In recent years, China has proven persistently to be the exception to traditional theory. As Minxin Pei, a prominent China scholar, has emphasized, there exists a large amount of uncertainty present in conventional analysis of China’s reform, despite the proliferation of theory explaining non-democratic market reforms and despite the certainty with which the world seems to have accepted a dominant China. Developmental state theorists demonstrated that democracy was unnecessary for aggressive economic development; South Korea, Taiwan, Singapore, and others all initiated sweeping, unprecedented economic growth without legitimate democratic institutions. Granted, the developmental state model so often associated with these countries is not one that exhibits features entirely harmonious with the neoclassical market-based paradigm, but it does thrive on international markets and private economic actors, rather than state control over prices, supply, and distribution mechanisms as in a communist system. However, nearly all of the states mentioned eventually became more committed to not just economic liberalization and adoption of market principles, but also to political systems of open, democratic participation. Thus, academics and policymakers alike have been baffled as China continues to reform from a command economic model to a predominantly market-based model, maintain unprecedented growth, and simultaneously avoid wholesale democratization. There is a common feeling that sooner or later China will crack and everyone is taking bets as to when.
Predictive indicators that China’s economic prowess may not outlast the need for democratization are bountiful, ranging from empirical examples taken from China’s neighbors in East Asia to theoretical discussions regarding the economic reform of post-communist states. One of the foremost such discussions is Joel Hellman’s, which dispels the once commonly accepted principles of J-curves, as they relate to transitions to capitalism. The J-curve concept regarding the transition from a command system to a market system adheres to an intuitively sensible logic. According to this model, it was traditionally argued that the primary opponents to reform would be the short-term losers, and thus states should work to protect against potential backlash of the losers until reforms gained enough popular support. Hellman turns this argument on its head, demonstrating convincingly that in post-communist countries, genuine economic reform is often stalled by the short-term winners of reform policies, rather than the losers. Critical to understanding the relationship between political and economic reform, then, Hellman contends that politically inclusive systems are necessary to prevent short-term winners from stalling continued progress. Democracy, in sum, ensures that economic reform will endure and benefit a larger number of actors.
Considering Hellman’s argument and the evidence on post-communist states that he provides, it is difficult to reconcile China’s success in implementing market reforms with its persistent lack of genuinely participatory political processes. If post-communist states with more open political systems have enjoyed robust continued reform and those without have been mired in more stagnant partial reform, as Hellman asserts, then how is China able to remain committed to economic reform? There are at least several clues. For one, China has been much more successful at co-opting both the potential short-term losers and short-term winners in its reform processes. As Yan Sun has pointed out, “China’s gradualism has allowed officials to retain some of their old powers and to acquire new powers over the economy.” Though Sun’s observation is more specifically in reference to the nature of corruption in China’s reform process and though there is disagreement on just how gradualist China’s reform has been, the author’s insight helps explain China as a potential exception to Hellman’s rule. The Chinese Communist Party (CCP) has been quite deft at ensuring that those who benefited from the previous economic system gain a stake in the new one as well. Gennadi Kazakevitch and Russell Smyth also illustrate how through measures such as rapid agricultural liberalization, market reforms were implemented in China at times with lightning speed and created new opportunities for many different actors to benefit from the new system. Consequently, China has been able to avoid the political instability that would be caused by democratization while also avoiding getting stuck in Hellman’s partial reform conundrum.
Furthermore, it is worth considering that Hellman makes his assertion about the necessity of democracy to genuine market reform without acknowledging any states that have pursued market liberalization without political liberalization. China is proof that such states can exist, and moreover, that their market reforms can be quite successful. Nonetheless, we should not dismiss Hellman’s conclusions entirely due to China’s rather unique circumstance. Chinese leaders continue to tread largely uncharted waters. The post-communist countries, those of Hellman’s study, by and large committed to some form of democratic reform either prior to or during economic reform. Hellman’s conclusions thus offer a compelling explanation of simultaneous reform toward both a democratic political and market economic system. His model demonstrates that although the political costs may be high, once democratic reforms are initiated it is most beneficial to democratize aggressively, if the gains from market reforms are also to be maximized. And perhaps that is precisely why leaders of the CCP have suppressed democratization; they fear losing both the Party’s grip on power and the country’s ability to maintain economic growth. Yang Dali has shown that China now faces increasing societal pressures brought on by the great economic growth it has achieved. From environmental degradation to growing income inequality, Chinese leaders have a gathering storm of problems to address. Although it seems unlikely China will be able to stave off democratization indefinitely as these pressures build, for now the country seems miraculously able to remain the exception to an otherwise reliable rule.
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