The inevitability of Chinese democracy

Francesco Giavazzi Project Syndicate

Fifteen years ago, Fang Hongin was protesting in Tienanmen Square. A few years ago, in Beijing, he ran one of China's most popular TV shows, each week testing the limits of the authorities' indulgence. Today, he runs Dragon TV, Shanghai's leading station, and advertisements featuring him hang from the city's skyscrapers.

Hu Shuli belongs to the same generation: The journalist whom the Economist magazine calls "China's most dangerous woman," moved from her first job, with the Party press, to editing Caijng, a business magazine that runs stories on corruption, exposing businessmen and public officials.

It would be a mistake, however, to interpret these experiments with a free press as signs that democracy in China is near. The Party allows Caijng to expose corruption because this helps it to stop China's most serious disease. "The first civil right is getting out of poverty," says Yongtu Long, one of China's WTO negotiators. "In 15 years, we got 200 million people out of poverty; 700 million Chinese today have access to electricity, an unknown luxury 15 years ago. This is why our priority is growth: Everything else, frankly, is less important."

Growth, however, does only mean getting people out of poverty. Twenty-five years ago, China had a more egalitarian society than Sweden; today there is vast inequality between city and countryside, between the western provinces and those bordering the Pacific ocean, and within cities, which attract a constant flow of former peasants looking for jobs. Indeed, China's income distribution today looks more like that of Brazil than that of Sweden.

But more inequality also means more opportunities: Becoming rich today in China remains very difficult, but it is no longer impossible -- just walk into one of the pubs of downtown Shanghai. Inequality can be accepted, but not if it is the fruit of corruption, and this remains China's foremost social problem, which the Party has been unable to eradicate, despite Caijng's exposis and the death penalty.

Can China really do without democracy? A few years ago, Fareed Zakaria, then an editor of Foreign Affairs, argued against the priority normally given to democracy, simply defined as the possibility of choosing political leaders through free elections. The world is full of democracies, he argued, that routinely violate human rights. "Elections are of little use if democratically elected governments limit the freedom of the press and the independence of the judiciary."

"There is certainly more freedom in Shanghai than in Moscow," says a professor from Tsinghua University in Beijing, echoing Zakaria. She is probably right, although India reminds us that sometimes elections are a powerful and effective mechanism to correct the path a country has taken. India's economy is growing almost as fast as China's, with a similar increase in inequality and, to some extent, corruption. But Indian voters have turned against this model. As a result, India's economy is likely to slow.

It is hard to tell whether this is good or bad. It is probably bad in the short run, but who knows about the longer term? The point is that questions such as, "Are we creating too much inequality?" cannot even be asked in China. The upshot is that whenever a problem gets out of hand, the turnaround comes too late and is dramatic. This is why China cannot shelve the problem of its transition to democracy.

Democracy is not only a mechanism to help prevent strategic mistakes. There is a more mundane reason why many, even within the Party, think that a democratic transition has become inevitable: The Party is simply losing control of the country.

Deng Xiaoping was the last Chinese leader to possess undisputed authority to decide on public policy. Today, the Party's political bureau has more than 20 members and each resolution requires unanimity. More important decisions require an even larger consensus, involving up to 3,000 people. For example, the Party's main current activity is drafting the documents that will be approved at the next congress, scheduled for the autumn of 2007.

The difference between the economy's pace and that of the Party means that the country increasingly runs on its own. As in the past, when a dynasty weakens, the provinces make their own decisions. Even slowing the economy is hard: Lacking an efficient financial system, credit growth must be controlled directly through banks. But the director of the Guangzhou office of China Construction Bank, China's largest, consults with the party leader of his province before executing the directives he receives from the bank's head office in Beijing.

Considering these difficulties, some inside the Party admit that "there is only one way forward: Let someone be in charge, no matter how she or he is chosen, even through an election, provided effective decision-making is restored." So China's democratic transition may be closer than anyone realizes. But if it happens, it will not result from grassroots democratic experiments in towns and villages; rather, it will be an elite- driven transition, careful to preserve the government's control. This is the only condition under which the People's Liberation Army and the all-powerful Military Commission will accept democratization.

The writer is Professor of Economics at Bocconi University, Milan.