Why Have China's Reforms Stalled?

My abridged translation of the article:-

“In the last 30 years of implementing the reform and open policy, the most crucial improvement in the politics arena is the gradual institutionalizing process. One most prominent example can be found in the transfer of supreme political power, which is conducted more and more in accordance with predetermined procedures – there is a tentative timetable to follow. In other words, people are becoming more and more certain about in which year, at which type of conference, which leader will step down and be succeeded by whom.

From the latter part of the 1990s, because of the institutionalization of the transfer of political power and the regularity of relatively important conferences, a certain expectation within China’s society has emerged, whenever the time comes for a change in leadership or when it is close to certain important conferences taking place. It is an expectation of an announcement of some kind of policy changes. As a habit, people would anticipate policy changes that might favor their own interests – they expect ‘big action’ and ‘breakthroughs’ in the reform and open policy.

In China’s political field, this expectation has been repeating itself again and again. But the continuous expectation is met with continuous disappointment.

This phenomenon projects a profound problem. It is that people tend to expect too much from a change of leadership leading to a new round of reforms. Such unrealistic expectation is founded on one serious oversight – the oversight that during the 30 years of reform, certain interest groups have consolidated their power within the political and administrative system. In the beginning, these interest groups were relatively weak and could not see clearly the overall trend of policy direction. But as time went on, they have come to be clairvoyant. By now, they know exactly when and how to do what, in which area, and to say what and how to say it, in order to maximize their special interests.

I can still remember what was said to me 15 years ago by someone who used to work within the system, when I returned to China for the first time since I had gone abroad to study. He said: ‘You’ve been out of the country for almost 10 years now. You may need another pair of glasses to observe China. When you went overseas, we were at the initial stage of reform and were concerned mostly with ideologies. But now, people are seeing more and more clearly where their material interests lie. So the present irony is in the fights among different special interest groups; ideologies have become secondary.’

Now in retrospect, those words are very sobering indeed. Of course, people with such a viewpoint now are growing in numbers, but in 1993 that kind of foresight could be said to be a very astute judgment.

My friend’s judgment was made entirely from his work experience in the system. But from a theoretical angle, we may get an even greater insight. When I was studying for my Ph.D, one book particularly impressed me – it is Mancur Olson’s ‘The Rise and Decline of Nations’.

The salient point of the book is that in any nation, if there is a long enough period of political stability, there will appear special interest groups. These special interest groups will become more and more mature and skilful with time. They will know how to manipulate the nation’s most important public policies, economic and social development and the political machine, especially the administration and the law. They will also know what rationale to use for their manipulation. As their skills become more and more sophisticated, their interests will become more constant and abundant. Ultimately, this will lead to the nation’s economy, society and legal system being arranged in such a way as to serve only the special interest groups. This will in turn blight the nation’s development dynamics, with all departments numbed by inertia, until the nation slides into a deep decline.

If one applies Olson’s theory to China now, after her 30 years of reform, it is very fitting in many important aspects.

In the Mao era, because Mao would not let the nation to have a stable political system, therefore no deeply rooted special interest groups were able to get established.

When China entered the Deng Xiaoping era, big upheavals were becoming fewer and fewer in number, especially in the post-1989 period. Twenty years of political stability have given special interest groups a good nurturing ground.

Anyone who has worked for a period of time in China and who has observing eyes would be able to tell who the special interest groups are. For example, one often hears that China’s hydro-electricity system belongs to a special interest group. It is so powerful that it owns not only all the large rivers and streams, but also the medium rivers and streams. Their projects are worth billions and tens of billions of funds. Many Chinese people can point out who the representatives of this interest group are. They include a former hydro-electricity director and a former premier, and of course those so called ‘experts’ who seem never able to find ‘scientific reasons’ to back up the group’s projects.

Another important special interest group is the real estate industry that has emerged in the last 20 years. Those who are able to carry out real estate business in China are no ordinary people – because land is a very scarce commodity, especially in the big cities.

We must not forget that the one-child policy arena is also one of the special interest groups. There are many international studies that confirm that if a society wants a long-term solution to its population growth problem, the most civilized way is to promote primary and secondary education, especially in villages and among women. This is a far better solution than China’s present high-handed policy. The latter policy has caused numerous tragedies as well as led to an imbalance in the gender ratio.

But why hasn’t the Chinese government adopted the policy of voluntary child-birth control via widespread promotion of free education, which has been proven effective in other countries? The reason is that the birth-control policy over the last few decades has given rise to a special interest group – there are hundreds of thousands of cadres all over the country who have secured, through the birth-control policy, government jobs, access to and control of money and power.

As much as Chinese citizens today feel disgruntled about the special interest groups, there is little they can do. Yet the whole society, in particular the weak and vulnerable, have to bear the negative consequences of those interest groups hijacking public policies, especially those involving the country’s future development. Therefore, against such a backdrop, people’s expectations about ‘new policies’ or ‘good measures’ whenever there is a change of leadership or an important conference always quickly turn into disappointment.

Although special interest groups are also present in the United States and Europe, but they operate under a system very different from China’s. Under their system, the special interest groups can influence public policy, but they are not omnipotent. Firstly, no interest group can have long-term control over the general presidential election process. Secondly, no interest group can have simultaneous control over the Senate and House elections. Thirdly, the interest groups have no way of controlling the media, although they may influence a part of it. Fourthly, the U.S. and Europe are highly globalized economies which are subject to vigorous international competition and this in turn forces interest groups to compromise.

The above checks and balances are reasons why special interest groups in the U.S. and Europe cannot have a long-term grip on their countries’ public policies and development strategies. But under China’s current system, those kinds of checks and balances are either absent or are extremely fragile.

China’s administrative leader is not chosen via competition in an open and transparent manner. China’s National Congress and Politburo members are not democratically elected. More than half of the National Congress representatives are incumbent or retired government officials – this is a sure way of letting special interest groups consolidate their network. Moreover, although some media have been able to unravel the truth about some issues, most of the time and on most important issues the media are under uniform state control.

Therefore, I feel that even if the current leaders and their immediate successors want very much to carry out some drastic reforms, due to their lack of charisma like Deng Xiaoping’s, they will not be able to force the special interest groups to back off. This will be the case for many years to come.”