James R. Speights
Political Science 101
Dr. Emerson
April 16, 2020
Global Markets, Constitutional Reform and Democracy in China
Introduction:
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Over the last twenty years, China has experienced an extraordinary transition from an agricultural-based economy to a thriving industrialized market. This shift in economic policy led to an exponential growth in
China’s GDP and an improvement in the standard of living throughout the country. Since its political and economic reforms of the 1970’s,
China’s economic triumphs have been one of the most rapidly emergent in world history; China’s economy has become the fourth largest in the world (Background Note:
China, 2010). China has become an economic superpower in a little over twenty years, with a 4.2 trillion dollar GDP, and an annual average economic growth rate of 9.5%.
Using World Bank benchmarks, China’s poverty rate has decreased from 64% in 1978 to 10% in 2004. The dramatic evolution in China’s economy has continued to develop despite worldwide recessions and without extended periods of high inflation, which are customary in rapidly developing countries.
China’s deliberate political decision to liberalize its state-controlled Marxist principles in economic institutions was an important catalyst and is the dominant theory for its rapid growth and dramatic poverty reduction. Still, the income gap between rich and poor has continued to grow, as has the evidence of corruption and crony capitalism within state and privately owned firms (Park, 2006). Additionally, the disparity in prosperity between

Speights - 2 urban and rural provinces may be distorting actual poverty statistics. Approximately
60% of China’s population lives in rural areas, and while urban businesses have created a wealth of employment opportunities for those who live in urban centers, many farmers in rural provinces have not seen a rise in opportunities or income (Pei, 2002). There is evidence that China’s urban centers have strongly benefited, while leaving the rural farming sector behind.
China continues to maintain an authoritarian regime while advancing open-market principles. This has raised the question of whether this political and economic structure will continue to increase the gap between rich and poor, and whether that disparity will ultimately lead to a country that is politically illegitimate in the eyes of its citizens. There is also a significant debate over whether authoritarian regimes can sustain economic growth without simultaneously liberalizing their political regimes; some scholars argue that liberal market capitalism necessitates a democratic, or at least a constitutional, form of government. This paper investigates whether China can sustain an efficient, liberal, economy while possessing authoritarian centralized political institutions.
Contradiction in Governance
China initiated policies of market liberalization in the late 1970’s that were completely antithetical to its traditional political and economic ideologies. Its emphasis on the communist principle of “class struggle” co-existing with the capitalistic view of “growth rates” would appear to be a direct contradiction in terms (Pei, 2002). While there is no doubt that China has succeeded in growing its economy, its failure to redistribute resources throughout the country has resulted in a significant gap between rich and

Speights - 3 poor, even while its overall poverty rate has significantly decreased. Recognizing the presence of social inequities, Hu Jintao-Wen JiaBao, the current Premier of the State
Council of the People’s Republic of China, declared that his government’s chief objective was to emphasize improved public administration with an eye towards a
“harmonious society” (Chen W. , 2007). Yet, Hu also announced that his government was not interested in wholesale political reforms, but rather, an improvement in the efficiency in the current administrative public policies. There is concern that a return to prioritizing social equity without across-the-board political reform will weaken China’s ability to effectively distribute resources equitably (Saich, 2006). So, e ven with China’s acceptance that social inequity is on the rise, it is not clear that China ’s edict to address social equity is workable under the current political structure. It has been argued that
China’s leadership will not sacrifice its economic growth to more effectively redistribute wealth to the poorer classes of society (Chen S. , 2002). Although the survival of
China’s regime rests on its ability to effectively deal with its social inequities while maintaining its economic commitments, accomplishing this task appears more complex than simply suggesting “political reform.”
Because political institutions are created and rooted in the culture of any state, the question of political reform has many meanings depending on the makeup of a state’s existing institutions. In China’s case, there is no guarantee that democratic reforms, as have been suggested by scholars, would be effectiv e given China’s culture, political history and current position in the global marketplace. First, China may be unwilling or unable to shed strongly embedded Confucian concepts that are intertwined with its political institutions, in favor of democratic principles (Chen W. , 2007). Even if social

Speights - 4 reforms are necessary to ensure, or at least make possible, Premier
Hu’s goal of restoring a more equitable distribution of resources, it is disputable that the democratization of China’s institutions will guarantee that objective.
Democratization or Utilitarianism?
Some of China’s traditional authoritarian norms of control have been relaxed since the economic reforms of the 1970’s. Today, Chinese citizens are targeted for repression only if they openly criticize or challenge the authority of the government. As the entrepreneurial opportunities have increased in China’s economy, democratic social groups and intellectual elites —who once stood in Tiananmen Square protesting the government —are now firmly entrenched in China’s political economy and hold positions of power in government.
China’s technocratic bureaucracy is now made up of the very people who once posed the greatest threat to China’s legitimacy (Guo, 2007). The connections and payoffs at both the state and local provincial levels have placed economic power into the hands of those who have self-interest in maintaining, rather than overthrowing the status quo; a business culture of corruption and crony capitalism is deeply embedded in China’s economy. Scholars maintain the presence of pervasive corruption, detached bureaucratic elites and a disenfranchised populace are the ingredients that will eventually undermine the legitimacy and the capacity of China’s government to rule effectively; it is the perception of the populace, not the specific problems that lead to the downfall of nations (Pei, 2002). Therefore, even if Hu’s rhetoric suggests a more equitable distribution of resources for the Chinese people, if the perception is that the government is corrupt and disconnected from the wishes of its people, its political legitimacy will be challenged. It is argued that equity is purely a

Speights - 5 political matter rather than an economic one. An unbalanced (or corrupt) allocation of political power will lead to the demise of both political and economic institutions (Chen
W. , 2007). For this reason, many posit that democratic reforms and liberalization of
China’s institutions are necessary to achieve political or economic stability.
There is little doubt that the legitimacy of a state depends on the consent and will of its people; however, whether that legitimacy is generated exclusively by democratic ideology is debatable. According to a survey by the 2005 Pew Global Attitudes Project , there is growing evidence that citizens are not necessarily more satisfied with democratic governments than they are with authoritarian ones (China's Optimism:
Prosperity Brings Satisfaction and Hope, 2005). According to the poll, 72% of the
Chinese people were optimistic about their government, yet only 48% of Americans reported the same optimism. Notwithstanding the social inequities present in China, the
Chinese people appear not to be as socially disenfranchised as some authors would suggest. Therefore, it has been suggested that rather than rely on the theories of
Westernstyle democracy, the utility of China’s government should be assessed by evaluating results over ideology (Ogden, 2007)
. In other words, if China’s existing political institutions are strengthened and its policies result in a more economically and socially balanced outcome, then its authoritarian ideology, or “top down” approach to populism, may be irrelevant. China is unique in many respects. It has more people and more land with different social ideals than those of other Western democracies.
Moreover, unlike many Westernstyle democracies, Hu’s proclamation of restoring social and economic equity unilaterally extends beyond the middle class and into the most impoverished provinces of China. If the country eventually prospers, then it is

Speights - 6 hypothesized that China’s population will accept its authoritarian bureaucracy and will not demand a Western-style democratic regime.
Economic Stability via Constitutionalism
Notwithstanding the questions of populism, China’s ability to successfully bridge the existent income disparity will depend on its ability to sustain economic development.
One of the main factors in
China’s economic fate will be its ability to continue to attract foreign financial investment, and build upon foreign investor confidence. The evidence from the Asian financial crisis of the 1990’s makes one thing clear: the downfall of the economies in authoritarian countries, such as Taiwan and South Korea, was a result of a collapse of investor confidence fueled by the corruption and crony capitalism within these authoritarian regimes (Pei, 2002). The literature suggests that the only way to guarantee investor confidence is through political transparency, and the only way to accomplish transparency is through some form of constitutionalism.
The “rule of law” and an independent judiciary, especially when it comes to financial accountability, is necessary to sustain investor confidence, and in turn, economic growth (Davis, 2005). Taiwan, South Korea, Singapore and Indonesia were driven to develop constitutional institutions after their economies suffered significant setbacks. In all of these countries, an emphasis on strong legal institutions was lacking and their bureaucratic technocracies were unable to sustain an environment of trust within their liberal markets. Even though social liberties are not present in any of these regimes, robust quasi-constitutional legal and judicial institutions exist in these countries today.

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In turn, domestic and foreign investors have returned to investing in the Asian markets, despite their lack of democratic political institutions.
Conclusion
Two aspects of China’s development over the last several decades are undeniable:
China has grown into a global industrial and economic power, and there is a growing social inequity between the urban and rural economies. China still possesses a bureaucratic technocracy that has, and thus far, values efficiency over equity. Poverty has declined to an extent, and national polls reflect that the Chinese have a positive outlook on their futures. Yet, it is unclear whether China’s history of repression and censorship may be contributing to these attitudes. The diminutive improvement in the lives of
China’s rural population may feel quite large compared to conditions that existed in the past. While Hu has committed to addressing the social ills of the country, the prospects for doing so without reforming China’s political institutions is problematic.
Despite the proclamations by China’s government to strengthen its political institutions and create a “harmonious society,” there is ample evidence from former authoritarian regimes such as Taiwan, South Korea and even Singapore, that constitutionalism may be a pre-requisite for economic sustainability.
The e vidence shows that China’s symptoms of corruption, crony capitalism and social inequity were all present in other authoritarian regimes before their economies and regimes collapsed. Accordingly, China may continue to grow economically, but the sustainability of that growth will depend on a business and political structure that fosters an environment of continued foreign direct investment. The “rule of law” is paramount

Speights - 8 to investor trust in a market economy. China, while furthering improvements in its legal system has thus far, not been able to rectify its institutional problems of crony capitalism and corruption. Constitutionalism seems to be the most promising method to alleviate these ills, yet China’s leadership seems unwilling to entertain such reforms. Liberal democratic institutions are not required to sustain economic vitality, but an independent legal and judicial system appears to be essential to thwart the fraud and bribery that exist in any liberal market system. The transformation may require an unhurried and systematic reform of its institutions, but in order for China to sustain its economic growth and promises to its people, it must establish accountability and transparency via a robust program of legal reforms. Democracy is not a requirement, and probably historically impossible for China, but constitutionalism should be an integral part of
Chi na’s institutional plans for economic reforms.

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