Sunday, October 11, 2015

Is China Really Cracking Up?

Is China Really Cracking Up?


A ChinaFile Conversation



On March 7, The Wall Street Journal published an  by David Shambaugh arguing that “the endgame of Chinese communist rule has now begun...and it has progressed further than many think.” Shambaugh laid out a variety of signs he believes indicate a regime on the cusp of failure. Do you agree with his assessment? Why or why not? — The Editors

Responses




Iagree with Shambaugh to the extent that the C.C.P. regime is in crisis. But the regime has muddled through one crisis after another, including the catastrophes of the Cultural Revolution and the Tiananmen crackdown, by tackling its symptoms. It is too difficult to predict the arrival of the cracking up moment now.
The current crisis came after more than three decades of market-oriented economic reform under the one-party rule that has produced a corruptive state capitalism in which power and money forge an alliance. The government officials and senior managers in state-owned enterprises have formed strong and exclusive interest groups to pursue economic gains. China ranks among the countries of the highest income inequality in the world at a time when China has dismantled its social welfare state, leaving hundreds of millions of citizens without any or adequate provision of healthcare, unemployment insurance, cost of education, and a variety of other social services. In the meantime, China has become one of the world's most polluted countries. The crisis has worsened as China’s economic growth is slowing down and could come to a pause or even enter a downturn. The huge social, economic, and environmental costs China has paid for its rapid economic growth could eventually derail China from its growth path. As the worsening economic, social, and environmental problems cause deep discontent across society and lead many people to take to the streets in protest, China has entered a period of deepening social tensions. Apparently, the Chinese government is frightened and has relied more and more on coercive forces. The cracking up moment could ultimately come when the economic growth has significantly slowed down and the government is unable to sustain the regime’s legitimacy with its economic performance.
While scholars such as Shambaugh are warning the coming of cracking up, President Xi Jinping is unlikely unaware of the danger of possible collapse and has been doing his part to prevent it from happening. Opposite from the prescription by liberal scholars and Western leaders, Xi has seen that the key to keeping the C.C.P. in power is to further empower the authoritarian state led by the Communist Party, reflecting the long struggle of the Chinese political elites in building and maintaining a powerful state to lead China’s modernization. Lucian Pye famously observed that China suffered a "crisis of authority" in a deep craving for the decisive power of "truly effective authority" ever since the collapse of the Chinese empire in the 19th century. Chinese elite attributed China’s modern decline partially to the weakening of the state authority. The authority crisis called for the creation of an authoritarian state through revolution and nationalism. The Chinese communist revolution was a collective assertion for the new form of authority and a strong state to build a prosperous Chinese nation. The very essence of the C.C.P. legitimacy for the founding of the P.R.C. was partly based upon its ability to establish a powerful state as an organizing and mobilizing force to defend the national independence and launch modernization programs.
To rectify his predecessors’ overemphasis on the transformation of China through decentralization reforms that weakened the state’s authority and the C.C.P. central leadership, President Xi has made concentrated efforts to over-empower the authoritarian state. Repeatedly warning against “Westernization,” Xi emphasizes a unified national ideal of the “China Dream” and has allowed the security/propaganda axis to tighten up controls on expression of different political ideologies and opinions. Taking strong measures to strengthen central Party and government authority, he set up new and powerful small leadership groups, such as the Central National Security Commission and the Comprehensive Deepening Economic Reform Small Group, with himself as the head. Looking to Mao Zedong for inspiration to manage the country, he launched the largest rectification and mass line campaigns in decades to fight corruption. Describing Mao as “a great figure who changed the face of the nation and led the Chinese people to a new destiny,” Xi has emerged as a champion of the party-state power, with himself at the top as a strongman.
Whether or not empowering the authoritarian state is a long-term solution to the current crisis, it seems to have targeted some of its symptoms and temporarily silenced its liberal critics inside China. As a result, it may help postpone the arrival of a cracking up moment at least for now. — 


Idisagree with David Shambaugh. Neither China nor its Communist Party is cracking up. I have three reasons for this judgment. First, none of the factors Shambaugh cites strongly supports the crack-up case. Second, the balance of evidence suggests that Xi Jinping's government is not weak and desperate, but forceful and adaptable. Third, the forces that might push for systemic political change are far weaker than the Party.
Shambaugh thinks the system is on its last legs because rich people are moving assets abroad, Xi is cracking down on the media and academia, officials look bored in meetings, corruption is rife, and the economy is at an impasse. This is not a persuasive case. True, many rich Chinese are moving money abroad, both to find safe havens and to diversify their portfolios as China's growth slows. But in aggregate, capital outflows are modest, and plenty of rich Chinese are still investing in their own economy. Following an easing of rules, new private business registrations rose 45% last year—scarcely a sign that the entrepreneurial class has given up hope.
The crackdown on free expression and civil society is deeply distressing, but not necessarily a sign of weakness. It could equally be seen as an assertion of confidence in the success of China's authoritarian-capitalist model, and a rejection of the idea that China needs to make concessions to liberal-democratic ideas to keep on going. It is also related to the crackdown on corruption, which Shambaugh wrongly dismisses as a cynical power play. Corruption at the end of the Hu/Wen era had got out of control, and posed a real risk of bringing down the regime. A relentless drive to limit corruption was essential to stabilize the system, and this is precisely what Xi has delivered. It cannot work unless Xi can demonstrate complete control over all aspects of the political system, including ideology.
As to the economy and the reform program, it is first worth pointing out that despite its severe slowdown, China's economy continues to grow faster than that of any other major country in the world. And claims that the reform program is sputtering simply do not square with the facts. Last year saw the start of a crucial program to revamp the fiscal system (which has led to the start of restructuring local government debt), first steps to liberalize the one-child policy and hukou system (discussed for years but never achieved by previous governments), important changes in energy pricing, and linkage of the Shanghai and Hong Kong stock markets. News reports suggest that we will soon see a program to reorganize big state owned enterprises (SOEs) under -like holding companies that will focus on improving their flagging financial returns. These are all material achievements and compare favorably to, for instance, the utter failure of Shinzo Abe to progress on any of the reform agenda for Japan he outlined two years ago.
Finally, there is no evidence that the biggest and most important political constituency in China—the rising urban bourgeoisie—has much interest in changing the system. In my conversations with members of this class, I hear many complaints, but more generally a satisfaction with the material progress China has made in the last two decades. Except for a tiny group of brave dissidents, this group in general displays little interest in political reform and none in democracy. One reason may be that they find uninspiring the record of democratic governance in other big Asian countries, such as India. More important is probably the fear that in a representative system, the interests of the urban bourgeoisie (at most 25% of the population) would lose out to those of the rural masses. The Party may well be somewhat insecure, but the only force that might plausibly unseat it is more insecure still.
Predictions of Chinese political collapse have a long and futile history. Their persistent failure stems from a basic conceptual fault. Instead of facing the Chinese system on its own terms and understanding why it works—which could create insights into why it might stop working—critics judge the system against what they would like it to be, and find it wanting. This embeds an assumption of fragility that makes every societal problem look like an existential crisis. As a long-term resident of China, I would love the government to become more open, pluralistic and tolerant of creativity. The fact that it refuses to do so is disappointing to me and many others, but offers no grounds for a judgment of its weakness.
Seven years ago, in his excellent book , Shambaugh described the Party as "a reasonably strong and resilient institution....To be sure, it has its problems and challenges, but none present the real possibility of systemic collapse." That was a good judgment then, and it remains a good judgment now. — 


Iagree with Shambaugh that there are serious cracks in the C.C.P. regime, not only because of his arguments and evidence but also because of his deep knowledge about and long-time access to the Party’s elite. Whether these cracks will lead to the end of C.C.P. rule, nevertheless, is difficult to predict. The prediction about a C.C.P. endgame this time might end up like the many unrealized predictions before. It may also be like the story of cry wolf: The wolf didn’t come the first two times but finally came when nobody believed it would come. The bottom line is, the C.C.P. is facing very tough challenges that it has not been seeing for decades. Whether and how it can weather them is uncertain.
First, Xi is a leader who came to power with very few sources of legitimacy. Mao and Deng were among the founding fathers of the People’s Republic. Both Jiang Zemin and Hu Jintao were handpicked by Deng and got the backing of party elders at the moment of coming to power. Xi, despite his princeling background, is the first leader who was chosen out of a delicate compromise among party factions.
In the midst of Xi’s rise to power, there were, among others, the mysterious incident, followed by the unusual downfalls of  and . What Wang Lijun actually told the American diplomats during his sleepover in the U.S. Consulate in Chengdu, and what sensitive information he eventually conveyed to the central government is still unknown. But the rumor that he revealed, out of self-protection, a plot by other princelings to get rid of Xi through a coup does not sound too out of whack. If this is true, then Xi’s frenetic purge of other factions in his anti-corruption campaign makes sense as a desperate move to whip the disrespectful elite to submission through creating a culture of terror within the Party.
Xi’s purges surely make new enemies and make most of the Party elite feel deeply anxious about their fortunes. It won’t be so surprising if some of those anxious elite conspire to find chance to depose Xi. Such internal coup against unpopular leader is not alien to the C.C.P., with precedents of the downfall of the  and  in the late 1970s.
Second, the Party’s internal rift is unfolding at the worst possible time as far as the economy is concerned. To be sure, a 7.4 percent annual  rate is an enviable number to many other emerging economies. But this figure needs to be understood in China’s context. With the heavy and soaring indebtedness of the Chinese economy and the ever aggravating unemployment problem, the Chinese economy needs higher-speed growth to stay above water.
The debt hangover of the 2008-09 stimulus is worrying. Total debt to GDP ratio of China jumped from 147 percent in 2008 to over 282 percent now, according to a recent McKinsey report, and it is still growing. It is a dangerously high level compared to other emerging economies. The economic slowdown will lead to profit decline for companies and revenue shortfall for local governments, increasing their difficulty in servicing and repaying debts. A vicious cycle of defaults and further growth deceleration can turn a slowdown into something uglier. Hard landing or soft landing, the Chinese economy is not flying any more. China’s social tranquility and elite compromise over the last two decades, both built upon a high-flying economy, could unravel.
It is well possible that the C.C.P. elite, no matter how much they dislike Xi and his  campaign, will still prefer not to rock the boat, as they are well aware that they are nobody without the protection of the party-state institution, and their privileges will be under far greater threat in the wake of a regime collapse. It is also possible that after all the years of pacification and domestication ever since Tiananmen, China’s civil society and dissidents became so timid and cornered that they are incapable of taking advantage of any cracks in the regime.
Is Xi successfully increasing his grip of power through the anti-corruption campaign, or does his rule still suffer from inadequate legitimacy behind the mask of invincibility? Only time can tell. But besides the endgame of C.C.P. rule, we should also ponder at another possible scenario that can come out from the current elite rift and economic landing: the rise of a hysteric and suffocating dictatorial regime which effectively maintains its draconian control over a society gradually losing its dynamism. Perhaps we can call this hypothetical regime a North Korea lite. — 


With respect to David Shambaugh, what has interested me most in this matter is the response to what amounts to a carefully hedged prognostication, rather than his specific arguments in and of themselves.
It has been fascinating to watch what strikes this observer, at least, as a certain betrayal of anxiety in the efforts of some of those who have rushed to take Shambaugh down, or at least refute and discredit his arguments. The notes have ranged from “how dare he?” to “who does this person think he is?” to, in some of the more breathless reactions, attacks on his motives: he is a pawn or at least an unwitting agent of this or that occult force. Along the way, Shambaugh’s good faith has been questioned; he becomes an actor on behalf of America, or “the West,” which is said to be always trying bring China down, or cast its political and economic model in doubt. (This extends, of course, to the limited Chinese responses we have seen so far, such as that of the Global Times, which has responded with vilification, forgetting perhaps that for decades a cherished recurrent theme in Chinese propaganda has been the fundamentally flawed nature of “Western” democracy or capitalism, and, of course, its inevitable demise.)
Before getting down to details, perhaps the first thing to be said is that it is impossible to appreciate Shambaugh’s perspective without understanding where he “comes from.” Few among the first wave of critics have credited him for his scholarship, other than to note that he is prominent or respected within the academy. Few have explored the actual nature of his work over the years, or the findings he has made in previous writings, such as China’s Communist Party: Atrophy and Adaptation, a careful study of how the Party responded to the shock of the demise of the Soviet Union and began reinventing itself. Shambaugh gives enormous credit to the C.C.P. for these efforts, but it is clear by the time he published his subsequent book, China Goes Global: The Partial Power, that the scholar had come to the view that in many ways we have overestimated China’s strengths and underestimated its weaknesses. This is all worth spelling out because even if Shambaugh’s “crackup” theory surprised you, it has clearly not come out of thin air; rather, it is the latest wrinkle in the evolving views of an earnest scholar.
Perhaps the next most important point to be made, and it has not been heard enough in this discussion, is that no one knows where China (or the world) is heading, say twenty, or even ten years down the road. Mao oversaw rapprochement with the U.S. in order to counter the Soviet Union, and this can be said to have brought capitalism to his country, which was clearly not his aim. Deng embraced capitalism, and that can be said to have led to a near existential crisis for the Party around the issue of democratization. The U.S. embraced China also in order to balance the Soviet Union, as well as, a bit later, to seek markets. This ended up in the creation of what now appears ever more like a peer rival, after a brief period of monopolarity in the world. Unintended, even undesirable consequences are the name of the game in matters of state and in international affairs, and however assertive and determined Xi Jinping may appear to us now, in the early phases of his rule, it is a safe bet that his drive to realize a Chinese dream will produce many things he could never have dreamed of—or desired. It is also for the least plausible that Xi’s remarkable apparent confidence is a kind of compensation for deep anxiety at the top in China: a recognition that the country is walking a tightrope.
I defer to others on the specifics of China’s known challenges, but a few points seem fairly obvious. The early, and one might say easy, phase of China’s takeoff is over. That period consisted in large measure of stopping doing stupid things and inflicting damage on oneself. Moving forward now from here becomes exponentially more difficult. This means finding a way to sustain relatively high growth rates, when almost everything points to a natural, secular slowdown. It means coping with environmental challenges on a scale never seen before. It means dealing with the emergence of a middle class, and everything that political science suggests about the difficulties that this poses for authoritarian regimes. It means finding a way through the middle income trap. It means restraining corruption that in this view is, if anything, even worse, meaning more systemic, than commonly recognized. It means coping with the accelerating balancing of nervous neighbors. It means somehow coping with issues of ethnic and regional tensions and stark inequality. It means drastic and mostly unfavorable changes in demography. And it means doing all of these things, and facing any number of other serious challenges that space doesn’t allow one to detail here, without the benefit of a coherent or appealing ideology other than nationalism and, one says tentatively, budding personality cult-style leadership.
We don’t know how this is going to turn out. For every success one can point to involving China, it is easy to point to at least one stark and serious problem, or potential failing. I don’t share Shambaugh’s confidence in predicting the demise of the Chinese Communist Party, but it does not strike this reader as a reckless prediction. It should not surprise us, and neither should its opposite, China’s continued relative success. Such is the degree of uncertainty we must all live with. — 


Given David Shambaugh’s past arguments about the resilience and adaptability of the Chinese Communist Party (C.C.P.) as well as research-based approach for nearly everything he writes, I confess to being a bit stunned at his turnaround on the prospects of the C.C.P. Nevertheless, Dr. Shambaugh identifies reasons for the persistence of crises within the C.C.P., not its doom. Whether any of future crisis within the C.C.P. is capable of bringing the machinery of Chinese government down is as unpredictable as it may be foreseeable. By prediction, I mean a specific time and trigger. By foreseeable, I mean a distinct possibility that should be recognized among the scenarios for China’s future.
In an analogy I have used before, China may be like a corked champagne bottle. From the outside, all is placid and calm. If opening the bottle is like a leadership crisis, only when the bottle is opened will you find out how much pressure has been building inside and how serious the “spillage” will be. The signs of pressure may be observable, like how much shaking the bottle has suffered; however, the result cannot be known until the cork is popped.
We have ample evidence to suggest that, despite greater institutionalization in leadership selection and a more centralized party bureaucracy, Chinese elite politics is fierce, cutthroat, and prone to providing exciting contingencies. From the perspective of 2015 and the long run-up to Xi Jinping’s certain coronation, it is easy to forget the contingency that gave Xi the opportunity to rise. Had Hu Jintao not somehow neutralized Jiang Zemin and ousted Shanghai Party Secretary Chen Liangyu for corruption in fall 2006, it is impossible to conceive how Xi would have become the party general secretary. Why should we think the politics that allowed Xi to rise from his unenviable position as the last alternate Central Committee member selected to party chief has dissipated suddenly with his ascension?
The basic opacity of Chinese politics that created the impetus for factionalism also has not changed. In a low information environment, as Lucian Pye argued long ago, party cadre have to band together to gather information and act (or not) in the ways that maximize their chances for survival and advancement. Perhaps the greatest evidence of this opacity is that party officials are availing themselves of the commercial security/intelligence sector to spy on one another, to acquire both information and leverage. Two of Bo Xilai’s greatest crimes were attempting to subvert the Chinese government’s secure red phone system and attempting to find willing acolytes in the State Secrets Bureau. Part of the shakeup in the security services has to do with the blatant violation of norms developed early in the Reform Era that the intelligence services should be removed from domestic politics.
Much has been made of Xi’s status among and solidarity with the princelings; however, if family ties are important, then why should the sons and daughters of China’s revolutionary generation have solidarity? The evils their parents inflicted upon one another as they struggled to survive in the chaotic politics of Mao Zedong’s China can hardly be called a recipe for harmony. Yang Shangkun and Deng Xiaoping had close ties going back to the early days of the Chinese Revolution; yet, Yang and his brother were ousted amid rumors of an attempted coup against Jiang Zemin while Deng was wasting away and after having supported the “Southern Tour” that restarted reform after the Tiananmen Crisis. Fifteen years ago, Cheng Li identified more than half a dozen factions among the princelings, and no satisfactory explanation has ever been given for why they would suddenly have congealed.
For these and many other reasons, I think leadership splits and resulting crises are foreseeable, but not predictable. They could arise from policy differences, economic shocks, how to address unrest, succession at the next party congress, etc. The more the C.C.P. maintains collective leadership, the more stable the party is likely to be as its elites can more readily find common ground and walk back from the brink even as policymaking is harder. The more personalized Xi makes the party, the more vulnerable the party will become to fights among the leadership, especially after he leaves the political scene.
The consequences of these crises and whether the C.C.P. will fall are more difficult to estimate in advance, because the nature of leadership divisions, such as the unity of the military and security services, in a crisis cannot be foreseen. Nor do we know what impact the People’s Liberation Army’s isolation from the party relative to the years of dual party-army elites will have on its behavior. If the C.C.P. collapses under the strain of a leadership crisis, it will be because problems rapidly pile up or cascade across the country. As Shakespeare wrote, “When sorrows come, they come not single spies but in battalions.”
The C.C.P.’s collapse is just one potential Chinese future, and one that cannot be dismissed out of hand given the probable persistence of elite conflict. Nor would its collapse necessarily be a good thing. Alternatives to the C.C.P. include anarchy and military dictatorship, and even a return to Mao’s kind of tyrannical and oppressive leadership. China’s future is a problem to consider soberly and seriously without reveling in the potential for the C.C.P.’s demise, as David Shambaugh has attempted. If he is right, the bigger question about the party’s fall is what to do in response. A foreseeable challenge is one that requires preparation. — 


In a 1948 article , Xi Zhongxun was quoted saying “the most lovable (ke’ai / 可爱) qualities of us Communist Party folks are devotion and sincerity (zhongcheng laoshi / 忠诚老实).” Almost 70 years later, his son, Xi Jinping, has taken this idea and run with it. Speaking in 2013 to Party members in Liaoning, for example, he said, “leading cadres must treat the masses with devotion and sincerity.” In a People’s Daily  summarizing Xi’s guidance—intended to help his audience avoid being targeted for having ideological or “work style” problems—the formula “devotion and sincerity” is used 12 times in the space of about half a page. The full set phrase has continued to be quite prominent in the many official media reports describing the Party’s ongoing anticorruption and internal governance campaigns. It shows all the signs of a deliberately chosen ideological formulation, or tifa (提法).
Towards the beginning of his essay, David Shambaugh remarks on this ritual of “parroting back official slogans,” characterizing it as “a theatrical veneer,” and “little more than an act of symbolic compliance.” Indeed, one of the five reasons he gives for impending regime change is how bored officials must be while sitting in meetings listening to these formulations being endlessly repeated. Yet for many within the Party, tifa are anything but boring: they are a constant reminder of lines not to be crossed, positions to be advocated, opportunities for advancement (or, especially since the Deng era, enrichment), and expressions of the current balance of power. They are visible expressions of political capital and materialized authority.
That’s all to say that, even in a one-party system, politics can be a domain of meaningful and engaging personal involvement. Xi the Younger, sitting in his cave in Shaanxi during the Cultural Revolution, no doubt had plenty of time to decide just to which formulations the Party needed to pay more attention. It’s no accident that he has alighted on a few of his father’s along with others from various sources. There is no equivalent form of behavior in regimes that are truly ideologically sterile, such as the more straightforward kleptocracies targeted by the Color Revolutions. Esoteric as it seems for many of us, this is a kind of “representation.”
What’s being represented, of course, is not the Will of the People as embodied in a referendum, or in the choice of elected representatives. Political theorists can (and do) argue endlessly about just what “the People” are, and to what extent they can have a “Will.” But what we all can agree on is that societies look one way or another. For Xi Jinping to bring back an idealized version of the “devoted and sincere” Party cadre devoting himself to the people is not just a calculated strategy—it clearly represents an appeal to a widely-shared set of aesthetic values. There is a whole subfield of political theory called ,” but it’s not necessary to go into the weeds of that discipline at least to consider its biggest takeaway: authority contains both rational and irrational factors, and these are messily intertwined.
Of course, Max Weber said much the same thing nearly a century ago when he divided legitimate authority into rational, traditional, and charismatic forms. Importantly, he viewed most societies as embodying all three to various extents. History is also full of charismatic leaders who have founded lasting states. An honest look at U.S. history, as well, shows that Lincoln and F.D.R. were not just especially competent public servants—they radically reformed their political systems in part by means of personal, charismatic authority. Mao and (at least within the Party) Deng both asserted legitimacy in this fashion, and Xi seems set to do the same. Only the Chinese people can say whether or not his vision will be equally successful. Ultimately, it may well be a question of his own “work style”—will most people really end up finding him as “devoted and sincere” as he portrays himself? The only relevant claim I’d like to advance is that Western academics are ill-placed to definitively answer that question.Ke’ai is in the eye of the beholder. — 


In the 1990s, some American scholars and journalists indulged themselves in forecasting a China collapse into several republics, like the Soviet Union. Some based their arguments on the growing regionalism in the country, others bet on the passing away of Chinese leader Deng Xiaoping.
To their disappointment, China has not disintegrated into six or seven republics. Instead it has become the world's second-largest economy and it is well on its way to being No 1.
Yet the rise of China has not discouraged some in the United States from continuing to fantasize about the breakup of China.
In his Wall Street Journal article "The Coming Chinese Crackup," on March 7, David Shambaugh, a China scholar at George Washington University, pronounced that the "endgame of Communist rule" in China has begun. But his article is based on some random and superficial facts, and his arguments can best be summarized as yipian gaiquan (hasty generalization), or with the English idiom, "One swallow does not make a summer."
Shambaugh is right that no campaign can eliminate the problem of corruption. But no one should be so naive as to believe that corruption can be completely uprooted, either in China or in the U.S., where President Barack Obama has repeatedly complained about money in politics.
Shambaugh's deep flaw is that he looked at China with a bias, completely ignoring the positive aspects.
For example, the anti-corruption campaign launched by President Xi Jinping has raised hope for many Chinese that the thorny issue is being tackled. The campaign has been popular both at home and abroad, including winning support from senior Obama administration officials and many China scholars in Washington. In the past days, U.S. scholars, both on the right and left, have questioned Shambaugh's logic.
I believe Xi and many Chinese know that fighting the war on corruption is really hard. Yet Shambaugh seems to suggest that doing nothing is probably a better way forward. — 

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