When Will China’s Government Collapse?

When Will China’s Government Collapse?

“The endgame of Chinese communist rule has now begun,” influential China scholar David Shambaugh wrote in a March 7 article in the Wall Street Journal. “And it has progressed further than many think.”

Is the ruling China’s Communist Party (CCP) on the brink of collapse? We asked several China hands for their take:

Ho-fung Hung, Associate Professor of Sociology, Johns Hopkins University:

I agree with Shambaugh that there are serious cracks in the CCP 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 CCP rule, nevertheless, is difficult to predict. The prediction about a CCP endgame this time might end up like the many unrealized predictions before. It may also be like the story of boy crying wolf: The wolf didn’t come the first two times, but it finally came when nobody believed it would come. The bottom line is, the CCP is facing very tough challenges. Whether and how it can weather them is uncertain.

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 of China. Deng handpicked his successors Jiang Zemin and Hu Jintao — both of whom got the backing of party elders when they came to power. Xi, despite his princeling background, is the first leader chosen out of a delicate compromise among party factions.

Amidst Xi’s rise to power, the mysterious Wang Lijun incident occurred, followed by the unusual downfalls of former top leaders Bo Xilai and Zhou Yongkang. What Wang actually told the American diplomats during his sleepover in the U.S. Consulate in Chengdu, and what sensitive information he eventually conveyed to Beijing is still unknown. But the rumor that he revealed a plot by other princelings to get rid of Xi through a coup does not sound too crazy. 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 depose Xi. Such internal coup against unpopular leaders is not alien to the CCP — it happened with the downfall of the Gang of Four in 1976, and former party chairman Hua Guofeng a few years later.

Second, the party’s internal rift is unfolding at the worst possible time, as far as the economy is concerned. Yes, a 7.4 percent annual growth rate is an enviable number to many other emerging economies. But with the 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. China’s debt to GDP ratio jumped from 147 percent in 2008 to 282 percent now, and is still growing. It is at 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 could turn a slowdown into something uglier.

It is possible that the CCP elite, no matter how much they dislike Xi and his anti-corruption campaign, will still prefer not to rock the boat. They are aware that they are nobody without the protection of the party-state, and their privileges will be under far greater threat in the wake of a regime collapse. It is also possible that in the years of pacification and domestication following the 1989 Tiananmen Square crackdown, China’s civil society and dissidents have become 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 CCP rule, we should also ponder another possible scenario: the rise of a hysteric and suffocating dictatorial regime which maintains its draconian control over a society gradually losing its dynamism. Perhaps we can call this hypothetical regime North Korea lite.

Arthur Kroeber, Editor, China Economic Quarterly:

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 crackup case. Second, the balance of evidence suggests that Xi’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 percent in 2014 — 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 era of Xi’s predecessor Hu Jintao 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 for 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. 2014 saw the start of a crucial program to revamp the fiscal system, which led to the start of restructuring local government debt; first steps to liberalize the one-child policy and the hukou, or household registration 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 SOEs under Temasek-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 Japanese Prime Minister Shinzo Abe to progress on any of the reform agenda he outlined for his country 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 percent 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. 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 China’s Communist Party: Atrophy and Adaptation, 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.

Howard French, Associate Professor, Columbia Journalism School:

With respect to 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 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 the 2008 book China’s Communist Party: Atrophy and Adaptation, a careful study of how the party responded to the shock of the fall of the Soviet Union and began reinventing itself. Shambaugh gives enormous credit to the CCP for these efforts, but it is clear that by the time he published his 2013 book, China Goes Global: The Partial Power, he had concluded that 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 20, or even 10, years down the road. Mao oversaw rapprochement with the United States 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. Former paramount leader Deng Xiaoping embraced capitalism, and that can be said to have led to a near existential crisis for the party around the issue of democratization. The United States embraced China also in order to balance the Soviet Union, as well as, a bit later, to seek markets. This ended up creating what now appears ever more like a peer rival, after a brief period of unipolarity. Unintended, even undesirable consequences are the name of the game in matters of state and in international affairs, and however assertive and determined Xi may appear to us 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 at 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 is, if anything, even worse, meaning more systemic, than commonly recognized. It means coping with the accelerating balancing of nervous neighbors. It means 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, 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 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.

Suisheng Zhao, Professor, University of Denver:

Yes, the CCP regime is in crisis. But it has muddled through one crisis after another, including the catastrophes of the chaotic, decade-long Cultural Revolution and the 1989 Tiananmen crackdown, by tackling its symptoms. It is too difficult to predict the arrival of the cracking up moment now.

This current crisis comes after more than three decades of market-oriented economic reform under one-party rule, which has produced a corruptive brand of state capitalism in which power and money ally. The government officials and senior managers in state-owned enterprises (SOEs) 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, and a variety of other social services. Meanwhile, China has become one of the world’s most polluted countries. The crisis has worsened as China’s economic growth is slowing.

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, Beijing is frightened and has relied more and more on coercive forces. The cracking up moment could come when economic growth has significantly slowed, and Beijing is unable to sustain the regime’s legitimacy with its economic performance.

While scholars such as Shambaugh are warning of this cracking up, President Xi Jinping is likely aware of the danger of possible collapse and has been trying to prevent it from happening. Opposite from the prescription by liberal scholars and Western leaders, Xi has seen that the key to keeping the CCP 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.

China scholar Lucian Pye famously observed that China suffered a “crisis of authority” — a deep craving for the decisive power of effective authority ever since the 19th-century collapse of the Chinese empire. 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 CCP legitimacy 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 reforms that weakened the state’s authority and the CCP central leadership, 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 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.

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