Minxin Pei and James Fallows each have articles out this month in Foreign Affairs and The Atlantic which seek to examine what the financial crisis means for China. Mr. Fallows frames the question thusly:
Is the “China story” as we’ve known it—the three-decade-long story of modernization and prosperity supervised by an authoritarian regime whose economic success excuses most complaints and failings—over? Has it reached its limits and exposed its contradictions? If China does not keep moving forward and growing, will it tear itself apart?In China's Way Forward, Mr. Fallows offers two reasons why China will rebound 1) economics; and 2) "cultural and political realities." The economics argument is swallowed more easily. China's stimulus plan is fiscal expansion on infrastructure projects which should employ a lot of people and keep China's economy growing. A stable authoritarian government allows China to use fiscal expansion to stimulate the economy without falling into the vices that have made Keynesian economics unworkable under representative governments: slow implementation and inefficiency. Additionally, China's banks are flush with cash and have been ordered to lend. My only problem, and maybe I'm just addicted to footnotes with multiple sources, is that Mr. Fallows rosy picture of China's economic future is painted with guidance from reports by investment firms. These are more than observers as they are literally vested in continued confidence in China's economic future, and I'd take 'em with a grain of salt.
As to cultural and political realities, Mr. Fallows finds that the "unspoken premise" on which the "'China is over' hypothesis" rests, "that average Chinese people just barely tolerate the social bargain the government now offers--limited freedom, potentially unlimited wealth," is fundamentally flawed. Though I can't say I disagree with his characterization, Mr. Fallows' premise lies on personal anecdotes which are supposed to make us think that the Chinese people's strength of character forged in the '70s will carry them through any catastrophe.
Many of the Chinese I've met have impressive life stories, but just because they or their parents or their grandparents worked on a labor gang does not mean that the almost "90,000 riots, strikes, demonstrations, and collective protests reported annually" will not "intensify in hard times," as Mr. Pei argues in Will the Chinese Communist Party Survive the Crisis? Rather than look to the average Chinese as a threat to China's stability, Mr. Pei suggests that power struggles in the ruling elite of the Party might create divisions in the upper ranks that have not existed in modern China. Here's a sampling of his characterization of the ruling elite:
The current Chinese leadership is a delicately balanced coalition of regional, factional, and institutional interests, which makes it vulnerable to dissension.Mr. Pei argues that the Party is brutally efficient at quieting social discontent, but that elite power struggles might lower this efficiency allowing instability in migrant workers and the middle class to grow. This would result in further elite power struggles, allowing greater instability, turning into a cycle of "progressive destabilization."
No single individual towers above the others in terms of demonstrated leadership, vision, or performance -- which means that no one is beyond challenge, and the stage is set for jockeying for preeminence.
China's nonideological ruling elites have stuck with the party because it has been paying them off. But when economic hardship ends the easy handouts, the elites' support and loyalty to the system can no longer be taken for granted.
Both men field solid arguments, but I think that Mr. Pei's are the most worth bearing in mind. Mr. Fallows points out that most of the demonstrations in China are not aimed at the Party in Beijing, but against local governments. The financial crisis and the efficacy of Beijing's stimulus plan might change that. If Beijing's stimulus plan fails to deliver enough to satisfy a lot of people, then this will open the door for wider discontent with the Party's ruling elites. Then the elites will have the opportunity, if not the need, to distinguish themselves from each other which might set the stage for struggle.
6 comments:
It is likely that there will be increased divisions within the Chinese leadership over policy, especially among the princelings and the technocrats. However, there is one issue which will continue to hold China together, and that is the chairmanship of the Central Military Commission, which Hu Jintao now holds. This is the steel fist behind the glove, and as long as that position is held uncontestably by one person, that is where the REAL power in China lies. At the end of the day, all governments rely on force to stay in power. The other issue is the lack of a viable alternative to the CCP. There are many dissidents in China, but none have been able to put together an attractive alternative for the Chinese people. And in these troubling times, it is unlikely that anybody will have a strong platform.
China is in trouble, but so does most of the world. We shouldn't forget how much capital surplus the Chinese government have from trade over the years and how strong this government is military wise. The surplus offers Chinese government amble room to continue injecting capital toward domestic economy. They have been very cautious, but I suspect the government won't stop at the first round of $585b package (3% GDP).
Paul,
Interesting perspective. I must confess that I know little about the powers and responsibilities of the China Military Commission. I think you're definitely onto something with the current lack of an alternative.
Christine,
I think you're right about this being the first round. And, it's good to see that Transnational Law Blog is back!
I'd side with Fallows - people are not going to try to get rid of the CCP because of the current economic crisis. If push comes to shove, the CCP can still blame America for any slowdown. Only if the Chinese economy fails to recover once we reach the other side of this crisis will we see trouble - at that point people's patiences will have worn wafer thin.
Okay, here's where I go all language nazi, but what is the difference between "thus" and "thusly"?
Thusly is a bombastic form of thus. I try to write in a somewhat conversational manner. When I converse, and unless I'm conducting business, I tend to have a twinkle in my eye. Thusly is simply more fun to say and to write, even though it is "a pointless synonym for thus."
Yes, TLB is back though not in complete intensity as it was since we all pretend somewhat busy here. Btw, I went to ungrad at UCSC. Needless today, Santa Cruz is voted as my favorite beach town of all time. :)
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