China and the End of Reform

A Review of ‘China’s Future,’ a New Book By David Shambaugh

Is the Chinese Communist Party putting an end to the decades-long process of China’s opening to the outside world? Is the era of liberal reform over? Consider the latest piece of evidence: on April 28, the Standing Committee of the National People’s Congress passed the long-awaited Foreign NGO Management Law. The Law, which has been in the works for years, creates an extensive and intrusive system of registration and approvals, and seeks to ensure that the Party is able to control which Chinese entities have access to Western funding and expertise.

At a press conference, government officials emphasized the law’s supposed benefits to foreign NGOs operating in China. Yet a close reading made clear that the law, far from helping foreign NGOs work more effectively in China, would instead severely restrict the activities of all foreign non-governmental groups operating in the country, including Western foundations, NGOs, academic institutions, and others. Though implementing regulations, due out later this year, could soften some of the worst elements of the law, many observers nonetheless fear that Western efforts on subjects deemed too sensitive—which could include everything from LGBT rights to public interest lawyering—would fail to win the needed approvals and thus be unable to proceed. 



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The foreign NGO Law was but the latest in a series of steps designed to reassert Chinese Communist Party (C.C.P.) authority over Chinese society, in part by limiting the activities of Western actors in China. Ideas, too, are suspect: the Party has gone to great lengths to reinforce its control over the university sector, clamping down on the teaching of so-called “Western” concepts, including constitutionalism, democracy, and the importance of a free press. Party officials have tightened up on attendance by Chinese academics at international conferences where such matters are discussed, and have put a stop to gatherings in China discussing, usually in more qualified terms, the same subjects.

Chinese media has also been hit hard. Scores of journalists have been forced from their jobs over the past few years, and others have chosen to resign, fed up over mounting restrictions on what can and cannot be said in print. Even business reporting, long a somewhat more open space for Chinese journalists, has gotten tougher, and more dangerous. In August 2015, Wang Xiaolu, a reporter for the leading newsweekly Caijing, was apparently forced to go on national television to apologize for his reporting on China’s stock market woes. His televised confession was widely seen as a signal to other journalists to be careful about reporting bad economic news. More recently, the Party has given much more explicit warnings: in early May, The Wall Street Journal reported that business journalists, economists, and think tanks have been told to purge any negativity from their analyses of the Chinese economy; for the foreseeable future, only bullish forecasts will do.

For some time now, American observers have been watching as the political space in China continues to shrink. A nervous and sad consensus has formed: whereas in years past relative optimists and pessimists debated China’s political, legal, and economic trajectory, now all agree—save for a vanishingly small number of holdouts—that political and economic reforms have ground to a halt. If the era of gradual reform and opening has ended, what comes next?



China’s Future

David Shambaugh
China’s future arguably is the most consequential question in global affairs. Having enjoyed unprecedented levels of growth, China is at a critical juncture in the development of its economy, society, polity, national security, and international relations. The direction the nation takes at this turning point will determine whether it stalls or continues to develop and prosper.Will China be successful in implementing a new wave of transformational reforms that could last decades and make it the world’s leading superpower? Or will its leaders shy away from the drastic changes required because the regime’s power is at risk? If so, will that lead to prolonged stagnation or even regime collapse? Might China move down a more liberal or even democratic path? Or will China instead emerge as a hard, authoritarian, and aggressive superstate?In this new book, David Shambaugh argues that these potential pathways are all possibilities—but they depend on key decisions yet to be made by China’s leaders, different pressures from within Chinese society, as well as actions taken by other nations. Assessing these scenarios and their implications, he offers a thoughtful and clear study of China’s future for all those seeking to understand the country’s likely trajectory over the coming decade and beyond. —Polity Press

In his new book, China’s Future, prominent China scholar David Shambaugh argues that, after years of double-digit economic growth, China has reached a crucial turning point. China’s ruling Communist Party, whose stellar successes had, not too long ago, led to dizzy predictions of a new Chinese model of development, faces tough times ahead: economic growth has slowed, social problems continue to mount, and political reform has stalled. There are dark clouds on the horizon, and, though it is not too late for the Party to avoid a full-blown crisis, Shambaugh is not optimistic that the C.C.P. will take the reformist path. Instead, the Party and the country it rules likely face years of slow economic growth and political and social stagnation, an unenviable package of woes that economists call the middle-income trap.

What should the C.C.P. do? In Shambaugh’s view, it all comes down to political reform. “China is not moving ahead politically and therefore it is not moving ahead economically either,” Shambaugh writes. Taking a page from the classic modernization theory textbook, Shambaugh argues that reform of the political system—whose structure is largely unchanged since the founding of the People’s Republic in 1949—is China’s best chance to avoid long-term economic stagnation. Though Shambaugh argues in favor of more far-reaching reforms, including Singapore-style controlled elections that would inject some element of competition into the political system, nonetheless he believes that the C.C.P. could get by with less. At present, elections are probably less important than key political reforms that would limit the Party’s powers. In particular, after decades of foot-dragging, the Party has to create strong autonomous government institutions that can check Party officials’ own worst impulses. If it does in fact invest heavily in institutions, the Party will signal to the Chinese public and the world that it has embraced a new role for itself, that of facilitating the economic decisions and activities of others, rather than, as at present, being the biggest single player in the economy and society.

Shambaugh sees little evidence to suggest that the Party leadership is willing to embrace a more modest role for itself. In fact, as noted above, since taking over as China’s supreme leader, Xi Jinping has moved to assert even tighter Party control over many key elements of Chinese life. Whereas the Party should be stepping back, for the most part, it is moving forward, hitting back at perceived threats and stressing loyalty and control as the hallmarks of Chinese politics in the Xi era.

One strength of China’s Future is that Shambaugh carefully qualifies his arguments, making clear that the long-term stagnation and decline that he foresees is not the same as state collapse. The C.C.P. has a number of resources at its command, including the world’s largest stock of foreign exchange reserves; the largest standing army; and propaganda and surveillance machines that are the envy of autocrats everywhere. It has used its impressive arsenal of repressive tools to ensure that any possible alternatives to the C.C.P. remain divided and weak. And it benefits from the fact that many disgruntled Chinese who are dissatisfied with C.C.P. rule are voting with their feet, exiling themselves to cleaner, freer climes in Europe, the U.S., and Australia. In other words, the C.C.P. could maintain its strong grip for some time to come, even as the country itself struggles to manage ever larger socio-economic burdens.

Though his language is a bit more blunt than some others’, Shambaugh is not the first to tread this ground: other scholars have also taken a rigorous look at China’s reformist choices, and have expressed doubts as to whether China has found some new way to avoid the pitfalls of modernization. Shambaugh himself rightly praises Minxin Pei’s prescient 2006 work, China’s Trapped Transition, which deserves credit for highlighting many of the key problems cited by Shambaugh several years before he and others did. Jonathan Fenby’s more recent book, Will China Dominate the 21st Century?, also casts doubt on the inevitability of China’s rise. Other, more narrowly-focused tomes have highlighted key elements of the problem: Yasheng Huang’s excellent Capitalism With Chinese Characteristics, for example, showed that, far from being an entrepreneurial, market-driven paradise, China remained heavily reliant on state actors to drive economic growth, which means that market reform is blocked by bureaucratic actors unwilling to let go of their own power.

Despite these and other precedents, Shambaugh deserves credit for putting forward, so clearly and bluntly, his view that the C.C.P. is in real trouble.

That said, is Shambaugh right?

To me, one development that bolsters Shambaugh’s argument is the loss of so many activist voices, many of them professional contacts and personal friends, who have worked so hard to nudge Chinese politics in a more liberal direction. Think of leading activist lawyer Pu Zhiqiang, who was jailed for more than 18 months over his online political commentary. Pu was released in December 2015, but lost his lawyer’s license as a result of his criminal conviction. Or his friend and colleague Teng Biao, who left China for exile in the United States after years of official harassment. Or the longtime investigative journalist Gao Yu, who was handed a seven-year jail sentence for allegedly leaking confidential state documents in April 2015; she was later released on medical parole. Or the scholar-activist Guo Yushan, founder of the innovative think tank Transition Institute, who was held without trial for almost a year before being released in September 2015. Sadly, there are scores, even hundreds, of others like them, all of whom have so much to give to their troubled country, who have been intimidated into silence, jailed, or exiled.

Though the C.C.P. would never admit it, it needs these brave men and women, and many others like them, to help push a reluctant bureaucracy and an unsure public to embrace reform. I suppose the Party faces fewer immediate challenges now that these men and women have been neutralized. But if Shambaugh is right, the Party may be hurting its own long-term prospects by cracking down on the very group of activists who could help the Party reverse course. 

And yet, the next few years also provide an opportunity: it is possible, even likely, that the C.C.P. leadership agrees that China has reached a turning point, and that strong medicine will be needed to navigate the rocky waters ahead. Over the past few years, Beijing has doubled down on hard authoritarianism as the antidote to China’s problems, and yet key challenges persist. As it runs out of options, perhaps Beijing, convinced that desperate times call for desperate measures, can be convinced to change direction and trade in authoritarianism for a series of modest, step-by-step technocratic reforms. It could enlist the men and women it has persecuted, and let them get back to their important work of pushing for bottom-up change. If such an unlikely eventuality should arise, then the C.C.P. leadership would be well served to pick up a Chinese translation of China’s Future—there the Party will find a series of strong and well-articulated arguments in favor of a return to reform, at last.