Is the ‘China Model’ Failing?

The Atlantic’s Max Fisher asks whether the implicit pact between Party and people in China is unravelling

China’s unspoken promise to its citizens — stay in line, and we’ll maintain economic growth — has long convinced many people in and outside of China that it would guarantee regime stability. The Chinese people will be happy (or at least not so unhappy as to rise up), the reasoning goes, so long as the economy is strong. Watching China’s economy buoy as our own sank, some U.S. columnists have even expressed envy for the Chinese model, though such opinions represent only a minority. The mainstream U.S. view seems to be this: China’s model might not be very moral or ethical, but it works, and the country’s rise will inevitably continue, with an autocratic but wealthy China playing a large (and possibly dominant) role on the world stage.

This may very well be the world’s future, with China, and perhaps other state-run societies, becoming an undeniably definitive feature of the global system. But few of the theories predicting the Chinese model’s successful endurance anticipated the protests currently racking China’s outer provinces — and even some inner provinces. It began long before the Arab Spring; in the large, Northwestern province of Xinjiang, where the mostly Muslim, ethnic Uighur population rose up against a government that had long oppressed it. The protests were violently suppressed, but have rekindled several times, including recently ….

Last week, riots broke out in Guangdong province, the country’s most populous as well as its industrial base. Coastal, ethnic Han, and economically essential, Guangdong province matters for China. In the violence end ensuing crackdown, protesters burned out cars, ransacked shops, and rained bricks on police. CNN’s Eunice Yoon, arriving here not long after the protesters, wrote, “for the first time since I started reporting in China years ago, workers approached us unfazed by our cameras. They were unafraid to vent their grievances to foreign TV journalists even as the police looked on.” Police soon commanded her to leave.

Forbes Asia editor Tim Ferguson, meanwhile, argues that serious imbalances are “choking” China’s economy and brewing social instability.

Many fortunes rest on the Chinese being able to maintain the Magic 8, the 8% GDP growth rate widely thought to be the baseline for ongoing prosperity there. This is a tall order as the central government endeavors to tamp down price inflation and runaway real estate markets in major cities.

Global economists have spent much ink and airtime in recent years decrying the world’s “imbalances,” by which they primarily mean the U.S.’ (borrow too much, save too little) and a few other developed nations’. A corollary is that China has abetted this indulgence by buying up America’s bonds with its massive savings— leashing the yuan to help exports. Trade flows, as a result, get out of whack.

None of that has changed—in fact, some late evidence is that China is again mopping up Treasury notes—but what’s coming into clearer focus is that the Chinese have their own internal imbalances that are no less difficult to correct ….

This unsettled situation, not unique to China but coming on top of years of arrogance and corruption by insiders of the Communist system, is playing out in various Chinese street dramas. These mini-uprisings, in turn, keep the nation’s rulers on edge as they look to a reshuffling of their own ranks next year at the 18th party congress. Their reflex is to control when, economically, they ought to let go in order for fundamental change to occur.

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