If we compare electoral competitive democracy with deliberative democracy, the former undermines one-party domination, so the [Chinese Communist] Party is afraid of it. But deliberative democracy lets people add their voices to concrete policies, which makes government more responsible and accountable, without challenging the CCP. That is one of the fundamental reasons the 18th Party Congress emphasized that deliberative democracy is important for China. It involves people in the decision making process but does not change the power structure.
The global debate has focused on the rising inequality across individuals. But a different form of inequality has emerged in China -- the inequality between the household on the one hand, and the corporate sector and government on the other. For decades, China has been one of the fastest growing countries in the world, lifting hundreds of millions of people out of poverty. At a time when industrialized economies have seen greater inequality within countries, China's accumulation of wealth has contributed to a significant decline in global inequality. But exactly how much of the benefits of that growth has accrued to its rightful owners -- the Chinese households, the bedrock of society? Thus, the most pressing challenge for China's economic model is to release greater resources available for households.
This week, U.S. President Barack Obama is visiting Asia to meet U.S. allies and assure them of America's backing as China rises to become the dominant power in the region. In light of the West's weak response to Putin's takeover of the Crimea, some Asian allies are concerned about whether the U.S. will stand steady in the event a conflict breaks out between one of its allies and China.
A bigger but somewhat slower growing China of the future will contribute about as much to global demand as the smaller but faster growing China of before. This is arithmetic: An economy that is twice as big can grow by half as much and contribute the same to global demand. By the way, China today is more than twice as big as it was a decade ago. So, the good news is, even with slower growth, China will continue to be an engine of global output. Indeed, an even bigger engine than before.
China is locked on a course that will transform it from surplus saving to saving absorption -- no longer inclined to lend its capital to the United States but increasingly focused on putting its savings to work in building a social safety net and funding the wherewithal of its own populace. Long the world's ultimate producer, China is now determined to emerge as consumer, too.
If you have competent and well-trained bureaucrats or well-educated technical professionals who are dedicated to public interest, this kind of government is better than democratic government in the short term. But there are no institutional rules limiting the power of a bad emperor. The last bad emperor commonly acknowledged as such was Mao Zedong. Such an individual can do far more damage to the society than a constitutionally and democratically constrained democratic leader.
The world has kept close watch on the ongoing downward adjustment of China's shadow banking system -- credit intermediation involving entities and activities outside the regular banking system -- with the near-default of a large trust product during the last few weeks being part of the worrisome news coming from the country.
About two years ago, I visited Hong Kong for the very first time and could not believe my eyes. Traveling from the dated, fraying JFK airport in NYC to the shining, efficient airport in Hong Kong, my world view was immediately changed: It was the U.S. that was a third-world country, and Asia was vivid.