China will become a procedural democracy
I have just finished reading John Lee’s book, Will China Fail?, released by the Centre for Independent Studies. Lee has performed a valuable service by documenting what moving towards freer markets has achieved – stunning growth rates and lifting hundreds of millions out of poverty. He also notes the fundamental contradictions that must eventually be resolved by the Chinese Communist Party.
These contradictions arise from the tension between free markets and political authoritarianism. Free markets cannot exist in a vacuum. Markets require the defence of private property, enforcement of contracts and government organs operating under the rule of law. Though no longer a totalitarian state, China is still very authoritarian. It does not have an independent legal system, and thus cannot provide businesses the certainty they need to prosper.
