The Bo scandal shows the Chinese system to be as thoroughly rotten as one would expect of a kleptocratic police state. What is unusual is only that it wasn’t kept under wraps. The country is run by a small number of Mafia-style families jostling with one another for power and profits. China’s power brokers are quasi-feudal lords with networks of cronies grasping all that they can. The sisters of Gu Kailai, Bo’s wife, controlled a $126 million network of international businesses, according to Bloomberg News. They got rich on the families-and-friends program.
If China’s economic rise has been something to behold during the past three decades, it is not a tribute to the technocratic proficiency of China’s rulers. In China’s mixed system, it is the genuinely private companies that are more economically efficient. The World Bank writes, “A recent study shows that between 1978 and 2007 total factor productivity growth (a measure of efficiency improvements) in the state sector was a third that of the private sector, which has proved to be the more powerful engine of growth and innovation.”