The Economist is this week hosting a debate on the “Chinese development model”, nicknamed “the Beijing Consensus”. The premise is nothing new: supporters argue that autocratic rule in China has brought 30 years of impressive growth, and that its strong grip on power has allowed to Communist Party to respond swiftly to crises such as the 2008 financial crisis and global warming. Critics, on the other hand, remind us that we all thought the same thing about Japan in the 1980s, and just look how that turned out (I was only a few years old in the 80s, but intelligent people back then apparently thought Japan would be the next big superpower and the model to emulate, only to see Japan’s economy slide into a long period of stagnation in the 90s).
The Chinese economy won’t continue to grow by 8-10% per year forever. The amount of growth in the past 30 years has been incredible, but a lot of that was bound to happen once the ridiculous economic policies of the Communist era were reversed and the Chinese people were allowed to be their naturally entrepreneurial and hard-working selves. Today, too much GDP growth comes from real estate, which is probably in a bubble (it’s enough to travel around China and see all of the empty high-rises to know that something is wrong), expensive infrastructure investment (like high-speed trains) with questionable returns, and the financial sector, with lots of money going into the pockets of people with the right connections. I see the Communist Party less as a master puppeteer pulling all the right strings, and more as a huge, complicated web of a bureaucracy desperately trying to cling on to power, with different factions trying to carve out as much of the pie for themselves before the whole thing collapses.
If China does go the way of Japan, it wouldn’t be a bad outcome — a comfortable standard of living, and given its huge population, China only needs a per capita GDP of roughly a fourth of that of the US in order to become the world’s biggest economy. And both Chinese and Western media have in the past few months been awash with stories on the recent rises in worker’s wages, signalling the first step in a shift in the economy (although a part of the rise in wages was really just an adjustment for the lack of rise with inflation during 2008 and 2009, while factories braced themselves for a downturn in international demand). Higher wages are good for everyone, both the workers with more money in their pockets, and the Chinese and foreign companies that want to sell their products to China’s growing middle class. Factories are also beginning to move from rich coastal cities like Shenzhen to more affordable inland cities, like Wuhan, spreading jobs and money more evenly across the country. (On a side-note, for a great account of life as a migrant worker in a factory town, see Leslie Chang’s book Factory Girls).
But despite these steps forward, I’m worried about the current system. I want China to succeed — not only because I like China (and I’ve just invested two years of my life into learning Chinese), but also because China accounts for a sixth of the world’s population, and bringing this huge population out of poverty and into a happy, stable existence would be a huge step forward for humanity. For that to happen, I believe economic reform will have to be accompanied by political reform.
The important thing about democracy isn’t elections per se (although elections are probably an important component of ensuring accountabilty in a political system). Rather, it’s the security provided by guaranteed rights and civil liberties that matters. If you’re never sure whether you’ll be given a fair hearing in court when a developer with ties to the government wants to take your land, you’re much less likely to make investments. If the media isn’t allowed to reveal that an executive in a state-owned company has been taking bribes, it’s much harder to fight corruption. Rich Chinese are moving abroad because living in China is just too risky, and everyone is focused on short-term profits rather than long-term investments, because it’s just to hard too tell what the long-term will bring. The small benefits that might be gained from autocratic rule don’t come close to compensating for the huge disadvantages, ranging from distorted markets and a level of risk that discourages long-term investment, to the lack of security that comes from not being able to depend on basic civil rights, driving rich and talented Chinese people out of the country.
My impression, however anecdotal, is also that more Chinese people are unhappy with the current state of affairs than outsiders realize from media reports. The problem is that young people who care don’t always know what to do or how to get in involved. The obvious choices — like joining a political party, or writing about your opinion, are off-limits, and the burden of being an only child with the responsibility of eventually providing for parents and two sets of grandparents means that most people have no choice but to focus on their careers. There’s a lot of nationalism among the post-80s and post-90s generations, which disguises discontent in the short term, but doesn’t necessarily mean that the system is working and people are happy.
The idea of the “Asian model”, that Asian cultures value hierarchy and prefer paternalistic and autocratic leadership, is one that I find ridiculous. The American-style presidential system might not be the answer everywhere, but no one wants to be put in jail for trying to protect local wildlife, and I don’t believe restricting basic civil liberties is necessary for or conducive to economic growth.