My old professor Burton Malkiel sees the "tectonic shift" that continues in China:
I believe that the lasting legacy of the cataclysmic Sichuan quake will be a tectonic shift towards a freer China, an enhanced image of the Chinese government, and a renewed commitment to encourage rapid growth in the poorer central and western regions of the country. And the recent declines in Chinese stock prices have provided investors with a very attractive entry point to correct the substantial underweighting of China in the investment portfolios of most individual and institutional investors.
Contrary to the numerous, perennial -- and tedious -- warnings of a coming Chinese crash, a scary new free-market "autocracy," or even an embrace of "classical fascism," Malkiel shares my own view, that Chinese economic freedom is both real and crucial in and of itself and is in fact leading to much more political freedom:
the “firewall†that surrounds the internet in China has been severely breached. Countless bloggers have heaped praise on the rescue effort but have also been unafraid to offer sharp criticism of officials who supervised the construction of the shoddy schools and buildings that crumbled when the quake hit. Ordinary citizens have rushed in to help, independent of any planning by the government. The surge of patriotic fervor has even muted the voices of those criticizing China’s policies with respect to Tibet.
Prof. Benjamin Friedman of Harvard University has argued that economic growth eventually leads to increased political freedom. Some China hands have been skeptical that the Friedman hypothesis applies to China. The 2008 earthquake may well prove to be a defining moment in China’s development into a flourishing civil society with increased personal freedom and with a government that is less distrustful of its own citizens.
For 30 years since Deng Xiaoping's "reform and opening up" policy began, Western political writers and historians have misjudged China. It's been the economists, like Malkiel, who have gotten it right.
