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Is China Unstable

.. ruling regime as a communist dictatorship, the nature of the Chinese regime has changed profoundly in the last two decades. If we may call the pre-reform Chinese regime a socialist one with a broad base of support among workers and peasants, pro-market reforms have seriously eroded the broad social base of the CCP. This change has come about, ironically, precisely because of the relative success of the economic reform under Deng Xiaoping. For the peasantry, market-oriented reforms have resulted not only in direct economic benefits and independence from the state; they have fundamentally eroded the Communist Party’s political control in rural areas and left the regime without means of mobilizing political support there.

As for urban SOE workers, market-oriented reforms have begun to hurt their interests by making their jobs insecure and benefits less generous. They blame their plight on the government and have begun to display their discontent openly and violently. The regime’s political support today comes primarily from only four groups: the bureaucracy, the military, the security forces, and the rapidly increasing urban middle- class that will have much to lose (such as the value of their stocks and real estate) in the event of political instability. 2. Organizational deficit.

The CCP previously controlled a vast network of social organizations, including the official labor unions, women’s associations, the youth league, and many professional associations, which in turn controlled most segments of the population. But that is no longer the case. Official organizations closely tied to the party have lost credibility, enjoy little grassroots support, and cannot be expected to serve as instruments of control or political support. Other organizations, notably, religious groups and professional associations, have become more independent and will likely resist manipulation by the party. 3. Weak institutional channels of resolving state-society conflict.

A related weakness of the present political system is the absence of credible institutions that would allow individuals and groups to articulate and pursue their own interests. In democratic systems, electoral and legislative processes do this, but in China, no institutions perform such functions reliably. In their absence, collective grievances will accumulate, leading in the long term to political instability. In the short term, collective grievances are increasingly expressed in violent protests. In fact, the government admitted there were 5,000 collective protests in 1998.

4. Absence of effective institutions to resolve conflicts within the state. China also has no functioning institutions that might resolve conflicts among the various components of the state. The absence of such institutions, which would typically be provided for by federalism, causes cyclical opportunism characterized by frequent policy changes by the central government and resistance to those policies from local governments. Consequently, the policy environment is uncertain and law enforcement weak.

In fact, the most serious problem facing China is not that it does not have democracy, but that it does not have federalism. That is, it lacks a clear division of responsibilities between the central and regional governments. HIDDEN STRENGTHS OF THE REGIME I have listed a series of structural weaknesses of the party-state in China. However, it would be wrong to conclude from the above observations that the system is about to collapse, for there are several strengths that help offset these weaknesses. Weak opposition.

Domestically, the CCP faces no real threat.Because opposition to the regime is unorganized and dispersed, for most people there is simply no credible alternative. This is perhaps the most important factor working in the CCP’s favor. A party song states, Only the CCP can save China, but it should be, Only the CCP can govern China — at least for now. Relative elite cohesion. Political turmoil in China in the last 50 years has always come from disunity and power struggles at the highest level of the regime. Today’s top elite is much more unified than during any previous period.

The political differences between top elites today are mainly over policy and personality, rather than over ideology. The CCP remains a formidable force of control. Because the party maintains a relatively effective system of control in dealing with top-priority issues, in the short term it should be able to confront any challenges to its hold on power. The CCP has also learned a key lesson from the 1989 movement: never to allow a minor incident to develop into a full-blown political crisis. That explains why the government reacted swiftly and harshly against the leading dissidents in the last few months. The Chinese are beginning to tackle their long-term problems.

It is encouraging to see that some of the top leaders seem to have realized the long-term threats to the current system and have begun to take some tentative steps to address them. It seems that ideas of federalism are beginning to influence institutional designs in China. Among the most promising steps taken so far is the reform of the central bank along the lines of a Federal Reserve-style system. Moreover, the 1994 tax reform, although far from perfect, was the first step toward fiscal federalism. CONCLUSION Although localized incidents of social unrest, sparked mostly by economic difficulties, are likely to increase, the Communist Party should be able to avert significant political turmoil in the near future. However, even if the Chinese government gets through 1999 without a repeat of 1989, it must soon confront the issue of political reform more seriously, because the challenges it poses will only increase as time passes.

If no significant institutional change is undertaken, China will experience rising tensions that its current political system will be incapable of handling. Failure to implement political institutional reforms may lead to rising instability through three mechanisms, either simultaneously or sequentially. First, failure to reform will reduce economic efficiency as the costs of insecure property rights, poor contract enforcement, and exorbitant rents become more baneful. This will inevitably reduce the rate of growth, which will further exacerbate social tensions and damage the legitimacy of the Communist Party. Second, failure to reform will allow corruption to worsen, inequality to rise, and poor governance to persist, eventually causing a massive social explosion such as occurred in Indonesia in May 1998.

Third, failure to reform will cause rising division within the current moderate-conservative ruling coalition as the more liberal elements become disenchanted and frustrated with the slow pace of reform. A split within the elite has led to political instability before, and could easily do so again. Indeed, although China is unlikely to become another Indonesia today, it is very likely to become one in ten years’ time if its leaders are lulled into complacency. Political Science.