Yesterday Chartwell caught up with Jonathan Fenby, China expert, historian and co-founder of the emerging markets research firm, Trusted Sources.
Though in no way a subscriber to the ‘China is doomed to fail’ thesis, Jonathan did argue that China’s leadership is faced with a tricky balancing act between maintaining legitimacy through growth on the one hand, and maintaing its hold on power on the other.
For example, food price inflation is a huge problem for China. This is partly due to environmental damage and land erosion, but also because the country’s governing structures encourage urbanisation at the expense of agricultural land. Farmland is owned by regional governments, and, for various reasons (too complex to go into, he said), these regional authorities are rather strapped for cash at the moment. How do they solve this problem? Surprise surprise, by selling off land for development. Now, the best way to combat this would be for the central government to allow regional governments to raise their own revenues through taxation. However, this would mean the centre relaxing its grip on power to an unacceptable degree.
Perhaps it is contradictions like this that have inspired the title for Jonathan’s latest book, Tiger Head, Snake Tails (Simon & Schuster, 2012). An old Chinese saying, it is used to describe someone who may look powerful at first glance, but has unseen loose ends that weaken them. Only time will tell…