The man charged with building a pension system for over a billion people told me that they are looking at all possible models. “We like the Chilean one,” he said. “You mean the private pension fund where workers contribute and then the money is invested?” I asked. He nodded. Despite the stock market crash of 2015, Chinese authorities introduced reforms that required public workers to pay into the system for the first time. Many people, including almost all government workers, are now funding their own pensions, at least in part. That begins to change the relationship of the citizens to their leaders, lessening dependence on the government and emphasizing individual responsibility.
Pressures are growing too to rein in the arbitrary power of the state. The absence of sound courts and a culture of rule of law is retarding the development of the private sector. The problem is evident in the lack of protections for people’s assets. Citizens watch as developers and local party leaders expropriate their land. With no legal means of recourse, they riot. China experiences roughly 180,000 protests every year, according to a professor at Tsinghua University.6 In 2011, residents in the fishing village of Wukan demonstrated how the lack of a reliable legal system has implications for social stability. Protests over corrupt land seizures escalated into an all-out rebellion as villagers barricaded roads and kicked out local police and party officials. Order was eventually restored in a deal that allowed villagers to vote for new local leaders, in what might have been China’s freest ever local election. But the experience was a searing one for the authorities. Chinese officials now readily admit that they need a reliable court system that can command trust. Could an independent judiciary be next?
The country also faces growing social inequality—the rich are getting richer while upward mobility is slowing for the poor. This has led the leadership to crack down on ostentatious wealth, particularly among children of the party’s elite. One young man made unwanted headlines when he crashed his black Ferrari after a night out in Beijing. His father was a high-ranking official. Party members have since been told to stay out of fancy restaurants and dress humbly. The “Red Nobility” has become a problem in a narrative of socialist equality.
Try as the government might to curb the wealthy, though, people find ways to spend their money and gain advantage. On a recent trip, I noticed a group of kids leaving their middle school. They were wearing running gear with a prominently displayed swoosh.
“Is that a sports team?” I asked my guide.
“No, that is what they like to wear to school. You have to have money to get your kids into that school.”
Incredulous, I said, “But all schools are public.” He didn’t answer.
The regime’s record thus far of coping with change is pretty good. But the demands are proliferating and accelerating. A few men have to find answers to myriad challenges. If you are going to be omnipotent, you had better be omniscient too.
When an authoritarian makes a good decision, he can deliver on it quickly. But when he makes a bad decision, he still delivers on it, but with little or no feedback until it is too late. Chinese leaders have made some bad decisions.
China has a horrible demographic problem stemming in part from a bad decision delivered effectively. In the hope of slowing population growth, families were allowed to have only one child. There was no population explosion. But the law of unintended consequences has kicked in. China now has an aging population and one that is skewed toward men. It turns out that families, particularly rural families, who were going to have one child wanted a boy. Many girls disappeared. Now there are reportedly as many as thirty million Chinese men without mates. The regime reversed the one-child policy in 2015, but the damage has already been done.
Similarly, the rapid industrialization of the country has had its own negative effects. Chinese cities are experiencing a pollution nightmare. It is quite literally impossible on some days to see the skyline. During a recent trip, one of my dinner guests rode his bicycle to the restaurant—wearing a gas mask. The regime has tried a variety of schemes. The most widely ridiculed is one that issues license plates with a number that designates your “driving days.” People are supposed to use their cars only every other day. “Don’t they know that people just buy two license plates?” a friend told me.
At first the regime tried to deny the problem, or at least to downplay it. The government issued a pollution index each day. Unfortunately, people had access to a smartphone app that measured the particulates in the air. The U.S. embassy was also displaying the real numbers on a very large screen. Eventually, the regime gave in and started to provide more realistic numbers, and it is now pushing effectively for greener policies.
This episode reveals a bigger problem for the Communist Party: The population increasingly has access to independent information. Authoritarians need to control the narrative, and that is getting hard to do. While the Chinese government works harder than any other to censor the Internet, many say that people find a way around the walls. Dissidents have not been able to use social media to organize or to mobilize on a large scale: The government has managed to squash that kind of activity. But when there is a crisis—for instance, with tainted baby milk formula in 2008—people turn to the Web for the true story. In other words, the party may be able to stifle some of the effects of proliferating sources of information. It is devoting enormous resources to doing so, by hiring over a million people to censor the Internet. One wonders if it will ever be enough.
In short, the Chinese government faces some unpalatable choices. For any authoritarian regime, even a successful one, the question is whether, when, and how to take steps toward political reform. In advance of the 18th Party Plenum in 2012, there was great expectation that Beijing might do just that. The selection of Xi Jinping, a man with an impeccable pedigree (his father was one of Mao’s lieutenants on the Long March), raised hopes that he might be China’s Gorbachev. But unlike the Soviet leader, Xi would have economic prosperity as a shield against collapse. Perhaps China could find a soft landing.
The story thus far is largely in the opposite direction. Xi has amassed more power than any Chinese leader in recent memory. In the past, executive authority was divided between a strong premier with responsibility for the economy and the president, who handled everything else. Zhu Rongji and Jiang Zemin exemplified the division of labor. It allowed the prime minister space to pursue economic policy with the protection of the president, who managed the politics.
Xi Jinping has broken that model. He now heads all of the important functions of the state, from foreign policy and internal security to economic regulation and governance reform. While he seems to have absolute authority to run the country, he is likely to get total blame if he fails. Some say that this explains the most controversial of his policies—the anticorruption drive.
Believing that the “leading role of the Communist Party” is at stake, Xi has instituted a major purge of its ranks. The anticorruption campaign was initially popular—a belief in the need for it was widely shared.
Wang Qishan, a man whom I had known when in government, was tapped to lead the effort. He received me in 2015 when I was in Beijing. We shared a few old memories and talked about the general course of reform in the country. Wang was the same affable man I had come to know, until he turned to his current work. His face stiffened and he grew quite stern. “The party has to be beyond reproach if it is to maintain a leading role,” he said. “There are eighty-seven million members and they must all be completely clean.” He explained that he had created investigatory committees to go out to even the smallest party units and look for corruption. I remember thinking, And you will find it, because it is everywhere.
Later that night I met with some businesspeople. They talked about the effects of the campaign. “People who once signed a deal to spend $100 million won’t spend $1 million,” one person said. “Everything is grinding to a halt because everyone is scared. A lot of people are being executed.” One man then told a story that is
making the rounds in Beijing. It is of a famous general who had taken to playing golf on his own little nine-hole course. The land had probably been acquired by questionable means. “But he wasn’t really hurting anyone. He was turned in by some local official, tried, and executed. They buried him under his favorite golf hole as a message to everyone,” my guest said, shaking his head.
The atmosphere of fear among party members has led some to wonder if the anticorruption campaign has gone too far and to suggest that it is time to say, “Just don’t be corrupt from here on.” The party cannot tolerate constant uncertainty, they say. And there is a sense that the program has taken an arbitrary turn—no one knows who is next or what the charges will be.
While anticorruption measures are a step in the right direction in theory, other changes in China are more concerning. The independent space between politics and the rest of life appears to be shrinking. Xi has placed a new emphasis on strengthening cultural and national values—even if it means imposing them. In the face of so much upheaval, he is clearly searching for a unifying narrative. The Chinese nationalist impulse is one, and it is leading to an emphasis on China’s military might and rightful place in the world. China is increasingly assertive in the Asia-Pacific region, laying claim to disputed territory and militarizing the South China Sea. This has alarmed its neighbors and caused them to bind closer to the United States for protection. Tensions in the Asia-Pacific are very high indeed.
The desire for recognition predates Xi, of course. The Beijing Olympics were a chance to showcase China, starting with a nationalist opening ceremony that sent a few chills up the spines of those who watched. Two thousand and eight perfectly synchronized drummers rising from the turf seemed to capture the mood.
But Xi has relied on not just a nationalist narrative but an avowedly communist one. The government demands that schoolchildren once again study Mao and his Little Red Book. He has tried to reinstitute “patriotic” activities, even insisting that the ballet reflect socialist values. His crackdown on the media has led at least one editor of a prominent newspaper to quit rather than face the pressure of political controls.
The picture of China today is an odd mix of a thoroughly modern international power, craving respect but increasingly insecure about its future. At least some of that insecurity seems to stem from a lack of trust in its people’s intentions. Therefore, the regime is determined to control their actions and make their intentions irrelevant. In a country of 1.4 billion people, that is a tall task.
In 2014, I spoke at the prestigious Tsinghua University in Beijing. A Chinese friend refers to the university as Stanford and Harvard all wrapped into one. I decided to speak to the students as if they were at Stanford. This wouldn’t be a lecture about U.S.-China relations but about them—the students—and their ambitions and the power of education.
The question-and-answer session was a surprise to me. “What do I do if my parents don’t like my major?” “I am an engineer, why should I bother with literature?” “I am a Uighur [a Muslim minority] and everyone treats my people as if we are terrorists. We are just poor. How can I help?”
They are thinking and they refuse to be programmed, I thought. They question their parents and university officials. Can questioning the government really be that far behind? The task for China’s leaders is to preserve their system and still make room for a creative, innovative, and increasingly prosperous people. They may not take China along a democratic path, but the road that they are on could relatively soon run out of room.
In this regard, there is always a temptation to contrast the world’s largest democracy, India, with its huge authoritarian neighbor, China. In India, the question of whether citizens would have a voice in how their country is run was answered with independence in 1947. Still, governing the huge country has been exceedingly difficult. Ask most CEOs about China and they talk about growth and huge markets. Ask about India and you will get a glazed look—and a lecture about bureaucracy and corruption.
Leaders are insecure in authoritarian states because they have no reliable way to judge the temperature and intentions of their people. Democratic systems have shock absorbers and plenty of feedback. Today the speed and volume of information flowing from citizens to their governments and back again is unprecedented. But democratic institutions react relatively slowly. They are protected from tyranny because leaders are constrained. Those very constraints, though, make it hard to get things done quickly.
To be fair, India has grown rapidly too and is home to some of the finest companies in the world. Mumbai, Hyderabad, and Bangalore rival almost any international technology center. But the slums of Calcutta are on par with the worst circumstances in the least-developed corners of the earth. Upon taking office as prime minister in 2014, Narendra Modi launched major plans to unravel crippling regulations and improve the atmosphere for business. He also launched a bathroom initiative, providing sanitary stations for poor Indians so that they would not relieve themselves on the street.
The Indian story is filled with contrasts of that kind. But for all of its challenges, India is a functioning democracy. When independence came in 1947, the country already had an institutional blueprint left to it by the British. There was a large and well-trained civil service; the new army was diverse, constrained by constitutional checks and thoroughly under civilian control; and leaders subjected themselves to popular vote. The country was fortunate to have an inspirational founding father in Mahatma Gandhi, and a competent and long-lived first leader in Jawaharlal Nehru, who ruled from 1947 to 1964. It seemed set to take off and be successful.
And to a certain extent it did. India has had sixteen national elections since independence and all of them have resulted in the peaceful transfer of power. It is remarkable that a country with well over a billion people who don’t worship the same god manage to do this without much upheaval at all. India has the second-largest Muslim population in the world and yet has experienced very little trouble with Islamic radicalism. The exception to that rule is the terrorism that emanates from Pakistan. Indeed, one could argue that the conflict with Islamabad has held the country back, diverting resources to a conflict that has resulted in three all-out wars (in 1947, 1965, and 1971) and innumerable near misses.
A new prime minister always brings new hope of an Indian revival—a great country that can finally reach its potential. The skepticism eventually sets in as impatience grows with the inability to deal with a suffocating bureaucracy and corruption.
But it is interesting to contrast democracy’s approach to those issues with that of authoritarians. We have seen that even in the United States it took almost a hundred years to root out widespread corruption. Eventually, Teddy Roosevelt was elected on a platform of doing exactly that, and in time the problem was resolved. The press played a role, and civil society too, in supporting the changes and establishing rules of the game and punishments for violating them.
India is now engaged in an effort to finally deal with endemic corruption. Unlike in China, the drive was spurred from the bottom up, not the top down. Activist “Anna” Hazare, seeking to bring attention to the problem, went on a hunger strike in April 2011. At first the government tried to ignore him, but persistent press attention made that impossible, leading to investigations and more press coverage. The issue would become the central one of the 2014 election campaign. Narendra Modi, then chief minister (similar to a governor) of Gujarat, was elected after withering criticism of the Congress Party and Prime Minister Manmohan Singh. Clean governance and effective governance were, he argued, inextricably linked.
The private sector has played a role in the anticorruption drive too. Nandan Nilekani, a cofounder of Infosys, had an idea to improve government services and reduce corruption. He and his engineers built a sophisticated biometric identification system for the central government so that citizens would have a national ID.
I visited the Aadhaar project in New Delhi in 2013. The brightly lit building housed engineers
working intently in cubicles that surrounded a clean room. It looked just like any Silicon Valley company, sophisticated and organized. Our conversation with Nilekani was really inspiring. He clearly thought his project had a higher cause—removing the middleman, the bureaucrat, who handed out pension checks, food subsidies, and other benefits “for a fee.” His eyes sparkled as he spoke of a world in which a farmer in rural India used a biometric ID to receive a benefit directly—securely and quickly. The program had the backing of the Singh government and has now convinced Prime Minister Modi of its worth as well. It is likely to be a real bipartisan achievement. India’s Supreme Court has ruled that Indians cannot be forced to have an ID—that too is how democracies work. But so far more than a billion people have voluntarily signed up.7
It took the United States more than a hundred years to root out most corruption, but it did. There is no guarantee that India will succeed, but it has a good foundation for doing so. Officials can be held accountable publicly and transparently. That should give the effort a pretty good chance. Recent events in South Korea have followed a similar script, as citizens, the press, and the legislature have insisted on accountability at the highest levels for allegations of corruption.
By contrast, the anticorruption drive in China is all top-down. It is secretive and the Communist Party leadership is accuser, judge, jury, and executioner. That is roiling the country because the rules are not clear. And no one knows when the party purge might turn into something larger, a vendetta or a political campaign that engulfs the broader population.
Democracies are not efficient, but they may ultimately be more effective and resilient. They depend on transparency and a complex web of institutions, public and private, to keep authorities in check. Most of all, they depend on the willingness of citizens to engage those institutions and use them to demand the best of those who govern them. India has the infrastructure of democracy in place. Whatever the challenges ahead, that is a good place to start.
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