Present at the Stagnation

Is China's Development Stalled?

Minxin Pei thinks that China's transition from communism to democracy is stalled. Pei, a senior associate and the director of the China Program at the Carnegie Endowment for International Peace, supports his view by pointing to China's lack of government accountability, weak administrative institutions, and widespread corruption and repression. His description of these problems is accurate, but his interpretation of their import is questionable.

Since the death of the reform pioneer Deng Xiaoping, in 1997, most China experts have subscribed to one of three main theories about the future of China's government: that it will collapse, democratize, or remain authoritarian. Gordon Chang argued for the first view in his 2001 book, The Coming Collapse of China. Chang's list of China's problems included most of those Pei discusses as well as others, such as subversive religious sects, resentful ethnic minorities, budget deficits, and job losses expected to follow from the country's accession to the World Trade Organization. Based on his experiences as a lawyer in Shanghai, where he witnessed lying, cheating, and social decay, Chang predicted that a revolutionary uprising of the disaffected would overthrow the Chinese Communist Party (CCP).

Bruce Gilley laid out the case for the second view, the inevitability of democratization, in his 2004 book, China's Democratic Future. He noted China's liabilities but also stressed its assets, including its century-long tradition of democratic values and its large new middle class. Gilley agreed that the current authoritarian regime is out of sync with the needs of a modern economy and society but argued that the regime's opponents are too weak, divided, and dispersed to overthrow it. Drawing on social science theories about the conditions needed for successful democratization, he predicted that pro-democracy factions in the CCP's leadership and in Chinese society would come together during a future power struggle and, with the help of a largely competent state bureaucracy, set China on the path to a democratic future.

Others (including this author) have put forward a third possibility, resilient authoritarianism. This perspective emphasizes the CCP's continued ability to sustain popular support through a combination of economic growth, skillful repression and propaganda, and foreign policy successes that gratify a nationalist public. The CCP conducted an orderly leadership succession in 2002 and 2003 that brought to power a new generation of competent technocrats, who have since announced programs to address such issues as peasant poverty and insolvent banks. The regime faces numerous problems but shows no sign of either collapsing or democratizing.

Pei contributes a valuable fourth perspective to this debate. He draws in part on recent polemics by Chinese intellectuals about the state's declining power and rising social and economic inequality -- problems some so-called neoleftists attribute to a sellout of China's resources and autonomy to foreigners. Many of the Chinese scholars participating in this discussion are neoauthoritarians. Pei, by contrast, is a democrat. He believes that China should be moving toward "a market economy and, perhaps potentially, to some form of democratic polity" but is unable to do so because its political institutions remain underdeveloped. The echo of Samuel Huntington's Political Order in Changing Societies is intentional; Pei gratefully acknowledges Huntington's teaching and inspiration.

In four monographic chapters, Pei exposes the weaknesses of the reforms of the Deng and post-Deng eras. Examining China's political structure today, he finds that its legislative institutions are ineffective, its courts not independent, and its village elections seldom competitive. He also finds that dissent is suppressed and that China's economy is not in good health. He argues that China's much-praised gradualism has produced a bastard system in which bureaucrats, not markets, set certain commodities' prices; banks take big losses on loans that government officials order them to make; and money-losing state-owned enterprises (SOEs) dominate key sectors. Moreover, the government has failed to provide the people with education, public health, a clean environment, or safe workplaces, in part because its revenues as a share of GDP have fallen since the reform era began, in 1978. As a result, the regime faces discontent among both rural residents and the urban unemployed.

The core problem is corruption, which Pei describes as "endemic" and "systemic." Both the failures and the successes of reform seem to encourage it. Over the past few decades, the government has become larger and more decentralized -- and more predatory. Decentralization, intended to stimulate initiative, has instead led to more frequent bribery of local officials. Because government cadres are pessimistic about the regime's longevity, they have an incentive to get rich while they can. As a result, Pei says, some local governments have become "Mafia states" allied with criminal gangs. Rather than enforcing honesty, the party survives through patronage. Thanks to rising prosperity, the political elite can cream off resources without impoverishing the nouveaux riches. The political class thus has no incentive to undertake authentic reform.