Foreign and Defense Policy, China

Experts discuss China’s growth in the 25 years following Tiananmen Square and beyond

Image Credit: shutterstock

Image Credit: shutterstock

In the 25 years since Tiananmen, China has continued to grow and prosper in a number of areas. But in the persistent absence of many basic human rights, is this growth sustainable?

 

Arthur Brooks: President of AEI, author of The Road to Freedom: How to Win the Fight for Free Enterprise” (2012), former professor at Syracuse University

We often talk as though economic growth itself were our ultimate goal. But in truth, prosperity is merely a means to a more important end—the ability of every man and woman to define and pursue happiness. Economics plays a vital role, but material circumstances are only one piece of wellbeing. Just as important, if not more important, is the liberty to chart one’s own course. A hunger for personal freedom is written on every human heart.

So whether or not China’s human rights violations undermine its GDP, they are tragic in and of themselves. That a billion Chinese people today have economic opportunities unthinkable a generation ago is an incredible blessing. But without an equal expansion of individual liberty, that miracle will remain profoundly incomplete.

 

Nicholas Eberstadt: Henry Wendt Chair in Political Economy at AEI, a senior adviser to the National Bureau of Asian Research, a member of the visiting committee at the Harvard School of Public Health, and a member of the Global Leadership Council at the World Economic Forum

China’s modern economic development since the death of Mao is the most remarkable episode of sustained long-term growth in all of recorded history. Period.

No economy has ever grown as fast for as long as China’s has since the December 1978 CCP Plenum that kicked off Deng Xiaoping’s “reforms”. (We can still say this even given some of the nontrivial uncertainties in China’s national accounts data.)

While Chinese growth has been breathtaking during most (for many readers, all) of our lifetimes, we must also appreciate the significant measure of “catch-up growth” that China has enjoyed since the death of Mao Zedong and the curtailing of his catastrophic policies and practices. On the eve of China’s still-continuing growth explosion, the country was perhaps the world’s most conspicuous economic under-performer.

This is no longer the case. Nowadays China is obviously no longer punching below its weight. Instead it is a middle-income (aka Third World) economy, producing more or less ordinary middle income results on the basis of a more or less ordinary middle income human resources profile.

In our era, over 80% of global differences in per capita GDP, both between countries and within countries over time, can be explained by just four factors: 1) health, 2) education, 3) urbanization (one way of tracking social complexity), and 4) “business climate”.

China’s productivity today is just about exactly what we’d predict for any country with its (slightly above world average) health and education levels and its (slightly below global average) urbanization ratios and “economic freedom” ratings.

This can only mean that the epoch of heroic economic growth in China is coming toward a close.

From here on out, productivity improvements will be earned the way they are all around the rest of the world: through measurable augmentation of human resources, gains in social complexity, and improvements in institutions and policies.

China may well manage to outperform the world economy for some time to come. But the holiday from economic history is over.

Sustaining 3% or 4% per capita growth over the decades ahead should be regarded as a very creditable accomplishment indeed–if indeed such an accomplishment can actually be achieved.

 

Pei Minxin: Director of the Keck Center for International and Strategic Studies at Claremont McKenna College, and a former senior associate with the Asia Program at the Carnegie Endowment for International Peace

The Communist Party today faces two fatal threats: economic slowdown and endemic corruption. China’s economic slowdown is irreversible. In addition to the loss of growth drivers (cheap labor, exports, and investment), the law of “reversion to the mean” (all countries with high rates of growth will see their growth fall to the average rates) dictates that China’s growth will likely fall to 4-5% per year in the coming decade. Once growth falters, the Communist Party’s rule will be increasingly vulnerable as its performance-based legitimacy erodes.

Corruption inside the party-state will also delegitimize the party and cause bitter division within the regime. Popular discontent over corruption is already very high. The revelations of looting by very senior leaders inside the party, such as Zhou Yongkang and his family members, will probably further convince the public that the party is rotten from within. The current leadership, if it continues to wage its war on corruption with the same intensity, can run another risk. Because of the extent of the corruption inside the party-state, continuing the anti-corruption drive will create dangerous fissures among the ruling elites. A large number of officials will feel insecure and perhaps band together to fight back. Such a situation will imperil the party’s unity – but could create a rare opportunity for a regime transition.

 

Dan Blumenthal: Resident fellow and director of Asian Studies at the American Enterprise Institute, former commissioner on the US-China Economic and Security Review Commission, former senior director for China, Taiwan, and Mongolia at the Department of Defense

The bad news is that intensified competition is beginning to define the Sino-American relationship.  China has translated wealth into power and power into ambition. Meanwhile, the United States has identified the Asia Pacific as critical to the future of its security and prosperity and is pushing back. The struggle for military and geopolitical advantage is thus becoming more dangerous.  The good news is that competition need not lead to conflict.

The 25th anniversary of the hope and then tragedy at Tiananmen Square is an opportunity to reflect upon a key source of the Sino-US competition: China’s oppressive, authoritarian political system. Although it is possible for the two governments to maintain a stable relationship, even that is a difficult task. Why? Because the United States will neither trust nor form a true friendship with a government that abuses the rights of its citizens.

Washington knows that a government that does not respect the law at home will not respect the rules abroad; a country that jails its Nobel Peace Prize winner disdains the values of the democratic world; and, a country that feeds its people a steady diet of propaganda and lies will not be honest about its strategic intentions.

The solution lies within China itself. The Chinese people may arrest the dangerous competition. They suffer most from the corruption and deceitfulness of their government. So many Chinese are working for change, for greater truth and justice, for better lives for the children, and for the protection of their basic rights. If they succeed in their valiant and courageous efforts, China and the United States will almost surely avoid conflict. Indeed, the future may bring a great friendship.

 

Derek Scissors: Resident scholar at AEI, adjunct professor at George Washington University, and former economist for Intelligence Research Ltd. In London

China can be a middle-income country without granting basic economic freedoms. It cannot be a wealthy country.

In wealthy countries, people easily move to where they want to work. This allows jobs and workers to be matched, which is necessary for high labor productivity. China says it is moving toward open labor markets over the next decade but is nowhere close at present and its labor market liberalization plan has flaws. Not coincidentally, the productivity of Chinese workers remains far below those in rich countries.

There are no rich countries where all farmland is collectively owned. Clear private ownership of land greatly increases agricultural efficiency, turning the most backward sector in poor countries into an advanced sector in rich countries. Chinese reform began with property rights in agriculture. But the Chinese Communist Party was founded on collective land ownership and little progress has been made in the past 25 years.

Sound protection of intellectual property is necessary to innovate and fully benefit from others’ innovation. Moreover, China’s aging workers, polluted land, and high debt means innovation is increasingly important, as the Party recognizes. At present, though, Chinese innovators know anything they create is at high risk of being stolen. Not all wealthy countries are innovative but all protect IP better than China does.

Most important, countries don’t become wealthy unless they allow competition. China allows competition, but only subject to the whim of the Party. Individuals and firms can compete economically until such time as the Party forbids it. The rule of law is much-discussed; the single most important economic element is that competition can be subverted by decree. So Party members get rich but the country doesn’t.

If China is to become rich, ordinary people must be able to work where they want, to own their land, to protect their inventions and, above all, to be able to compete freely.

Also watch Dan Blumenthal’s video on the 25th anniversary of Tiananmen:

In case you missed our event: “25 years after Tiananmen: A discussion with Chen Guangcheng.” In his only public event to mark the anniversary, prominent activist Chen Guangcheng discussed the human rights situation in China, the evolution of free society, and what can be done to enhance public understanding of the moral foundation of free societies. 

Follow AEIdeas on Twitter at @AEIdeas.

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