China Power

David Shambaugh on China's Future

An interview with David Shambaugh on the possible paths China can take.

David Shambaugh on China’s Future

China's Future by David Shambaugh. Polity Press, 2016; 244 pages, 24 figures. $19.95 pbk., $19.95 Kindle, $59,95 hdbk. ISBN: 978-1-5095-0714-6

Credit: Polity

China's future is a topic that fascinates the world, particularly as the country leaves the era of double-digit economic growth. Will leaders in Beijing be able to steer the country onto a new economic track of sustainable growth, or will China enter a period of stagnation (or worse)? Dr. David Shambaugh,professor of international affairs and the director of the China Policy Program at George Washington University, explores this question in his latest book, China's Future, arguing that all facets of China's fate will depend on the domestic political choices made by the Chinese Communist Party. Below, The Diplomat'sShannon Tiezzi talks with Dr. Shambaugh about his book and his forecast for China's futures.

The Diplomat:Your book posits the eventual (if slow) decline of the Chinese Communist Party (CCP), unless it engages in political reforms to some extent. One piece of evidence for this is the cycle of the rise and decline of other Leninist states, a pattern which fits the trajectory of the CCP. However, leaders in Beijing have studied the collapse of similar systems obsessively for this very reason. Do you think they have learned how to successfully stave off collapse without making political compromises?

David Shambaugh:In my earlier research, particularly in my previous (2008) book China's Communist Party: Atrophy & Adaptation, I have studied in depth and detail the CCP's extended and extensive assessment of the collapse of the Soviet Union, East European communist party-states, as well as their analyses of non-communist authoritarian regimes across the world. This has been something of an obsession on the part of the CCP since 1989–but it was no simple academic exercise; it had very real existential implications. That is, the CCP was aware that their rule could go the same way as these other former Leninist regimes if they did not learn the "right" lessons. But, in this protracted effort, researchers and officials in the CCP International Department, Central Party School, and a wide range of other institutions, cleaved into two essential groups.

Without going into great detail here (although I did in the aforementioned book as well as chapter 4 of China's Future), the first group I label the "Soft Authoritarians" and second school the "Hard Authoritarians." The first group was of the view that it was not so much Gorbachev's reforms that broke the Soviet system, but that by the time he introduced them the system itself was fatally flawed by decades of Brezhnevite bureaucratism that it could not withstand the "shock therapy"—so it snapped and collapsed. The Soft Authoritarians thus concluded that this required progressive opening and change managed by the regime—that is, the Chinese equivalents of perestroika and glasnost must be phased-in incrementally. Otherwise, the system in China could similarly stagnate and decline. They also believed that economic reform had to precede political reform in general, but that the latter had to support the former (even Deng Xiaoping admitted this).

So, this first group of Soft Authoritarian CCP leaders–lead by former senior Politburo member Zeng Qinghong—but supported by former leaders Jiang Zemin and Hu Jintao—began to progressively open the political system beginning around 1998. This lasted for a decade until 2008-2009, when the Hard Authoritarians seized control at the Center and radically shifted course. There were a variety of precipitating causes that caused this radical shift (which I detail in chapter 4 of China's Future), but they fundamentally believed that such managed political opening from above was impossible—it could not be managed, would inevitably cascade out of the regime's control, and bring about the same types of pressures on the regime and likely cause collapse of party-state as in the former USSR.

To answer your question, I argue in my new book that the Hard Authoritarians have not learned the correct lessons from the collapse of the Soviet Union and other Leninist party-states. It may keep them in power in the short-term, but I believe their policies are only accelerating their longer-term decline and possible ultimate demise. This is a long and protracted process—not a question of immediate implosion. If they stay on this course, I judge that China will have only limited success in achieving the reforms necessary to make qualitative changes in the economy, society, and polity that will power China through its current "trapped transition" (in Minxin Pei's apt term) and on to a path of sustainable development to become a mature developed modern economy, stable society, and humane political system.

One of your central arguments is that China's economic transformation cannot succeed without at least partial political reforms (Soft Authoritarianism). If push comes to shove, will the CCP be willing to trade some political control for continued economic growth?

It is no secret that China has reached a series of key turning points on its developmental path and dramatic national transformation. After more than three decades of successful reforms the nation has reached a number of critical junctures in its economic, social, political, environmental, technological, intellectual, national security, foreign policy, and other areas of development. Diminishing returns have set in and it has become plainly evident that the main elements of the broad reform program first launched by Deng Xiaoping in 1978 are no longer applicable or sustainable for spurring China's continued modernization over the next decades.

The key issue for nations like China at this stage of development is precisely the relationship between economics and politics. For economies to transition up the value-added ladder, break through the developmental ceiling, and make the kinds of qualitative transitions necessary to become truly modern and developed, political institutions must be facilitative. They must cease being "extractive" states and become what scholars Daron Acemoglu and James Robinson describe in their insightful book Why Nations Fail as "inclusive states." This requires tolerance—even facilitation—of autonomous actors within society. Those countries that are more open—politically, economically, socially—are more stable and in a better position to withstand the inevitable pressures of domestic demands and globalization. Those that are relatively closed do not respond well to these pressures and risk state failure.

To respond more directly to your question, when the CCP was being run by the "Soft Authoritarians" from 1998-2008 (as I noted above), they were calculating that sacrificing some political control was necessary to achieve sustainable economic growth. And it was working. But around the same time, circa 2007-2008, China's macroeconomic development model began to reach diminishing returns and began to enter the so-called "middle income trap" as well as encountering a variety of other structural impediments in the economy. So, they were on the right track politically precisely at the point when the economic circumstances began to change—then they changed the political direction and have unleashed seven years of ever-intensifying controls and repression. This is not a recipe for economic success. Rather, by staying on its current course, I predict that economic development will relatively stagnate and stall, exacerbating already acute social problems, and producing the protracted political decline over time of the ruling Chinese Communist Party. The regime needs to return to its pre-2009 path, take a positive-sum instead of zero-sum approach to social-political life in the country, and thereby helping to facilitate the country's economic transitions.

Democracies, for all their virtues, often fall into the trap of postponing crucial decisions for fear of the short-term consequences — and the impact at the ballot box. If China does move toward Soft Authoritarianism or even a Singapore-style democracy, would that make the tough economic choices the country faces easier or more difficult to tackle?

In my view, it would make them considerably easier for the country to tackle. The socio-economic challenges China faces today and into the future (detailed in two separate chapters in the book) will not be successfully addressed—by which I mean qualitatively so—without political loosening and increased tolerance of the public sphere and civil society, and the further expansion of the private sector of the economy.

This line of argument is hardly new to social scientists. Modernization theorists during the 1960s have all identified this necessity. Either these regimes at this stage of development adapt and become more open and inclusive—hence increasing their chances of political survival as well as facilitating socioeconomic transitions and providing enhanced public goods—or they fail to do so and steadily decline.

Why should China be immune to the processes that afflicted other late-stage Leninist regimes or newly industrializing economies—processes so amply demonstrated in decades of in-depth research in multiple cross-national studies?  China is not immune to these generic phenomena. China may be distinct, but it is not unique. These same processes and pressures are already beginning to bite in China, and they can only be expected to intensify in the future.

This is China's current dilemma, and it is a profound one. Quite simply, it is not moving ahead politically and therefore there will be increasing limits on how it develops economically and socially.

In your concluding chapter, you note that U.S.-China relations have entered a "new normal" of intensified competition. Given this shift, do you think Washington needs to overhaul its approach to China, and if so, what would a new China policy look like?

U.S.-China relations are also at a fundamental turning point, I believe. "Muddling through" or staying on auto-pilot is no solution to managing the multiple complexities of Sino-American relations today and into the future. The relationship has qualitatively changed in recent years and is, on balance, quite troubled, I believe. I am not sure, however, that the Chinese government recognizes the seriousness of the changed zeitgeist in the United States or the sources of discontent on the American side. Beijing seems to simultaneously be in denial and suffering from excess hubris.

Relations between the United States and China have never been easy, but they are getting much more strained and difficult. This is not an aberration or a temporary trend; it is the "new normal." It is also entirely natural and predictable as China's power and capabilities have increased. The Sino-American relationship is thus finding it increasingly difficult to find a stable equilibrium—much less a positive narrative and trajectory into the future. The relationship has failed to find extensive common ground to forge a real and enduring partnership. The "glue" that seems to keep it together is the fear of it falling apart. Without such a strategic anchor the relationship is left vulnerable to unremitting frictions on second-tier issues.

There are several reasons for the deterioration in ties, but one is that security increasingly trumps economics in the relationship. The military, security, and geopolitical realms are now increasingly defining the relationship. In the United States what this means is that the "pro-engagement coalition" led by the business community is no longer dominant, and a "competition coalition" comprised of several constituencies in-and-out of government are now in the ascent. Indeed, even the tone of the business community has become more negative as American corporations are encountering ever-greater impediments to operating in China. The deteriorating political climate (increased repression) and human rights in China has further aggravated ties.

The 2016 presidential election campaign only serves to accentuate this trend. No matter who takes the oath of office and becomes the 45th president of the United States in January 2017, there will likely be a qualitative hardening of American policy towards China—which will only aggravate existing tensions. This is a long-term secular trend and other nations should not be surprised.

In this broad context, and to respond to your question, I do think that the United States needs to undertake a complete top-to-bottom reappraisal of its relations with China—bilaterally, regionally, globally, and across various functional sectors—and Washington needs to adjust its policies toward Beijing accordingly. I would characterize the needed new policy as "tough engagement." It should be based more on unilateral actions than bilateral process. There should be many components to it—rhetorical, diplomatic, military, regional, global, cultural, technological, commercial, and bureaucratic. This will not be an easy balancing act—but if American priorities are clearly in American interests, then a clear policy roadmap will follow.  I am still working through the specifics of this menu in my mind, but I believe a general toughening of the U.S. posture toward China across-the-board is called for. On this, I believe there is consensus among experts and bipartisan support in the United States.