A presentation to the Royal Commonwealth Society in Hong Kong on 18 September, 2013
A presentation to the Royal Commonwealth Society in Hong Kong on 18 September, 2013
On 29 November last year, Party Secretary Xi Jinping evoked The China Dream during a visit to "The Road Toward Renewal" exhibition in Beijing.. The phrase went viral on China’s Twitter-style weibo and drew a spate of emotional patriotic outpouring from overseas Chinese.
Since then, commentators have been trying to interpret Xi’s vision, ranging from a mundane call for solving China’s problems, to a sublime renaissance comparable to ancient glories of the Middle Kingdom or Europe’s Age of Enlightenment. Click here In any case, Xi was speaking of a “China Dream” for the nation collectively, not a “Chinese Dream” in the sense of good life of the “American Dream”.
of a legitimacy crisis, the yearnings for epochal change have been in the air
amongst the top leadership. Since Xi took office as Party Secretary, he has
launched a high-profile battle against official corruption and extravagance,
calling for closer bond between the Party and the people, and upholding the
rule of law and ideals enshrined in China’s Constitution. Click here
Some cold water was poured on Xi’s reformist rhetoric by an article in the New York Times. Xi’s fight against corruption and inequalities is pitted against opposition from vested interests. His demand for constitutional checks is contrasted with his warning about the collapse of the former USSR. His call for political liberalization is cited with his approbation of Mao’s revolutionary socialism. Reading the article, one can be forgiven for thinking that Xi's reformist stance resembles "a riddle, wrapped in a mystery, inside an enigma."
The confusion and myth are largely
a product of binary thinking - either giving up single party leadership or
sclerosis, either Western democracy or risk of a "French Revolution",
either forward to the future or retreat to Maoism.
In fact, the apparent contradictions are signs of a continuing quest for China’s unique model of democracy. There is a conviction that there is no one-size-fits-all formula, least of all a quick-fix that mandated glasnost and perestroika within 500 days which precipitated the collapse of the former USSR.
Indeed, in enlightened Party intellectual debate, the original Paris Commune is considered a form of local democracy ("we the people") and Mao's revolutionary "mass line" as embracing the will of the “grassroots” (or the 99%) against social injustice.
Not many in China believe that the country's future lies in copying Western multi-party “confrontational” democracy, with all its recent fault-lines. But how to make the Party truly represent and accountable to the people within a one-party state continues to test the ingenuity of the leadership.
For starters, however, China is likely to change the household registration (hukou) system (which marginalizes migrant workers) as well as to promote civil society to monitor local governance. These reforms and others are proposed in a recent 468-page World Bank report jointly undertaken with the Development Research Centre of the State Council. Click here
Another pointer to feasible change was a succinct, down-to-earth, 10-year roadmap for China’s social and political development provided by Professor Yu Jianrong of the Chinese Academy of Social Science. This includes a more centralized (and less locally biased) judiciary, abolition of certain authoritarian organs such as “labour educated camps”, and more governance transparency, including declaration of officials’ private assets. Indeed, some of these measures are brewing, if not already being experimented with.
However, as China vows to realize a middle-income society by 2030, it is timely to revitalize the Party by invoking a grand renewal reminiscent of what captivated the entire people at the founding of the People’s Republic. In a thought-provoking book “The Transformation of Chinese Socialism”, Ms Lin Jun evokes the vision of “xiaokang (middle-income) socialism” with empowered local citizenry. Amongst other thoughts, she explains how “community, security, integrity, and democracy” can be intertwined to empower local citizenry, including the non-profit and voluntary sectors, in creating a harmonious and “caring economy”. Her thoughts resonate with a popular nostalgia for ideals of the Communist Revolution “where its government was clean, its army was the model of serving the people, its working men and women were dignified, and its life was meaningful without commodification and consumerism.”
Moreover, in the age of scarcity and environmental strains, it is possible to envision an epochal transition from an “industrial” to an “ecological civilization”, in the words of Pan Yue, China’s Vice Minister of Environmental Protection Click here, where minimalism is preferred over surfeit, and less can be more.
Indeed, local citizenry has recently been allowed to grow and even succeed in reversing major municipal projects on environmental grounds. Citizenry empowerment in the workplace is also quietly promoted as in the case of Foxconn, Apple’s Taiwanese manufacturer. The company is now allowed to bring in US-based Fair Labour Association to train its 1.2 million workers in China in voting for representatives on 18,000 union committees.
It has often been said that with the One Child Policy, China will get old before getting rich, as the pool of low-wage workers is being exhausted. However, thanks to an annual output of seven million university graduates, China will have 195 million of them by 2020, more than the entire U.S workforce. In a survey in May 2012, KPMG, an audit, tax and advisory firm, expects that over the next four years China will rival with the United States in innovative technologies, particularly in cloud computing and mobile telephony. Likewise, Clyde Prestowitz, president of the Economic Strategy Institute, anticipates the rise of a “Silicon China” Click here. According to the World Intellectual Property Organization, China tops the world in 2011 in patent applications, the first time in a century for a developing country Click here. By all accounts, therefore, China should be on track to overcoming the Middle Income Trap in transit to a higher-income country.
This prognosis is supported by a presentation of Professor Angang Hu of Tsinghua University. He finds that driven by total factor productivity growth, innovation and human capital accumulation, by 2020 China will, by whatever measurements, surpass the United States as the largest economy, growing to 2.2 to 2.5 times the U.S. GDP by 2030. By that time, China is slated to have the largest consumer market, the largest urbanization, and the largest infrastructural system, coupled with the largest pool of innovative human capital, a green country, and a more equal and equitable society.
Nevertheless, there remain many institutional bottlenecks and other challenges like resource scarcity, demography and vested interests that can derail Professor Hu’s optimistic trajectory. What is even more crucial, however, is whether China could craft a path-breaking new “social contract” that can harness a democratically organised citizenry to aid, monitor, participate in and hold accountable a clean and effective state that delivers the greatest public goods for the greatest proportion of the people.
Notwithstanding the odds, a visionary China Dream never fails to inspire and rally dedicated or ambitious aspirants. According to the People’s Daily, a 27-year old double-major from Yale University is giving up a lucrative career overseas to work as a lowly-paid official in a remote village in Hunan Province. As a Chinese, he vows to give his share to help fellow villagers to realize the dream for a better life for themselves and their off-springs. Click here
The hearts and minds of the whole nation are now being touched by Xi’s “China Dream”, and the inspiring vision, imprecise though it is, does not look wholly unattainable.
Alexi de Tocquerville’s“The Ancien Regime and the Revolution” is a critique on how liberal and egalitarian revolutionary ideals could become corrupted and forgotten afterwards. The classic tome has been reported to be doing the rounds amongst China’s top leaders and is now a best-seller in China Click here. When asked by Richard Nixon, Chinese Premier Zhou Enlai was reported to have said that the implication of the French revolution was too soon to tell. Perhaps he was right all along.
Contrary to some less well-informed Western
observers, many of the rights and privileges of modern democracy have
already been enshrined in China's Constitution, revised and perfected by
the Communist Party's early founding fathers.
"The resulting document guaranteed full powers for a representative legislature, the right to ownership of private property, and freedoms of speech, press and assembly. But the idealism of the founding fathers was short-lived. Though the Constitution was ratified in 1982 by the National People’s Congress, it has languished ever since", acccording to an article in the New York Times of 3 February, 2013.
" Some of Mr. Xi’s recent speeches, including one in which he emphasized the need to enforce the Constitution, have ignited hope among those pushing for change", the New York Times continues.
"Most notable among those is Study Times, a publication of the Central Party School, where Mr. Xi served as president until this year. That weekly newspaper ran a signed editorial on Jan. 21 that recommends that the party establish a committee under the national legislature that would ensure that no laws are passed that violate the Constitution."
Neither Mr Xi nor the Study Times of the Party School are known for thinking off the top of their heads. The Bo Xilai affair and a growing economic, social and political divide are clear writings on the wall. It has been said many times recently that Alexis de Tocquerville's tome on the French Revolution is becoming favourite reading amongst China's top leaders.
While China will chart its own path of development and will not copy the Western model of rival multi-party politics, political reform is getting more pressing as mounting social discontent is posing an existential threat to the Party.
The debate on the need for real dmocratic reform is intensifying amongst China's top elites. Professor Yu Jianrong of the Chinese Academy of Social Science circulated a succinct, down-to-earth, 10-year outline for China’s social and political development. First promulgated in April this year, it went viral on Sina Weibo amongst his 1.5 million followers on the popular micro-blogging site. Click here
While the jury is still out pending Xi's formal installation as China's new President, the prognosis is building up that something epocal is likely to materialize sooner rather than later, as chances for China's true renaissance, and indeed its very system survival, are now at stake.
There are many tell-tale signs that China has now reached a historic watershed.
First, the economy is changing towards slower, but more balanced, equitable and sustainable growth, to be driven by consumption instead of capital investment and exports.
Second, according to Arvind Subramanian, senior fellow at the Peterson Institute for International Economics, more currencies are moving in sync with the Chinese yuan, the reminbi, as a “reference currency” than with the dollar. Click hereThird, for the first time, China tops the world in patent applications. Click here
Fourth, a rising citizenry or civil society is succeeding in reversals of government decisions over such matters as social justice, local environment, and press freedom.
Fifth, “labour re-education”, a 60-year-old Communist system since the founding of the People’s Republic of China, has now been announced to be scrapped. Click here
Sixth, China’s new leadership is now fighting corruption as a top threat to the nation’s stability.
Seventh, externally, China has grown too big and too globalized to continue with Deng Xiaoping’s famous dictum of “biding time and lying low” (“tao guan yang hui”). A nascent blue-water navy is taking shape and more aggressive stands are being taken in asserting the nation’s maritime territorial claims.
The list is by no means exhaustive.
According to a report of the European Council for Foreign
Relations (ECFR) (Mark Leonard, ed., November, 2012) click here, China is trapped in
its own success and needs to enter into a new era. “After Mao’s political revolution (‘China 1.0’) and Deng Xiaoping’s
economic revolution (‘China 2.0’), they are (the country is) expecting a ‘China
The report, a collection of essays by some of China’s most influential thinkers, identifies three traps or crises in which China finds itself - in the realms of affluence, stability and national power. How to respond to them is subject to intensive academic and political debate:
"In the economic realm, the main divide is between a social Darwinist New Right that wants to unlock entrepreneurial energy by privatizing all the state-owned companies and an egalitarian New Left that believes the next wave of growth will be stimulated by clever state planning”.
“In the political realm, the main divide is between political liberals who wants to place limits on the power of the state, either through elections, the rule of law, or public participation, and neo-authoritarians who fear these measures will lead to a bureaucratic collective government that is unable to take tough decisions or challenge the vested interests of the corrupt, crony capitalist class”.
“In the foreign policy realm, the main divide is between defensive internationalists who want to play a role in the existing institutions of global governance or emphasize prudence and nationalists who want China to assert itself on the global stage."
The intensity of these debates, however, belies the extent of differences between what are portrayed to be diametrically opposing schools of thought. For example, the so-called New Right does not see that China needs to import the kind of Western market fundamentalism that led, for example, to the financial crisis. Moreover, the quoted example of a push by the New Right, the 468-page World Bank Report jointly undertaken with the Development Research Centre of the State Council, is by no means all about “marketization” . It also contains the target of achieving universal access to public goods such as heathcare, education and housing by 2020, reform of the hukou system which marginalizes migrant workers, improved governance and promotion of civil society. These are all agendas said to be part of the ideology of the New Left.
As an example of the latter, the so-called “Chongqing model” also sets great store on the complementary and mutually re-enforcing role between public ownership and private enterprise, as Nobel prize-winning economist James Meade has argued.
In any event, these debates do not fracture the collective leadership, as opposing ideas are, as a rule, discussed and reconciled through various expert groups, a healthy feature of China’s relatively efficient decision-making process. There is no partisan gridlock as what causes administrative dysfunction in American politics.
Indeed, there are valid ideas in various intellectual camps which deserve adoption if China 3.0 is to find a unique path to economic, social and political development and to define the nation’s place in a post uni-polar world. These include such transitional steps as Ma Jun’s “accountability without elections”, “budgetary” and “social” democracy through wider public consultation, and monitoring governance through civil society; Zhang Weiying’s safeguard of individual “rights”; Pan Wei and Shang Ying’s “Wuxi experience” of neighbourhood communities; and Wang Yizhou’s diplomacy of “creative involvement” by providing public goods in the global commons commensurate with China’s emerging status as a world power.
Sun Liping, former PhD supervisor of Xi Jinping at Tsinghua University, identifies China’s “correction predicament” or “transition trap” where accumulated problems have grown too difficult to resolve and reform is opposed by powerful vested interests. He opines that a social consensus must be built to tackle this predicament head-on as there is only “a fleeting historical opportunity to face this challenge”.
China also has to grapple with a “Middle Income Trap”, where countries reaching about $3,000 to $8,000 per capita income tend to stall in productivity and income growth. Nevertheless, according to a research study of China’s Academy of Social Sciences (CASS), this hurdle is likely to be overcome by 2021-25. Click here At the 18th Party Congress, President Hu emphasized the objective of attaining a Middle-Income Society by 2020, doubling per capita income of $5,530 in 2011 to $10,000. This would require only an average growth rate of less than 7% annually, a target not totally beyond reach, given China’s recent innovation records.
A recent OECD report suggests that “China will overtake the eurozone in 2012 and the US within the next four years to become the largest economy in the world”. More recently, Party leader Xi Jinping talks of China’s dream of a coming renaissance. Click here However, with some seven million university graduates added every year, a rapidly growing, middle -class “Chinanet” generation is increasingly demanding greater legitimacy, accountability, openness and personal liberty. Absent meaningful democratic reform, any vision of a Chinese renaissance would not only remain elusive, but the very survival of the Communist Party risks being threatened.
There is a rumour that Alexis de Tocqueville’s tome on the French Revolution has been doing the rounds amongst the top leadership. This may not be without foundation, for amidst the crises and traps China is facing, perhaps democratic reform is the most critical of all.
Interview on Inside Story with Aljazeera English on 27 December 2012 together with Dale Rutstein, the China spokesperson for UNICEF, the UN child protection agency; and Victor Gao, the director of the China National Association of International Studies, a think-tank affiliated with the Chinese ministry of foreign affairs.
Doubt , if not pessimism, is expressed by by David Shambaugh on the ability of China’s new leadership to power China's Rise in an article of 21 November, 2012 here in YaleGlobal Online, a platform of the Yale Centre for the Study of Globalisation.
Shambaugh is professor
and director of the China Policy Program Elliott School of International
Affairs at George Washington University, and Senior Fellow in the Foreign
Policy Studies Program at the Brookings Institution. The article heralds
his forthcoming book “China Goes Global: The Partial Power (2013)” Click here
Shambaugh recognizes “a surprising strong consensus” both inside and outside China on the following critical domestic reform areas –
“ – reorienting the economic
growth model away from investments into physical infrastructure and
subsidized exports to one driven by domestic consumption and innovation,
emphasizing the knowledge economy and service industries;
– breaking the government’s monopoly over several sectors, while empowering civil society and loosening controls over the media, so as to facilitate the free flow of information needed in a real market economy and innovation society;
– adequately resourcing “public goods” for the populace – including healthcare, environmental protection, improved quality of education, pensions, old age care – while seriously addressing social stratification and inequity;
– instituting the real rule of law – so as to counter rampant corruption, rising crime, systemic abuse of privilege and power, and facilitate the predictable functioning of a market economy;
– addressing seething discontent among ethnic groups in Tibet and Xinjiang in positive ways instead of relying on intimidation and repression
– permitting greater political pluralism, even within a one-party system”.
“In the foreign-policy arena”, Shambaugh thinks that “China’s neighbours hope it will adopt a more accommodating and less confrontational posture, particularly over maritime territorial disputes. Beijing also needs to work with the United States to stem the strategic competition and mistrust now pervasive in the relationship. Its relations elsewhere in the world are increasingly afflicted by the growing perception of China as a mercantilist state soaking up natural resources and investing in strategic assets. China also needs to play a greater role in global governance commensurate with its power and position in the international community”.
However, the eminent professor thinks that China’s new generation of leaders is hamstrung by four inherent constraints -
“The growth model has not only produced impressive national development – it has also employed a huge relatively unskilled workforce. To transition away from this model risks widespread unemployment and labour unrest, which would threaten social stability and party rule”.
Shambaugh explains that “The composition of (China’s ) exports needs to move up the value chain – and this is linked to shifting investment from “hard” to “soft” infrastructure: education, science, cutting-edge technologies, innovation and cultural creativity. For China to make these transitions requires more than a shift in financial allocations, though, as it requires loosening of the political system, media censorship and civil society. A “knowledge economy” cannot easily be built in an authoritarian system.”
Shambaugh argues that with the spectre of the collapse of the former USSR, together with the lingering threats of the Eurasian “colour revolutions” and the “Arab spring”, there is a gripping fear that “opening the political system to genuine pluralism, empowering civil society, loosening media censorship, permitting free inquiry and critical thinking in education and research, or making the legislative and judicial systems autonomous of party control, would inevitable cascade out of control and spell the demise of party rule”.
“The core problem is the state sector of the economy, which still accounts for roughly 30 percent of GDP. This includes state monopolies of the banking, energy, finance, defense, heavy industrial, aerospace, telecommunications, and much of the transportation sectors, as well as enormous swaths of land and property owned by the party, state and military. Lenin warned of “state-monopoly capitalism” in 1917 – China has it in spades today. These vested interests, particularly the 145,000 state enterprises and 120 “national champion” corporations, are not about to divest their interests voluntarily”. In addition, “three other entrenched interest groups inhibit reforms: the military, the sprawling internal security apparatus and the arch-conservative wing of the Communist Party”.
There is an “entrenched national narrative of victimization. This narrative, assiduously developed over six decades through the propaganda and educational systems, underpins the political raison d’etre of the Communist Party – but it is a core source of the frictions with China’s neighbours and the West. China needs to shed this psychological baggage to truly normalize relations with Asia and the West – but to do so is to undercut the party’s legitimacy”.
To be fair, Professor Shambaugh is to be agreed as his prognosis is much more balanced and analytical compared with most China studies characterized by sectoral or pre-judgemental bias, hyping either the “China threat” or “China collapse” at one end of the spectrum to “China rules the world” at the other. According to his description of his forthcoming book, his conclusions are based on “six distinct dimensions of China’s global emergence (perceptual, diplomatic, global governance, economic, cultural, and security) and multiple manifestations of each”.
While Shambaugh’s scepticism is well-placed, it must nevertheless be seen in the following context –
On “path dependence”-
Ever since China started to reform and open up in 1978, the country’s development has been a continuous work-in-progress, to stay above waters of a continually changing tide. This perennial status of flux, of adaptation and change, has been at the core of China’s economic miracle, compressing over a century’s economic progress into a few decades. However, this has been breeding existential threats in unbalanced growth, rampant corruption, social inequity and ecological degradation and a hotbed of other social ills.
As early as the beginning of China’s 11th Five Year Plan (2006-2010), the leadership has been highlighting the so-called five imbalances (between rural versus urban, human versus environmental, economic versus social, national versus local, and inward versus outward investments). Ever since, the leadership has ushered in a swath of initiatives to hone “ a nation of innovation” including a battle for talent. Click here and the promotion of the kind of “soft” infrastructure highlighted by Shambaugh: education, science, cutting-edge technologies, innovation and cultural creativity, though the outcome is not yet inconclusive.
There has thus been a clear sense of changed direction since 2006 – now reinforced by the 12th Five Year Plan (2011-15) – towards a dramatically different path based on slower but more balanced, higher-quality, more equitable and more sustainable growth. There is a broad-based awareness that the cheap labour pool is dwindling and China must redouble efforts to respond to the so-called Lewis Curve Turning Point Click here and the challenges of the Middle Income Trap. Click here
So the point here is that “path dependence” is not immutable.
On the “Soviet shadow” –
True, the Communist Party is caught in a quandary. But what Daron Acemoglu and James Robinson describe as “extractive institutions” (“Why Nations Fail”, Profile Books, 2012) have generated growing social unrests that threaten to undermine the stability of the whole regime. It is no coincidence that from Wukan, Shifang to Ningbo, a recent series of uncharacteristic, high-profile, government about-turns have begun to happen, overturning local projects approved in Beijing in response to public protests against land grabs and pollution. In particular, the so-called “Wukan model” of open and fair village elections was daringly promoted by Wang Yang, one of China’s rising, if recently checked but no means “disabled”, pro-reform “stars”.
It is also instructive that a host of reform proposals in a new 468-page World Bank report were given the rare imprimatur of the State Council (Development Research Centre). These include the promotion of civil society, including the role of the media to monitor governance (if initially only at the local level), and the strengthening of the rule of law, although, admittedly, there is still a long and winding road towards greater legislative oversight and judiciary independence.
But if the story is to be believed, Alexis de Tocqueville’s “French Revolution” is doing the rounds amongst China’s top leadership, including Li Keqiang, the Premier-in-waiting and Wang Qishan, the new anti-graft czar. And fighting corruption has been termed a matter of “”life or death” for the Party and the nation, according to both out-going President Hu Jinatao and President-in-waiting Xi Jinping at the 18th Party Congress.
The point here is that the “”Soviet shadow” also means that “not managing change” in tune with the times will only threaten the whole regime’s survial.
On “vested interests”
The reason why the 18th Party Congress was unexpectedly delayed was the shock of the Bo Xilai affair. Regardless of factional vested interests, nothing concentrated the minds of the collective leadership better than when the whole apple chart was about to be overturned by the overarching ambition of a scheming, if charismatic, individual. This was also an epiphany that vested interests must be curved, if not eradicated, particularly those represented by the monopolistic state-owned enterprises which sapped the vitality of the private sector. Indeed, this is one of the major reform areas highlighted in the World Bank/Development Research Centre report.
As for the military, a series of top military promotions and reshuffling took place during the mysterious disappearance of then Vice President Xi Jinping. It is probable that he took French leave to boost the loyalty of the military leadership in preparation for his taking over the Military Commision chairmanship in a first-of-its-kind complete power transfer at the Party Congress. As it is now confirmed, the Party’s top leadership has been reduced from nine to seven members, downgrading the security and propaganda apparatus below the level of the Politburo Standing Committee.
All these changes are of course not enough to break the so-called “iron quadrangle” of the military, the security apparatus, state-owned enterprises and arch-conservatives. This is not totally unlike the American example of the military-industrial complex forewarned at the time of President Einsenhower plus its modern adjuncts of big business and Wall Street.
The point here is that vested interests, when push comes to shove, can also trigger reform in order to maintain overall regime stability.
On Aggrieved nationalism
The nation’s psychological baggage is a reality borne of centuries of foreign oppression. Some of the remaining territorial disputes are in fact their outcome. Such disputes are unlikely to be resolved anytime soon. So territorial integrity is likely to remain a sore point in the national psyche for a long time to come.
Nevertheless, China has now become more proactive in the global commons, for example in international peace-keeping, as the largest contributor of peace-keeping forces amongst Permanent Members of the Security Council. The country is also instrumental in brokering the six-party talks on North Korea and is taking a keener interest in addressing conflicts in the Middle East. But such a role cannot be equated to acquiescence with one-sided demands or abrogation of China’s own national interests. Indeed, no self-respecting nation would do this.
Meanwhile, China is now embarking on a mission to promote the country’s soft-power, including Confucianism and other aspects of China’s culture and heritage. But notwithstanding the gravitas of China’s economy, debates about the merits of the so-called Beijing Consensus and growing world-wide interests in the Chinese language, China is unlikely to have many genuine followers until the country succeeds in showcasing a new attractive civilization with a heart and soul that appeal to the spirit of the times.("China's Economic Success and Its Implications for the World Order" Click hereIn the final anaysis, despite many negative connotations, “in the past ten years under the current leader, Hu Jintao, the economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95% of all Chinese with some kind of health coverage, up from just 15% in 2000. Across the world, China is seen as second in status and influence only to America,” according to The Economist front cover article of 27 October 2012.
An article here for the South China Morning Post dated 19 September 2012, China's Economy and Policy, the flagship publication of Gateway International, a global China consultancy firm, postulates that brighter days are ahead for China’s economy.
The latest OECD report “Looking to 2060: Long-Term Global Growth Prospects” dated November 2012 here suggests that “China will overtake the eurozone in 2012 and the US within the next four years to become the largest economy in the world. By 2060 …… the combined GDP of China (27.8%) and India (18.2%) will be larger than that of the OECD – and the total output of China, India and the rest of the developing world (57.7%) will be greater than that of developed OECD and non-OECD countries (42.3%)”.
Notwithstanding competition and rivalry, which are common to all political systems, the different factions, power-centres, and vested interests of the Party polity all embrace and continue to benefit from China’s continuing reform and progress. The question is not whether to reform but where, how much, and how fast, and of course, how to apportion their respective power and influence.
Depending on the time horizon and a host of imponderables, brighter prospects may or may not materialize. Nevertheless, I am more inclined to the view that the bottle is at worse half full. There is serious leakage that needs to be fixed but more water is coming in. At any rate, the jury is still out.
If one is to believe that in reply to Richard Nixon, Zhou Enlai said it’s still too early to tell the impact of the French revolution, perhaps it is still too early to be pessimistic about China, especially at such an epochal watershed when no change is no option.China will remain a work in progress for years to come. So, until China manages to address all of the above challenges, Professor Shambaugh is accurate - China remains a "Partial Power".
On the eve of an epochal leadership transition, The Economist front cover article (27 October 2012) here shows why Xi Jinping, China’s expected President-in-waiting, must grasp the nettle to overcome a series of dire challenges to the country’s stability, if not its very survival.
“The departing prime minister, Wen Jiabao, has more than once called China’s development (“unstable”,)“unbalanced, uncoordinated and unsustainable”.
This is in spite of China’s impressive gains on a wide front during the past decade under the watch of the out-going Hu-Wen leadership.
The Economist continues,
“In the past ten years under the current leader, Hu Jintao, the economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95% of all Chinese with some kind of health coverage, up from just 15% in 2000. Across the world, China is seen as second in status and influence only to America”.
According to successive PEW public attitude surveys, a vast majority of the population remains broadly supportive of where the country is heading, in stark contrast to the surveys’ findings on many Western nations. However, across various strata of society, there is a growing tide of disquiet, mistrust, and civil protest against the Chinese government.
“The poor chafe at inequality, corruption, environmental ruin and land-grabs by officials. The middle class fret about contaminated food and many protect their savings by sending money abroad and signing up for foreign passports. The rich and powerful fight over the economy’s vast wealth. Scholars at a recent government conference summed it up well: China is “unstable at the grass roots, dejected at the middle strata and out of control at the top”, says the Economist article.
The latest protest in Ningbo during 25-28 October 2012 against a petrochemical plant project is a case in point. See a YouTube video here. Like a few recent high-profile cases elsewhere such in Dalian, Liaoning Province and Shifang, Sichuan Province, the governemnt quickly backed down, unlike previous get-tough repressive tactics, even as the projects in questions represented massive investments approved at the highest levels in Beijing. Click here
“Once, the party could bottle up dissent. But ordinary people today protest in public. They write books on previously taboo subjects and comment on everything in real time through China’s vibrant new social media. Complaints that would once have remained local are now debated nationwide. If China’s leaders mishandle the discontent, one senior economist warned in a secret report, it could cause “a chain reaction that results in social turmoil or violent revolution”.
“Having long since lost ideological legitimacy, and with slower growth sapping its economic legitimacy, the party needs a new claim on the loyalty of China’s citizens”, the Economist intones.
There is no
doubt that the Party is well aware of its existential challenges. As pointed out
by The Economist's Briefing article on the same subject, a rare joint study published in
February 2012 of the World Bank and the Development Research Centre of the State
Council captures a host of China’s impending challenges with suggested recommendations.
These include liberalization of the hukou
system which marginalizes China’s “under-class” community of migrant workers,
reform of state-owned enterprises to make way for the private sector, liberalization of the financial system, enhancing innovative productivity to
escape the “Middle Income Trap”, growing a green economy, and promoting a
greater role for civil society. It is reported that Li Keqiang, China’s Premier-in-waiting is the study’s staunch supporter. Click here
Likewise, China’s economy is taking an about-turn in the 12th Five Year Plan (2011-15), from a high-speed, low-cost, energy-intensive, and export-dependent model to a slower, higher-value-added, consumption –oriented and environmentally sustainable model. This shows how China is responding to the challenges of the “Lewis Turning Point” (a related obstacle of the Middle Income Trap), where the country’s reservoir of cheap labour is running out when the population profile starts to age. Click here
To mitigate the looming aging profile, there is still no sign that China is scrapping the One Child Policy anytime soon. Perhaps this is not going to happen before the middle class exceeds half of the population by 2020 or thereabouts, when without government diktats, quality will count more than quantity in determining the size of families. However, there is urgency in making this policy change as turning around the population profile even a little will take decades rather than years. In any event, under present circumstances, China will grow old because the country gets rich (in per capita terms).
China’s most daunting challenges, however, remain social and political, in particular growing inequalities, lack of checks and balance against corruption and power abuse, absence of an independent judiciary, and want of social justice and freedom of political expression.
It is rumoured that one of Li Keqiang’s favourite reads is Alexis Tocqueville’s opus on the French Revolution. The downfall of the “ancien regime” was characterised by what Daron Acemoglu and James Robinson call “extractive institutions” in their seminal work “Why Nations Fail” (Profile Books, London, 2012). Perhaps the Premier-to-be is mindful of Zhou Enlai’s famous response to Richard Nixon, that the impact of the 1789-99 Revolution was then too early to tell.
Granted, “extractive” elitism is not confined to China alone or developing countries in general. It also happens in America as the lead promoter of democracy. In The American Conservative May 2012 issue, Ron Unz, the journal’s publisher, poses the question "Which superpower is more threatened by its “extractive elites?” His question is the context of a critical comparison between the U.S. and China's body-politic, referring to the 1% versus 99% divide in America. Click here
The United States may also have a kind of “prince-lings” in the form of an unholy alliance between Wall Street and the powerful “military-industrial complex” forewarned by President Einsenhower. However, in the final analysis, notwithstanding any such “extractive elitism”, America possesses, unlike China, the check and balance of the ballot box and a highly independent judiciary defending the spirit of the American Constitution.
As for China, The Economist leader finds signs of further reform in a front-page article dated 16 October 2012 in Qiushi , the Chinese Communist Party’s main theoretical journal, which, according to the magazine, calls on the government to “press ahead with restructuring of the political system”. The Economist proceeds to lay out, “taking a deep breath”, its vision for progressive political reform, starting from the village level all the way to competitive election for the nation’s top leadership.
“Independent candidates should be encouraged to stand for people’s congresses, the local parliaments that operate at all levels of government, and they should have the freedom to let voters know what they think. A timetable should also be set for directly electing government leaders, starting with townships in the countryside and districts in the cities, perhaps allowing five years for those experiments to settle in, before taking direct elections up to the county level in rural areas, then prefectures and later provinces, leading all the way to competitive elections for national leaders”.
“The Chinese Communist Party has a powerful story to tell. Despite its many faults, it has created wealth and hope that an older generation would have found unimaginable. Bold reform would create a surge of popular goodwill towards the party from ordinary Chinese people”.
“Mr Xi comes at a crucial moment for China, when hardliners still deny the need for political change and insist that the state can put down dissent with force. For everyone else, too, Mr Xi’s choice will weigh heavily. The world has much more to fear from a weak, unstable China than from a strong one”, opines The Economist.
In any case, in the wake of the Bo Xilai saga, the Party has been shocked into reality that strengthening the rule of law and further reforming the Party are pre-requisites for political survival. Click here
However, while the Party is drumming up the need for the rule of law (as distinct from rule by law), there is still no sign of a political decision to establish a more independent judiciary. Local judges remain appointed by local party secretaries. Despite channels of appeal to higher courts, this system of judiciary has spawned a glaring "feudal" anachronism whereby aggrieved individuals have to make it all the way to Beijing to seek redress against overt or covert resistance of local officials. Short of a complete judiciary overhaul, if at least all judges are appointed by Beijing instead, this would immediately minimize the chances of miscarriage of justice through collusion at local levels.
As for political reform, the magazine’s reading of Qiushi is one-sided at best. The Party article merely reiterates the need for China to find her own path in continuous reform on all fronts in keeping with the changing times. It warns against the inherent contradictions in Western capitalism, which have been increasingly exposed in recent years. The article is an affirmation of the leadership of the Party. Absent is any suggestion of copying the West’s model of competitive multi-party democracy.
Nevertheless, leaving aside its perhaps over-ambitious recommended timetable, the political reform proposed by The Economist is not totally incompatible with the form of “intra-Party democracy” openly promoted by the Party during the past decade. The success of Singapore’s single-party rule (notwithstanding elections) and the broad support the Communist Party has been enjoying amongst the vast majority of the Chinese people in recent years may well give the Party added confidence to move in this direction, if only at a measured pace.
To take any
view on whether China’s one-party system is sustainable and to envision the
likely shape of any political form, however, it is necessary first to understand how China
chooses its top leader. The Economist, like most China watchers in the West, is
relatively silent on this point. When asked, I have on occasions jokingly alluded to the internal dynamics in the election of a new Pope or the leader of a powerful business association.
After the strongman era ended with Deng Xiaoping, the leadership contest has become a competitive meritocratic process sprinkled with a natural dose of political rivalry and horse-trading for the top job. Gone are the days when ideology alone mattered as the Party has since been firmly wedded into a consensus of continuous reform and opening up. The rallying focal point is to what extent, considering track records and affiliates, an individual can be trusted by the Party polity “across the aisle”, to borrow an American expression, in maintaining a collective, united, and purposeful leadership to carry the Party torch and the nation forward.
Thus, through layers of power structure, from stints as junior local party officials to ministerial appointments, from work in provinces to key municipalities, from socio-economic to political portfolios, some well-tried winners compete over the years to get to the top echelons who are of a right age, proven calibre, and high standing within and outside the Party. This process seem to hark back to China’s ancient meritocratic mandarin system that underpinned the most successful (and long-lasting) dynasties.
The Chinese system of meritocracy resonates with the ancient Confucian wisdom that the state should be well governed by the most meritorious and the most able to serve the public good. 大道之行也, 天下为公, 选贤与能. If in the coming decades, this system of single-party collective leadership based on Confucian competitive meritocracy continues to prove successful in driving China, the world’s largest country, forward on all fronts, it would be a powerful alternative mode of government to the Western model based on rival multi-party democracy.
Read “How are China's top leaders selected and how stable is China's Communist Party?” here
Last but not least, Confucian ideas are being re-interpreted by China in the modern context of government for the people, harmony in the society, harmony between nations and harmony between man and nature. While Western democracies are revealing various fault-lines, such as the global financial crisis, the European sovereign debt crisis, the “Occupy Wall Street” Movement, and relations with the rise of political Islam, it may be tempting to speculate whether a China Renaissance based on a Confucian model of harmony may offer a viable alternative to the existing West-dominated word order.
However, any such visions of grandeur are unlikely to materialize from China’s economic renaissance so far. First, China’s economy is by no means an unqualified success - more in quantity than in quality. Second, much of the world remains suspicious of the implications of a rising China, seen as an outlier to world-accepted social norms and values. Third, the world’s extant superpower, the United States, feels increasingly threatened by an ideologically-adverse challenger, and is rapidly re-focussing its geopolitical strategy. Fourth, and perhaps most importantly, China’s perceived foibles in human rights, rule of law, corruption, inequalities, social justice, and pollution are having a negative impact on the world’s perception of China.
If China is to rise to the historical opportunity to influence the world order for the better, the nation must first reform its many failings to create a new attractive civilization with a heart and soul that appeal to the spirit of the times.
For Xi, the tasks ahead are historical as they are Herculean. There is no doubt that not only the Chinese people, but the whole world will be watching with abated breath.
Read “China’s Economic Success and its Ideological Implications for the World Order” here
A cover story by Ron Unz, publisher of The American Conservative, appears in the journal's May 2012 issue in the form of a critical comparison between the U.S. and China's body-politic, posing the question as to "Which superpower is more threatened by its “extractive elites”? Click here
The title of the article "China’s Rise, America’s Fall" is over-hyped, as many Chinese would be the first to admit. Nevertheless, the author explains,
"In a recently published book, Why Nations Fail, economists Daron Acemoglu and James A. Robinson characterize China’s ruling elites as “extractive”—parasitic and corrupt—and predict that Chinese economic growth will soon falter and decline, while America’s “inclusive” governing institutions have taken us from strength to strength. They argue that a country governed as a one-party state, without the free media or checks and balances of our own democratic system, cannot long prosper in the modern world. The glowing tributes this book has received from a vast array of America’s most prominent public intellectuals, including six Nobel laureates in economics, testifies to the widespread popularity of this optimistic message".
"Yet do the facts about China and America really warrant this conclusion?"
"Meanwhile, the rapid concentration of American wealth continues apace: the richest 1 percent of America’s population now holds as much net wealth as the bottom 90–95 percent, and these trends may even be accelerating. A recent study revealed that during our supposed recovery of the last couple of years, 93 percent of the total increase in national income went to the top 1 percent, with an astonishing 37 percent being captured by just the wealthiest 0.01 percent of the population, 15,000 households in a nation of well over 300 million people".
"Evidence for the long-term decline in our economic circumstances is most apparent when we consider the situation of younger Americans. The national media endlessly trumpets the tiny number of youthful Facebook millionaires, but the prospects for most of their contemporaries are actually quite grim. According to research from the Pew Center, barely half of 18- to 24-year-old Americans are currently employed, the lowest level since 1948, a time long before most women had joined the labor force. Nearly one-fifth of young men age 25–34 are still living with their parents, while the wealth of all households headed by those younger than 35 is 68 percent lower today than it was in 1984".
"The total outstanding amount of non-dischargeable student-loan debt has crossed the trillion-dollar mark, now surpassing the combined total of credit-card and auto-loan debt—and with a quarter of all student-loan payers now delinquent, there are worrisome indicators that much of it will remain a permanent burden, reducing many millions to long-term debt peonage. A huge swath of America’s younger generation seems completely impoverished, and likely to remain so".
"International trade statistics, meanwhile, demonstrate that although Apple and Google are doing quite well, our overall economy is not. For many years now our largest goods export has been government IOUs, whose dollar value has sometimes been greater than that of the next ten categories combined. At some point, perhaps sooner than we think, the rest of the world will lose its appetite for this non-functional product, and our currency will collapse, together with our standard of living. Similar Cassandra-like warnings were issued for years about the housing bubble or the profligacy of the Greek government, and were proven false year after year until one day they suddenly became true".
"But if our government policies are so broadly unpopular, why are we unable to change them through the sacred power of the vote? The answer is that America’s system of government has increasingly morphed from being a representative democracy to becoming something closer to a mixture of plutocracy and mediacracy, with elections almost entirely determined by money and media, not necessarily in that order. Political leaders are made or broken depending on whether they receive the cash and visibility needed to win office".
"When parasitic elites govern a society along “extractive” lines, a central feature is the massive upward flow of extracted wealth, regardless of any contrary laws or regulations. Certainly America has experienced an enormous growth of officially tolerated corruption as our political system has increasingly consolidated into a one-party state controlled by a unified media-plutocracy".
"Ordinary Americans who work hard and seek to earn an honest living for themselves and their families appear to be suffering the ill effects of exactly this same sort of elite-driven economic pillage. The roots of our national decline will be found at the very top of our society, among the One Percent, or more likely the 0.1 percen".
"Thus, the ideas presented in Why Nations Fail seem both true and false. The claim that harmful political institutions and corrupt elites can inflict huge economic damage upon a society seems absolutely correct. But while the authors turn a harsh eye toward elite misbehavior across time and space—from ancient Rome to Czarist Russia to rising China—their vision seems to turn rosy-tinted when they consider present-day America, the society in which they themselves live and whose ruling elites lavishly fund the academic institutions with which they are affiliated. Given the American realities of the last dozen years, it is quite remarkable that the scholars who wrote a book entitled Why Nations Fail never glanced outside their own office windows".
Why Nations Fail shows that truly democratic and inclusive institutions may take centuries to build, as in the case of Britain and the United States. It also flags up the importance of centralised state authority to maintain political stability including law and order, without which countries can hardly take off, as in the case of Colombia. It highlights the need for basic infrastructure such as shelter and schools in such failed states as Afganistan and certain countries in sub-Sahara Africa, where "conditional" development aid has been too much squandered by corruption and layers of aid bureaucracy to deliver. What is more, it shows how, even in democratic India with inclusive institutions, basic public services such as healthcare could break down because of collusion of health workers with local authorites.
All these examples seem to suggest that for countries at a relatively early stage of development, the need for infrastructural and livelihood improvements may be more immediate than building inclusive political institutions. Without a solid economic foundation, it is doubtful that inclusive institutions alone can feed the hungry masses, nor are they likely to endure. Indeed, as Dambisa Moyo says in "Dead Aid - Why Aid is not working and how there is another way for Africa", (Allen Lane, 2009), "What is clear is that democracy is not the pre-requisite for economic growth... On the contrary, it is economic growth that is a pre-requisite for democracy...." (p.43)
Ironically, while America seems to be turning more and more "extractive", the Communist Party of China (CPC), notwithstanding its deep-seated corruption and other foibles, has been making itself more and more "inclusive". Since China launched the Open Door Policy in 1978, the Party had succeeded in lifting more than 400 million peasants out of abject poverty. Right now, Deng Xiaping's old slogan of "letting a few people get rich first" regardless is outliving its usefulness. Former President Jiang Zemin introduced the doctrine of "The Three Represents" as political code to co-opt China's entrepreneurs, professionals, and others in the private sector into China's body politic so that they, too, would have a stake in the country's economic success. President Hu Jintao likewise ushered in the doctrine of "Harmonious Society" embedded in the current Five Year Plan (2011-15), designed to create a more equitable, more balanced, and more sustainable society.
For China, notwithstanding years of stellar growth, the development ahead remains uncertain and success is by no means guaranteed in face of mounting domestic and global challenges, including rampant corruption, acute inequalities, resource scarcity, worsening ecological strain, and rising social unrests. Complacency or self-congratulation is clearly no alternative to perennial reform, adaptation and transformation, if China under the CPC is to survive, let alone prosper.
The jury is still out as to which development model best suits China's own circusmtances.With increasing evidence of dysfunctional Western democracies, including destructive partisan politics, it seems unlikely that China would wish to abandan her well-tried experimental approach to finding her own development path - "groping for stepping stones in crossing a river" - and simply download a Western one-size-fits-all mode of democracy.
But the Bo Xilai affair has sounded very loud alarm bells of the resurgence of Maoist "extractive" vested interests. The Party leadership appears now to be more alive to the urgency of democratic reform, as Premier Wen Jiabao has repeatedly urged in the recent past.
What is instructive is the newly-announced promotion to full general of Liu Yazhou, Political Commissar of the National Defense University, a member of the Central Commission for Disciplinary Inspection, China's top anti-graft watchdog. He is also a prolific writer, a global strategist and a rare out-spoken young Turk for urgent democratic reform. He studied in the U.S. for ten years. and rose steadily through the ranks partly through the power of his pen. As the son-in-law of Li Xiannian, one of China's most-respected founding revolutionaries, he is one of the princelings exceptionally known for his integrity, frugal living, and hatred of corruption. He is well-chosen counterweight against any ramnants of the Bo Xilai clique who may choose to rear their heads at some future juncture.
An article "China must reform or die" on 12 August 2010 in the Sydney Morning Herald quoting General Liu says a lot about where he is coming from. Click here
With increasingly conciliatory responses to social unrests, a high-profile promotion of the Wukan model of open and fair village elections, and a newly released 468-page World Bank report jointly undertaken with the Development Research Centre of the State Council, which promotes a more inclusive society amongst a swath of other reforms ("China 2030: Building a Modern, Harmonious, and Creative High-Income Society" Click here ), there is likely to be more than meets the eye following the coming leadership transition in the autumn.
So, afterall, along with more inclusive economic institutions as proposed in the World Bank report, reform towards a more inclusive political system in China, whether Western democracy or democracy with Chinese characteristics, may be coming sooner rather than later.
In an article for Asian Horizons in The American Interest, May/June 2012 edition, John Lee, Michael Hintze Fellow for Energy Security at the Centre for International Security Studies, the
University of Sydney, and a scholar at the Hudson Institute in Washington, DC., outlines what he believes is the true nature of China's state capitalism, which he brands "China's corporate Leninism."
A number of observations are in order.
First of all, the role of the state in Western capitalism is not as separate as the John Lee article asserts. Think of the “military-industrial complex” forwarned by President Eisenhower and the current Occupy Wall Street Movement driven by the 1% and 99% American economic divide.
What the article doesn’t explain is why China’s model of state-capitalism has so far proved to be rather successful.
The answer is that first, for a vast developing country in rapid transition, physical infrastructure is the foundation for economic development. By concentrating power, the state is in a much better position to mobilize resources to build essential highways, power grids, and new cites from scratch, driving the country’s ongoing industrialization and urbanization.
Second, learning from South Korea’s “chaebols”, China wants to grow her own “national champions” that hold sway in the international marketplace and are in a better position to acquire the resources and skills to underpin on-going development.
Third, contrary to what the article asserts, the strategic industries reserved for state-owned enterprises are actually part of a broader “defence of the realm” concept. Nascent strategic industries like aviation and finance are liable to be decimated if foreign competition is left entirely unchecked. Memories are still fresh of the economic havoc in Latin America and the former Soviet Union played by indiscriminate liberalisation quick-fixes under the so-called Washington Consensus. What is more, sectors like energy and telecommunications are also regarded as having national security implications by Western countries. That's why China's earlier attempts to acquire equity stakes in these sectors in the United States got back-fired.
Last but not least, as China’s economy evolved, so did her political power structure. A relatively recent change was formalized through President Jiang Zemin’s “Theory of the Three Represents”. This is a political code-word to ensure that the interests of the business sector and new intellectual elites (the “advanced productive forces”) along with the majority of the masses are brought into China’s body politic so that they also become beneficiaries of China’s state-driven development.
This inclusiveness is almost inevitable if only to pre-empt the kind of eventual collapse faced by "extractive intitutions" which characterized early Western autocracies like the ancien regime of Louis XIV or past Western colonial empires, as described in Daron Acemoglu and James A Robinson's thought-provoking book, Why Nations Fail, Profile Books, London, 2012.
The article in question mentions that three-quarters of the Chinese Communist Party now consist of the business, professional and academic elites. This is extremely instructive as this changed composition makes the political system relatively more inclusive.
The fact remains that the vast majority of the Chinese people are more satisfied with the way the country is developing, according to a new 21-nation survey in July 2012 of the PEW Research Centre’s Global Attitudes Project. According to the study, "The Chinese, in particular, are positive about their economic situation, with nine in 10 saying they’re better off than the previous generation, eight in 10 satisfied with current national economic conditions, seven in 10 feel financially more prosperous than they were five years ago and more than two-thirds happy with their own personal economic circumstances." "The outlook for the long term is bleak in most places with the exception of China, the only nation surveyed where a majority of respondents expressed confidence that their children’s future would be brighter". Click here
By allying the interests of the vast majority with the long-term interests of the state, the Chinese Communist Party is turning the Party into a government for the people, though not, as yet, of or by the people.
Nevertheless, after years of breakneck growth, all is not well. China is now at an inflexion point with rising levels of social discontent, sharpening inequalities, lack of social justice, rampant corruption, dwindling profit-margins, inefficient allocation of capital by state-owned enterprises, a looming aging population profile, ecological strains in an age of resource scarcity, and the rising aspirations of a more educated, economically more independent and internet-savvy middle-class.
Hence, China is now changing tack rapidly, as evident from the latest Five Year Plan (2011-15) and a recently-released 468-page World Bank report “China 2030: Building a Modern, Harmonious, and Creative High-Income Society". The latter has been jointly undertaken with the Development Research Centre of the State Council. It is an open secret that Li Keqiang, China’s likley next Premier-in-waiting, is a strong supporter of the Report. Amongst its main recommendations are proposals to address the repressive "hukou" system, reform of the state-owned enterprises, promotion of civil society including NGOs, and moves towards a more balanced, more creative, more equitable, more tolerant and more environmentally-sustainable society. Click here
President Hu Jintao mentioned openly the D-word more than 60 times at a Party Congress in October 2007. What is unlikely to happen, however, is a simple downloading of Western adversarial and often dysfunctional multi-party democracy. All said, China is likely to continue quest for her own form of democracy best suited to her unique economic, social, cultural, political and historical circumstances, in keeping with the changing times.