Skip to content

Lawyer-Witch-Hunt and Blood-for-Land: China’s Lawless Economy

China’s economy will eventually feel the pain if society remains awash in lawlessness.

It is tempting to shrug off the ongoing crackdown against prominent lawyer Gao Zhisheng, who boldly supported China’s underprivileged economic classes, as yet another tantrum typically thrown by the Chinese government against its own people stepping outside the lines. It is equally plausible that the killings in Shanwei, a prosperous town abutting Hong Kong, were almost inevitable due to the brewing tensions between the haves and have-nots in China. Larger questions, however, remain, as to the foreboding significance of the two events, especially when they coincided with another familiar announcement of impressive growth in China’s GDP, which put the country on course to pass France to become the world’s fifth largest economy.

In any modern democracy, rule of law and economic freedom forge a symbiotic relationship that sustains its prosperity and growth. Mr. Gao and casualties in Shanwei highlight the glaring absence of such infrastructures in China, notwithstanding its glowing GDP and unusual absorption of foreign capital. If Chinese lawyers had been given a free hand to operate like Mr. Gao, their mediation would ensure tragedies in Shanwei never happen. On the other hand, if the governance in China had improved so much as to rule out a repeat of a Tiananmen-Square-style killing by the military, Mr. Gao and his colleagues would have been free to go about their business—and China would be a better place for investment opportunities.

Wang Jian, a senior economist affiliated with a premier think tank of the Chinese government, found that up to 54 percent of China’s GDP is derived from investment in fixed assets, a percentage that has never been reached by any other country in history before, not even Japan, which, at 46 percent, was the second highest during its go-go years in the 1960s. Mr. Wang forecast a depression in three years, ahead of the Beijing Olympics, triggered by serious overcapacity and overcompetition when the current excessive investments translate into real productive capabilities. Andy Xie, Morgan Stanley’s top China economist, recently argued that China should choose over GDP to use NDP, which stands for Net Domestic Product—calculated by deducting from GDP such social costs as environmental damages and human lives lost due to unsafe production methods—in measuring its economic development. He believes the GDP has misguided local governments to chase unwarranted economic targets, in a manner reminiscent of meeting the quota for rightists or class enemies in past political movements. These targets decide the officials’ promotion and give them the boasting right at Party meetings. Unfortunately, they are also the reason behind the land dispute that led to 20 killings in Shanwei and fatal accidents that occurred to miners represented by Mr. Gao.

Up until now, cheap labor has attracted foreign capital and has been the engine that drives the juggernaut of the Chinese economy. It is, however, dangerously unknown how long this superiority will last. The Chinese population has shown signs of aging due to the success of the family planning policy, and the foreign capital in search of a higher rate of return could go elsewhere, to places such as India, where the social system is more Westernized. In the longer term, sustainable economic development in China will only be possible when transparency and accountability, as has happened in countries with whom China is trying to catch up, are firmly established to govern its economic activities.