How China Can Prevent Collapse

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About 20 years ago, Chinese Communist Party leader Deng Xiaoping headed south from Beijing to Shanghai, where he was delivering a key speech as part of his famous southern tour. This was considered a prelude to the second wave of reforms in China. Following the first wave of reforms, which were launched in 1978, the second wave called for Chinese officials to be bolder and more innovative in pushing China’s development.

The most important point highlighted by Deng was that the market and planned economies were not about choosing capitalism or socialism. From around this time onwards, China embarked on a journey of true market reform.

Since then, the country’s outlook and standard of living has undergone tremendous change. Last year, China’s economy surpassed Japan’s to become the world’s second largest. China’s per capita GDP has also passed $3,000. And even as the outlook for the economies in the United States and Europe remained bleak, many Chinese were still intently focused on luxury items.

And yet, although China weathered the global economic crisis relatively well, there has been one example after another of domestic social unrest. The most notorious was what happened in Wukan in Guangdong Province, where villagers extracted pledges from Communist Party officials to allow local polls to be held in an open manner.

News has travelled fast on social media, such as microblog Weibo, about these developments – faster even, it seems, than the government is able to respond through official state-run media. This is all ultimately tied to the reforms unleashed three decades ago. And it raises the question of whether China can expect even more far-reaching changes as a result of the leadership transition later this year.

With no Deng-like strongman to lead the way, though, the answer looks to be no. Instead, this third wave of reforms will likely be less about economics and more about politics. There are already some indicators of what to expect from the 18th Party Congress scheduled to be held in October.

Certainly, this is a turbulent time, both domestically and internationally. It’s this reality, perhaps, that has prompted a number of senior Communist Party officials to take the unusual step of together calling for political reform. During China’s recent parliamentary sessions, a senior official from Guangdong called for reform led by the party’s leaders, a sentiment echoed by a senior official from Shaanxi.

Meanwhile, a report released by Tsinghua University has highlighted the emergence of China’s social contradictions, and called for a broad political push to remedy the situation. It said that China is caught between the extremes of misguided socialism and crony capitalism. The publication of the report was seen by the media as an effort by some of the country’s elites to push back against the status quo.

A third point on what to expect in China is tied to the international system. The Arab Spring and the mass demonstrations against the rule of Vladimir Putin have undoubtedly worried the Communist Party, and helped it realize that reform is a must. Indeed, although policing of Weibo has been strict, the government hasn’t tried to ban it outright, suggesting at least some flexibility on the issue of change. In the long run, greater freedom of expression, including criticism of the government, will actually encourage and enable the government to improve. An early sign of the acceptance of this reality came recently, when the Communist Party-controlled People’s Daily admitted microblogging is important for promoting social democracy and openness.

A fourth point is that although differences remain within the Communist Party, there’s also some consensus between the various factions, whether they are left-leaning or right-leaning, that some kind of reform – including of governance – is probably necessary. Both sides believe that unless change is implemented, the much-treasured stability could crumble, which would pose a significant threat to the Party’s rule. After all, it’s better to cede some power than have all of it taken away.

Political reform is necessary for China. Over the next five years, if presumed President and Premier Xi Jinping and Li Keqiang can’t achieve a breakthrough, then Chinese society faces a genuine danger of collapse – something that would threaten the huge economic progress that the country has made over the past few decades.

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