Title

Is China’s Reform Era Over and, If So, What’s Next?

Fordham Law School professor and regular ChinaFile contributor Carl Minzner says we've arrived at “China After the Reform Era,” a development that’s “not entirely bad” but also has a “dark side.” Minzner’s conclusions, excerpted below, come from a recent essay in the Journal of Democracy. —The Editors

Comments

Political stability, ideological openness, and rapid economic growth were the hallmarks of China’s reform era. But they are ending. China is entering a new era, the age after reform.

This is not entirely bad. For some in China, it may mean a chance to address such reform-era excesses as rampant ecological damage, stark social inequality, and a cultural heritage badly damaged in the rush to modernize. Yet there is also a dark side.

What kept China stable during the reform era can be summed up in a single word: institutionalization. The last two decades of the twentieth century saw the rise of an increasingly steady set of norms in China to govern state and society alike:

  • An increasingly norm-bound politics of elite succession;
  • A depoliticization of the bureaucracy, marked by the decline of factional purges and the rise of meritocratic norms;
  • Steady institutional differentiation, with top CCP leaders handling more clearly defined portfolios and SOEs responding to market pressures;
  • The emergence of bottom-up “input” institutions—local elections, administrative-law channels, and a partly commercialized media airing popular grievances—that gave citizens a limited political voice and helped to boost state legitimacy;
  • New channels that helped to give the rising new economic elite a sense of being invested in both China’s future as well as in the existing party-state;
  • An ideological stance open enough to welcome a broad range of domestic social constituencies and foreign institutional innovations alike.

These all are now unwinding. Some—such as semicompetitive local elections or assertive domestic media outlets—quietly gave way over the past decade in the face of renewed state controls. Since Xi’s rise in 2012, other norms have been broken more dramatically.

The reasons for the unwinding are twofold. First, Beijing has systematically undercut its own bottom-up reforms. Over the past two decades, a regular pattern has developed. Individual leaders sponsor reforms to address latent governance problems. Doors open. Citizens start to use them to participate politically. Villagers begin to organize around semi-open elections. Public-interest lawyers explore new legal channels. Social media start to take shape as a forum in which citizens can air grievances. At that point, central Party authorities get nervous. They see shades of 1989 and step in to put a lid on things. Reforms are smothered, activists detained. For precisely this reason, China has remained locked in a one-step-forward, one-step-backward dance since the 1990s, with the Party regularly deinstitutionalizing everything outside its own walls.

Naturally, this is a problem for Chinese society. It robs social activists of the gradual evolutionary path toward becoming a moderate, institutionalized political force. But it is a problem for the rulers too. Absent any external checks, the semi-institutionalized nature of Party rule since the 1990s has fused with the fastest accumulation of wealth in human history to produce vested political and economic interests that are both highly corrupt and deeply resistant to change—the Chinese analogue of the K Street lobbyist–U.S. Congress nexus, but without even the shadow of elections, judicial oversight, or a free press as checks.

Now put yourself in Xi Jinping’s shoes. You know that China faces deep economic and social challenges. You sense that the Party itself has gone badly astray. Yet you lack any external institutions to rectify it. Nor is there an alternative political force—such as the organized opposition movements that emerged despite authoritarian rule in Taiwan and South Korea—that you might employ as a counterweight. (Not that you would even remotely entertain such a notion: The lessons of 1989 run too deep.) What would you do?

Here we come to the second reason for the shifts noted above. Xi appears to have concluded that his only path to a breakthrough requires him to tear up the existing rules—reversing many if not all of the partly institutionalized internal Party norms that Andrew Nathan noted back in 2003. Hence Xi has opted for politicized anticorruption purges of rivals, centralization of power in his own hands, cultivation of a populist image, and an ideological turn toward nationalism and cultural identity. These are not mere transitory policies. For Xi, they are absolutely fundamental shifts necessary to address the crisis he sees facing China.

He may be right. Optimists can point to his efforts at fiscal and economic reform. They can cite his efforts to strengthen Party disciplinary and legal systems as indications that he will build new political institutions on the ashes of the old. Perhaps Xi does indeed belong to that rarest of all rare breeds—the benevolent authoritarian emperor who presides wisely over the remodeling of China, while ruthlessly crushing dissent in the process.

Moreover, there are still several key reform-era norms that have not yet been breached. The ideological redefinition of China remains embryonic. Marxist dialectics still figure in CCP speeches even as Confucian quotations proliferate. And Chinese state television, unlike its Russian counterpart, continues to promote interethnic harmony rather than rank appeals to majority-group chauvinism. Most important, Xi has drawn a clear line at social mobilization. For all of his invocation of Mao-era symbolism, there has been no sign that he intends to resort to mass movements.

Yet China is now steadily cannibalizing its own prior political insti- tutionalization. Observers such as David Shambaugh, who once pointed to such institutionalization as a source of stability for the party-state, are revising their evaluations of the system’s sustainability sharply downward. Others have begun to speculate openly whether reform-era policies limiting top Party leaders to ten years in office might be next to go, with Xi Jinping perhaps trying to extend his rule well beyond 2022. Uncertainty hangs in the air. Chinese with the most to lose are diversifying against risk—placing their money in Vancouver real estate and their children in U.S. colleges, and maybe even seeking passports from one or another of the small Caribbean nations that is known to put citizenship up for sale.

The events of 1989 did not resolve the core question of China’s political future. Nor did they put it on hold indefinitely. Rather, they launched a cascading set of effects that have swept through China’s politics, economy, and society in the years since. The resulting reverberations have now begun to dislodge core elements of the institutional consensus that has governed China for decades. A new future is slouching toward Beijing to be born.

A new normal is starting in Beijing. Minzner is right to highlight these changes; however, I am reluctant to go as far as declaring this transition “a new era” in Chinese politics. The changes taking place are not as dramatic as those separating the Mao and reform eras. Instead, we are seeing a shift in the institutionalization of reform era politics, increasing centralization and returning to classical rhetoric. Beijing isn’t throwing out the rulebook, it’s simply changing the rules. It’s attempting to fix the system while also hedging against the chance that it may fail.


Mao believed in the power of chaos to transform society for the better. He also lurched from idea to idea and yanked China as he did so, leaving catastrophe and violence in his wake. China’s reform era leaders responded to such uncertainty with concrete pragmatism and numbers-based institutionalization. Local officials would be judged not on their ideological furor but by statistics, most famously GDP growth figures. The party-state’s rhetoric equated growth in the statistics with better lives for the Chinese people. And it worked for much of the 80s, 90s, and into the 2000s. More people had more money and things than ever, but investment and exports dominated growth more than consumption ever did. Only so many highways, ports, and high-speed rail lines could be built efficiently. The massive infrastructure expenditures and loans that kept China’s growth engine humming during the great recession of 2008-9 piled empty airport on empty airport, spending money that would never make back a return. Something had to change; it’s in the nature of that change that I differ from Minzner.


Rather than Xi taking personal power and de-institutionalizing China, I see a unified party-state leadership in Beijing centralizing its ability to monitor local governments and bureaucracy. Throughout the reform era, central officials had limited vision into local conditions and relied on just a few statistical metrics to judge performance. This limited vision created opportunities for graft and corruption to fester, but with growth exploding party central failed to notice. Now anti-corruption activities are all the rage. But rather than the anti-corruption crusade being mostly about eliminating the personal rivals of Xi, I see it as empowering a party institution—the Central Commission for Disciplinary Inspection (CCDI)—to monitor the behavior of people inside the party-state’s bureaucracy. Increasing local inspection officials’ rank and independence looks like incorporating new gears into a system rather than cannibalizing the old one. Reducing corruption is thought to unlock more potential growth by cutting off the grabbing hands of local officials.

At the same time, the return of rhetoric echoing Confucius points to a hedge against the chance that growth will not return. Rather than justifying its rule on performance numbers, it attempts to justify continued one-party rule through moral uprightness. Outcomes may not be ideal, but the process by which rules are made and decisions undertaken is proper. Attacking corruption allows the party-state to assert the wisdom of its decisions and decision-making system. Invoking Chinese culture also burnishes the party's nationalist credentials.

To be sure, the crackdowns on rights lawyers, Internet freedom, and international cooperation are serious and not to be ignored. China has possession of a capacity for violence that it can and does train on individuals and groups. For now, China’s new normal retains enough reform era DNA to be both normal and new.

I agree with Carl that China seems to be entering a transition phase, and that many political norms are becoming increasingly outdated. That said, I do wonder whether the previous era can be accurately called a “reform” era, and whether the new era—let’s call it that for now—will necessarily be any less “reformist,” at least from an economic policy perspective (and perhaps from a judicial one as well):

For arguably the past 15 years, the amount of openness and market-based competition in the Chinese economy has decreased, rather than increased. As a number of economists, notably MIT’s Huang Yasheng, have pointed out, the high point of economic openness in China was the 1980s and early 1990s. Since the 1998 SOE reforms, state capitalism has been on a clear upwards trajectory, giving SOEs and large private firms with strong government connections—the two, as Curtis Milhaupt and Wentong Zheng point out in a recent article, are quite indistinguishable in their modus operandi—a decisive competitive advantage over “truly private” companies. In other words, under conventional definitions of “reform,” China’s “reform era” in economic policy ended long ago, even if the intellectual world has been slow to realize it, and we have been living in a “post reform” world of state capitalism (some might prefer “crony capitalism”) for over a decade.

In many ways, Xi’s recent concentration of power through the anti-corruption campaign and his appeal to populism can be interpreted as laying the political groundwork for market-oriented economic reforms. If the Party Leadership’s numerous statements on these issues (including the much-analyzed but now somewhat forgotten Third Plenum Reform Agenda) are any indication, the government seems to understand the immense structural challenges facing the Chinese economy, particularly the anti-competitive effects of collusion between government entities and large firms, and will attempt (is attempting, even) to address them. Present activity levels are admittedly low, but one could argue that this is because the Xi regime has yet to accumulate enough political capital to truly challenge the state capitalism establishment. The difficulty of doing this is likely exacerbated by the deep connections between that establishment and Xi’s own political faction, and it remains to be seen whether the Party Leadership has the political willpower to dismantle an economic regime from which it benefits privately. Nonetheless, it has shown awareness of the problem, and is at least saying the right things, so perhaps the best intellectual approach is to wait and see.

I would also argue that the government is more serious than has often been acknowledged about professionalizing and empowering the judiciary. Recent reforms concerning access to courts, judicial independence (both financial and bureaucratic), and procedural formalization have been encouraging. Chinese judicial reform has always been a glass half-full/half-empty affair—the arrest of Xi Xiaoming may be an indication that the Party Leadership is unhappy with the moderately more aggressive stance that the SPC now displays towards judicial reform—but the legal populism rhetoric that prompted Carl and others to debate whether China was “turning against law” during the Wang Shengjun era has died down, and there have been actual reforms to back up the “fazhi” rhetoric that the Party Leadership trumpeted so loudly last year. Finally, because Carl and I have both worked on the “xinfang” apparatus, I wonder specifically what he makes of the recent attempts to move informal petitions into the formal administrative litigation process—which do seem, if recent statistics are correct, to be having considerable effect.

Reform is a relative term. It means to change something with the intention to make it better. Carl convincingly presents the case that change is afoot. In the span of six months alone, the Communist Party has announced a new National Security Law, a Foreign NGO Management Law, and an intention to extend its influence into every nook and cranny of society. That there is a changing political landscape in China is irrefutable.

Whether these shifts constitute anti-reform or pro-reform depends on who is speaking. This distinction is perhaps why Carl and Jeremy differ in the name they choose to give to the recent changes. From the stance of a liberal political ideology, the reform era has ended. But if we stand in the shoes of a Party member or even a CEO, the recent policy shifts may constitute terribly important reforms.

So who is in the winner's circle?

Maybe Xi is aiming individually to usher in the return of history, positioning himself to become the champion of the proletariat. Xi was raised in a revolutionary family and is clearly well-versed in Marxist ideology. But now into year three of his reign, Xi hardly has moved to empower the massive proletariat class produced by 20 years of breathtaking neoliberal economic development. Chinese workers and peasants continue to be subject to large-scale abuse and have almost no right to organization and collective bargaining (even compared to workers in the U.S., where most politicians make every effort to distance themselves from explicit socialist ideology). Unless Xi is biding his time—hiding a redistribution ace card up his sleeve until 2020—it is very difficult to believe that he hopes to return China to its pre-Deng socialist roots with himself as the hero.

The Party probably considers recent changes pro-reform. While Xi's pedigree equipped him with the language of Marxism, critically it nurtured in himdeep loyalty to the enduring power of the Communist Party. One-party rule has permitted apparatchiks such as Xi and their families to become astonishingly wealthy and powerful. To keep the klepocratic party rolling, some obstacles have to be cleared away. The anti-graft campaign aims to deal a blow to the enemies within, the civil society crackdown to the enemies below, the naval bravado and nationalism to the enemies outside.

What of the economy? It is widely believed that in the long-term corruption is a drag on an economy ; Minxin Pei argued that corruption cost China at least 3 percent GDP growth every year. An opposing view holds that corruption is so widespread in China that making every official liable for past graft removes the grease from the Chinese economy and starves the luxury market—Bank of America Merrill Lynch put the cost at $100 billion last year alone.

But corruption aside, the economy is perhaps the only liberalized institution which Xi's regime has not sought to tear down. The consolidation and privatization of SOEs will continue. As Taisu points out, the march toward a free market—that is "economic reforms"—apparently will continue.

I conclude that the political and economic elite in China are still living in a reform era. But the Chinese worker and intellectual may have entered a dark age.

Previous commentators have brought up several legitimate points. To stimulate the conversation, I add two points that further suggest the continuity in Chinese political economy.

The reform era is generally characterized by the commitment to market liberalization, privatization, civil society, election, and rule of law. Minzner emphasizes the importance of political institutionalization. By depoliticizing the bureaucracy, China is able to build a meritocratic system. It is this capable state that is behind China’s rapid economic growth. This development has gained China, and indeed autocracy, some legitimacy among scholars who are dissatisfied with western democracies. Xi’s anti-corruption campaigns disrupt this positive trend. Under the name of ridding government of corrupt officials, Xi targets the leaders and followers of rival factions. This reminds us of the ugly factional politics that were all too familiar in the pre-reform era. Unfortunately the political institutionalization during the reform era is actually a myth. After all, today’s factions do not just form overnight. Like Zhou Yongkang and Xu Caihou, these leaders have thrived in the old factional politics and nurtured their own networks for decades. One strand of this literature argues that the state utilizes growth rate to evaluate officials and only capable leaders are promoted. We analyzed career trajectories of provincial and prefectural officials between 1978 and 2010 and did not find empirical evidence supporting this argument. Instead, what stands out is the power of personal ties and factional loyalty. This meritocracy myth is embraced and even propagated by the leadership for boosting legitimacy. But it goes directly against the nature of autocratic politics. Not surprisingly, officials with strong networks have forged education, ethnicity, and even age in practice. As Wallace has shown elsewhere, growth measure has also been inflated to fit the “game rules”. Beneath the meritocratic surface of the reform era is the usual factional politics.

As for economic policies, I do not foresee an abrupt end of reforming. The current growth model has already shown its limits and Xi does not have the luxury of time enjoyed by former President Hu Jintao. On the other hand, I am not as optimistic as Zhang that the market will finally win over. The most likely outcome is the continuation of muddling through, just like in the reform era. It is possible that Xi intends to use anti-corruption campaigns to remove feudalistic oligarchs and open up market competition. Once his power is secure, he would promote further market reforms. Three years have passed and this prospect grows dimmer. In 2013, Xi laid out an ambitious plan to deepen reforms in various sectors, including SOEs and urbanization. In both cases, the state continues to dominate and marketization is slow to come. Massive intervention in China’s stock market recently demonstrates the continuing influence of SOEs and local governments in economic decision-making. Even though the oil system is cleaned up, there is no major attempt of market liberalization. In a way, this is understandable. Even if Xi is indeed pro-market, he still needs to face the political challenge and reward loyal followers with lucrative and powerful opportunities. China’s future is not in the hands of one person.

Reform implies that the Communist Party had some sort of vision of how to transform the system it established after taking power in 1949. After the Cultural Revolution ended in the mid-1970s there wasn’t much of a “system” left to reform. As a Fudan University student in February 1979, a few months after the Party decided to shift its focus to the Four Modernizations, what struck me was that the Party was, at least temporarily, putting aside its goal of transforming China from the top and, instead, getting out of the way and letting people have more control over their own lives—something they took hesitantly at first, then with gusto. Since that time, there has been a dialectic between shou (restriction) and fang (liberalization). Unusual for a Leninist party, the reform era CCP has pulled back and tolerated a great deal of experimentation throughout society, periodically summing up what was afoot and deciding what to formalize in law and regulations, and what to get rid of; what sectors required strong Party leadership (however measured) and which could be allowed to operate more autonomously. The undeniable macro trend over the past 30+ years, not without serious glitches of course, has been continuous opening up: marketization, privatization, and globalization.

We need to recognize that China operates on at least two levels of reality: the ideologically informed definition from the Party (though what exactly that ideology is anymore, beyond the primacy of Party rule, is not clear), and daily life as lived by real people in society. Outside my hotel in Beijing is a giant electronic billboard brought to you by the Korean conglomerate LG. The revolving set of adverts includes luxury housing, high-end liquor, Korean electronics and, by the way, the People’s Liberation Army. That about sums up China today: a mass of probably irresolvable contradictions. Don’t mention ”totalitarianism.”

The subway to lunch was filled with mostly young people glued to their electronic devices. The restaurant where I ate in a trendy hutong near the Lama Temple was packed with young Chinese and foreigners, also glued to their devices, occasionally engaging in conversation. These people, as well as the farmers who now own and operate hostels and restaurants en route to the Great Wall, which cater to the nouveaux riches in their SUVs, have all benefited from the reforms. The reform decades have brought changes, uneven though they may be, in China’s broader economy, not just in the showcase Eastern seaboard cities—changes to social structure, social relations, politics, legal system, values, and culture much more fundamental than anything the Communists tried to push with violence after winning national power.

As has happened before, the Party leadership is investigating the current state of change to determine what to tolerate, what to encourage, and what to stamp out. The Xi leadership, deeply informed by Leninism, Confucianism, and Legalism, is very well aware of the pathologies all around. It wants to monopolize the right to expose them, and to prevent social activists (including lawyers) at home and abroad from pointing these out and proposing solutions. It wants to prevent horizontal linkages among domestic and foreign actors facilitated by the geographical, social, and technological mobility brought about by the reforms. Societally-generated reform will continue, though the direction will continue to zig and zag.

Thanks to the ChinaFile editors and Asia Society for organizing this exchange, and to all of the commentators for their thoughtful remarks. Let me make one broad response, followed by a few more specific ones.

It’s important to underline what I mean when I argue “China’s reform era is ending.” Of course, “reform” will continue in China— particularly if one just uses that term to refer vaguely to “social change.” All societies change over time. Babies are born. Skyscrapers are built. Businesses go bankrupt. Nor will “reform” disappear from the official Chinese political lexicon. The term has become nearly sacrosanct. Consequently, future Chinese leaders undoubtedly will appropriate its mantle as clothing for whatever policies they seek to pursue.

The deeper, and much more important, question is whether the defining characteristics that observers generally associate with China’s reform era—(改革开放 / gaige kaifang): political stability, rapid economic growth, and an ideological openness to the outside world—will continue. And as I argue in the article, there are major signs that all of those are buckling fast. That’s why China’s reform era is ending.

In presentations that I’ve made, my article elicits two different types of reactions that it might be useful to address. [Note: neither of these is fully the position of any of the commentators above, so when I pick out particular sentences they use, I’m not arguing that they completely embrace the positions reflected in the two different types of reactions.]

One reaction that I get is from those who argue that there is less than meets the eye in the reform era. One way of phrasing this runs as follows: “Aren’t you overstating things? There wasn’t that much of a change in the Chinese political system between the Maoist era and the so-called reform era, and consequently, whatever is happening now isn’t really that much of a change in the grand scheme of things.” There are strands of such an argument in Fubing Su’s claim that “political institutionalization during the reform period is a myth.”

But that’s simply not true. Let’s look at one example: the issue of political succession. Mao’s first designated successor, president Liu Shaoqi, died on the cold floor of prison cell after being purged by Mao, being subjected to months of public denunciations and beatings by Red Guards, and then denied medical treatment for diabetes and pneumonia. Mao’s second successor, defense minister Lin Biao, perished in a mysterious plane crash in Mongolia after allegedly attempting a military coup and seeking to flee to the Soviet Union. That’s what happens in a system that lacks political institutionalization—when your rules of political succession are simply the laws of the jungle.

In contrast, political succession in the post-1978 era has followed totally different rules. None of the top leaders since—Hua Guofeng, Zhao Ziyang, Jiang Zemin, Hu Jintao—has (so far) been beaten to death. Indeed, the Party-state itself has developed quasi-orderly rules for succession to the top of the system. Examples include the qishang, baxia (七上八下) norm, by which Politburo members aged 68 are ineligible to succeed to another term in office, while those 67 or younger may continue to serve, or the exemption of Politburo Standing Committee (PBSC) members from prosecution after leaving office (in contrast to ordinary Politburo members such as Chen Xitong or Chen Liangyu). Sure, these aren’t remotely close to liberal political institutionalization, but they are nonetheless examples of institutionalization—a more rule-based approach to political ordering.

And that’s why the takedown of Zhou Yongkang (which openly violatied the norm against going after former PBSC members), and the current maneuvers around Hu Jintao and Jiang Zemin are so important—dwe face the very real possibility that core political norms that have governed the entire system since the post-1978 era are unraveling.

Note that this is totally different from asking whether China is returning to the Maoist era. One can conclude that the key elements that characterized the reform era are ending, without saying that Xi is a new Mao. As others have mentioned—so far, there is zero sign (so far) that Xi intends to return to Maoist-era social mobilization.

The second reaction that my paper seems to generate is the reverse of the first: an argument that the shift from the Maoist era to the reform era was so dramatic and fundamental so as to overshadow all subsequent developments. “Aren’t you overstating things? China has changed utterly since the Maoist era—it has Starbucks, high-speed rail, and overseas travel. This is totally different from pre-1978 China. Consequently, whatever is happening now isn’t really that much of a change in the grand scheme of things. We are clearly still in the reform era.” This line of thought shows up in Thomas Gold’s argument that “The undeniable macro trend over the past 30+ years, not without serious glitches of course, has been continuous opening up: marketization, privatization, and globalization.”

The problem with this argument is two-fold. First, by setting Cultural Revolution-era China as the uniform baseline for all relevant comparisons, one risks denying oneself the ability to appreciate subsequent shifts in Chinese society and governance. In other words, with that mindset, as long as one can purchase the latest in consumer electronics, and as long as Beijing streets aren’t filled with Red Guards, one reaches the conclusion that China is always living eternally in the reform era of the 1980s and 1990s. Applied to American history, a similar logic would demand the conclusion that the United States has been in a vaguely defined post-Civil war reform era since the 1860s, since there has been no civil war, globalization has continued, and slavery ended. But that’s not the way we evaluate history. The relevant comparison isn’t between the Cultural Revolution and China today, but between the heights of the reform era and conditions today. And if you walk through this analysis – on political stability, economic growth, and ideological openness, you reach a different conclusion. That’s precisely why many scholars who look at the past thirty years would disagree that the “macro trend of the past 30+ years” has been “continuous opening up.” Yasheng Huang, for example, has detailed how liberal economic reform efforts in the 1980s began to slide in a dramatically different direction in the 1990s, producing many of the underlying problems with which Chinese authorities are currently grappling.

The second problem is an outgrowth of the first. If you are worried about the stability of the Chinese system, it is a serious mistake simply to look ahead in the road for a Cultural Revolution-sized abyss. A 100-foot drop will total one’s car just as effectively as the Grand Canyon will.

One last comment on a point made by Taisu Zhang. I agree with him that there’s actually been a significant shift back towards judicial professionalism. As I argue in a separate article, the Chinese court system essentially has shifted 180 degrees the direction of many of its policies since 2012. I've been very impressed with some of the people who have been put in charge at the Supreme People's Court. So why don’t I come out more positive in my assessment of where China is going? Because the broader environment within China is beginning to shift so dramatically. Five years ago, I was quite worried about trends within the Chinese political-legal apparatus, but the trajectory of many other components of the Chinese state and society were unclear. Now, you are seeing China’s economy tank, core elite political norms being thrown into question, and ideological trends turning sharply negative. In that context, what’s going on in the court system is but a sideshow. That’s why we are moving from “China’s turn against law” to the “end of China’s reform era.”