[Balding's World] The tradeoff Xi and Chinese leadership continue to make is simple: they believe that policy problems such as economics or the environment are manageable and present no existential threat. Loosening government control presents a situation, they believe of rapidly becoming unmanageable and presenting a major existential threat. If we understand the tradeoff within the framework of risk trading, Xi and Chinese leadership believe the loosening government control presents a much riskier situation. Put another way, they are comparing common daily risks that will create problems to the the less common high relative loss risks. For instance, a plane takes off in bad weather knowing it will bounce a little is a common low risk event. The existential risk is the event of a plane crash because the pilot falls asleep that requires strict controls and constant vigilance.
The implication for all this thinking is actually pretty clear: expect events to continually get worse and the Xi regime continues to tighten controls, state involvement, and aggressive foreign policy. Too many believe that Xi and many Chinese leaders understand the necessity of private enterprise, there is more concern about relaxing controls believing the economy to be more a system of general input and output tables whereby growth can be engineered. This leaves growth and economics up to a managerial and statistician crowd within government bureaucracies. Put another way, Xi believes he can engineer growth but needs to manages political purity.
There is no going back to the halcyon days of Chinese openness and private enterprise. This is the new normal. |