Twofish's Blog

November 8, 2006

Why the Communist Party of China is not Leninist

Filed under: china, politics — twofish @ 6:01 pm

Comment I made on

http://www.walterhutchens.net/blog/2006/11/06/listed-chinese-banks-good-investments/

I don’t think that direct state intervention is that much of a concern. The primary motivation of the Communist Party of China is to stay in power. To stay in power requires a strong economy. No one that I know of has come up with an argument that direct state intervention in the banks will help the economy, and all of the recent historical experience in China suggests otherwise.

Also, I strongly dispute the characterization of the Communist Party as “Leninist.” It certainly is authoritarian, and not liberal democratic. At the same time, there are multiple centers of bureaucratic and political power within the Party. The fact that you have multiple interest groups within the Party and within society as a whole I think greatly reduces the likelihood of direct state intervention in the banks.

In any case, Western investors have a lot of insurance. Huijin couldn’t impose its will on the state banks without the Western banks knowing about it since they have seats on the board. If Huijin did that, the Western banks would pull out, and that would cause a really painful crisis of confidence in the system. This set up is intentional.

One really has to be careful about labelling. What happens a lot is that because the something has characteristic X, you label it Y, which implies that it has characteristic Z, which may or may not be the case.

For example, the Communist Party of China like the Communist Party of the Soviet Union both are one party authoritarian states, but if you label both as Leninist, this can imply that the CCP has characteristics of the CPSU which it doesn’t. Similarly, the management of Netcom is interested in having outside directors with real power, but if you label both as “American style management” you miss the key differences.

Of course if your point is that the CCP and CPSU are “essentially” the same, you can consistently do this, but you probably should argue your assumptions rather than just assume them in the classification.

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