It's naked self-interest, stupid.
- By Yasheng Huang<p> Yasheng Huang is professor at MIT Sloan School of Management, founder of China and India Labs, and author of the book Capitalism with Chinese Characteristics. </p>
For many years, Western leaders have couched the argument for greater political openness and democratization in China in moral terms, citing the universality of both human rights and the aspirations for freedom and independence. In May, defending her decision to help the Chinese activist Chen Guangcheng, Secretary Hillary Clinton told Chinese leaders, "We continue to look to China to meet its international obligations to protect universal human rights and fundamental freedoms." But even Western-educated intellectual elites in China don’t think that this would benefit them or their country; Chinese leaders, schooled in the ideology of Marxism and Leninism, believe it even less.
The reason is a deep gulf of values. The Chinese have a utilitarian concept of "rights" — that they should advance the greatest good for the greatest number of people — in contrast to the Western view of rights as protections against encroachments on the disenfranchised few. Even the most critical of Beijing intellectuals would acknowledge that Chen’s and other dissidents’ ideas resonate only with a tiny percentage of China’s 1.3 billion people.
It’s time for the United States to pivot to a new approach toward influencing China’s political future: explaining that democracy produces concrete benefits such as balanced growth, stability, and personal security — even for top Communist Party officials. This performance-based argument will resonate with many of China’s economic and intellectual elites and may have a chance to influence the thinking of Xi Jinping and his fellow top officials.
But first, it’s necessary to dispel the widespread myth that China’s current political and economic system is uniquely responsible for China’s growth. Yes, in the last 30 years, China has done a remarkable job of lifting hundreds of millions of people out of poverty, but we must keep this achievement in perspective. One reason the post-Mao leadership lifted so many people out of poverty is because Mao Zedong kept so many Chinese poor. (In 1979, showing remarkable candor, the Chinese Communist Party itself publicly acknowledged that per capita grain consumption of Chinese remained stagnant between 1957 and 1978.) Second, the poverty threshold is commonly defined as living under $1 a day. Living above that line is an improvement — not prosperity. Based on data provided by the World Bank in 2008, roughly 30 percent of China’s population, or 390 million people, lived below $2 a day. By this measure, China has a comparable percentage of people living in poverty as Honduras, a country that never experienced China’s rapid GDP growth.
Besides, China’s overall performance in the last 60 years does not stack up well against its neighbors. Since World War II, the most successful economies have all been in East Asia: Japan, South Korea, Taiwan, Hong Kong, and Singapore. There are three exceptions to this East Asian rule of success: China, North Korea, and Mongolia. The first two are led by communist parties, while Mongolia was communist from 1924 until 1993. So the appropriate question is not why China has grown so fast in the last 30 years, but why it is still so poor compared with other countries in the region.
In any case, China’s growth after 1978 is by no means historically unique. Between 1912 and 1936, China’s industrial economy expanded rapidly; estimates put the number at an annual rate of between 8 and 13 percent a year. Back then, unlike China today, the private sector played the leading role in economic growth. Many banks were privately owned. Political control was tight but not nearly as authoritarian as it is now. That era of growth was cut short not by the intrinsic shortcomings of the system, but by the Japanese invasion in 1937 and the subsequent civil wars.
For all the focus today on skyscrapers and fancy cars, China’s economic rise was most beneficial to the average person in the 1980s, when Chinese politics were at their most liberal. During that decade, three reformist leaders — Deng Xiaoping, Hu Yaobang, and Zhao Ziyang — not only undertook economic reforms, but also initiated meaningful political ones, including putting term limits on officials, separating functions of the state from those of the party, and instituting rural elections. Back then, China had none of the huge imbalances that it does now. The consumption to GDP ratio remained high, by Chinese standards, at 50 percent, compared with 35 percent today. China’s exchange rate was overvalued and it posted trade deficits year after year. Above all, personal income growth, especially among China’s 800 million peasants, substantially exceeded China’s GDP growth during the 1980s. There was no tradeoff between political liberalism and economic growth.
China’s GDP growth over the 1990s and 2000s, however, has not been as beneficial to the average Chinese. Using Chinese GDP data to diagnose the health of the Chinese economy is a bit like peering into a building from an airplane; you need to move in closer to see what is really going on. Looking at measures of living standards is a better way to determine the health of an economy. China’s total energy consumption, for instance, overtook that of the United States in 2009, but Chinese households only play a minor role in China’s energy explosion. Personal electricity consumption as a share of total electricity consumption peaked in 2001, at roughly 14 percent (compared with about 38 percent in the United States). The rest is for industrial and commercial uses.
To put things in perspective: As of 2009, the electricity consumption of the average Chinese for personal purposes was 8 percent of that of the average American. This is nowhere near the 20 percent implied by the GDP per capita comparison. China has a lot of power — the Chinese don’t.
Digging deeper, one learns that Chinese household income growth has consistently lagged between 2 to 3 percentage points behind GDP growth each year over the last two decades. Average Chinese unambiguously live better lives today than they did when Mao died in 1976, but much of the GDP gains went to the government and corporate sector, not ordinary people.
A performance-based case for democracy is thus not about how to grow GDP faster but about how to distribute the gains equitably and efficiently. An unrestrained government will do what it does best — feeding itself off of gains from growth. According to the calculations of Zhiwu Chen, a professor of finance at Yale University, total Chinese government revenue in 2007 was 5.7 times that of 1995, but urban income in 2007 was only 1.6 times that of 1995; for rural income over the same period, only 1.2 times. Facing budget shortfalls due to the slowdown this year, some local governments in China are now reportedly "pre-collecting" taxes for 2013.
Taxation without representation is one form of pilfering state resources; corruption is another. Some analysts believe that the Chinese people tolerate corruption in exchange for fast growth. This is a bit like saying that New Yorkers tolerated Hurricane Sandy. Fast growth maintains a façade of stability not because it has secured tacit complicity from the Chinese people, but because it has funded the instruments of repression. The Chinese government today spends more on maintaining domestic stability than on its military.
But this funding formula will crumble once the growth slows down. No country in the world is able to maintain genuine social stability through repression alone. Real stability comes from a sense of involvement in the political and civic affairs and decisions and from a wide consensus about how economic, social, and political opportunities and outcomes are and should be distributed in a society. In a word, democracy.
For China to open up politically, however its elites have to believe that it is in their interest to do so (which, indeed, it is). The West could start by pointing out how the rigged Chinese justice system is a danger even to the powerful. In a 1998 book, Gu Kailai, the wife of disgraced Chongqing Party Secretary Bo Xilai, criticized the U.S. system for being too obsessed with the rights of the defendants, compared with the swift justice of the Chinese system. This year, in an August show trial that lasted just one day, Gu was given a commuted death sentence for the murder of a British businessman. It’s fair to assume that she probably wished for less of that judicial swiftness with her own neck on the line.
And it’s not just Bo and Gu: China’s one-party system has been terribly cruel to many of its own elites. In the past two decades, the party secretaries in three out of four most important local governments in China (Beijing, Shanghai, and Chongqing) have been toppled or jailed. Between 1949 and 2012, there have been six heads of the Communist Party. Three were abruptly forced out of power; one in blatant violations of the party’s own procedures and one died under house arrest. Two of Mao’s anointed successors died on the job: Liu Shaoqi was tortured to death and buried with a fake name, Lin Biao in a fiery plane crash when he tried to escape to the Soviet Union. One of Deng Xiaoping’s sons was pushed out of a building and became a paraplegic. In 2007, a vice chairman of the National People’s Congress, China’s legislature, and a director of China’s State Food and Drug Administration were executed. The history of the Chinese Communist Party is littered with violence and arbitrary justice meted out against its own kind. Limiting the power of the party should not be couched as a zero-sum outcome at the expense of the organization, but as a way to limit party’s ability to harm its own.
Chinese political elites implicitly understand that democracies provide security of property and of persons. When ousted by Bo, Wang Lijun, the former police chief of Chongqing, did not turn to the Chinese Ministry of Justice but the U.S. consulate in Chengdu. Other Chinese elites outsource their personal security by sending their family members to study and to reside in the United States; wouldn’t they like a little more of that security closer to home? For democracy to work for China, it has to work for China’s most powerful. There is no other way.