3. A Non-Independent Central Bank

Today all the central banks of developed countries are independent from the government. The notion of central bank independence is based on economic and financial motives, but above all it is tightly linked to the democratic system: the checks and balances system of power. Like courts and the press, the central bank is a magistrate in its own field and as such it is expected to be free from the other power centres. As the court is in charge of law enforcement, so the central bank is in charge of price and financial stability. Price stability (i.e. the domestic value of money) being a public good, the central bank has a duty to act as a counter-power and make sure that monetary policy is implemented free of government interference. In China the mere idea of an independent centre of power from the Party-State is not compatible with the Chinese communist regime, nor with the multi-century history and political tradition of China: central power could be delegated but not decentralized. For centuries, due to the huge size of its territory and population, China has been centralized, broken down and reunited again and again. Centralization is a basic feature of Chinese politics. From this perspective, Mao was the last in a long line beginning with the first emperor, Shi Huang di, who united China in 220 BC through blood and violence. As opposed to Western empires, the Chinese Empire has never experienced any form of feudalism, i.e. a hereditary power handed over to a local baron over a given territory and population. By definition, local power is limited in time and may be cancelled at any time.