China and its Discontents

Archive for the ‘Li Peng’ tag

SOEs Must be Reformed, But Whither the Political System?

leave a comment

The new leadership has just as many ties to state-owned enterprises as the old. The brother of Li Keqiang, who is expected to become the prime minister, is one of four deputy directors of the State Tobacco Monopoly Administration. With 98 percent of the Chinese market for cigarettes, the state-owned tobacco administration generates taxes and profits that total 7 to 10 percent of the entire revenue of the central government, according to a report in October from the Brookings Institution in Washington.

This from an article on China’s SOEs by Keith Bradsher in the New York Times. This is an insane method of revenue collection. In contrast, the U.S. federal government relies on tobacco taxes for about 0.2% of its total revenue (of course individual states make much more revenue from tobacco taxes, but it’s generally not more than 4-5%). I think it is inevitable that the new PSC will undertake some form of economic reform, particularly of SOEs, if only because such economic reform has precedent and many influential backers. I don’t see a great chance of real political reform, however. The fact that people like Jiang Zemin and Li Peng still have major influence and are sitting on the dais while Hu Jintao delivers his work report signals to me that no individual, however well intentioned, can have much of a liberalizing influence on the Chinese political system in the near future.

Written by Will

November 10th, 2012 at 7:40 pm