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China's modernisation and its discontents

The catastrophic 50 mile toxic oil slick  that is blighting Manchuria is only one symptom of the growing problems of China's modernisation. In openDemocracy earlier this year, the deputy minister of the environment Pan Yue warned of the limits to growth that China's disastrous environmental degradation will impose. Chemical spills pass, but the degree of air and water contamination, the falling water tables, the loss of agricultural land and the creeping desertification are not easy to reverse. There is a more fundamental problem at the heart of this and other obstacles to China's political and economic health -- the turbid official reaction, the continuing preference for cover up over action, the lack of transparency and acountability in the Chinese political system that magnifies the effect of such events. In another symptom of a dysfuntional system, the Chinese government has been battling to contain the damage caused by a copper trader who placed a series of wrong bets on copper futures earlier this year.

Liu Qibing, who worked for the government entity, the National Control Center of the State Reserve Board -- buying up raw materials to feed China's building boom, thought world copper prices would fall as a result of the government's clamp down on building. He committed to buy large quantities.  But  Beijing's relaxed its ban on new projects and Chinese demand soared again, along with world prices. Facing huge losses, Beijing has been dumping copper on the market as fast as it can, to try to damp down prices and stem the losses.  Liu Qibing is not , of course, the only trader to come unstuck - remember Nick Leeson. But his downfall seems to have caused by betting on government decisions that remain secret. Perhaps as Beijing counts the cost, its leader might reflect on the fact that transparency and accountability are not just optional add ons but are necessary for a healthy economy as well as a healthy political system.

November 25, 2005 in openDemocracy | Permalink

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