As we noted in an essay this morning, modernizers within China’s elite are open to economic liberalization. The Chen Guangcheng case has consumed media attention, but American officials have been quietly working with their Chinese counterparts on a range of economic issues. And according to the Wall Street Journal, the Chinese have been unusually willing to discuss the possibility of easing restrictions on foreign ownership of financial-sector firms, limiting export subsidies, and reducing tariffs and taxes on consumer goods. These and other changes could radically reshape the U.S.-China trade relationship, boost U.S. exports, and enable the Chinese economy to develop a stronger consumer base and reduce the influence of its powerful state-owned enterprises.As today’s VM essay noted, however, there are powerful interests within China that will fight this trend. “Hardliners” and nationalists hold powerful positions in the armed forces, provincial governments, state-owned corporations, and various government departments. They do not want political reform to reduce their power and will fight this reformist agenda.The Chen incident is a heaven-sent opportunity for these folks to try and obstruct what might otherwise be a very promising set of negotiations. Given that many of the issues China and the US want to discuss would lead to support for China’s private economy and reduce the power of the state owned enterprises, it’s not surprising that the hardliners want a fight.
China’s America-Facing Modernizers Signal Change on the Horizon