ASIA'S GAME OF THRONES

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Published on: November 12, 2015

ASIA'S GAME OF THRONES

The Twilight of Communist Party Rule in ChinaMINXIN PEI

The Communist Party’s post-Tiananmen survival strategy is exhausted, and its new strategy is likely accelerating the party’s demise.

No autocracy has been as successful as the Communist Party of China (CPC) in the post-Cold War era. In 1989, the regime had its closest brush with death when millions of protestors demonstrated in major cities throughout the country, calling for democracy and venting their anger at official corruption. The party was saved only with the help of the People’s Liberation Army (PLA), whose tanks crushed the peaceful protestors around Tiananmen and in Beijing on June 4. In the quarter-century since the Tiananmen massacre, however, the CPC has repeatedly defied doomsayers predicting its imminent demise. It has survived the shock of the collapse of the Soviet Union but also weathered the East Asian financial crisis of 1997–98 and the global financial crisis of 2008. Since Tiananmen, the Chinese economy has grown roughly tenfold in real terms. Its per capita income rose from $980 to $13,216 in purchasing power parity (PPP) in the same period, catapulting the country into the ranks of upper-middle income economies.

Such a record has understandably led many observers, including seasoned China-watchers, to believe that the CPC has become a resilient authoritarian regime with many inner-strengths that most autocracies lack. Among other things, the CPC is said to have developed an effective process of leadership succession based on established rules and norms, a meritocratic system of selecting capable officials, and a capacity to respond to popular demands. Instead of an ossified regime like the Communist Party of the Soviet Union under Leonid Brezhnev, the CPC has demonstrated a remarkable ability to learn and adapt.¹

Unfortunately for proponents of the theory of “authoritarian resilience”, their assumptions, evidence, and conclusions have become harder to defend in light of recent developments in China. Signs of intense elite power struggle, endemic corruption, loss of economic dynamism, and an assertive, high-risk foreign policy are all in evidence. As a result, even some of the scholars whose research has been associated with the authoritarian resilience thesis of have been forced to reconsider.² It has become increasingly clear that the recent developments that have changed perceptions of the CPC’s durability are not cyclical but structural. They are symptomatic of the exhaustion of the regime’s post-Tiananmen survival strategy. Several critical pillars of this strategy—such as elite unity, performance-based legitimacy, co-optation of social elites, and strategic restraint in foreign policy—have either collapsed or become hollow, forcing the CPC to resort increasingly to repression and appeals to nationalism to cling to power.

Hence, China’s ruling elites now face the starkest choice since Tiananmen: The post-1989 autocratic crony capitalist development model is dead, and they can either emulate Taiwan and South Korea to democratize and gain an enduring source of legitimacy, or prepare to apply ever-rising repression to maintain one-party rule. How they choose will affect not just China and Asia, but the whole world.

Despite popular images of “people power” or the “Arab Spring” revolutions, the single most important source of regime change in authoritarian regimes is the collapse of the unity of the ruling elites. This development is caused principally by the intensification of conflict among the ruling elites over the strategies of regime survival and distribution of power and patronage. Experience from democratic transitions since the mid-1970s shows that, as autocracies confront challenges from social forces demanding political change, the most divisive issue among ruling elites is whether to repress such forces through escalating violence or to accommodate them through liberalization. Should reformers prevail, initial steps toward regime transition, typified by relaxation of political and social control, will follow. If hardliners win the fight, greater repression—but also escalating social and political conflict—will result, at least until the regime faces another crisis that forces it to revisit the question of whether a repressive course is the best strategy.³ Another familiar source of elite disunity is the conflict over the distribution of power and hence the ambit of patronage networks. In more established autocracies, such as post-totalitarian Leninist party-states, this conflict tends to arise when competition for power leads to violations of long-established rules and norms that safeguard a delicate balance of power among ruling elites and their physical security. In many if not most cases—and China is no exception—such violations are committed on behalf of family groupings, and hence represent the repatrimonialization of politics.⁴

In the case of China, the collapse of elite unity turns not on a debate between hardliners and reformers, but on a fight for dominance among hardliners themselves. The initial sign of elite disunity at the top was the purge of Bo Xilai, the high-flying former party chief of Chongqing, on the eve of the 18^th CPC Congress in 2012. Later events proved that Bo’s fall was only the prelude to the largest internal housecleaning the party has seen since the Cultural Revolution. After Xi Jinping, the winner of the battle, formally assumed his position as the CPC general secretary and the commander-in-chief of the PLA in November 2012, he launched the most ferocious anti-corruption campaign in recent memory to achieve political supremacy by destroying his rivals. Although Xi’s signature campaign appears to be popular, it has almost overnight dismantled the system the ruling elites painstakingly constructed in the post-Tiananmen era to maintain their unity.

Three pillars supported this system. The first was a delicate balance of political power at the top, commonly known as collective leadership, designed to prevent the emergence of another Mao-like leader who could impose his will on the party. Under this system, key policy decisions were made through a process of consensus-building and compromise, ensuring the protection of the interests of the senior leaders and their factions. The second pillar was absolute personal security for top leaders. One of the key lessons from the debacles of the Maoist era was that elite unity is impossible without such security, because only untouchable rulers have the capacity and credibility to negotiate with each other, strike deals, and resolve intra-regime conflict. The third pillar was a system of sharing the spoils of economic growth among the elites, mainly through large and sophisticated patronage networks. To be sure, this system has caused pervasive corruption, but it also has provided incentives for its elites to toil for the regime.

Today, less than three years after Xi ascended to the top, this system has been shredded. The equivalent of a “multipolar” world at the top of the CPC regime is now a “unipolar” system; the “collective leadership” has yielded to strongman rule and a decision-making process dominated by Xi. Absolute personal security for the top leaders, defined as sitting or retired members of the Politburo Standing Committee, has also been shattered with the fall of Zhou Yongkang, a former member of the committee and internal security chief who drew a life sentence in 2015 after his conviction on corruption charges. The anti-corruption drive and its accompanying austerity measures have also put an end, at least temporarily, to the practice of sharing spoils among elites, engendering their bitterness and reportedly prompting them to engage in work stoppages as protest. While it is doubtful that Xi’s war on corruption will actually root out corruption, it has succeeded in destroying the post-Tiananmen incentive structure inside the regime.

On its own, the transformation of “collective leadership” into “strongman rule” may not necessarily unravel Chinese Leninism. However, the clear initial outcome of this transformation so far is the evaporation of elite unity, the glue that has held together the post-Tiananmen system. Even though there are no overt signs of challenge to Xi’s power within the CPC today, it is a safe bet that his rivals are biding their time, waiting for the right moment to strike back.

If elite disunity deteriorates into a political showdown and results in the rejection of the system Xi is trying to construct, there are only two possible outcomes. One is to bring back the corrupt post-Tiananmen system. On the surface, this may seem the most tempting and promising solution, but it will not work: Several of the key underlying conditions that supported the post-Tiananmen system, in particular investment-driven growth and middle-class political acquiescence secured with prospects of ever-rising prosperity, have largely disappeared. If the status quo ante cannot be restored, the CPC will need another way out. While nobody knows what the party will choose, it is worth remembering that, by that time, the party will have tried and exhausted three models of autocratic governance: Maoism (radical communism), Dengism (crony capitalism), and the Xi model (strongman rule). Ironically, the CPC may find itself in the same dire strait as the Communist Party of the Soviet Union in the mid-1980s: Short of ideas and strategies for maintaining one-party rule in perpetuity, it may be desperate enough to gamble on anything, including democratic reform and political pluralism, as a long-term strategy for making the party a viable force in a China totally transformed by socioeconomic modernization.

If elite unity is the glue of the post-Tiananmen system, economic performance, as is commonly acknowledged, is the most important source of popular legitimacy for the ruling party. A quarter century of high growth has bought the CPC a long period of relative social stability and provided it with enormous resources to strengthen its repressive capabilities and buy off new social elites and the urban growing middle-class. However, as the “Chinese economic miracle” is now ending, the second pillar of the post-Tiananmen system is about to collapse as well.

Ostensibly, the present sharp Chinese economic slowdown may seem like a natural deceleration after decades of torrid growth. But a closer look at the causes of “the great fall of China” suggests that structural and institutional obstacles, not cyclical ones, are at work and that China is entering a phase of low to moderate economic growth that could imperil the legitimacy of the CPC. Press coverage of Beijing’s recent economic troubles has focused largely on the more visible and dramatic symptoms of the Chinese economic malaise, such as the collapse of a stock market bubble and surprise currency devaluation. However, China’s growth deceleration has much deeper roots.

Structurally, China’s rapid growth in the post-Tiananmen era was driven principally by one-off favorable factors or events, and not by the purported superiority of an authoritarian state. Among these factors or events, the most important is the “demographic dividend”, which provided a seemingly endless supply of cheap and able-bodied young workers for China’s industrialization. Besides their low wages, young migrants from rural areas to urban centers can gain an instant and large increase in labor productivity simply by virtue of being paired with operating capital, without need for extensive educational preparation. Consequently, the mere redeployment of the country’s excess rural labor force to factories, shops, and construction sites in the cities can make the economy more productive. According to Chinese data, an urban worker’s productivity is four times higher than that of a rural peasant. In the past three decades, about 270 million rural laborers (excluding their families) have moved to cities and now account for 70 percent of the urban work force. Some economists estimate that about 20 percent of China’s GDP growth in the 1980s and 1990s came from the rural-urban labor relocation.⁵ But because China’s population is aging rapidly and the mass migration from rural to urban areas has peaked, this one-off favorable structural factor cannot be replicated.

Another one-off positive shock that powered China’s growth since Tiananmen was its entry into the World Trade Organization (WTO) in 2001. In the 1990s China’s export growth averaged 15.4 percent per annum, thanks to its integration into the global economy. But after its entry into the WTO, China achieved annual growth in exports of 21.7 percent over the period 2002–08. Export-driven growth began to slow after 2011. Between 2012 and 2014, export growth averaged 7.1 percent, a third of the growth in the prior decade. In the first seven months of 2015, exports contracted around 1 percent, the development that probably prompted Beijing to devalue its currency.

Perhaps the most troubling aspect of China’s long-term economic outlook is the diminishing return from its investment-driven growth strategy. As a developing country with relatively low stocks of capital, China initially benefited immensely from a sustained rise in its investment rate. In the 1980s, China ploughed an average of 35.8 percent of GDP into factories, infrastructure, and housing. The rate rose to 42.8 percent on average in the 2000s and has reached 47.3 percent since 2010. Such massive increase in investment, accounting for more half of China’s GDP growth, has been the primary engine of economic expansion in the past two and half decades.

However, investment-driven growth in the Chinese context has had three negative consequences. One is the diminishing returns on investments, because each incremental increase in output requires more investment, as measured by capital output ratio (the amount of investment needed to produce an additionalyuan of GDP). In the 1990s, Chinas capital output ratio was 3.79. In the 2000s, it rose to 4.38. This trend—growth requiring ever-rising investment—is simply not sustainable. China is already investing nearly half of its GDP, an extraordinary number made possible by state control of infrastructure development. The extent of overcapacity and misallocation of capital are equally extraordinary.

Another harm inflicted on the economy is that investment squeezes out household consumption (36 percent of GDP in 2013, compared with 60 percent in India), causing a massive structural imbalance and making sustainable growth impossible. That sustainable growth must come from moving away from export-led modalities to domestic market growth, but it cannot set roots with household consumption so artificially low.

The final cost of China’s investment-led growth is that much of it has been financed by credit and ploughed into industrial sectors already plagued with excess capacity. With debt-to-GDP ratio exceeding 280 percent of GDP today (compared with 121 percent in 2000), risks of a full-blown financial crisis have risen because the largest borrowers—local governments, state-owned enterprises, and real estate developers—have poor repayment capacity due to a narrow tax base (local governments), overcapacity and poor profitability (state-owned enterprises), and a deflating property bubble (real estate developers).

If China’s long-term economic woes are purely structural, the country’s prospects are not necessarily dire. Effective reforms could reallocate resources more efficiently to make the economy more productive. But the success of these reforms critically hinges on the nature of the Chinese state and its political institutions. Sustained wealth generation can only take place in states where political power is constrained by the rule of law, private property rights are effectively protected, and there is wide access to opportunity. In states dominated by a small ruling elite, the opposite happens: Those in control of political power become predators, using the coercive instruments of the state to extract wealth from society, defend their privileges, and impoverish ordinary people.⁶

To be sure, the economic policies of the CPC have changed beyond recognition since the end of the Mao era. However, the Chinese party-state has yet to shed its predatory instincts and institutions. Despite rhetoric professing respect for the market and property rights, the actual conduct and policies of the Chinese ruling elites show that they neither respect private property rights nor wish to protect them. The most telling evidence of the absence of their willingness to constrain the predatory appetite and capacity of a one-party state is the top leadership’s undisguised hostility to the idea of constitutionalism, the essence of which is enforceable limits on the power of the state and its rulers. The CPC’s rejection of any meaningful limits on its power, in practical terms, implies that China cannot have truly independent judicial institutions or regulatory agencies capable of enforcing laws and rules. Since genuine market economies cannot function without such institutions or agencies, it is clear that, as long as the party places itself above the law, real pro-market economic reforms are impossible.

Many observers argue that a one-party regime is nevertheless capable of implementing pro-market reforms, citing China’s post-Mao history as evidence. Such an argument misses the crucial fact that post-Mao economic reforms, however impressive on the surface, have largely exhausted their potential. Moreover, the Maoist system was so inefficient that even partial reforms could unleash enormous productivity gains, especially in a society where the entrepreneurial energy of the people had been suppressed with totalitarian terror for three decades. Even more importantly, these partial economic reforms have not yet gutted the economic foundations of the CPC rule: state ownership of most productive assets, such as land, natural resources, power-generation, telecom, banking, financial services, and heavy industries. What is holding the Chinese economy back is not its dynamic private sector, but its inefficient state-owned enterprises, which continue to receive subsidies and waste precious capital.⁷

Genuine and complete economic reforms, if actually adopted, will threaten to destroy such foundations. In all likelihood, giving up most of its control over the economy and China’s immense national wealth will result in the organizational collapse of the CPC. The CPC finances and supports its vast organizational infrastructure—party committees and cells through Chinese society—with public funds, the exact amount of which is huge but remains unknown. Much of the funding for the CPC’s organization and activities is provided through the opaque budget of the Chinese state. If the CPC gives up its control of the economy and government spending is made truly transparent, it will no longer have the financial resources to exist. It will become impossible to support the lavish party perks and privileges, such as high-quality health care, large entertainment budgets, free housing, and other allowances, that are provided to officials as rewards for their membership in the elite club.

Another catastrophic consequence of complete pro-market reforms would be the destruction of the patronage system the CPC relies on to secure the loyalty of its supporters. The foundation of this system is state-owned enterprises (SOEs) and party-controlled economic bureaucracies and regulatory agencies. If market reforms lead to genuine privatization of these firms (which account for at least a third of the Chinese GDP), the CPC will no longer be able to reward its loyalists with good jobs and contracts, thus risking the loss of their support altogether. Instructively, in the CPC’s blueprint for economic reform released in the fall of 2013, its new leadership reiterated that the party would not abandon the SOEs.

Thus, the continuation of China’s predatory and extractive institutions precludes successful, radical, and complete market reforms. The impossibility of the task of constructing a genuine market economy supported by the rule law can be summarized in a wise Chinese proverb, yuhumoupi, or bargaining with a tiger for its skin. The long-term prospects for China’s economic growth, key to the CPC’s survival, are not optimistic. As the era of rapid growth produced by partial reforms and one-off favorable factors or events ends, sustaining China’s growth requires a radical overhaul of its economic and political institutions in order to achieve greater efficiency. But since this fateful step will destroy the economic foundations of CPC rule, it is hard to imagine that the party will actually commit economic, and hence political, suicide. Those unconvinced by such reasoning should count the number of dictatorships in history that willingly gave up their privileges and control over the economy in order to ensure long-term national prosperity.

Slouching Toward Repression and Nationalism

If long-term economic stagnation were to set in, the Chinese middle class’s support for the status quo will erode. Co-optation of the fast-growing middle-class—another key pillar of the CPC’s post-Tiananmen survival strategy—has been enabled by the past quarter century’s economic boom. China’s secular economic slowdown will undoubtedly reduce opportunities, curtail expectations, and limit upward mobility for members of this critical social group, whose acquiescence to the CPC’s rule has been contingent upon its ability to deliver satisfactory and continuous economic performance.

With the evaporation of elite unity, looming economic stagnation, and likely alienation of the middle-class, the post-Tiananmen model is left with only two pillars: repression and nationalism. Contemporary authoritarian regimes, lacking popular legitimacy endowed by a competitive political process, have essentially three means to hold on their power. One is bribing their populations with material benefits, a second one is to repress them with violence and fear, and the third is to appeal to their nationalist sentiments. In more sophisticated and successful autocracies, rulers rely more on performance-based legitimacy (bribing) than on fear or jingoism mainly because repression is costly while nationalism can be dangerous. In the post-Tiananmen era, to be sure, the CPC has employed all three instruments, but it has depended mainly on economic performance and has resorted to (selective) repression and nationalism only as a secondary means of rule.

However, trends since Xi Jinping came to power in late 2012 suggest that repression and nationalism are assuming an increasingly prominent role in the CPC’s survival strategy. An obvious explanation is that China’s faltering economic growth is creating social tensions and eroding public support for the CPC, thus forcing the regime to deter potential societal challenge with force and divert public attention with nationalism. There is, however, an equally valid explanation that many observers have overlooked. A survival strategy that depends on delivering economic growth to maintain legitimacy is inherently unsustainable not only because economic growth cannot be guaranteed and ever-rising popular expectations will be impossible to meet, but also because sustained economic growth produces structural socioeconomic changes that, as demonstrated by social science research and histories of democratic transitions, fatally threaten the durability of autocratic rule.

Autocracies forced to strike a Faustian bargain with performance-based legitimacy are destined to lose the wager because the socioeconomic changes resulting from economic growth strengthen the autonomous capabilities of urban-based social forces, such as private entrepreneurs, intellectuals, professionals, religious believers, and ordinary workers through higher levels of literacy, greater access to information, accumulation of private wealth, and improved capacity to organize collective action. Academic research has established a strong correlation between the level of economic development and the existence of democracy and also between rising income and probabilities of the fall of autocracies.⁸ In the contemporary world, the positive relationship between wealth (measured in per capita income) and democracy can be seen in the chart below, which shows that the percentage of democracies (classified as free by Freedom House) rises steadily as income level increases. Partly free countries decline as income rises as well. The distribution of non-democracies, or authoritarian regimes, resembles a U-shape. While more dictatorships can survive in poorer countries (the bottom two-fifths of the countries in terms of per capita income), their presence in the top two-fifths of the countries seems to reject the notion that wealth is positively correlated with democracy. A closer look at the data, however, shows that nearly all the wealthy countries ruled by dictatorships are oil-producing states, where the ruling elites have the financial capacity to bribe their people into accepting autocratic rule.⁹

Sources: Calculated using income data based on per capita purchasing power provided by the World Bank. Freedom indices provided by Freedom House.

Chinese rulers, if they take a look at the chart, should worry about their medium-to long-term prospects. There are 87 countries with a higher capita income, measured in PPP, than China. Fifty-eight of them are democracies, 11 are classified by Freedom House as “partly free”, and 18 are dictatorships (“not free”, according to Freedom House). But of the 18 “not free” countries with higher per capita income than China, 16 are petro-states (Belarus is included in this group because Russia provides it with significant subsidized energy). The two non-oil states are Thailand (a military dictatorship that overthrew a semi-democracy in 2014) and Cuba (also a Leninist one-party dictatorship). Of the 11 partly free countries, Mexico and Malaysia are significant energy producers while Kuwait and Venezuela are classical petro-states. What should give the CPC leaders even more cause to worry is that Chinese per capita income of $13,216 (PPP) in 2014 is comparable to that of Taiwan and South Korea in the late 1980s, when both began to democratize.¹⁰ If the experience of regime transitions in upper middle-income countries, including Taiwan and Korea, were applicable, the CPC should expect rising societal demand and mobilization for political change in the coming decade (some signs of such mobilization can already be detected).

The only implication one can draw from this analysis is that, unless China wants to follow Cuba’s example and maintain a closed economy to ensure the survival of a one-party regime, it will face decreasing odds of holding on to power (provided that China does not miraculously become the equivalent of Saudi Arabia). But since China will never be a petro-state, the CPC may have a chance of long-term survival by introducing some form of competitive politics and becoming a “partly free” regime—a substantial step forward from its Leninist status quo. Alternatively, it can resist even moderate reforms and bet its survival on escalating repression and fueling nationalism.

Judging by the policies and measures taken by the current CPC leadership, the party seems intent on betting against history. In the past three years, the party has greatly intensified repression. Among its most notable steps, the CPC has aggressively tightened censorship of the internet, social media, and the press, passed a national security law designed primarily to curtail non-governmental organizations and ensure regime security, destroyed hundreds of church crosses to restrict religious freedoms, strengthened ideological control on college campuses, and arrested dozens of human rights lawyers and civic activists on trumped-up charges. In many ways, the level of repression today is higher than any time since the Tiananmen crackdown.

Equally worrisome but more dangerous is Beijing’s escalating appeal to Chinese nationalism. The CPC has all but abandoned Deng Xiaoping’s low-profile and non-confrontational foreign policy in favor of a more muscular external strategy that has brought China on a collision course with the United States. Evidence of Beijing’s renewed appeal to nationalism and its assertive foreign policy can be found in the staging of a first military parade celebrating Japan’s defeat in World War II (even though the CPC played at most a marginal role in the war), a propaganda campaign celebrating the “China Dream” (the essence of which is the revival of China as a great power), a near-explicit demand for parity with the United States (couched in Beijing’s call for a “new type of great power relationship”), relentless cyber-attacks against U.S. government and commercial establishments, and provocations and brinksmanship in the East and South China Seas (establishing a controversial Air Defense Identification Zone over disputed Senkaku/Diaoyu Islands and mass land reclamation and island-building in the disputed waters of the South China Sea).

If the CPC believes that escalating repression and nationalism will enable it to maintain power during a period of elite disarray, deteriorating economic performance, and heightened social tensions, it must consider the enormous risks and costs of this new survival strategy. Besides taking China backwards, this strategy is unsustainable and dangerous. Repression may work for a while, but autocracies overly dependent on it must be prepared to escalate the use of violence continuously and apply ever-more draconian measures to deter opposition forces. Repression can also be bad for business, as rulers are forced to curtail information flows and economic freedom to ensure regime security. (Indeed, Western firms are already complaining about the inconveniences caused by the Great Firewall.) Raising the level of repression when the economy is sinking into stagnation will strain the CPC’s resources because repression requires the maintenance of an expensive network of informants, secret police, censors, and paramilitary forces. Repression also incurs huge moral costs and could ignite a divisive debate inside the regime. Let’s put the question starkly: Is China really ready to become another North Korea?

Manipulating nationalism and muscle-flexing may deliver short-term political benefits, but only at the cost of the CPC’s long-term security. One of the wisest strategic choices made by Deng Xiaoping was to develop friendly ties with the U.S.-led West to accelerate China’s modernization program. In the post-Deng era, Xi’s two predecessors, Jiang Zemin and Hu Jintao, also learned a key lesson from the collapse of the Soviet Union: a strategic conflict with the United States would imperil the very survival of the CPC. The costs of a new arms race would be unbearable, and outright hostility in Sino-U.S. relations would destroy the bilateral economic relationship.

It is unclear whether the CPC leadership understands the risks of its new and still-evolving survival strategy. If its members are convinced that only this strategy could save CPC rule, now threatened by the collapse of the key pillars of the post-Tiananmen model, they are likely to continue on the present course. Ironically, such a course, if the above analysis is right, is more certain to accelerate the CPC’s demise than to prevent it.

¹The literature on China’s “resilient authoritarianism” is large. Representative works include Andrew J. Nathan, “Authoritarian Resilience,” Journal of Democracy (January 2003); David L. Shambaugh, China’s Communist Party: Atrophy and Adaptation (University of California Press, 2008).

²Andrew Nathan acknowledged in 2013 that, “The consensus is stronger than at any time since the 1989 Tiananmen crisis that the resilience of the authoritarian regime in the People’s Republic of China (PRC) is approaching its limits.” Nathan, “Foreseeing the Unforeseeable,” in Andrew Nathan, Larry Diamond, and Marc Plattner, eds., Will China Democratize? (Johns Hopkins University Press, 2013); David Shambaugh published a much-noted long essay, “The Coming Chinese Crackup,” in the Wall Street Journal on March 6, 2015 arguing that the endgame for the CPC regime has begun.

³Samuel P. Huntington, The Third Wave: Democratization in the Late Twentieth Century(University of Oklahoma Press, 1993); Guillermo O’Donnell and Philippe C. Schmitter,Transitions from Authoritarian Rule: Tentative Conclusions about Uncertain Democracies (Johns Hopkins University Press, 2013).

⁴See Aviezer Tucker, “Why We Need Totalitarianism”, The American Interest (May/June 2015).

⁵Cai Fang Wang Dewen, “Impacts of Internal Migration on Economic Growth and Urban Development in China,” in Josh DeWind and Jennifer Holdaway, eds., Migration and Development Within and Across Borders (The Social Science Research Council, 2008.)

⁶The literature on the predatory state and extractive institutions is vast. The most influential works are Daron Acemoğlu and James Robinson, Why Nations Fail (Crown Publishing, 2012); Douglass North, Institutions, Institutional Change and Economic Performance (Cambridge University Press, 1990).

⁷The huge inefficiency of state-owned enterprises, as compared with the dynamism of the Chinese private sector, is detailed in Nick Lardy, Markets over Mao: The Rise of Private Business in China (Peterson Institute for International Economics, 2014)

⁸Seymour Martin Lipset, “Some Social Requisites of Democracy: Economic Development and Political Legitimacy,” American Political Science Review (March 1959); Adam Przeworski,Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990(Cambridge University Press, 2000).

⁹Academic research has also established a strong link between oil and dictatorship. See Michael Ross, “Does Oil Hinder Democracy?” World Politics (April 2001).

¹⁰Yu Liu and Dingding Chen, “Why China Will Democratize,” Washington Quarterly (Winter 2012).

Minxin Pei is the Tom and Margot Pritzker ’72 Professor of Government at Claremont McKenna College and a non-resident senior fellow of the German Marshall Fund of the United States. His latest book, China’s Crony Capitalism: Dynamics of Regime Decay, will be published by Harvard University Press in 2016. This article is drawn from a larger research project on China’s likely regime transition that has received financial support from the Smith Richardson Foundation, the Carnegie Corporation of New York, and the John D. and Catherine T. MacArthur Foundatio