April 24, 2006	Monday	Rabi-ul-Awwal 25, 1427

On April 16, Chinese President Hu Jintao made a landmark statement in a meeting with Lien Chan, leader of Taiwan’s opposition Ku Min Tong party, which, for very understandable reasons, no major newspaper bothered to report. Only BBC and CNN TV news bulletins made passing reference to the president’s speech.

In spite of Western accusations of repressing freedom of expression, Chinese governments listen to and care about their nation’s best interests, and never hesitate to accept where they went wrong. Cultural Revolution of the 1960s, reformation under Deng Xiaoping during 1980s and now President Hu Jintao’s frank admission about the need for a complete re-assessment of economic policies proves the point.

More importantly, President’s Hu’s statement clearly shows that Chinese leadership doesn’t practice borrowed ideologies; while it patiently listens to and watches alien ideas in action, it thinks and evolves through its own experience – a quality that is missing in the leadership of most other nations and, blissfully, we form a part of this idea-borrowing club.

In his landmark statement, President Hu said that Chinese economy had grown by more than 10 per cent last year, but the government “does not seek high-speed economic growth”. Such high growth was not an official target. He said that the government wants to pay more attention to improving the lives of the ordinary people, implying thereby that the real sign of success is improvement in the standard of living of the masses.

Expressing his concerns about the impact of high economic growth, he said: “We are concerned about the pace of development and the quality and the effect of our growth. We are also concerned about saving our resources, environmental protection and the improvement of our people’s livelihood”. These are the concerns of a leadership that is conscious of its responsibilities as a citizen of the world keeping in view the demand-pull strain created on world output of many commodities and environmental pollution.

Chinese leadership is not overly impressed by deceptive ratios and percentages, which statisticians throw up. The latest versions of these figures suggests that China’s economy is still growing at a blistering pace though not at 15 per cent a year, as the case in the late 1990s. China does need fast growth to create jobs but President Hu’s comments reflect increasing concern among the country’s top leadership that hundreds of millions of people living in the countryside missed-out on the nation’s economic miracle.

President Hu’s statement may be the first explicit expression of the government’s worries but feeling about the majority not benefiting from China’s record growth for more than a decade is not new. Last year the government announced that it would adopt policies to improve that situation but reforms to speed-up the trickle down effect will take time to sink in. The fact that China is aware of the need to make amends, places it well above the leadership in many other countries.

Protagonists of globalization of trade, now on the defensive, do not like the masses to know that what these self-styled philosophers make out to be so holy is, in fact, no more than a mirage. The results they wanted to achieve through de-regulation and globalization of markets did not show up because the leadership could not speed-up the trickle down effect; ignoring statements, such as the one made by Chinese President cannot hide the fact that growth routed through the private sector found its way only to the coffers of the powerful few.

This reality is now surfacing everywhere. A glaring example thereof is the resentment that is building up in US and European economies. Being more liberal, European governments, especially French, German and Italian, are facing a tough time. Unemployment–the product of hasty market deregulation without requisite adjustments in social and commercial values–may popularize socialism yet again because distributive justice in the free enterprise system is fast losing its credibility.

While Western economies (many of them still buoyant, courtesy the wealth they accumulated during their pre- and post imperial days) can survive the current disrupted state of their economies much longer, condition of many developing economies is worse. These countries are witnessing rapid erosion of their industrial productive capacities and build-up of huge distortions in their balance of payments because their economies could not face up to competition unleashed by the lifting of barriers to trade.

In his recent statements on the state of Pakistan’s economy, the country’s president has expressed his dissatisfaction with the levels of inflation and unemployment on the one hand, and excessive profitability of the corporate sector on the other. However, his observations were not as direct as one would have liked, given the size of the distortions created by the profile of the monetary policies pursued in the last three years.

Abdicating state authority in favour of the private sector in areas that have a direct impact on the common man’s life, has been the cardinal mistake that governments everywhere seem to be making without realizing that by subordinating their role to the private sector, they are diluting the raison d’etre for the continuation of the state as the primary institution. What they all fail in appreciating is the fact that there is a fundamental difference in the objectives of the state and the private sector.

The state is not in the business of making profit (at least that is the common belief to-date) but the private sector is driven primarily by the profit motive, irrespective of its much talked about concerns for social responsibility. Only a handful of the private sector institutions genuinely believe in the fact that they too are citizens first, and must keep the social impact of their policies upper-most in their multifaceted inter-action with society as buyers, consumers, suppliers, employers and taxpayers.

As citizens, businesses need all the support and freedom that they require for continuing as truly productive institutions for their owners but they must never be allowed to forget that they have to support the state in achieving the ultimate objective of improved standards of living for all its citizens, especially the vast majority of the underprivileged. Unless this cardinal principle is built-into every state policy, there is no way that growth will trickle down to the underprivileged quickly enough, which is the single biggest failure of the state everywhere.

The convoluted assumption that standard of living improves with availability of cheap automobiles and electronic gadgetry, reflects the mindset of the vast majority of the private sector players about what is the real objective of life. Tragically, even senior politicians tend to equate prosperity in rural areas with the number of motorcycles sold every year, which is shocking.

Given such a mindset even among the politicians, who could be bothered about setting up schools, vocational training centres, colleges, libraries, professional training centres, gymnasiums, healthcare centres, hospitals, theatres, art studios, etc. and how many financiers would be interested in financing small businesses as a means to improving the overall social and economic environment.

If governments are really concerned about fulfilling their responsibilities to their citizens they must, by regulatory action, require businesses to participate in these crucially important activities. For the state, that is the only justifiable way of passing on its responsibilities to the private sector. Unfortunately, that is not happening and therefore the trickle down effect is not even a trickle.