Everyman’s Strategic Survey (45): How China might evolve

Putting aside the potential very ill effects (for both sides) of the ongoing Sino-American trade war, Dr Hahm Chaibong, who is president of the Asan Institute for Policy Studies in Seoul, South Korea, and was, previously a senior political scientist at the RAND Corporation in Santa Monica, California, professor in the School of International Relations and the Department of Political Science as well as the director of the Korean Studies Institute at the University of Southern California and Director of the Division of Social Sciences Research & Policy at UNESCO in Paris, has written a thoughtful essay in Foreign Affairs that may well tell us how China is likely to develop in the next generation or so.

Dr Hahm begins with a bit of a story: “After overseeing his country’s rapid economic development for nearly a decade,” he writes, “the leader of an Asian nation abolishes term limits and assumes absolute power. As justification, he cites the need for national unity in an increasingly uncertain security environment. Western-style democracy, he argues, is neither necessary nor inevitable; the country needs a strong leader and a government with distinctive national characteristics. To counter the influx of Western values, he rehabilitates Confucianism, once shunned as the root of the country’s backwardness. In the West, meanwhile, observers lament this political regression, wondering why economic growth has not led to political liberalization; some argue that the country President-Park-chung-heerepresents a new model of development … [but] … The country is not China under Xi Jinping but South Korea under Park Chung-hee. The year is not 2018 but 1972. At the time, few imagined that South Korea would be a functional democracy and a member in good standing of the liberal international order within a decade and a half. The heavy industrialization program that Park launched when he consolidated power not only helped South Korea overcome poverty to become a producer of high-value goods such as automobiles, ships, steel, and chemicals; the reforms that made South Korea’s economic development possible also undermined Park’s authoritarian government. The regime tried and failed to stem the tide of liberalization: in 1987, South Korea made a successful transition to democracy.

Today,” Hahm Chaibong says, “China is having its own Park Chung-hee moment. Xi has resisted political reforms and tightened his grip on the state while overseeing continued economic growth. However, as with South Korea, what may look like an exception to the rule that economic openness leads to political liberalization is more likely a case of delayed effect. Ultimately, the very steps required to achieve the economic growth that the Chinese Communist Party (CCP) needs will also invite the political liberalization that it fears and resists.

I, of course, am one of the many who has agreed that China might be an exception to the general rule that “economic openness leads to political liberalization,” and I have suggested that Singapore, not Westminster or Washington is a more likely model for China’s political adaptation.

In a half dozen or so very readable paragraphs Dr Hahm retells the story of South Korean from (circa 1960) “a legacy of dire poverty, colonial exploitation, and fratricidal war,” through a mix of economic expansion and trade liberalization with coincided with President Park’s efforts to limit Western liberal democratic trends and to reintroduce Confucianism to South Korea, until, in some respect despite Park Chuing-hee, South Korea is, today “a liberal democracy [which] achieved this improbable success by hitching itself to the nascent liberal international order.” Now, I will quibble, just a bit with Professor Hahm’s description of South Korea as a “liberal democracy;” because I believe that it fits better into the category of successful conservative democracies … largely because if its strong Confucian traditions.

The parallels with China,” he says, “are striking. Like South Korea, China has overcome imperialism, civil war, and national division to become an economic powerhouse. From the mid-nineteenth century, China was a poverty-stricken agrarian state, but beginning in the late 1970s, it implemented a series of economic reforms, decollectivizing agriculture, loosening the reins of state control, and opening the country to foreign investment. As a result, China became the manufacturing hub of the global economy, lifting hundreds of millions out of abject poverty in the process. As time went on, the country hitched itself to the liberal international order by joining its constituent institutions, including the International Monetary Fund and the World Bank in 1980, the Asian Development Bank in 1986, and the WTO in 2001 … [but, Professor Hahm notes] … Like South Korea under Park however, China is balking at the next step of political liberalization. In October 2017, during the 19th National Party Congress, the CCP enshrined Xi and his ideology in China’s constitution, and in March of this year, the CCP amended the constitution to remove term limits, paving the way for Xi to stay in power indefinitely.

Hahm Chaibong adds that “China is also undergoing a Confucian revival. This is nothing short of astonishing: throughout the twentieth century, intellectuals and political leaders alike, including Mao Zedong, excoriated Confucianism as the main obstacle to China’s modernization. But at the beginning of this century, Xi’s predecessor, Hu Jintao, based his “harmonious socialist society” doctrine, which was designed to counter the inequality created by rapid economic growth, on Confucian teachings. As of this year, the Chinese government has established 525 Confucius Institutes around the world. (The goal is to have 1,000 by 2020.) And since taking power, Xi has repeatedly extolled Confucianism in his speeches as the key to understanding China’s history and distinctive national character … [and] … Just as Park did in 1972, China’s leaders today argue that the country does not need to become a Western-style democracy to maintain its current level of success. “Socialism with Chinese characteristics,” they claim, will continue to make the country competitive. As Xi said at the 19th Party Congress, “We should not just mechanically copy the political systems of other countries.” But as Park discovered, economic liberalization generates pressures that even authoritarian leaders cannot fully repress.

I have to agree, fully, with his analysis.

He goes on to describe, in a few more paragraphs, South Koreas rather sad experiments with autocracy under President Park but he explains, “After Park’s death, [he was assassinated in 1979] successive South Korean governments continued to liberalize hyundai-manifacturing-plant-ulsanthe sectors of the economy that had been under direct government control. In the 1980s, the government opened the country’s capital markets, allowing South Korean companies to raise capital from the global financial markets rather than from state-run banks. In 1997, South Korea fell victim to the Asian financial crisis, forcing the country to ask for an International Monetary Fund bailout. It was a humiliating moment for Seoul, but leaders used the crisis to push through major market-oriented reforms that dismantled the centrally 136012644-612x612planned investment model. Two years later, the economy was growing again, recording an 11 percent growth rate in 1999. All the while, South Korea further integrated itself into the growing liberal economic order, joining the WTO in 1995, the Organization for Economic Cooperation and Development in 1996, and concluding 15 free-trade agreements with 52 partners, including the EU (in 2011), the United States (in 2012), and China (in 2015). The country’s transition from repressive backwater to democratic powerhouse was complete.

Like South Korea during the Park era,” Dr. Hahm explains, “China is experiencing the limits of economic liberalization without political reform. The Chinese economy today suffers from massive inefficiency and production problems due to an overreliance on state control. State-owned enterprises have become a major drag on the economy, but reform has stalled. Meanwhile, Chinese banks are saddled with massive amounts of bad loans. The real estate bubble, the product of excessive debt and overbuilding, could burst at any moment … [but] … Despite these problems, the sheer magnitude of the CCP’s achievement in lifting the country out of poverty and transforming it into the second-largest economy in the world has convinced many observers that the Chinese may indeed be onto something. And the regime’s ability so far to defy periodic predictions of its demise has led many observers to contend that the so-called China model offers an alternative path of political and economic development.” Hahm Chaibong disagrees; “This tendency to view the Chinese system as anything other than pre-liberal, pre-democratic, and even premodern authoritarianism is reinforced by widespread self-doubt within liberal democracies today,” he says, and “China’s rise comes at a moment of deep anxiety about the long-term viability of the liberal international order. These two developments are happening at the same time, but they are the product of two very different forces. The ascent of China is the story of a developing country becoming a developed one, whereas the West’s current soul-searching is a crisis of success that came as a consequence of having fully embraced economic, social, and political liberalization.

He concludes with a question: “Has Beijing found a new form of state capitalism that china-street-shutterstock_157021067-620x414will out-perform or even outlast liberal democracy?” No, he answers, and he says “It would be odd if China’s path suddenly diverged from South Korea’s. Just as “Korean-style democracy” was nothing more than a euphemism for old-fashioned dictatorship, the same is true of “socialism with Chinese characteristics” … [he goes on to say that] … There are two possible paths for China companymaxevisgoing forward: political liberalization, which would enable continued economic success, or authoritarian retrenchment, which would slowly but surely undermine China’s economic growth. The lesson of South Korea is that when it comes to sustaining economic growth, political liberalization is not a matter of choice.

I hope he’s right.


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