Russia hopes to emulate China

Here’s an interesting story from the NYT:

Nearly two decades after the collapse of the Communist Party, Russia’s rulers have hit upon a model for future success: the Communist Party.

Or at least, the one that reigns next door.

Like an envious underachiever, Vladimir V. Putin’s party, United Russia, is increasingly examining how it can emulate the Chinese Communist Party, especially its skill in shepherding China through the financial crisis relatively unbowed.

United Russia’s leaders even convened a special meeting this month with senior Chinese Communist Party officials to hear firsthand how they wield power.

In truth, the Russians express no desire to return to Communism as a far-reaching Marxist-Leninist ideology, whether the Soviet version or the much attenuated one in Beijing. What they admire, it seems, is the Chinese ability to use a one-party system to keep tight control over the country while still driving significant economic growth.

What China has that Russia doesn’t that is helping the former with its strong economic growth are two interrelated things: first is a strong export market and two, cheap labor that is the backbone of that successful export market.  As also mentioned in the article, Russia is a country highly dependent on oil.  Sure at times when oil prices are skyrocketing as it was back in the summer of 07, the Russians (or a few of them) take windfalls profits from the commodity like Alaska gets snow in a year.  But when prices slump like they did after the summer of 07, it spells danger for Russia’s economy.  So apart from the two success factors for China that Russia doesn’t possess, the former Soviet state also needs to have a diversified export market.  Even if China faced a slump in demand in this crisis from its highly export-driven economy, they don’t face the volatility Russia does with its commodities export.

Source: NYT


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