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Without human rights China's boom will turn to bust

This article is more than 14 years old
China must let civil society flourish, which means more political freedom

As a new Chinese year dawns, Beijing is feeling empowered on many fronts. Its seat is assured at the top table of every global summit, whether on financial matters, security or climate change.

At one level, the global balance of economic power has shifted decisively eastward. Most of the west spent the money it earned, borrowed more and spent that too. It is broke, while China's pockets are bulging.

The Chinese economy expanded by around 8% in 2009. The country has unrivalled status as exporter-in-chief to the rich world's consumers. Its own vast population is eyed thirstily by the industrialised world as a potential market, but the Communist Party has control over the terms of access.

That changing relationship has been accompanied by more Chinese assertiveness, both in foreign policy and domestic affairs. Dissent is being stifled with more vigour and less heed to outside criticism.

But it would be a mistake to see in that trend only Chinese strength. States also become more coercive when they feel insecure.

China's phenomenal economic expansion has many characteristics of a bubble. Most enterprises run on state loans, awarded on political, not commercial criteria. Debts accumulated in this way amount to nearly three times China's GDP – trillions of dollars. The exact amount is impossible to know because truly independent auditing would be tantamount to political sedition.

But as China integrates more with the global economy it will struggle to sustain the pretence that its domestic economy is based on real transactions, when so much of it is paper fiction. There will have to be an adjustment. It could be just painful; it could be calamitous.

That need for economic reform is inseparable from the need for greater democracy. The transition to a more functional domestic economy requires clear legal standards of property and consumer rights. That amounts to the same kind of reforms that democracy activists demand. Long-term economic stability and human rights both rely on trusted, independent legal institutions.

China urgently needs to discern its good businesses from its rotten ones. It will struggle to do that unless it has consumer organisations, sound commercial banks, free trade unions, independent accountants.

It must, in other words, let civil society flourish. That means more political freedom. Beijing is clearly not interested in taking lessons on political morality from the west. It might be more open to arguments based on hard commerce.

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