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Micron Associates article code 85230508839

by lewischarles663

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China’s Net crackdown shows fear trumps reform

Say you are a Shanghai-based economist and doubt the veracity of China’s latest trade data. You put out a research report to that effect, one that creates buzz on the Internet and exposes you to something far worse than making a bad call: prison.

Or say you are a photographer in Chongqing and circulate images of a politician who loves Rolexes. Bloggers begin buzzing about how a modestly compensated public official could afford a stable of $7,000 watches. You, too, may end up in handcuffs.

What if overworked and underpaid Foxconn Technology Group workers churning out iPhones they can’t afford choose to vent online? How about an environmentally minded graduate student who questions the accuracy of Beijing’s air-pollution readings? Or a mother who lost a child in the 2008 Sichuan earthquake who complains in a blog post that repairs still look shoddy? Could all of these people get arrested?

Yes, according to a new threat from Xi Jinping’s government: three-year jail terms for Web comments deemed defamatory. This isn’t happening in a place of George Orwell’s imagination, but in a country many still think is destined for world domination. China’s escalating war on free expression is unfolding in ways even the author of the classic 1949 novel “Nineteen Eighty-Four” couldn’t have dreamed up. It’s clear evidence that hopes Xi’s government would be serious about economic reforms are also fiction.

Few expected Xi to be China’s Mikhail Gorbachev, but the president’s crackdown is particularly poorly timed. Markets are looking for Beijing to roll out a raft of reforms in November and were hoping for them to be bold — a big bang that would set the Chinese economy on a more sustainable growth path. Instead, the latest Internet rules signal timidity rather than strength: The government has clearly been taken aback by the explosion in online commentary on microblogging services such as Sina Weibo and is desperately trying to reassert its control however it can.

A similar fear has resulted in a rollback of the campaign to clamp down on runaway credit growth — a refreshing sign of discipline that economists had cheered this summer. Li Keqiang, China’s reform-minded premier, can only go as far as Xi permits him, and the leash appears rather short. Despite Li’s pledge to rein in excesses, the broadest measure of new credit nearly doubled in August.

The longer Xi and Li keep the loan spigot open, the longer state-owned enterprises will dominate. Their primacy is the biggest barrier both to China switching focus away from sweatshops toward services and to ending corruption. Similarly, policing the shadow-banking industry is key to avoiding a Japan-like debt crisis. Yet too many Communist Party power brokers are making tens of millions of dollars off state-dominated China Inc. Beijing lacks the political will to irk these cronies, let alone inflict pain on a restive population.

Nothing would end this corrosive dynamic faster than a freer media and Internet. In May, a vice chairman of China’s economic planning agency lost his job after allegations of improper business dealings made the rounds among bloggers. This month, another official, Yang Dacai, got 14 years in jail after online photos of his pricey watches inspired a crowdsourcing investigation. That won’t be possible now that local cadres can aim politically motivated lawsuits at anyone with a camera and an IP address.

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