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The underestimated party-state (Arthur Kroeber - The Financial Times)
March 5, 2007 8:51 AM
Copyright The Financial Times
Arthur Kroeber, Managing editor, China Economic Quarterly
Published February 26 2007
People in the rich world perturbed by China’s rise spend a great deal of time these days consoling themselves with a political fantasy. China’s economy may be growing fast, the argument goes, but unless that growth is matched by political reform – specifically, the adoption of Western-style democracy – then economic progress will grind to a halt.
This argument has plenty of what the music business calls crossover appeal. The yellow-peril school of Chinaphobes like it because it enables them to forecast the imminent collapse of a sclerotic state unable to manage the dynamic forces it has unleashed. Idealists, of either the liberal or the neo-conservative persuasion, find it validates their view that evolution towards an Anglo-American style capitalist democracy is the inexorable course that all nations must follow, failing which they must stagnate or collapse.
Few seem willing to accept the possibility that the Chinese party-state will manage to keep rapid economic growth going for a long time, while reforming the political system only slowly and on terms dictated mainly by Chinese culture and bureaucratic history – not on Western, and particularly not on Anglo-American lines. Yet for anyone who cares to analyse China on the basis of empirical evidence, rather than appeals to bogus axioms of political development, this seems the most likely outcome for China in the next two decades.
The China-must-reform-as-we-say-it-must fantasy has been most clearly articulated by two recent books. China’s Trapped Transition, by Minxin Pei of the Carnegie Endowment, claims that corruption has so overwhelmed the Chinese state that it is rapidly losing the capacity to deal with all sorts of social problems. The Writing on the Wall: China and the West in the 21st Century, by Will Hutton (reviewed by Martin Wolf in the FT on February 2), asserts that “the Chinese economy and the Chinese Communist Party are in an unstable halfway house” between socialism and capitalism, and that the party must surrender its monopoly on power – soon – or risk economic collapse.
Both books, not to mention legion other critics, are right to point out that China faces a staggering array of problems: corruption, income inequality, water shortages, environmental degradation, the potential for epidemic disease and so on.
But where these books and the legion other critics go spectacularly wrong is in their assessment of the Chinese party-state as “sclerotic,” “rigid,” “unresponsive” and so on. The Chinese party-state has many exceedingly repulsive aspects, and certainly uses ruthless repression as one of the tools of governance. But if for no other reason than an interest in self-preservation, it is responsive to all manner of ills. Critics’ underestimation of the party-state’s ability to identify and address problems is a severe failure that leads them into erroneous diagnosis.
Listing all the evidence would take a book at least as long as Mr Hutton’s, but here is a sampling.
General state capacity? A decade ago government revenues were 10 per cent of GDP, a pathetic figure, and many economists doubted whether the government would be able to muster the resources to deal with any of its problems. Today revenues are around 20 per cent of GDP, and China runs one of the tightest and most prudent fiscal policies in the developing world.
Corruption? There is no question that corruption is widespread in China. It is also true that corruption in China has generally been of the lubricating rather than the destructive kind: it more resembles the monumental corruption of America’s late 19th-century Gilded Age, which was a concomitant of rapid economic growth, than the kleptocratic, zero-sum corruption that has destroyed many African countries. The decision to keep much of the economy in the hands of state corporations run by an increasingly professionalised cadre of technocrats, though much derided by free-market purists, was also in part a conscious attempt to avoid the growth of a private tycoon elite – as in Latin America or south-east Asia – that could capture the political system and use it to protect their own privileges rather than to foster broad development goals. The two most dangerous corruption clusters of the past decade were both smashed. Massive smuggling in the mid-1990s was brought under control by a fierce enforcement campaign and more sensible tariff policy. The Shanghai land-grab of the past few years, which saw a handful of property developers and officials profit obscenely from the eviction of ordinary people from their homes, ended last fall with the incarceration of the city’s party boss. In the past year Shanghai was the only major Chinese city in which property prices declined.
Income inequality? The government has decided that in a large fast-growing country, equality of outcomes is hard to achieve but ensuring equality of opportunity is a state responsibility (Anglo-American hearts ought to be warmed). To widen opportunity it has invested huge amounts in education, quadrupling the number of university graduates in the past five years, and launching a program for free public education through grade nine in the poorer inland provinces. By 2015 nine years of free public education should be standard throughout the country, and by 2020 the hope is to have 85 per cent of the population with at least a high-school education. The target may not be reached but its very existence belies the idea of a jack-booted state fearful of the future.
Health care? Thanks to the SARS and bird-flu scares, people love to talk about how epidemic disease is a heartbeat away from devastating China. Yet thanks to SARS and bird-flu, there has been a dramatic change in how the government deals with epidemic diseases. Before SARS, China denied it had an AIDS problem. After SARS, it launched a major campaign to contain the epidemic. China’s record on controlling AIDS is far superior to that of India. Progress against tuberculosis – a far more important epidemic than AIDS, with 1.3m new cases every year – has been even more impressive. Between 2002 and 2005, the proportion of TB cases detected by China’s public health service soared from 30 per cent to 80 per cent, and 90 per cent of cases were successfully treated.
Environment and resource efficiency? Here progress has been achingly slow. But take a look at the leadership of the National Development and Reform Commission (NDRC), which is by far the most powerful economic policy body. A few years ago this very technocratic organisation pooh-poohed environmental and resource-efficiency concerns. Today, four of the agency’s five vice-ministers are tasked with environmental and energy issues. One of them was until recently the environment minister. This suggests a clear impetus towards better environmental management in the next decade.
Governance? People who think the party is just a bunch of old people sitting tight and clinging to outmoded ideas should check out what President Hu Jintao has done to local governments in the past year. Nearly 200,000 officials have been shifted around and promotion preference has been given to younger officials with experience dealing with poverty and rural development issues. The new generation of provincial leaders promoted by Mr Hu is on average five years younger than the existing provincial leadership, and almost none of them have the engineering degrees so beloved of the old Communist Party. Instead they studied economics, management, history and law. Age and term limits – all introduced under Mr Hu’s watch – mean that it is now virtually impossible to hold a senior position in the central government past the age of 70, or at the local level past the age of 65.
None of this is to argue that China has the best of all possible governments, simply that foreign observers have a dismal track record of underrating the resourcefulness and resilience of the Chinese party-state. As someone who has lived and worked in China for the better part of the last 20 years, I fervently hope that the nation progress sooner rather than later towards a more open, tolerant, pluralist society. But wishing for something does not make it so, and on the evidence of recent years the Chinese state is fully up to its self-appointed task of running an economy at full-throttle while conducting limited political and governance reforms in its own way and at its own pace. The world had better get used to the idea that China can steer its own course, and that we may just have to live with it as it chooses to be, not as we would like it to be.
Copyright The Financial Times Limited 2007
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