William Overholt (Harvard), argues that as China reaches a threshold where success has eliminated the conditions that enabled miraculous growth, Xi Jinping is pursuing the riskiest political strategy of any important national leader. Alternative outcomes include continued impressive growth and political stability, Japanese-style stagnation, and a major political-economic crisis.
China, not unlike the United States, confronts enormous challenges. These include deadly environmental degradation, a rapidly aging population, unequal access to education and health care, a skills mismatch between what graduates can do and what employers seek, low social trust and community engagement, regional and intra-regional inequality, and low labor and capital productivity.
Success has created an exponential rise in the complexity of economic and political issues. China’s leadership has responded with a brilliant plan of economic transformation, but has political problems with implementation of key reforms, and has no comparable model of political transformation. By applying comparisons with other emerging countries, China’s Crisis of Success reveals China’s core strengths and weaknesses, in the process potentially revolutionizing much of our understanding of China. On one hand, other than human rights China has served the needs of its people much better than most Western theories acknowledge. For instance, contrary to widely accepted political analyses, Chinese communism is not uniquely susceptible to corruption and environmental degradation; developing democracies like India are much worse. Moreover, contrary to the most highly regarded economic theorists, China is far more economically inclusive than its democratic counterparts at similar levels of development; for instance, home-ownership is 20 percentage points higher than the U.S. Moreover, China’s administrative system, denigrated by respected Western analysts as crippled by factionalism and incapable of long-range planning, actually demonstrates extraordinary strengths.
Comparative analysis also reveals China’s weaknesses. There is no widely applicable Beijing Model; China’s path can only be emulated countries experiencing certain extreme conditions and even then only for a limited time. Xi Jinping’s extraordinary ability to eliminate rivals does not necessarily convey comparable ability to implement reform policies. Implementation of those policies at a time of financial stringency requires paying a heavy price in economic growth and political support and so far the leadership has been unwilling to pay much of that price. Lack of this leaves China in a crisis of success: a big success, a proportionately big crisis, and resulting uncertainty as to whether the future will bring continued political and economic success, stagnation, or collapse of the model.