The People's Republic of China: A Regime in Crisis

By Arthur Waldron | July 7, 2008 | 8:07 PM EDT

When the Chinese government abetted the stoning of the U.S. embassy in Beijing last month, it exposed the folly of treating China as a strategic partner and a responsible international power. It may also have signaled a need to divert attention from increasingly severe economic and political problems.

First there were anti-Chinese demonstrations in Suharto's Indonesia; now there are anti-American demonstrations in Jiang Zemin's China. Signs of government weakness in both countries, the disorders were orchestrated by the regimes. In Indonesia, of course, they ended unhappily for Suharto: That country has now embarked on the treacherous but long overdue business of democratization, to general praise from foreign capitals, including Washington. But where will the ugly anti-American demonstrations in Beijing lead, and what will Washington say?

Those demonstrations and the Chinese government's role in facilitating them have called into question the picture of China that the Clinton administration has been trying so hard to sell: a "strategic partner," a fundamentally stable and increasingly open regime, misunderstood and maligned by some, but more and more a responsible player internationally, while at home a regime doing not such a bad job, considering all the problems it faces, even if Americans don't always like the means.

Now we must ask what kind of a regime it is that crushes dissent ruthlessly most of the time but unleashes the rent-a-mob against foreign embassies when that suits its purposes.

To begin with, such a regime is simply too unpredictable to be anybody's long-term partner, and is probably weak to boot. It may well be heading for a crisis, and if so, thoughts of working closely with it or even "engaging" it about disagreements should probably be set aside in favor of planning against possibly worse trouble to come. In Asia, that means ensuring above all that our ties with Japan and other key democratic states in the region are strong enough to weather any possible disorder.

Until recently, this has not been the White House policy. Instead, Washington has staked more and more on its relationship with China, making a steady stream of concessions, while lecturing Japan on how to reform, aiding North Korea, deflecting legitimate Philippine concerns about Chinese territorial encroachment, waffling on missile defense, and turning a blind eye to threats against Taiwan-hoping against hope that its wished-for China, secure, prosperous, and strong, would eventually emerge.

A Dangerous Fantasy

The stoning of the American embassy has exposed that approach for the dangerous fantasy it is, for no possible interpretation of recent events squares with the administration's imagined China.

Obviously, the same Chinese rulers President Clinton has been steadily wooing have encouraged the demonstrations. How else to account for the buses carrying protesters, the printed placards they have carried, the strange inactivity of the police? And if besieging the ambassador and his staff and breaking all the windows in the embassy are the considered policy of the Chinese government, then we face a real problem.

But suppose, as many observers suggest, that the protests are being used by some in the Chinese government to get back at others; suppose that, like the partly managed, partly spontaneous violence of the Cultural Revolution, these mobs have domestic targets-say, the advocates of political and economic reform, the advocates of an open policy, even Zhu Rongji himself. That, too, would mean trouble for the United States, with its policy founded on the expectation that the reformers will stay in control.

Add to this the observation that Beijing fears unrest in the streets like that of 1989 and may therefore be attempting to defuse and channel the free-floating anger widespread in Chinese society, and one must see the demonstrations across China-like those in Indonesia a year ago-as signals that the regime is threatened. While this diagnosis may not accord with the views of official Washington, it does fit developments throughout Chinese society.

The Asian Crisis Comes to China

Start with the economy, on the success of which Beijing has staked its legitimacy. The East Asian economic crisis, which some claimed China had avoided, seems now only to have been deferred. And remember that Suharto was in the end a victim of that crisis.

For much of the rest of Asia, bankruptcies, devaluations, and bank failures are slowly receding into the past, but in China they are breaking news. Economic growth has been slowing, despite massive public works and other government spending, and foreign investment has been falling.

The scale of the problem is only now starting to become clear. During the years of easy money and rapid growth, investments in China were evaluated even less strictly than elsewhere in Asia, with cronyism, bribery, and political influence steering vast flows into ill-considered real estate ventures and other losing projects. At the same time, the antiquated state-owned heavy industrial enterprises that still employ much of the urban workforce were not shut down (as in Russia and Eastern Europe) but kept on life support with forced loans, which in turn have rendered China's banking system insolvent. All this would have been extremely difficult to fix had reform begun in earnest a decade ago. But the pervasive corruption of China's political system prevented reform, guaranteeing that when the attempt to change is made, it will bring at least as much distrust and anger as it does progress.

The problem of China's entry into the World Trade Organization (WTO) captures the dilemma Beijing faces. Remaining outside the international organization would stunt China's growth and condemn it to marginality. Yet a genuine freeing of the economy is also perilous, at least in the short term. Washington has praised Beijing for not devaluing the renminbi, but can a fixed exchange rate survive an open regime? China's rulers insist that the state-owned enterprises will be reformed so as to compete in world markets like multinational corporations, but who can believe that? The WTO would bankrupt many of them and throw millions out of work.

Political Unrest: Present and Past

Add to this political problems. The aspirations expressed at Tiananmen in 1989 have never been crushed, despite the continuing arrests and detentions of dissidents, crackdowns on the media, screenings of Korean War films, and other expedients. Demonstrations large and small are now a regular feature of Chinese life, numbering in the thousands every year. A Chinese Democratic party has been founded, although the government refuses to recognize it; religions, kinship societies, labor unions, smuggling rings, and messianic cults all exist under the surface of society as well. Not only the Chinese economy, but also the Chinese population, poses an increasing problem to the regime, an old-style Leninist organization that has dismantled most of its institutional props. What is the answer?

When Japan was challenged by Commodore Perry's black ships in 1853, the reaction in fairly short order was not only a change of administration, but also a transformation of governmental structure-the Meiji restoration-so that, by the end of the 19th century, the institutions of Japan's constitutional monarchy differed little from those of contemporary European states like Imperial Germany. When Japan then defeated China in war, it looked as if Beijing might follow the same path. But the attempt similarly to reconstruct China that began during the "hundred days reform" of 1898 miscarried. The empress dowager carried out a coup d'\'e9tat, initiating the pattern that has followed ever since. Though repeatedly challenged, militarily in the past and economically in the present, and despite regular talk of democratization, China has never actually modernized its political structures. Indeed, a Ming courtier brought back to life would quickly find his bearings in contemporary Beijing (but be baffled by Tokyo or Taipei).

Not only that, the lurch backwards has regularly been accompanied by mass protest, spontaneous or otherwise. The classic example is the empress dowager's patronage of the antiforeign "boxers," whose popularity in her closed China has a parallel in the craze for the mystical martial art qi gong today. The point is not that the Chinese are particularly credulous; they are not. It is that when other avenues are closed off, dissatisfaction nevertheless finds a means of expression.

Once the dynastic-style Chinese system begins to come apart, moreover, it is extremely difficult to reconstruct. China for the first fifty years of this century was roiled by a struggle over political authority, never far from the surface and regularly exploding in civil wars. Starting as coups-relatively self-contained struggles within the elite-these internal conflicts expanded until, by the late 1940s, the fight between the Nationalists and Communists engulfed the country. The Communist victory, however, solved nothing. While Mao lived, the problems of economic and democratic transformation were frozen by his personal authority. But with twenty years now of thaw, they are coming to life again, and as the demonstrations this year and of a decade ago make clear, they once again involve the population. Even if the Chinese ruling group were unanimous in its interests and views, which most clearly it is not, it could not hold back the tide.

The Prospects for Reform

Will things work out better this time? Reasons for optimism are not hard to find. China is ready for democratization. Its people are mostly homogeneous ethnically, educational levels are higher than ever before, incomes are rising, and famine no longer threatens. The programs the dissidents advocate are by and large both realistic and responsible. So a political transition in China along the lines of what has been seen in places like Spain and Poland and Taiwan and Korea would probably succeed, eventually leading to a government not unlike India's, though perhaps less fragmented.

Such a government would have a popular mandate to confront China's besetting economic problems, something the current regime lacks. Democratic political reform, in other words, might initiate a virtuous circle that would lead to economic reforms as well, and a general rise in welfare. But if the palpable popular anger vented in the Beijing demonstrations underlines the pressing need for such reforms, the government's role in the protests suggests reforms will not be forthcoming. That will mean, unfortunately, growing political chaos.

The Chinese word for such chaos, luan, is regularly used by the regime to describe the peaceful mass democracy movement of ten years ago. The Tiananmen Square demonstrations, however, could have been ended peacefully had the government been willing to make a political breakthrough. (In fact, the government of Zhao Ziyang wanted to do just that, but was replaced, at the order of Deng Xiaoping, by the current administration of Jiang Zemin.) Had that breakthrough taken place, China today would be close to achieving what Japan managed a century ago: genuine political modernization.

But China may resemble Indonesia first. Beijing's recent atavistic turn toward street violence-real luan-suggests that the story will have a tragic ending. Chinese governments have regularly beaten the antiforeign drum, with catastrophic results for themselves and sometimes their neighbors as well. If this is happening once again, then Washington can forget about engagement and t he happy scenarios that accompany it: The task will be to work with our democratic allies to keep the peace and weather any storm, while hoping that the Chinese, like the Indonesians, will finally embrace genuine political change.

Arthur Waldron is director of Asian studies at the American Enterprise Institute.