Q&a -- Kellee S. Tsai

China And Democracy

Economic advances won't necessarily lead to political freedom, says a Johns Hopkins political scientist who's just published a study on its emerging entrepreneurial class


According to conventional wisdom, China is marching down a road that will eventually lead to democracy. The first steps are the economic ones that China is taking, opening up a centralized economy to market forces, letting free enterprise reign. Economic growth is expected to lead to popular pressure to change a totalitarian regime into a democratic one, complete with respect for human rights.

"The idea is that as per capita GDP increases, that will basically bring about all types of structural changes - increasing education, urbanization, industrialization - which will create structural conditions more favorable to a transition to democracy," she says.

The problem, Tsai says, is that this theory came out of the experience of only two countries - the United States and Britain - and has not really played out in many other places.

"But it remains very entrenched in official discourse," she says. "Within the Capital Beltway, it is very alive and well."

Tsai decided to take a closer look at what was going on in China's burgeoning entrepreneurial class, to see if the country was following the path laid out by the modernization theory. The result is her new book, Capitalism without Democracy: The Private Sector in Contemporary China, published by Cornell University Press.

The basis of her research was an extensive survey of those driving China's move to private enterprise, looking for signs of a concurrent move toward democracy including political activity and grievances against the current communist regime.

"I supplemented that with field work in 10 Chinese provinces, interviewing over 300 entrepreneurs, from peddlers on the streets to CEOs who are on the Forbes list of the wealthiest in the world," Tsai said. "I also interviewed a lot of government officials and bureaucrats." What did your research show about whether China is traveling this road to democracy?

In the logic of the modernization theory, the first step is the formation of a capitalist class. But in order to have class formation, you need people who identify with a certain class, like the working class in Britain or the middle class in America.

That is completely absent in China. There has been private sector development since the late '70s, but the people who would constitute what looks like a capitalist class actually have very little in common with each other.

Though they all seem to be engaging in similar types of economic activities, they get there in different ways, whether it is former farmers turned peddlers or moonlighting teachers finding other work, or high-ranking party members running factories or intellectuals engaged in entrepreneurship, you have very diverse backgrounds in China's private sector. Most do not even identify themselves as capitalists.

When they encounter problems running their businesses, they draw on very different social networks and resources to resolve them. Their coping strategies have varying levels of effectiveness.

This lack of cohesion impedes the formation of a capitalist class that could push for political reform. Wouldn't the fact that China was once supposedly a classless society mean there is a certain cohesion to its population, even as free enterprise takes hold?

People have a tendency to assume a homogeneity in China since it seems to be so highly centralized. We have a tendency to anthropomorphize China, to say that China wants this or China believes that. But what Beijing says is China is not necessarily the case on the ground.

China is a huge country with significant local variations. There is no single model of China's political economy. Indeed, there have been many divergent trajectories in China as it has developed its private sector.

In some cases, local authorities looked the other way as farmers dismantled their communal farms. These new private businesses were left on their own, financed by informal means, which was the subject of my first book, Back-Alley Banking: Private Entrepreneurs in China, published in 2002.

Then there are localities that during the Mao era got the preponderance of state capital investments. Now they are cursed in the reform era, sort of a Rust Belt phenomenon. They are burdened with tens of thousands of employees, many reaching retirement age, many already retired and on pension. The local government in those sectors would very much like to promote the private sector and attract foreign investment, but its hands are strapped because of the many people who depended on the old government structures. It has to keep them off the streets.

Then there are the special economic zones that attracted foreign investment early on. One might think that they are doing really well because there is, say, a large Nike factory there. But it is actually the foreign investors who are doing well, not the domestic indigenous private sector. What you find there are local private entities falsely registering as foreign investors to get the same economic benefits, tax breaks and loans and such.

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