How should we classify the Chinese regime?
Someone recently asked how we should classify the Chinese regime. As I was rethinking this, it occurred to me that regimes most similar to the Chinese one are in corporations.An Organization for Economic Cooperation and Development (OECD) report in 1999 said, "Corporate governance is [1] the system by which business corporations are directed and controlled. The corporate governance structure [2] specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and [3] spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also [4] provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance."
Is it possible to see China as one of the largest and fastest growing corporations in the world, China, Inc.?
The Party monopolizes the government and the government controls the state. This regime controls [1] "the system by which... [the country is] directed and controlled... [It] [2] specifies the distribution of rights and responsibilities among different participants... and [3] spells out the rules and procedures for making decisions... By doing this, it also [4] provides the structure through which... objectives are set, and the means of attaining those objectives and monitoring performance."
The Party Politburo can be seen as the corporate board of directors and its standing committee as the executive committee of the corporate board.
The government's State Council, headed by the Premier, is the group that includes the top executives of China, Inc. The party cadres are managers and the government bureaucrats and workers are supervisors and labor.
Where this comparison begins to break down is probably in the hints of corporate democracy in the recognition of shareholder rights and expectations. Shareholders can, in limited ways, affect the governance of corporations. Can Chinese citizens do as much? Similarly, government and civil society can impose upon corporations and make demands as stakeholders. When government is the corporation, it is an arm of corporate policy, not subject to government policy. And stakeholders outside the Party and the government have few legitimate ways of influencing the policies of China, Inc. The inabilities of environmental groups to sway policy decisions are prominent examples.
And what about the fiduciary responsibilities of the corporation and its executives? is the Politburo held responsible for accurate accounting? Will the State Council ever be called to a hearing of the Peoples Congress? Will a president every not be reelected?
The campaign against corruption may be a hint that there is some sense of responsibility, but so far it's only a hint. And the targets of anti-corruption prosecutions are likely to be political opponents of the top executives.
The party and government in China are actively developing commercial and property legal systems to facilitate economic investment from outside China. But there's little in the way of guaranteeing individual rights or actually allowing democracy.
As China, Inc. grows and grows more complex; as China, Inc. takes on more new foreign partners; and as China, Inc.'s stakeholders become more able to assert their self-interest (if only through markets), the governance system might begin to resemble more familiar political models. For now, the corporate model is probably an instructive one.
Labels: China, governance
posted by Ken Wedding @ 8:55 PM
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