One Country, Thirty-Two Economies

“Many provincial or municipal governments have erected protectionist barriers against investment from other provinces or cities. This has fragmented the national economy… creating a “one country, thirty-two economies” malaise. A survey finds that 85.8 percent of state-owned enterprises invested only in the same city and tat 91.1 percent invested only in the same province.” – Jozsef Borocz. China and the Transformation of Global Capitalism. Ho-Fung Hung,ed. Baltimore:  The Johns Hopkins University Press, 2009. Pg. 192.

This was a completely fascinating realization for me while reading this particular section. While some Americans believe that China is more fragmented than the standard “all of them” view allows for, I think this survey shows how factionalized China is economically more clearly than almost anything else I’ve seen previously. Moreover, this adds a huge crack into the idea of China’s continued, unstoppable  economic success. If the country is so factionalized, how can it possibly be effectively ruled and viewed as a whole? And if China cannot be viewed as a whole, how can it stay together? China has a history of civil war and succession – starting in 1851, the Taiping rebellion established the Taiping Heavenly Kingdom, a large, separate country within the heart of southern China. It was in place for approximately 13 years. If this history of factionalization is allowed to continue, I feel that it could be one of the first things to fracture under social or economic duress.  Moreover, the current economica rules in place in China promote this nearly separatist approach – according to the chapter, it is extremely difficult for companies to divert savings to invest in new sectors. This seems like an odd policy at best – wouldn’t you want cooperation between localities? It seems to me that it would promote community.

Is the reason that China does not promote investment between localities because they want to make sure the industrial units state compartmentalized? In other words, are they trying to prevent things like migrant laborers, by making it more difficult to form economic ties with areas outside of one’s designated locality?

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