November 15, 2012 2:59 am

China’s leaders must embrace democracy

Social tensions will force the party to reform, writes Minxin Pei

As the Chinese Communist party inaugurates its new leadership, a question on the minds of many Chinese and western observers is whether the party will allow democratic reforms in China.

The answer they get from the party this time, as on previous similar occasions, is unambiguous: the CCP has no intention to give up power. In his opening speech to the 18th party congress last week, Hu Jintao, the outgoing general secretary, dispelled any doubts about the party’s resolve to keep its political monopoly. He pledged that the leadership would “never take the evil road of changing flags and banners” – code for abandoning one-party rule.

While such a declaration must be taken seriously, it is important also to remember that the CCP does not have the only say about China’s future. In fact, its bravado notwithstanding, the party is facing unprecedented pressures from all directions to relinquish its power through democratic reforms.

The most important sign that one-party rule is becoming more shaky is the return of the democracy debate. The intellectual recognition that the status quo is unsustainable is always the first and vital step towards changing it. In the Chinese case, this intellectual awakening is driven by powerful trends in the Chinese economy and society.

Take, for example, China’s economic performance, which underpins the party’s rule. With its recent slowdown, many people are struggling to identify the causes. One argument that has gained the most influence is that a pernicious form of statist crony-capitalism has metastasised and is killing China’s economy.

Statist crony-capitalism lies behind China’s assorted economic ills: macroeconomic imbalances, discrimination against the private sector, over-regulation, financial repression and lack of innovation. Statist crony-capitalism first emerged in the 1990s, when the CCP shifted from market-led reforms to a state-led investment drive as the engine of growth. For a while, a set of one-off favourable factors, such as the demographic dividend (leading to a high ratio of workers to non-workers), globalisation and a credit boom, delivered impressively high growth and concealed the costs of this predatory system.

The economic slowdown now exposes the dark side of statist crony-capitalism. A consensus is fast emerging in China: economic reform today requires political reform, explicitly democratic reform first. Without empowering the people, the entrenched groups – local governments, state-owned enterprises, central bureaucracies and families of the ruling elites – will not cede their privileges willingly.

If the desire to revive economic growth to stay in power is not sufficient to motivate China’s new leadership to gamble with political reform, then the country’s escalating social tensions will force their hands. Fuelled by resentment against inequality, corruption and environmental degradation, the Chinese citizenry, now far more urbanised and connected by modern information technologies than before, has begun to challenge the party on a wide range of public policy issues. The most recent large-scale environmental protests that forced the cancellation of mega-industrial projects are only a harbinger of things to come. The 500-plus mass protest incidents occurring daily are another indicator of the restiveness of Chinese society.

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Based on international experience, the party is likely entering a period of crisis before its ultimate exit from power. Since Portugal began its transition to democracy in 1974, roughly 80 countries have made similar transitions from autocracy to varying forms of democracy. To be sure, not all of the transitions have produced high-quality democracies. But the striking fact today is that only a quarter of the countries (48 out of 195) in the world are governed by autocracies. Many factors were responsible for this political revolution. For China, the most relevant are two: failure of one-party rule and the political consequences of economic development.

A one-party regime may be the most sophisticated form of autocracy. But even such regimes cannot avert demise. Because of the rule of “adverse selection” (autocracies attract opportunists and produce progressively weaker leaders due to over-bureaucratisation and risk-aversion), one-party regimes degenerate through organisational decay. While democracies can renew themselves through political “creative destruction”, one-party regimes cannot. That is why the world’s oldest democracies are more than 200 years old while the longest-ruling one-party regime – the Soviet Union – lasted only 74 years. Now at 63 years in power, the CCP will soon be testing that limit.

The political laws of modernisation are also stacked against the party. It becomes almost impossible to maintain autocratic rule in non-oil based economies as per capita gross domestic product rises above a given level (about $4,000-$6,000 in purchasing power parity). With its per capita GDP close to $8,400 in PPP, China is already an outlier. Of all the autocracies or semi-autocracies with a higher per capita GDP than China, almost all are oil-based economies. The CCP may have defied the odds so far, but cannot do so indefinitely.

One thing we have learnt from transitions to democracy since 1974 is that regimes that initiate change before they totally lose credibility fare far better than those that resist democratisation until the bitter end. This self-evident lesson ought to be abundantly clear to China’s incoming leaders.

The writer is a professor of government at Claremont McKenna College

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