Liberal or conservative - China ponders its future

The two approaches were articulated by the former party secretaries of the regions – Bo Xilai from Chongqing and Wang Yang from Guangdong. While Wang is now a high-ranking member of the Central Committee of the CPC Central Committee, Bo was recently convicted for corruption and sentenced to prison, and some of China’s senior officials are now denying the Chongqing model even exists. 

Despite this huge divergence in fortunes, the debate is still very much alive, as it represents the real challenges China faces.

Put simply, Guangdong represents a liberal approach of open-market policies, private enterprise and greater individual freedom. Chongqing offers a more conservative path of social programmes such as low-cost housing, healthcare and pensions, along with greater oversight and control by the state. This has been described as a choice between “baking a bigger cake” through fostering market forces or “cutting the cake” in an equitable way.

Both are practical responses to China’s current period of transition. After more than three decades of rapid economic development, China is facing weakening demand for exports, growing social inequality and increasing demands for citizens’ rights. China needs to change and these models provide some options.

Although the Chongqing and Guangdong models might seem very different on the surface, some analysts maintain they are simply different strategies for dealing with different stages of development – something I agree with.

Guangdong is the most industrialised part of China. It built its prosperity as the factory of the world, using cheap local labour to assemble products for export. Today circumstances have changed. Labour is no longer cheap and it faces the twin challenges of higher costs and weakening global demand for its exports. 

The solution proposed by Wang is to rapidly rise up the value chain, develop higher skill levels and gain advanced technological expertise. To attract and retain high-calibre people, Guangdong needs to be sophisticated and globally-connected and this means responding to demands for greater freedom and civil rights.

Chongqing, in western China, is much less developed – some even compare it to Shanghai 20 years ago – and labour is still cheap. Its major economic need is to provide attractive incentives to migrant labour to staff its factories, and its development model addresses this. Incidentally, this did not originate from Bo but was first articulated by President Hu Jintao in 2007, who stressed the importance of balancing political, economic, social and cultural measures.

The pressing social issues of China today are not necessarily the same everywhere. While in Chongqing the needs are mainly for affordable housing, migrant rights and land management, in Guangdong, demands are growing for an open civil society and freedom of expression, including over the Internet.

The economic and social challenges facing China may be complex, but they are certainly not unique. At one level or another, they are being faced by most other countries in the world, including Thailand and our neighbours. 

We will watch with interest how China deals with them. This subject will certainly be discussed at the Third Plenary Session of the 18th CPC Central Committee next month. Let’s hope they will find a way to achieve both goals – bake a bigger cake and cut it fairly.