Transcript: China Chat
Utley: Well, let's follow up on this point because we've had a number of questions, too, about the absence in China, not just of adequate protection of intellectual property rights but also questions about the legal system, access of–particularly for foreign investors–the accounting system, whether it is adequately transparent or not, the banking systems which has going through a tremendous changes and stresses not to mention a social welfare system which western societies and industrialized societies have used have used for difficult times and transitions in their economies and which does not exist to that extent in China with the challenge of state industries being sold off or being privatized and mass unemployment. So, given the absence of these societal structures, legal structures, accounting structures, etc. To what extent is this a very serious danger, a challenge to stability and growth and to what extent do you see this questions, these fields being adequately addressed in China. Let's go back to Beijing and talk with Professor Zuay at Tsinghua University.
Xue: Yeah, I think I wouldn't call it absence of a legal system, or banking system or accounting system. I would have to say that the banking system and the accounting system have really undergone a dramatic change over the past two decades and in some areas, I think that progress is much faster and other areas are slower. And one of the things that I see in the banking system is, they've begun to reform some of the state banks which have been more serving as a policy instrument than sort of an independent, you know, financial institutions.
Utley: Bill Fischer first, your thoughts on this?
Fischer: I think what we forget when we talk about China is that it is still very much a developing country and the issues both on the previous question and the present question, about fiscal and social infrastructure deficiencies, those are problems that all developing countries have. So China's making its transition from a developing country to a more developed country and it's going to go through the normal struggles with trying to build social infrastructure, paper trails, accountants and all of that, like everyone else did. But the one that I would think is the most important, in the short term, is the social welfare system because as WTO accession, leaves an imprint on the Chinese market, we're going to see more and more Chinese workers imperiled by the loss of a social welfare system which has been traditional rooted in the enterprise rather than in the state. And so the race is really between China's ability to build a state welfare system as opposed to the present system.
Utley: Follow up with one question that was e-mailed to us was pointing out that China's economic system is an unusual hybrid right now. We've had command economies under communism, we have free market economies, we have continental Europe social market economies–one e-mailer described what China's doing is a kind of "Command Market" economy. That is the state plays a strong role in many aspects while allowing the free forces of the markets to go forth and push ahead. Michael in Australia, is this something that you see as unique and is it sustainable. Which really is leading to the question of the role of the Communist party and the state, not just in political control but in economic direction setting?
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