Austerity with Chinese Characteristics

A Chinese one yuan coin in front of a 100 yuan banknote (Courtesy Reuters)

This year, to the consternation of the world?s luxury-goods producers, ?austerity? became one of Beijing?s most prominent political buzzwords. Since becoming head of the Chinese Communist Party last November, Xi Jinping has announced a steady stream of belt-tightening measures: government officials have been barred from hosting lavish banquets and wearing designer watches, and the construction of government buildings has been banned for five years. It?s only natural that Western commentators have been quick to interpret China?s austerity drive in terms of their own long-running debate about macroeconomics: from Athens to Dublin to Washington, D.C., politicians and economists are arguing the economic merits and drawbacks of budget-cutting and deficit spending.?

But it would be a big mistake to interpret Xi?s ban on shark-fin soup as an extension of what Paul Krugman describes as the West?s ?turn to austerity? since 2010. Whereas Western austerity has been an economic policy tool, in China its essence is primarily political. China has a long history of turning to frugality not to stimulate business confidence but, rather, to combat the disease of corruption. It?s safe to say that Xi has been thinking less of Milton Friedman or John Maynard Keynes than of China?s own political reform tradition, stretching from Confucius to the Communists.

In the formative period of Chinese politics, some 2,500 years ago, Confucius crafted a philosophy of government and social ethics that left a profound imprint on East Asian civilization. He admonished rulers to keep both taxation and spending to a minimum. The enlightened ruler, Confucius and his followers said, should embody a certain kind of moral austerity in his personal behavior and fiscal austerity in matters of state. The people -- most of them farmers -- would then follow the emperor ?like grass bends in the wind.? In other words, demonstrating one?s political virtue through austerity, frugality, and simplicity would ensure popular legitimacy and dynastic stability.

The Confucian approach to ensuring virtuous government through frugality has been a consistent thread in Chinese politics well into the modern era. One early-eighteenth-century emperor, for example, declared a permanent freeze on tax rates as a show of Confucian thriftiness. (Although this policy eventually backfired: the tax ceiling hampered the government?s ability to generate revenues for the remainder of its 200 years in power.) Campaigns against corruption -- including arrests of senior ministers -- were a regular feature of late imperial times. Even the major political upheavals of the twentieth century turned on questions of corruption and frugality. The Nationalist Party of Chiang Kai-shek, who took over as head of state of the Republic of China after Sun Yat-sen?s death in 1925, quickly earned a reputation for corruption. Chiang responded by promoting neo-Confucian values as part of what he called his New Life movement, which made ?simplicity and frugality? one of its core virtues. But he ultimately fell to Mao Zedong, who promoted an even more radical notion of the austere state. Mao demanded that Communist Party cadres reject the slightest hint of bourgeois comfort, including by wearing a uniform of a nondescript Mao suit. Although Mao ended up living more like a Roman emperor than a Spartan soldier, he was effective at creating the perception that the Communists were incorruptible, in stark contrast to the Nationalist Party?s reputation for graft. As Confucius would have predicted, this helped the Communists win the ?hearts and minds? of the people.

The old Confucian paragon of the ?clean official? still resonates powerfully in today?s half-capitalist, half-Communist, pseudo-Confucian China. The current austerity program is best understood as Xi?s attempt to put his own stamp on that traditional notion of good governance. In particular, there are clear traces of Mao in Xi?s program. Xi even recently praised Mao?s list of ?six nos? that barred officials from squandering the people?s wealth, and he promised to renew Mao?s old fight against ?formalism, bureaucratism, and hedonism and extravagance.?

Source: http://www.foreignaffairs.com/articles/139629/john-delury/austerity-with-chinese-characteristics?cid=rss-snapshots-austerity_with_chinese_charact-000000

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