The Future of China’s Discontent
How the Chinese Communist Party is Buying its Right to Rule
By Dylan Nezaj
A New York Times article describes China as the “land that failed to fail.”[i] Indeed, the Chinese Communist Party (CCP), which governs what is now the world’s most prominent authoritarian state and the greatest hegemonic rival to the United States, was time and time again assumed to be on the brink of regime collapse. Yet each time it defied expectations and subverted the prescribed rules of political economy.[ii] Overcoming the disastrous Maoist policies of the Great Leap Forward and the Cultural Revolution, China ascended economically under the export-led growth model and resource consolidation efforts led by Deng Xiaoping.[iii] This growth, however, did not culminate in a shift to a more democratic body politic in China. In lieu of the Tiananmen Square protests, the CCP, unlike the Soviet Union, resolved solely to entertain a liberalization of its economic model, and not its political model.[iv][v]
China’s promising, high-GDP-growth path ended around the Great Recession of 2008. In the aftermath of the ensuing global financial crisis, China’s current president, Xi Jinping, presided over an economy saddled with debt, corruption, a deficit in imports, and declining productivity.[vi] The so-called “New Normal” of the Chinese economy is characterized by slower growth, and the CCP, under Xi’s leadership, has aspired to make this growth of a higher quality to foster technological, scientific, and cultural innovation, and to spread subsequent gains throughout Chinese society.[vii]
The CCP’s actions since Xi’s ascent in 2013 are indicative of its effort to earn and maintain the public’s trust through a proven track record of economic growth and stability. China’s leadership maintains its authority over the public through policies aimed at continuing the nation’s ascendant growth path and elevating living standards. Such a political model runs counter to that of liberal democracies, in which the public will exhibits itself through regular, free, and fair elections. Elected representatives are expected to adapt economic policy as a response to such election pressures, and threats to the government’s stability are quelled by checks and balances inscribed into the procedures of governance – although these checks and balances can be subverted. Any regime, liberal or authoritarian, is vulnerable to the threat of populist uprising posed by economic uncertainty and perceived unfairness. While many Western governments appear to have been afflicted by such uprisings in recent years, Xi’s reforms characterize the CCP’s efforts to maintain legitimacy without the instability that elections imply.
Combating Corruption and Party Consolidation
One key part of Xi’s efforts to bring about a “new era of socialism with Chinese characteristics” has been his anti-corruption campaign, which can be understood to be a dual effort to improve public understanding of the efficiency of the party’s functions while ridding the party of officials who might hinder Xi’s economic reforms.[viii]
In order to strengthen the party’s local functions, Xi has cracked down on local-level inefficiencies by increasing oversight of low-level officials.[ix] Meanwhile, head party cadres have seen their immunity threatened, as the CCP has expelled numerous ineffective party heads, corrupt officials, and political rivals, from the party, often interpreted as an effort to rid the government of Xi’s opponents.[x] This effort has primarily been carried out by the CCP’s own enforcement branch, the Central Commission for Discipline Inspection; it is a party apparatus, and not the Chinese judiciary, that has been in charge of rooting out corruption and punishing those responsible.[xi]
Investing in Human Capital and New Sectors
Prior to Xi’s rule, China’s leaders aimed to use the country’s backwardness to their advantage, driving growth through the integration of as much labor and capital into production as possible.[xii] There is now debate as to the continued efficacy of such a strategy, as China’s GDP growth has begun to slow significantly.[xiii] Seeing as how slowed GDP growth threatens the public’s approval of the government, the CCP must adjust its economic strategy to make the most benefit out of what is now slower economic growth, lest it be forced to quell subsequent public discontent through more forceful means.
China may be at or near a point where average urban wages are insufficient to incentivize its rural population to enter the industrial workforce, known in economics as the Lewis Turning Point.[xiv] This difficulty to attract new labor might not be such a problem if China were not also experiencing an alarming decline in productivity.[xv] It’s no wonder there is fear of the country exhausting its “advantage of backwardness,” or its ability to reorient a large rural labor force towards urban economic sectors.[xvi]
Apart from having taken great strides to improve the Chinese education system to enhance worker productivity, the CCP has also undertaken financial sector reforms. Specifically, the state has allowed the market to play a greater role in determining interest rates to initiate a flow of money into new sectors, such as high-tech and renewable-energy manufacturing, thereby diversifying the economy’s overall activity.[xvii] The influx of money into these sectors has also produced conditions more amenable to high-productivity private sector industry and services.[xviii][xix]
The resulting growth in these newer industries has bolstered the Chinese economy’s ability to attract foreign investment and remain competitive in an international marketplace. This augmented competitiveness allows China to maintain its relatively high, if not slowing, rate of GDP growth.
Dispersing Discontent
The aforementioned effort to mobilize all of China’s resources has required the integration of its vast rural labor force into urban industry. It is well understood, however, that highly populated cities pose a significant threat to authoritarian regimes, as pollution, urban crowding, and proximity both to other citizens and to the agencies of governance themselves all breed the risk of collective action.[xx] In order to placate these urban populations, authoritarian regimes often implement urban-biased policies, like greater social insurance disbursements or more transit investments, at the expense of rural regions. These policies, however, then tend attract further migration to cities, thereby exacerbating the threat of collective action.[xxi]
The CCP has sought to mitigate the danger of collective action through two policies: the hukou, and a national government stimulus.[xxii][xxiii] The hukou, or household registration system, essentially functions as a domestic passport that controls migration throughout the country. Since the hukou is administered by the state, it allows the CCP to block migration to cities whenever it sees fit. Likewise the CCP can – and did – encourage the migration of rural residents in pursuit of work to coastal cities. Such migrants were the cornerstone of China’s becoming the world’s factory.[xxiv] Through the hukou, the CCP can also mandate a return to one’s home municipality, thereby reducing the threat posed by agglomeration.[xxv]
The second policy is a national government stimulus package following the global financial crisis that has encouraged a shifting concentration of labor into inland cities. Direct subsidies to state-owned enterprises in inland provinces maintained GDP growth in such regions by keeping these businesses afloat, despite a drop in worldwide demand for Chinese exports.[xxvi] This policy not only ensured that migrants would find strong job prospects upon returning home from coastal regions, but it also incentivized a flow of skilled workers from coastal cities to inland cities.[xxvii]
Faster Growth in New Places
Slowing economic growth can spell doom for an authoritarian regime, dramatically undermining its stability. Although stimulus packages can temporarily assuage discontent or placate the public by briefly buoying the economy, the CCP has felt the need to fundamentally alter the global economic order to firmly place China in a leading international role.
In order to integrate distant markets into China’s economic reaches, Xi launched the Belt and Road Initiative (BRI), in which the Chinese government has invested in the development of transportation infrastructure abroad.[xxviii] The BRI, Xi’s most notable economic policy, was originally motivated by fears of China’s susceptibility to a cutoff of maritime channels, as well as concerns of general energy vulnerability.[xxix] Since its establishment, however, it has proven to be a boon to regions that have not historically shared in China’s rapid growth, and has also opened doors for investment by a burgeoning Chinese private sector abroad.[xxx]
Indeed, coastal cities have traditionally dominated Chinese trade.[xxxi] However, the numerous rail networks and fuel pipelines constructed by the Chinese government under the BRI have linked inland provinces to foreign markets in a way that their location would have once precluded.[xxxii] These new networks have driven growth in such provinces, attracting coastal populations and thereby alleviating threats to the regime on two fronts.[xxxiii] First, by breaking up huge agglomerations of people in coastal cities, the CCP has alleviated the threat of collective action there. Second, the public’s desire for growth and stability is satisfied by the stronger GDP growth in these inland provinces.
Conclusion
The CCP has undertaken numerous reforms to maintain relatively high GDP growth – a critical prerequisite for regime stability. Chinese leadership appears to be optimistic, and in the meantime, it seems the regime is under no immediate threat of usurpation. Nonetheless, China continues to see an overall decline in its GDP growth. New points of contention – frustration over air and water pollution, discontentment from the poor enforcement of labor and environmental law, and dismay over the CCP’s abridgement of civil liberties – are becoming increasingly salient. How the CCP responds to these mounting challenges may attest to the viability of an authoritarian political model in the 21st century. Can an authoritarian regime buy its time with engineered economic success, or will it crumble before demands for democracy?
Bibliography
[i] Philip P. Pan, “The Land that Failed to Fail,” The New York Times, November 18, 2018, https://www.nytimes.com/interactive/2018/11/18/world/asia/china-rules.html
[ii] Ibid.
[iii] Jeremy Wallace, “China’s Growth in Comparison” (lecture, Cornell University, Ithaca, NY, August 20, 2018).
[iv] Jeremy Wallace, “Growth Debates” (lecture, Cornell University, Ithaca, NY, September 18, 2018).
[v] Lowell Dittmer, “Xi Jinping’s ‘New Normal’: Quo Vadis?” Journal of Chinese Political Science, no. 22 (2017): 430, DOI 10.1007/s11366-017-9489-4
[vi] Dittmer, “New Normal,” 430-33.
[vii] Alice Miller, “Only Socialism Can Save China; Only Xi Jinping Can Save Socialism,” China Leadership Monitor, no. 56 (2018), https://www.hoover.org/sites/default/files/research/docs/clm56am.pdf
[viii] Samson Yuen, “Disciplining the Party: Xi Jinping’s Anti-Corruption Campaign and its Limits,” CEFC China Perspectives, no. 3 (2014): 1, 47. http://www.cefc.com.hk/article/disciplining-party-xi-jinpings-anti-corruption-campaign-limits/
[ix] Yuen, “Disciplining the Party,” 42-44.
[x] Yuen, “Disciplining the Party,” 43.
[xi] Yuen, “Disciplining the Party,” 44-47.
[xii] Mark Leonard (ed.), “China 3.0.” European Council on Foreign Relations, published 2012, https://www.ecfr.eu/publications/summary/china_3.0
[xiii] Ibid.
[xiv] Mitali Das and Papa N’Diaye, “Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?” International Monetary Fund, published January, 2013, https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Chronicle-of-a-Decline-Foretold-Has-China-Reached-the-Lewis-Turning-Point-40281
[xv] World Bank and the Development Research Center of the State Council, P. R. China. 2013. “China 2030: Building a Modern, Harmonious, and Creative Society.” Washington, DC: World Bank. DOI: 10.1596/978-0-8213-9545-5. License: Creative Commons Attribution CC BY 3.0. https://www.worldbank.org/content/dam/Worldbank/document/China-2030-complete.pdf
[xvi] Leonard et. al, “China 3.0.”
[xvii] Richard Dobbs, Susan Lund, Jonathan Woetzel, and Mina Mutafchieva, “Debt and (Not Much) Deleveraging.” McKinsey and Company, published February 2015.
[xviii] World Bank, “China 2030.”
[xix] Houze Song, “Macro Outlook: Steady As She Goes on Deleveraging.” Macro Polo, published August 16, 2018, https://macropolo.org/macro-outlook-steady-as-she-goes-on-deleveraging/
[xx] Jeremy Wallace, “Cities, Redistribution, and Authoritarian Regime Survival,” The Journal of Politics 75, no. 3 (July 2013): 633, DOI:10.1017/S0022381613000340.
[xxi] Jeremy Wallace, Cities and Stability: Urbanization, Redistribution, and Regime Survival in China (New York: Oxford University Press, 2014), 162.
[xxii] This argument is explicated throughout: Jeremy Wallace, Cities and Stability: Urbanization, Redistribution, and Regime Survival in China (New York: Oxford University Press, 2014), 159-86.
[xxiii] Jeremy Wallace, “China 2030” (lecture, Cornell University, Ithaca, NY, September 4, 2018).
[xxiv] Ibid.
[xxv] Wallace, “Cities, Redistribution, and Authoritarian Regime Survival,” 643.
[xxvi] Wallace, Cities and Stability, 168.
[xxvii] Jeremy Wallace, “Urbanization I” (lecture, Cornell University, Ithaca, NY, October 11, 2018).
[xxviii] Arthur R. Kroeber, China’s Economy: What Everyone Needs to Know (Oxford:
Oxford University Press, 2016), 52, 245.
[xxix] Zhou, Lei. The Political Economy of China’s Belt and Road Initiative (Singapore: World
Scientific Publishing, 2018), 12.
[xxx] Ferdinand, Peter. “Westward Ho—the China Dream and ‘One belt, One road’: Chinese
Foreign Policy under Xi Jinping.” International Affairs, 92 (2016): 941-957.
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[xxxi] Zhou, Political Economy, 144.
[xxxii] Ferdinand, “Westward Ho,” 11.
[xxxiii] Jeremy Wallace, “Belts, Roads, and Trade Wars” (lecture, Cornell University, Ithaca, NY, November 29, 2018).