China’s syndrome of lawless growth

One of the writers who best understood the phenomenon of totalitarianism in the 20th century, British historian Robert Conquest, argues that any totalitarian attempt to control all aspects of life is untenable in the long run and allowing a far greater leeway on some matters — tactical disagreements — is much more viable.

China is no longer a totalitarian state. The regime no longer seeks to control every aspect of life or way of thinking. Although the Chinese Communist Party remains determined to hold on to power, there is no utopian goal as such that totalitarian regimes ruthlessly strive towards.

Indeed, the party is becoming less relevant to many Chinese and different forms of behaviour are largely tolerated as long as they are not deemed to be threatening to CCP authority or social stability. In the words of one expert, Albert Keidel, who has worked and lived in China for more than 25 years, “life in China has softened a great deal''.

Single-party systems reach their heights when their vision of the future is universally received and there is sufficient buy-in from the population for the regime to employ totalitarian tactics; state-backed force is only one part of the coercive apparatus. When regimes move towards softer authoritarian models, it is often a sign that their grip on society is slipping and they have no choice but to relax aspects of authority.

Political and social challenges are mounting. For the CCP, the present transitional period is correctly seen as a period of immense significance in terms of the future of its authoritarian rule in China.

The credibility problem for the regime: There is growing evidence that the regime's authority and capacity to govern are declining (in addition to its legitimacy). This is occurring for two main reasons.

First, although it is clear that increasingly allowing the operation of free markets was seen as therapeutic rather than transformative in terms of Chinese politics and society, the authority of the CCP is based on an insecure strategy of inefficiently using resources to fuel a bubble economy. Moreover, the solution — to grant the private sector greater and greater access to this wealth and control of critical sectors of the economy — would accelerate the irrelevance of the party. As the regime continues to oversee an economy based on unsound fundamentals and becomes increasingly less able to provide social and public goods, more and more cracks appear in the facade of CCP credibility.

Second, public decision-making and administration become more sporadic and unpredictable as the disconnect between the central leadership and the majority of its population becomes more pronounced.

This is occurring for several reasons. First, senior CCP members are increasingly becoming part of the new wealthy elites as a result of their privileged position within a China growing richer. Moreover, as part of the tactic to co-opt the new and emerging urban elites, the senior leadership has neglected the poor and especially rural populations, to their detriment. It is easy to forget that there are still about 900 million rural inhabitants in China (and only 100 million to 150 million in the middle and upper classes).

The capacity (and intent) of the leadership to understand their problems and deal with their complaints is greatly diminished.

Second, as the regime decentralised, there was a loss of fiscal (tax collection and spending), administrative and legislative power for the central government, which was increasingly transferred to local governments. This means that the execution of political, social, legal or economic macro policy from the top becomes much more difficult and unpredictable. In other words, there is a loss of centralised control and a greater reliance on local governments that are neither very accountable nor transparent.

The worst local government practices tend to be in the poorer rural areas, which are ruled by the law of local leaders.

The lack of predictability might be less important in a purely agrarian society of uneducated peasants shut off from the world and each other, but is much more critical as a society becomes more complex and the people more educated. China has a literacy rate of about 80 per cent, which includes most of the poor peasants. Looking at the Soviet experience, US political science academic Alfred Evans argued that the inability to set up impartial mechanisms for adjudication, enforcement and regulation, and effective rules for resolving disputes, went a long way towards explaining the resulting loss of legitimacy for the regime and the subsequent implosion of the system.

If simple grievances such as why one is prohibited from bidding for a legitimate contract in a neighbouring province, or why one's home can be bulldozed without warning or adequate compensation despite national laws stating otherwise, are not resolved in an appropriate and predictable way, daily life is invariably compromised and the regime is invariably blamed. In one study, of the 10million petitions registered in 2003 with the Petitions Office, set up to hear and resolve public grievances and disputes, just two out of every 1000 were resolved.

If the one party in power retains the right to intervene regardless of agreed rules, and does so because of a fragmented and disjointed decision-making process, or else because of politically motivated or corrupt CCP officials, the tactic of central leadership deflecting blame towards local officials starts to wear thin. If the CCP maintains that it knows best and the rule of law can be bypassed by incompetent or corrupt CCP officials as well as courts and tribunals ultimately under the party's instruction, then the loss of credibility continues to be directed towards the party as a whole.

That the reported instances of unrest are rising exponentially obviously suggests a rising tide of discontent. However, most analyses stop there because little information is revealed by the Government about the nature of these instances and what they concern. What we mostly hear from the Chinese Government is talk of procedures established to mitigate the seriousness of these incidents. Piecing together a picture of what is happening has mostly been left to intrepid insiders and determined reporters. These piecemeal reports, which are becoming more lucid and comprehensive, point to scenarios that have variously been described as a tipping point, a time bomb and a precipice for the regime.

Indeed, official media channels can no longer hide (and perhaps no longer want to hide) the rising instances of social unrest. These instances are the most tangible signs of an increasingly disgruntled population.

Social unrest in China: Officially reported instances of social unrest (involving 15 or more people) have risen from 8700 in 1993 to 87,000 in 2005 (the latest available figures). This is about 240 instances each day.

The first important point about the rising instances of social unrest is that it indicates a citizenry that is increasingly defiant or unafraid of the authoritarian coercive apparatus. This means the level of discontent is so profound that the protesters no longer care about the consequences of unrest or that the regime's ability to enforce compliance and order has been seriously compromised.

As the truth is undoubtedly a combination of both, this is worrying news for any authoritarian government.

Second, although indicators are that millions have been saved from poverty under World Bank standards of $US1 a day, this statistic must be tempered by the fact social and financial safety nets (such as health, education and welfare) have been greatly reduced during the reform period. For example, a recent UN study estimated that out-of-pocket spending on health care in China has almost doubled as a percentage of total health expenditure from 1980 to 2002, from 36 per cent to 68 per cent. Meanwhile, government spending in the same period has been reduced from 32 per cent to 15 per cent.

Much progress was made from 1979 to the mid-1980s. Since then, of the approximately 900 million peasants, about 400 million have seen their incomes stagnate or decline during the past decade.

Third, the political danger is not just the growing divide between China's minority privileged classes and the rest (most of which are desperately poor) — although this is in itself a genuinely tragic humanitarian crisis — but that most of the cases, and the worst cases, of unrest are directed towards local authorities and officials. In other words, the problem is seen to emanate from the government and a connection is made between the regime and the hardships the general population face.

This is not surprising, as most cases involve frustrations caused by corrupt officials, arbitrary and repressive taxes and land grabs from officials, unpaid benefits or loss of rights against official bodies, non-enforcement of laws by authorities and courts, lay-offs of workers by the state, use of thugs by local officials to demand compliance, and the like.

Even though they control about two-thirds of government revenue collection (with the central Government receiving about one-third), local officials do not deliver services that are relied on by the masses because of insufficient budgeting, corruption or incompetence. When local officials want more money, they simply collect more taxes or fees. In rural areas, because all village land is ostensibly collectively owned, the lack of clear and definable property rights allows greedy local officials to effectively make decisions as to how the land is used, distributed, sold, developed and so on. The regime is intrinsically culpable. The frustrations cannot be dismissed as unruly citizens fighting among themselves or as a result of racial or intra-provincial tensions, as the central leadership attempts to do.

Fourth, the size of instances of unrest is growing and can be frightening. For example, in cases recently documented for 2003, a mob of 50,000 torched police cars in Chongqing to protest against the beating of a migrant worker; 100,000 stormed a government building and forced the postponement of a dam project in Sichuan due to inadequate compensation; 20,000 miners and their families rioted against lay-offs and the loss of their pensions.

Other recent instances of unrest include 80,000 retired workers who protested in China's northeast over unpaid pensions in 2002;

30,000 rioting over exorbitant bridge tolls issued by local authorities in 2004; 7000 textile workers protesting after being forbidden to form their own union in the Shaanxi province in 2004. Of the 74,000 instances recorded in 2004, 17 involved 10,000 or more people, 46 involved 5000 or more people and 120 involved 1000 or more people. That order was restored only after martial law was implemented in many of these cases highlights the seriousness of the problem. Even for the smaller incidents, the numerous anecdotal accounts of protesters violently targeting or resisting authorities speaks volumes about the crumbling regard for the “people's'' party.

The government strategy of linking its legitimacy to macro-economic growth may temporary placate the privileged classes but has no apparent bearing on reducing social unrest. As the Chinese economy boomed from 2001 to 2005, the number and scale of incidents continued to rise: further evidence, as if more were needed, that the fruits of any growth are restricted to the privileged few. Impressive macro figures inflated by fixed investment spending cannot solve problems festering away in the micro environment.

The possibility of co-ordinated social unrest: Most commentators outside China agree that the possibility of co-ordinated and widespread social unrest is low and does not pose any foreseeable threat to the regime. Although the social unrest is usually directed towards local officials and, by implication, the regime as a whole, it is not co-ordinated. The protesters do not generally call for the overthrow of the CCP, let alone constitute any kind of pro-democratic movement, and the instances of unrest do not amount to, in the eyes of most experts, a Tiananmen-style protest that is aimed at the central leadership.

They are probably better understood as unprompted pressure valves to vent and release frustrations within a system that does not provide formal mechanisms for such release. They tend to be reactive rather than political in nature and many believe that a social movement is unlikely to arise from one of them.

However, the confidence many Western commentators have that these protests do not contain the seeds of co-ordinated mutiny is of little comfort to the Chinese leadership, which takes this possibility much more seriously. It is true that there is no ready-made and credible political alternative to the CCP at the moment. The regime, well versed in the art of remaining in power by eliminating alternatives and controlling the apparatus of coercion (rather than enhancing legitimacy and service delivery), has seen to that.

Yet non-political organisations can lend their support to political causes. Organised groups within China such as the Falun Gong, Roman Catholics (as opposed to Chinese Catholics) and independent trade unions are given close attention and are subject to significant persecution and control. The Chinese are well aware that there was the same confidence expressed in the viability of communist regimes before the recent revolutions in the Soviet Union, Czechoslovakia and Romania. For good reason, authoritarian regimes tend to take the possibility of revolution much more seriously.

Moreover, the regime is well aware that popular dissatisfaction with their lives among hundreds of millions of Chinese, official corruption and an inability to procure redress for injustices and frustrations has led to rising unrest and disenchantment with the party. Furthermore, as more economic, administrative and coercive power moves into the hands of local rather than central officials, effective governance by the vanguard of the regime becomes less feasible.

The inability (and political unwillingness) to genuinely target the corruption problem is a prime illustration. The structural flaws and economic difficulties that lie ahead will exacerbate these conditions. How the regime responds is critically important.

This is an edited extract from Will China Fail? by Dr John Lee (Centre for Independent Studies, $24.95). Lee is a visiting fellow at the CIS and managing director of Sydney-based research company L21. A University of NSW law and arts graduate, he completed a masters and doctorate in international relations at University College, Oxford University.