TO GET RICH IS GLORIOUS–AND GOOD FOR DEMOCRACY

By David Da-hua Yang

Wealth begets glory in today’s China. But whether it will also beget democracy is an open question. True, an extensive network of civic organizations has sprung up across the country. But the government has cultivated it–as a way to maintain its control over an increasingly independent society. And, as the wealth of this nonstate sector continues to grow, it is likely that private economic power will, more and more, be parlayed into political power and, in the process, exploit the very mechanisms designed to temper it. Persistent tension between the central government and various levels of local governments will no doubt help this process along.

Since the fall of the Iron Curtain and the Soviet Union, a great deal of scholarly attention has been focused on the role civic associations play in the process of introducing democracy to a society accustomed to autocracy. It is generally agreed that the process requires not simply a middle class, but an autonomous one. Those looking for similar patterns in China are driven to distraction by the close link between Chinese civic organizations and the state. China’s nouveau riche elite are proving to be a disappointing lot. Instead of challenging state authority, they try to accommodate it; instead of asserting their rights, they ingratiate themselves with the state. How can such a self-centered, materialistic lot be expected to change a system that has treated them so well?

WHO REPRESENTS WHO?

Certainly, the vast majority of China’s “civic” organizations represent the state rather than the people. Often enough, their primary function is to promulgate state directives. And when they do attempt to influence policy, they sometimes are shut down.[1] In the city of Tianjin, an official of the local Self-Employed Laborers’ Association (SELA), a group of small business owners, told an interviewer bluntly that the purpose of his organization was to control its members.[2] Little surprise that the people they purport to represent hold many state-sponsored associations in great contempt. There is, apparently, no substitute for friends in City Hall.

There is also little doubt that, from the perspective of the state center, civic associations are primarily instruments of state control. But, as is so often the case, local agents of the state will have their own very different agendas and incentives. Thus, while Chinese civic organizations may not be effective as advocates for the people, neither are they always effective as instruments of the state. In implementing policies, bureaucrats frequently cast aside the state’s original intent in their efforts to advance their own parochial objectives. The resulting fissures in the state edifice may work to the great advantage of social elements, especially when these elements have ample resources at their disposal.

Indeed, in Tianjin, the performances of two state-sponsored business organizations serving different memberships could not have been more different. Where officials of the SELA see themselves mainly as overseers, officials of the ICF (Industrial & Commercial Federation, a federation of large-scale enterprises) frequently resort to influence peddling on behalf of their members. Christopher Nevitt, the author of the Tianjin case study, argues that the difference lies in the amount of resources available to the two groups’ respective memberships. Similarly, case studies in Shenyang revealed that the primary consideration in city officials’ dealings with social groups was economic. As long as it is good for the local economy, central regulations can be brushed aside.[3] Likewise, recent studies have linked the autonomy of local labor unions to the emergence of professional managers–as these managers become increasingly independent, the state must rely on unions to balance managerial power.[4]

ROOM FOR OPTIMISM

Seen from this perspective, there are grounds for optimism for the future of civic associations in China. In the reform era, state mobilization of society is a double-edged sword. Because the state no longer enjoys a monopoly over over the distribution of sources, and can no longer dictate all the terms, it must accommodate society’s interests if it wants society’s cooperation. No wonder that a crucial factor in many exchanges between state and society appears to be the economic resources at society’s disposal. The more resources society has, the more concessions the state needs to make. Societal elements are thus beginning to influence political policy. In many rural townships, successful enterprise managers are given responsible posts in government. Where formal entry into government is more difficult, local bureaucrats are co-opted by private business interests.

A higher level of elite business interests in politics does not, of course, necessarily equate to a more decisive move toward democracy. Given the highly profitable partnership between elite business interests and officialdom, it may even be argued that business interests would be hostile to political changes. But there are two points we should keep in mind. First, though oligarchy is not democracy, it is still closer to democracy than Leninist dictatorship. Second, globalization and China’s move to a market economy will drastically alter the landscape of Chinese business. Old relationships will become obsolete. The ones to hold all the cards will be entrepreneurs with the knowledge and talent to create wealth, not bureaucrats who happen to hold the right chops and occupy the right offices. In the end, any inconvenience caused by the loss of old guanxi may be more than compensated by the benefits of a democracy. Greater transparency and predictability in politics, for example, greater security for private property rights, not to mention China’s greater integration into the international community.

After twenty years of reforms, the nonstate sector has evolved to become the primary engine of economic growth, employing more than half the urban workforce and accounting for three-quarters of industrial output. But, up to now, the nonstate sector’s contribution to the national budget has been surprisingly small, in part because of preferential tax policies, but also because the government has been unwilling to rely on politically unruly private business interests. The dismal performance of the state sector may leave the government little choice, however. By 1997 the budgetary revenue-to-GDP ratio had fallen to 11.6 percent, well below the international norm of over 40 percent.[5] It appears plausible that, over time, the economic leadership of the nonstate sector will gradually translate into greater leverage over political leadership. Even today, the Chinese state has to extract revenue through compromise and negotiation with society, and the balance of power will shift increasingly in society’s favor. Since the mid-1990s the central government has begun to collect revenue directly from local enterprises. This increased interaction will in all likelihood play to the private sector’s advantage. With central and local authorities in direct competition over the same sources of revenue, the private sector will have, or be able to create, more opportunities to benefit from them.

“THE TINIEST SPARK”

Still, it is likely that the first political concessions will come from local governments, which have proven themselves to be supreme pragmatists with little ideological baggage. For example, the hugely successful decollectivization of agriculture was a local initiative driven by “pressure from the populace within the context of interregional competition for economic prosperity”.[6] Caught between the center and the market, local governments will become ever more susceptible to societal pressure. It is also likely that elements of business interests already incorporated into the state apparatus will become increasingly assertive. They may not necessarily act coherently as a group, but their individual efforts may help shape political institutions in the aggregate. We should not underestimate the potential of local changes to change China.

As Chairman Mao himself famously put it, “even the tiniest spark can ignite the plain.”

NOTES

1. Frolic, Michael, “State Led Civil Society,” in Civil Society in China, edited by Tim Brook and Michael Frolic, M.E. Sharpe, 1997.

2. Nevitt, Christopher, “Private Business Associations in China: Evidence of Civil Society or Local State Power?,” The China Journal, July 1996

3. White, Gordon et al., In Search of Civil Society: Market Reform and Social Change in Contemporary China, Clarendon Press, 1996, pp. 137-138

4. Zhang, Yunqiu, “From State Corporatism to Social Representation”, in Civil Society in China, edited by Tim Brook and Michael Frolic, M. E. Sharpe, 1997

5. Zhang, Le-yin, “Chinese central-provincial fiscal relationships, budgetary decline and the impact of the 1994 fiscal reform: An evaluation,” The China Quarterly, March 1999. Table 4.

6. Luo, Xiaopeng, “Rural Reform and the Rise of Localism,” in Changing Central-Local Relations in China, edited by Jia Hao and Lin Zhimin, Westview Press, 1994. Pp. 116-119.

David Da-Hua Yang is a doctoral candidate in the Program in Political Economy at Princeton University. He holds an MBA from New York University.

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