Nitin Desai: How will China change?

The Chinese political system has to change and how it does so will affect all of us.

The political evolution of China is perhaps the most important source of uncertainty for the world economy and for international relations. The prospects for the world economy rest on how the strange relationship between the US deficit and the continued willingness and ability of China (and for that matter Japan and Taiwan) to accumulate dollars will play out. Besides that, China is the growth engine of the world economy today. It accounts for nearly 30 per cent of global GDP growth and about 10 per cent of world trade. Its low-cost manufactures have helped to keep down prices and contain inflationary pressures in the US. All this depends on a political system in China that is able to maintain a low-wage, high-investment and high-growth economic environment and avoid any serious disruption in its relationship with the US and its allies in East Asia. How long will this political stability last?

The Red Revolution in China was based on a coalition of liberal, nationalist and communist forces and this led to a continuing ideological struggle between left ideologues and pragmatists. The first thirty years or so were a ding-dong battle between these two groups with Mao Zedong leading the ideologues and Zhou Enlai being the protector of the pragmatists. The Great Leap Forward in 1958 was the left swing and, when it failed to deliver, the pragmatists struck back. But by 1966 the left was in the ascendant when the Cultural Revolution led to huge upheavals. The ding-dong continued with a swing back to the right after the death of Lin Biao, Mao's principal lieutenant, in 1971. Deng, who had been marginalised during the Cultural Revolution, made his second appearance on the policy stage in 1973 with the help of Zhou, but was purged again when the ideologues came back with the Gang of Four. The confused situation continued until after 1976, when both Mao and Zhou died. This is when Deng consolidates his position and the period after 1979 is essentially the Deng era.

In ideological terms the Chinese regime is more coherent now. The transition from Jiang Zemin to Hu Jintao took place without any policy disruption. The Great March generation is long gone and the next generation which grew up in the midst of the ideological battles has also retired. A new post-sixties generation has taken charge. Many of them come from a civilian background in development management. Hu Jintao, the current leader, and Prime Minister Wen Jiabao are engineers by training and have worked in the public sector before coming up in politics. Their pragmatism in economic matters and hard-line authoritarianism in political matters do not face any serious ideological challenge within the central Party leadership.

The basis for the moderating trend in domestic economic policy and foreign policy is the reaction to the Cultural Revolution by a generation of leaders who experienced its disruptive force at first hand, the changing leadership profile, with the shift from political military generalists to techno-bureaucrats, the need for stability to promote economic development and military strength, and to protect the political system in the face of collapsing communist regimes in the former Soviet Union and Eastern Europe.

But conflict within the leadership has not disappeared completely. In the present moderating phase of Chinese politics, the axis of conflict is a little different. It is between the political liberalisers, like Zhao Ziyang, who fell after the suppression of dissent that manifested itself most visibly in Tiananmen Square in 1989, and those who want to preserve the authoritarian political system like Jiang Zemin and his successor Hu Jintao. Though much has been done to mitigate the arbitrariness of the Mao era, the Party in China remains a monolith run tightly by the central leadership with a great deal of authority resting with the one leader who sits at the head of the Party, the Armed Forces and the Government.

The challenge to the political system will come from outside the central Party. Rapid economic growth has perhaps won the allegiance of significant parts of the non-Party elite, particularly in business and the professions. But the liberal intelligentsia remains alienated with some of the key figures living in exile. The spread of communications and the Internet allows their ideas to spread amongst students, always the most volatile of all social groups, and the media. These political liberalisers could find a champion, a latter-day Zhao Ziyang, within the party, and use the forthcoming 2008 Olympics or the 2010 Shanghai Expo to challenge the regime at a time when it is exposed to global scrutiny.

China's problem is that its Party-State political structure has not found a way of socialising and accommodating dissent or an expression of regional or ethnic identity within the political process. This is one big difference vis-à-vis India. Take for instance the Falun Gong, which continues to trouble the Chinese authorities. In India, by now, they would have formed a political party and become part of a ruling coalition!

Another source of challenge could be from disaffected provincial party leaders and military commanders who wield considerable power in China. The base for their "revolt" against the central leadership could be many millions of public sector workers who are losing out because of unemployment and stagnant wages and the town and village enterprises that are being hurt by the opening up of the economy. The growing lumpen elements in urban areas may further add a volatile element to this base. But this threat, unlike the liberal protests, will be from the left and seek to capitalise on the Mao inheritance.

A monolithic Party cannot run an open economy with a rapidly growing middle-class, a large country with substantial inter-regional differences, a society with differentiated religious or ethnic identities. The challenge will come from the intelligentsia, from disaffected provinces and from marginalised or persecuted minorities. When the challenge comes, China could evolve into a liberal multi-party democracy or swing back to a stronger Maoist agenda. Yet another possibility is a strong nationalist agenda provoked by some foreign policy misadventure. Whichever way it goes, the change will come, sooner than we think, in years rather than in decades, and when it comes the disruptive transition could last a while.