So Callick’s thesis that all China needs to do is fix the courts and the reform pressures will ease is implausible. His belief that political reform will then improve economic performance thus also appears improbable.

It seems far more important that China embrace economic change that can lead to broad civil coalitions forming as the foundation for an agenda of political reform. And one way forward is through state-owned companies being forced to comply to the disciplines of the market.

In response to Findlay and Drysdale, Callick suggests that this cannot occur due to the lack of transparency in the way that SOEs operate. But where on earth will this transparency come from other than the market?

Indeed, his example of the flaws of the Chinese market system, ICBC, has a capitalist pinup boy from Goldman Sachs on its board, has open listings of its capital reserve, non-performing loan and asset ratios (through the central bank) and releases annual reports not dissimilar to those of most Western banks. Why? ICBC’s need for foreign expertise encouraged it to sell a 10 per cent stake to Goldman and other foreign investors prior to its float on the HK and Shanghai stock exchanges.

Similarly, Callick’s claim that SOEs are not subject to the discipline of the market appears contrary to current evidence. The success of Chinese ‘national champions’ such as Haier and Lenovo was predicated on their ability to compete in the cutthroat Chinese domestic market. China’s accession to the WTO has given it a far more open domestic market. The days when foreign companies were forced to accede to onerous joint venture regulations in order to access the Chinese market are increasingly dated.

It is this movement towards greater competition and openness that needs to be encouraged. The more China embraces markets and competition, the more likely that moribund SOEs fall behind and be replaced by successful Chinese firms. The success of these firms increase their need to access capital, further bolster nascent Chinese capital markets, and allow Chinese citizens to become integrated in the process through share ownership. The protests in Jishou are in some ways a positive sign for China, and demonstrate how the populace has begun to decouple concepts of economic prosperity from party rule.

To be clear, I am not arguing that the shift from rule by law to rule of law is not essential, nor that one party rule is in any way desirable or aiding China’s development. Rather, it is more realistic that we understand first on how incentives for political reform develop through participation in the market and involve Chinese citizens in leading the push for reform.