Caijing Magazine Warns New Leaders of Critical Challenges

Created: 2012-09-07 10:00 EST

Category: Business
China's Caijing magazine has long been known as one of China's few hard-hitting journalistic organizations. Although it is subject to official censorship on any issue deemed politically sensitive, it nonetheless maintains editorial standards of, as far as possible, giving accurate and unbiased reporting.
That's why its highly pessimistic analyses of China's economic and social situation, and the challenges facing the new generation of Chinese leaders being named in October, has many observers taking note. The most recent issue of the magazine devoted its cover feature to an interview with leading economic analyst Wu Jinglian—and his diagnosis of China's current state was not positive.
Wu Jinglian said conflicts in China's economy and society have reached a critical juncture, as clashes intensify with the growing shortage of domestic resources, environmental destruction, corruption and the widening rich-poor gap.
According to Wu, the majority of these problems are caused by failed implementation of economic reforms, lagging political reform, intensified repression of administrative power and officials' market intervention. China's top priority now should be to restart reforms in the economy and politics.
Most Chinese economists tend to wholly separate economic reform from political reform, especially given that comments on the latter topic are often censored or punished by Party authorities.
In his Caijing feature, which has gone viral on the Chinese internet, Wu states that China's new leaders have only two choices going forward: either establish a "market economy under the rule of law" or deliberately continue in the direction of "state capitalism".
Wu later clarifies that he means the state-owned enterprise model whereby officials and their families dominate markets to their own benefit. This kind of so-called "crony capitalism" is a key factor in the current troubles facing China, from corruption to widening class resentment.
Beijing-based lawyer Xiao Guozhen says that China will be a very dangerous place if there are not sincere efforts to realize the rule of law.
[Xiao Guozhen, Beijing Attorney]: 
"The free economy under the rule of law is the only way out for China. I don't see any other option. If the economy lacks rule of law it cannot be sustainable, and could even see a terrible crash. All sectors in China have great potential if the rule of law really improves."
This is Caijing's third article in as many years about economists' appeals to reinitiate reforms. Yet, according to most observers, serious and comprehensive political or economic reform has long been put on hold by Communist leaders.