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China Syndrome

Capitalism does not necessarily lead to democracy.

May 29, 2006, Vol. 11, No. 35 • By ELLEN BORK
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China's Trapped Transition

The Limits of Developmental Autocracy

by Minxin Pei

Harvard, 306 pp., $45

A MAN WALKS INTO A BAR. At first, he finds nothing unusual about the noisy, convivial atmosphere, but then he realizes something is a little different. Numbers are being called out, one at a time, eliciting laughter from the patrons. "Seventeen," says one man. Laughter. "Fifty-six," another says, to great amusement. "What's going on?" he asks the man next to him, who replies: "Everyone knows all the jokes already so we assigned numbers to them. Saves a lot of time."

Policy debates about China often seem like this: an inane repetition of policy one-liners lacking facts or persuasive argument. In this new book, Minxin Pei demolishes the frequently uttered, and facile, pronouncement that China's economic development will bring about political liberalization. He shows that China does not conform to this, or other, theories that overlook crucial features of China's economic development and political system, especially the incentives and motives driving the leaders of its one-party political monopoly.

Pei, a political scientist who directs the China program at the Carnegie Endowment for International Peace, does not dispute the significance of China's dramatic post-Mao development, including rapid economic growth, greater access to information and personal mobility, the decline in the state role of the economy, and its integration into the global economy. But he points out that the causal link often assumed between economic development and the achievement of democracy, or political liberalization, has failed to operate in China. Reluctant to reject the theory that a threshold per-capita GDP is necessary for democratization (advanced by Samuel Huntington), Pei suggests it is possible that China may not yet be wealthy enough.

This is a half-hearted nod to Huntington, however, to whom the book is dedicated. Pei devotes the rest of China's Trapped Transition to arguing that the lack of political reform can be explained by examining the choices leaders of China's quasi-totalitarian state have made, and why.

China has stalled in a "trapped transition," Pei argues, because its Communist leaders insist on maintaining power and taking a gradual approach to market reforms. This is not part of a strategy for political liberalization; instead, China's leaders have been at pains to shore up their monopoly on power. The dividends of economic reform are used to "strengthen their repressive capacity and co-opt potential opposition groups, especially counterelites." Seeing even limited erosion of their political power causes them to "intensify their efforts to maximize current income while maintaining a high level of repression to deter challengers."

Pei's attention to the attitudes of China's rulers is important, given the general disregard for their thinking and behavior in American and European debates about China policy. We tend to interpret political and economic decision-making from a Western, democratic perspective, frequently projecting onto Chinese leaders attitudes and objectives they simply do not share. Pei challenges the self-deluding notion that Chinese leaders can be prevailed upon to see political reform as in their interest. He makes it clear that they see no such thing.

Chinese leaders' choices do make sense, however, according to their own agenda. Decisions about which sectors to liberalize (typically the smaller, less valuable ones) and who to let into the booming economy (sometimes foreign companies rather than domestic, sometimes the other way around) and who to lend to are politically motivated. Overall, he says, China lags behind other former state-socialist economies that began reforms later.

While Pei is generous to the intellectual adherents of the gradualist economic theory, he argues that favorable assessments are distorted by the failure to consider "the greatest constraint on economic reform: an authoritarian regime's fear of losing power during reform." Such fear prevents the ruling elites from making "accompanying reforms that restructure the key political institutions that define power relations and enforce the rules essential to the functioning of markets, such as the security of property rights, transparency of government, and accountability of leaders."

It's not for nothing, Pei writes, that authoritarian regimes do not follow the "big bang" approach to economic reform.