Xi claims a "new era" version of non-democratic economic and political organisation superior to Western systems. But the Chinese development model is deficient in fundamental respects says Pranab Bardhan and not easily reproducible elsewhere

By Pranab Bardhan*

It seems that China’s leaders have now forsaken Deng Xiaoping’s advice to tao guang yang hui (“keep a low profile”). In declaring a “new era” for China during October’s 19th National Congress in Beijing, President Xi Jinping presented the Chinese system of governance as a model for other countries to emulate. Leaders who “want to speed up their development while preserving their independence,” Xi said, should look to China as “a new option.”

Developing countries, particularly in Southeast Asia and Sub-Saharan Africa, seem awestruck by this possibility. China’s official news agency, Xinhua, has even suggested that as the West’s democracies falter, “enlightened Chinese democracy” could offer a path forward.

Amid all the lofty rhetoric, it is worth asking: what, precisely, is the Chinese model of economic and political development? And, is it actually preferable to the alternatives?

China’s model comprises a number of key characteristics, including authoritarian governance buttressed by the perception of stability; state-guided industrial policy and finance; massive infrastructure investments; rural industrialization backed by small-scale agriculture; and openness to foreign trade and technology. This model has, no doubt, produced rapid economic growth in China over the last three decades, lifting hundreds of millions of people out of poverty.

But the implication that the first ingredient – authoritarianism – is necessary for rapid development misses the mark. In fact, it is this characteristic of the Chinese system that should give other countries the greatest pause.

Consider China’s East Asian neighbors – in particular, Japan, South Korea, and Taiwan. Each has achieved high growth through state-guided industrial policy, rural industrialization, and openness to trade. But Japan achieved these objectives within the framework of its postwar democracy, while South Korea and Taiwan have been democracies for three decades. Authoritarianism, in other words, served no necessary modernizing role.

Democracy is, to be sure, exasperatingly slow and often contentious. But its deliberative and electoral processes help mitigate conflicts, especially in heterogeneous and conflict-ridden societies. Even in a more homogeneous country like China, the absence of open public discourse does the opposite, as evidenced by the state’s mishandling of ethnic unrest among Tibetans and Uighurs.

Without a strong civil society or an independent judiciary to check government power, Chinese leaders have, on many occasions, made catastrophic errors in judgment. Look no further than Mao Zedong’s Great Leap Forward or the Cultural Revolution.

Xi, too, has blundered. For example, his decision to order China’s state-owned enterprises (SOEs) to prop up China’s falling stock market in 2015 was an epic miscalculation.

Once foreign exchange reserves held by the People’s Bank of China stopped flowing to struggling SOEs, the market fell to the same low levels as before intervention. By that point, hundreds of billions of dollars had been wasted.

The absence of political checks and institutional mechanisms for public scrutiny has also encouraged abuse of power and high levels of corruption, contributing to high inequality, arbitrary land grabs, unsafe working conditions, food safety scares, and toxic pollution, among other problems. While Xi’s energetic anti-corruption efforts may stem some injustices, without fundamental political reform, his campaign against dishonest party officials is likely to be a Sisyphean task – when it is not merely a ploy to curb potential political rivals.

Economic management suffers from similar opacity. At the moment, there are few, if any, checks on debt-fueled investment by SOEs or politically connected firms. This shortcoming, to the extent that it results in massive misallocation of capital, is and will remain a source of major macroeconomic uncertainty for China.

As China’s economy becomes more complex, the absence of transparent and accountable governance processes, combined with frequent crackdowns on civil society and efforts to enforce conformity and discipline, will ultimately stifle entrepreneurship and innovation. It does not help that, while China’s expenditure on research and development as a share of GDP is now quite high, much of it is in the public sector. If the SOEs remain too-big-to-fail, this will create a further drag on innovation. As China graduates from the “catch-up” phase of economic development, addressing this constraint will only become more important.

The lack of openness and transparency could also test political stability. In the face of crisis, China’s leaders often overreact by repressing dissent. Collective and pragmatic leadership in recent decades has done a reasonable job of managing the problem, but Xi’s consolidation of power, and the cult of personality surrounding him, could exacerbate instability.

Democratic governments, for all their messiness, are less fragile, as they draw their legitimacy from pluralism and political contestation, rather than from high economic growth or nationalist appeals. Judicial decisions overturning President Donald Trump’s arbitrary travel bans in the United States, or similar rebukes of Indian Prime Minister Narendra Modi’s attempts to criminalize dissent, are examples of how institutional autonomy strengthens the resilience of democratic political systems – resilience that China lacks.

Despite the official narrative, most of the features of the Chinese system of governance that Xi has championed have little to do with him. They are vestiges of China’s imperial or early communist governments: a performance-based meritocratic promotion system; an organizational framework that ensures top-down loyalty without compromising the quality of local governance; and a unique system of political centralization combined with economic and administrative decentralization.

In other words, for all its allure, the Chinese model is deficient in some basic respects, and not easily reproducible in others. Any country that takes to heart Xi’s invitation to emulate China but does not have a similar organizational history will likely be unsatisfied. Not only is China politically unique, but it also possesses a large and increasingly prosperous domestic market that enables it to lure foreign investment on its own terms.

So, no matter what the Middle Kingdom’s newest emperor might claim, development with Chinese characteristics is really only for China.


Pranab Bardhan is a professor at the University of California, Berkeley, and author, most recently, of Globalization, Democracy and Corruption: An Indian Perspective. Copyright: Project Syndicate, 2017, published here with permission.

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17 Comments

When all is said and done , the free-market democracy founded on the rule of law , free speech and human rights is far from perfect .

But it has no parallel as a system to allow the human to do what it should be doing for itself with minimal intervention from an intrusive government

...a number of key characteristics, including authoritarian governance buttressed by the perception of stability; state-guided industrial policy and finance; massive infrastructure investments; rural industrialization backed by small-scale agriculture; and openness to foreign trade and technology.

When you add authoritarianism to the rest of those, how is the result not simply fascism?

Rick: I understand what you are saying and agree but the word 'fascism' has lost any meaning other than 'disapproval beyond contempt' and used to kill discussion.

Fair point. I should note I intended it only in terms of its original meaning.

Fascism is fundamentally linked to Catholicism, elitism and social heirachy. All the classic fascist states had this in common. Italy, Spain, Portugal and many South American states. But what about NS Germany I here you ask? They weren't really fascist in the strictest sense of the term. But you're right few people understand the term beyond its pejorative meaning.

What about Russian fascism?

Or British Fascism? There never has been a fascist Russia or fascist Britain.

Oswald Moseley and his black shirts might disagree with you there, and allegedly multiple members of the royal family of that time. They enjoyed quite a bit of support pre-war, although you're quite right Britain never became fascist.

Fair to say it's still well short in some aspects - there's plenty of individualism as well as statism to go around, rather than the militaristic romantic nation over self aspect.

So a heavy dose of nationalism, strong military (and belief in military), state-corporate control of economics. Some aspects but not others.

Yeah, falls short of fascism in the historic sense, I guess.

Enlightened Chinese democracy ..... hahahahahaha.......
The Chinese must be so enlightened that they all decided to vote for Xi.

What a highly intelligent article. Can we get our own two United Front MPs to review it please.

Developing countries, particularly in Southeast Asia and Sub-Saharan Africa, seem awestruck..

The Western press seems "awestruck" by China's achievements but is there any evidence that Southeast Asia and Sub-Saharan Africa do as well? Is it because China is not a Western European culture? There have been the examples of Japan, Singapore, Taiwan and South Korea although perhaps only Japan could sort of be seen as doing it on it's own, certainly up until the Pacific War.

..as the West’s democracies falter..

Are the West's democracies faltering? I was intrigued by this. It has actually always been a communist canard that the West is faltering so this is not exactly a new concept. It's worth reading the link in the article to "enlightened Chinese democracy". It is fairly enlightening in that it describes how non-communist factions play a a consultative role rather than a governing role. I picked out the bits that criticize Western democracy and edited them slightly to give a more focused aspect to this view:

Crises and chaos swamp Western liberal democracy.

Division is an unavoidable consequence of the adversarial nature of Western democracy today. Endless political backbiting, bickering and policy reversals, which make the hallmarks of liberal democracy, have retarded economic and social progress and ignored the interests of most citizens.

In parliamentary or presidential politics, parties obtain their legitimacy in turn through ballot boxes, causing frequent regime change and often a complete about-face in policy. What progress has been made is often lost and inefficiency reigns.

As parties in the West increasingly represent special interest groups and social strata, capitalist democracy becomes more oligarchic in nature. The cracks are beginning to show, with many eccentric or unexpected results in recent plebiscites.

If Western democracy is not to collapse completely it must be revitalized, reappraised and rebooted.

My view is that China's success can be attributed to its adoption of Western technology, design, style and fundamental, everyday, belief system. Similar to what Japan has done. In contrast to India, the Middle East and Africa to a large extent. China is thoroughly Western while retaining a few Chinese characteristics. This has happened quickly. I visited in 1999 and again in 2007 and the physical change was striking. They tell me that this transformation has accelerated since then too, so much so that you hardly recognise the place. The practical absence of religion and superstition has aided this transformation immeasurably. This is a trait of successful Western European cultures too.

True, china got to where it is now by copying the west like their rival Japan had done. However the japs retained certain core values from Shinto believe during their transformation while china almost thrown out all their morals and ethics. To me Japan's transformation was a success because their people mature with it, while china is like a kid with a flash car and a machine gun. While it may seem like a good sign that CCP is now trying to refine what is Chinese morals but I just don't see how they can do it well while they themselves are void of any for the past 50 years

Yes and as far as I am aware Japan hasn't sought approval for the export of its system (post war) as China appears to be now. It's almost as if China needs some affirmation as if it is not quite sure. If I were Xi I'd just say to other countries, "hey, you be you, lol"

@Zachary Smith, thanks for fair comments about China. Welcome to China more often. :)

I think China is running things much like a commercial corporation. The picture of Xi above is reminiscent of someone like Tim Cook about to address an Apple meeting or something. Corporations are not democratic enterprises and are authoritarian in nature too.
One of the critical things to achieve now is stopping corporations seizing control of the Internet. A second amendment type constitution for the Internet is absolutely essential if we are to progress beyond becoming mindless consumers and slaves of the corporations.

The battle that's going on right now in the USA, too. Corporations trying to seize control of the internet via Ajit Pai's attempts to do away with net neutrality. If Ajit Pai succeeds he'll ultimately be responsible for the hampering and dampening of digitally-driven economic growth in the USA, with likely a great effect on the USA's place in the world in future.

US governance seems to be getting more and more corrupt, and - unfortunately - with little regard for the people it was supposed to be. It seems to hardly resemble any more "a government of the people, by the people and for the people".