But what it does not reveal is that manufacturing in China is about to get far more expensive. Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones.

Desperate factory owners are already shifting production away from this country’s dominant electronics manufacturing center in Shenzhen toward lower-cost regions far west of here, even deep in China’s mountainous interior.

That’s precisely what I’ve hoped would happen. China is a nation of contrast—while the east is rich from manufacturing and exports, the landlocked western interior of China is still incredibly poor. China is almost two nations, one developed and one developing.

But development based on unskilled, cheap labor inevitably leads to higher standards of living and increasing wages. Over time, the “cheap” part of it disappears, so manufacturers move elsewhere in search of low costs. As this happens, areas that were dependent on unskilled labor for economic growth must transition toward skilled labor. This is China’s largest challenge—their incredible economic growth is a result of labor that’s laid dormant for decades suddenly coming online all at once, but they must now move from unskilled to skilled labor. In other words, they must move up the supply chain from merely putting things together to manufacturing intricate parts and to even designing them.

As manufacturers move toward other regions and countries with lower wages, the same process plays out. I’m hoping this will have the same effect on China’s interior, but there are natural barriers for it. Using unskilled labor in China’s east is easy: it’s close to the coast, so moving goods to port is cheap. The west doesn’t have this same advantage. Anything manufactured there will have to be moved by truck or rail to the coast.

That approach became more marked with the global financial crisis that began in the fall of 2008. China interpreted that crisis as symbolizing both the decline of the Anglo-American brand of capitalism and the weakening of American economic power. That, in turn, strengthened its two-fold belief – that its brand of state-steered capitalism offers a credible alternative, and that its global ascendance is inevitable.
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The biggest loser from the global financial crisis, in China’s view, is Uncle Sam. That the US remains dependent on China to buy billions of dollars worth of Treasury bonds every week to finance its yawning budget deficit is a sign of shifting global financial power – which China is sure to use for political gain in the years ahead.

The amusing thing about the U.S.’s complaints about China’s currency policy is the vast sums of dollars it results in for China are used to fund our drunken borrowing. Biting the hand and all that.

Chellaney is correct—China views this as the moment where they begin to pull ahead of the west in global power.

Our refusal to recognize the role government power played in the 2008-09 financial crisis only strengthens their position. We continue to try to fix our economy through government control (government spending as stimulus, home buyer tax credit which only delays the inevitable home sales contraction, prolonged low interest rates, and ridiculous amounts of borrowing to support it) under the illusion that the financial crisis was merely a resort of free markets, and thus can be controlled. All the while we are granting the Chinese Communist Party’s basic premise that capitalism must be directed by an authoritarian government hand for the benefit of society, and borrowing our way toward future disaster. We are losing our philosophical and financial edge.

It has to bring the economy back from the runaway 12% growth reported early this year to a sustainable level of around 8% which would create sufficient jobs, keep the population happy and underpin the Communist party’s claim to be the only force that can ensure material progress. It needs to rein-in industries whose excess output adds to the perennial problem of over-capacity, but without creating mass unemployment. It needs to guard against inflation and boost wages.

China’s economy is still heavily dependent on exports. Their incredible economic growth, and thus employment for the population, is driven by it. Allowing the Yuan to appreciate as much as U.S. critics desire would severely harm their export sector, so it isn’t an option.

China does need to become a more self-dependent economy, which entails building a larger and sustained middle class (so consumer goods can be a larger part of the economy) and moving up the supply chain into a product design role.

There still is, though, a huge portion of the population just looking for a steady job of any sort. While the east of China is well developed and in some parts feels very much like a developed country, the west of China is also very much a developing country. The incredible amount of migrant workers in China’s eastern cities bear this out. The CCP knows China’s history well, so it knows that the largest threat to its power is poor economic conditions. They want to continue developing the west and secure the east’s affluence so their power isn’t threatened.

Allowing the Yuan to significantly appreciate against the dollar would threaten this. China’s move away from manufacturing must happen, but the CCP wants to develop the economy in a controlled manner to prevent significant social shocks.

On the Monday after its statement, the PBOC let the currency appreciate by over 0.4%, generating quite a bit of excitement. At that rate the yuan would double in value in just 174 trading days. The next morning the central bank set its parity to reflect the previous day’s close. But as Tuesday wore on, it decided that “market supply and demand” needed a bit of a nudge. Heavy dollar-buying by the country’s big state banks, presumably at the PBOC’s behest, pushed the yuan down against the dollar, allowing the central bank to set a Wednesday-morning parity of 6.81 (see chart 1).

It’s a smart move on China’s part to try to placate the U.S., but I don’t think it’s going to matter. They aren’t going to let it appreciate as much as critics in the U.S. want (they would like our trade deficit with China wiped out).

Apparel production is a prime example of China’s declining competiveness in markets dependent on low-cost labor. According to a study by the US consulting firm Jassin O’Rourke, labor costs in China are higher than in seven other Asian countries. The average cost for a worker is $1.08 per hour in China’s coastal provinces and $0.55-0.80 in the inland provinces. India was in seventh place, at $0.51 per hour. Bangladesh offers the lowest cost, only one-fifth the price of locations like Shanghai and Suzhou.

That’s how developing markets work: an economy based on cheap labor leads to rising standards of living and wages, and that advantage erodes over time. The economy must then shift to different economic advantages, or higher up the supply chain, as Ang says.

Insightful and dead-on.

The U.S. and South Korea are in an especially difficult spot here. Sinking a warship must have a strong response, but the response must be perfectly designed not to further ratchet up tensions. North and South Korea are one small mistake away from all-out war, and the costs of war are difficult to comprehend. South Korea’s capitol, Seoul, is within artillery distance of the demilitarized zone and would be almost immediately leveled if war breaks out.

China’s position makes this even more difficult. A unified response to North Korea would reduce the potential for increasing tensions. By refusing to recognize North Korea as responsible, though, China is preventing preventing that from happening.

He doesn’t presume that war with China is inevitable, but rather that as China re-emerges as a world power, it’s a possibility with many triggers, and we must be prepared for it.

His writes that we will have to disperse our forces throughout the Pacific, so the Chinese will not be able to eliminate a single U.S. naval base and cripple our Pacific forces, like the Japanese sought to do with Pearl Harbor, and develop new strategies that either defend our central naval advantage, the aircraft carrier, or move more toward submarines as the central means of projecting power (both for their offensive capabilities and because they enable us to drop special forces on land stealthily).

If you have any interest in foreign policy, I absolutely recommend reading it.

Big credit decisions in China are not advanced by any one bank, nor any one banker. Credit is infused and withdrawn by central diktat. That process has extraordinary appeal to state planners but is horribly inefficient for individual institutions. In recent weeks, for example, as the screws on lending have tightened, favoured industrial companies have been getting urgent calls from their bankers demanding that they immediately scoop up their credit needs for months to come, or be subject to a freeze of uncertain duration. Firms that manage to load up on credit still suffer because they bear interest costs long before the money is actually needed.

“The Chinese banks are pure utilities,” says one banker. “The State Council [the government’s chief administrative arm] tells them to lend, and they lend.” Overt controls increase in line with the amount of credit. Loans above $500m are said to be directly vetted by the State Council.

China’s economy is by no means a free market. While individual firms are allowed some semblance of freedom, the government manipulates the economy towards its ends. Economic success is had through the government, not through the market.

The U.S. economy is stepping in this direction. Fannie Mae and Freddie Mac are perfect examples of this model: their primary intent is not to make a profit, but to expand credit in the housing market to fulfill the government’s policy goal of increased homeownership. They are given special privileges to do so, and they played a large role in inflating the housing bubble by allowing too much liquidity in the market. Government distortion of the market has consequences.

Rather than recognize this, however, the Obama administration has tried to adopt its own version of China’s government-dictated banking sector:

President Barack Obama challenged top bankers Monday to explore “every responsible way” to increase lending, saying they were obliged to help after being rescued by taxpayers. He asked them to “take a third and fourth look” at their small-business lending.
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Obama, in a statement after more than an hourlong meeting with the executives, said he reminded them that much of the financial crisis that took the U.S. banking system to the brink of collapse had been “of their own making.” He also exhorted the executives — both in private and in public — to drop their opposition to an overhaul of the nation’s financial industry.

Besides being completely un-presidential — attempting to shame private businesses in to supporting government policy — it is wholly antithetical to a free market, and exactly what led to the financial crisis: government policy encouraging dumb loans and investments. Yet here we are, and the administration is now pressuring banks to do precisely that. When they say lend, they lend. Or at least that’s what the administration is seeking.

I want to provide more detail on exactly why I believe this, and on a possible route to this reform I think is possible. I wrote a paper in May 2008 that sketches the possibility for a Confucian constitutional democracy in China.

I am publishing it below in its entirety for those of you interested.

China, many say, is rudderless. It is being pushed quickly, but has no direction; it lacks an underlying ideology and base for its continued growth. After the collapse of the Qing dynasty, and with it the imperial system, China’s standing moral and political systems were discredited, and the Chinese were forced to find a new system.

For a while, it seemed that Marxist-Leninist inspired Maoism would be China’s defining philosophy, an all-encompassing political, social and economic model for society. But Maoism, too, was discredited by the horrors of the Great Leap Forward and the destruction of the Cultural Revolution.

These criticisms are not entirely with merit. While the effects of the opium wars, and the imperial system’s collapse, on Chinese identity should not be understated, it is important how these things are conceptualized in their effect. The horrors the Chinese suffered from European imperialism and the decline of the Qing empire were not simply because of the discrediting of their political and social philosophy (empire-based system, and Confucianism, respectively), but because of the discrediting of China itself.

The Chinese today are proud of their nation not because of its superior political and social structure (although the culture is of prime value), but because of its economic success, and international political strength. This points to a fundamental resilience and flexibility in what constitutes being “Chinese,” and it indicates that it is more than belief in particular social norms and form of government.

In the comment section of a Chinese weblog, one Chinese native commented on the identity of nations. He wrote that while many nations, such as the U.S., are founded upon defined principles, and thus its identity is tied directly to them, China is not. He writes:

For me personally, the love for my country lies with the land, the land of ‘middle Kingdom’, it matters not to me, whatever prefix one adds, may it be PR, or RO, my sentiments stay the same. The land has never done anything bad to anyone, what could I possibly cirticise it for? To me and many other chinese, it is the country (the Land, not the government) comes first, then the people. Without China, then there will not be chinese (not in any meaningful way by chinese standards).

For this writer, Chinese identity is not even necessarily defined by their history; being “Chinese” is connected to the land itself. This does not mean that Chinese identity is disconnected from their social structure and norms, political system and history. Instead, it indicates just how flexible Chinese identity is. It shows that what defines being Chinese can evolve over time, with just as strong of a connection for the people to being Chinese.

A historical tradition of language and common beliefs is important. Whether Confucianism as a social doctrine was officially rejected or not by the PRC, it still defines daily Chinese life today, and they should not lose that.

From this point of view, then, this paper will first consider a past example of China’s cultural flexibility, then identify how Confucianism in a modern incarnation can serve as a viable framework for Chinese society, and finally explore how human rights and the rule of law should fit into the “new China.”

The Buddhist Model

In The Lexus and the Olive Tree, Thomas Friedman wrote, “I was musing about this in Jerusalem one afternoon [about loss of identity] with my friend Yaron Ezrahi, the political theorist, when he made a trenchant observation. He said: “You know, Tom, there are two ways to make a person feel homeless — one is to destroy his home and the other is to make his home look and feel like everybody else’s home.”

Developing nations are dealing with precisely this problem. They want to develop, and they want to develop quickly, because modernity benefits their people — it increases their living standard. Rapid development, though, can quickly overrun and swamp a nation’s traditional culture, “Americanizing” rather than “globalizing.”

China, with its consistent ten plus-percent growth, and influx of Western culture, has ran head first into this issue. Though China has had difficulty modernizing without losing its traditional culture, its history offers China, and the developing world, a model for how to do so without losing its identity.

Buddhism is thought to have entered China during the Han Emperor Mingdi’s rule (57-75 AD), who is said to have dreamed of a golden deity who asked to be worshipped in China. Recognized as the Buddha, Mingdi requested Indian Buddhist texts, and that a Buddhist temple be built (Roberts, 45). Between the Han and Tang dynasties (206 B.C. to 907 B.C.E.), Buddhism fell in and out of favor with the emperors, but generally in the beginning faced difficulties in being accepted, despite Mingdi’s enthusiastic embrace of Buddhism.
In A Concise History of China, J.A.G. Roberts writes,

It is usually suggested that the spread of Buddhism in China was slow and that this was because a variety of obstacles stood in the way of its acceptance. These included the resistance of the Chinese educated classes to a religion which elsewhere had appealed to an illiterate community; the incompatibility of the Buddhist emphasis on the renunciation of worldly concerns with the Confucian emphasis on the importance of the family; and the difficulty of translating Buddhist religious concepts into Chinese, partly because of Chinese ignorance of Sanskrit, and partly because the translators subsumed Buddhist ideas into the vocabulary used for Daoist concepts. (45)

Despite these inherent difficulties, and others such as government fears that Buddhist temples were becoming grounds for tax evasion and other anti-social behavior, Buddhism not only spread across China, but became dominant. Buddhism spread so successfully in China due to the tireless work of translators, which tried to accurately translate and transliterate Indian Buddhist concepts into terms the Chinese could understand, and because other aspects were Sinocized. Rather than there being very few buddhas, or only one, the Chinese began to believe that there were many buddhas, each reflecting some aspect of human life, which followers could pray to and ask for guidance and help. This alteration to Buddhism reflected China’s existing history of ancestor worship. Moreover, and perhaps more strikingly, Chinese Buddhist artwork and architecture came to reflect Chinese taste and culture. One striking, if shallow, example of this is the laughing buddha. This buddha is fat and happy, and signifies success and plentifulness. It contrasts strongly with Indian Buddhist representations. The Chinese also ignored important Buddhist concepts that did not fit with Confucianism and ancestor worship. Schirokauer explain, “The idea of non-self, or non-soul, never had much currency in popular Buddhism nor was it generally taught even by well-educated Chinese monks.”

While the Chinese were hesitant to accept Buddhism for various reasons, eventually it took on Chinese characteristics or lost parts that were incompatible with China’s culture. In effect, the Chinese accepted a foreign influence into their culture and received its benefits without losing their identity. One such benefit was Buddhism’s emphasis on literacy and the unity one religion creates. In most Buddhist sects (but not all), reading the Buddhist classics is necessary to be a believer. Because being able to read is necessary to read the texts, there was a strong increase in literacy across China after the Tang dynasty, and especially in the Song, when the printing press was invented. Also, Buddhism helped unify the people under the Sui dynasty (580-618 C.E.) and pull them out of the disastrous era of chaos that preceded it.

Modernization¹ bears resemblance to Buddhism’s entrance into China. Buddhism entered China through commerce, and helped set the stage for a Chinese golden age under the Tang and Song dynasties, and the Chinese adopted it without losing their identity; indeed, because Buddhism became a part of being Chinese in many ways, it enhanced it. The process of modernizing can, and is, happening in the same way. Trade and business is also the primary vehicle for modernization, and it brings with it the benefits of radically higher living standards.

Modernization, and its twin, globalization, are often maligned for harming cultural identity in developing nations. While this criticism holds much merit, it is often made in a historical vacuum. Trade between peoples and their resulting interactions have caused cultures to mix and even disappear for thousands of years. This is a natural process of change and renewal. Within this context, the cultural change happening in developing nations should not be looked at with fear and loathing, but rather a critical eye. Much like Buddhism was met with skepticism by many in China, and embraced by others, creating a Buddhism that fit into China’s pre-existing culture, modern cultural exchange should be met the same way. While there are certainly dangers involved with globalization (as I have discussed earlier), if developing nations look at it skeptically but openly rather than just shutting off from the world, they can reap the benefits without losing who they are. Changes will happen. China’s culture, America’s culture, Malaysia’s culture, and every other country’s culture will not be the same in fifty years. That should, however, be accepted for what it is, historically and naturally inevitable. Nations should take steps to enjoy modernization’s benefits while limiting its harms, just as the Chinese did centuries ago.

The Chinese are, once again, doing just that. While in Beijing, Suzhou and Hangzhou, I saw government-subsidized enamel, silk, jade and embroidery factories. The Chinese desire that these traditional practices are retained in Chinese culture, and so are protecting them. Interestingly, though, they are not just protecting them, but these traditional practices in many ways are flourishing due to domestic and foreign interest in them, as tourism increases and discretionary income for Chinese families continues to rise. This is only one example of practices that can be used to retain and extend traditional culture into the future of modernity.

A Confucian Framework

Political

Confucianism has been conflated with authoritarianism, with some comparing Mao’s dictatorial government to Confucianism.

These comparisons are misguided. While it is certainly valid to compare the PRC to past emperors, linking its controlling nature to Confucianism is flawed. The philosophy which has guided past emperors in their authoritarian governments, and which resembles the PRC today, is not Confucianism. Rather, it is legalism, which advocated explicitly defined behavioral laws for the people to follow, with swift punishment if they are broken. In contrast, Confucius considered himself to be a teacher rather than an innovator, and constantly studying past tradition, and the current reality. For Confucius, there was no real end-state where a person knows all there is to know; studying earnestly and honestly was more important than what was learned. This indicates Confucius’s advocacy of being humble. People are not supposed to force beliefs and lifestyles on others, but are rather supposed to live as an example to them. Politically, this meant that a “sage ruler” for Confucius was one that did not set strict behavioral laws and enforce them harshly, but rather a ruler that was kind, well-intended, and respected the traditions. This ruler would encourage his people to live morally through example rather than coercion (as contrasted with legalism and Moism). Confucius said:

If the people be led by laws, and uniformity sought to be given them by punishments, they will try to avoid the punishment, but have no sense of shame. If they be led by virtue, and uniformity sought to be given them by the rules of propriety, they will have the sense of shame, and moreover will become good.

Since the embarrassment of the opium wars, the collapse of the Qing, China has taken a Machiavellian or Hobbesian-like philosophy: whatever it takes to become great again is what we will do. That brashness still fills much of the PRC’s actions, such as their willingness to push through construction of the Three Gorges Dam without consideration for the people it will displace and its cultural and environmental effects.

Confucius’s emphasis on study, and thus humility, would serve as an excellent framework for China’s government and society into the future. While the government certainly has a paternalistic role in this conception of society, it also has a much kinder one. In some sense, a Confucian government in China has never been attempted.

This framework leaves the door open for constitutional democracy in some form. This paternalistic role is much different from how it would normally be perceived. Because of the framework’s key aspect – humility and the continued desire to learn more, both from tradition and through individual thought – the government would not be considered the preeminent institution in society with final say; rather, China’s past, and the Chinese people’s own thoughts, would have an integral part.

This sounds remarkably like a Western democracy itself. An underlying assumption of a democratic system is that humanity does not have a perfect conception of the “proper” way to order a society, and thus we need a system that encourages and institutionalizes change in thought as it occurs. This is not much different from Confucius’s own view.

The “constitutional” part has thus far been left out. While a full democratic system (complete rule by the majority) would reflect change in society’s thought, it would also allow the government, or factions controlling it, to institute restrictive behavioral laws, perhaps against the framework’s principle of humility and lead through example. A constitution could serve to protect against these harms, both by limiting the government’s scope of power, and by limiting the democratic majority’s right to enforce their views.

Government, then, becomes an institution to protect the people, and not to control them; to encourage them toward a proper way of life, and not a totalitarian state.

Confucianism also has an embedded sense of humanism. Like many religions and philosophies, such as Buddhism, Daoism, Islam, Christianity and Judaism, the Analects have references to the “golden rule,” or the idea that each person should treat others as they would like to be treated. The golden rule indicates a deep belief that human life must be respected above all else. The Analects said:

5.12: Zigong said, “what I do not wish others to do unto me, I also wish not to do unto others.”
The Master said, “Ah, Zigong! That is something quite beyond you!”

This is not an obscure excerpt. The Analects contains at least three varying forms of the golden rule, and has many more sections that indicate Confucius’s focus on respecting human life. Confucianism’s embedded sense of humanism makes it an ideal political framework for reforming the PRC. Since the PRC’s inception, it has not had a respect for human life. Individuals under its conception of society gain their value through the gains of the greater society; thus, there is little conflict in sacrificing a few for the success of China.

Social

This framework also would serve a parallel role. Confucius’s emphasis on study in part led to the incredible Chinese tradition of study until the present day. This tradition is of utmost importance in present times, because as China’s economy transitions from unskilled to skilled labor, as it is increasingly doing in the East, the primary problem foreign and domestic businesses in China are facing is a lack of skilled management level Chinese workers.

Confucianism in this sense perfectly positions China for their path toward modernity. In a science-based and technologically-advanced society, a person’s education more than any other thing is what positions them for success.

More interestingly, though, is Confucianism’s focus on the private rather than public sphere. A modern society is more orientated toward private organizations and institutions (family, church, groups, business, non-profits) than the public (government). Confucianism is primarily concerned with the relationship of family members, and insuring they fulfill their proper duties. Confucians believe that a good society can only be had when the individual first becomes good (honest and well-intentioned through self-cultivation) herself; then fulfills her familial duties (filial); then the individual can serve society. From this, a good society is constructed – it cannot be forced on people through coercion, because it depends on each individual, from the single family unit to the emperor, being good. This shifts the focus of importance away from the government and toward the private sphere.

This is of particular importance because since Deng Xiopang’s economic reforms, and as a result a decrease in social welfare programs, the Chinese have struggled with how to provide aid to those who need it. Confucianism’s private focus could help solve this dilemma.

Economic

Confucianism can also act as a check against what are perceived as capitalism’s excesses. While the PRC has now declared that getting rich is “glorious,” Confucianism just as strongly argues that helping others is a duty. Charity, or the individual belief that helping others is fundamentally a good thing to do, is a key underpinning of any capitalist society. It functions as a means of helping the less fortunate without use of the government’s coercive power. Capitalism, in other words, depends upon the good of humanity.

Constitutional Democracy and Human Rights

We first established that Chinese identity can withstand outside influences (and even benefit from them), and that Confucianism is a viable framework for a constitutional democracy, and uniquely positions China for success as a modern nation. Interestingly, this means that China should re-connect to its historical heritage to move forward, rather than sever it altogether as Mao attempted to do during the Cultural Revolution. China must re-assert its cultural identity.

Adopting Confucian principles for political rule, though, is something China has never really done. While all of China’s dynasties claimed the mandate of Heaven, a concept that arose from Mencius’s teachings (a Confucian scholar from roughly the same time period as Confucius), and each dynasty’s emperor tried to portray themselves as a “sage” emperor, China’s dynasties have most strongly reflected legalist philosophy in their rule. This seems to arise out of an innate fear of the chaos and horror of the Warring States period, or a three hundred-year period which preceded China’s unification under the Qing dynasty in 221 B.C.E., and which gave birth to Confucianism, Daoism, Legalism, and Mohism.

These fears are not without merit, but the trauma may somewhat be overplayed in current times and, indeed, the disunity may be caused by China’s historical solution – authoritarian rule.
Past dynastic collapses, such as the Ming and Qing, were caused by China’s twin devils: economic malaise, and political frustration. The former, during the Qing, resulted from China’s agricultural economy hitting its ecological and systemic limits, and the latter by the Qing’s endemic corruption and refusal to reform.²

China has the first devil mostly solved. China’s economy is expanding at an incredible rate, and most people within China have benefited from its growth. Even the peasants, which have historically suffered economic exploitation during China’s good times and suffered the worst during its bad, are even seeing increases in their standard of living, and are poised to realize more growth as factories move West to find cheaper labor.

The second devil, however, remains unsolved. Like past dynasties, the CCP is hesitant to relinquish control and reform itself. History, though, has a habit of repeating itself.
The PRC has liberalized economically in hopes that increasing their people’s wealth will silence their political frustration. This tactic will only last so long, and without political reform, eventually there will be a June 4th movement that succeeds where the last failed.

The Confucian framework for political reform, I think, provides a convenient out for the CCP. Part of the motivation for the CCP’s hesitancy in moving forward with political reform is that they are afraid of admitting that they were wrong in the past. While invoking Confucianism is itself admitting they were in error, its convenience is that it is a Chinese rationale for reform, rather than swallowing the impossibly large pill that the West was right.

More integrally, though, implementing constitutional democracy and guaranteeing human rights³ does two things: democracy serves as a vent for political frustration, and it will, in an ironic twist, re-connect China with its traditional past.

The most fundamental problem with dictatorship of any kind is that dissent is almost always repressed, and thus its only release is through an explosion of anger and violence directed at the ruling regime. This explains why dictatorships tend to be unstable in the long run.

While democracies are not immune from sudden spurts of popular anger and violence, they are less susceptible to it, and there is a very clear reason: dissent with the ruling party is not only accepted, but is an integral piece of the system, and that dissent can be expressed both verbally and through action – voting against the ruling party. Because the public has a more direct control of the government, and can remove it through the political process rather than outside of it, they are much less likely to rebel against it. In this sense, the only way for the CCP to secure the PRC’s continued stability is to lessen its own control and liberalize its political system along with the economy.

The second effect is that it connects the “new China” to China’s rich cultural tradition, and could even be seen as moving it more toward Confucius’s ideal than any other dynasty in China’s history since the Qin.

Conclusion

This will not be easy, but I believe it can be done. Over a period of centuries, Buddhism entered and fused with Chinese culture, enriching it and strengthening China. The end result was positive for China, but it took a while to accomplish. What this indicates, though, is China’s culture and identity are resilient, and are able to subsume and make “Chinese” in a healthy manner.
China is only two centuries in to the same process today, but through the same process, China can adopt Western practices – specifically constitutional democracy and protection of human rights – and make them their own. The result will be a stronger China.

Nothing is certain in history, but the trend certainly is toward economic and political liberalization. Whether the CCP wants to or not, I believe they have little choice. They do have a choice, however, and that is how it happens. If the CCP decides to proactively reform the PRC, then it may do so without any rebellion. It has the framework to do it.

If it chooses not to,⁴ though, it almost certainly will end in its collapse. History repeats itself, and unless they learn its lesson, they will eventually collapse from pent up political frustration just as past dynasties have before them.

1. When I use the word “modernization,” I use it to mean the process of making a country economically independent from nature (or, rather, radically more independent than an agricultural economy) through scientific and industrial means, and opening the markets to individual control and direction; and changing a system of governance to reflect a respect for individual rights, such as implementing the rule of law, and protecting those individual rights. There are things that make up the core of a “modern” state (an admittedly loaded term).
2. This is a serious glossing over, but it is a fair summary.
3. An interesting question is what rights should be guaranteed. Beyond the original negative rights – life, liberty, and property (even property is in question in the West) – there is an entirely separate debate on what positive rights should be guaranteed, if any.
4. It should be noted that this is not the trend the CCP is on, even under Hu Jintao’s direction – a noted conservative. China has continued its economic liberalization, and has even allowed some political reform, too, with the enshrinement of the “inviolable” right to property within its Constitution in 2007.