The Rise and Decline of China?

Can The Regime Survive?

The future emergence or economic success of China is a fascinating debate. One the one hand there are those who look to China's insatiable drive for raw materials and resources as it rushes to modernise its economy and infrastructure. Just in the past few days, for example, The Daily Mail reported that Chinas first quarter GDP growth rate came in at 11.9 percent.

On the other hand, there are those who argue that statistics from China are "official" and therefore cannot be relied upon. Far more seriously, however, are arguments pointing to the endemic corruption, bribery, illegality, and dishonesty within China. Others argue that the Chinese government has essentially lost control of the country--it has just not realised it yet.

In this vein, the World Affairs Journal recently published an article by Gordon Change, entitled The Party's Over: China's Endgame. Chang is author of a book entitled The Coming Collapse of China. Below is a synopsis of his article. The dominant narrative in the West of China as the emerging global powerhouse, overtaking all other countries within fifteen or so years, is based upon a simple extrapolation of the growth and development statistics of the past twenty years. This represents a very shaky foundation.

The Chinese economy has benefited from the reduction in trade barriers over the past twenty-five years. Consequently, its economic growth has been export led. Without export growth, its economic growth is fragile.

As we saw in the Great Depression, the exporting countries had the hardest time adjusting to deteriorating economic conditions. That is proving to be the case now as well. China’s exports fell 16.0 percent last year, and forecasts show a weak export sector for at least the remainder of this year. As a result of declining exports and other factors, Beijing presided over the world’s fastest slowing economy. China’s economy, in fact, grew by about 15 percent in 2007, but fell to negative growth at the end of 2008.

To cope with this reverse, and ever living in dread of popular uprisings, the Beijing government responded by a massive injection of liquidity into the financial system. Chang argues that this is a "sugar high"--quick acting, but soon exhausted.

Government-mandated lending pushed unneeded funds into the Chinese stock markets, which caused an abnormal jump in prices; similar funds also flooded into the coffers of casinos in Macau, which had been languishing before the stimulus program. Predictions that Beijing’s plan might trigger the biggest wave of corruption in Chinese history now seem correct. And forced lending will undoubtedly create a mountain of bad loans because banks are shoveling funds to “beauty-show projects” that have little economic viability.

The Chinese economy needs greater diversification and less (almost exclusive) reliance upon exports. It needs, for example, greater consumption. But--and here lies the rub--internal consumption can only develop if people are free to make their own purchase decisions, and enterprise is free to meet local demands. Chinese government authoritarian economic planning remains acutely uncomfortable with freeing up the market.

The price of institutionalized Communist Party decisionmaking has been the diminution of the organization’s ability to govern. Why? China’s system is now weeding out the Mao Zedongs and even the Deng Xiaopings in order to prevent the rise of charismatic leaders, particularly someone like a Chinese Gorbachev. The individuals surviving this vetting, not surprisingly, lack the dynamism and ability of their bloodthirsty but imaginative predecessors. As the current leadership works to keep the lid on, small problems grow into big ones and big ones become gigantic. None of these problems has threatened the existence of the regime because increases in economic output in recent years have masked dislocations. But as the economy begins to contract, these problems may become too big to ignore—and perhaps too big to solve.

A taste of growing living standards creates enormous tensions that can result in an authoritarian regime being torn down.

Worse yet, even if the Communist Party could solve each of these specific problems in short order, it would still face one insurmountable challenge. The economic growth and progress of the last three decades, which makes so many observers believe in the inevitability of China’s rise, is actually a dagger pointed at the heart of the country’s one-party state.

Change, in general, is tough for reforming regimes. As Tocqueville noted, it was rising prosperity that created dissatisfaction in eighteenth-century France and paved the way for revolution. These same trends played out more recently in Thailand, South Korea, and Chinese-dominated Taiwan. And they are at work right now in China itself.

Senior Beijing officials now face the dilemma of all reform-minded authoritarians: the economic progress that legitimates their leadership endangers their continued control. As Samuel Huntington taught us, sustained modernization is the enemy of one-party systems. Revolutions occur under many conditions, but especially when political institutions do not keep up with the social forces unleashed by economic change.

There is now a growing civil unrest in China. The number of protests and strikes is rising. Chang reckons there are now 120,000 civil protests and disturbances a year in China, possibly more.

Expressions of discontent are expected in destitute places like Guizhou or Gansu or Ningxia, but now they are beginning to appear in prosperous cities like Beijing, Shenzhen, and Shanghai. One of the country’s most popular heroes—executed in November 2008—was a drifter who entered a police compound in Shanghai and killed six officers and wounded four others on the eighty-seventh anniversary of the founding of the party. In a development that did not make the evening news inside or outside the country, middle-class Chinese outside his trial chanted, “Down with the Communist Party!” and carried banners emblazoned with “Long Live the Killer.” Clearly, the country’s ruling organization has lost legitimacy, even among the relatively well-to-do in the important coastal cities.

The response of the regime, thus far, has been to attempt more and more crackdowns and controls--such as greater censorship of the internet. But the attempt is failing. Technology has provided a means for people across China to express dissent--and when it gets to the stage that dissenters think "the people" are with them, revolution is no longer out of the question.

Unfortunately for the Communist Party, this new restiveness comes as technology and instant communications are changing society. News travels fast in the modern Chinese state. During the first six months of last year, China’s citizens sent 382 billion text messages. No other country has more cell phone subscribers (there are 703 million of them) or Internet users (384 million, at last count). Cyber China, the most vibrant part of the most exciting nation on the planet, reflects the growing inquisitiveness of Chinese citizens about their society. Political dissent is sizzling on the Web—and readily available, at least most of the time. It is on the Internet that officials criticize their own government for corruption and businessmen post tracts on democracy.

Beijing has been more successful than any other government in creating a Big Brother–style Internet—with the help of American technology—but it is fighting a battle in which it will never be able to claim final victory. To consolidate his hold on the country, Mao divided up the Chinese people into small units and isolated each unit from the others. Now, in a modernizing nation, citizens are putting themselves back together with cell phones and laptops. On the Internet and in other forums, the Chinese people today are having national conversations for the first time since the Beijing Spring of 1989. Because so many share common grievances, demonstrations can erupt and engulf the one-party state.

There is now a widespread disaffection and cynicism about the Chinese Government. Since all governments exist by the consent of the governed, even if only tacit, scepticism by Chinese people towards their own government presages widespread civil unrest.

As the acceptability of protest grows in China, the popularity of the Chinese government slides. “I don’t know anyone who believes in the party anymore,” one Shanghai resident said to me a few years ago. The strength of the Communist Party has been eroded by widespread disenchantment, occasional crises, continual restructuring, and the enervating effect of the passage of time. Although it is big, it is also corrupt, reviled, and often ineffective. In some parts of the countryside it no longer operates, having been replaced by clans and gangs with loose ties to officials. It’s doubtful the party even commands the loyalty of its own members. Many cadres are opportunistic careerists and many, for good or ill, disregard orders from the center. “Now, no Communist official is loyal to or will sacrifice for the party,” said democracy activist Peng Ming, just after he was released by the regime. “When I was in jail, the prison warden and guards were very respectful to me. Even when I criticized them, they would not criticize me back. Why? They said, ‘This regime will not last long. Who knows you won’t be our next leader? If we mistreat you now, you will come after us when you come to power.’”

Chang concludes with an intriguing anecdote:

Ultimately, rows of stern-faced Chinese soldiers goose-stepping through the center of Beijing on National Day tell us little about the government’s hold over the people. True, the one-party state is at high tide, but in the last thirty years, the country’s seemingly endless prosperity has fundamentally changed its people. The full extent of this change became clear to me in June 2008. I was in a dingy walk-up in my dad’s hometown, Rugao. It’s a backwater town in Jiangsu Province. I was trying to talk to a group of residents, some young and a few elderly, about the Olympics. Nobody wanted to discuss the Games, which were dismissed as just another government-staged event. All they wanted to hear was news from the American campaign trail. They wanted to hear about John McCain and Barack Obama. They wanted to hear about the workings of democracy.