China's Imminent Collapse

China's Imminent Collapse

Beijing struggles behind its crumbling facade of power as the New Champions descend upon the country.


The annual gathering of the great and good at the World Economic Forum in Davos has proved such a success that it has generated a series of spin-off events. I have spoken at a couple in Australia, and doubtless there are many others. But the biggest, second only to the WEF itself, is the Annual Meeting of the New Champions, informally known as “Summer Davos.”

As its official title implies, the Summer Davos is focused on issues affecting the rapidly growing economies of Asia. This year, the event is to be held in Dalian, China, under the theme “Mastering Quality Growth.”


Both the theme and the conference program are redolent of the optimism about the beneficence and inevitable success of the market-liberal model epitomized in the pages of the National Interest by Francis Fukuyama’s essay, The End of History.

To be sure, the Davos discussions are not characterized by the glib triumphalism which was so dominant in the 1990s, when Fukuyama’s essay appeared. The path to quality growth, it seems, is beset with obstacles. Wise policy and good judgment are needed if these obstacles are to be avoided, and the very purpose of the Meeting of the New Champions is to provide guidance on navigating a path around them.

Nevertheless, the program evinces little doubt that China and other emerging Asian champions will in due course follow a slightly modified version of the trail blazed by already developed countries, acquiring the necessary institutions such as rule of law and liberal democracy along the way.

The impression of following a well-used trail is particularly evident in themes such as “disruptive innovation,” a slightly shopworn catchphrase coined by Clayton Christensen of the Harvard School of Business in the early years of the dotcom boom. Having helped to inflate that spectacular bubble, it is now being exported to the equally fizzy economies of East Asia.

The optimistic narrative offered at Davos is not without its critics. An alternative view is popular in two sharply opposed camps: those within the Chinese hierarchy who take the notion of “socialism with Chinese characteristics” at something like face value, and those in the United States who maintain the traditional suspicion of—and hostility to—China, either as a continuation of the Cold War or on the view that any two great powers must eventually clash.

On the alternative account, China (and perhaps other Asian countries) can grow rich without becoming either liberal or democratic. Having done so, Beijing will (and, in the view of Chinese supporters of this analysis, should) convert its economic power into political influence. Globally, this influence will naturally favor a strong version of the doctrine of noninterference in the internal affairs of sovereign states (at least until China is powerful enough to contemplate such interference itself) and support for autocratic governments of all kinds as a counterweight to the claims of liberal democracies to be the only genuinely legitimate governments.

On the face of it, the advocates of the second view have the better of the argument. Within China, the last twenty years have seen huge economic growth, but no net progress towards democracy. The hopes raised by the prodemocracy protests of 1989 have been crushed, and most Chinese appear to have accepted the political status quo and settled down to making money.

The promotion of local elections in rural villages as a training ground for democratization has turned out to be a dead end. Although the system of local elections has been in place for decades, it has not led to an extension of the system to the township level, let alone to the cities where economic activity is now centered. And the central authority does not hesitate to step on any village that takes its democratic rights too seriously—for example, by electing an unacceptable candidate or demanding the removal of a well-connected village chief.

Indeed, the system of local elections may be seen as a strategic retreat by the Communist Party, the better to defend its monopoly of power at the national level. With no remaining ideological interest in the way villages are run, handing off responsibility for the generally thankless business of local government makes a lot of sense.

Internationally, China has established the Shanghai Cooperation Organization, along with Russia and a group of authoritarian governments in Central Asia (the ’stans) and with India, Iran, Mongolia and Pakistan as official observers. This group has a common interest in promoting the view that there is no uniquely suitable model of government and that Asian circumstances require Confucian values of deference to authority.

Finally, the Chinese government has sought to secure control over natural resources and to use that control to pursue geopolitical goals. Among the most notable examples was the monopolization, through predatory competition, of the market for “rare earths” and the imposition of an embargo on exports to Japan following that country’s detention of a Chinese fishing boat in disputed waters.

All of these give the appearance of a unified regime in which economic and political power are wielded jointly in the pursuit of national interest. Unsurprisingly, this model is appealing to many Chinese and viewed with a mixture of fear and envy by many in the West.

But appearances can be deceiving. Great powers, actual or aspiring, tend to overestimate their ability to direct the course of events. The United States has long used embargos as a tool of policy (or at least as an expression of political anger), most notably against the government of Cuba. In the absence of broad international participation, however, such policies are at best useless and at worse counterproductive. The Castros are still in power, long after dictators less offensive to U.S. sensibilities have been driven into exile or thrown into prison.

The Chinese rare-earths embargo was even less successful than the Cuba embargo, being abandoned after only five weeks. Its only effect was a scramble among users of rare earths to secure alternative supplies, resulting in the reopening of mines that had been shut down as a result of low-cost Chinese competition. An expensively acquired position of market power was trashed for no return.

The SCO has been similarly ineffectual. It has not exercised a decisive influence on events in Western Asia. Russia’s actions in promoting separatist ministates like Abkhazia and South Ossetia have run directly counter to Chinese concerns for territorial integrity. Similarly, the organization has had little influence with respect to the fall of successive governments in Kyrgyzstan. When and if the autocracies in the other ’stans come under serious challenge from their subjects, it is hard to see the SCO doing much about it, or retaining much appeal for the successor states.

If Afghanistan is the graveyard of empires, Asia has been the graveyard of international organizations, and the SCO seems doomed to share the fate of SEATO, ASEAN, APEC, AP-6 and many others. These organizations (SEATO died through lack of interest in the 1970s, but the rest still exist) have held many meetings, but it’s hard to point to a single substantive achievement between them. And most of these organizations had a more coherent membership and rationale than does the SCO, which looks rather like a salon des refusés formed in defiance of the corresponding organizations of liberal democracies.

Finally, there is the big question of whether the Chinese Communist Party can maintain its monopoly on power in a fully developed market (or perhaps mixed) economy. Contrary to some optimistic hopes, there is little to suggest that the development of a market economy per se will be sufficient to produce a shift towards democracy. The party has been very successful in coopting leading members of the business sector and in ensuring that they have a substantial stake in the maintenance of the existing order.

On the other hand, as the example of the Arab Spring has shown, authoritarian governments may be much more fragile than they appear. The system of self-selecting oligarchy that has emerged in China since the death of Mao has been a source of stability, but it offers no good way of resolving fundamental disagreements about policy directions.

The spectacular economic growth of the past two decades has made the resolution of policy disagreements relatively easy. Simply put, there has been enough surplus to satisfy all important interests and still allow rapidly rising incomes for the mass of the population, or at least those in urban areas who might pose a threat to political stability.

Again, the example of the Arab Spring suggests that a slowdown in economic growth can bring about a sudden break in what seemed like an established political order. In democracies, economic shocks typically result in electoral defeat for the incumbent government, which at least provides the public with someone to blame, and a test of the hypothesis that the crisis was the result of mismanagement.

In a closed oligarchy like that of China, there is no such mechanism. The system could break down from within, as factional disagreements within the central committee spill out into the broader party and the public at large. Alternatively, large-scale public protests, combined with disagreements over the extent to which repression is desirable and feasible, could bring about a rapid breakdown.