The Momentous Middle Kingdom

Examining the Paramount Domestic and Foreign Issues Facing China Today and Tomorrow

Sixty years of rule under the CCP has metamorphosed China, from a poverty

stricken farmland, into the world leader in trade and exports. Simply in terms of GDP, China is 90 times larger than it was in 1978, and is now only second to the United States. With an annual growth of 8%, economists have already been placing bets on when the United States will be dethroned of its hegemony status. While the Chinese momentum appears to show no signs of slowing, the United States, through its foreign and domestic faults, is seemingly withering away as a world power. Between snowballing debt, military quagmires, and fatuous domestic political frays, there appears no hope of an American recovery. At least, this is how the pessimistic media portrays it. In reality, while America has numerous challenges and issues, China is also a spawning pool for political, economic, and social hurdles. This paper will rst address key domestic issues which are plaguing China including: Rural vs. Urban Divide, Energy and the Environment Crisis, and Adapting to Socioeconomic Conditions. Furthermore, it will address pressing foreign policy issues, including Chinas entanglement with the United States, Regional Securities and World Stability. Acknowledging the complexity of these problems, the paper will examine the specic tradeoffs that China faces in these areas, and conclusively argue whether they will be a barrier to its continued rise.

Conclusively, the paper will demonstrate that these potential handicaps to the CCPs agenda will only increase in magnitude as the nation swells in economic growth and responsibility. Thus, while China may continue to rise over the course of the next forty years, it will be under the cautious paranoid eye of the CCP. 1989 marked the fall of communism. For Westerners, the solidication of

capitalism in the word would have been essentially complete once China followed suit. Over twenty years later, it never did. Now, whether it be of human rights, democracy, and/or economic mischief, the West have since taken advantage of opportunities to denounce and scrutinize the Chinese government. Although the CCP could not care less of the outcries of foreigners, it is critical to realize that this does not mean that government policy towards the economy and society has remained stagnant, quite the contrary. Examining the CCP policies reveal that the party is well aware of the pressing need to adapt and change to the ow of cultural and economic needs; indeed, it is necessary for the survival of the Party to accommodate and respond to the citizens. There is a precarious balancing act, though, between stability and freedoms which the Party has and must continue to exercise. While Mao Zedong and Hu Jintao both ruled under the banner of the Chinese

Communist Party, a comparative of the political, economic, and social status quo is disparate. The leadership of Mao was marked by ambitions to form a collective bond, integrating the nation under a united ideology. What occurred was the complete and

utter control of the individual. The Party inltrated every aspect of society, creating an environment where ones work, word, and worth, were intertwined, and directly determined, by the state. Because no urban jobs existed except those assigned by the state personnel system, and peasants could not leave their collective without permission, those who ran afoul of a political judgement had no escape.1 The spiritual essence of the Cultural Revolution that formed during the late 1960s was essentially that those who rebelled against this dreamed utopia were worthless to society. Times have changed. The State no longer provides a moral compass for the

population.2 Indeed, state controls and guidance have subsided greatly since Maos era. A prime example is the unprecedented access to news and world views. China had 1,938 news- papers and 9,468 magazines in print at the end of 2006, both up tenfold since 1978 . . . Social conicts, corruption cases, and stories of abuse by local ofcials are now widely reported in the Chinese media.3 Additionally China now has over 210 million internet users, and over 547 million citizens have mobile phones. The modernization process, started by Deng Xiaoping in the late 1970s, was

responsible of this. It began a process of decentralization, which not only set China on

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 296. Print.
2

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 300. Print.
3

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.

course for economic success and raised millions out of poverty, but greatly diminished the scope of state intervention in society. Most Chinese now nd it relatively easy to avoid all bit the most pro forma types of political activity and do not live in fear of close political monitoring by the state. This change in the extent of state interference in peoples lives is one of the most important repercussions of the past quarter century of reforms. 4

The correlation between these repercussions and economic growth is the exact causation. Over the course of the past thirty years new societal pressures ranging from protesting migrants to tech savvy urbanites to ambitious entrepreneurs, have created a ripe environment to mold a new China. As stated by Kenneth Lieberthal, the three growing segments of Chinese society - proprietors, stake holders, and the needy - are placing new demands on the CCP and the state . . . to preserve its power, the CCP has chosen to revitalize itself and to adjust to new social realities . . .5 These adjustments have begun to shift centralized power into the hands of regional directors and civil society organizations (CSOs) This is evident is that fact that large Chinese corporations are able to lobby for policy change, such as the lifting of European trading bans, but also that the afuent and education, through the use of CSOs (which 4.2 million citizens are involved in, can implement local change, such as halting the construction of a nuclear power plant in Shandongs Rushan City.

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 299. Print.
5

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 300. Print.

Authority is being shifted, but not forfeited. While the Mao era was marked by a

totalitarian regime, China of the 21st century is transitioning towards an authoritarian, not democratic, government structure where, ultimate legitimate authority rests in the people, not the party.6
Yet, the examples above show that citizens can gradually acquire the power to effect some change, and they are now experimenting with ways to use that power and test its limits. Certainly for now, CCP tolerance (in some cases, encouragement) of a greater degree of social organization, communication, autonomy, and action remains a critical enabler. As these cases show, Chinese society is becoming more robust, diverse, interested, and capable over time, not less so. 7

The key for the CCP is that it occurs over time. The party is well aware that drastic changes in civil liberties and hints of democracy can quickly lead to chaos, which is exactly opposite what any government, particularly China, wants to contend with. The challenge thus for China is to nd a compromise, a balance, between societal and economic freedoms while ensuring that the CCP can reign in control when needed. As economic conditions improve though, especially for the rising middle class, greater pressures will be placed upon the government and Party to hand the responsibility of the few and give it to the many. This is indeed the overall beckoning challenge that China will face as it emerges into the globalized world. As stated, the monstrous economic boom over the past thirty years have

drastically transformed China. Educated youth are striking it rich as entrepreneurs in

6

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.
7

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.

the open markets and millions have ocked from the elds and into the city ofces. While this has resulted in a new bourgeois class, it has also cut a divide in inequality along urban and rural residents. With the CCP now working closely with big business in attempts to prolong their GDP growth, no one is watching the peasants. While open markets and the privatization of land and capital have propelled

China forward on a qausi-capitalist platform, they have also reckoned forth, exploitation, such as land seizures, and discrimination against groups such as migrant laborers . . .those with special health needs,8 and the 800 million Chinese on the countryside. As of 2007, rural capital was only a third of what their urban counterparts raked in. This disparity is only going to continue to grow, as rural incomes growing at 9 percent compared to the 12 percent for urban dwellers.9 Examining data collected from the Ministry of Land and Resources(pdf) reveals the causes of this. In 2007, it shows, there were investigations in over 90,000 cases of illegal land use, involving 207,000 acres of land. This represented a twenty percent increase when compared to 2005. According to government researchers, for every mu of land (about 0.17 acres) that is seized, between 1 and 1.5 peasants are affected, indicating that between 540,000 and 814,000 peasants may have lost their land in 2006.10

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.
9

Ibid.

10

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.

Exploitation is an unfortunate side affect of privatization, and one which the CCP

will have to accept into the distant future if it wishes to continue its economic growth. Additionally though, they will also need to continue to quell rural protests because of this also. The number of mass incidents of disturbance and protests in China has risen rapidly, from 10,000 incidents involving 730,000 people in 1993 to 74,000 incidents involving more than 3.7 million people in 2004. (pdf) This is directly due to the increasing economic inequality between rural and urban citizens, which in turn is due to the subsidized living conditions of the cities and the regressive taxation placed upon the rural workers. As stability is the number one objective of the CCP, as stability ensures economic prosperity and thus their own legitimacy, they will need to take heed in the future to accommodate those who were left during this transition. Chinas rise is marked by passage into the use of industry. As the United States

and other nations did, China is currently gorging itself on energy while turning a blind eye towards the environment. The tradeoff is clear, the CCP wants its industrial heyday as other countries did, the environment may have to wait. While there is a huge incentive to do this, in the long term this sustained development could prove catastrophic as the population continues to expand and the environment continues to degrade. As with most countries, Chinas political leaders do not wish to gamble their short term economic gains to solve uncertain long term issues.

The demographics of China puts 95 percent of its population on the eastern

seaboard. This is not coincidental. The majority of Chinas geography is occupied by desert, marshes, and mountainous regions, ill suited for industrial, urbanized living. Consequently there is a massive concentration of the population, rather than a distribution of the landscape. This has resulted in suffocating smog in the cities, entire regions being deforested and cultivated, such as in southern Guangxi and Sichuan Province11, as well as lakes and marshes being dredged to create more arable land. Available energy resources are also affect by this geography. While China has gas reservers and potential hydroelectric potential, infrastructure would need to be developed in the expensive mountainous regions, and while China has oil reserves as well, they are already at capacity. Consequently, China has turned to its abundant supply of coal to fuel its industries. Over 60 percent of the countries energy . . . Chinas basic distribution of energy resource dictates that it will rely on coal as a major source of power.12 Chinas current environmental/energy concerns are a result of Maos policies in

the Great Leap Forward. Massive emphasis was placed upon nancing and investing Chinas heavy industries. During the 1950s the CCP invested 80 percent into industry, with 80 percent of that going towards heavy industry. Emphasis was placed upon

11

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 284. Print.
12

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 277. Print.

reaching a specic output level. This resulted in the State Planning Commission to forgo environmental consequences and instead simply build more factories to reach the quota. As a consequenc, heavily polluting steel and chemical industries were developed in Bejings suburbs . . . discharge pipe was placed right alongside the major intake pipe that provided the bulk of the citys water supply. 13 The introduction of the 1978 economic reforms havent changed the paradigm,

although some improvements have been made. Particularly, decentralization from the reforms have given more power and responsibility to municipal, country, and township governments in controlling the zoning of industry. Unfortunately, due to environment laws without teeth, such as Chinas fee tax which taxes only the industry which is found to pollute the most, free-riding is the norm. While it may be easier for locals to deal with regional pollution issues than the government, citizens fail to see the point in paying the clean up price from those who upstream, while at the same time not being reimbursed by those downstream who benet the most from their actions. The incentives for Chinese industry is to export around the world and reap the

nancial benets. On one hand, this is clearly working. Examining Chinas GDP demonstrates massive growth from being an investment / export oriented nation. This fact subtly mentions Chinas key economic problem though, its an export country. China has had the highest most consistent economic growth of any country, ever. How

13

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 278. Print.

long can a nation support its economic growth and sustain itself when it is unable to export during a world depression? The answer isnt as simple as in the United States where American consumers can sustain the nations economy. The Chinese economic policy and markets are based on exporting. Consequently little attention is given to the exploited Chinese citizen whos money is invested into the countries technology and business, not social programs and agencies that can improve the economic standing of its citizens. Ironically, most citizens dont have the personnel wealth to even buy the products they are producing. Its interlocking export-consumer dance with the United States is prolonging this trend. Additionally, China is playing a dangerous game by subsidizing US consumption and debt because at the same time it is buying US bonds which, although historically safe, could prove unwise if US ination sky rockets. As China grows as a world power, so too will its inuential domain and its

responsibility within its region. Conversely regional securities between Japan, North Korea, Taiwan and other Asian nations will continue to rise. Although Chinas policy typically turns a blind eye towards foreign countries actions, Without Chinas active participation, multilateral organization can have only limited meaning with regard to regional condence-building.14 Additionally, it will have to take active measures to ensure diplomatic stability with U.S. allies in the region, especially as it increases its military expenditures.

14

Christensen, Thomas. "Fostering Stablity of Creating a Monster?." Project Muse, n.d. Web. 1 May 2011.

There is a historical legacy of high tension between China and Japan, and thus

sense of mistrust between the two nations. With China expanding its military, Japan has been putting greater emphasis on national security. Japanese assertiveness in security policy could lead to a further spiral of tensions between the two counties, detriment of regional stability.15 Both nations though are eying North Korea. China has been taking active measures to create talks regarding the nuclear

disarmament of North Korea; it is an issue which China cannot ignore. The tradeoff here is simple, China can either ignore their isolated rogue neighbor and risk U.S. military pressure if North Korea decides to continue to arm themselves nuclearly, or take the responsible regional position of ensuring stability, which coincidentally is in Chinas economic interests. This isnt toss-up. Clearly, this is an issue which will be critical for Chinas national security into the near future. Taiwan is another regional security issue which could easily ignite. Currently it is

viewed as a zero-sums game. If China were to aggressive liberate Taiwan than regional condence in China would evaporate as neighboring countries would look for foreign security assistance, particularly the United States (If it already did not immediately have boots on the ground). The overriding connection between these regional securities though is by

addressing them China is 1) building regional credibility as a negotiator and diplomat,

15 Ibid.

and 2) ensuring U.S. doesnt need to ex its own muscles within the region. As China continues to grow it will continue to converge with U.S. interests. As a member of the U.N. Security Council, China typically abstains from voting, but it has been shown to be unafraid to use its power. It will be paramount for China and U.S. to work with not against each other in East Asia. The two are already a powerful economic ally, this could translate into equally strong diplomatic ties but only if the two countries are careful where they step. Although these challenges persist in China, there is no doubt the nation will

continue to rise as a major power over the next forty years. Looking beyond that time constraint though, the forecast is cloudy. The key to Chinas growth is its economic stability, sustainable development as its called. While this has produced great wonders for China, it is at a socioeconomic and environmental cost. As GDP continues to rise, and the CCP continues to pour more wealth into investment and exports, as well as opening the markets to even greater privatization, the Chinese consumer will be left behind because the governmental structure is ill equipped to quickly adapt to the new environment. China is a nation of stability and patience, yet the economic surplus has created such social uctuation, as well as the middle class which continues burden the CCP with demands for greater protection for their capital, that their will eventually be a breaking point where the citizens are no longer convinced that the CCP is looking out for the majorities best interests.

Bibliography Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 296. Print.
1 2

Ibid pg. 300

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.
3

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 299. Print.
4 5

Ibid. pg. 300

Gilboy, George. "A Political and Social Reform in China: Alive and Walking." The Washingont Quarterly, 2008. Web. 1 May 2011.
6 7

Ibid. Ibid. Ibid. Ibid.

10

Lierberthal, Kenneth. Governing China: From Revolution Through Reform. 2nd ed. New York City: Norton & Company, 2004. 284. Print.
11 12

Ibid. pg. 277 Ibid. pg. 278

13

Christensen, Thomas. "Fostering Stablity of Creating a Monster?." Project Muse, n.d. Web. 1 May 2011.
14 15 Ibid.