A Freer China

From Investor Business Daily:
Posted 11/14/2005

Foreign Affairs: Suddenly the Middle Kingdom's a hot destination for struggling politicians. Both Gov. Arnold Schwarzenegger and President Bush are following the Nixonian formula: Fly east when your polls go south.
It can't hurt. If our leaders need to get tough about China's regional ambitions and tricky trade practices, they also can refresh themselves about the universal magnetism of freedom.

Just days ago, Beijing's communist rulers announced a giant step away from Maoist population control. They've erased the line between urban dwellers and peasants. Can we be so smart?

Impetus for the reform came from the market economy, driven as it is by choice and opportunity. The half-century-old distinction will let Chinese move more easily between farm and city.

Rural China, since Deng Xiaoping introduced capitalist measures in the 1980s, has lagged behind the economic progress enjoyed by residents of the cities, primarily coastal. The new policy removes one more roadblock to prosperity for Chinese locked in farm labor.

The new policy helps assuage the seething resentments that had begun to undermine communist authority in the hinterlands. President Hu Jintao and Prime Minister Wen Jiabao can show themselves astride the vanguard of a social movement already in progress unofficially.

Though Chinese were required to register as peasant or urban dweller, an estimated 200 million people in recent years have migrated from farms and villages to the cities. Eliminating the houkou system, which entitles urban residents to better housing and health care, gives official sanction to the unstoppable reality.
All this is good news. What Westerner would not want long-oppressed people on the other side of the globe to enjoy more freedom of movement and more of a stake in a market economy? Still, Beijing's imperialistic ambitions toward Taiwan, indeed throughout Asia, should be kept in check.

A prosperous economy, Bush policymakers have argued, can force popular demands for democracy. Perhaps, but it also can spread contentment with one-party rule.

The Chinese have adopted capitalist habits precisely because of their contractarian orderliness — much to be preferred over what economist Ludwig von Mises called the "planned chaos" of socialism. The revered People's Liberation Army itself — following a more fascist than socialist model — owns many of the enterprises proliferating across China.

Just last week U.S. agents uncovered what appears to have been a major spy ring, thought to have passed significant submarine technology to Beijing. Will the president protest? Given new currents in China's political psychology, he should.

China's revived if mixed interest in freedom might prompt us to rethink our own direction. We do not, of course, require citizens to register as peasant or urban dweller. But through rigid agricultural policies and urban planning, through a hyperzoning movement dubbed "smart growth," which creates unelected government bodies to regulate land use, our political class comes closer.

Memo to both Bush and Schwarzenegger: A few years ago Nobel economist Milton Friedman quipped that China's vibrant Guangdong province was more capitalistic than California. If trends continue, China could become an entrepreneurial hotbed as the good old USA stagnates under increments of democratic socialism.