China’s New Deal

One of the paradoxes posed by China’s rise has been the way in which increased economic expectations have not translated into increased demands for political liberalization. But is it possible that the financial crisis will liberalize China more than the past decade of growth? Here’s how the WaPo describes the stimulus package Beijing unveiled today:

In a wide-ranging plan that economists are comparing to the New Deal,the government said it would ease credit restrictions, expand socialwelfare services and launch an infrastructure spending program thatwould include the construction of new railways, roads and airports.

What’s striking is the expanded welfare services and the fact that these measures came in response to the oldest form of democracy known to humankind: mobs in the streets. Welfare services create higher expectations for both governance and responsiveness. And ultimately the ballot is a much more efficient method of expressing dissatisfaction than mass demonstrations.

The U.S. was much further along the path towards becoming a superpower in 1929 than China now is. But the social safety net that resulted from the Great Depression certainly helped define the nature of what kind of superpower it became. It would be ironic if the current financial crisis has the same kind of impact on China.