Wednesday, March 04, 2009

Li Rui is at it again

In this revealing NYT article, we find out that former Mao secretary is at it again. Since being purged by Mao and suffered horrible ordeals during the Cultural Revolution, Li Rui has been the unrelenting critic of regime policy and a sort of a conscience of the CCP regime. He is now calling for deficit reduction and more democratization. In terms of democratization, he has been singing the same tune for decades, to little avail. On deficit, however, I think Li Rui should stick to what he knows best. The current deficit, though historically high in absolute amount, is relatively small as a share of GDP (3.33%). Moreover, what he perhaps does not realize is that local governments are on a whole broke and cannot finance the stimulus, so the money would have to come from banks and central debt issuance.

Party Elders Press for Checks on China’s Stimulus Plan

New York Times
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Published: March 3, 2009

BEIJING — As China’s government doles out $584 billion to stimulate its ailing economy, critics inside and outside the Communist Party have pressed for details about the murky spending plan and demanded the right to follow the money.
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Times Topics: China

A cluster of liberal Communist Party elders recently wrote to President Hu Jintao and the rest of the party leadership, seizing on the economic troubles and the need for more accountability to promote democratic reforms.

“We very much endorse the central authorities’ investment of 4 trillion renminbi” — $584 billion — “to drive the economy,” they explained in the letter, dated Jan. 20, a copy of which was obtained by The New York Times.

“At the same time, we are extremely worried that the privileged and the corrupt will seize this opportunity to fatten themselves, damage the relationship between the party and the people, and intensify social conflict.”

They pressed for checks and balances on the recovery program. More sweepingly, they urged that state media be freed from censorship and that courts allowed to operate without interference from the ruling party, reforms the party has repeatedly rejected in the past.

The stimulus plan has led to calls for greater transparency from other quarters as well.

A Shanghai-based lawyer, Yan Yiming, has threatened to sue the National Development and Reform Commission, China’s de facto central planning agency, unless it publishes an inventory of items approved for financing. Mr. Yan’s crusade attracted legions of supporters online.

The government is working hard to look responsive, though without releasing much new information. On Sunday, a senior central planning agency official said the government would publicize project details as the plan was approved.

A party-run liaison group called the Chinese People’s Political Consultative Conference has also sought to use the country’s annual parliamentary session, which opens on Thursday, as a forum to show that the government is listening to demands for greater openness.

The chief drafter of the letter by the party elders was Li Rui, 91, a secretary to Mao Zedong before being felled in a 1959 purge. Other signatories included a retired propaganda minister, Zhu Houze, and a publisher, Du Daozheng, along with 13 other aging members of the elite.

Beyond the stimulus, a defense lawyer, Zhang Sizhi, one of the elders, said it was also fair to describe their letter as a vision of reforms vital for the party to endure in the long term.

“The greater the difficulties,” the elders said, “the greater the need for democracy.”

The government has vowed to spend its way out of the economic slump through public works projects, subsidies and tax breaks. It is also trying to speed up social reforms like universal health care.

But the details have remained sketchy. In November, China rushed out its stimulus plan with no public scrutiny, scant details of the spending breakdown and none of the acrimonious debate that slowed action in the United States.

The central government is financing less than one-third of the package, leaving local governments, banks and private enterprise to finance the rest. The mandate from Beijing is to “ensure growth” and “expand domestic demand.”

In their letter, the elders said they feared that the open-ended mandate would set off a binge of uncontrolled spending by regional and local interests, leading to waste and corruption. China spent years before the recent crisis trying to rein in freewheeling local governments and state-backed business interests.

Already, there are signs of a spending spree. Banks doubled their lending in January compared with the same month of 2008, state media say.

Some securities analysts estimate that loan recipients, mostly state-owned firms, funneled as much as a third of new loans into stock market trades, which may help explain a surge in the Shanghai Composite Index this year despite the deepening gloom. To track the loans, regulators have asked banks to submit account records.

The elders behind the letter amassed political clout in the 1980s, as rehabilitated reformists serving progressive party leaders. But those leaders were later purged, and the deadly Tiananmen Square crackdown of 1989 ensued. Two decades later, their agenda of accelerated democracy remains a distant dream.

The party leadership has not responded to the letter, Mr. Li’s son said Tuesday.

One of the elders, 80-year-old Du Guang, said the call for democracy had become even more relevant during the economic downturn. He said he was skeptical of the party’s measures to supervise the stimulus spending.

Mr. Du also criticized the focus on public works projects instead of the country’s weak social services network. “You have to look at how to expand demand in the long term,” he said. “Social spending is more important than building railways, expressways and other basic infrastructure.”

It is a year of madness and ultimate feast to some people before the sweeping burst at the end.
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