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China Policy Institute Briefing Series – Issue 14 CHINA’S POLITICAL TRANSITION Professor Yongnian ZHENG © Copyright China Policy Institute 13 November 2006 China House University of Nottingham University Park Nottingham NG7 2RD United Kingdom Tel: +44 (0)115 846 7769 Fax: +44 (0)115 846 7900 Email: [email protected] Website: www.chinapolicyinstitute.com The China Policy Institute was set up to analyse critical policy challenges faced by China in its rapid development. Its goals are to help expand the knowledge and understanding of contemporary China in Britain, Europe and worldwide, to help build a more informed dialogue between China and the UK and Europe, and to contribute to government and business strategies. China’s Political Transition by Yongnian ZHENG * In the past quarter of a century, China has achieved rapid socio­economic transformation, with its economy growing at an annual rate of more than 9%. China’s per capita GDP in 2004 had reached US$1,200, approaching the level of mid­income countries. An increasingly open economy has created conditions for the development of a more open society: by 2003, China had surpassed the USA as the world’s largest telephone market; China’s registered Internet users had surpassed 120 million to form the world’s second largest “web population” after the USA early this year, and it is expected that China will become the largest at the end of this year. In Russia and East Europe, the rule of the communist parties did not survive the reforms. In contrast, despite undergoing the transformation into an open economy and an open society, China retains its authoritarian political system. Will China’s political system be able to survive its rapid socio­economic transformation? This is the key concern among proponents of “China uncertainties” which have developed outside China recently. Some would argue that the futures of India, Russia, or even Indonesia, can be charted with more certainty since these countries have established a democratic political framework. All big transformations bring about uncertainties. China’s current transformation is unprecedented in the history of modern states, and its associated uncertainties are understandable. The question is: Can China overcome all these uncertainties? Political transition is the key. Political transition can be understood as transformation from authoritarianism toward an uncertain “something else.” That “something else” can be the installation of a political democracy, or even perhaps the restoration of a new, and possibly more severe, form of authoritarian rule. I believe that most people would agree that a meaningful political transition in China must involve the former scenario, that is, a transition from the existing authoritarian structure to one with a higher degree of political democracy. I also believe that after more than two decades of economic reforms, it is unlikely for China to return to either a Maoist or any other type of totalitarianism. Will China become democratic? I would argue that democratization is one of the goals of China’s transition, but not the only goal. China’s political transition at this stage of development is more about state­building. To date, China is still in a process of becoming a modern state. Without developing a set of modern state institutions, democratization will not help China to resolve all uncertainties resulting from rapid socio­economic transformation. How can political democratization take place in China? Theoretically, there are many paths towards democracy. But empirically, China seems to be following the path that takes it first through economic reform, then social reform, and eventually political reform. The country is now entering the second stage of this path. This path does not mean that China ignores all forms of political reform that are necessary for its economic or social reforms. But it is reasonable to argue that political reform so far has been secondary to other reforms. * Yongnian Zheng is Professor and Head of Research at the China Policy Institute of the University of Nottingham, United Kingdom. This paper was presented to a conference on "China: Towards an Innovative Society ­­ the risk, the opportunities" at Wilton Park on 13 November 2006. 2 I disagree with the popular notion that China’s reform strategy was characterized by “economic reform without political reform.” As occurred in Russia and other Eastern European countries, China has also experienced simultaneous economic and political reforms. The difference is that China’s reform has been gradual. It is divided into different stages. In the first stage, China’s leadership placed overwhelming emphasis on economic reforms. In the on­going second stage, the emphasis is now on social reforms. Although some political reforms have been carried out, these are to supplement either economic reforms or social reforms. China has yet to enter a third stage where political reforms become the central theme. Economic Reforms First, allow me to take a brief look at China’s first stage of reform, that is, the economic reforms. This stage can be further subdivided into two different phases. The first phase (from the late 1970s and the middle 1990s) was characterized by intergovernmental decentralization. During this period, economic decision­making authority was shifted to local governments. Local governments became de facto owners of state enterprises. They were highly interventionist, and became what the scholarly community called local ‘developmental states’. While intergovernmental decentralization was successful in promoting local economic growth, it had weakened the central government’s capacity to macro­manage China’s economy. Around the mid 1990s, the Chinese leadership began to engage the second wave of economic reforms through selective recentralization. Selective recentralization involved the establishment of key state institutions that allowed the central government to play a more active role in managing the national economy. Selective recentralization was centered on two major reforms, i.e., taxation reforms and central banking system reforms. In 1994, the central government implemented a new taxation system, i.e., the tax­division system, otherwise known as a federal style taxation system. In 1998, the central government began to reform China’s financial system: all provincial branches of the central bank were eliminated and nine cross­provincial or regional branches established. These two reforms have strengthened central economic power greatly. Social Reforms In the last few years after the Hu Jintao­Wen Jiabao leadership came into being, China’s reform curve has turned towards social issues. In China’s context, social reforms are responses to the negative social consequences resulting from its economic boom. In the 1980s, the Chinese leadership operated under Deng Xiaoping’s principle of ‘get­rich­first’. The state of the poor became a secondary priority among leadership agendas, embodied by the slogan, ‘to get rich is glorious’. Then under Jiang Zemin, Deng’s directives were pushed to an extreme. It was under Jiang that GDP growth became the single most important performance indicator for local government officials – and under Jiang when the capitalists were invited to the CCP party membership and when private property was granted constitutional protection. But after more than a decade of the ruthless, single­minded pursuit of GDP growth, the Chinese leadership is finding it necessary to step back from its previous mode of economic development. Undesirable consequences, like income disparities and environmental degradation, are today affecting not only economic growth itself, but also social stability. Hu Jintao began to turn the wheels of China’s economic growth in a different direction when he first rose to power. Evidence of this change is the subtle replacement of Jiang’s time­table to ‘build a well­off society’ (xiaokang shehui) with Hu’s aim to ‘build a harmonious society’ (hexie shehui). The new approach of the so­called ‘scientific development’ is to ‘strike a balance’ in 3 Beijing’s various policies. More specifically, it raises the importance of social justice in the pursuit of China’s long­term development, in terms of more even distribution between different regions and different social groups and in terms of economic, legal and political rights. Therefore, the Chinese leadership is now giving priority to social reforms, such as welfare, medical care, education, public transportation, and others. The government is trying to transform itself from an agent of economic development to a public service provider. Social reforms also include measures to provide more institutionalized mechanisms for wider participation in both political and economic processes, as well as to allow different social groups to share the fruits of China’s growth. Following the recent call to build a harmonious society, two new plans are under discussion. The first is the plan to expand public feedback mechanisms. China currently does not have in place extensive, open, transparent and institutionalized feedback mechanisms (e.g. direct elections) that allow different social groups – especially less privileged ones such as farmers, rural workers, and urban workers – to articulate and aggregate their interests. As social grievances run high following the leadership’s long period of negligence, the task of expanding the public feedback mechanisms becomes imminent. Similar to the policy of making administrative procedures more transparent,

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