Posts Tagged ‘revolution’

In my last post I looked at the factors in today’s China that could be ingredients for a Tiananmen-like rebellion.  If that happened, it could go a million different directions in the aftermath depending on what catalyst brought it about. So rather than make a pointless prediction of what exactly would happen, today I want to look at some general things that might come into play in a post-uprising China.

Scenario 1 – The party successfully puts down the rebellion.

The party is much more paranoid than it was in 1989 and now spends more money on “internal security” than on national defense. One has to imagine they have very sophisticated contingencies in place to respond to any number of uprising scenarios. But if a serious challenge happened and the party survived, it would indeed be a wakeup call in the same way Tiananmen was. It would probably be followed by a brief clampdown followed by accelerated reform.

Scenario 2 – The party is overthrown.

Ok, so what happens next? Liu Xiaobo and his pals are busted out of prison to draft a constitution and a representative democracy is established? Not likely.

Americans are especially susceptible to thinking this could happen because their own country was founded in this manner and it turned out pretty well (eventually). But few appreciate how truly exceptional that was in world history.

More often leaders hijack popular sentiment to seize their own power (see: Lenin, Mao, Castro, Pinochet, Pot – to name a few). Even when democracies are established in theory following an overthrow of the former system, it doesn’t tend to work out quite like you’d hope. Afghanistan’s “democracy” is nearly 10 years old now. How’s that working out? Well, besides the constant violence, one woman is jail for being raped and can only get out of her 12 year sentence by undoing the “adultery” and marrying her rapist. So there’s that.

It’s yet to be seen if the other freshly “democratic” Middle-Eastern states will fare any better. But it’s important to remember this isn’t the first time they’ve had popular uprisings. Somehow a tyrant (or group of tyrants) usually ends up back in power. The big Asian democracies of Japan, South Korea and Taiwan are all successful, but they developed as American protectorates – and still had long messy (often violent) transitions to functional democracy.

So where does that leave the exponentially larger and more diverse China?

One of the reasons Tiananmen failed was because there was no clear aim. Everyone was pissed off for different reasons. The students wanted faster reforms while the peasants felt they’d been left behind by overly-rapid reforms. No decisive leaders ever emerged. Not a lot’s changed in terms of those interests except that now there’s an ultra-nationalist wing who thinks the government is too weak on foreign affairs. So if someone were to ascend to power they’d have to focus on the grievances that are shared by the most people across different demographics.

Throughout Chinese history, most revolutions have looked somewhat similar. After a dynasty has been in power for a long time, wealth inequality gets worse and worse. People become frustrated by the privileged class flaunting their wealth and the leaders building frivolous projects on the backs of the peasantry. An uprising is started by leaders who promise to take land and wealth from the rich and redistribute it among the poor. This majority tyranny is enough to propel the leaders to power whereupon they fulfill their promise and reward the peasants. Then over time the leaders are corrupted. They give way to even more corrupt later generations. Land and wealth slowly aggregates back into the hands of a few and the cycle starts over again.

Wealth inequality and corruption are grievances shared by most people across the board in China today. If the Communist Party were overthrown, things could actually get a lot more communist. The Chinese rich seem to already have this worry, as many are now flocking to get foreign passports.

Then there’s the issue of the People’s Liberation Army. It’s hard to imagine that those with all the weapons won’t try to find a place for themselves in the new order. Besides, no one is going to lose support by pledging a hardline on territorial issues and “The West” like the PLA tends to do. Like most militaries, they’d prefer to use their toys outside a simulation setting.

A PLA general discussing how China would respond if America interfered with an invasion of Taiwan once said, “We Chinese will prepare ourselves for the destruction of all of the cities east of Xian. Of course, the Americans will have to be prepared that hundreds of cities will be destroyed by the Chinese.”

Delightful. And we all know how well military governments tend to work out anyways (See: Libya, Myanmar).

Again, it would be pointless to speculate on the specifics of the aftermath of a theoretical a revolution. There are too many wild cards. But given today’s (and most of history’s) situation anyone who would ascend to power would likely have to appeal to nationalism and disgust over the wealth divide. The country could split apart into separate states, but I doubt it. Chinese are pretty sensitive about territorial integrity. Keeping China together would most likely be included as part of the nationalist platform of any viable leader.

As I’ve written before, I don’t buy that the entire country would erupt into chaos under most scenarios.  The fundamental business apparatus is in place and I suspect most people would opt to keep going to work rather than taking to the streets to hurl bricks. However, any new political system would have profound long-term effects. And try as I might, I’m struggling to imagine a plausible scenario where an overthrow of the current system has a happy ending.

A western-style democracy would be very unlikely to spontaneously emerge and it could cause more problems than it fixes anyways. I buy the official line that China’s couldn’t handle an abrupt transition to nationwide elections. There are too many avenues for tyranny and deception. The democracies that evolve from existing systems over time tend to be much more successful than the ones that come suddenly from revolution. Slow (but consistent and visible) reform in giving the people a meaningful voice under a rule of law is the best route.  Hopefully the current Chinese leadership does what’s in everybody’s interest and addresses the substance of what could lead to rebellion.

Hint: that probably doesn’t include the iron fist being upgraded to a stronger metal.

Click here to see another perspective on this issue.

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Today, as Libyan rebel forces close in on Tripoli, it seems yet another nation will overthrow their authoritarian rulers in the Jasmine Revolution. Since the movement broke out in December, political forecasters have devoted plenty of ink to speculation over if and when China’s authoritarian government will collapse.

For the record (and anyone at the Ministry of Truth who may stumble upon this), I don’t at all wish for a collapse or overthrow of the Communist Party. Gradual reform leading to real public accountability would be much better than the abrupt dismemberment they’re setting themselves up for with the current iron fist approach.

But in the fairly-likely event that they do dig their own grave, where does that leave a post-Communist Party China?

The Party would have you believe that the country would dissolve into absolute chaos; that they’re the Elmer’s glue holding the whole rickety apparatus together. Without them, people would take to the streets to pillage, rape, torture, kill, etc.  Plenty of foreign observers share that bleak outlook too.

But a few weeks ago I spoke with Uri Dadush, former World Bank director of international trade and author of the book Juggernaut: How Emerging Markets Are Reshaping Globalization. He said China’s GDP is projected to grow at around 5% annually for the next 40 years. “Even if there is a political crisis, that doesn’t mean that China will not grow,” he said.

In economic terms, revolutions aren’t as catastrophic as they appear to be, especially in recent history. This chart maps Egypt’s annual GDP growth for the past 50 years. This measure shows how much the GDP grew in a given year compared to where it was the previous year. It’s good for highlighting economically disruptive events.

Clearly, Egypt has always been a fairly turbulent country capable of enduring crises and quickly bouncing back, never dipping below 0% growth. But the most significant part is if this chart were extended to today. It would show a dip to 2% growth in the fiscal year ending this June, which included the Jasmine Revolution. Before the revolution, it was predicted to grow at around 5%. The government overthrow may have very briefly slowed growth and had some opportunity costs, but it was hardly chaos. Now Egypt’s economy is humming again and will probably hit 5% growth again by year’s end.

Here’s China over the past 50 years:

The two largest dips were during government directed campaigns; the Great Leap Forward being especially catastrophic. Then in 1987-1988 there was massive (over 20%) inflation of the Yuan which partly enabled the Tiananmen Square uprising. The crackdown did scare away some investment. Growth slipped a bit but remained positive and quickly rebounded.

An even better indicator of national well-being is per-capita GDP, because this shows how the wealth of the average person is growing or stagnating. A flat line here is bad; people aren’t getting any wealthier. A downward slope is very bad; people are becoming worse off. If you look at China by this measurement the story is very promising.

There’s a very gentle negative slope during the 60’s and the power struggle of the late 70’s, then it’s all upward. Tiananmen didn’t even leave a mark.

Let’s look at another country’s per capita GDP growth and see if you can spot when the revolution took place:

There’s a sharp decline beginning in 1996 ravaging the average person’s net worth by over 33%, but if you think that’s where the political upheaval was, guess again.

The Asian Financial Crisis devastated Thailand, but when a military coup a decade later overthrew the ruling Prime Minister after a year-long political crisis, there wasn’t even a blip. Per capita income continued to grow to its highest levels ever.

These economic charts don’t tell whole story, but they do tell a lot of things. They tell that, even in the midst of political crisis, people still buy things and people are still working at the store to sell to them. Then there’s a whole network of manufacturing and investment behind those people that continues to expand. So the idea that a political crisis throws the country into violent chaos is greatly exaggerated. And what may have caused a serious disruption even 30 years ago might be hardly noticeable now thanks to globalization.

Mr. Dadush explained, “The drivers of economic growth are very fundamental. They are much deeper than even big political developments. They have to do with technologies and ideas that have already been invented. Once they’ve been invented it’s very difficult to stop their spread. If you have more or less the conditions and you have educated people you can absorb these things and you will have economic growth. Educational openness to the world, the absorption of ideas and technology are very fundamental forces. They can be delayed by political disaster but they cannot be stopped.”

There are plenty of non-political things that can tank the economy, like a housing bubble, demographic decline, foreign financial collapses, protectionism, environmental catastrophe, natural disasters, etc. But contrary to what the Party would like everyone to believe and what all those (totally existent) foreigners who dream of seeing China in chaos believe, political upheaval doesn’t seem to be a serious threat to the economy or the common person’s well-being.

This doesn’t necessarily apply to developed countries as strongly though. Once they’re developed they rarely see more than 5% growth in a given year and become more vulnerable to market and political fluctuations, as you can see in this chart of the US and Japan:

But it will be a long time before China gets to that point as a nation; around 40 years according to Dadush. So China could bounce back much more easily from any political crisis than these nations could.  A prolonged civil war might be different, but that’s very unlikely. Even then, it wouldn’t be as destructive as one would imagine thanks to the fundamental global business presence.

Whatever replaced the CCP would certainly have significant long-term economic impacts, but the simple act of a power switch (non-violent or otherwise) would hardly knock growth and the institutions supporting it out of place. Even in a country that, as we all know, has its own “special circumstances.”

I’m sure economists (which I am not) and others can poke holes in this theory. Tunisia isn’t bounching back quite like Egypt, but it wasn’t growing as much to begin with either. And Libya is still in a drawn out civil war (again, extremely unlikely in China) and its recovery is yet to be seen. But none of these countries come close to having the business apparatus and distribution network in place that China does, which are both hedges against “chaos.”

However, the most important thing these economic charts don’t address is happiness during and after a revolution, which obviously doesn’t equate with economic stability. Economic growth still allows for unchecked corruption, wealth inequality, trampling of human rights, perversion of justice, unfair trade practices, arbitrary violence and wholesale withholding of important information. It would indeed be a shame if the Chinese people were ever subjected to that.

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Chart Sources: World Bank data powered by Google Public Data Service (a great resource for comparing countries’ economic and social aspects)