Why has China not democratized? Modernization theory holds that capitalism lays the groundwork for democracy; it reduces state controls by emphasizing the importance of the individual and of the rule of law.[1] Despite its supposed economic miracle and despite its pursuit of capitalism with “Chinese characteristics,” China is no democracy; its legislature the “National People’s Congress” acts merely as a rubber stamp for the decisions of the Standing Committee of the Politburo, and the human rights abuses of the authoritarian regime are well documented.[2] Elections held at the township and village level do not represent genuine democracy as party committees often conspire to ensure the victory of the Chinese Communist Party (CCP) candidate.[3]  Below, I examine the prospects for genuine democratic reform to take hold in China.

I make use of the theoretical framework provided by Acemoglu and Robinson in ‘Economic Origins of Dictatorship and Democracy’. Those scholars adopt a generalized view of the world by dividing societies into the “elites” and the “citizens,” and by classifying regime types as being either a democracy or a non-democracy (dictatorship). A democratic regime serves the interests of the entire population, whereas a non-democratic regime acts in the interests of the “elites.” The success or failure of democracy is determined by cost-benefit calculations on the part of citizens and elites. When elites feel threatened by the reforms that democracy would bring, they resist; where citizens perceive little to be gained from demanding democratization, non-democracy is consolidated.[4]

I accept this theoretical framework but I distinguish between two types of elites: political elites and economic elites. While some individuals may fall into both categories, I use political elites to refer to high-ranking members of the CCP (members of the politburo, provincial and regional administrators)  and I use economic elites to refer to the managers and owners of businesses, as well as the foreign sector managers (Chinese nationals who manage foreign-owned or foreign-backed businesses). I pose two questions: to what extent do political and economic elites have an interest in pursuing democratic reforms? To what extent do the citizens have an interest in pursuing democratic reforms?  To answer those two thesis questions I pose additional, more precise questions: First, does the cultural environment affect the interests of elites and citizens? If so, does the cultural environment in China affect the likelihood of democratization? Second, does the institutional environment affect the interests of elites and citizens? If so, does the institutional environment in China affect the likelihood of democratization?

Before proceeding, we must ask if reducing societal relations to a struggle between elites and citizens is appropriate for China.  First, the principle of Occam’s Razor holds that when choosing between two or more competing hypotheses, the one with the fewest assumptions should be favoured.[5] In other words, the reductionist view offered by Acemoglu and Robinson offers a framework that can be easily applied to China. Second, there is speculation that increasing economic grievances is leading to social polarization.[6] We ought to understand what motivates individuals at each extremity.

Does the cultural environment affect the interests of elites and citizens? Defining culture is fraught with theoretical difficulties; an overabundance of definitions makes it difficult to systematically examine culture. When using the term “culture,” I use the definition provided by Francis Fukuyama: he defines culture as an “inherited ethical habit” which “can consist of an idea or a value…or of an actual social relationship.”[7] Some democratic theorists believe that some cultures are inherently hostile towards democracy and that at the very least such cultures will prove an obstacle to democratic reforms. In the theoretical literature, it has been argued that Confucianism is inherently undemocratic. I refer to this as the “cultural argument.” In his essay “Democracy’s Third Wave,” Samuel P Huntington says the following on Confucianism:

“Confucian societies lacked a tradition of rights against the state; to the extent that individual rights did exist, they were created by the state. Harmony and cooperation were preferred over disagreement and competition. The maintenance of order and respect for hierarchy were central values. The conflict of ideas, groups, and parties was viewed as dangerous and illegitimate.”[8]

Thus, Confucian philosophy has played a profound role in the development of states in East Asia, including China, Japan and South Korea. Furthermore, the history of these countries has been marked by a dominant state that has left scant room for groups to form in opposition to the state.

We can contrast Confucian historical development with the development of nation-states in the West. The Biblical maxim “Render to Caesar the things that are Caesar’s and to God the things that are God’s” was interpreted by early Christian theologians as implying the importance for the separation of church and state.  For example, in “The City of God,” St. Augustine distinguishes between a “heavenly city” and an “earthly city.” The former is built on a pursuit for truth; the latter includes the pursuit of earthly pleasures. The two cities must remain separate and individuals will likely reside in both cities.[9] In short, the nation-states of Western Europe have at their roots a demarcation between two social orders, the church and the state.  Perhaps as a consequence of this, nation-states of the West have a rich historical narrative expressing scepticism of state authority. The Founding Fathers of the USA were inspired by proponents of limited government such as John Locke and Adam Smith. It would seem that American political culture is inherently sceptical of authority, whereas in China any intellectual writing in critique of the state has not had the same effect on political culture.

To be sure, there is a history of anti-statism in China: Lao Tzu has been called the first libertarian philosopher.[10] But such anti-statist views are not prominent in China today. When Jaclyn Boyle interviewed students at Peking University in 2008, she found that many of those interviewed expressed the belief that China’s history and traditions are incompatible with democracy. Those same students emphasized the importance of economic development and of social stability, and downplayed the importance of democratic governance in the short-term.[11] There also does not appear to be much space for alternative orders to exist outside of the state. Yu Keping writes that as of 1998 there were over 700,000 civilian non-enterprise bodies.[12] Overwhelmingly, such organizations were established by the government or are in some way tied to the government.[13] Thus Chinese history has been strongly influenced by a philosophy that requires a dominant state.

Confucianism is also hostile towards the individual. The Confucian philosopher Wang Yang-ming stressed the importance of individual perfectibility.[14] In that sense, Confucianism allows for the development of and flourishing of the individual. Yet any notion of “individual perfectibility” in Confucian thought implies that the individual is nevertheless constrained by the collective.  There would appear to be an incompatibility between democracy and Confucianism. Whereas the former emphasises individualism and inalienable rights, the latter emphasizes the primacy of the collective and the need for order.

In sum, the cultural argument holds that Confucianism is inherently hostile to the individual and to democracy; it is an inherently statist philosophy, implying that there can be little to no room for alternative social orders to exist. Social harmony, stability, and respect for hierarchy are emphasized as values among the citizens. Consequently, it would seem that the cultural environment affects the interests of elites and citizens. But does the cultural institutional environment in China affect the likelihood of democratization? In actuality, there is a seemingly contradictory nature to individualism and democracy in China and East Asia more generally.

Joel Fetzer and Christopher J Soper argue that Confucianism is malleable over time, just as all other philosophies and ideologies are. Confucian values enjoy broad support in China, Taiwan, Singapore, and South Korea. Their stochastic study finds that in China, Confucianism is negatively correlated with support for democracy. Yet a different relationship emerges in Taiwan where Confucianism lacks a statistically significant relationship with support for democracy. The implication is that Confucianism, while not increasing support among the people for democracy, does not necessarily reduce support for democracy among the people. The authors conclude that democracy and Confucianism are not incompatible and that political elites can always manipulate ideology to maintain their legitimacy .[15]  This is poignant, especially when one considers how Christianity was used to legitimize the monarchies of Europe. The “divine right of kings” theory implied that European monarchs were ordained by God and that such rulers deserved unyielding obedience from their subjects.[16] Similarly, the maxim of “Render to Caesar” can be taken to mean that individuals should obey the laws of the state. Confucianism, like Christianity, can be used to legitimize a variety of political regimes.

Examining China’s modern history, one can see that there may even be growing support for reducing the intrusion of government. During the Cultural Revolution, the Chinese people witnessed the abuses of political power. For that reason, some Chinese academics have argued for the creation of checks and balances in government.[17]  Chinese academic Li Buyun challenges the view that individualism and collectivism are incompatible. As he writes:

“Rather than being diametrically opposed, individual and collective rights are unified and cannot, in fact, be separated, for individual rights provide the foundation for collective rights…Unless individuals ultimately benefit, collective rights lose all meaning.”[18]

That liberalism and Confucianism are compatible has been articulated by the intellectual Yu Dan who promotes an idea of “liberal” Confucianism that downplays themes such as social responsibility, although whether or not this represents an authentic interpretation of the Analects is disputable.[19]

In examining the evidence so far, I do not mean to suggest that democratization will occur in China because of a presumed and growing intellectual movement against the state; instead, I wish to point out that the cultural argument does not hold up. That is to say, if democracy does not come to China, it will not be because Chinese culture is incompatible with democratic values.  To conclude, does the cultural environment in China affect the likelihood of democratization? The cultural environment is insufficient to explain the non-democratic nature of China. As I have demonstrated, culture is malleable and it changes over time. Furthermore, philosophy and religion can be used to legitimize various types of regimes. While Confucianism may have been used to legitimize a statist authority for much of China’s history, Confucianism could be made to be compatible with democracy.

Does the institutional environment affect the interests of elites and citizens? By “institutions” I mean the “rules of the game” as described by the economist Douglass North.[20] Put more concretely, how are the interests of elites and citizens affected by relations between different levels of government? How are the interests of elites and citizens affected by relations by the state and businesses? This first section focuses on the interests of political elites.

Communism, while officially the state ideology, is no longer guiding elite or citizen behaviour. Officially, the CCP emphasizes that there is a struggle between the people and the enemies (diwo maodun).[21] This is one element of what some scholars call “consultative Leninism” which is the framework that guides elite behaviour.[22] According to Steve Tsang, consultative Leninism is marked by an obsession with staying in power. To remain in power, elites eliminate political threats before they emerge. Elites also pre-empt demands for democratization by allowing township and village elections or by relying on deliberation for the purposes of legitimization. Consultative Leninism also implies that political elites eliminate threats before they emerge. To do so, political elites in China have made extensive use of the internet. A 2013 report from The Economist examines how an entire industry has emerged in China to support government efforts to censor online activity. Political elites at the local level can acquire software to keep them abreast about what is being discussed online by citizens in their locality. Additionally, the CCP employs thousands of censors to regulate internal internet activity so that undesirable material may vanish within seconds of being posted.[23]

Political elites also promote “brand nationalism,” in which China’s long and proud history is emphasized alongside the work of the CCP.[24] Implicitly or explicitly, Chinese political elites have created and sustained a discourse of a struggle between the people and its enemies (diwo maodun). The bellicose stance taken by the Chinese government towards Taiwan has less to do with geopolitics than with a perceived imperative to appease nationalist elements among the citizenry. Appeasing such elements is in the self-interest of political elites who prefer to maintain their positions, yet it is at the same time not in their self-interest since posturing could force China into a conflagration with its neighbors. Susan Shirk describes the decision-making of General-Secretary Jiang Zemin in response to the US offering a visa to the Taiwanese president. Shirk explains:

“Jiang Zemin decided it was safer to appease the hawks…by holding live-fire missile exercises toward Taiwan and risking a war with America than allow public protests.”[25]

Thus, political relations with Taiwan are a matter of “regime survival” for the CCP.[26] This seemingly contradictory behaviour on the part of the CCP is perfectly rational, fitting well into the consultative Leninism that I outlined above. It reflects an obsession with staying in power. In sum, the development of “consultative Leninism” affects the perceived interest of elites. Obsessed with staying in power, the elites do not make unnecessary use of repression. The emergence of nationalism as a social force affects the perceived interest of citizens who perceive a struggle with outside forces.

Does the institutional environment in China affect the likelihood of democratization? Deng Xiaoping stressed that the CCP should uphold four cardinal principles: the dominance of Marxist-Leninist and Mao Zedong thought, the leadership of the party, the centrality of socialism in the economy, and the proletariat dictatorship.[27] While Xiaoping never renounced these truths, his reforms have set China down a path of reform that is in some ways leading to the undoing of these principles. For example, Xiaoping sought to resolve the Successor’s Dilemma by initiating two-limit term presidencies. The dilemma occurs because a political ruler wants to ensure that their successor will not undo their life-time work. If the ruler is in power until death, he wields absolute power and ensures the continuance of his reforms; yet he cannot nurture a competent successor. If he retires early, as Deng Xiaoping did, then he can nurture a political successor who will continue his reforms while at the same time sharing power with the upcoming successor.[28]

Deng Xiaoping successfully resolved this dilemma but as a result, political power is no long concentrated in the hands of one man. As Yu Liu and Dingding Chen argue, while the CCP continues to crack down on opposition and exercise brute force against outspoken critiques of the regime, such an exercise of “naked power” reflects the precarious nature of the CCP. The increasing use of repression is indicative that “the state has less and less capacity to persuade and co-opt.”[29] Even under Mao Zedong political power rested on a constituency of elites.[30] Today, political power is more diffuse than it was under Mao. It is conceivable, therefore, that as political power among elites is gradually made more diffuse support for democratic reforms will grow. It is conceivable that elites will turn to citizens for legitimacy in the forms of elections. This is important to consider: as Susan Shirk points out, the perception among elites is that reform among the citizenry will “fizzle” if there is no elite backing.[31]

Does the institutional environment affect the interests of elites and citizens? This section examines the role of fiscal decentralization in China’s economic growth. An oft-repeated argument in the literature on China is that decentralization was paramount in China’s “economic miracle.” It has been argued that China’s economy is made up of “parallel” and “diversified” economics (in the provinces and regions). Decentralization has encouraged political experimentation and entrepreneurship; decentralization has created checks on political authorities; fiscal decentralization has given officials an incentive to introduce policies that facilitate economic growth; and decentralization has imposed a hard budget constraint on officials.[32]

The theory of “market-preserving” federalism holds that a federalist county will be economically efficient. First, the work of FA Hayek demonstrates that because of incomplete information, no government can feasibly plan the economy. Consequently, central governments should delegate economic and fiscal policy to the provincial or regional level. Second, provincial and regional governments will face hard-budget constraints. Whereas a central government is able to print money through the use of a central bank, regional and provincial governments have no such option. Third, individuals might “vote with their feet” by moving from one region to one that accommodates their preferences.[33] Fourth, by operating within the nomenklatura system, political elites in regions and provinces are incentivized to compete with one another by experimenting with different policies.[34]

If federalism and decentralization are important for understanding China’s economic growth, might it not be possible that political entrepreneurship will occur in different regions, thereby fostering democratic reforms? The answer is complex.  Hongbin Cai and Daniel Treisman argue that provincial governments were not checks on central political authority, even after the beginning of reforms in 1978, and nor are provincial governments adequate checks on central political authority today. The most illustrious example concerns Yu Xuanping, former governor of Guandong who was removed from office after clashing with his superiors in Beijing.[35] In short, while the central government in Beijing may delegate some decision-making to regional and provincial governments, the central government still retains the authority to hire and fire officials at the lower levels. So, does the institutional environment in China affect the likelihood of democratization? The likelihood of democratization in China suffers adversely given that China is not a federalist state and that the central government can still dictate its terms to lower levels of government.

So far, the discussion has focused on the incentives of political elites in advancing (or resisting) democratic reform. I turn now to a discussion of economic elites and ask: Does the institutional environment affect the interests of economic elites? The interest of economic elites to advance democratic reform depends on the impact of the central government on local business interests. Jianjun Zhang describes the emergence of an entrepreneurial class and he argues that such a class will be the instigator of democratic reform in china. He examines the prospect for democracy in two regions, Sunan and Wenzhou, contrasting two examples of regional economic development in which the role of the central government has differed. Sunun has always been dependent on the government while Wenzhou has not. The government was unable to create strong collective initiatives in Wenzhou and an entrepreneurial class has emerged as a result. In Wenzhou, there are relatively low barriers to entry into the market.  In Sunan, a new capitalist class has emerged but the bar to entry is high. These are the “managerial capitalists,” economic elites who have acquired wealth at the expense of the citizens.  As such, these capitalists favour the status quo and have no incentive to push for democratic reform. By contrast, in Wenzhou, the entrepreneurial class has an interest in changing the status quo in the direction of more openness to safeguard their assets.[36]

Jianjun Zhang concludes that:

“Democracy thus would provide opportunities for them [elites in Wenzhou] to participate in politics, gain social recognition, and protect their interests.”[37]

This is more or less in tune with what Yasheng Huang argues in ‘Capitalism with Chinese Characteristics’.  Huang argues that an entrepreneurial and “politically-independent” environment emerges when rural Chinas interests are asserted, whereas a crony-capitalist and oligarchic environment emerges when urban China dominates.[38]

In a similar vein, those who Margaret Pearson refers to as the “business elites” are hesitant to see the advancement of democratic reforms.  These individuals have significant autonomy from the state yet such elites also benefit from clientele relations with the state.[39][40]Alternatively, some business elites in China would perceive democratization as antagonistic to their interests. For example, business elites would be wary of seeing China dragged into a conflict as a result of untamed nationalism. The work of Edward Mansfield and Jack Snyder in ‘Electing To Fight’ demonstrates that the hasty introduction of national elections in the absence of strong institutional guarantees for elites can lead to domestic instability and even war.[41]

To recap: does the institutional environment affect the interests of political elites and economic elites and citizens? Undoubtedly, the relations between the regional and central governments affect the behaviours of elites and citizens. The nomenklatura system has encouraged political elites to experiment with different policies but political elites are ultimately accountable to their superiors in the CCP. The central government retains the power to hire and fire officials at lower levels of government. Economic elites face different incentives to democratic reforms, depending on how large a role the central government plays in the local economy. In Wenzhou, an entrepreneurial class developed because the state was not active in promoting economic development in that region; that group of economic elites is more likely to have an incentive in advancing democratic reforms. In Sunan, the state has remained entrenched and there is little interest on the part of crony capitalists to change the status-quo. So, political elites and economic elites have an interest to pursue democratic reforms depending on how entrenched the state is in their township, region, or locality. The interests of political economic elites are affected by the institutional environment and the institutional environment in China affects the likelihood of democratization.

At the outset of this paper, I posed two questions: to what extent do political and economic elites have an interest in pursuing democratic reforms? To what extent do the citizens have an interest in pursuing democratic reforms?  Economic elites face different incentives depending on the extent to which they have been co-opted by the state. The research of Yasheng Huang and Jianjun Zhang demonstrates that capitalism in the urban centers differs from capitalism in the rural areas. Jianjun Zhang’s comparison of Sunan and Wenzhou is illuminating: where the state did not co-opt economic elites, a relatively open market emerged. Where the state co-opted economic elites, crony capitalism emerged. In the former case, economic elites have an incentive to push democratic reforms; in the latter case, economic elites prefer the status quo.

Political elites also face different incentives, and it is feasible that in the short-term some political elites will rely on citizens for legitimization in the form of elections. This is something that Yu Liu and Chen Dingding suggest in their article “Why China will democratize.” Additionally, political power has become more diffuse since Deng Xiaoping overcame the successor’s dilemma. On the other hand, Consultative Leninism, which now guides political elite behaviour, creates incentives for political elites to focus on remaining in power at all costs by regulating the internet, pre-empting democratic reformers and by creating a historical narrative that has bred to nationalism.

Citizens may face incentives to push democratic reforms but this may depend on how Confucian philosophy continues to evolve. As I have demonstrated, neither Confucianism nor Chinese culture in general is inherently undemocratic; a philosophy or religion can be used to legitimize a variety of regimes. In conclusion, although the article “Why China will democratize” argues that democratization will occur in the near future, only time will tell whether the political and economic elites perceive the benefits of democratization as outweighing the costs.

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