Chance Chan / Reuters Work in progress: repainting in Jiaxing, China, May 2014

Autocracy With Chinese Characteristics

Beijing's Behind-the-Scenes Reforms

Sooner or later this economy will slow,” the New York Times columnist Thomas Friedman declared of China in 1998. He continued: “That’s when China will need a government that is legitimate. . . . When China’s 900 million villagers get phones, and start calling each other, this will inevitably become a more open country.” At the time, just a few years after the fall of the Soviet Union, Friedman’s certainty was broadly shared. China’s economic ascent under authoritarian rule could not last; eventually, and inescapably, further economic development would bring about democratization.

Twenty years after Friedman’s prophecy, China has morphed into the world’s second-largest economy. Growth has slowed, but only because it leveled off when China reached middle-income status (not, as Friedman worried, because of a lack of “real regulatory systems”). Communications technology rapidly spread—today, 600 million Chinese citizens own smartphones and 750 million use the Internet—but the much-anticipated tsunami of political liberalization has not arrived. If anything, under the current regime of President Xi Jinping, the Chinese government appears more authoritarian, not less.

Most Western observers have long believed that democracy and capitalism go hand in hand, that economic liberalization both requires and propels political liberalization. China’s apparent defiance of this logic has led to two opposite conclusions. One camp insists that China represents a temporary aberration and that liberalization will come soon. But this is mostly speculation; these analysts have been incorrectly predicting the imminent collapse of the Chinese Communist Party (CCP) for decades. The other camp sees China’s success as proof that autocracies are just as good as democracies at promoting growth—if not better. As Malaysian Prime Minister Mahathir Mohamad put it in 1992, “authoritarian stability” has enabled prosperity, whereas democracy has brought “chaos and increased misery.” But not all autocracies deliver economic success. In fact, some are utterly disastrous, including China under Mao. 

Both of these explanations overlook a crucial reality: since opening its markets in 1978, China has

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