Undemocratic Capitalism

Undemocratic Capitalism

Mini Teaser: Will  the market democratize China? The logic of economic determinism may not be so inexorable after all.

by Author(s): David Zweig

And there is little reason to anticipate the emergence of competitive political parties or an institutionalized movement for democracy. As in Hungary, where factions in the communist elite in the 1980s turned into competitive parties, stark differences over development strategies among Chinese factions made a similar scenario seem plausible in the China of the 1980s. But today is different. Jiang Zemin's struggle to maintain legitimacy as the "core" of the leadership makes concessions and institutionalized division of authority or separation of powers difficult. The core of any factional opposition, Qiao Shi, was removed from office in 1997, and such a party structure simply cannot arise outside mainstream influences under current circumstances.

Tiananmen sent a message to the Chinese people that public protest will be met with violent counterforce. Since then - and despite some signs of division at the top - most urban Chinese have accepted the government's offer to pursue private interest through business; to seek personal freedom through amassing wealth; and to maintain economic growth through political passivity. Chinese also compare the chaos in the former USSR to their own country's economic vigor and say the equivalent of "there but for the grace of God go we." As far as political models are concerned, the specter of Russia more than outweighs the lure of Hong Kong to most Chinese who have political power.

American Choices

This reality poses hard choices for U.S. policy. The widespread belief in an evolutionary process in which economic liberalization drives political democratization in China is narcotic in its policy impact. Through it one can excuse nearly any short-term accommodation, using the rationale that buying time makes sense because time is on the side of all that is benign. But what if this is wrong? China may change more slowly than anticipated; it may become corporatist rather than democratic; or it may even implode violently.

All three developments would be problematic in one way or another for the United States. But all three, and particularly the first two, are more likely than the comforting thesis of inevitable, rapid and smooth democratic transformation. While marketization is forcing economic institutions to liberalize somewhat, political liberalization, in terms of the emergence of real competitive politics, appears nowhere on the national agenda. Powerful vested interests would be threatened by a free press and public disclosure of the activities of China's middle and upper strata, particularly as they seek to profit from SOE restructuring. Moreover, the social unrest likely to emerge from massive layoffs simply cannot be accommodated by a system undergoing political liberalization. A reality check on China today tells us that - pace Henry Rowen - China is very unlikely to be a democracy by the year 2015.

So what should the U.S. government do? It must accept that while a major swing in economic reform and global market liberalization appears to be looming, those changes will face severe domestic opposition that could in the end push China in a decidedly illiberal direction. In the mid-term, it might be that encouraging China to liberalize - by holding out the prospect of WTO membership, for example - would instead trigger a system collapse. Corruption could easily accelerate under the current SOE reform strategy, and the sell-off of state firms might be more vigorously pursued if China attained WTO membership. According to various reports, as much as $10 billion worth of state assets have been stripped by private and public interests in the name of economic reform. The sale of shares in public firms could exacerbate this problem: factory managers and bureaucrats could borrow bank funds to buy up large amounts of shares in public companies, and then sell off the companies to other firms who lay off redundant employees. The result would be windfall profits for bureaucrats while workers are dumped on the streets. Could such a state of affairs persist for a long time without an explosion? Perhaps, but it would not be a sound bet.

Would a collapse in China be a good thing for American interests? A collapsed Soviet Union is widely interpreted as having been a favorable development - although the hobbled Russia that emerged from it has won decidedly mixed reviews. If the Chinese political system today is in fact unreformable, as the Soviet system proved to be, could people really still prefer that the system collapse? The negative global repercussions would be enormous. Who knows what would arise in place of the semi-reformist Chinese government we have now? While there is little doubt that a democratic China would be a better partner than an authoritarian one, China's long march from authoritarianism to democracy must traverse many dangerous passes, where a simple misstep could lead to disaster. Does the United States want to push China onto a path that could undermine the first extended period of economic growth and development experienced by the Chinese people in over a century and a half? Would that make for long-term stable relations? American policymakers need to address these questions, rather than operate on the flawed assumption that economic reform will produce political liberalization without radical political discontinuity in the bargain.

What is needed, then, is a continued policy of engagement that helps China move down the road of liberalization, but that does not justify that policy on short-term predictions of dramatic political change. The United States must engage China because of China's rising power and influence, because of its market, and because greater American involvement in China increases the likelihood of more positive, long-term developments. But the administration must not win supporters for its China policy based on promises it cannot keep and on developments in China that it can neither predict nor control. China will change at its own pace, taking into consideration the need for social stability, the power and interests of its now frightened bureaucrats, and the real limits that exist on the power of the top leaders. Only then will Sino-American relations be established on a stable footing that will weather the difficult times that lie ahead as China continues its dangerous, but nonetheless remarkable, reform program.

David Zweig is associate professor, division of social science, at the Hong Kong University of Science and Technology, and research associate for the Joint Centre for Asia-Pacific Studies, York University/University of Toronto.

Essay Types: Essay