polluting new factories
and coal power plants keep going up. The party has talked for
decades about building a social safety net, yet as the working
population ages the government isn't investing nearly enough to
head off looming crises in health care, education, and pensions.
China spends more than Japan on research and development, according
to the Organization for Economic Cooperation & Development
(OECD), but its record of innovation is underwhelming.
<BR> <BR> "A CRITICAL POINT"<BR> China
observers dismiss these flaws as the growing pains of a nation
making a breathtakingly fast transition from a command economy to a
free market. But now it's becoming clearer that these and other
structural problems aren't being addressed. The same policies that
have been so successful at boosting the gross domestic product by
developing new export industries and public works projects, it
turns out, undermine initiatives that might move China's economy to
a higher level. In its pursuit of growth at all costs, China
skimped on investments needed to provide basic affordable health
care and the regulatory machinery that can enforce environmental,
safety, and corporate governance regulations nationwide. Solving
these shortcomings will require a massive shift of the resources
that are now being plowed into capital projects. While Beijing
would like to cool the economy, however, it is wary of doing
anything that would slow the high growth needed to generate jobs
for the millions of youth pouring into the workforce each year,
especially with a pivotal leadership conference scheduled this
fall. "China's economic development model was based on the simple
concept of expansion of production," says economist Chen Xiushan of
People's University in Beijing. "This model has reached a critical
point." <BR> <BR> A more intractable problem is
China's power structure itself. Although Beijing holds a monopoly
on politics, local Communist Party officials enjoy wide latitude
over social and economic affairs. They also have huge professional
and financial incentives to spur GDP growth, which they often do by
ignoring regulations or lavishing companies with perks. As a
result, China has built a bureaucratic machine that at times seems
almost impervious to reform. Even if Beijing has the best
intentions of fixing problems such as undrinkable water and
unbreathable air, it is often thwarted by hundreds of thousands of
party officials with vested interests in the current system.
<BR> <BR> Beijing knows it must change course.
China's $1.2 trillion in foreign reserves—the most ever amassed by
any country—and soaring trade surplus may seem like signs of
strength, but they're actually evidence of an overreliance on
exports, weak domestic consumption, and a primitive financial
system. And a dearth of social services makes a widening income gap
between urban and rural areas politically explosive. Conjuring
ancient Confucianism, President Hu Jintao harps repeatedly on the
need to attain a "harmonious society," implying that China today is
anything but. In March, Premier Wen Jiabao labeled the economy
"unstable, unbalanced, uncoordinated, and unsustainable."
<BR> <BR> DYSFUNCTIONAL
ADMINISTRATION<BR> To their credit, Chinese officials have
unveiled a blitz of corrective measures. Regulators this year shut
more than 180 illegal food producers. A directive ordering
government agencies to use legitimate software has helped cut the
share of pirated programs to 82% from 92% in 2001. Beijing is
launching new health-care initiatives, trying to tame the runaway
stock market, and passing stringent environmental rules. And in
2006 alone, nearly 30,000 officials were prosecuted for corruption.
<BR> <BR> If this reformist agenda fails, watch
out. The working assumption from Washington to Tokyo is that China
is on a trajectory to become a modern market economy and a
responsible global citizen. But if its problems persist, the world
will have to keep living with a giant trade partner that can't
guarantee safe products, control piracy, or curb pollution. China
could keep growing rapidly for years, but a scenario of
dysfunctional administration calls into question whether it will
really become an economic superpower with world-beating
corporations that challenge the West in innovation—a Japan Inc. on
steroids. <BR> <BR> China doesn't lack the
finances to fix its shortcomings, and it has the legal structure
for regulating the environment, health care, and worker safety.
What Beijing does lack is the will to overhaul a political
structure that gives party officials down to even the smallest
villages huge influence over many facets of economic life. "The
laws in China compare with some of the best in the world," says
activist Liu Kaiming, founder of the Migrant Workers Community
College in Shenzhen. "But it is not able to enforce the laws fully
because local governments are focused on pleasing the big bosses in
companies." What's more, few mainland enterprises are proving they
can move beyond low-cost commodity goods and succeed on a global
stage with innovative products, a function of both their limited
managerial vision and flawed high-tech policies from Beijing.
<BR> <BR> The roots of China's ersatz capitalism
go back to devil's bargains made in the 1980s and '90s to
accelerate China's takeoff. Late paramount leader Deng Xiaoping
declared it was O.K. to "get rich," a green light for legions of
cadres to discard their Mao suits and rush into business, often by
setting themselves up as middlemen or grabbing stakes in communal
assets. Beijing also granted great latitude to provincial and local
officials to manage development and social services such as
education and health care. The two requirements: Remain loyal to
the party and meet high economic-growth targets.
<BR> <BR> The system spans China's 657
municipalities, 2,862 counties, and 41,636 townships. Because
roughly 70% of a typical official's annual performance assessment
is based on GDP growth, says University of Michigan Sinologist
Kenneth G. Lieberthal, the cadres shower local businesses with
perks. These can include access to cheap credit, land, licenses,
protection from competitors, and exemptions from regulations. The
opportunities for graft are staggering. "What is unsaid, but
understood, is that if your locality becomes wealthy, so do you,"
Lieberthal says. "Instead of the Chinese Communist Party, it ought
to be called the Chinese Bureaucratic Capitalist Party."
<BR> <BR> The fuzzy nature of corporate ownership
in China heightens the conflicts of interest. Officially, state
enterprises account for just one-third of the economy, compared
with 80% two decades ago, but that statistic is misleading because
it includes only companies directly controlled by Beijing-based
ministries. In truth, many mainland companies have financial ties
to county, city, and township governments. In some respects, that
policy of giving members of China's immense bureaucracy a personal
stake in growth has worked brilliantly. Big-ticket industrial
projects get finished in record time, and infrastructure is
smoothly put into place. Daniel H. Rosen of the Institute for
International Economics estimates that while it takes four years to
build an aluminum smelter in the West, similar projects can take
less than a year in China. <BR> <BR> ENFORCEMENT
STRUGGLES<BR> These Red capitalists, though, have evolved
into a powerful and wealthy elite with an enormous stake in the
status quo. Truly private capital markets would strip officials of
their power to reward cronies with bank loans and stock market
listings. Copyright enforcement might do wonders for China's
software industry, but it's blocked at the local level by cadres
more interested in safeguarding the jobs and profits that flow from
knock-offs. Although Beijing gives provinces funds for schools and
health clinics, much of that money winds up elsewhere. The National
Audit Office has reported that 10% of audited central government
funds—including money allocated for pensions, health care, and
unemployment—are diverted into illegal loans to companies,
construction of posh government buildings, and other questionable
investments. "All the things we see as competitive advantages for
China now are translating into disadvantages," says Rosen.
<BR> <BR> Beijing is doing what it can to rein in
rogue players. On July 10, Zheng Xiaoyu, the former commissioner of
the State Food & Drug Administration (SFDA), was executed
for accepting bribes of about $850,000 from eight drug companies
seeking quick product approval. Worse, on his watch the agency gave
the green light to many flawed drugs, including an antibiotic that
killed more than 10 people. The Shanghai party secretary, Chen
Liangyu, was fired last year after being accused of plowing $400
million in pension funds into real-estate projects and toll roads.
And last September, authorities discovered that two senior
executives at a state-owned insurer had deposited $4 million-worth
of premiums in the bank accounts of friends and family.
<BR> <BR> </DIV>
插入表情