The End of Reform in China

June 2015
Since the start of its post-Mao reforms in the late 1970s, the communist regime in China has repeatedly defied predictions of its impending demise. The key to its success lies in what one might call “authoritarian adaptation”—the use of policy reforms to substitute for fundamental institutional change. Under Deng Xiaoping, this meant reforming agriculture and unleashing entrepreneurship. Under Jiang Zemin, it meant officially enshrining a market economy, reforming state-owned enterprises, and joining the World Trade Organization. Under Hu Jintao and Wen Jiabao, it meant reforming social security. Many expect yet another round of sweeping reforms under Xi Jinping—but they may be disappointed.
The need for further reforms still exists, due to widespread corruption, rising inequality, slowing growth, and environmental problems. But the era of authoritarian adaptation is reaching its end, because there is not much potential for further evolution within China’s current authoritarian framework. A self-strengthening equilibrium of stagnation is being formed, which will be hard to break without some major economic, social, or international shock.

IS CHINA EXCEPTIONAL?

One reason for the loss of steam is that most easy reforms have already been launched. Revamping agriculture, encouraging entrepreneurship, promoting trade, tweaking social security—all these have created new benefits and beneficiaries while imposing few costs on established interests. What is left are the harder changes, such as removing state monop­olies in critical sectors of the economy, privatizing land, giving the National People’s Congress power over fiscal issues, and establishing an independent court system. Moving forward with these could begin to threaten the hold of the Chinese Communist Party on power, something that the regime is unwilling to tolerate.
Another reason for the loss of steam is the formation of an increasingly strong antireform bloc. Few want to reverse the reforms that have already taken place, since these have grown the pie dramatically. But many in the bureaucracy and the elite more generally would be happy with the perpetuation of the status quo, because partial reform is the best friend of crony capitalism.
What about society at large? Modernization theory predicts that economic development empowers society, which eventually leads to political transformation. With a per capita GDP of roughly $7,000, is China succumbing to this logic? Many argue that the country will not, because it is exceptional. Political legitimacy in China rests more on the goods government provides than the rights it protects, they claim. Entrepreneurs are co-opted, students are distracted by nationalism, peasants and workers are interested only in material justice. More likely, however, what is exceptional in China is not society or culture but the state.

Reuters / Stringer

An protest against the government's plans to construct a petrochemical plant in Zhejiang province, October 2012.

In China, as elsewhere, economic development has led to contention: peasants are demanding lower taxes, workers want more labor protections, students are forming activist groups, entrepreneurs are starting charities, media organizations have begun muckraking, and lawyers are defending human rights. Collective action has soared, and the country now has more than a million grass-roots nongovernmental organizations. And the Internet poses a big challenge for the regime, by linking ordinary people to one another—and to intellectuals.However, it takes organizational skills and ideological articulation for practical pursuits to mature into political demands. These require at least some political space to develop, and such space is almost nonexistent in China. If the Chinese Communist Party has learned anything from the 1989 democracy movement and the Soviet experience, it is the lesson that “a single spark can start a prairie fire,” as the Chinese saying goes. Equipped with tremendous resources, the regime gradually developed an omnipresent, sophisticated, and extremely efficient apparatus of “stability maintenance,” which has successfully prevented the second half of modernization theory’s logic from being realized. This system for ensuring domestic security is designed to nip any sign of opposition, real or imagined, in the bud. Prevention is even more important than repression—in fact, violent suppression of protests is seen as a sign of failure. China’s strong state is reflected not 
so much in its sharp teeth as in its nimble fingers.
Speech is censored, in the press and on the Internet, to prevent the publication of anything deemed “troublesome.” Actions are watched even more closely. Even seemingly nonpolitical actions can be considered dangerous; in 2014, Xu Zhiyong, a legal activist who had led a campaign for equal educational opportunities for the children of rural migrants, was sentenced to four years in prison for “disturbing public order.” Public gatherings are restricted, and even private gatherings can be problematic. In May 2014, several scholars and lawyers were detained after attending a memorial meeting for the 1989 movement in a private home. Even the signing of petitions can bring retribution.

Reuters / David Gray

Paramilitary policemen at Tiananmen Square, November 2012.

Just as important is the emerging mass line—that is, official public guidance—about China’s critical need to maintain stability. A grid of security management has been put in place across the entire country, including extensive security bureaucracies and an extra-bureaucratic network of patrol forces, traffic assistants, and population monitors. Hundreds of thousands of “security volunteers,” or “security informants,” have been recruited among taxi drivers, sanitation workers, parking-lot attendants, and street peddlers to report on “suspicious people or activity.” One Beijing neighborhood reportedly boasts 2,400 “building unit leaders” who can note any irregularity in minutes, with the going rate for pieces of information set at two yuan (about 30 cents). This system tracks criminal and terrorist threats along with political troublemakers, but dissenters are certainly among its prime targets.
In today’s China, Big Brother is everywhere. The domestic security net is as strong yet as delicate as a spider web, as omnipresent yet as shapeless as water. People smart enough to avoid politics entirely will not even feel it. Should they cross the line, however, the authorities of this shadow world would snap into action quickly. Official overreaction is a virtue, not a vice: “chopping a chicken using the blade for a cow,” as the saying goes, is fully approved, the better to prevent trouble from getting out of hand.
This system is good at maintaining order. But it has reduced the chances of any mature civil society developing in contemporary China, let alone a political one. And so even as grievances proliferate, the balance of power between the state and society leans overwhelmingly toward the former. Social movements, like plants, need space in which to grow. And when such space does not exist, both movements and plants wither.

THE BURIED GIANT

Lacking support from above or below, reform in China has now stagnated, and may even be moving backward. The current leadership still embraces the rhetoric of reform, and it has indeed launched some reform initiatives. Yet they tend to be, as the Chinese say, “loud thunder, small raindrops.”
The most significant is Xi’s anticorruption campaign. Having brought about the downfall of 74 provincial-level officials over the past two-plus years, in addition to hundreds of thousands of lower officials, the campaign is certainly vigorous. In the three decades before Xi took power, only three national officials lost their positions for corruption; in less than three years under Xi, five have already done so. Yet the anticorruption campaign should not really be considered a reform program. Instead of encouraging freer media, more independent courts, and watchdog groups to expose and check corruption, the campaign is driven and controlled from the top and characterized by secrecy, ruthlessness, and political calculation. Yu Qiyi, an engineer at a state-owned enterprise who was accused of corruption, died of torture while being interrogated in 2013. Zhou Wenbin, a former president of Nanchang University, has also claimed to have been tortured, in early 2015. This is reminiscent of the Maoist “rectification” campaigns (albeit much less intense) or even disciplinary actions in imperial China. Such campaigns tend to produce more concentration of power rather than less, strengthening the legitimacy of particular charismatic leaders at the expense of bureaucracies.
External pressure tends to ignite defensive nationalism rather than indigenous liberalism.
Small reforms are moving forward in some other areas as well, but none of them is transformational. The 18th Party Congress, held in late 2012, emphasized judiciary reform, but so far, nothing much more than administrative restructuring has happened. A Central Committee edict in late 2014 promised to strengthen “institutions of independent and fair trials and prosecution,” but it set the first principle of legal reform as “asserting the leadership of the Chinese Communist Party.” Party officials frequently nod to the importance of “deliberative democracy,” and early this year, the party released a plan to “strengthen socialist deliberative democracy,” but it is unclear how deliberation can be made meaningful without ways of punishing institutional unresponsiveness.
There has also been repeated talk about reforming the laws and rules that apply to nongovernmental organizations. Progress in this area, however, is slow and dubious, as demonstrated by the forced dissolution of the Liren Rural Library project, which was focused on extracurricular learning in rural China. The economic arena has seen some genuine reforms, such as the reduction of licensing barriers for businesses and the introduction of more competition in banking, but many see the efforts as mild, with state monopolies in several areas largely untouched. And in social policy, the loosening up of the national one-child policy represents progress, but it may not be enough to make much of a difference.
Underlying the inertia is ideological deadlock. The so-called socialist market economy principle has guided China for over 30 years, allowing for both continuity and reform. It has always contained something of an internal contradiction, because the impersonal legal system required by the market economy could potentially compete with the personalized party leadership as the final arbiter of public affairs, and in recent years, the question has come to the fore with greater urgency: Which is more important, the needs 
of the market economy or those of the Communist Party?
In practice, the needs of the party prevail. But the regime has not developed a coherent, contemporary ideological discourse to justify that outcome. Marxism is obviously inadequate. The regime increasingly resorts to Confucianism, with its convenient emphasis on benevolent governance within a hierarchical order. Yet the two coexist uneasily because the party still nominally embraces Marxism-Leninism, whose emphasis on equality goes against Confucianism, which stresses hierarchy.
What Xi presents most often are the so-called socialist core values. Now posted everywhere in China, these include “prosperity, democracy, civility, harmony, freedom, equality, justice, the rule of law, patriotism, dedication, integrity, friendship.” The list reads more like an ad hoc patchwork than a coherent vision. It reflects anxiety more than confidence, and with good reason: a praxis without ideological grounding is weak and unsustainable.

Reuters / Carlos Barria

A protester getting detained in Zhejiang province, October 2012.

FOUR FUTURES

China faces four possible futures. In the first, which the party favors, the country would become a “Singapore on steroids,” as the China expert Elizabeth Economy has written. If the anticorruption campaign is thorough and sustainable, a new party might be born, one that could govern China with efficiency and benevolence. Policy reforms would continue, the country’s economic potential would be unleashed, and the resulting productivity and progress would boost the new party’s legitimacy and power.
Such a future is unlikely, however, for many reasons. For one thing, Singapore is much less authoritarian than contemporary China; it has multiple parties and much more political freedom. Political competition is not completely fair, but opposition parties won 40 percent of the popular vote in elections in 2011. For China to emulate Singapore, it would have to open up political competition significantly, possibly stepping onto a slippery slope to full pluralistic democracy—an outcome the Communist Party does not want to risk. Singapore is tiny, moreover, and so the cost of supervising its administration is relatively small. China is huge, and the party would find it increasingly difficult to supervise the country’s vast, multilevel governmental apparatus from the top down.
The second and most likely future, at least in the short term, is a continuation of the status quo. Whatever problems it has, the regime’s current model of “socialism with Chinese characteristics” is not exhausted. From demographics to urbanization to globalization to the revolution in information technology, the structural factors that have facilitated China’s rise are still present and will continue to operate for some years to come, and the regime can continue to benefit from them.
But not forever: a regime relying on performance legitimacy needs continued economic growth to maintain itself in power. With growth already slowing, fear of a hard landing is rising. A housing bubble, manufacturing overcapacity, financial instability, weak domestic demand, and widening inequality represent significant vulnerabilities. The bursting of the housing bubble, for example, could cause problems throughout the economy and then in the political sector, too, as local governments lost a major fiscal source that they rely on to support public services and domestic security.