In China, The Communist Party Rubber Hits The Capitalist Road

China’s resilient system of governance has endured for millennia. Its success has rested on the hierarchical authority of an “emperor” who is ethically bound to serve “all the family” of society, combined with guidance by a learned “mandarinate” class tested by experience and empowered on the basis of merit.

Every dynasty under this system at first gave the civilization a new burst of energy and confidence, but in time failed to fulfill its ethical duties and eventually succumbed to the decay of corruption. Consequently that dynasty was overthrown and a new emperor took over.

The governing system in China today under the Communist Party is not a departure from, but a modern organizational echo, of this ancient political lineage. It has been responsible for pulling hundreds of millions out of poverty into moderate prosperity, laying the world’s longest high-speed rail system anywhere that connects burgeoning new megacities and reaching the top ranks of the global economy in only three astonishing decades.

Today, however, the system which has managed to balance stability and change for so long is being challenged as never before. As in previous dynasties, the red emperor is fighting to retain legitimacy through a concerted and protracted crackdown on corruption.

Propping Up and Cracking Down

But new strains unique to the 21st century are also manifestly evident in the Party leadership’s simultaneous effort to prop up the Shanghai and Shenzhen stock exchanges through massive state intervention while cracking down on an emergent civil society. Aside from ordering state-controlled brokerages and banks to stop selling any holdings, China’s leaders have tightened censorship of social media and approved the sweeping arrests of rights lawyers across the country. Even activists who favor the Party’s stated reform goals — promotion of women’s rights or curbing corruption and pollution — are harassed or arrested.

Decades into reform, this is finally where the Communist Party rubber hits the capitalist road and a restless public connected by social networks. The nemesis undoing its capacity to stem volatility and maintain stability through traditional hierarchical control is the democratization of information. Publicly listed stocks are valued and traded based on information widely shared by investors and can’t simply be commanded to only go up. Six hundred million Weibo and WeChat users, who share their reality several times a day with others, can’t simply be told something evident to all is not true.

The nemesis undoing its capacity to stem volatility and maintain stability through traditional hierarchical control is the democratization of information.

The Party’s conundrum is real: As the “encompassing organization” in charge of everything, it is at fault if anything goes wrong. Despite the considerable merits of a one-party system that can forge consensus and unity of purpose for beneficial long-term goals, President Xi and his fellow leaders are laboring under the power of the wrong metaphor. Their guiding light seems to be a misreading of the lessons of the collapse of the Soviet Communist party in the late 1980s and early 1990s.

China’s top party officials appear to believe that the Soviet party met its demise because of Gorbachev’s policy of “glasnost,” or transparent information, and has thus concluded the way to survive is to construct a narrative people are compelled to believe in by controlling what they are otherwise allowed to know.

The reality is that the Soviet party collapsed precisely because of a similar effort to disguise reality with a trumped up narrative that didn’t square with the facts. When the lies were taken away under “glasnost,” there was nothing there. The Chinese party could not be more different. In China, the emperor does have clothes. It has demonstrably delivered for its people over the last three decades.

Certainly there have been mistakes. But admitting mistakes and fixing them, not covering them up, is what establishes legitimacy in the information age when everyone knows what’s what anyway.

A Challenge to the Unitary State

It is true that China has always been a unitary state that never experienced the Western battles between religious and secular authority which, historically, created the space for an autonomous civil society that is beyond the power of the state. For this reason China’s governing philosophy has never developed an institutional separation of powers. Even the Qin Dynasty School of Legalism — which is said to be President Xi’s primary inspiration in his anti-corruption campaign — was meant to reinforce the administrative power of the unitary state. “Rule by law” is not meant to give the individual a way to redress abuses of power through the appeal to an independent judiciary as “rule of law” would do, but to ensure that rulers and citizens alike abide by rules set down by the state when their ethical fortitude falters.

What is different for China now than during its 2,000 years of institutional civilization is the intrusion of the information age where all share the same access to information. Just as the bourgeoisie created the space for civil society vis-à-vis royal absolutism in Europe, and just as women are today the makers of civil society vis-à-vis theocracy and patriarchy in the Islamic world, so, too, are retail investors and netizens the makers of civil society in China.

The Party’s conundrum is real: As the ‘encompassing organization’ in charge of everything, it is at fault if anything goes wrong.

This is a new and unprecedented development for such an old civilization. Acknowledging this reality does not mean China should move toward the organized chaos and legalized campaign finance corruption of multi-party democracy. In much of the West, particularly in the U.S., competing partisanship has divided the body politic and paralyzed governance with disconsensus to the detriment of the common good. And when elected officials increasingly represent their contributors instead of constituents, voting becomes a form of disenfranchisement disguised as consent of the governed.

Rather, China might take its cue from Singapore. There, investor behavior makes or breaks stock prices based on transparent and trusted information. An independent judiciary blocks abuse of authority and disables endemic corruption.

When the encompassing umbrella of the banyan tree becomes so dense it shuts out too much light to allow new growth on the ground beneath, Singapore’s former Foreign Minister George Yeo has written, it needs to be pruned, not uprooted. Having earned allegiance to its narrative through performance, Singapore’s nanny state has gained the confidence to lighten up and give civil society more room to breathe. China’s leaders would better serve their cause by adopting the power of the right metaphor from their own civilizational sphere — Singapore — instead of obsessing about the collapse of the old Soviet party that has little in common with the Asian way.