5 Ways China Could Become a Democracy  (Page 3 of 3)

Should such a scenario occur in China, it would be the most ironic.  For the last twenty years, the Communist Party has tried everything to avert a Soviet-style collapse.  If the “Gorby  scenario” is the one that brings democracy to China, it means the party has obviously learned the wrong lesson from the Soviet collapse.

“Tiananmen redux” is a third possibility.  Such a scenario can unfold when the party continues to resist reform even amid signs of political radicalization and polarization in society.  The same factors that contribute to the “Gorby scenario” will be at play here, except that the trigger of the collapse is not a belated move toward liberalization by reformers inside the regime, but by an unanticipated mass revolt that mobilizes a wide range of social groups nationwide, as happened during Tiananmen in 1989.  The manifestations of such a political revolution will be identical with those seen in the heady days of the pro-democracy Tiananmen protest and the “Jasmine Revolution” in the Middle East.  In the Chinese case, “Tiananmen redux” produces a different political outcome mainly because the China military refuses to intervene again to save the party (in most cases of crisis-induced transitions since the 1970s, the military abandoned the autocratic rulers at the most critical moment).

“Financial meltdown” – our fourth scenario – can initiate a democratic transition in China in the same way the East Asian financial crisis in 1997-98 led to the collapse of Suharto in Indonesia.   The Chinese bank-based financial system shares many characteristics with the Suharto-era Indonesian banking system: politicization, cronyism, corruption, poor regulation, and weak risk management.   It is a well-known fact today that the Chinese financial system has accumulated huge non-performing loans and may be technically insolvent if these loans are recognized.  In addition, off-balance sheet activities through the shadow-banking system have mushroomed in recent years, adding more risks to financial stability.  As China’s capacity to maintain capital control erodes because of the proliferation of methods to move money in and out of China, the probability of a financial meltdown increases further.  To make matters worse, premature capital account liberalization by China could facilitate capital flight in times of a systemic financial crisis.   Should China’s financial sector suffer a meltdown, the economy would grind to a halt and social unrest could become uncontrollable.  If the security forces fail to restore order and the military refuse to bail out the party, the party could lose power amid chaos.  The probability of a collapse induced by a financial meltdown alone is relatively low.  But even if the party should survive the immediate aftermath of a financial meltdown, the economic toll exacted on China will most likely damage its economic performance to such an extent as to generate knock-on effects that eventually delegitimize the party’s authority.

“Environmental collapse” is our last regime change scenario.  Given the salience of environmental decay in China these days, the probability of a regime change induced by environmental collapse is not trivial.  The feed-back loop linking environmental collapse to regime change is complicated but not impossible to conceive.  Obviously, the economic costs of environmental collapse will be substantial, in terms of healthcare, lost productivity, water shortage, and physical damages.Growth could stall, undermining the CCP’s legitimacy and control. Environmental collapse in China has already started to alienate the urban middle-class from the regime and triggered growing social protest.  Environmental activism can become a political force linking different social groups together in a common cause against a one-party regime seen as insensitive, unresponsive, and incompetent on environmental issues. The severe degradation of the environment in China also means that the probability of a catastrophic environmental disaster – a massive toxic spill, record drought, or extended period of poisonous smog– could trigger a mass protest incident that opens the door for the rapid political mobilization of the opposition.

The take-away from this intellectual exercise should be sobering, both for the CCP and the international community.  To date, few have seriously thought about the probability and the various plausible scenarios of a regime transition in China.  As we go through the likely causes and scenarios of such a transition, it should become blindingly clear that we need to start thinking about both the unthinkable and the inevitable.

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