China Syndrome: Capitalism does not necessarily lead to democracy
Ellen Bork
Weekly Standard
May 29, 2006

China's Trapped Transition
The Limits of Developmental Autocracy
by Minxin Pei
Harvard, 306 pp., $45

A MAN WALKS INTO A BAR. At first, he finds nothing unusual about the noisy, convivial atmosphere, but then he realizes something is a little different. Numbers are being called out, one at a time, eliciting laughter from the patrons. "Seventeen," says one man. Laughter. "Fifty-six," another says, to great amusement. "What's going on?" he asks the man next to him, who replies: "Everyone knows all the jokes already so we assigned numbers to them. Saves a lot of time."

Policy debates about China often seem like this: an inane repetition of policy one-liners lacking facts or persuasive argument. In this new book, Minxin Pei demolishes the frequently uttered, and facile, pronouncement that China's economic development will bring about political liberalization. He shows that China does not conform to this, or other, theories that overlook crucial features of China's economic development and political system, especially the incentives and motives driving the leaders of its one-party political monopoly.

Pei, a political scientist who directs the China program at the Carnegie Endowment for International Peace, does not dispute the significance of China's dramatic post-Mao development, including rapid economic growth, greater access to information and personal mobility, the decline in the state role of the economy, and its integration into the global economy. But he points out that the causal link often assumed between economic development and the achievement of democracy, or political liberalization, has failed to operate in China. Reluctant to reject the theory that a threshold per-capita GDP is necessary for democratization (advanced by Samuel Huntington), Pei suggests it is possible that China may not yet be wealthy enough.

This is a half-hearted nod to Huntington, however, to whom the book is dedicated. Pei devotes the rest of China's Trapped Transition to arguing that the lack of political reform can be explained by examining the choices leaders of China's quasi-totalitarian state have made, and why.

China has stalled in a "trapped transition," Pei argues, because its Communist leaders insist on maintaining power and taking a gradual approach to market reforms. This is not part of a strategy for political liberalization; instead, China's leaders have been at pains to shore up their monopoly on power. The dividends of economic reform are used to "strengthen their repressive capacity and co-opt potential opposition groups, especially counterelites." Seeing even limited erosion of their political power causes them to "intensify their efforts to maximize current income while maintaining a high level of repression to deter challengers."

Pei's attention to the attitudes of China's rulers is important, given the general disregard for their thinking and behavior in American and European debates about China policy. We tend to interpret political and economic decision-making from a Western, democratic perspective, frequently projecting onto Chinese leaders attitudes and objectives they simply do not share. Pei challenges the self-deluding notion that Chinese leaders can be prevailed upon to see political reform as in their interest. He makes it clear that they see no such thing.

Chinese leaders' choices do make sense, however, according to their own agenda. Decisions about which sectors to liberalize (typically the smaller, less valuable ones) and who to let into the booming economy (sometimes foreign companies rather than domestic, sometimes the other way around) and who to lend to are politically motivated. Overall, he says, China lags behind other former state-socialist economies that began reforms later.

While Pei is generous to the intellectual adherents of the gradualist economic theory, he argues that favorable assessments are distorted by the failure to consider "the greatest constraint on economic reform: an authoritarian regime's fear of losing power during reform." Such fear prevents the ruling elites from making "accompanying reforms that restructure the key political institutions that define power relations and enforce the rules essential to the functioning of markets, such as the security of property rights, transparency of government, and accountability of leaders."

It's not for nothing, Pei writes, that authoritarian regimes do not follow the "big bang" approach to economic reform.

Yet China's elites are motivated by more than just the desire to maintain power. They recognize the uncertainty in the delicate balance they have created, and respond to the enormous incentive to cash in on the benefits of power before the enterprise collapses. According to Pei, the widely accepted belief that East Asia's "strong government authority + pro-market policies = superior economic performance" neglects the crucial point, that a strong state can just as easily be a "grabbing hand" as a "helping" one; that is, be a "predatory state." The results, he writes, are "dire." The belief that economic development under such conditions could lead to democracy is "wishful thinking because the predatory state and economic development are, logically, mutually exclusive."

One might say that, in the predatory state Pei describes (specifically, a decentralized one), all hell breaks loose. This is not theoretical. Pei documents massive corruption, a bloated state apparatus that fails to perform its functions, the sapping of revenues by local governments, and, ultimately, the inability to control officials. Ideological commitment to communism long abandoned, these officials are increasingly preoccupied with their own exit strategies, which involve getting foreign passports and transferring money abroad. Whereas China's Communist elite were long known to exhibit the "fifty-nine phenomenon"--accelerating their self-dealing as they approached retirement age--Pei shows that the age of those engaging in corrupt activities is getting lower and lower. At the most extreme, Pei writes that officials collude with criminal organizations, resulting in "local mafia states," and he provides details of dozens of such cases.

Needless to say, the preoccupation of officials with preserving power while planning how to get out leaves a lot of responsibilities unmet, or what Pei calls "governance deficits." Some evidence of this deterioration of governance is "mundane but telling," such as the incidences of traffic deaths, workplace injuries, and even accidental poisonings. The quality of education and public health care is declining.

Indeed, the Communist party itself has atrophied. It no longer commands mass allegiance or has legitimacy, reflected in a decline in rural recruitment, the loss of party members through layoffs of those employed by state-owned enterprises, and the failure to attract members from the private sector.

Yes, but what about the political reform that China has already embarked on, and which is frequently presented as proof that China's economic development is, in fact, leading to liberalization? "It is worth noting," Pei writes,

that all the important institutional reforms in the political system--such as mandatory retirement of government officials, the strengthening of the National People's Congress, legal reform, experiments in rural self-government, and loosening control of civil groups--were all conceived and implemented in the 1980s--before China's economic take off. [emphasis added]

As for those reforms, the results are poor. The national and local parliaments serve the executive or party's agenda, and are unable to provide independent oversight, an outcome Pei says was "fully predictable" as the party never intended such reforms to work. Legal reform, too, is "tactical in nature," set in motion to "serve the party's overall strategy of maintaining its political monopoly through economic reform."

Pei seems encouraged by the existence of village elections, in spite of his devastating assessment of how the party manipulates them and prevents them from exercising power. At least, as Pei says, "rural residents are politically sophisticated enough to tell real elections from phony ones." A serious problem arises when outsiders mistake them for real reforms rather than a symptom of a party in decay that should be pressed harder to give up power, not praised for novel ways of managing local affairs. Worse, bogus reforms are a trap for ordinary people who step into the small opening that has been created only to be crushed when it closes. Pei could have included any number of examples of brutal treatment of lawyers, legal workers, activists, and villagers who dared to try to make village elections truly democratic.

Yet even the "golden age" of political reform in the 1980s was never intended to lead to democracy or an end to party rule. Pei explains that neither Deng Xiaoping nor Zhao Ziyang--who fell from power for failing to back Deng's crackdown at Tiananmen--envisioned anything but continued party rule. Not only did the 1990s fail to advance further meaningful reform, but the discussion and debate within party circles, which Deng encouraged, was cut off under Jiang Zemin.

Having refused to adopt serious political reforms, which could manage China's economic growth and other social pressures, the Communist party pursues sophisticated selective repression, relying on networks of informants, improved methods of dealing with large protests, a massive effort to police the Internet, and an effective campaign to co-opt China's elites. These measures must be taken seriously, as a distinct phase of Communist party rule; otherwise, debates about China's human rights record will remain stale and unproductive.

It is not enough to argue that there have been no more Tiananmen massacres, and that China is in a post-Mao era in which mass campaigns, such as the Great Leap Forward and the Cultural Revolution, are in the past. We are seeing something new. Pei argues that the current crackdown on the Falun Gong reflects a new phenomenon, related directly to the decay of the party. Under Mao, he writes,

[T]he CCP could have easily mobilized its loyal supporters, such as workers and peasants, to contain and even destroy a nationwide social network like Falun Gong without resorting to the use of police. . . . The CCP could not mobilize a single social group to support its crackdown. In the end, it was the application of brute force, not the mobilization of the masses that enabled the CCP to destroy the movement inside China.

The "trapped transition" is not sustainable. Democracy may come, not led willingly by the Communist party, but, says Pei, "more likely as the result of a sudden crisis brought on by years of corruption, mismanagement, and institutional decay." It is not a criticism to say that Pei doesn't offer much in the way of policy recommendations. He offers an indictment of the claim that economic development will lead to democracy, rebuking the premise upon which U.S. policy toward China has been based under presidents of both parties.

Having stayed out of policy throughout the book, Pei is a bit clumsy in describing the players in the China debate, suggesting that the "fizzle" of China's rise will disappoint both the "liberal engagers," who want democracy, and the "hard-nosed realists obsessed with the potential threat" from China, who hunger for big defense budgets. This lacks the subtlety and insight that distinguishes the rest of the book.

Of course, Pei is a political scientist, relying on abstract terms that will not be familiar to general readers. But he more than compensates with a profound argument, richly documented with anecdotes, statistics, and studies, including a wealth of sometimes jaw-dropping information from official Chinese sources. China's Trapped Transition will make future debate more rigorous, and more relevant. Anyone who wishes to participate in that debate must read it.

Ellen Bork is deputy director at the Project for the New American Century.