By C. H. Kwan
Voice, July 2000
This article was published in Voice in Japanese, as the lead article in a special section on "Will the 21st Century be an Asian Century?"
The 21st century will not be an Asian Century unless China succeeds in its modernization drive. In turn, China needs to adopt a market economy based on private property, replace its one-party dictatorship with a democratic system, and cooperate with the international community (Japan and the United States, in particular). Should China become a rich country where the rights of its citizens are properly protected, unification will become an attractive option for Taiwan.
Among the structural problems facing the Chinese economy, stagnation of the state-owned sector is particularly serious. Low efficiency is a common problem of state-owned enterprises everywhere, and in China the poor performance of state-owned enterprises has contrasted sharply with the dynamism in the newly emerging private sector. Realizing this simple fact, the government has gradually broadened its interpretation of "socialist public ownership." Currently, it still insists to own over 50 percent of the equity shares of large enterprises, but at the same time it also allows small- and medium-sized enterprises to go private under the policy of "grasping the big ones and letting the small ones free." In the end, China has no choice but to privatize the large enterprises as well, which would amount to abandoning public ownership completely. The Communist Party may then lose its legitimacy to rule and find it difficult to maintain the status quo of a one-party dictatorship. In terms of Marxian dialectics, China's success in its transition to a market economy, and thus economic development, hinges crucially on how the growing contradiction between the economic base and the superstructure can be resolved.
Until now, although China has maintained a one-party dictatorship, it has been steadily giving up the traditional socialist economic system based on economic planning and public ownership of the means of production. Thanks to this policy change, China has achieved a growth rate of almost 10% a year since the shift to economic reform and door opening in the late 1970s. The demand for democracy has been increasing along with incomes, however, while the reputation of the Communist Party has been badly hurt by widespread corruption among government officials and a rising crime rate. The "policy mix" of economic liberalization and political dictatorship has reached its limit; the Communist Party needs to reform itself or it will face grave consequences.
In retrospect, the 20th century was a drama featuring the rivalry between capitalism and communism, which ended with the total defeat of communism, as symbolized by the collapse of the Soviet Union. Even in China where the Communist Party has managed to survive into the 21st century, few people even within the Party truly believe in communism. For the Chinese leadership, communism is still a means to stay in power, but for the Chinese people, it is neither a means nor an end. The task from now on is not to build a communist utopia but to abandon the one-party system and shift to a democratic one. While the idea of "peaceful evolution," whereby democratization leads to the demise of the communist regime and the transition to a capitalist system, scares the Chinese Communist Party, it is probably the best scenario if China is to avoid the kind of turmoil that accompanied the collapse of the Soviet Union.
Although democratization in China is still suffering the aftermath of the 1989 Tiananmen incident, it would be too pessimistic to think that democracy can never take root in China. There are already many cases in which economic development has paved the way for democracy, as in Korea and Taiwan since the mid-1980s. Taiwan held its first direct presidential election in 1996, giving rise to a government based on public support. In March 2000, Chen Shui-bian of the Democratic Progressive Party won the second direct presidential election, and a peaceful transition of power from the ruling Nationalist Party (Kuomintang) to the opposition party took place for the first time. Taiwan's experience shows that when the time is ripe the realization of democracy is possible in a Chinese society. If China continues its rapid pace of economic growth, the time will soon come when the role of the Communist Party will be over.
In addition to pursuing economic and political reforms, China needs to maintain a stable international environment in order to achieve modernization. The most cost-effective way to do so is to allow the United States and Japan to play larger roles in regional security and economic matters respectively. At the risk of over-simplification, China should act as a free rider to take advantage of the public goods of a stable international environment provided by the United States and Japan. Unfortunately, judging by this criterion, China's diplomacy has been a total failure.
China's handling of relations with Japan provides typical examples. First, President Jiang Zemin angered most Japanese by repeatedly emphasizing the historical issue when he visited Japan in November 1998. Sino-Japanese relations have stayed in the doldrums, despite the late Prime Minster Obuchi's subsequent visit to China, and Japanese investment in China has continued to fall. No doubt China suffered immense losses during the Japanese invasion, but continuing to accuse others prevents China from learning from its own failures. More than fifty years have passed since the end of the Second World War, and it is the time for the two countries to shift from a backward-looking to a forward-looking way of thinking. In this respect, the recent improvement in relations between Japan and South Korea provides a good example for China to follow. Second, China declined Japan's offer to participate as an observer in the G-8 Okinawa Summit to be held in July this year, probably for the simple reasons that it was a Japanese initiative and that China would prefer to participate as a full member. As a result, China missed a golden opportunity to repair its relations with Japan and to strengthen its ties with leading industrial nations. Finally, for the sake of regional stability, China should have supported instead of rejected Japan's proposal to set up an Asian Monetary Fund shortly after the onset of the Asian crisis in the summer of 1997.
Likewise, the prevailing hostility between China and the United States does not favor China's modernization. The diplomatic rhetoric of a strategic partnership between the two countries offers no assurances, as bilateral relations have been plagued by conflicts over a wide range of issues, including trade, human rights, and cross-strait relations. Following the collapse of the Soviet Union, the tendency for the United States to target China, the only remaining communist giant, as a hypothetical enemy has become more and more apparent. Indeed, the United States has continued to embargo the export of many high-tech products to China, while at the same time at best only passively supported China's entry into the World Trade Organization (WTO). In order not to give the United States an excuse to pursue a policy of containment, China should speed up its economic and political reforms and change as soon as possible the name of the Communist Party, which has become incompatible with China's new reality.
Finally, unification with Taiwan should come as a natural consequence of China's success in achieving modernization, rather than stand as a goal of its own to be pursued hastily even at the expense of economic development. While China has kept warning Taiwan not to seek independence under any circumstances, China should realize that conquering Taiwan by force is not a viable option. In the first place, given the current military balance, it is doubtful whether China has the upper hand. Furthermore, the possibility of military intervention by the United States cannot be ruled out. Even if China won, it would likely face economic sanctions imposed by the industrial powers and their adverse consequences for the Chinese economy. A Taiwan conquered by force would prove to be a burden rather than an asset to China, as its economy would stagnate amidst massive brain drain and capital flight.
Peaceful unification between China and Taiwan requires convergence in both the level of economic development and the political system, and it will therefore be a long-term process. Although most Taiwanese people acknowledge their Chinese identity, they would oppose unification if it implies a sharp fall in their standard of living. Furthermore, they do not trust the Communist Party and would certainly like to keep the fruits of democratization that they have achieved so far. Should China succeed in its modernization drive, however, people in Taiwan will become proud of being Chinese and the time will then be ripe for unification.
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Citation: C. H. Kwan. "The Role of the Chinese Communist Party Coming to an End," Voice, July 2000.
Original URL: http://www.brookings.edu/dybdocroot/views/articles/fellows/200007kwan.htm
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