China has been able to achieve miraculous economic growth. This economic growth has allowed the Chinese Political Party (CCP) to remain in control of the country. The question of whether this economic growth can be sustained has been the largest threat to the CCP’s control and the stability of China. A significant decrease in economic product could be causation for the collapse of the longtime ruling CCP in favor of democratization. Even as China endures deep environmental issues, experiences vast inequality, faces the difficult transition from an investment-driven economy to a consumption driven economy, and increases in unpredictable nationalism, China will continue to grow and remain stable under the control of the CCP and not democratize.
This stability is due to the limiting of environmental destruction as a result of the shift away from heavy industry, the increase in contentment of the Chinese people as incomes increase, allowing consumption to increase, and the reduction in threats from inequality and nationalism due to continued economic growth.
A large threat to the stability of China’s economy and the control of the CCP is the environment. China’s industrial economic boom has come with energy needs in order to supply such industry. China fueled its economic development with coal, especially coal mined by local villages collectives.
China’s wide array of environmental degradation, including air, water, and soil pollution and land degradation, is hazardous to both human health and the economy. In terms of economic loss, environmental degradation costs China 8 to 10 % of the GDP every year .
Pollution additionally contributes to hazardous health issues, as there has been a 19% increase in urban cancer and a 23% in rural cancer cases. The rise of pollution-related illnesses contributes to social instability. In 2005 alone, 51,000 protests were held for environmental grievances.
This environmental assessment is currently morbid, but as China’s economy matures and transitions, this damage to the environment will decrease. China’s economy is slowing, which translates to less pollutants being emitted. The decrease in investment as China shifts towards consumption reduces the needs of natural resources to fuel industrial growth. Since China has now reached its fastest pace growth, its growth will slow and thus prevent further damage to the environment by reducing the emissions associated with a developing country. With environmental degradation slowing, social disruption due to environment-related factors will also decrease and not threaten the CCP’s control.
China was a more equal country in the 1980s. At this time, no provinces in China were equipped with the capital to create significant income, so everyone was equally poor. Since the economic reforms beginning in 1978, incomes have increased dramatically and the amount of people in poverty has drastically decline.
The benefits of economic progress, however, did not benefit China equally. The market reforms led to increasing inequality as the coastal cities became entrenched in wealth, while the west remains poor (Wang, lecture). When income-generating capital became available in China, there was then an opportunity for some to exploit this opportunity and amass wealth, thus generating inequality (Naughton, 248).
While undesirable, inequality is not a serious threat to social stability. While the benefits of the Chinese economic miracle has not been spread evenly throughout the population, incomes are increasing and poverty is decreasing. It would be extremely surprising to see an attempt to challenge CCP power due to inequality when the population at large is benefiting from economic progress.
Additionally, most inequality grievances are aimed at local governments and not the central government (CCP) anyway, due to the notion of rightful resistance (Wang, lecture). This also contributes to the unlikeliness that the discontent due to inequality in China would seriously threaten the CCP’s grip on power.
While this economic progress is currently continuing, should there be a serious slowdown in the economy, then the problem of inequality will become more pertinent to social stability, as incomes will not increase at the same levels so the population will be less satisfied and more prone to disrupting political norms.
The largest threat facing China is that of a serious economic slowdown. The CCP has based its legitimacy not upon ideological values, but rather, the promise of economic progress (Wang, lecture). If China enters a period of significant economic slowing, then the CCP will be at risk of losing power and control due to social instability. If China’s economic growth seriously decreases, the CCP will lose its base for legitimacy. Lacking legitimacy for its tight control will cause social disruption. As discussed earlier, such a slowdown would also aggravate the problems created by inequality, for when incomes stop growing, then the people will no longer be content and will be more likely to protest the vast Chinese inequality in favor of democracy. Another issue China will face in the wake of an economic slowdown will be the middle class. Since the reforms of the 1980s, China has become a middle class society. Once a society has amassed wealth and becomes used to a high standard of living and the benefits of a continually growing economy, the people will be more discontent when there is an economic slow down (Wang, lecture). Wealthier, middle-Class Chinese citizens will have something to lose in an economic slowdown.
Amidst all of these complications associated with a decrease in economic growth, China’s economy is currently slowing. How, then, will the CCP manage to retain is legitimacy and control while promoting social stability? The coming economic slowdown does not have to negatively affect the country; but rather, it can actually be a benefit.
The largest problem facing the Chinese CCP economy is that it has historically been investment-driven. As much as 48% of China’s GDP has been invested since 2009. China invested greatly in heavy industry such as factories, at a detrimental cost to the environment, but in doing so, has accrued higher incomes and increased the GDP at unprecedented levels. China, however, has now passed the turning point of becoming a upper-middle income country, and its economic growth is beginning to slow. This strategy of an investment-driven economy served China well as it was developing, but now that it has become an upper-middle income country, China must successfully transition to a consumption economy. An investment-driven economy is unsustainable for China because it no longer has a labor comparative advantage, as competition for workers and real wages increases. China is also heavily indebted due to faulty or unnecessary infrastructure project loans made out from banks . The marginal return on investment is decreasing as well, further diminishing the sustainability of investments.
If China wishes to maintain economic growth, it must make reforms aimed at consumption. China has begun to do so by reducing investments, and consumption has expanded wildly in recent years. While the consumption contribution to GDP has been growing rapidly, it has not grown enough to offset the loss of contribution to GDP from investment.
The slower growth China will experience as it transitions from investment-driven to a consumption-driven economy can actually benefit the country. This slower growth will dramatically benefit the environment, as discussed above. This slowdown will also force more reform policies to be implemented, thus further freeing up the Chinese economy from state control (Naughton, 23). This lower growth rate will be sustainable in the long run and allow China to focus its attention to technology and innovation instead of heavy industry, as required of the investment-driven economy. China ia already devoting 2% of its GDP to research and development (Naughton, 22). If China can implement the reforms necessary to manage a steady transition from an investment economy to a consumption economy, China’s economy will continue to grow at a slower rate and allow for China to switch from heavy industry to sectors like technology and research, which is more sustainable than riskier investments that had led to the rising Chinese debt.
This stable transition can only occur if market-oriented reforms are embraced. It has been posited that since most of the Special Economic Zones are run by princelings, there will be strong opposition from vested interests in embracing further market reform (Wang, lecture). Since the CCP relies upon its economic prosperity to maintain legitimacy and social order, however, should there be a serious economic downturn, the policymakers, regardless of princeling status, will be forced to enact reform to prevent social disruption.
One problem the CCP will encounter is that of the dependency ratio. As China’s population ages due to the one child policy and more elderly citizens must be supported by the younger generations, there will be less consumption spending. This could result in lower consumption contributions to GDP. This will undoubtedly make the transition to the consumption economy more difficult.
In addition to placing legitimacy upon economic growth, the CCP is attempting to increase its legitimacy through promoting Chinese nationalism. This type of nationalism includes a praise of China’s long, historical traditions and past. This is a hollow nationalism, however because the CCP also spent decades attacking traditional China, especially during the May Fourth Movement (Zhao, 301). It has been posited that this nationalism could be dangerous to the stability of the CCP, as nationalism can lead to uncontrollable behavior by the citizens (Wang, lecture). Since the top-down nationalism the CCP is instilling through state-sponsored programs like the Patriotic Education campaign is a hollow nationalism, this nationalism is not strong enough to allow for uncontrollable behavior or social disruption. This brand of fake nationalism therefore does not pose a threat to the social stability of China or the CCP’s control of power.
China was able to achieve its economic miracle by loosening its market and turning away from Marxism and toward capitalism without initiating political reform. This event has gone against trends of other countries democratizing after attaining significant economic growth. China does not require democratization to continue growing economically and to remain stably under the control of the CCP. The stable growth China will experience after it transitions to a consumption economy will increase standards of living and pull even more people out of poverty, so there will little social disruption or need to overthrow the government. This is not to say that China will not democratize far in the future once the country has been a stable, consumption economy for longer. At this stage, citizens used to higher standards of living will perhaps want more political freedoms.
It is argued by Strambough, however, that China requires political reform in order to have an innovative, sustainable economy. Mr. Strambough cites political corruption, a slowing economy, the loss of effectiveness of propaganda, and increased political repression as reasons for China’s need to democratize. Political corruption, however, will only pose a serious threat to China if it should impede economic progress, as princelings will be unwilling to give up control of special economic zones (Wang, Lecture). A slow economy, however, will force reform, as a serious economic slowdown would result in a loss of power of the CCP should its members not comply to reforms. While repression does prevent the easy flow of knowledge, the Chinese internet is open enough to continue to allow economic innovation . Additionally, CCP legitimacy is now based on economic progress and nationalism, not traditional ideological propaganda. Strambough’s concerns that China must democratize to continue flourishing is faulted in that China need only further reform itself economically to maintain stability and CCP control.
While China is entering a precarious time, facing environmental degradation, inequality and economic and nationalistic threats, China is equipped to handle these issues effectively. As long as China initiates more market reforms, the economy will continue growing and the CCP will remain in control. The other issues such as environmental degradation and inequality are all quelled by economic growth and reform, therefore not requiring democratization or political reform. The threat of nationalism is a hollow one, also not requiring political reform. All of these aforementioned threats to China can be traced back to the economy; therefore, as long as reforms continue the economic progress, democratization is not needed and China will remain strong and stable under the CCP.