The Road To Prosperity

 CCP would appreciate a lot of this article.  "Good job David Shambaugh !", Hu Jintao said.

Monday, Sep. 28, 2009
By David Shambaugh

Sixty years ago Mao Zedong stood before a sea of people atop Tiananmen
Gate proclaiming, in his high-pitched Hunan dialect, the founding of
the People’s Republic of China and that the "Chinese people have stood
up!" The moment was marked with pride and hope. The communists’ victory
had vanquished the Nationalist regime, withstood the vicious onslaught
of the Japanese invasion and overturned the century of foreign
encroachment on China’s territory. Moreover, Mao and the Chinese
Communist Party (CCP) came to power without significant external
support — theirs was largely a homegrown revolution.

Mao brought a vision for China that has resonated from the 19th century Qing dynasty reformers to this day: to regain China’s fu qiang
(wealth and power), dignity, international respect and territorial
integrity. In this regard, Mao and the CCP positioned themselves
squarely with a deep yearning among Chinese — thus earning their
loyalty and the party’s legitimacy. His successors have not wavered
from this singular vision and mission.
(Read "Where China Goes Next.")

Tragically, Mao’s belief in restoring China’s greatness and
achieving modernity was inextricably intertwined with his ideological
desire to transform China into a socialist and revolutionary society.
Mao’s social engineering continually convulsed China in unrelenting
political campaigns. These movements disrupted productivity and caused
horrific loss of life. Yet, despite the chaos, the People’s Republic
embarked on industrialization and stood up. By many measures, 60 years
on, China has achieved significant progress toward becoming a major and
global power. Mao may recognize it, but he would not be wholly happy
with it.

As the People’s Republic of China commemorates its 60th anniversary,
it seemingly has much to celebrate. China is the world’s most populous
and industrious nation, is the world’s third largest economy and
trading nation, has become a global innovator in science and
technology, and is building a world-class university system. It has an
increasingly modern military and commands diplomatic respect. It is at
peace with its neighbors and all major powers. Its hybrid model of
quasi-state capitalism and semidemocratic authoritarianism — sometimes
dubbed the "Beijing Consensus" — has attracted attention across the
developing world.

This growing soft power of China was strengthened by the 2008
Olympics extravaganza, and the Shanghai Expo next year will similarly
dazzle. The 60th anniversary celebration in Beijing on Oct. 1 will
impress, if not frighten, the world with an arresting display of
military hardware and goose-stepping soldiers. Less visible is the fact
that China is the first major economy to recover from the global
recession and, indeed, is leading the world out of it.
(Read "Mission Accomplished. Now What?")

China is on a roll, particularly when viewed over time. Visiting or
living in China every year over the past three decades, I have had the
personal opportunity to witness dramatic transformations. When I first
went to China in 1979, vestiges of the Cultural Revolution were still
evident: revolutionary slogans painted on walls and pockmarks on
university buildings from bullets and howitzer shells shot by dueling
Red Guards. Camouflaged, but just as evident, were the personal scars
borne by intellectuals and officials whom I met at the time. I heard
stories of beatings and humiliations, confiscations of personal
possessions and loss of living quarters, and forced hard labor.

I then witnessed the dramatic blossoming of personal freedoms and
economic growth in the 1980s, punctuated by periodic countercampaigns
launched by neo-Maoists in the leadership. One could literally feel and
see Chinese society come alive after its long Maoist trauma, only to
have people quickly recoil when the conservatives in the leadership
reasserted themselves. This seesaw pattern persisted throughout the
decade, culminating in the dramatic Tiananmen demonstrations and their
suppression in June 1989.

In the early 1990s, I again experienced China as a society
traumatized, this time by the aftermath of Tiananmen. But by mid-decade
Deng Xiaoping had reignited domestic economic reforms and China had
normalized its place in the world after its post-Tiananmen isolation.
Politics, however, remained frozen and the heavy hand of the state
remained evident. Only during the present decade, in the waning years
of Jiang Zemin’s rule and under Hu Jintao, has the Communist Party
begun to experiment with very limited political reforms. My discussions
with those party officials involved with crafting the "democratic"
reforms makes clear that there are strict boundaries to how far they
will proceed.

Thus, when considering the totality of six decades, the record of
the PRC is decidedly mixed. While its achievements have been momentous,
so are the contrasts and contradictions exposed by those very same
achievements. In many sectors, each reform breeds new problems and
challenges. China has come a long way, but it still has a long way to

See pictures of Remembering Tiananmen Square.

The Cost of Wealth

The question for China’s leaders was never whether to modernize —
but how. During the Maoist era a variety of economic models were
experimented with, each of which achieving some modicum of growth. Yet
all of them left China lagging far behind the West and East Asia. The
costs of some initiatives, like the Great Leap Forward from 1958 to
1960, were catastrophic in human and environmental terms. It was not
until Deng and Chen Yun, another reform-minded Politburo member,
returned to power in 1978 from internal exile that the economic course
was changed.

Three decades later, the world witnesses the extraordinary results.
China is now the world’s third largest economy, after the U.S. and
Japan, and recently surpassed Germany as the largest exporting nation.
Its GNP is on course to overtake Japan’s by 2010 and perhaps that of
the U.S. by 2020.
(Read "Why the China-U.S. Trade Dispute Is Heating Up.")

Much of this dynamic growth has been export-driven, benefiting the
low- and medium-technology sectors of the economy. But China is
beginning to move up the technological ladder and is becoming more
innovative in certain sectors such as electronics and biotechnology.
The country has become a manufacturing superpower and the workshop of
the world, producing two-thirds of all photocopiers, microwaves and
shoes; 60% of cell phones; 55% of DVDs; over half of all digital
cameras; 30% of personal computers; and 75% of children’s toys, plus a
wide variety of other goods.

As a result of its economic boom, China has amassed a staggering $2
trillion in foreign exchange — the largest reserves in the world — and
is beginning to invest significant amounts abroad. Today, 37 Chinese
multinational corporations rank among FORTUNE’s top 500 global
companies, up from just six a decade ago, while 450 out of the FORTUNE
500 American companies have production lines and a business presence in
China. China has become the world’s largest recipient of foreign direct
investment. To fuel its economic boom, China’s voracious and insatiable
appetite for raw materials has led it to absorb large amounts of global
commodities. China now consumes 16% of global energy resources and is
the world’s third largest consumer of oil.
(Read "Can China Save the World’s Economy?")

But the economic explosion has come at a high environmental cost.
China’s air and water are among the most polluted on earth and it is
the leading emitter of greenhouse gases. The environmental nightmare is
hurting public health. Malignant cancer now accounts for 28.5% of
deaths while respiratory diseases account for 13.1%, according to the
2008 China Statistical Yearbook. China’s growth has been dynamic, but it is also double-edged.

Reinventing a Nation

Mao spent his lifetime trying to transform Chinese society in his
utopian, socialist and revolutionary vision. He tried to create a "new
socialist man" and an equitable society. His regime succeeded in
providing the world’s largest population with food to eat, housing and
basic services. Social vices were eliminated, literacy was expanded,
life expectancy increased and infant mortality decreased. These were no
small achievements. But Mao’s efforts to impose socialism had a
deadening effect on urban and rural society alike, as political
movements repeatedly harassed different groups of people.

By the time Deng and his compatriots came to power in 1978, China
was traumatized, tired and alienated by 30 years of Maoist experiments
and totalitarian controls. Deng’s wisdom was to recognize that the
state needed to retreat from society and the economy if the creative
and entrepreneurial spirits of ordinary Chinese were to be unleashed.

Three decades later, Chinese society has fully blossomed. Chinese
today experience a wide variety of personal freedoms in daily life that
they and their ancestors had never known. Chinese state and society
have also reconnected with the past, emphasizing Confucian and Buddhist
values. More than 200 million people have been lifted out of poverty
and the members of a growing middle class with disposable income travel
abroad, invest in the stock market, dine out and decorate their stylish
apartments with furniture purchased from stores like Ikea. Access to
education has become far more widespread. Some 21 million students
attend university today, while an estimated 300,000 study abroad every
year. Approximately 206 million Chinese children attend primary and
secondary schools. Basic literacy is almost universal in China today,
while it was roughly 20% in 1949. Still, China remains a poor country
by global standards: some 207 million people still live below World
Bank poverty levels on less than $1.25 per day.

See pictures of China’s infrastructure boom.

With economic growth have come demographic shifts and life
improvements. Live expectancy has shot up while infant mortality has
plummeted. In 1949 more than 90% of the population lived in rural
areas; given the expansion of urban areas, slightly more than half (721
million) do today, according to official statistics. But China’s
increasing urbanization and spreading industrialization have resulted
in a considerable loss of arable land and forcible evictions, sparking
much resentment against local officials.

Chinese intellectual life has also improved, although over time this
remains one of the real dark spots of Chinese communist rule. For six
decades intellectuals have been persecuted, harassed and forced to
conform and create within various boundaries set by the state. They
continually probe the boundaries — until the state pushes back. Despite
continuing controls, public and private discourse in China has never
been so free. The blogosphere and Internet are alive with unbridled
discussion — unless and until it crosses the state censor’s invisible
(Read "Avoiding Censors, Chinese Authors Go Online.")

While China has made much progress, it still has many blemishes.
Treatment of ethnic minorities — particularly Tibetans and Uighurs — is
the Achilles’ heel of the regime, as violent riots last year and in
recent months have clearly demonstrated. Crime and corruption remain
serious problems, while cities struggle to provide basic services to
the huge "floating population" of 100 million or so migrants. Income
disparities (as measured by the Gini coefficient) are now approaching
the highest in the world. China has again become a stratified society —
just what Mao sought to eliminate. Still, given the unprecedented scale
and nature of China’s socioeconomic change over the past 30 years, the
country’s relative stability is commendable.

Politics Not as Usual

At first glance, China’s political system has not changed much since
1949. It is still a Leninist system, dominated by the CCP and an
oligarchy of its self-selected leaders, which tolerates no opposition.
The Party’s powerful Organization Department oversees all major
appointments in the country, and one must really be a party member to
get ahead professionally. Party and government organs remain
essentially as they were six decades ago, copied from the Soviet Union.

But while much of the structure and essential nature of the system
remains largely the same, the substance and process of politics has
changed quite a lot. The leadership and the 76 million party members
are better educated and their recruitment and promotion is much more
meritocratic. Competence is now rewarded. In the past, there existed
only two exit paths from officialdom: purges and death. Now mandatory
retirement is firmly implemented. Instead of being a totalitarian party
dominated by a single leader, the CCP today is an authoritarian party
with a collective leadership. The leaders themselves — at least those I
have witnessed — are now remarkably self-assured and relatively
sophisticated. Marxist-Leninist ideology plays little, if any, role in
their decision-making. The policy process is more consultative,
although still lacking in transparency. Much emphasis is put on
governance and officials at all levels undergo required training in
public administration.

On the whole, the Communist Party has proven itself to be remarkably
adaptable and open to borrowing elements from different countries and
political systems. As a result it is becoming a hybrid party with
elements of East Asian neo-authoritarianism, Latin American corporatism
and European social democracy all grafted to Confucianist-Leninist
roots. The uprising in Tiananmen and across China in 1989 and the
subsequent collapse of communist systems in Europe and the Soviet Union
were instructive experiences for the CCP. Many lessons were drawn, but
the principal one was to remain flexible and adaptable, not dogmatic
and rigid.
(Read "Beijing Clamps Down After Call for Democracy.")

Will the Party’s adaptability and the nation’s continuing economic
growth be sufficient to sustain it in power indefinitely? Perhaps. The
CCP’s sustenance to date has certainly surprised many leading China
watchers. But, going forward, the major challenge to the Party will
likely be its ability to deliver adequate "public goods" to the
population: health care, education, environmental protection and other
social services. Providing stability and ever increasing personal
wealth will not be enough to guarantee the Party indefinite legitimacy
— it must continuously improve the quality of life of its citizens.
This is China’s new revolution: the revolution of rising expectations.

Taking On the World

Any consideration of China’s transformation since 1949 must
recognize the dramatic improvement in China’s global posture. Sixty
years ago the new People’s Republic was cut off from the world, having
diplomatic recognition only from a relatively small number of nations.
It was excluded from the U.N. It soon became embroiled in the Korean
War and the Cold War, which brought further isolation. Despite some
marginal trade with Western Europe following the 1954 Geneva Conference
on Indochina, China was cut off from international trade, finance and
aid. As a result, its economy stagnated.

See pictures of "China Goes to Africa."

Six decades later, China has fully embraced globalization at home
and has burst onto the world’s stage in a largely positive fashion. It
now has both interests and a presence in parts of the world completely
new to China — such as Latin America and the Middle East — and enjoys
rising international prestige. Beijing has generally managed its
relations well with the major world powers: the U.S., Russia and the
E.U. It has transformed its regional diplomacy in Asia, reasserted a
role in Africa and become much more deeply engaged with international
organizations and across a range of global-governance issues. China
used to eschew multilateralism, distrusting it as some kind of
(Western) conspiracy. While Beijing remains a selective multilateralist
globally — engaging on some issues and not others — the broad trend has
been positive and in the direction of deeper contributions to the world

China is also more proactive on global security issues ("hot spots"
as Chinese analysts like to describe them). When natural disasters now
strike, such as the South and Southeast Asian tsunami in 2004 and the
Pakistan earthquake the following year, China is there to provide
physical and financial assistance. China now has over 2,100
peacekeeping personnel deployed in about a dozen nations worldwide —
more than any other member of the U.N. Security Council. This is one
tangible expression of China’s strong commitment to the U.N. Today,
indeed, the PRC may be the greatest advocate of the U.N. among the
major powers.
(Read "China Takes on the World.")

In the field of arms control, China used to be a serious
proliferator of missiles and missile components, and a significant
seller of conventional arms. But, over time, China has signed or
ratified the Nuclear Non-Proliferation Treaty, the Comprehensive Test
Ban Treaty and the Biological and Conventional Weapons Convention, has
joined the Nuclear Suppliers Group and has essentially adhered to the
Missile Technology Control Regime (although it is not a member). This
is not the China that the world used to know: a "revisionist"
destabilizing power that sought to overturn the international order.
Today, the People’s Republic of China is deeply involved across the
globe and is increasingly an upholder of, and contributor to, the
existing international order. China has been a considerable beneficiary
of the post – Cold War order, which has allowed Beijing to establish a
presence in regions and international institutions that was not
previously possible.

China’s strategic posture is also changing. Its military
modernization program has made giant strides in recent years — and they
will be on display in the massive military parade in central Beijing on
Oct. 1. In many categories China’s military is the best in Asia and in
some sectors is approaching NATO standards. The People’s Liberation
Army still has no global strike capacity, however, other than its
intercontinental ballistic missiles and cyberwarfare capabilities.

Still, many countries worry about China’s rise and global expansion,
even though it has, to date, been outwardly peaceful. Public opinion
polls in Europe and the U.S. regularly reflect a negative image of
China, while concerns over economic competition and job losses are
growing in Europe, Africa and Latin America. Substantial strains remain
in Beijing’s ties with three of China’s most important neighbors:
Australia, India and Japan. Even relations with Russia, which have
achieved historic highs since the collapse of the Soviet Union, have
run into obstacles. This is unsurprising. As Beijing expands its
influence and begins to flex its new muscle on the world stage, it’s to
be expected that China will engender occasional discord with other
(Read "The China-India Rivalry: Watching the Border.")

Future Shock?

Some historians of China think they see the telltale signs of
dynastic decline: government corruption, social discontent (especially
in the countryside), autocratic rulers and a militarizing state. Some
contemporary China experts also voice their doubts — proclaiming the
regime fragile and the political system ossified — while economists
question how long the dynamic growth can continue.

While the system and country have weaknesses and challenges, the
Sinological landscape is littered with its naysayers and critics. The
People’s Republic of China has endured for six decades and has overcome
a wide variety of serious domestic crises, border wars and
international isolation. Its strengths and adaptability have repeatedly
been underestimated by outside observers. One thing is certain: China
will remain a country of complexity and contradictions — which will
keep China watchers and Chinese alike guessing about its future

Shambaugh is professor and director of the China Policy Program at
George Washington University in Washington, D.C., nonresident senior
fellow at the Brookings Institution, and currently a visiting scholar
at the China Academy of Social Sciences in Beijing. His latest book is
China’s Communist Party: Atrophy and Adaptation

See pictures of China on the wild side.

Find this article at:,9171,1924366,00.html

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