Forget political reform. China’s future will be decay, not democracy. So writes Minxin Pei, Director of the China Program at the Carnegie Endowment for International Peace, in the March/April 2006 issue of Foreign Policy magazine. (Hat tip: Andrew Leigh). Pei's article, The Dark Side of China’s Rise, argues that:
China’s economic boom has dazzled investors and captivated the world. But beyond the new high-rises and churning factories lie rampant corruption, vast waste, and an elite with little interest in making things better.
Pei puts these arguments in much greater detail in his new book China’s Trapped Transition: The Limits of Developmental Autocracy, just published by Harvard University Press:
Pei casts doubt on three central explanations for why China's strategy works: sustained economic development will lead to political liberalization and democratization; gradualist economic transition is a strategy superior to the "shock therapy" prescribed for the former Soviet Union; and a neo-authoritarian developmental state is essential to economic take-off. Pei argues that because the Communist Party must retain significant economic control to ensure its political survival, gradualism will ultimately fail.
The lack of democratic reforms in China has led to pervasive corruption and a breakdown in political accountability. What has emerged is a decentralized predatory state in which local party bosses have effectively privatized the state's authority. Collusive corruption is widespread and governance is deteriorating. Instead of evolving toward a full market economy, China is trapped in partial economic and political reform.
A provocative thesis in this age of China worship, but one that appears to find support in today's Financial Times, where Richard McGregor warns that A fierce battle hobbles China's march to the market (subscriber only):
Amid worries over inequality, a dispute over the extent and pace of liberalisation is threatening to hinder Beijing’s moves towards privatisation and foreign investment. Some measures have already been delayed.
Mark Thoma provides lengthy excerpts in his post Economic Reform and Single Party Rule in China. But its not just about ownership - social policy failures are also raising hackles, as McGregor's article notes:
China is now less equal than the US and Russia, according to the World Bank, and income inequalities are still widening. And while incomes have mostly risen across the board, the social wage ... which provided free health, education, housing and an old-age pension – has been drastically cut, all but disappearing in the countryside.
China spends less than one-fifth of the developed-country average on health and education.... In rural areas, where China’s poorest communities live, nearly 90 per cent of health costs are borne by individuals. ... education researchers are discovering that drop-out rates among rural children from junior secondary schools average 30-40 per cent. “This is the most under-reported story in China – the country’s massive failure to educate its rural youth in the 1990s,” says Yasheng Huang of MIT Sloan School of Management.