Regime Watch: Beijing

In a previous post, I noted that a possible benefit of an increase in Chinese tourism to Taiwan due to a new cross-straits commercial air travel arrangement between Taipei and Beijing might be a great many Chinese (presumably Chinese from the middle and upper classes who can afford to travel) might just decide that life in a liberal democracy beats life under a communist regime. But besides individual Chinese, there is much that China as a nation can learn from Taiwan, like the benefit of economic freedom for its citizens. As an example, the 2008 Index of Economic Freedom, published jointly by the Heritage Foundation and the Wall Street Journal ranks China as number 126 (out of 162 countries ranked) for a freedom score of 52.8 (or mostly unfree). For Asia-Pacific nations, China ranks a lowly 23 out of 30 countries.

According to the report:

China is a one-party state ruled by the Chinese Communist Party. Despite rhetoric about democratic development, the party maintains strict control of political expression, speech, assembly, and religion. Since opening up to foreign trade in the early 1980s, China’s economy has expanded rapidly. It is now the world’s second-largest economy in absolute terms, although per capita income remains low. Most workers are employed in the agricultural sector. The financial sector is largely opaque and state-controlled, raising concerns about lending practices. Since joining the World Trade Organization in 2002, China has liberalized many sectors of its economy, but it still suffers from the lack of a rule of law, poor protection of intellectual property rights, and corruption, among other hurdles.

Taiwan, on the other hand, ranks number 25 in the world, and number 6 out of the 30 Asia-Pacific nations ranked, with a freedom score of 71 percent (or mostly free).

According to the report, besides having “one of the regions most dynamic democracies,”

Taiwan has high scores for investment freedom, trade freedom, property rights, freedom from corruption, and government size. The average tariff rate, the inflation rate, and the level of corruption are all low. Although Taiwan’s personal income tax is high, the corporate tax rate is moderate, and overall tax revenue is low as a percentage of GDP. Government spending is similarly low. Taiwan’s investment climate is healthy, and 100 percent foreign ownership is permitted in most sectors. Property rights are protected by the judiciary, although there are minor problems with case delays and corruption associated with organized crime.

So instead of pointing missiles at the Taiwanese, Beijing should be taking lessons from them.