The Chinese National People’s Congress is convening to consider among other things a “recommendation” to abolish term limits for China’s president and vice president. The outcome of that deliberative process is unusually un-suspenseful. President Xi Jinping will soon rule for life, confirming him as the most absolute ruler of China since the death of Mao Zedong. Chinese authorities have decisively suppressed dissent in any forum, including online media. The last flickering hopes for Chinese political liberalization seem crushed for years to come.
Twelve years ago, at a time when those hopes still burned bright, a dissenting China expert named Minxin Pei published an arresting argument. Not only would the Chinese Communist Party never willingly liberalize, he argued, but rather than permit liberalization, the party would eventually smother China’s economic growth too. I read China’s Trapped Transition: The Limits of Developmental Autocracy shortly after it was first published. Pei and I have kept in touch over the years since. Pei now serves as the director of the Keck Center for International and Strategic Studies at Claremont-McKenna College.
On March 2, I spoke with Pei via Google Doc to inquire how it felt to deliver one of modern political science’s most powerful and resounding “I told you so”s.
David Frum: A decade ago, you broke ranks with almost all conventional China expertise and predicted that the People’s Republic would not successfully transition toward true economic and political freedom. Why were so many people so wrong? These were knowledgeable and intelligent people. What misled them so badly?
Minxin Pei: I would say many people were too dazzled by the superficial changes, especially economic changes, to realize that the Communist Party’s objective is to stay in power, not to reform itself out of existence. Economic reform or, to be more exact, adopting some capitalist practices and embracing market in some areas, is only a means to a political end. In fact, Deng Xiaoping made it crystal clear when he started the reform, but unfortunately many observers, including China-watchers, failed to read him correctly. They have made other mistakes as well. For example, they overlooked the nature of the Chinese regime. It is not your garden-variety dictatorship, but a successor to a totalitarian regime. It is both far more ruthless and determined to protect its power than an average dictatorship and far more capable of doing so.
Frum: Some of them might have said, “Well, whatever the regime may imagine it is doing, in fact it is opening a door it will not be able to close. Liberalization has an irresistible logic all its own.” Was that an unreasonable thing to think?
Pei: In the Chinese case, the door was never fully open in the first place. So the forces that try to make it less open or close it have a less difficult time to do so. Additionally, when China was forced to keep the door more open, it was in a weaker position relative to the forces outside—the West in general and the U.S. in particular. But when the conservative forces inside China gain strength while the West appears to be in decline, those forces are far more likely and able to close the door again, as is happening right now. So, while the logic of irresistible liberalization appears to be reasonable on the surface, it overlooks the underlying reality of power.
Frum: Has the door closed? How decisively has China turned toward profounder authoritarianism with this grab by President Xi for lifetime rule?
Pei: Politically, the door is probably 90-95 percent closed. Substantive exchanges between China and the outside in the so-called sensitive areas—especially involving serious academic exchanges and civil society—are a fraction today compared with the pre-Xi era. Economically, the door is much less open, probably the least open since the reform era began nearly four decades ago. There is a growing consensus that China today is the least open since the end of the Cultural Revolution. That is a very devastating comment on the political conditions there.
Frum: Now let’s step back in time. You published in 2006, before the Great Recession, at a time when the Chinese state reported economic growth in excess of 10 percent per year. At that time, it was a popular game to calculate when China would overtake the U.S. in absolute economic size. That was the year you warned: This will all soon slow, and perhaps even halt, because of pressure from above motivated by fear of power-competitors below. What did you then perceive to lead you to this conclusion?
Pei: I was following mainly China’s political change at that time. The puzzle people like me were grappling with was whether economic reform was leading to political change. The trend starting in the late 1990s showed divergence between economic progress and political change. While China was getting richer, its political system exhibited signs of stagnation. So I wondered what was the real cause and whether autocratic politics could infect economic reform. My conclusion was that China by the early 2000s reached the sweet spot for its one-party state. Its economic reform was half-complete but had already delivered enough political benefits for it to retain legitimacy. It could use the growing economic resources to strengthen its repressive capacity to defend its political monopoly. It does not want to reform the economy further because doing so would also risk losing control over the economy and all the benefits it can generate for the party. So there is a hard limit to how far the party would push economic reform.
In a fully “marketized” economy—in the Chinese case that would mean very few state-owned enterprises—the Communist Party would have no real economic means to protect its political monopoly. But if the economy is not fully marketized, inefficiency will eventually doom economic growth. That’s why I applied the concept of “trapped transition”—the continuation of the status quo leading eventually to stagnation.
Frum: You also laid special stress on the tension between the anxieties of the rulers at the political center—and the ambitions of local rulers closer to the creation of wealth.
Pei: Like my colleagues, I have long wondered how Chinese rulers, who came to power vowing to destroy private property and largely accomplished their goal during the Mao era, would deal with the rise of large private wealth. Based on the experience of the last two decades, during which large private wealth emerged, we get a complex picture. As a whole, the Communist Party remains worried that creators of wealth could be a threat. So there are definitely tensions between the party and capitalism. But individual members of the regime and individual capitalists have formed alliances, or crony networks if you will, to extract wealth from China’s hybrid economy. This has become a real headache for the regime because these networks erode the regime’s internal discipline and integrity. That is part of the reason for Xi Jinping to launch his crackdown on corruption. He and his colleagues feared that the party was being eaten hollow from inside by this alliance between local officials and tycoons.
Frum: So crackdowns on “corruption” are actually assertions of national Communist hegemony over local Communist officeholders?
Pei: This was one of the motivations, and apparently Xi has accomplished this objective. China today is going through re-centralization, especially re-centralization of political authority. Of course, Xi’s anti-corruption campaign has other objectives, including the purge of his rivals. And he has accomplished that goal as well.
Frum: To reprise an old joke, in a democratic country, an official who is exposed as corrupt will lose power; in an authoritarian regime, an official who loses power will be exposed as corrupt.
Pei: Exactly—except it is far worse in a dictatorship. An official who loses power in a dictatorship will not only be exposed as corrupt, he would suffer far more devastating consequences. He would be depicted as morally degenerate and his family members could face prosecution and imprisonment.
Frum: What if anything would you revise, amend, or enlarge in your 2006 statement from the vantage point of 2018?
Pei: I would revise one of the scenarios for change in the conclusion. Although one of the scenarios—depicting the rise of a hard authoritarian leader vowing to save the regime with more conservative policies—unfortunately turns out to be true, I also constructed a more optimistic scenario in which provinces led the way of reform in a “middle-up” model. The changes in the last five years, during which provinces quickly fell in line with Beijing, show that the potential for generating systemic changes in China provinces is much less than expected.
Frum: Has China now arrived at the “trap” you foresaw? Is it stuck? If yes, does any further economic progress remain possible, or will China now succumb to Japanese-like stagnation at a vastly below-Japanese level of prosperity?
Pei: In terms of systemic or institutional change, China probably entered the trap a decade ago. Although China has maintained ostensibly reasonable growth rate, it has done so mainly by increasing debt or leverage. Future economic progress is doubtful without real and radical economic change, but what has happened in the last five years under Xi, who promised radical reforms but has not delivered on his promise, is discouraging. So the prospect of a Japanese-like stagnation is real. But because the party’s legitimacy depends on prosperity, such a scenario would be fatal to its survival.
Frum: If economic stagnation is fatal to regime survival—but the fuller reforms necessary to economic growth are regarded as unacceptable—what happens? In particular, does the regime turn to foreign adventurism as a new mode of legitimation? China’s foreign policy has become increasingly assertive over the past decade, to the point of provocation, even bellicosity. Is that the future to be faced?
Pei: Foreign adventurism in the context of declining economic performance is a distinctive possibility, but it is also very risky for the regime. If it succeeds, it will gain domestic legitimacy, but should it lose a war, it could lose power quickly. In the short to medium term, the Communist Party’s real strategy is to strengthen the security state, including the building of a powerful surveillance state. The strategic thinking behind it is that, since we can no longer deliver carrots, we will have to rely on sticks more. This explains the rising degree of repression in China, and things could get a lot worse if the economy performs more poorly. At the moment, China’s assertive foreign policy is partly designed to burnish the regime’s image at home, but it would be premature to say that Chinese leaders would be rash enough to decide to go to war with a neighbor and risk a military defeat (if the U.S. intervenes).
Frum: But the responsible international problem-solving hoped for by Presidents Bush and Obama from China—that seems equally out of the question?
Pei: Sadly, that is out of the question at least for the foreseeable future. In fact, U.S.-China relations are entering a very difficult period and the two countries could become strategic adversaries should the current dynamics continue.
Frum: Americans habitually assume that the behaviors of other countries—especially the unwelcome behaviors—must respond to some prior behavior or offense from the United States. Yet, you are describing a negative evolution in China that originates entirely within China, that is powered by exclusively Chinese forces, and to which U.S. policy has been at least until now almost perfectly irrelevant.
Pei: The U.S. might have been responsible for many problems, even disasters, around the world, but in the case of China since the end of the Mao era, most observers would agree with me that factors within China were solely responsible for the reversal of reform, or the failure to achieve radical or complete reform in China. In fact, the U.S. has been a positive force for change in China since Nixon opened the door in 1971. The difficulty is, of course, the U.S. has limited influence in effecting domestic political change in China, but I would not say that it is irrelevant. What hinders American political influence in China today is the dysfunction of American democracy and the resultant erosion of the appeal of democracy.
Frum: And there you bring us to a final and most haunting question. As China has risen—and especially since the regime showed its capacity for violent repression at Tiananmen Square—Americans have worried whether China would join and support the U.S.-led liberal world order … or whether it would remain outside and hostile. At an optimistic moment, the U.S. and its partners invited China into the World Trade Organization; at a more pessimistic moment, those partners projected a Trans-Pacific Partnership built without China and to some degree to counter China.
But now in 2018, we face a United States that has repudiated the TPP it once led—and that is on the verge of imposing heavy and broad tariffs on steel and aluminum with only the most laughable pretense of trade-law legality. On the day we talk, the president of the United States frankly welcomed trade wars. America’s own commitment to democracy has been degraded under a president who campaigned on an explicit platform of hostility to China, joined to friendship with Russia.
There is much you might want to say in answer to these thoughts, so take this next only as a thought to jump from, but … has China over the past few years changed us more than we have changed China?
Pei: If there were lingering doubts about whether China could be welcomed into the liberal order, there is no doubt now. Chinese actions in recents show that they have no interest in becoming a member of the club. They want the economic benefits from the Western liberal order but reject its political values and fear its security alliances. Now they are in a strong enough position attempting to build their own club house. What has changed is not us, but China. Now there is a vigorous debate about Chinese influence in Western democracies. It is true China has changed us in some ways. Western businesses now must worry about political punishment from China—just ask Daimler-Benz, Delta, and Marriott (all of which inadvertently offended China one way or another). Of course, on balance, the West has changed China more, although apparently not enough in the political realm.
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