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> "China's Capitalist Transition": see
> for more
> information
> on this new East-West Center project.
>
>
> CAPITAL INVESTORS SWAY CHINA'S LEADERS
> Clamor for Political Reform Growing
>
> HONOLULU (Aug. 24) -- China's immense and rapid transition to a
> free-market economy is giving unprecedented influence to domestic and
> international capital investors, a China specialist at the East-West
> Center said.
>
> "This is changing the political equilibrium by making the Chinese
> party-state, which relies to a considerable extent on economic growth for
> its legitimacy, more dependent on the decisions of capital holders, both
> foreign and domestic," said Chris McNally, who just returned from six
> weeks in China.
>
> China's leaders have become more dependent on international trade and
> investment flows, creating incentives to maintain a peaceful international
> environment conducive to China's socio-economic development. "This in turn
> is pushing China to become akin to a status-quo power in the Asia
> Pacific," McNally said.
>
> McNally is a coordinator for the East-West Center project, "China's
> Capitalist Transition." A recent conference brought together 20
> distinguished scholars from China, Hong Kong, Singapore and the United
> States to look at where this monumental transition is leading China.
>
> China's rapid development has "set free new productive forces," giving the
> country a competitive advantage in the international capitalist system,
> McNally said. Sustaining this advantage will require changes in the
> country's internal political structure and external orientation.
>
> The East-West Center project aims to foster "a realistic and unclouded
> analysis of China's economic rise," McNally said, by analyzing the facets
> of China's transition to capitalism, which is far from complete. "There
> are many stumbling blocks in the way, a possible conflict with Taiwan
> being foremost."
>
> To show how strongly the country has burst onto the world economic stage
> over the past three years, growth in trade with China accounted for 62
> percent of overall trade growth in the United States in 2002. The number
> is even more staggering for Japan, where increased trade with China that
> year accounted for 11 times the overall trade growth.
>
> With thriving entrepreneurs, more property owners, and the massive inflow
> of global capital, pressure for political reform in China is increasing
> rapidly. "There is a strong undercurrent clamoring for institutional
> predictability that the present political system cannot deliver," McNally
> said. "People feel a degree of insecurity that stems from the very nature
> of the political system."
>
> This desired predictability, McNally said, can "only be reached by a
> greater degree of transparency and accountability. Part of the central
> leadership is willing to make changes but so far we have seen quite
> little. Clearly, the rule of law is not well established, allowing local
> leaders to circumvent rules and undermine private property rights."
>
> Chris McNally can be reached at (808) 944-7239 or
> mcnallyc@eastwestcenter.org
