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TESS VIGELAND: Worries over inflation brought the stock market down today in Shanghai. The Chinese premier delivered what amounts to his version of the State of the Union address, and he vowed to get a grip on a surging economy that’s been pushing the cost of living way up for the Chinese working class. The political elite, that’s supposed to be in control, finds itself confronted with a dilemma. On the one hand, inflationary pressures are threatening to sow social unrest. On the other, entrenched provincial leaders could stand in the way of any serious reform.
Here’s Marketplace’s Bob Moon.
BOB MOON: Pork is not the other kind of meat in China — it’s the top choice, but lately, there have been shortages. Prices are up, and some critics of the central government have made a new saying popular. “Eight ministries can’t take care of one pig.”
Chinese Premier Wen Jiabao told the National People’s Congress he wants to streamline the bloated government bureaucracy into fewer but more powerful agencies. Even as he spoke, though, there were signs those plans might end up being watered down. Sijin Cheng watches China for the business research firm Eurasia Group. She’s seen this kind of struggle before.
SIJIN CHENG: Every time they have tried this in the past they can reduce the number of ministries for a few years, but inevitably, it would balloon back into, you know, numbers even higher than previously.
Cheng says oftentimes Beijing can’t stop local officials from carrying out their own policies until it really brings the axe down, and she says that just doesn’t make for efficient policymaking. China watcher William Gamble, of Emerging Market Strategies, says that entrenched system is all but impossible to change.
WILLIAM GAMBLE: The old Chinese expression about, “The mountains are high and the emperors are far away,” is that they’re sort of pass masters at getting around these orders that come down from Beijing.
Gamble says today’s speech may have been greeted with polite applause from those entrenched lawmakers, but don’t count on any quick fixes.
GAMBLE: Remember, the prime directive in China is not to grow the economy. The prime directive in China is to grow the economy so that the Communist party can stay in power.
Gamble says any attempt at change won’t come smoothly.
In Los Angeles, I’m Bob Moon for Marketplace.
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