Abstract
China's economic success under an authoritarian political system in the past 30 years has raised a question about whether the China model will replace the Western model of modernization. This paper seeks answers to this question by exploring to what extent China offers a distinctive model of economic and political development and whether the China model represents a successful co-existence of a free market and an authoritarian state in order to maintain economic growth and political stability, as well as discussing what the appeals and limitations of the China model are.
Introduction
China's rapid economic growth in the past 30 years has stood out as one eye-catching exception to the general pattern of modernization in the West and provided an example for some developing countries to follow suit. As one observer indicated, 'from Vietnam to Syria, from Burma to Venezuela, and all across Africa, leaders of developing countries are admiring and emulating what might be called the China Model'. According to this observer, the China model has two components. The first is to copy successful elements of liberal economic policy by opening up much of the economy to foreign and domestic investment, allowing labor flexibility, keeping the tax and regulatory burden low, and creating a first-class infrastructure through a combination of private sector and state spending. The second component is to permit the ruling party to retain a firm grip on government, the courts, the army, the internal security apparatus, and the free flow of information.1
Indeed, China has tried to strike a balance between economic growth and political stability and between a market-oriented economy and an authoritarian state to sustain its continued economic growth in its modernization efforts. China's success has raised a question about whether the China model will replace the American-style of capitalism or Western model of modernization because 'what China has achieved in the last couple of decades legitimately lays siege to many of our most deeply held notions about the realities of government and economics'.2 It is from this perspective that one observer asserts that China has become the 'biggest potential ideological competitor to liberal democratic capitalism since the end of communism'.3
Indeed, the China model has posed a serious challenge to the dominance of the Western modernization model that attempts to impose free-market and liberal democracy simultaneously on non-Western and developing societies. But the questions remain. To what extent does the China model represent a successful co-existence of a free market and an authoritarian state? Is China's economic system truly free and China's political system truly authoritarian? How successfully has the Chinese leadership balanced economic freedom and political control to maintain economic growth and political stability? What are the appeals and limitations of the China model? This paper seeks answers to these questions by exploring to what extent China offers a distinctive model of economic and political development and if the so-called China model can be sustained.
From the Beijing Consensus to the China model
The debate over the China model started largely from the publication of John(Joshua) Cooper Ramo's 2004 article that used 'the Beijing Consensus' to describe China's unique development approach as distinct from 'the Washington Consensus' that connotes a more conventional approach by John Williamson in a 1989 paper. Williamson listed a set of ten neo-liberal policy prescriptions for economic reform in Latin America that he thought more or less everyone in Washington would agree upon, including: fiscal discipline; reduction of public subsidies; tax reform; market-determined interest rates; competitive exchange rates; trade liberalization; free flow of foreign direct investment; privatization of state enterprises; deregulation; and legal protection for property rights.4 These policies stressed the primacy of the market and the limited role of the state and were later presented as one size fits all for Latin American and other developing states facing economic crisis.5 Although Williamson's list focused only on economic policy, the Washington Consensus was expanded to include liberal democracy, together with free market, as the indispensable destination of modernization and became the basis of the 'shock therapy' applied to the former Soviet Union and East European countries after the collapse of communism in these countries.
Countries that adopted the Washington Consensus wholesale, however, did not perform particularly well. Beginning in 1998, political leaders in Latin America have criticized both the philosophy and implementation of the Washington consensus. They argue not only that it failed to achieve its goals but also that it may actually have made the social and economic conditions of many of the region's citizens worse … the World Bank and the IMF, two institutions in which the United States is the major decision-maker, are accused of adopting Washington consensus policies to benefit US economic and financial interests.6
According to one study, one of failures of the Washington Consensus came from its misinterpretation of the success of the East Asian newly industrialized countries as due to neo-liberal economic policy against the excessive state intervention in Latin America.7 Due to the failure of Washington Consensus policies, the term 'post-Washington Consensus' became popular among scholarly works. In a 2005 article entitled the 'Post Washington Consensus Consensus', Joseph Stiglitz argued that the Washington Consensus ignored market failures and viewed government as the problem. Instead the focus should be on which measures are necessary to improve both market and government. The Washington Consensus had proved neither necessary nor sufficient for successful development and any future consensus could not be made just in Washington. Any new framework must provide better and greater adaptation to the circumstances of the countries involved.8
It was in this context that Ramo proposed the provocative 'Beijing Consensus' as an alternative to the Washington Consensus. According to Ramo, the Beijing Consensus has three features: a commitment to innovation and constant experimentation in reforms; an emphasis on sustainability and equality instead of per capita GDP as the only measure of progress; and a commitment to self-determination. Ramo asserts that the Beijing Consensus represents opposition to the status quo represented by US hegemony because China has succeeded in its development through a willingness to innovate, taking account of quality of life as well as economic growth, and providing enough equality to avoid unrest; and by valuing independence and self-determination and refusing to let other Western powers impose their will, and, therefore, provides less developed countries an example to ensure their own financial integrity and keep great powers in check.9
Ramo's provocative argument aroused a debate about whether China really offered a new model. The supporters praised that it 'does explain how, for the first time since decolonization, the countries of the South are able to follow their own political direction, and find partners, states as well as businesses, not aligned with the US vision'.10 The critics questioned the validity of the Beijing Consensus. One scholar sees the Beijing Consensus as a myth because China has not strictly followed its tenets. First, the Chinese are not innovation leaders and there is nothing inherently innovative in China's technological and policy initiatives. For the most part, Chinese enterprises make products and provide services that were designed or invented outside China and Chinese economic policy is more imitative than innovative. Second, the evidence that China is pursuing sustainable and equitable development is highly limited. While China has taken significant steps to create a regulatory infrastructure for environmental protection, whenever there is a tradeoff between the environment and growth, the latter wins. In the meantime, inequality in China is growing. Third, China's economic development strategy is not unique because China's policies and trajectory share similarities and differences with a wide range of countries, including those with more liberal capitalist governance regimes and those with developmental states.11
Clearly there is no more of a Beijing Consensus than a Washington Consensus and the term is used by different people in different ways. While there are various elements to Ramo's sense of it, many people have used the concept to refer to various aspects of China's unique approach to economic and political reform, such as pragmatism, gradualism, the significant role of the Chinese state in economic development, markets before democracy, and a two track legal system where civil and politic rights are limited in the name of stability and economic growth and more progress in other areas, particularly commercial law. In this case, more and more people have simply used the China model to describe China's approach toward development, in which a high level of economic growth is achieved without fundamentally changing the communist one-party rule, in contrast to the Western model of modernization that demands a free market system going hand in hand with liberal democracy. The China model, in this case, is often in a shorthand way described as a combination of economic freedom and political oppression.
This description, however, is not accurate. Economically, China has indeed established in significant part a free-market economy, called by Chinese leaders a socialist market economy, in which labor, capital and commodities flow increasingly freely. Private sectors have played an increasingly important role in the national economy and employment. Stock markets are established and farmers are given control over their own land. China has also engaged with global markets to attract foreign capital, technology and management skills, and participated in the global economic division of labor by taking advantage of its cheap labor and huge domestic market. The Chinese economy, however, is only selectively free. The state still keeps ultimate control over strategic sectors of the economy and a large range of core industries, including utilities, transportation, telecommunications, finance, and the media. The People's Bank of China remains a tool of government rather than an autonomous institution, as most Western central banks are. Many of China's global partners require transparent governance, independent courts, enforceable property rights, and free information. Almost none of them are present in China today.
A variant of the East Asian model
The 'illiberal' aspects of China's socialist market economy, however, have not prevented China from achieving a high rate of economic growth and lifting the living standards of the Chinese people. As a matter of fact, the selective state control over the economy has made China less vulnerable to outside shocks, evident in the fact that China weathered the 2008-2009 global economic crisis better than many Western countries. As one observer pointed out,
the big attraction of China to capital from overseas has been that the political setting is stable, that there will be no populist campaign to nationalize foreign assets, that the labor force is both flexible and disciplined, and that policy changes are rational and are signaled well ahead.12
Another observer confirmed that
businessmen, media moguls and architects all flock there. Could there be a better place to do business, build stadiums and skyscrapers, or sell information technology and media networks than a country without independent trade unions or any form of organized protest that could lower profits? Meanwhile, concern for human or civic rights is denigrated as outmoded, or an arrogant expression of Western imperialism.13
China's market economy, in many aspects, is similar to the East Asian newly industrialized economies (NIEs) of Singapore, Hong Kong, and South Korea in the 1970s and 1980s when neo-liberal economic policy and political authoritarianism coincided with historical opportunities for export-led development and led to rapid modernization. From this perspective, the China model is a twenty-first century variant of the East Asian model with the following three features.14
First, China's modernization is driven not by any ideological doctrine or principles but by pragmatism, vividly expressed by the famous Chinese saying, 'a cat, whether it is white or black, is a good one as long as it is able to catch mice', and the encomium to 'cross the river by feeling for stones'. Taking a pragmatic and experimental approach, the reform has been piecemeal and gradual, implemented in selected sectors and regions and began with the easier and less controversial issue areas. The Chinese leadership has worked through the existing economic and political institutions while gradually reforming them and reorienting them to serve the modernization goals.
Second, China's modernization is led by a strong and pro-development state, capable of shaping national consensus and ensuring overall political and macroeconomic stability in which to pursue wide-ranging reforms. Emphasizing economic growth as an overarching national goal and political stability as a pre-condition for modernization, the Chinese developmental state bureaucrats have the ability to implement and execute strategic planning 'forthrightly and without the distractions and abrupt course changes brought about by that inherently unstable system known as democracy, with its fixation on rival parties and alternation'.15 The developmental state is the explanation for the extraordinary marshaling of resources in China to create world-class infrastructure, majestic cities, airports, highways and dams rising during the reform years. It also explained how the rapid economic growth has occurred while the communist one-party rule remains.
Third, China's approach toward modernization has involved selective learning from the liberal Western models, including the American model. What makes the Chinese model unique is that the communist regime has safeguarded its own policy space as to when, where and how to adopt Western ideas. In particular, while the Chinese state has adopted most of the basic principles of the Washington Consensus, especially its emphasis on the role of the market, entrepreneurship, globalization and international trade, it rejected or modified the liberal aspects that would greatly reduce the role of the state. For example, while the state gradually opened the domestic economy to international competition, it has maintained protection to key sectors and infant industries.
Political reform and the China model
On the political aspect of the China model, it is also not accurate to simply characterize it as 'oppressive'. As a matter of fact, the pressure for political reform has been built up since China began revamping its economy in the late 1970s. As it has become more and more difficult for the communist regime to sustain a growing disconnection between a market-oriented economy and a dynamic society, on the one hand, and an anachronistic and authoritarian state on the other, Chinese intellectuals and government officials have been hotly debating how and if the single party rule can adequately facilitate China's transition or if a multi-party electoral democracy is required.
Democracy has always been on China's political reform agenda although the concept is interpreted 'with Chinese characteristics'. An important component of the Chinese political discourse since the concept was introduced from the West to China in the early twentieth century, the Chinese elite has interpreted democracy from a pragmatic perspective. The enlightened Chinese intellectuals argued that democracy could be a means of communication between government and people to achieve harmony in society as it brings the solidarity of the group and offers the means of national survival in a world of fierce competition. Popular participation is a sign of civilization, an attribute of modernity, and a road to wealth and power and would unleash energies and contribute to the collective welfare. This assumption makes Chinese understanding of democracy very different from that in the West, which assumes that individuals have particular interest contrary to the general interest of the state. Individuals pursue selfish ends and an invisible hand turns these efforts into a general increase in welfare. Chinese elites, however, simply don't want to see private interests antagonistic to public interests as a serious problem for politics and look for a harmony of interest.16
The current Chinese official discussion of political reform has emphasized the instrumental aspect of democracy to maintain social order and achieve social harmony. As a result, while many Western observers and Chinese liberal intellectuals have pushed China's political reform toward a multi-party democracy, Chinese government officials and some Chinese scholars have proposed political reform to uphold and improve communist party leadership by increasing political participation and public supervision, making the single party system more efficient and providing it with a legal base. Pan Wei, a Berkeley trained Chinese scholar at Peking University, proposed a consultative rule-of-law regime, which is a 'mixed' regime derived from the Chinese tradition of civil service via examination and the Western tradition of legalism and liberalism via the separation of power to form checks and balances.17 Advocating the consultative rule of law regime as a feasible path for China to fundamentally improve the rule of the CCP within the single party system, Pan believes this direction of political reform is a logical development in light of China's particular social setting and the political culture.
Ruling out Western-style democracy as not a fit to China's particular circumstances, political reform in China has thus been undertaken mostly in the following four aspects, which have defined the political part of the China model: institutionalization of the leadership system; the effort to make the government more responsive to an increasingly plural society; the improvement to citizen's constitutional rights; and transformation of the CCP from a revolutionary party to a ruling party.
1. Institutionalization of decision-making system and intra-party democracy
Institutionalization of China's leadership system started in the 1980s when Deng Xiaoping realized that 'the lack of effective institutions and checks on arbitrary authority had helped bring about disasters in the Mao years'.18 Significant reform measures include regular Party and state body meetings according to constitutional schedules; and a constitutionally mandated two-term limit for the premier and president and mandatory retirement age for all party and government posts. These reforms enhanced formal institutional authority, which derives from and is constrained by impersonal organizational rules and rests on a formal position in an institutional setting, and weakened informal personal authority of top leaders, which revolves around individual personage and supersedes impersonal organization in eliciting the personal loyalty of followers.
For many years in PRC history, personal authority was more important than institutional authority in top-level politics. Institutional authority advanced to take a more important position during the transition of the Chinese leadership from revolutionary to post-revolutionary generations after the rise of the Jiang Zemin leadership in the 1990s. Completing the transition toward the post-revolutionary generation, the Hu leadership has moved further along the direction of institutionalization of the leadership system with an emphasis on expanding intra-party democracy, which refers to the efforts to promote internal transparency and consultation in policy making, strengthen internal supervision and introduce more competition inside the ruling hierarchy. The idea of intra-party democracy was officially promoted in the political report of the 16th National Congress in 2002. The party's Central Committee endorsed the reform at the 2005 plenum with the statement that 'the development of intra-party democracy plays an important exemplary and guiding role in pushing forward people's democracy'.19
Expanding intra-party democracy requires preserving the normative rules and procedures of collective leadership in the decision-making process. Hu hopes that making rules clear and exposing officials to scrutiny would help stem widespread corruption, abuse of power and other wrongdoings that threatened the party's rule. In a move to institutionalize the decision-making system in the State Council, upon coming to office, Premier Wen Jiabao stopped making decisions at premier work meetings (zhongli bangong huiyi), which did not have any legal status but were held regularly by his predecessors, Premier Li Peng and Premier Zhu Rongji, because it gave them a lot of discretionary power in the decision-making process. Instead, Wen has made decisions at the State Council Executive meetings (guowuyuan changwu huiyi) and State Council Plenary meetings (guowuyuan qianti huiyi) stipulated by the constitution and State Council Organic Law. According to one report, the change
reflects the institutionalization of the State Council decision-making system, avoided the rule of man in decision-making process. This is a major method toward ruling the country according to the constitution and laws. The reform was a step toward legalization, institutionalization, and regularization in the operation of the State Council.20
Another significant move was the decision in July 2003 to abolish the annual series of informal central work conferences at the summer resort of Beidaihe. Although their existence and jurisdiction were never stipulated in the CCP or PRC constitutions, the central work conference for many years 'served as a forum for consensus building in which important members of the political elites make bargains with each other'.21 Major policy and personnel decisions were made at the month-long Beidaihe conferences. Vacationing and participating in these informal meetings, retired elders exercised undue influence. The decision to abolish the informal conference and to rely upon formal meetings of the Politburo and its Standing Committee is a major advance toward institutionalization of decision making at the top. A Hong Kong reporter described the decision as an 'effort to regularize [government] procedures and institutions' and a 'testimony to Hu's determination to curtail rule of personality and to run the party and country according to law and institutions'.22
Another reform is to subject the supreme Politburo to the scrutiny and supervision of the Central Committee. Starting from the Third Plenum of the 16th Central Committee in October 2004, the Politburo submitted an annual report to the full Central Committee, which nominally elected the Politburo. This reform was written into the resolution on constitutional amendments passed at the 17th Party Congress in October 2007, which requires that party leaders at all levels be subject to oversight by sitting committees. This means that the Political Bureau is expected to report regularly to the Central Committee at plenary sessions and accept its supervision, while local standing committees are to do the same to local party committees.23
In addition, the Party has attempted to institutionalize a voting system on important personnel decisions. The Chinese official media reported that about 8% of nominees were eliminated in the primary elections of members and alternate members of the 17th CCP Central Committee in 2007. The margins are bigger than those at the 16th National Congress in 2002, indicating a sign of progress. At the 16th Congress, ten, or 5.1%, of the nominees lost in the primary vote for candidates of Central Committee members. Another seven people, or 5.8%, lost in the vote for candidates of members of the Central Discipline Commission. The proportion of the dropouts in the primary election of alternate members of the Central Committee was 5.7% in 2002, which translates into nine people.24
As a result of these incremental steps towards institutionalization of the leadership system, the top CCP leaders have possessed less and less personal authority. Hu Jintao, no matter how capable he is, would be less likely to become a strongman after his retirement. The lack of a strongman in the leadership would at least make members of the CCP leadership more willing to follow normative rules and procedures in decision-making.
2. Cadre accountability
Another aspect of political reform is to make government officials/cadres more responsive to the demands of society and more accountable for their bad performance. A number of institutions have been established for this purpose, including legislative oversight committees, supervision committees, Party discipline committees, internal administration reconsideration procedures, a system of letters and visits, administrative law, and judicial review. The most important one is the cadre accountability system (ganbu wenze zhi), through which officials found unable to prevent mishaps ranging from epidemic to labor unrest would face tough penalties or dismissal.
Although the beginning of the accountability system may be traced to a decision made by the State Council to investigate administrative responsibility of officials for major safety accidents in 2001, the system was triggered primarily by the SARS (severe acute respiratory syndrome) crisis in 2003. After a whistleblower exposed lies about the outbreak, Chinese people began demanding basic rights to information and the World Health Organization and foreign media clamored for accountability. Unlike in the past, the drama was chronicled in real time on the Internet. Realizing the danger that SARS could pose to the country and the state, Hu made an unusual move to acknowledge that the government had lied about the disease and fired nearly 1,000 government officials, including Beijing's mayor and the country's health minister, for covering up the actual number of SARS patients.25
In response to the media exposure and domestic and international pressure, a cadre responsibility system was set up whereby leading officials were demanded to take greater accountability and required to report truthfully on the epidemic situation. In April 2004, the CCP Central Committee issued a 'Provisional Regulation on the Party and Government Resignation', which prescribes that officials who, through make serious mistake or neglect in their work cause major damage or produce serious consequences and who have a leadership responsibility for deadly catastrophes should take responsibilities and resign from their posts. This regulation for the first time provided a legal base for the accountability system and brought resignation due to responsibility (yingju cizhi) as part of the accountability system. The PRC Civil Service Law that became effective in January 2006 made further stipulation about the responsibility and resignation of government officials. In addition, the cadre responsibility and resignation system was written into many other laws and regulations, such as the 'CCP Inner Party Supervision Regulation', 'PRC National People's Congress Standing Committee Supervision Law', 'PRC Administrative Supervision Law', the 'CCP Disciplinary Punishment Regulation', 'Civil Servant Administrative Punishment Regulation' and the 'PRC Criminal Law'.
As a result, the behavior of China's usually docile media began to change. Since the adoption of the accountability system, major accidents such as bird flu and mine explosions have been routinely exposed in the media and the responsible officials have been routinely removed or even punished. A 'punishment storm' was unleashed after the Sanlu milk formula contamination scandal, which left several infants dead and thousands hospitalized, was revealed in August 2008. Many officials responsible for the scandal were removed from office and some of them were criminally charged. Li Changjang, the minister in charge of the General Administration of Quality Supervision, Inspection and Quarantine—China's top product quality watchdog—stepped down over the scandal. The party chief and several senior officials from Shijiazhuang city, where the Sanlu Group is based, were sacked in the purge.26 When a fatal mudslide was triggered by the collapse of an illegal iron-ore waste reservoir in northern Shanxi province on 8 September, the governor of Shanxi province, Meng Xuenong, resigned and the vice governor and other provincial and city officials were dismissed.27 This was Meng's second resignation from a ministerial level position after his first removal from the position of mayor of Beijing during the SARS outbreak.
Although the reform has made the Hu-Wen administration more responsive to popular demands than its predecessors, these changes do not indicate a conviction of acceptance of liberal democratic principles or entail the building of institutions and systems of governance that would guarantee effective supervision of the rulers. Making the cadres more responsive to societal demands, the way in which the cadre accountability system has worked is actually to make the cadres responsive mostly to their hierarchical superiors. This is not what is perceived as accountability in a genuine sense of democracy.
3. Constitutional reform
Building a legal system, or 'fazhi', a Chinese word which means both 'rule of law' and 'rule by law', is the third most important aspect of political reform. In addition to making many laws and training legal professionals, constitutional reform has become a hotly contested issue in China's political reform agendas.
The PRC has adopted four constitutions. The first constitution in 1954 detailed the state structure of the new People's Republic but its normal function became obsolete when the Cultural Revolution resulted in the disruption of an established institutional arrangement. The second constitution, known as 'the Cultural Revolution Constitution' (wenge xianfa), was produced in 1975. After the inception of economic reform, the third constitution, known as the 'Four Modernization Constitution' (sige xiandaihua xianfa), was adopted in 1978, marking initial attempts to restore the pre-Cultural Revolution political system and the re-orientation of party policy toward economic development. The formal structures governing the Chinese political system barely gained legitimacy with the 1978 constitution, and the fourth constitution, known as the 'Reform and Opening-up Constitution' (Gaige kaifang xianfa), was passed in 1982. Among many changes in the 1982 constitution, the most important ones are a downgrade to the importance of class struggle in Chinese society; a stipulation that 'no organization or individual is privileged to be beyond the Constitution or law'; and an emphasis on the equality of all citizens before the law.
Functioning to regularize frameworks for political life in China, the 1982 constitution was amended four times in 1988, 1993, 1999 and 2004 in response to the policy adjustments at the 13th, 14th, 15th and 16th CCP National Congresses. The fact that it was amended, rather than replaced by new constitutions, suggests an important development in Chinese politics and a move toward international norms on legal issues. In addition, these amendments have made the constitution more like a legal document to provide protection to citizen's rights. For example, the 1988 amendment introduced provisions on private economy while the 1993 one replaced the concept of a 'socialist market economy' with the concept of a 'planned economy on the basis of socialist public ownership'. In the 1999 amendment, the role of the private sector was elevated from 'a complement to the socialist public economy' to 'an important component of the socialist market economy'. The phrase 'counter-revolutionary activities' was changed to 'crime jeopardizing state security'. Significantly, 'the constitutional amendments explicitly avow, for the first time in the constitutional history of the People's Republic, to “govern the state according to law” (Yifa Zhiguo) and “establish the socialist state of rule of law”'.28 The 2004 amendment added that 'Citizens' legal private property is not to be violated … the state protects citizens' private property rights and inheritance rights according to law'. This change puts private assets of Chinese citizens on an equal footing with public property, both of which are 'not to be violated'.29
While the top-down approach toward constitutional reform has set limitations to the scope of the amendments, Liu Xiaobo, a Chinese political dissident known for his role in the 1989 Tiananmen pro-democracy demonstrations, acknowledges that 'a constitution for the party authority (dangquan xianfa) has been transformed into a constitution to limit the party authority (xianquan xianfa)'. Evidence of the transformation, according to him, is that the emphasis of legal education has shifted from educating citizens to obey the law to educating officials to follow the law.30 Indeed, protection of constitutional rights has become a hot topic in China, as ordinary Chinese have developed an understanding of the legal rights they are supposed to enjoy and try to make them real. This development has produced a movement of rights consciousness and activism (weiquan yundong), which has brought about many new concepts among Chinese people, such as 'yimin weiban' (people are the original source of political authority), 'yixian ziguo' (to rule the country according to the constitution), 'zhiqing qiuan' (the rights for information), 'zhunzhong minyi' (Respect people's will), and 'lianjia zhengfu' (low cost government).31
4. Reform of the Communist Party rule
The reform of the CCP is the fourth significant aspect of political reform. Founded as a revolutionary party, the CCP was a vanguard of the working class and followed the communist ideological lines to capture state power and transform society during the Mao years. After Deng Xiaoping launched the market-oriented economic reform, the party found it imperative to adapt to all sorts of thorny problems of governing an increasingly complicated society. As a result, the CCP has had to face the challenge of transformation from a revolutionary mass party into a conservative ruling party.
This transformation has entailed two aspects. The first was to abandon the mass mobilization and social transformation goals in favor of political stability and economic development. The second was to change the vanguard nature into a more inclusive social democratic party. Jiang's 'three representatives' (sange daibiao) campaign in the early 2000s was one of the major efforts made in this direction. The key theme of the campaign was that the CCP should no longer just represent workers but should be representative of the development of advanced productive forces, the orientation of advanced culture, and the fundamental interests of the broadest masses. In effect, the party's responsibility became to lead China towards the wealth and power that give it the right to rule. As a Western reporter interpreted, 'That is, the party can be all things to all people, promoting the interests not just of workers and farmers but of wealthy entrepreneurs as well'.32 The primary goal of this effort was to re-brand the Communist Party and make it more inclusive and less intrusive.
Since Hu took over the leadership position, he has focused his efforts on 'strengthening the party's ability to govern'. In practice, that means a sustained campaign to curb the abuse of power, strengthen the party's internal discipline and auditing agencies, and issue new rules governing the behavior of party members. A Party resolution warned that continued Communist rule could not be taken for granted unless the party's 68 million members improved their ability to govern and gained more support among the public.33 Hu put forward two new concepts—scientific development and harmonious society—to guide the campaign of strengthening the party's governing ability. These new concepts are aimed at restructuring China's development model by balancing the different aspects of the economy and social life, including the balance between economic growth and allocating resources to improve people's livelihood; between urban and rural growth; between coastal and the hinterland economic growth; and between development and the environment. The emphasis is on reducing regional economic disparity, narrowing the income gap, promoting the efficiency of energy usage, curbing environmental degradation, and building social welfare programs, a more stable social order, and a stronger sense of social morality. These are pragmatic policy objectives that may help the CCP to stay in power as a typical ruling party.
The transformation from a revolutionary party to a ruling party has led to the decline of doctrinal approaches to policy debate and helped mitigate political struggles in the top echelon. If ideological correctness is no longer the objective in power struggles, differences at the policy level are more likely to be tolerated. As one observer indicates, in this case, 'the life-or-death factional politics that had not been uncommon during the Mao era is unlikely to re-emerge. This in turn gives collective leadership a better chance'.34
The appeals and limitations of the China model
These political reform measures have aimed at finding a 'China's Road' or a 'Third Road' of political transformation. The 'First Road' is to adopt Western-style competitive elections and party politics and transform the CCP into a social democratic party to compete in parliamentary and electoral politics, much like what has happened in South Korea, Taiwan and some other East Asian countries. The 'Second Road' is to embrace democratic ideals through the so-called 'shock therapy' of rapid change, including overthrowing communist party rule. In the eyes of the CCP elite, China is not ready for the first road and the result of the second road would be unacceptable turmoil and instability. They argue, sincerely in many cases, that China's different political history and culture require a third way to retain the single party rule and gradually expand political participation from society if China is to evolve in a unified and peaceful manner.35
The 'Third Road' of transformation is the essence of the China model. Because it is a non-ideological, pragmatic, and experimental approach to spur both social stability and economic growth while not compromising the party's authority to rule, the China model has not only gained ground among leaders of some developing countries. The appeal of the China model has come largely due to the following three developments in the past decade.
First, China has been successful in boasting the world's fastest-growing economy under the one-party rule. The China model is thus presented as a fast track for economic growth without visible social and political disorder that often comes as a by-product of democratization. As one observer indicates,
Today's China demonstrates that a regime can suppress organized opposition and need not establish its legitimacy through elections. It shows that a ruling party can maintain considerable control over information and the Internet without slowing economic growth. And it indicates that a nation's elite can be bought off with comfortable apartments, the chance to make money, and advances in personal, non-political freedoms (clothes, entertainment, sex, travel abroad).36
Comparing the appeal of Islam and the China model, another observer points out that
radical Islamism may appeal to millions of Muslims, but it cannot reach beyond the faithful, except by conversion. More important, it cannot plausibly claim to be associated with economic, technological or cultural modernity. By contrast, the opening ceremony of the Beijing Olympics, like the skyscrapers of Shanghai, shows us authoritarian capitalism already staking that claim. In the Bird's Nest stadium, the latest audiovisual high-tech was placed at the service of a hyper-disciplined collectivist fantasy, made possible by financial resources that no democracy would have dared devote to such a purpose.37
It is from this perspective that Joseph Nye holds that the success of China's political economy has made it attractive to many developing countries. In parts of Asia, Africa and Latin America, the so-called 'Beijing Consensus' on authoritarian government plus a market economy has become more popular than the previously dominant 'Washington Consensus' of market economics with democratic government.38 Only three decades ago, China was as poor as some of the poorest third world countries. While most of the latter remains among the poorest in the world, China's economy has expanded rapidly. Given the many problems confronting developing countries, China seems to offer a new model on how to fight poverty and ensure good governance, albeit one that challenges the conventional wisdom offered by Western countries and the international financial institutions they control.
The second development is the declining attractiveness of the Western model of modernization due to the US economic, political and foreign policy failures in the recent decade. Economically, the US is now deeply in debt to China and its very solvency is put in question. In particular, the financial meltdown sweeping across the globe in 2008-2009 to a great extent raised serious questions about some important aspects of the neo-classic economic approach toward development and confirmed some aspects of the China model. As one observer said, 'While there have been vigorous debates in academic circles about their respective efficacy, the ongoing financial turmoil seems to favor the Beijing approach'.39 Politically and diplomatically, the American model treats less developed non-Western countries as developed societies in which Western institutions could automatically take root. It imposed liberalization before safety nets are set up; privatization before regulatory frameworks are put in place; and democratization before a culture of political tolerance and rule of law is established. The result has often been discouraging or even devastating. In a 2008 book on the struggle to build democracies in the world, Larry Diamond blamed the US policy of trying to accomplish democratization by international coercion as partial responsible for what he called 'democratic recession' in many parts of the world.40 Another study also attributed the failed US policy for the trend 'underlying the erosion of democracy and Western influence in the post-communist region'.41
Indeed, the failure of US foreign policy, symbolized by the war in Iraq, damaged the Western model of modernization. As James Mann points out, 'US foreign policy … has tied the spread of democracy to the use of force. This has not only failed but also undermined support for democracy'.42 As a result, many developing nations have been increasingly fed up with the doctrinaire Western model of democratic promotion and increasingly impressed by a Chinese model that emphasized pragmatism, economic growth and political stability.
The third development is China's 'value-free' diplomacy toward many developing countries. Unlike Western diplomacy that sets moral principles such as good governance, democracy, transparency, rule of law, and respect for human rights as one of several foreign policy objectives, China's diplomacy is guided mostly by economic and strategic interests. Consequently, China has developed friendly relations with many developing countries without any preconditions. For example, in its global search for energy resources, China has pursued deals with countries that are off-limits to Western companies because of sanctions and the threat of bad publicity. Beijing has justified this policy on the grounds of non-interference in domestic affairs. With such 'value-free' diplomacy, China awarded Zimbabwe's dictator Robert Mugabe an honorary professorship at the China Foreign Affairs University in Beijing in 2005 and signed economic-cooperation agreements with Uzbekistan a few days after the country's Interior Ministry fired into the crowd of peaceful demonstrators in May 2005.43 Given China's rising power status, political leaders in these countries may readily use Beijing as a hedge against American power. As a result, many political leaders in third world countries have welcomed the Chinese development model together with its value-free diplomacy as an alternative to the European and US versions of both. China has reinforced this attraction by economic aid and access to its growing market. Offering no-strings-attached financial aid and economic assistance to Africa and to Southeast, South, and Central Asia has become a central part of China's foreign and trade policies.
It is due to the above three developments that the China model has become an alternative model of development by default. History has been ruthless. Less than two decades after Francis Fukuyama announced the 'end of history', more and more observers now see a 'post American world' in which many political leaders in developing countries favor China's approach of state-led economic reforms with limited political reforms and also take heed of China's pragmatic approach to reforms.
A Chinese analyst cites the Chinese-African summit that gathered about 50 African heads of states in Beijing in the fall of 2006 as an example to suggest that 'many of the African leaders coming here for the Chinese-African summit meeting are attracted not only by opportunities for aid and trade, but also by the Chinese model of development'. According to him, what they usually need is not a liberal democratic government, but a good government capable of fighting poverty and delivering basic services and basic security because the paramount task for most developing countries is how to eradicate poverty, a root cause of conflicts and various forms of extremism. So long as the American model remains unable to deliver the desired outcome, the Chinese model will become more appealing to the world's poor.44
The China model, however, has some clear fault lines. First, it lacks moral appeal because it is guided entirely by pragmatism, which, by definition, is behavior disciplined by neither a set of values nor established principles. The attraction of many developing countries to the China model has come almost entirely due to the tangible economic and political benefits rather than intangible moral appeals. That is why after the idea of a Beijing Consensus gained ground, Ramo returned to the fray with some dissonant data. In a pamphlet called Brand China, he takes a much less optimistic view of China's image. Using a global opinion research survey conducted by Young & Rubicam, Ramo finds a China's image emergency and concludes that China's brand is weak and the country is not trusted overseas.45 Citing Ramo's changing view, one observer indicates that the Chinese may get on famously with the governments of Sudan and Zimbabwe, but such relationships are only likely to confirm the damaging impression that China is a country that will always put profits above human rights and other moral principles. Seen in this light, 'China's growing influence in Africa and even Southeast Asia has little to do with a new Beijing Consensus; it is simply old-fashioned power politics'.46 Joseph Nye also argues that while the 'Beijing Consensus is attractive in authoritarian and semi-authoritarian developing countries, it undercuts China's soft power in the West because China suffers from corruption, inequality, and a lack of democracy, human rights and the rule of law'.47
Second, the Beijing Consensus has not been effective in dealing with many important dimensions of human development at home and abroad. Chinese economic growth, while undeniably impressive, is widely associated in the West with political oppression and environmental pollution. A New York Times editorial comments that although the 'Chinese miracle' has been the biggest economic story for several years now, a tale of a nation rising from the ashes of a Stalinist command economy to become the world's premier trading partner, China reminds us with distressing regularity that the progress has been selective. It cited the reports of slave labor in Chinese factories and the discovery that some of the popular Thomas the Tank Engine toys manufactured in China have lead in their paint. It also pointed to the earlier reports about the contaminated dog food, the stubborn support of Sudan for its oil, the regular reports of human rights abuses, the huge economic disparities between city and country, and the controls on the media. According to this editorial, China's unreformed political system fosters corruption and an undue focus on short-term economic gains, which will lead to more internal inequities and injustices and more tainted exports.48 As a matter of fact, China's economic performance improvement came mostly when China became less brutal and allowed greater personal and economic freedoms.
Third, the success of the Chinese model is very short. It is hard to claim the universality of their model because no economy keeps growing at the same pace forever. China's economic growth, just like other emerging economies in history, could come to a pause or even a setback or crisis. In addition, the gap between rich and poor in China has been growing in the past decade and this trend has become a serious threat to the political stability that has helped maintain economic growth and the legitimacy of the CCP. In this case, although the China model has sustained the economic growth and the regime legitimacy so far, how long that will persist is still anybody's guess. From a historical perspective, the current China model is only a transitional model of development. It may have to go from a value-free to a value-added transition involving the sequencing of economic growth, legal reforms, democratization, and constitutionalism, with different aspects of the development being emphasized at different times in the process in order to continue its political stability and economic growth, as demonstrated by the evolution of several East Asian NIEs. After achieving high levels of economic growth, these NIEs not only implemented rule of law but also eventually democratized and protected the full range of human rights through some form of constitutionalism. One scholarly study argues that this is the direction of the logic transition of the China model.49
Conclusion
China indeed presents a successful model of rapid economic growth and relative political stability. Economic growth has produced more wealth in society, steadily improved the living standards of the Chinese people, and therefore retained the performance legitimacy of the CCP regime. A Pew Global Attitudes Survey published on 23 July 2008 ranked the Chinese people among the most satisfied with their governments among 24 nations. More than 80% of respondents told the Pew Research Center that they were satisfied with China's economy and overall direction, and 65% thought the government was doing a good job.50 In this case, a large portion of the Chinese people, including the emerging middle class, is pretty well co-opted into the economic and political system, as demonstrated by the studies of Kellee Tsai and Bruce Dickson.51
However, this does not necessarily mean that the China model will be durable and even displace the Western model of modernization in the long run as the appeals of the China model come with the peculiar historical developments of the recent decade. In addition, the US may learn from its mistakes and strike at the cores of its economic, political and diplomatic policies. As a matter of fact, the transition from the Bush Administration to the Obama Administration in 2009 has already brought about many significant changes in US economic, political and diplomatic fronts. From this perspective, it is too early to assert that the China model will replace the Western model of modernization.
Notes
*Suisheng Zhao is Professor and Executive Director of the Center for China-US Cooperation at Josef Korbel School of International Studies, University of Denver. He is the founding editor of the Journal of Contemporary China, a member of the Board of Governors of the US Committee of the Council for Security Cooperation in the Asia Pacific (USCSCAP), and honorary jianzhi professor at Beijing University, Renmin University, Fudan University and Shanghai Foreign Studies University. A Campbell National Fellow at Hoover Institution of Stanford University, he is the author and editor of ten books. His most recent books are: China and the United States, Cooperation and Competition in Northeast AsiaChina-US Relations Transformed: Perspectives and Strategic Interactions, Debating Political Reform in China: Rule of Law versus Democratization, and A Nation-State by Construction: Dynamics of Modern Chinese Nationalism.
Dr. Suisheng Zhao, associate professor at the Graduate School of International Studies and executive director of the Center for China-U.S. Cooperation at the University of Denver.
1. Rowan Callick, 'How long can economic freedom and political repression coexist? Rowan Callick examines Beijing's sinister policy formulation', The American, The Journal of American Enterprise Institute, (November/December 2007), available at:http://www.american.com/archive/2007/november-december-magazine-contents/the-china-model.
2. Howard W. French, 'A China model, what if Beijing is right?', International Herald Tribune, (2 November 2007).
3. Timothy Garton Ash, 'China, Russia and the new world disorder', The Los Angeles Times, (11 September 2008), available at:http://www.latimes.com/news/opinion/la-oe-ash11-2008sep11,0,5312908.story.
4. John Williamson, 'What Washington means by policy reform', in John Williamson, ed., Latin American Adjustment: How Much Has Happened (Washington, DC: Institute for International Economics, 1990).
5. Ching Cheong, 'Rise of the Beijing Consensus?', The Strait Times, (23 October 2008).
6. Riodan Roett and Guadalupe Paz, 'Introduction', in Riodan Roett and Guadalupe Paz, eds, China's Expansion into the Western Hemisphere, Implications for Latin America and the United States (Washington, DC: Brookings Institution Press, 2008), p. 10.
7. Ziya Onis and Fikret Senses, 'Rethinking the emerging post-Washington Consensus: a critical appraisal', ERC Working Paper (Economic Research Center, Middle East Technical University, November 2003), pp. 4-5.
8. Joseph E. Stiglitz, 'Post Washington Consensus Consensus', PowerPoint presentation, Sao Paolo, 22 August 2005.
9. Joshua Cooper Ramo, Beijing Consensus: Notes on the New Physics of Chinese Power (London: Foreign Policy Center, 2004).
10. Alain Gresh, 'The world turned upside down, understanding the Beijing Consensus', Le Monde diplomatique, (November 2008).
11. Scott Kennedy, 'The myth of the Beijing Consensus', Journal of Contemporary China 19(65), (June 2010).
12. Callick, 'How long can economic freedom and political repression coexist?'.
13. Ian Buruma, 'The year of the China model', The Nation (Bangkok), (9 January 2008).
14. The discussion of the features is based on Randy Peerenboom, China Modernizes: Threat to the West or Model for the Rest? (Oxford University Press, February 2007); and Wei-wei Zhang, 'The allure of the Chinese model', International Herald Tribune, (1 November 2006).
15. French, 'A China model, what if Beijing is right?'.
16. Andrew Nathan, Chinese Democracy (New York: Alfred A. Knopf, 1985).
17. Pan's paper was initially published in a 1999 issue of Zhanlie yu Guanli [Strategy and Management]. A revised English version was published in the Journal of Contemporary China 12(34), (February 2003) and collected into an edited book, Suisheng Zhao, ed., Debating Political Reform in China, the Rule of Law versus Democratization (Armonk, NY: M. E. Sharpe, 2006).
18. Frederick C. Teiwes, 'Normal politics with Chinese characteristics', The China Journal no. 45, (January 2001), p. 74.
19. Cary Huang, 'Political reform remains core focus for party, stronger “intra-party democracy” will be high on next week's agenda', South China Moring Post, (10 October 2007).
20. 'Wen Jiabao quxiao zhongli bangong huiyi ruhua gaochen renzhi shecai' ['Wen Jiabao abolishes the premier work meeting to weaken the rule of man at the top'], Chinesenewsnet.com, (10 February 2004).
21. Suisheng Zhao, 'The feeble political capacity of a strong one party regime: an institutional approach toward the formulation and implementation of economic policy in post-Mao China', Issues & Studies 26(1), (January 1990), p. 76.
22. Willy Wo-lap Lam, 'China: breaking with the past?', CNN.com, (23 July 2003).
23. Goh Sui Noi, 'Beijing takes small steps to greater transparency, moves by ruling party include more participation for congress delegates', Straits Times, (28 October 2007).
24. Chen Xia, 'Understanding Hu's hot new terms', China.org.cn, (16 October 2007).
25. Zhao Huanxin, 'Tightened reins make gov't accountable', China Daily, (14 March 2004).
26. 'China's chief quality supervisor resigns amid public grumbles over tainted milk', Xinhua, (22 September 2008).
27. 'Shanxi governor resigns, acting governor appointed', Xinhua, (14 September 2008), available at:http://english.sina.com/china/2008/0914/186199.html.
28. Qianfan Zhang, 'The people's court in transition: the prospects of the Chinese judicial reform', Journal of Contemporary China 12(24), pp. 69-70.
29. 'Constitution to clarify private rights', Xinhua Newsagency, (5 January 2004), available at: www.china.org.cn.
30. Liu Xiabo, 'Zhonggong Xianfa guan de chubu bianhua' ['The preliminary changes in the CCP's constitutional outlook'], Chinesenewsnet.com, (14 January 2004).
31. Nanfeng Chuang [South Wind Window], (15 December 2003), pp. 47-52.
32. Elisabeth Rosenthal, 'China's communists try to decide what they stand for', New York Times, (1 May 2002).
33. Edward Cody, 'Chinese officials seek to pump up the party', Washington Post, (3 December 2004), p. A16.
34. Li Mingjiang, 'The 17th CPC Congress: the transition that the world missed', RSIS Commentaries, (31 October 2007).
35. Willy Wo-lap Lam, 'Appealing to modern comrades', South China Morning Post (electronic version), (1 November 2000).
36. James Mann, 'China's dangerous model of power', Washington Post, (20 May 2007).
37. Garton Ash, 'China, Russia and the new world disorder'.
38. Joseph S. Nye, 'The rise of China's soft power', The Wall Street Journal Asia, (29 December 2005).
39. Ching Cheong, 'Rise of the Beijing Consensus?'.
40. Larry Diamond, The Spirit of Democracy: Struggle to Build Free Societies Throughout the World (New York, NY: Times Books, 2008), pp. 56-87 and 123.
41. Adrian A. Basora and Jean F. Boone, 'The Georgia crisis and continuing democratic erosion in Europe/Eurasia', Foreign Policy Research Institute, E-Notes, (3 October 2008).
42. Mann, 'China's dangerous model of power'.
43. Alex Berkofsky, 'The hard facts on soft power', PacNet 26, (31 May 2007).
44. Wei-wei Zhang, 'The allure of the Chinese model'.
45. Joshua Cooper Ramo, Brand China (London, UK: The Foreign Policy Center, 2007), pp. 12-19.
46. Gideon Rachman, 'The hard evidence that China's soft power policy is working', FT.com, (19 February 2007).
47. Nye, 'The rise of China's soft power'.
48. Editorial, 'The China puzzle', New York Times, (22 June 2007).
49. Peerenboom, China Modernizes.
50. John Garnaut, 'East does not meet West on China's self-image', Sydney Morning Herald, (24 July 2008).
51. Kellee S. Tsai, Capitalism without Democracy: The Private Sector in Contemporary China (Ithaca, NY: Cornell University Press, 2007); Bruce J. Dickson, Red Capitalism in China, The Party, Private Entrepreneurs, and Prospects for Political Change (Cambridge, UK: Cambridge University Press, 2003).
The China Model
11/2007｜Rowan Callick |November/December 2007 Issue The American
From Vietnam to Syria, from Burma to Venezuela, and all across Africa, leaders of developing countries are admiring and emulating what might be called the China Model. It has two components. The first is to copy successful elements of liberal economic policy by opening up much of the economy to foreign and domestic investment, allowing labor flexibility, keeping thetax and regulatory burden low, and creating a first-class infrastructure through a combination of private sector and state spending. The second part is to permit the ruling party to retain a firm grip on government, the courts, the army, the internal security apparatus, and the free flow of information. A shorthand way to describe the model is: economic freedom plus political repression.
The system’s advantage over the standard authoritarian or totalitarian approach is obvious: it produces economic growth, which keeps people happy. Under communism and its variations on the right and left, highly centralized state-run economies have performed poorly. The China Model introduces, at least in significant part, the proven success of free-market economics. As citizens get richer, the expectation is that a nondemocratic regime can retain and even enhance its power and authority. There is no doubt that the model has worked in China and may work as well elsewhere, but can it be sustained over the long run?
The Communist Party of China, or CPC, rose to power in the mid-20th century after decades of civil war, starvation, and eventually the invasion of theJapanese. But under Mao, communism fell far short of its economic promise. Then, after the bitter chaos of the Cultural Revolution, which began in 1966 and culminated with the death of Mao in 1976, Deng Xiaoping carefully devised and implemented the formula through which the CPC today retains its legitimacy: the party ensures steadily improving living standards for all, and, in return, the Chinese people let the CPC rule as an authoritarian regime. This economic basis for the party’s power gives it a credibility that is being projected well beyond its own borders, with all the more success because of the recent decline in the international standing of the United States, focused as it is on its tough and increasingly lonely task in the Middle East.
The economic portion of the model works like this: open up the doors—kai fang—and let in foreign capital, technology, and management skills, guidingthe foreigners to use China initially as an export base. Engage with global markets. Let your manufacturing and distribution sectors compete with thebest. Give farmers control over their own land, and support the prices of staples.
Do everything you can to lift living standards. Give your middle class an ownership stake in the newly emerging economy by privatizing most of thegovernment housing stock for well below the market price. Corporatize as much of the state sector as you can, and then list minority stakes on the stock market to provide a new outlet for savings. But don’t let the central bank off the leash; use it to maintain a hold over the currency exchange rate and other key policy levers. Keep ultimate control over the strategic sectors of the economy; in China’s case, these include utilities, transportation, telecommunications, finance, and the media.
The leaders of the Deng and post-Deng years have mostly been engineers, people of a practical bent with a particular enthusiasm for pouring cement and building infrastructure.The salient features of China’s economic system, which is still evolving, include increases in inputs, improvement in productivity, relatively low inflation (with the state maintaining a grip on some prices while others are gradually exposed to the market), and rising supply, especially of labor. The country has a large pool of surplus rural workers, as well as many millions more who were laid off as state-owned enterprises underwent rapid reform, emerging from welfare-focused loss centers to become market-focused profit centers.
As it became easy to import sophisticated components from elsewhere in Asia and assemble them in China, most of the Asian neighborhood has been earning bilateral trade surpluses, becoming intimately enmeshed in the Chinese economy. The services sector remains undeveloped, a massive field awaiting investment and exploitation. Huang Yiping, chief Asia economist of Citigroup, says, “The mutually enhancing effects of reform and growth were probably the secret of China’s success.” The regime has succeeded in one of its prime goals, to generate sufficient surplus value to finance themodernization of the economy. China holds $1.3 trillion worth of foreign reserves.
Even after 30 years of the kai fang strategy, however, the Chinese economy remains only selectively open. For instance, although the currency, the yuan, can be converted on the current account, chiefly for trade, its conversion on the capital account, for investment, remains strictly controlled. China is still substantially a cash economy, with little use made of Internet banking or even of credit cards or mortgages.
The People’s Bank of China remains a tool of government rather than an autonomous institution, as most Western central banks now are. A large range of core industries are, by policy, fully or majority-owned by the government, and although the four “pillar banks” have attracted massive investments from Western corporations and from international shareholders, their boards and management are regularly shifted according to the needs of the party-state. Foreigners are free to establish fully owned firms in a fast-growing range of activities from manufacturing, processing, and assembly to banking and leasing, rather than being required, as before, to enter joint ventures with local partners. But the regulatory hurdles to register such companies usually take many months to negotiate. Indeed, much of China’s business environment is negotiable. There appear to be few absolutes.
Nontariff barriers to trade are declining, but they remain legion, especially in the services sector. Still, more and more foreigners are successfully doing business in China “belowthe radar” with small operations, such as restaurants, art galleries, and marketing firms, while the latest American Chamber of Commerce survey says that 73 percent of American companies operating in China claim they are operating profitably, with 37 percent adding that their profits in China are higher than their average global profits.
This steady but cautious opening of the economy to foreigners and to domestic entrepreneurs to a defined degree has ensured that as global liquidity has soared, much of it has found its way to China. The country’s very scale, with a population of 1.3 billion, is a lure in itself, but it is the nation’s convulsive arrival as not merely a receptacle but a driver of globalization that best explains its attraction to international business.
Many of China’s global partners require transparent governance, independent courts, enforceable property rights, and free information. None of these is present in China today, or will be unless the party surrenders a degree of political authority it has so far regarded as inconceivable. Won’t pressure forthese four requirements in itself apply sufficient pressure to force liberalization? Not necessarily—because China meets all four, plus a freely convertible currency and a free port, in its own city of Hong Kong, governed under the “one country, two systems” format devised by Deng. Hong Kong is a valve to release pressures that might cause a rigid centralized economy to explode.
Nor does China seem especially vulnerable to outside shocks. Daniel Rosen, principal of China Strategic Advisory, says that at the time of the Asian financial crisis a decade ago, which China largely sailed through, “the country had not opened its capital account, relied on foreign debt, floated its currency, freed monetary policy from political control, or even relinquished the role of the state as a predominant force in financial flows. A decade later, with a new sort of financial crisis unfolding in the United States subprime mortgage market, many believe the factors that insulated China in the past still buffer it today.” However, he concludes, this isn’t the final word: “The macroeconomic outlook is strong not because China is immune from adjustment pressures amplified by global credit conditions, but because it has a demonstrated willingness to accept adjustment where necessary.”
The China Model is demonstrating this cautious adaptability by shifting its focus from inward investment to outward investment—making its foreign reserves start to build the returns it will need as it faces the demographic jolt caused by the shift in policies from Mao’s “populate or perish” to the one-child urban family. “In addition,” says Italian journalist Francesco Sisci, “the party has shown itself adept at co-opting potentially troublesome private sector businesspeople by recruiting them into the National People’s Congress and the Chinese People’s Political Consultative Conference.”
When previous leader Jiang Zemin opened the Communist Party to such people, many commentators saw capitalists taking over the party. The reverse has happened, with the party extending its controls into the thriving private sector, where growing numbers of party branches are being established. But, Sisci concludes, “it is very hard to believe that in 15 to 20 years, when the middle class could be asked to pay 30 percent or more of its income in taxes, and both Chinese society and the world at large have become more open, that this middle class will remain content to stay out of politics.”
No one, however, is anticipating such a shift anytime soon. In the 1990s, a presumption grew that the crowds of well-connected young Chinese returning with their Ivy League MBAs would not acquiesce to the continued unaccountable rule of the cadres. But many of them instead joined the party with alacrity. A striking example is that of Li Qun, who studied in the U.S. and then served as assistant to the mayor of New Haven, writing a book in Chinese on his experiences. After his return to China, he became a mayor himself, of Linyi in Shandong Province in the Northeast. There, he swiftly became the nemesis of one of China’s most famous human rights lawyers, the blind Chen Guangcheng. First, Chen was placed under house arrest and his lawyers and friends were beaten because of his campaign against forced sterilizations of village women. Then, Chen was charged, bizarrely, with conspiring to disrupt traffic when a trail of further arrests led to public protests. He was jailed for four years.
Thus, best of all, in the view of many of the international admirers of the China Model, is that the leaders, while opening the economy to foster consumption, retain full political control to silence “troublemakers” like Chen. Indeed, the big attractions of China to capital from overseas has been thatthe political setting is stable, that there will be no populist campaign to nationalize foreign assets, that the labor force is both flexible and disciplined, and that policy changes are rational and are signaled well ahead. Economic management is pragmatic, in line with Deng Xiaoping’s encomium to “crossthe river by feeling for stones,” while political management is stern but increasingly collegiate, the personality cult having been jettisoned after Mao and factions having faded together with ideology.
The CPC is replacing old-style communist values with nationalism and a form of Confucianism, in a manner that echoes the “Asian values” espoused by the leaders who brought Southeast Asian countries through their rapid modernization process in Singapore, Malaysia, Thailand, and elsewhere. But at the same time, in its public rhetoric,the party is stressing continuity and is assiduously ensuring that its own version of history remains correct. Historian Xia Chun-tao, 43, vice director of the Deng Xiaoping Thought Research Center, one of China’s core ideological think tanks, says, “It’s very natural for historians to have different views on events. But there is only one correct and accurate interpretation, and only one explanation that is closest to the truth.” The key issues, he says, are “quite clearly defined” and not susceptible to debate. “There is a pool of clear water and there’s no need to stir up this water. Doing so can only cause disturbance in people’s minds…. However much time passes, the party’s general judgment” on such key events won’t change.
The party, for example, required its 70 million members to view, late in 2006, a series of eight DVDs made by the country’s top documentary producers about the fall of the Soviet Union. The videos denigrated the Khrushchev era because it ignored the crucial role of Joseph Stalin and thus “denied thehistory of the Soviet Union, which in turn triggered severe problems.” Young Soviet party members who grew up in this atmosphere lacked familiarity with the party’s traditions, and “it was they who went on to bury the party.” According to the CPC version of history, Stalin was wrongly viewed in the Soviet Union as the source of all sins, “in spite of the glories of socialism.”
But the documentary series ended on an upbeat note: the Russian people are rethinking what happened, and two-thirds of those surveyed now regretthe fall of the Soviet Union. “When Vladimir Putin stepped in, he reestablished pride in the country,” according to the videos. For Stalin, of course, read Mao. The CPC has no intention of taking Mao’s vast portrait off the Tiananmen Gate, nor burying his waxed corpse, sporadically on view at the Soviet-style mausoleum whose construction destroyed the feng shui, the harmony, of Tiananmen Square that Mao himself created.
In the May/June edition of the american, Kevin Hassett, director of economic policy studies at the American Enterprise Institute, explained that evidence is emerging that developing “countries that are economically and politically free are underperforming the countries that are economically but not politically free.” China, of course, is in the lead of the economically free but politically unfree nations. Hassett wrote, “The unfree governments now understand that they have to provide a good economy to keep citizens happy, and they understand that free-market economies work best.... Being unfree may be an economic advantage. Dictatorships are not hamstrung by the preference of voters for, say, a pervasive welfare state. So the future may look something like the 20th century in reverse. The unfree nations will grow so quickly that they will overwhelm free nations with their economic might.”
The kleptocrats who have ruled many developing countries in past decades have tended to come unstuck when Western aid dwindles, their own economies falter and then fall backward, and all too often rivals emerge within their armies. The China Model presents the possibility that such rulers can gain access to immense wealth through creaming off rents while at the same time their broader populations become content, and probably supportive, because their living standards also are leaping ahead. This formula also entails hard work, application, policy consistency, and administrative capacity spread through the country—hurdles where followers of China are likely to fall. But for now, they’re lining up in hope and expectation.
Even some Westerners are impressed by the new China. American swimming superstar Michael Phelps said on a visit to Beijing, the host city of theOlympic Games next August, “Going to the hotel, we see Subway, 7-Eleven, Starbucks, Sizzler, McDonald’s. It’s like a big American city. They have everything we have in the States.” In fact, they don’t. They lack basic freedoms.
It is true that the Chinese people are free to consume whatever they can afford. That’s novel. They have also gained in the last three decades thefreedom to travel where they want, at home and abroad. They can now work for whom they want, where they want. They can buy their own home, and live where they choose (the houkou system of registration is breaking down). A Chinese woman can marry the man she loves, though in the cities thecouple can still only have one child unless they can afford the fine for having more. The Chinese can study at any institution that will have them. They can meet anyone they like, but not in a suspiciously large group.
The emerging middle class also benefits from a “gray economy” that, a recent survey by the National Economic Research Institute led by Wang Xiaolu has discovered, is worth a breathtaking $500 billion a year, equivalent to 24 percent of China’s GDP. That’s why new graduates clamor for government jobs ahead of those with glamorous international corporations—because the opportunities to get rich quick during this transitional period of asset transference from the state, and to benefit hugely from rent-seeking, are so great.
But Chinese citizens can’t form a political party, or any other organized group, without official permission. They can’t choose their leaders. Even theordinary CPC members have no say in their hierarchy. Sisci, Beijing correspondent of the Italian newspaper La Stampa, writes in the China Economic Quarterly that “there is something like a 75 percent avoidance rate on personal income tax” because few people anywhere choose to concede taxation without any representation. “There is a political pact,” he writes. “The government allows tax evasion in return for political obedience. So far, the middle class has acquiesced: it prefers to pay less taxes and not vote, rather than buy its right to elect the government by paying more taxes.”
Phone calls, text messages, and emails are likely to be screened, and many Internet sites—such as Wikipedia and BBC News—are blocked or filtered by the 30,000 “net police.” Bloggers must give their real names and identity card numbers to their Internet service providers, which must in turn makethem available to the authorities when asked. Tim Hancock, Amnesty International’s campaign director in the UK, says, “The Chinese model of an Internet that allows economic growth but not free speech or privacy is growing in popularity, from a handful of countries five years ago to dozens of governments today who block sites and arrest bloggers.”
All books published in China must bear a license code from a state-owned publishing house. Books under question are sent out to groups of retired cadres to censor. Before art exhibitions, says painter Yao Junzhong, who now sells most of his work overseas, the local cultural bureau usually sends a list of taboos to the organizers, and through them to the artists: “You will be told not to attack communism, not to attack the party. Sex is sensitive. So is violence. But not as much as politics.” He recently had to send three photos of a painting, ready for an exhibition, to a gallery owner, the cultural bureau, and the exhibition organizer. The picture showed his young son holding a gun, set in a renminbi coin. “I named it ‘Qianjin,’ which means advance, and also means money.” A cadre couldn’t put his finger on it, but felt “there must be a political element,” so the organizer was told it was not appropriate.
All films must be vetted by the State Administration for Radio, Film, and Television. All print media are government- or party-owned. The party’s propaganda department has recently introduced a penalty scheme for media outlets that deducts points for defying government guidance. Twelve points means closure. Every inch of public territory remains tightly defended, although warnings are usually not explicit, leaving maximum space for artists to choose to censor themselves. Leading new-wave filmmaker Jia Zhangke, winner of the top award, the Golden Lion, at last year’s Venice Film Festival, says, “If we don’t touch thetaboo areas, we will have a lot of freedom. But then those areas grow larger. If your tactic is to guess what the censors are thinking, and try to avoid their concerns, you are ruined as an artist.”
Chinese people do not expect to obtain justice from the courts, which are run by the party, the judges answerable to the local top cadres. Ordinary people, the laobaixing, have to negotiate their way out of any troubles if they can. They have grown accustomed to, but not accepting of, widespread corruption. They are meant to report to the neighborhood police whenever someone new comes to stay with them. A file is kept on Chinese citizens, which follows their work and home moves, but they cannot see it. There are only two legal churches that the Chinese can join, the Catholic and theThree Self (Protestant) organizations; the leaders of both are ultimately responsible to the party. Evangelism is not permitted. There are no church schools. Freedom House, in its annual survey, gives China a ranking of “7” for political rights—the organization’s lowest rating and the same as that of North Korea, Burma, and Cuba (Japan ranks “1”). China ranks only slightly higher, at “6,” for civil liberties, the same as Iran, Saudi Arabia, and Zimbabwe.
In the 1980s, wishful thinking on the part of some Western observers, combined with a form of historical determinism that was, in its way, a tribute to thethinking of Hegel and Marx, had China inevitably becoming more free and democratic as it became more of a market economy. The Tiananmen massacre caused some head-scratching for a while, but Western business, in particular, tended to take the public view, when pressed, that a semi-capitalist country was bound to evolve in time into a democracy, because the emerging middle class would demand it.
Now, such views have faded. Premier Wen Jiabao said during the last annual session of China’s version of a parliament, the National People’s Congress, that the country would remain at the present “primary stage of socialism,” during which it would require continued guidance by the party, for at least another 100 years. This model of the state has power going from the top down, and accountability from the bottom up. It also leans heavily on theseductive story of China’s ancient uniqueness, its serial defiance of foreign prescriptions.
This story of cultural heroism, even though it is bound up in the China Model, with its far warmer embrace of globalization than most other developing nations have conceded, has acquired a glossy appeal because of the sheer, palpable success of China’s modernization drive. The nation’s gross domestic product has grown at an average annual rate of more than 10 percent since 1990.
When 21 leaders controlling three-fifths of the world’s economy met at the latest Asia Pacific Economic Cooperation summit in Sydney in September,The Nation newspaper in Thailand editorialized: “One could easily spot who the real mover and shaker among them was. It used to be that what theleader of the U.S. said was what would count the most. That is no longer.” The new mover and shaker is China. The entire piece was reprinted by TheStatesman, an influential English-language newspaper in India. Developing nations believe that, as an ideal, the China Model has replaced theAmerican Model, especially as embodied in the “Washington Consensus,” a set of 10 liberal democratic reforms the U.S. prescribed in 1989 for developing nations.
Last November, 41 African heads of state or government were fl own by China to Beijing for a summit hosted by President Hu Jintao. The government ordered most cars to stay off the roads as the leaders sped to meetings and banquets. One million security forces were deployed for almost a week to ensure the summit went smoothly. Abundant affirming slogans such as “La Belle Afrique” and attention to ingratiating detail—hotel staff learning African greetings, rooms decorated with African motifs, magnificent gifts even for the thousands in the presidents’ and prime ministers’ retinues—marked a contrast with concerns about corruption, crime, and cruel civil war that comprise most Western encounters with Africa.
Premier Wen said that two-way trade between China and Africa would double to $110 billion by 2010, after soaring tenfold in the last decade, with fuels comprising more than half of China’s imports from Africa. China is canceling its debts due from the least developed countries in Africa, setting up a $5.5 billion fund to subsidize Chinese companies’ investments in the continent, and increasing from 190 to 440 the number of items that Africa’s poorest countries can export to China tariff-free. Already, by a large margin, China is the biggest lender to Africa, providing $8.9 billion this year to Angola, Mozambique, and Nigeria alone. The World Bank, by contrast, is lending $2.6 billion to all of sub-Saharan Africa.
The Western requirement that good-governance medicine must be consumed in return for modest aid is now not only unwelcome but also, as far as many African leaders are concerned, outdated. They are no longer cornered without options. Now they’ve got China, which is offering trade and investment, big time, as well as aid. And more than that, they’ve got the China Model itself.
This is no longer the communist program that Mao Zedong tried to export with little success except in places like Peru and Nepal, where Maoists have survived long after they have vanished from China itself. It is, instead, the program that gives business room to grow and make profits, while ensuring it walks hand in hand with big, implacable government. And, of course, the China Model holds out the promise of providing the leaders of developing nations the lifestyles to which they would love to become accustomed.
This is the China Model: half liberal and international, half authoritarian and insular. Can it last?
A few writers have become mildly wealthier by forecasting doom. The best known is lawyer Gordon Chang, whose book, The Coming Collapse of China, published in 2001 by Random House, concluded, “Beijing has about five years to put things right.” Chang made clear that he did not expect the party to pull it off. His litany of likely triggers of collapse included entry into the World Trade Organization (which happened in December 2001), within whose regulatory structure, he said, China could not remain competitive; the impossibility of reforming the 50,000 state-owned enterprises, which he said sucked up 70 percent of domestic loans while producing less than 30 percent of the economy’s output; the failure of the reform of the banking system, with its huge burden of nonperforming loans and planned restructuring through inexperienced asset-management companies; the government’s lack of revenues; corruption; and the rush of new global information and views made available on the Internet. Chang’s critique was plausible at the time, but now, six years later, it merely underlines how dangerous it is to bet against China’s pragmatic economic reform program.
Randall Peerenboom of UCLA describes in his new book—China Modernizes: Threat to the West or Model for the Rest?—the country’s “paradigm for developing states, a 21st-century, technologically leap-frogging variant of the East Asian developmental state that has resulted in such remarkable success for Japan, South Korea, Hong Kong, Singapore, and Taiwan.” China resisted the advice of foreign experts to engage in shock therapy, he says, and has persisted in gradual reform. The state has played a key role in setting economic policy, establishing government institutions, regulating foreign investment, and mitigating the adverse effects of globalization in domestic constituencies. And the strategy has broadly worked: “Chinese citizens are generally better off” than in 1989. “Most live longer, more are able to read and write, most enjoy higher living standards.
China outperforms the average country in its income class on most major indicators of human rights and well-being, with the notable exception of civil and political rights.”
Where China fails to match up, however, is in creativity and innovation, without which it may have to resign itself to remaining a net importer of new technologies, and a manufacturer under license. It has failed to produce a single global brand to compare with its neighbors. Japan has its Sony, Toyota, Panasonic, Honda, and the rest. South Korea has its Samsung and Hyundai. Taiwan has its Acer, BenQ, and Giant bicycles. China’s Haier white goods and Lenovo personal computers remain, for now, wannabes. The controls that China deploys on use of the Internet, the battles it wages with its artists in every field, the focus in its education system on rote learning, the continuing failure to implement its own intellectual property rules, and now theembracing of a new Confucianism—all of these inhibit lateral thinking and invention.
As Maoism and Marxism lose their grip, the dangers of nationalism as a defining value system become apparent, and religion remains under suspicion as a potentially powerful rival to the Communist Party and the authoritarian state, China’s leaders are eagerly rediscovering the country’s 2,500-year-old Confucian tradition.
Contemporary philosophers claim to be reengineering Confucianism to suit the needs of 21st-century China by, for instance, focusing on the ecological potential in its advocacy of “the unity of heaven and humanity” and on its requirement of self-discipline. But the reasons that early-20th century modernizers and artists, including China’s greatest writer, Lu Xun, rejected Confucianism as essentially authoritarian and inimical to modernization remain unaddressed.
Lee Yuan-tseh, the president of Taiwan’s top research institute, Academia Sinica, describes how, after a traditional Confucian upbringing, he shifted for postgraduate opportunities to the United States, first at the University of California at Berkeley, then Harvard, then Chicago, and back to California. He says that the inquisitive academic climate there “made me think bad thoughts: that my teacher was wrong.” In time, he took what he describes as thebiggest step of his life—telling the teacher so. In 1986, he won the Nobel Prize for chemistry. In 2000, Gao Xingjian won the Nobel Prize for literature, but only after he had exiled himself and become a French citizen. No person has ever won a Nobel Prize for work in China; the U.S., by contrast, has won nearly 300 Nobel Prizes, winning or sharing four of the six 2006 awards.
Even in entrepreneurship and wealth creation, the CPC retains its grip. Carsten Holz, an economics professor at the Hong Kong University of Science and Technology, wrote in the Far Eastern Economic Review that “of the 3,220 Chinese citizens with a personal wealth of 100 million yuan ($13 million) or more, 2,932 are children of high-level cadres. Of the key positions in the five industrial sectors—finance, foreign trade, land development, large-scale engineering, and securities—85 percent to 90 percent are held by children of high-level cadres.”
Attempts are being made to shift the economy higher up the value-added chain by creating and importing more capital-intensive companies. For instance, on a vast industrial estate southeast of Beijing, Richard Chang, a Taiwan-raised American citizen, has built a $1.5 billion microchip-making factory for his company, Semiconductor Manufacturing International Corporation. The factory employs 2,000 staff who work in “clean rooms” constantly tested for dust and humidity. The machines there cost up to $30 million each. About 55 percent of the staff have undergraduate degrees, and 10 percent are hired from overseas. All have three months of in-house training before they begin work.
In 2006, manufacturers in China bought $64 billion worth of chips, but much of that hardware was imported. Whether SMIC—which Chang founded only in 2000, after working for 20 years with Texas Instruments—can build the research capacity and the skills needed to compete will provide an important test of China’s ability to move its model on to a higher plane. China, in typical fashion, threw a heap of incentives Chang’s way to ensure he got up and running: free land, syndicated loans, R&D aid, zero tax.
Like most other East Asian states, China’s route to development placed economic reforms before democratization. But the China Model differs markedly from most of the region in that it has resisted taking any serious steps down that road to democracy. There is talk of “intraparty democracy” within continued one-party rule, but unsurprisingly, no champions of it have any real influence. There were also some token village elections, but they have remained dominated by the CPC and its cadres. Commentator Shu Shengxiang wrote in July, on the influential website Baixing (“the common people”): “The democratically elected cadres are gouging the people [by corruption] too. They do not know that a democracy which only has elections but not supervision is at best a half-baked democracy, if not a fake democracy. Half-baked democracy not only harms the villagers’ personal interests, but even gives them themisconception that democracy is not good.”
At the same time, however, the party is refining its contract with the Chinese people to reflect shifting popular concerns about living standards: the quality of growth as well as the quantum. Leading this new agenda is the environment, which surveys show tends to top, together with corruption and access to health and education services, the concerns of most Chinese. The World Bank says China contains 16 of the world’s 20 most polluted cities in their air quality, and anxieties about both water and air have triggered a large proportion of China’s “mass events”—demonstrations and protests—which even official figures estimated at 87,000 in 2005.
The central government has effectively opened the environment to media commentary and to the establishment of NGOs, and has pinned the blame forthe worst environmental disasters on avaricious or neglectful local officials. Ambitious targets have been set, in the five-year plan that began in 2006, for reduction of carbon dioxide and sulfur emissions, and for the use of energy per unit of production. The goals are not being met, and the central government appears determined to impress the whole apparatus that its new green program is not just rhetoric, but that it means business.
This shift from quantity to quality of growth will form the core of the agenda in the second term of the current “fourth generation” of leaders around Hu Jintao and Wen Jiabao. At the party congress, which occurs every five years and started on October 15, their aim is to ensure that only people on board this quality-of-life program get promoted, both in the central institutions and in the provinces. The key principle for their decade in power is the Confucian concept of harmony—as in stability and avoidance of dissent.
This China offers a seductive model that is being eagerly taken up by the leaders of countries that have not yet settled into democratic structures: Vietnam; Burma; Laos; theCentral Asian dictatorships that were part of the Soviet Union; a growing portion of theMiddle East, starting with the United Arab Emirates, including its glossy new centers like Dubai; Cuba; most of Africa, including South Africa; and even to a degree the hereditary cult that is North Korea. Beijing sometimes gives more than it receives to cement its developing world leadership, according most-favored-nation status to Vietnam, Laos, and Cambodia even before they join the World Trade Organization. In an unsettling way, the China Model is attractive to the leaders of some countries that had already become democratic, such as Venezuela. The model is even inspiring democratic India to compete with its own adaptive version.
The China Model is, of course, admired in the West, too, with business leaders’ words (at platforms such as Forbes magazine conferences and theWorld Economic Forum, which has just instituted an annual summer session in China) providing great reinforcement for Chinese leaders. The World Bank is just one of the international institutions that champion China (its greatest client and in some ways its boss) as a paradigm for the developing world. Also fascinating is the appeal of the China Model to Russia, which as Azar Gat, professor of national security at Tel Aviv University, writes in Foreign Affairs, “is retreating from its post-communist liberalism and assuming an increasingly authoritarian character as its economic clout grows.”China is exporting scores of Confucian Institutes, most of them at first just language schools but in the future offering platforms for extending Chinese influence.
But back to our question: Is the China Model sustainable? Two recent books come up with opposite answers. The British center-left economist Will Hutton, author of The Writing onthe Wall, says China must accede to Enlightenment values or start to fall back again. American journalist James Mann, author of The China Fantasy, argues, in contrast, that theChinese middle class is thoroughly behind the China Model as its major beneficiary, ensuring that the usual source of confrontation with the power elite is not just docile, but eagerly applauding.
It may take a non-Sinologist like Hutton to see how very strange it is that a one-party state that pays lip service (at least) to the doctrines of Marx, Lenin, and Mao should not only survive into the 21st century after all its principal totalitarian and authoritarian peers have collapsed, fallen apart, or been beaten in world wars, but actually prosper, to the degree that its system is starting to gain such currency in the developing world.
“The party is facing a growing issue of legitimacy,” he writes. “If it no longer rules as the democratic dictatorship of peasants and workers, because theclass war is over, why does it not hold itself accountable to the people in competitive elections?” The answer is in the phrase Hutton himself frequently uses: “party-state.” The party won power by force of arms. The People’s Liberation Army answers to the party, not to the government or the nation, insofar as those concepts can be levered apart from the party any more. The party’s legitimacy, as viewed by most Chinese, lies in its history and past leaders, in its contemporary success at bringing prosperity to a thankful nation, and in its unyielding grip on the trappings of nationalism.
The large gold star in China’s fl ag, for instance, represents the CPC, the four smaller stars the workers, the peasants, the petty bourgeois, and capitalists sympathetic to the party. In the early 1980s, there was some vestigial discussion about separating party and state, but the idea was abandoned as both impractical and undesirable. The party rules today through four pillars—the army, the legal apparatus including the courts and police,
the administration, and the state corporations that dominate the “strategic” sectors of the economy. Without cutting away these pillars, without separating the powers, any attempt at “competitive elections” would be hollow. But the pillars appear, to use an understatement, firmly entrenched.
Hutton reiterates the old contention that China’s middle class, “more internationalist than its poor,” will ultimately insist that the party loosen its political control. James Mann replies that the middle class is doing very nicely, thank you, within the structure as it is. Its members are substantially incorporated into the party and are the structure’s biggest supporters, not its underminers.
Hutton’s most convincing critique is that “China has no business tradition that understandsthe moral facet of capitalism,…whose ‘soft’ institutions (a common culture and shared purpose) are as integral to growth and sustainability as the ‘hard’ processes.” The difficulty Chinese enterprise has in understanding, let alone absorbing and practicing, the morality and trust that are at the root of capitalism and of successful globalization is on display ever more luridly as food, drugs, toothpaste, toys, and a growing list of other products ring international alarm bells and cast a shadow over the “Made in China” brand credibility.
His core conclusion is this: “Welfare systems, freedom of association, representative government, and enforceable property rights are not simply pleasant options. They are central to the capacity of a capitalist economy to grow to maturity…. The party can relax its political control to allow theeconomic reform process to be completed. Or it can retain political control, watch the economic contradictions build, and so create the social tension that may force loss of political control.”
Hutton is not the first commentator to draw up a balance sheet of economic and social pluses and minuses for China, and figure that something has to give politically. “The clock is ticking,” he warns. But time keeps passing unremarkably, and one diligent and uncharismatic group of leaders quietly makes way for the next, and the party-state not only remains intact but also appears to flourish.
James Mann, however, says that if China does retain a repressive one-party political system for a long time, this “may indeed be just the China that theAmerican or European business and government leaders who deal regularly” with the country want. The “fantasy” in his book’s title is the notion that commerce will lead to democracy or liberalization. One of his scenarios is that the party is still in power 25 years from now, though perhaps called the“Reform Party.” But if it is to change names, the CPC will probably find that the “China Party” is the easiest sell.
Leading Australian economist Ross Garnaut, a former ambassador to China, adds an important element of historical perspective—that first Britain, andthen the United States, industrialized in a helter-skelter way, which was crucially moderated and channeled by institutional accountability that preventedthe industrial-baron entrepreneurs from losing proportion, alienating the population, and misallocating capital disastrously. The institutions that developed to meet this challenge of a rampant new power elite included parliaments, legal structures, and independent regulatory agencies. Will Chinafollow suit, or will its go-it-alone party steer its economy, after three decades of success, into difficult waters (or onto the reefs) because it lacks the true self-confidence to expose itself to other sources of power?
It is almost certain that China will push on with its present structure, but with the prospect of broadening democratic competitiveness for posts within the party, and institutionalizing consultations with more diverse groups in Chinese society, some outside the party. The“ample evidence” that Randall Peerenboom catalogs in his book, “that other countries are looking to China for inspiration,” reinforces the CPC’s determination to persevere. Laos is following China’s lead in implementing market reforms and producing higher growth. Iran and other Middle East countries, including Syria, have invited experts on Chinese law, economics, and politics to lecture to senior officials and academics. They are all attracted by what they see as China’s pragmatic approach to reform.The official newspaper China Daily recently hosted on its website a reader discussion on the theme: “China is a role model to all developing nations. After centuries of oppression and domination by Western nations, most developing nations are trying to pull themselves up from poverty. They look atChina’s rapid progress as an example. China also gives aid and technical help to these nations.” The theme attracted a host of supportive responses, such as, “China has shown that you can be successful by expanding through commerce and diplomacy, not by the imperialism demonstrated by theU.S. and UK.”
Vietnam, Cuba, Burma, and Venezuela provide good examples of the China Model’s attraction. Vietnam, whose economic reform program, doi moi, began 20 years ago, has followed China closely, especially replicating its outward-looking foreign investment regime. As a result, strong links have been created between the two communist countries, which are also the fastest-growing economies in Asia. In 2006, China had 377 direct investments in Vietnam. Since China and Vietnam resumed official economic relations in 1991, after Vietnam had allied itself with the Soviet Union, bilateral Chinese-Vietnamese trade has grown at an annual average of 40 percent. Meanwhile, Vietnam maintains a political system as authoritarian as China’s, with a ranking of “7” for political rights from Freedom House.
Vietnam’s new prime minister, Nguyen Tan Dun, says he wants to ramp up economic cooperation with China, and that the countries “should increasetheir cooperation to accelerate trade promotion and investment, plus organize trade fairs and exhibitions, to help each other seek more trade and investment opportunities.” In Vietnam’s north, close to China’s booming Guangdong Province, average wages and real estate are much cheaper than in coastal China. Vietnam is the most successful economically of the countries using the China Model, and its entrepreneurial talents suggest that in some areas it could in time even leapfrog it.
China’s ability to honor Mao, even as it tears down the economy he set in place, could provide a model for Cuba, says William Ratliff, a research fellow at Stanford University’s Hoover Institution who is an expert on both countries. “During the past 15 years, important members of the Cuban political, military, and business elite, including Fidel and Raúl Castro and two-thirds of the members of the Communist Party Politburo, have visitedChina and remarked with great interest on the Chinese reform experience,” Ratliff says. After Raúl’s visit to China, Zhu Rongji, a leading architect of economic reforms who wasthen premier, sent one of his chief aides to Cuba, where he lectured hundreds of leaders, with substantial impact.
Ratliff cites a Cuban intelligence official as saying: “Once Fidel Castro is out of the game, other areas of the Chinese experience will most probably be implemented in Cuba rather quickly.” Besides the economic model, the Chinese concept of an orderly succession of leaders within an authoritarian system also holds a deep attraction.
Former Chinese Foreign Minister Tang Jiaxuan, often sent as an emissary by President Hu to neighboring countries, said in September that “Chinawholeheartedly hopes that Burma will push forward a democracy process that is appropriate for the country.” The statement underlines China’s crucial support for the ruling military regime, which usurped the election won convincingly in 1990 by Aung San Suu Kyi’s party, with 390 of 492 seats. But Tang adds a note of disquiet; China is no longer blasé about being viewed as the main backer of dictatorships, including Sudan and Zimbabwe, and would rather that Burma, like those other outcast countries, worked harder to establish better relations with the rest of the world. In his speech, Tang was supporting the Burmese rulers’ plan to introduce a new constitution, and at the same time move toward a market economy, reinforcing the influence ofChina as their key model.
Since the start of 2007, there has been a surge in diplomatic and business visits by leaders between the countries, with the intention of strengthening economic and strategic ties. As in other countries committing themselves to the China Model, the exchanges entail Chinese businesspeople, technicians, and workers coming to live in Burma for lengthy periods. The South China Morning Post has described three Burmese cities—Lashio, Mandalay, and Muse—as “virtually Chinese cities now.” China is building a tax-free export zone for its own industries next to the port of Rangoon.
Meanwhile, Venezuela’s regime has become the leader of the hard left’s opposition to Western-led globalization. In August 2006, President Hugo Chávez said on arriving in Beijing: “This will be my most important visit to China, with whom we will build a strategic alliance. Our plans are to create a multipolar world, and to challenge the hegemony of theUnited States.” His attempts to enmesh China in his high-stakes campaign against theU.S. were deflected by courteous formalities, but China’s economic support—chiefly through investment in energy projects and purchase of oil, despite
Venezuela’s heavy crude being costly to refine and expensive to transport across the globe—considerably aided Chávez’s election campaign last December. Chávez praised China as an economic model for the world: “It’s an example for Western leaders and governments who claim that capitalism is the only alternative. One of the greatest events of the 20th century was the Chinese revolution.”
Joshua Kurlantzick, the author of Charm Offensive: How China’s Soft Power Is Transforming the World, writes: “No one has experience with today’sChina as a global player.... In a short period of time, China appears to have created a systematic, coherent soft power strategy, and a set of soft power tools to implement it”—particularly public diplomacy, aid, and trade—“though it is still in a honeymoon period in which many nations have not recognizedthe downsides of Beijing’s new power.” Those downsides might include a cavalier approach to the environment—other people’s as well as China’s own—growing military clout, the migration of large numbers of Chinese workers and businesspeople accompanying its trade and investment, harsh labor standards on its projects, and in general a new variant on old colonialism.
Kurlantzick writes: “As China becomes more powerful, other nations will begin to see beyond its benign face to a more complicated reality. They will realize that despite China’s promises of noninterference, when it comes to core interests, China—like any great power—will think of itself first.
“China could create blowback against itself in other ways, too. Still a developing country itself, China could overplay its hand, making the kind of promises on aid and investment that it cannot fulfill. And in the long run, if countries like Burma ever made the transition to freer governments, Chinacould face a sizable backlash for its past support for their authoritarian rulers. ‘We know who stands behind the [Burmese] government,’ one Burmese businessman told me last year. ‘We’ll remember.’”
The U.S., Japan, and other countries have been urging China to become more transparent about the rapid development of its military capacity, underlined last January by its missile shot that successfully destroyed an aging satellite, and by the sudden surfacing of a submarine, earlier this year, within five miles of the American aircraft carrier Kitty Hawk. At least some of the increased military budget is intended to compensate the People’s Liberation Army for its lost revenues when it was required, by forceful former Premier Zhu Rongji, to sell off most of its considerable business portfolio.
The principal foreign policy goals appear clear: preventing Taiwan from converting its de facto independence to de jure independence, maintaining a constant capacity to attempt an invasion, extending China’s capacity to open up new forms of access to reliable sources of energy and other commodities, and helping safeguard such routes.
China’s capacity to project adventurist military power far beyond its borders, or to offer significant help for other countries to do the same—for instance in Venezuela, unsettlingthe U.S.’s immediate neighborhood—is limited today both by its resources and by its reluctance to leave its heartland short of the muscle the party may need to quell domestic disturbances like those that swept the country in 1989.
To prevent a growing fear of China’s economic power, Beijing wants to demonstrate, Kurlantzick points out, that as it grows, it will become a much larger consumer of other nations’ goods, creating—in a favorite phrase of the current leadership—“win-win” economics. Chinese leaders constantly talk up thevalue of likely investments and trade, with total outward investment rising, according to official statistics, 1,000 percent in 2005, though this figure includes mere commitments and the total is only $7 billion, compared with $60 billion in foreign direct investment (excluding the finance sector) flowing to China.
China’s soft power offensive and the lure of the China Model remain, however, entirely official government programs. Where soft power has worked durably and has permeated connections among nations and nationalities, it has also involved civil society and the media, the arts, cultural attraction—the broad range of informal human contacts. Beijing will not let such areas of life off the leash at home, let alone license them for export. Thus, its charm in the developing world remains that of the official with his jacket still on, the limousine with darkened windows waiting outside—fully paid for—and the critics regularly, clinically rounded up and removed beyond earshot.
Rowan Callick is the Beijing-based China correspondent of The Australian newspaper. He has previously written for THE AMERICAN about coal in Chinaand economic resurgence in Japan.
