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SOURCE. Minxin Pei, Beijing Drama: China's Governance Crisis and Bush's New Challenge. Policy Brief 21 (Washington DC: Carnegie Endowment for International Peace, November 2002)

In this piece I focus on what Russia and China have in common. Of course, this does not mean that I consider the differences between the two countries to be unimportant. Besides obvious contrasts in geography, climate, history, culture, and demography, the structure of power in China remains much more monolithic than in Russia. However, even this may not be true in every respect. Specifically, the central government in China as well as Russia is greatly concerned at its loss of effective control over regional and local government.

Economic discrepancies between different parts of the country are enormous in both China and Russia. Growth tends to be concentrated in certain enclaves while large areas outside these enclaves are left behind. It is the balance that is different in each case. While areas of high growth in China comprise much of the coastal zone, even moderate growth in Russia is limited to Moscow, St. Petersburg, and a few other centers. But if growth in Russia takes off -- in particular, if would-be free economic zones like Kaliningrad province start to attract substantial investment -- while growth in China stalls, we may expect the two patterns to converge.

From the point of view of inter-state relations, it is pertinent that the growth areas of the two countries hardly impinge on one another. The regions on both sides of the Russian-Chinese border -- Eastern Siberia and the Russian Far East on one side, Manchuria (northeastern China) on the other -- are depressed peripheries of their respective states. In Manchuria (more than elsewhere in China) as in many parts of Russia, run-down loss-making Soviet-era state enterprises are closing down as subsidies are withdrawn, with the consequent rise in unemployment. This symmetry explains the phenomenon of cross-border Chinese migration as well as the tensions it causes in Russian-Chinese relations. (1)

China suffers from massive corruption in government and massive capital flight. "In recent years, corrupt Chinese government officials have moved large sums of money into the US and Canada. The means of such transfer are often illegal or shady." These words remain true if we substitute "Russian" for "Chinese." Capital flight from China is estimated at $20- 30 billion per year; most expert estimates of capital flight from Russia lie within the same range. (2) The net balance of capital flows is still much more favorable for China because incoming capital investment is so much greater than it is for Russia.

The fiscal problems of the two states likewise have much in common. Both governmental systems have to cope with a shortfall in tax receipts, and do so in part by means of "off- budget" revenues that are very difficult to monitor and control.

The author lists "signs of a failing Chinese state":

* dangerous roads: high and rising fatalities from traffic accidents

* low social investment, e.g. on education

* crumbling public health infrastructure; "HIV/AIDS is spreading rapidly."

* environmental degradation: soil erosion afflicts a third of the country; three-quarters of China's lakes and half of its rivers are polluted

* deadly workplace: a very high level of industrial accidents and fatalities, a large proportion of them in mining

The parallels with Russia are clear on every point.


(1) These enterprises were built in the 1950s with Soviet aid. On Chinese migration into the Russian Far East, see RAS No. 1 item 8. On the Chinese community in Moscow, see No. 11 item 7.

(2) See item 15 in JRL 7018 (January 15, 2003). Capital flight from Russia was at a much lower level in 2000, but has since returned to $20-30bn per year: see RAS No. 8 item 1.

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