After almost three years of calm, the American debate over China policy is set to heat up again. Like Bill Clinton, George W. Bush came into office pushing for a tougher approach to Beijing. And like his predecessor, Bush soon changed his tune. But if the Clinton administration's shift reflected a deep-rooted embrace of the logic of engagement, the Bush administration's shift has appeared more tactical, reflecting a realist appreciation for alliances of convenience during times of crisis. Now that the initial and most urgent phases of the war on terrorism have passed, China policy is likely to find its way back onto the agenda of hard-liners who consider the country a strategic competitor. They are likely to be joined by those who think that tough talk about trade deficits and China's human rights violations makes for good campaign politics. With the bilateral trade deficit now at $120 billion, Beijing's reported backsliding on human rights, and its heavy-handed diplomacy with Hong Kong and Taiwan, 2004 could be a banner year for the critics of engagement. Yet a return to China-bashing and to a strategy of containment would be a mistake. The past 30 years have demonstrated that engagement works -- if not exactly in the way its advocates predicted.

Supporters of engagement long argued that it would help tame China through a traditional pattern of modernization: economic growth and increased connection with the outside world would spur the development of a Chinese middle class that would in turn press for capitalism, democracy, and peace. But in fact, although China has gotten richer, economic reforms have not led directly to political ones. Economic liberalization is indeed breeding a middle class with a new set of demands, including protection of private assets, access to unfiltered information, and a greater political voice. So far, however, the middle class has not organized in any meaningful way to push for wholesale political change. Instead, that change is occurring primarily in response to the negative effects of China's market transition.

For the past several decades, as China's leaders have banked on the country's striking economic success to legitimize their leadership, they have ignored the political and institutional changes necessary to ensure that markets function smoothly and transparently and that the social challenges arising from economic reform are addressed effectively. The result has been a dramatic rise in corruption and the decline of the country's social welfare system, which together have bred widespread popular discontent and undermined the legitimacy of the ruling Chinese Communist Party (CCP).

China's leaders recognize that they must assuage this discontent in order to survive. They have responded by adopting a strategy of political reform that harks back to Deng Xiaoping's approach to economic reform a generation ago: decentralization, experimentation, and opening up to the outside world. President Hu Jintao and Premier Wen Jiabao are trying to enhance the efficiency of the system by establishing new political processes and institutions, inviting domestic and foreign experts into the process, and permitting local experiments to test what does and does not work.

In so doing, Hu and Wen have unleashed great popular expectations. Wide swaths of society -- including journalists, lawyers, property owners, environmentalists, and intellectuals -- are pushing for more reforms. At the same time, a strong current of resistance has developed within the CCP itself, which is fearful of losing its power. Even reform-minded party members are wary of pushing too far too fast and incurring social instability or a conservative backlash.

Since a gradual and benign transformation of China's authoritarian regime is in everyone's interest, the policy message for the United States is clear: stay the course of engagement and do what can be done to make economic and political liberalization succeed. U.S. policy cannot drive change in China by itself, but it can help provide the most supportive international context in which such change will thrive.


For China's leaders, time is now of the essence. For decades, they believed that economic growth would absolve them of providing people with health care and social security or of protecting basic human rights and the environment. Meanwhile, crime and government corruption spread, the social welfare system deteriorated, and the public alienation and distrust that have resulted now threaten the CCP's legitimacy.

State corruption is perceived as a particularly severe problem. A poll by the Chinese Academy of Social Sciences indicates that 60 percent of the 15,000 urban Chinese interviewed believe that economic reform has benefited the CCP and government officials the most -- and far more than the private sector. Another poll indicates that 80 percent of people in rural areas and 75 percent of city residents believe their local leader could be corrupted. Instead of rooting out illegal activities, officials have come to depend on them to fund local affairs: according to an official in the State Council (China's top government body), local government revenues increasingly derive from fines levied on criminals engaged in drug smuggling, prostitution, or gambling.

In response, thousands of retirees and unemployed workers from state-owned enterprises demonstrate each month against the corruption they believe has robbed them of promised compensation, retirement benefits, or medical insurance. Evictions and illegal land sales have prompted public suicides. The country's increasing -- and increasingly powerful -- middle class has been outspoken, too. Middle-class Chinese want effective legal institutions to protect their newfound assets, so they organize into independent associations (such as homeowners' groups) or run for political office to weigh in on decisions that affect their livelihoods.

These are voices that China's leaders know they can no longer ignore. (Private assets now exceed state assets by more than one trillion yuan, or $1.2 billion.) According to a recent poll, 30 percent of top CCP cadres believe that reforming the political system is the leadership's most urgent task. Yet political reform has been far from straightforward. It has seen many delays, reversals, and backlashes. Beijing has initiated some key reforms, but others have percolated from individual initiatives or small-scale government-sanctioned experiments (many of these changes had first been proposed by former Premier Zhao Ziyang as early as 1987). Some reforms have been announced and then withdrawn. In 2003, Shenzhen municipality boldly proposed to end the CCP's oversight of government functions, but the project was dropped when its chief supporter became vice-governor of a nearby province. Other reforms have taken years to materialize. A proposal to enshrine property rights in the constitution was first put forth in 1999, only to be defeated by opposition within the CCP and then passed, in March of this year, when a more hospitable political environment had developed. Every step forward seems to prompt a setback -- a crackdown on Internet freedom, a sweep of arrests of religious dissidents, or incidents of fraud or intimidation at local elections.


Nevertheless, political reform is resolutely moving forward, because China's leaders have come to understand that enhancing their legitimacy is a matter of survival. To give the people a greater stake in the political process, Hu and Wen are increasing transparency in government practices, broadening the CCP's membership base, and experimenting with electoral reform.

For the first time, last October, Hu allowed both that the agenda of the Politburo Standing Committee (the CCP's top leadership) be published and that a report on the Politburo's work be reviewed by the Central Committee (a wider group of top party officials). Local governments have undertaken their own experiments, too, inviting citizens to attend people's congresses (provincial assemblies) and opening more of their proceedings to the public. The city of Guangzhou recently launched a Web site with information about its activities, from personnel changes to urban planning and large-scale development projects, encouraging citizens to send comments and complaints directly to the mayor. It also passed path-breaking measures requiring disclosure of certain government records (much like the Freedom of Information Act in the United States). Such measures are now being considered at the national level.

The CCP has also sought to broaden its support base by varying its membership, in particular by welcoming entrepreneurs and successful businesspeople. A recent amendment to China's constitution acknowledges their important contribution and targets them for participation in the party. According to one estimate, 20 to 30 percent of China's private entrepreneurs are now CCP members. They are likely to have an important impact on issues such as the protection of property rights, reform of state-owned enterprises, and the highly controversial question of government oversight by the CCP. Some of them who also belong to provincial people's congresses or to the National People's Congress (China's national legislature) have already established their own private think tanks, staffed with social scientists and retired officials, to gather complaints and reform proposals from the general population. Other entrepreneurs have pushed political boundaries in different ways: Richard Chang, who heads the semiconductor powerhouse SMIC, founded his own church in Shanghai.

In time, however, the greatest force for political change will likely be electoral reform. Although it is not immediately clear how Hu's commitment to "ensure that the people can exercise democratic elections" will be put into practice, there are promising signs that it will materialize. There have been direct elections in villages for well over a decade, and other levels of government have experimented with various forms of representative democracy. Last year, in Peixian County in the province of Jiangsu, 70 local officials ran for a county magistrate post, enduring debates and public questioning in the process. The local people's congress made the final selection, but only after a public opinion poll had whittled the pool of candidates to three finalists.

Opening local elections to nonparty candidates also promises to have a significant long-term impact, by energizing the population at large. During the 2003-4 elections, nonparty members competed as "independents," in some cases even running formal campaigns with posters, leaflets, speaking engagements, and Web sites. Many were intellectuals or property owners who were eager to expand public participation in politics. As one Beijing-based candidate told a Western reporter, "I'm not interested in the elections. What I want is to use these elections to show people that they have the right [to stand], that they can do this without being sent to prison or getting in trouble." Although only a handful of independents were elected to district congresses, their active campaigning inspired the broader population: some cheered that for the first time China was having elections like those in the West that they had seen on television.


Legal reform has been underway in China since the death of Mao Zedong almost 30 years ago. The country's impressive economic growth, its transition to a market economy, and its integration into the global economy drove the first legal reform: a move toward an accountable regulatory environment, with well-defined laws and well-trained lawyers and judges. Its results have been striking. Since 1978, the number of lawyers in China has skyrocketed from 2,000 to 120,000, and more than 230 law schools are now training 80,000 future lawyers. More than 70 percent of Chinese judges today have received some formal legal training (including, for two judges on China's highest court, at Harvard and Yale); they no longer are ordinary citizens or retired army officials. Specialized subcommittees of the National People's Congress now study laws from abroad and rely on experts to draft complex, nuanced legislation.

In recent years, legal reform has assumed other, urgent purposes: to attack corruption, quiet social unrest, and, in the process, enhance the legitimacy of China's leadership. In a speech to the Politburo last fall, President Hu argued that urgent judicial reform was needed to ensure fairness and justice for Chinese society. There are more lawsuits than ever in China today, and the government loses more of its cases than it did before: in the early 1990s, only about 40 percent of all cases against the government succeeded, whereas now almost 75 percent do. Independent legal clinics have blossomed, specializing in environmental lawsuits, the protection of migrant laborers, and supporting the indigent. In the countryside, "barefoot lawyers" -- Chinese citizens without formal legal training -- are reading up on the law and advising their neighbors on how to protect themselves from predatory officials. As a result, traditionally powerless citizens are now successfully using the legal system for redress. In a recent case, a Beijing court awarded 500 migrant workers $608,000 in back pay from a construction company. After issuing the judgment, the court's president stated proudly, "The court is the weapon to guarantee your legal interests."

China now seems poised to enter a third and far more revolutionary stage of legal reform, which will challenge basic assumptions concerning the scope of individual rights and the relationship between the CCP and the constitution. Hu and Wen recently re-ignited a long-standing debate over whether the CCP is subject to, rather than an ultimate authority beyond, China's constitution and laws. They insist that the party must abide by the rule of law; others fear that it will lose its unique authority if it assumes a status equal to that of the state and the rest of Chinese society under the constitution.

While that debate has raged, Hu and Wen have scored several important successes by advancing people's rights through constitutional reform. In March 2001, the party amended the constitution to enshrine the right of private property and a commitment to "respecting and protecting human rights." Democracy activist Liu Xiaobo said of the new human rights provision, "China will abandon its earlier insistence on defining human rights as the right to subsistence. Without qualifying human rights as being 'with Chinese characteristics,' China is embracing them as a set of universal values." Legislation to improve review of death penalty cases and to overhaul the operation of labor camps is also under consideration.


The media have also become critical players in Beijing's anticorruption campaign and its effort to be more transparent. The reach of China's media today is impressive: there are 2,000 daily newspapers, and 900 television stations serve 90 million cable users. For the past several years, the media have helped ensure government accountability by investigating official cover-ups in the SARS (severe acute respiratory syndrome) epidemic, reporting on failed government campaigns to clean up the environment and root out corruption, and doggedly pursuing officials and businesspeople who flout the law and individual rights. In early 2004, the city of Shenzhen even introduced a draft regulation stipulating that journalists have a right of "reasonable distrust" -- that is, to be suspicious of the government -- which officials must respect.

The Internet has been an especially potent catalyst for political discussion. The rise in Internet use has been staggering: in 1999, there were 4 million Internet users in China, and estimates foresaw roughly 33 million users for 2003; in fact, last year there were approximately 79.5 million users, including 20 million new ones. Approximately 64 percent of Internet users in China read news on-line, and 40 percent of young users and 24 percent of adult users regularly visit overseas sites. There are more than 350,000 Web sites now based in China, some of which feature controversial content. The Web site of Aizhi, for example, an organization founded by world-renowned AIDS activist Wan Yanhai, reports discrimination against AIDS patients, and the Web site denounces high suicide rates among rural women and high taxes on peasants. In 2004, deputies to people's congresses began to use the Internet for on-line discussions with the public on such topics as traffic, piracy, garbage disposal, and education.

Media openness has also helped bring wide public attention to debates over the legal system and individual rights. In a recent high-profile case, prosecutors refused to bring a case against a college junior, Liu Di, who had criticized the Chinese government for not promoting freedom of speech, among other things. After she was arrested, Chinese intellectuals launched a nationwide Web campaign to gain her release. At first they suffered a few setbacks: last summer, Beijing clamped down on intellectuals who openly made radical reform proposals, and then, soon after Liu was released, another Internet dissident was arrested. But only seven months later, the intellectuals returned to ask the government to review the antisubversion law and delineate more clearly the scope of freedom of expression under the Chinese constitution.

The media have used their growing freedom not only to attack the government but also to preach circumspection more generally. For example, they provided remarkably levelheaded coverage of the trial of Liu Yong, an infamous mobster who was executed for murder and other brutalities last December. He was first condemned to death by a lower court. Then the Higher People's Court of Liaoning Province commuted the sentence, prompting charges of corruption and a national uproar. But when, four months later, the Supreme People's Court overturned the second ruling, reinstating the original sentence, the media cautioned the public against jumping to conclusions until the corruption charges against the appellate court, as well as claims that Liu had been coerced by the police, had been fully investigated.


With China moving toward a market economy, the government has relinquished much of its social welfare function. Rather than develop a comprehensive, universal system to replace the one once provided by state-owned enterprises and collective agriculture, China's leaders have encouraged individuals and nongovernmental organizations (NGOs), churches, and women's associations to step in. Citizens and private organizations now offer services ranging from recycling to assistance for battered women. Local officials often call upon churches to help care for the poor and the elderly. NGOs educate the general public and act as watchdogs on AIDS, the environment, and workers' rights. Throughout the country, individuals have become informal, independent advisers to help fellow citizens protest social injustice.

Civil society in China is still very different from that in the West, where voluntary associations, religious groups, labor unions, and NGOs operate outside the state. In China, NGOs must be registered with the government and their membership and activities approved by an official agency. They are prohibited from operating in more than one province -- a measure intended to stifle interregional political activity. (The Lions Club, which has had two branches since 2002, is a notable exception.) Only recognized and registered religions may hold services legally. Think tanks and private research institutes can be shut down or restricted on a moment's notice.

Still, the boundaries of what is permissible in China have been stretched considerably. According to Anthony Saich, a professor of international affairs at Harvard University, there are now as many as 700,000 unregistered private or not-for-profit organizations providing medical care, environmental protection, and education in China. And their agendas expand continually, as their goals become more ambitious and their tactics more aggressive.

The progress of China's environmental movement over the past decade is a good case study for how much change China has already seen -- and how much more it should expect. In the mid-1990s, environmental NGOs focused on education and biodiversity protection, issues that were not considered politically subversive. Gradually, however, individual activists began to influence policy by funneling reports and recommendations to senior CCP officials about improving air quality in Beijing or developing local recycling programs. Within a decade, the movement's mainstream had begun openly questioning whether the government would fulfill its promise to protect the environment. Greenpeace opened an office in Beijing. The media, the scientific community, and individual citizens together began investigating and reporting massive pollution accidents, launching cleanup campaigns, and condemning the government's failure to follow up. NGOs started bringing -- and winning -- lawsuits against polluting factories and corrupt officials.

Then came a seminal event. In October 2003, officials in Sichuan Province called off plans to build a dam on the Min River, one of the Yangtze River's main tributaries, after a broad-based mass media campaign condemned the project for endangering the Dujiangyan, possibly the world's oldest functioning irrigation system. With that success, the environmental movement crossed the line from providing politically nonthreatening education to aggressive lobbying. And because some of the movement's senior leaders, such as Tang Xiyang and Dai Qing, and their younger proteges (who cut their political teeth on student demonstrations in 1986 or the Tiananmen Square protests in 1989) argue that environmental protection cannot be accomplished without democratization, they could boost other popular movements in China. They could become models for reformists dedicated to causes such as health care, education, and worker protection, galvanizing them to press more aggressively for change.


Although China's leaders seem clearly resolved to continue down the path of reform, much about their strategy remains uncertain. Hu and Wen are careful when they talk about the future of reform in China. Hu has said that he will pursue political reform "unswervingly, actively, and cautiously." In an interview with "The Washington Post" last November, Wen pledged to develop democracy, protect human rights, and improve China's legal system. But he rejected any plan to reform the country's one-party system on the grounds that, because of its vast and poorly educated population, China should not rush its political overhaul.

Chinese intellectuals are also divided over what is the most desirable or likely course for reforming the country. The political analyst Liu Junning has argued that political reform will naturally spring from more market reform and greater economic freedoms. Pan Wei, an associate professor of political science at Beijing University and a government adviser, advocates a system insulating the state from the CCP's influence and codifying freedom of speech, assembly, and press. But he argues that China is "not ready" to become a multiparty democracy and that "democratizing the country without the basis of a clear and stable social or class division would lead to a Hobbesian war of all against all, not the stable partisan politics of the Western democracies." More ambitious thinkers, such as the constitutional lawyer Cao Siyuan, have laid out a detailed road map to representative multiparty democracy, with regular and competitive elections and a U.S.-style system of checks and balances among the legislative, executive, and judicial branches. But even Cao advocates caution. He favors gradually weaning the CCP from its position as sole ruling party, by changing its name to the Socialist Party of China, separating it from the state, and allowing it to accept private donations.

Nor does China have a clear model of democratization to emulate. Hong Kong and Taiwan may seem like obvious examples, but their politics are too unsettled to provide much guidance. Twice last year, people in Hong Kong marched en masse: to signal their autonomy from Beijing and to reject a proposed antisubversion law. In Taiwan, President Chen Shui-bian pushed through the legislature a constitutional amendment enabling popular referendums. At first, Beijing warned Taipei not to go too far, and it sent teams of experts to advise the Hong Kong government on the constitutionality of the demonstrators' demands. But more recently, it has taken a tougher line. Beijing's equivocating may be a sign that it is becoming increasingly uncomfortable dealing with these wayward elements as it struggles to accommodate its own on the mainland.

Meanwhile, although Beijing has already done much to promote the types of changes Washington has advocated, much more remains to be done -- and the reforms underway could stall before China becomes a full-fledged, multiparty democracy. U.S. engagement helped bring economic development and political liberalization to South Korea, Taiwan, and Thailand, but only after decades of sustained efforts. So too should Washington remain actively -- and patiently -- involved with Beijing, for two reasons: because engagement has worked, and because more of it is still needed. Election politics in the United States should not distract policymakers from the very real benefits that policy has already produced.

The United States can best help foster reform in China by being sensitive to both the opportunities and the limitations of its influence. It must first get a firm grasp of how China is or is not changing -- and how it is most likely to change in the future. A better understanding of China's current reforms will help the United States create a propitious environment for more progress down the road.

Conversely, shortsightedness will jeopardize opportunities. Take, for example, Washington's efforts to change China's penal system. To correct long-standing abuses -- appalling living conditions in labor camps, torture in prisons, and high execution rates -- the United States has repeatedly pressured China to submit to inspections by the UN special rapporteur on torture, the UN Working Group on Arbitrary Detention, and the International Committee of the Red Cross. Although such inspections help call attention to the worst abuses, their effect may be limited or even counterproductive, if they are not handled with great diplomacy. A different approach, based on a better understanding of organic developments inside China, might be more effective. For example, the United States could use as starting points the discussions about labor camp reform and review of the death penalty process that have grown in China over the past year. It could engage its experts in those local discussions, helping China to modify its practices on its own terms first. In time, perhaps, that might convince Beijing to institutionalize the type of wholesale, systemic reform that the international community wants.

Engagement, in other words, requires diligence. The U.S. government should reassess the way it reports on and analyzes China's reform progress. The State Department issues annual reports detailing China's record on human rights and religious freedom; these reports identify current human rights problems but say little about how China's behavior is changing. Three- to five-year progress reports that track significant changes in the status of dissidents and broader changes in the legal system, Internet usage, and the nature of reform debates would be useful complements. The Congressional-Executive Commission on China, for example, publishes expert testimony that represents broad perspectives on China's HIV/AIDS policy, environmental protection, religious freedom, and compliance with World Trade Organization standards, and it identifies trends in each.

China's extraordinary integration into the international economy has made it increasingly responsive to pressure from abroad and has brought the interests of various Chinese constituencies in line with international interests in political transparency, legal reform, and human rights protection. International outcry was in good part responsible for convincing China to shift from a policy of denial to one of transparency over the SARS epidemic last year, but partly because the medical profession, media, and top government officials in China were also advocating a more open approach. And it was the combined effect of agitation by Chinese NGOs and pressure and incentives from the international community that recently broke China's reluctance to acknowledge the severity of its AIDS pandemic. As China strives to become a beneficent regional power and a global player, international attention will continue to influence its domestic policies. International economic integration has already prompted political liberalization in China. The United States need only stay engaged to push that progress along.

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  • Elizabeth Economy is C.V. Starr Senior Fellow and Director of Asia Studies at the Council on Foreign Relations and the author of The River Runs Black: The Environmental Challenge to China's Future.
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