Chinese Vice Premier Liu He impressed at the recent meeting of the World Economic Forum in Davos when he expressed support for a more open China and the rule of law.
However, Western enthusiasm should not be tampered with. China’s leaders have always advocated a “socialist market economy”, not a free market economy based on a true rule of law that protects basic human rights.
In his speech, the deputy prime minister, who will retire in March, argued that China needs to “uphold the right principles” and adherence to the “rule of law”. But the principles he has in mind are not those of a liberal social order where people have the freedom to choose and express themselves.
President Xi Jinping has consolidated his power since coming to power in 2012. He has silenced any dissent and expelled anyone who might threaten his grip on power from the Chinese Communist Party. As the main leader of China, he wants to build socialist Market economy, where the state and the Chinese Communist Party rule by the force of law.
Liu He only promotes the party line when he calls for allowing ” [socialist] The market plays a decisive role” in allocating resources, while allowing “the government to play a better role.”
He simply echoes what President Xi says he told the Wall Street Journal in 2015“One of the important goals of China’s current economic reform is to enable the market to play a decisive role in allocating resources and make the government play its role better,” Xi said. “This means that we need to make good use of both the invisible hand and the visible hand.”
The problem is that, under Xi, the visible hand of the state has suppressed the invisible hand of the market. Private entrepreneurs and others who dare question the CCP’s monopoly on power are at great risk.
Although the vice prime minister told his audience that China would “never resort to a planned economy,” the truth is that the socialist market economy is still a planned economy. However, there is no doubt that China has made important strides since 1978 when Deng Xiaoping began to dismantle Mao Zedong’s centrally planned economy. The private sector was allowed to develop and was the main engine enabling hundreds of millions of Chinese to lift themselves out of poverty.
Xi Jinping’s policies have suppressed the spontaneous system of the free market Criticism of the Chinese Communist Party’s policy is prohibited. It is therefore notable that Liu He clearly emphasized the importance of entrepreneurs in the pursuit of “shared prosperity”—that is, the creation of wealth.
As he stated at Davos, “Entrepreneurship is a major factor in creating wealth in society. . . . If wealth does not grow, shared prosperity will become a river without a source or a tree without roots.”
Moreover, echoing Deng Xiaoping, he said: “As China grows, all Chinese people will be better off, but that does not mean that their incomes and level of prosperity should be the same.”
The deputy prime minister could also refer to the words of Premier Li Keqiang, who argued that a good government job is to “remove barriers and clear the way for people to benefit from their own entrepreneurship,” so that they can “realize the full potential in their lives.”
What Liu He did not—and could not—say is that although the Chinese constitution lists a number of human rights, those “rights” are subject to the arbitrary power of the state under the CCP. There is no independent judiciary to uphold the right to life, liberty, and property. Furthermore it, Article 51 Of the Constitution makes it clear that “In exercising their freedoms and rights, the citizens of the People’s Republic of China [PRC] Do not undermine the interests of the state.
These “interests” all include; The main interest of the Chinese Communist Party is to protect its monopoly on power. Thus, until this iron fist diminishes, citizens’ rights and freedoms will remain suppressed. As Wu Jinglian, one of China’s staunchest advocates of the move toward a liberal market system, warned: “Only by matching the rule of law with a market economy can we achieve complete success.”
When considering China’s future, the advice given by Milton Friedman on his first visit to China in 1980 is still very relevant. He has advocated the widespread adoption of “free private markets”, with an emphasis on “free” and “private”. Market socialism is no close substitute for real markets based on secure property rights and the free exchange of goods and ideas.
James A. Dorn is an emeritus senior fellow at the Cato Institute.