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The Effects of Economic Growth and Globalization on Democracy in China:
An Empirical Analysis
ABSTRACT
This paper is a case study examining the effects of economic growth and globalization on
democratization in China. This serves to fill a gap in the literature where an empirical case study
is needed to either prove or disprove theories for democratization in China. I begin by reviewing
the prevailing studies on this relationship and segue into a research model that will provide an
empirical evaluation for testing the hypotheses summarized in section one. This data is then
subject to analysis where I conclude that traditional beliefs of the globalization theory, the
modernization theory and the functionalist argument do not apply to China. Sustained economic
growth and continued expansion of the middle class in China coupled with increased trade
openness (among the highest in the world) have not had a positive effect on the case for
democratization in China. I offer some explanation for the status quo as found in regime stability
theory, then conclude with predictions about how democracy could come to China.
Introduction:
In the 21st century, the Western world is becoming less and less significant as this century
is radically living up to the name that many are giving it: The Pacific Century. In this new global
order, Asia is becoming the economic center of the world; Asia is home to the fastest growing
economies. In the heart of this emergent region is China. China is the world‟s most populous
country with over 1.3 billion people 1. It has the globe‟s second largest economy in terms of
1
World Bank Development Indicators: "China | Data." Data | The World Bank. 2009. Web. 29 Nov. 2010.
<http://data.worldbank.org/country/china>.
1
GDP; second only to the United States2. The Chinese economy has sustained rapid growth since
it began reforms in the late 70‟s and early 80‟s. It has moved from a lower developed country
into a level of medium development as defined by the Human Development Index (HDI) 3.
China‟s growth has come mainly from embracing the world market, thus becoming a true
product of globalization. There is no doubt in saying that China has experienced some great and
remarkable changes over the past few decades. What impact have these changes had on the
government of China? Specifically, has China become more democratic?
I: A LOOK AT THE CURRENT LITERATURE ON THIS ISSUE
I am not the first to look for patterns between market liberalization, economic growth and
political liberalization. Scholars have long examined these issues. Before I endeavor to provide
my own answers to these questions, it is customary and appropriate to review the literature on
this issue and to note prominent theorists and their respective theories. Some of the literature
focuses on the relationship between economic growth and democratization. However, a newer
trend in the field has been the relationship between globalization and democratization. In this
literature review, I will first target theories claiming a relationship between economic growth and
democracy in which the modernization theory of democratic development and the functionalist
model for democratization will be highlighted. Secondly, I will focus on arguments concerning
the impact of globalization on democracy.
Before we endeavor to summarize the major contending theories in this subject area, it is
necessary to define some relevant terms. Economic Growth, in this paper will be taken in its
2
Barboza, David. "China Passes Japan as Second-Largest Economy." NYTimes. 16 Aug. 2010. Web. 22 Nov. 2010.
<http://www.nytimes.com/2010/08/16/business/global/16yuan.html>.
3
Human Development Index attached: "China: Country Profile of Human Development Indicators." International
Human Development Indicators - UNDP. Web. 22 Nov. 2010.
<http://hdrstats.undp.org/en/countries/profiles/CHN.html>.
2
literal sense to mean an increase of the wealth in a country. This wealth is typically measured in
terms of Gross Domestic Product (GDP). This paper will remain consistent with the literature by
using GDP growth to represent economic growth. The phenomenon popularly known as
globalization is also discussed in this project. This term is used to describe the “comprehensive
world-wide process of the internationalization of communication, trade and economic
organization.”4 In this project, the part of globalization that will be focused on is the economic
element. The definition for democracy/democratization is not as straightforward as economic
development. This concept is certainly more complex, but generally is summed up in its
traditional sense as “government by the people.” The term democracy is a broad term that
describes different types of regimes where the populous has control over the administration of
the state‟s affairs. This control is typically exercised through popular elections. When
“democracy and democratization” is discussed in this paper, the above notions are being
considered.
The Modernization Theory
The “modernization theory” is a blanket term given to the types of arguments that claim
that economic growth or development will produce favorable conditions for democracy. The
modernization theory is very similar to the “optimist model” of globalization, described later.
However, it does not identify globalization as the initial cause for growing economic wealth, but
is rather simply concerned with what happens after procurement of wealth that leads to
democracy.
The logic behind these types of arguments is as follows: a growing economy leads to a
higher standard of living, with higher educational standards and the rise of the middle class. This
new and empowered middle class of capitalists will start demanding more freedom and
4
Online Dictionary of the Social Sciences: Globalization
3
representation thus bringing about democratic political reform. This argument does not blatantly
suggest that the growth of free markets, the expansion of private ownership and greater wealth
directly create democracy. Instead, the central idea of the modernization theory of democratic
development proposes that economic reforms and economic growth simply help create the social
conditions necessary to promote a democratic transition: conditions such as an educated,
politically assertive middle class.
Observers are split on how exactly this pattern plays out. Some claim that the general
wealth of the country will encourage people to revolt. Larry Diamond (1999) writes “…sooner or
later, economic development will generate growing pressures (and possibilities) for China to
make a definite regime change to democracy.” 5 Hu Shaohua agrees with Diamond and contends
that “The growing economy (in China) will bring higher living standards, a higher level of
education and a more complicated socioeconomic status in its wake. Under these circumstances,
more people will demand for freedom and democracy.” 6
The modernization theory is then further split into structural explanations and
volunteerist approaches. The structural claim can be simplified as follows: Democratic change is
based on structural transformations in the economy and in the society. Because changes that
favor free markets also favor democracy (i.e. rule of law and free flow of information), it is
reasonable to expect a democratic transition to follow economic liberalization. Proponents and
supporters of this theory include Bellin (2002); Koo (2001); Moore (1966); Reuschemeyer,
Stephens and Stephens (1992)
5
Diamond, By Larry. "The Global Prospect." Hoover Institution. Web. 07 Feb. 2011.
<http://www.hoover.org/publications/hoover-digest/article/7731>.
6
As Cited in Tsai, Kellee S. Capitalism without Democracy: the Private Sector in Contemporary China. Ithaca, NY:
Cornell UP, 2007. P 2
4
Volunteerist approaches claim that disgruntled business elites that arise out of economic
success will join forces with other elites to promote political change. This argument, as one
would guess, claims that as more entrepreneurs become active in the market, they will realize
that the current political system is not conducive towards private enterprise and thus demand
political change: the standard “no taxation without representation” claim is thus relevant here.
This argument does not necessarily stem from the notion that the entrepreneurs will be/are the
most inconvenienced by the status quo, but rather wield the financial means and influence with
which to promote the necessary and desired transition towards a democracy. Zheng (2004)
contends that “Chinese business classes are likely to play a role that their European counterparts
did in the past. Capitalism is creating a Chinese bourgeoisie. It is a class with teeth.”
Another approach (besides that focused on the bourgeoisie) that falls under the umbrella
of volunteerist arguments is the claim that a better educated population is also a byproduct of
modernization that will positively contribute towards an environment conducive towards
democracy. The educated public will be more aware of their suppressed circumstances and seek
to better these circumstances by calling for representation in a reformed government. Others
supporting this argument are Colomer (2002); di Palma (1990); Diamond (1999) Hagopian
(1990); Kirchheimer (1988) O‟Donnell, Schmitter and Whitehead (1986) and Przeworski (1991).
Although structural and volunteerist approaches vary in their explanation of how exactly
and by what means economic growth and market liberalization will influence a transition toward
democracy, they none the less agree that there is/should be a linear relationship between
economic growth/privatization and democratization. Therefore, for the purpose of my argument,
I will not distinguish between them. I will refer to these arguments in the future as the
“modernization theory of democratic development.”
5
This idea of a correlation between markets and democracy is not a novel one (nor does it
only apply to the situation in China). Political scientists, economists and journalists among others
have been discussing the link for decades. One of the first to argue that free markets and growth
were essential to democratic transition was S. M. Lipset. In his 1959 publication in the American
Political Science Review, entitled Some Social Requisites of Democracy, Lipset lays out what he
believes to be the essential “requisites” for democracy. They are as follows: an open class
system, economic wealth, an equalitarian value system, a capitalist economy, high literacy rates
and high participation in voluntary organizations. 7 As evident in this list, two of these requisites
deal directly with the economy and fit nicely into the modernization theory of democratic
development. Barrington Moore Jr. also agrees about the relationship between economic growth
and democracy. In his “Social Origins of Dictatorship and Democracy” (1966), Moore lays out
the foundation for what is necessary for a successful transition of power in favor of democracy.
In this work, Moore makes the famous conclusion of “No Bourgeois no Democracy” 8 Joseph
Schumpeter also recognizes the relationship between capitalism and democracy. He asserts that
“modern democracy is a product of the capitalist process.” 9
Xia Li Lollar writes optimistically about this very subject concerning the relationship
between the free market and democracy in China. She writes (in 1997 mind you) that China is in
the middle of a transition from a totalitarian regime toward a democratic regime and that it could
be classified as an authoritarian regime (as defined by Huntington10). She argues that the Chinese
government is helping to establish the social conditions necessary (i.e. an educated middle class
7
Lipset, S. M. "Some Social Requisites of Democracy: Economic Development and Political Legitimacy." The
American Political Science Review 1st ser. 53 (1959) p. 105
8
Moore, Barrington. Social Origins of Dictatorship and Democracy; Lord and Peasant in the Making of the Modern
World,. Boston: Beacon, 1966.p 418
9
Schumpeter, Joseph Alois. Capitalism, Socialism, and Democracy. New York: Harper & Row, 1976 p296-297
10
A totalitarian regime strives to control aspects of society; An authoritarian regime attempts to maintain lesser
control and a democratic regime. As described in Lollar p 78
6
and a private sector) for democratic transition by creating economic reform and transferring
decision-making power from the central government down to individual firms. By relinquishing
some power, Lollar believes that the economic reforms will help to create democracy in China. 11
The Functionalist Theory
Other arguments of democratic transition fall under the umbrella of the “functionalist
explanation.” The functionalist approach basically argues that democracy is the best form of
government suited to function in the modern world. From here the argument progresses to
declare that sooner or later, any state that wishes to participate in international affairs/ commerce
will develop a democratic system in order to successfully do so. Proponents of this argument
claim that “sooner or later, China will adopt a democratic system, because democracy is the most
feasible system in modern society. 12 Ronald Glassman (1991); Gordon White (1994) and Bruce
Gilley (2004) generally agree with this logic.
Francis Fukuyama posits a famous, but controversial, version of the functionalist
explanation in his 1989 essay and subsequent 1992 book entitled The End of History and the Last
Man. Fukuyama‟s central claim is that the fall of communism in the Soviet Union proves that
there is no other legitimate form of government. Throughout the majority of the 21st century
there were two contending models of governance and economics: the Soviet state directed plan
and the Western liberal market orientation. The implosion of the soviet state exemplifies it as a
failure. Free market capitalism and liberal democracy have brought about an “end of history” in
that there are no more legitimate competitors and that freedom and security have been realized
under this new world system. Following this logic, all other forms of political and economic
11
Lollar, Xia Li. China's Transition toward a Market Economy, Civil Society, and Democracy. Bristol, IN: Wyndham
Hall, 1997
12
Hu, Shao-hua. Explaining Chinese Democratization. Westport, CT: Praeger, 2000 p. 156
7
organization have become/ are becoming extinct simply because they are no longer suited to
function in today‟s world.
Globalization and Democracy
Since the term globalization has come into fashion, there have been many predictions on
how this phenomenon will affect world politics. Democratization of developing countries is one
area of contention. The idea that globalization (referring to international free-market
liberalization) leads to increased democratization has great rhetorical appeal for politicians,
particularly in the United States, who wish to pursue open market policies. These policies are
often lined with humanitarian and human rights language in order to offer a moralistic rationale
for pursuing free market policies. We have seen this tactic used when politicians push policies
like NAFTA and more open relations with China such as China‟s admission to the WTO.
Economic globalization has also been debated as a factor affecting democratization. The
question here is “what is the effect of economic globalization on democracy?” The literature
offers empirical and theoretical approaches to answering this question. These can be classified
into three conclusions: economic globalization has a positive effect, globalization has an
obstructive effect, and globalization has no apparent effect on democratization.
Globalization promotes democracy
This argument suggests that globalization does indeed cause government to pursue
liberalization for one or all of the following three reasons. Democratization logically follows
open economic markets. Globalization increases communication and the spread of information,
thus the pressure is put on governments by international humanitarian organizations to respect
human rights. Or that in order for a country to become attractive to a multinational corporation, it
8
must first adopt certain qualities such as open markets and private property laws as well as
maintain stability; all of which are conducive to democracy.
The simple logic behind the first argument can be presented in the following progression
explained by Ronda E. Howard-Hassmann in a 2005 edition of Human Rights Quarterly:
globalization
markets
liberal economic order
democracy13
The above provides a logical sequence of globalization leading to democracy. Globalization
creates free markets across the globe. These free markets, in order to exist and be sustained
promote a liberal economic order. Following the same logic, in order for a liberal economic
order to exist and be sustained, democracy must exist.
This logic seams straightforward; each of the links in the chain creates the appropriate
conditions for the next link to exist and each link reinforces the one before. The more
complicated stance that claims that globalization promotes democracy (and then human rights)
can be summed up using The Optimist Model. This model takes into account all of the steps that
should occur once a Multi-National Corporation (MNC) enters a country that is non-democratic
and does not respect human rights. MNC‟s, according to this model, directly cause the following
effects: “Job Opportunities, Tax revenue, Rule of (corporate) Law and New Business
Opportunity.” These effects, in turn, then cause such outcomes as “growth of the middle class,
increased education, liberal democracy and then finally, economic, political and social rights.” 14
The most obvious and clear effect of foreign investment is evident in the new jobs
created by the MNC. However, these new jobs, the ones that come directly from the MNC, are
not the only jobs that will be created, according to the optimist model. The MNC will cause
13
Howard-Hassmann, Ronda E.. "The Second Great Transformation: Human Rights Leapfrogging in the Era of
Globalization." Human Rights Quarterly 27.1 (2005): Figure I (c) P.15
14
Supported by the quantitative analysis performed in: Meyer, William H.. "Human Rights and MNCs: Theory
Versus Quantitative Analysis” Human Rights Quarterly 18.2. (1996), 368-397,
9
communities to grow around its new establishment. Entrepreneurs will take advantage of these
new settlements and set up new businesses and service industries, this action in turn, plants the
seeds for a new, robust entrepreneur/middle class. 15
Tax revenue paid by the new workforce and by the MNC itself will also be collected by
the host government, thus giving it the ability to function at a higher capacity. 16 This will allow
the empowered government to spend money on education, and perform other public services.
The increase in education creates a perpetuating cycle with the growth of the middle class, which
in turn contributes to higher levels of education.
The rise of the middle class has also been contributed as the base for democratic and
social reform. 17 As more and more people in a society become comfortable with their financial
standings, education will increase. Becoming aware of their own interests and their current
political situations will cause the new middle class to be dissatisfied with the oppressive, nondemocratic rule that suppresses their rights.
Robert Inglehart, in his post-materialist hypothesis, centralizes his argument around the
notion that advancements in one‟s physical security, brought about by increased wealth, will lead
an individual to become more concerned with “post-materialist values.” These values include
things like human rights, political rights, the environment, etc. Inglehart furthers his hypothesis
by making it specific to the phenomenon of globalization/modernization. In his 2005 Thesis,
Inglehart states:
15
Howard-Hassmann, Ronda E.. "The Second Great Transformation: Human Rights Leapfrogging in the Era of
Globalization." Human Rights Quarterly 27.1 (2005): P.21
16
Proves this relationship: Pritchard, Kathleen. "Human Rights and Development: Theory and Data." Human Rights
and Development-David Forsythe edition (1989): 329
17
Richards and Gelleny in Is It a Small World After All?: Globalization and Respect for Human Rights in the Third
World." Cite: Lerner 1958, Lipset 1959, Nelson 1987, Dahl 1989, Huntington 1991 etc.
10
“Modernization is a process of human development in which economic development
triggers gradual cultural changes that put increased emphasis on the values of self
expression, gender equality, tolerance of homosexuality and democracy. More advanced
democracies are more tolerant and all for greater individual autonomy.” 18
Scholars believe that there are other reasons why globalization increases pressure on
governments to liberalize. One such argument revolves around the view that: Globalization is
caused by the great advancements in communication and transmission of information. This
phenomenon makes it possible for international live news coverage, instantaneously from
virtually anywhere on the planet. According to Wesley T. Milner,
“As a result of new communication technologies and increasing interdependence,
governments are finding it increasingly difficult to violate their citizens‟ human rights
without attracting the attention and ire of interested individuals, governments and
international organizations around the world.”19
Governments cannot, according to this argument, do anything that would anger the international
community and thus draw unwanted and unfavorable attention to their regime. Transparent
democracy is the best way to avoid international scrutiny.
Proponents of this model and the third argument, also base their position on the
assumption that governments must make certain adjustments to their policy in order to attract
foreign investment. They must, for instance, privatize certain aspects of the economy so that the
investors will be able to see a profit motive. They are also required to have liberal trade laws,
once again appealing to the desire to profit. Stability in a government is also a favorable
18
Inglehart, Robert “Post Materialist Hypothesis”
Milner, Wesley T.. "Economic Globalization and rights: an empirical analysis in Globalization and Human rights by
Alison Brysk (2002), 77-97, (accessed April 4, 2010). P.78
19
11
condition that MNC‟s look for when shopping for a potential expansion site. Several regime
changes or drastic policy alterations would be a sign of instability and thus make that given
country unattractive. All of these changes have been attributed to democratization.
The main country that proponents of this model often focus on as a “success story” of
globalization improving government respect for human rights is Taiwan. In the chapter entitled
“Is it a Small World After All?: Globalization and Respect for Human Rights in the Third
World,” found in Coping with globalization: cross-national patterns in domestic governance,
David L. Richards and Ronald D. Gelleny state that: “… as Taiwan‟s economy grew, so did its
middle class”20 and that this new middle class called for the ability to participate in the
government and for better governmental respect for human rights. In response to their demands,
the government conceded and liberalized electoral policy and paid more careful attention to the
issue of human rights.
Globalization is detrimental to the development of democracy
The other side of the argument is that globalization is not indeed an apparatus that
enhances democracy and that free trade and globalization do not increase government incentive
to liberalize. The main factors of this argument are: Globalization causes governments to favor
the will of the MNC‟s and at the same time neglect the rights of the citizens. Free trade and the
endless search for labor cause discrepancies between rich and poor, income gaps and class
conflict. And, the reckless flow of “hot money,” encouraged by international monetary
organizations such as the International Monetary Fund, has a negative effect on the advance of
20
Richards, David L., and Ronald D. Gelleny. "Is It a Small World After All?: Globalization and Respect for Human
Rights in the Third World." in Coping with Globalization: Cross-national Patterns in Domestic Governance and Policy
Performance. London: F. Cass, 2002
12
effective free markets and the establishment of liberal democracies in developing third world
countries.
Those that claim that Globalization and International trade deteriorate governmental
incentive to democratize note the following progression:
globalization
poor)
market economies
liberal economic order
class society (rich vs.
rightlessness. 21
Between this model and the one described above, there is no disagreement up until the
point of liberal economic order. This is the crucial difference as those that believe that
globalization undermines human rights do so because the liberal economic order perpetuates
class cleavage, thus leading to the further exploitation of the poor working class by the rich
industrialists or by the MNC‟s that invest in foreign countries and seek inexpensive labor. They
argue that globalization is the cause for the increase in the income gap between the world‟s
wealthiest and the world‟s poorest individuals. 22
Although capitalism and free market values seems to be the only way for a country to
successfully add to its wealth, (solidified by the collapse of the Soviet Union and the failure of
the British socialist system discussed later in the Functionalist argument) there is no guarantee
that capitalization will warrant a fair or reasonable distribution of this wealth and that the poor
continue to lose out. The endless search for cheap labor causes this further exploitation: so called
“race to the bottom.”23
21
Howard-Hassmann, Ronda E.. "The Second Great Transformation: Human Rights Leapfrogging in the Era of
Globalization." Human Rights Quarterly 27.1 (2005): Figure II(b) p 17
22
Wallerstein (1974), Bollen (1983), Tarkowski (1989), Przeworski (1991), Gill (1995), Amin (1996), Cox (1996), Im
(1996), Kummell (1998)
23
Drucker (1994), Muller (1995), Bryan and Farrel (1996), Beck (1996), Cox (1996), Moran (1996), Marquand (1997),
Rodrik (1997), Martin and Schumann (1997), Longworth (1998)
13
Joseph Stiglitz, a prominent economist, is famous for his criticism of international
financial organizations such as the International Monetary Fund and the World Bank. Stiglitz
believes that in the era of globalization, these organizations recklessly encourage the flow of “hot
money” into third world developing states where this money has a detrimental effect on that
country. His criticism revolves around how the “hot money” has a tendency to leave a country as
quickly as it came in, causing „capital flight.‟ Multinational corporations also seek short term
monetary gains and do not attempt to invest in the host nation‟s infrastructure or policy issues
outside of those that affect them directly. Since their goals are only short term, the MNC and its
investors are likely to pull the plug if the initial profits do not present themselves immediately.
Also, in order to attract foreign investment, a government must tailor its policy around the
desires of the prospective industry, often times at the expense of the citizens.
24
The implications of what would happen once foreign investment leaves the host country
are devastating. The departure will cause an economic and political vacuum. Any business
growth or development of the middle class that might have occurred as a result of the foreign
investment is now in jeopardy of dying out due to the reflux of capital. Any democratization that
had taken place is also at risk of collapse once it does not have the support of the MNC and that
MNC‟s sender government. The money that had been infused into the country would
immediately dissolve causing job loss and distrust of the government (because citizens perceive
government betrayal). These factors would snowball until the country returns to the same
position that they were in prior to foreign investment or they may possibly find themselves in a
worsened state of affairs. This argument is referred to as the Pessimist Model.25
24
Stiglitz, Joseph E. Globalization and Its Discontents. New York: W.W. Norton, 2003. Print.
Found in: Howard-Hassmann, Ronda E.. "The Second Great Transformation: Human Rights Leapfrogging in the
Era of Globalization." Human Rights Quarterly 27.1 (2005): 1-40.
and at <http://muse.jhu.edu/journals/human_rights_quarterly/v027/27.1howard-hassmann.html#REF64>
25
14
Globalization has no effect on democracy
There are more researchers that do not fall into either of the aforementioned categories.
These researchers or theorists cling to the claim that the extent of globalization (whether positive
or negative) is exaggerated or that its effects vary by country.
Hypotheses:
Now that the theories have been explained, I will conduct an empirical analysis to determine how
they apply to China. Due to successful implementation of economic reforms, followed by three
decades of consistent growth, I expect to see a positive relationship between GDP growth as well
as GDP per capita growth and democracy. Similarly, China‟s decision to end decades of isolation
and fully embrace the international market should have an affirmative effect on democracy and
this effect should be visible in a linear relationship between trade openness and democracy in
addition to a FDI inflows and democracy.
Research Model
This section will serve as an empirical analysis to answer the following questions: Has
China‟s incredible economic growth had an effect on democracy? And: Has China‟s increased
trade openness and exposure to the rest of the world through the phenomenon of globalization
had an effect on democracy? I will answer these questions by examining the patterns of
economic growth namely GDP and GDP per capita and compare this data with indexes of
democracy to see if there is indeed a relationship. I will use the same approach for the issue of
globalization in China implementing indicators of globalization; specifically trade openness and
15
foreign direct investment (FDI) flows into China. I also will analyze the effect of education on
democracy, as higher education has been noted as being conducive to democracy. From this
data, I should be able to conclude whether or not economic reform, including the embracement
of the international market, has had a positive impact on democratization in China. The data
spans the 26 years between 1982 and 2008.
Independent Variables:
As mentioned at the beginning of this paper, economic growth is synonymous with an
increase in GDP. Therefore, GDP will be the independent variable used to represent economic
growth. I will also use GDP per capita as a measure for economic growth in order to control for
population size. Information on GDP and GDP per capita used in this project was borrowed from
the World Bank Data sets.26 27
Globalization is a more complex variable to measure, as it is more abstract. However, the
focus of this project is on the elements of globalization concerning China‟s involvement with the
international market. The best measure to encompass the notion of international market
participation is “trade openness. This is a combination of imports28 as a percentage of GDP and
exports29 as a part of GDP. In short, trade openness describes total trade as a portion of the entire
economy. I chose to use trade openness because it is an effective way of measuring exactly how
much of a country‟s economy is related to international markets. The numbers for this variable
are lifted from the World Bank Database. FDI inflows are also an effective measure of how
26
"GDP (current US$) | Data | Table." Data | The World Bank. Web. 17 Feb. 2011.
<http://data.worldbank.org/indicator/NY.GDP.MKTP.CD>.
27
"GDP per Capita (current US$) | Data | Table." Data | The World Bank. Web. 17 Mar. 2011.
<http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries>.
28
"Imports of Goods and Services (% of GDP) | Data | Table." Data | The World Bank. Web. 17 Mar. 2011.
<http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries>.
29
"Exports of Goods and Services (% of GDP) | Data | Table." Data | The World Bank. Web. 17 Mar. 2011.
<http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS>.
16
open a country is to foreign investment as they indicate how willing a country is to receive
foreign investment. This measurement describes the yearly amount of money invested by foreign
firms into firms located in China. These numbers, like those above, were compounded from the
World Bank databases. 30
Higher education is also a byproduct of the above two variables and as mentioned in the
literature review, is correlated with development of democracy. Therefore this is also a variable
of interest. I will use adult literacy rates to measure growth of education in the population. The
adult literacy rate is the percentage of the total adult population (15+) that is able to read and
write short simple statements. This also comes from the World Bank. 31
Dependent Variable
The focus of my research is to determine how the above variables affect democracy, so I
needed an appropriate measure for democracy. Just as democracy is difficult to define, it is also
hard to measure. Of the available indexes and measures for democracy available, I have settled
on the Freedom House Civil Liberties and Political Rights Scores. I have chosen this index
because it adequately measures the most fundamental requirements for democracy including
freedoms of expression and allocations of civil liberties. To achieve a good score on the Freedom
House scales, a country must be a liberal democracy. According to the Freedom House website,
“Political rights enable people to participate freely in the political process, including the right
to vote freely for distinct alternatives in legitimate elections, compete for public office, join
political parties and organizations, and elect representatives who have a decisive impact on
30
"Foreign Direct Investment, Net Inflows (BoP, Current US$) | Data | Table." Data | The World Bank. Web. 17
Mar. 2011. <http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD/countries>.
31
"Literacy Rate, Adult Total (% of People Ages 15 and Above) | Data | Table." Data | The World Bank. Web. 17
Mar. 2011. <http://data.worldbank.org/indicator/SE.ADT.LITR.ZS>.
17
public policies and are accountable to the electorate. Civil liberties allow for the freedoms of
expression and belief, associational and organizational rights, rule of law, and personal
autonomy without interference from the state.”32
Freedom House claims that their observations of “freedom in the world” are not bound by
culturally constrained conceptions of freedom or liberty. Rather, they base their comparisons on
“basic standards” of freedoms. They derive these standards from the Universal Declaration on
Human Rights. In order to turn these observations into comparable scores that can be used in
either cross-comparison or time-series analysis, Freedom House rates each country on a scale
from 1 to 7. A score of 1 is indicative of FULL respect for freedom, while a score of 7 signifies
NO respect for freedoms.33 For ease of analysis, I combine the scores from Civil Liberties and
Political Rights to create a single index ranging from 2 to 14; 2= full respect, 14= no respect.
To test whether or not the dependent variable is affected by any of the independent
variables, I run simple correlations.
32
"Freedom House Scores: Methodology." FreedomHouse.org. 2010.
<http://www.freedomhouse.org/template.cfm?page=351&ana_page=363&year=2010>
33
For more details on Freedom House scoring criteria visit freedomhouse.org
18
Results:
Economic Growth Indicators:
Graph 1: GDP in China Between 1982 and 2008
GDP
$5,000,000,000,000
$4,500,000,000,000
$4,000,000,000,000
$3,500,000,000,000
$3,000,000,000,000
$2,500,000,000,000
$2,000,000,000,000
GDP current USD
$1,500,000,000,000
$1,000,000,000,000
$500,000,000,000
$0
Graph 2: GDP per Capita in China between 1982 and 2008
GDP per Capita
$3,500
$3,000
$2,500
$2,000
GDP per Capita (current
USD)
$1,500
$1,000
$500
$0
19
Globalization Indicators:
Graph 3: Foreign Direct Investment (FDI) inflows in China between 1982 and 2008
FDI inflows (current USD)
160,000,000,000
140,000,000,000
120,000,000,000
100,000,000,000
80,000,000,000
FDI inflows (current USD)
60,000,000,000
40,000,000,000
20,000,000,000
0
Graph 4: Trade Openness (imports plus exports) in China between 1982 and 2008
Trade Openness
80
70
60
50
40
total trade as a percent
of GDP
30
20
10
0
20
Education Indicators:
Graph 5: Total Adult Literacy (% of 15+ population) in China between 1982 and 2008
Adult Literacy Rates
100
95
90
85
80
75
Adult Literacy Rates (% of
15+ population)
70
65
60
55
50
1982
1990
2000
2008
Democracy:
Graph 6: Democracy trends in China between 1982 and 2008
Aggregated Freedom House Scores
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
China (2= full respect for
rights 14= no respect)
United States
21
Table 1: Correlations between the variables
Correlations
Freedom House
Aggregated
GDP
-0.02736
GDP per
Capita
FDI
Inflows
-0.02606
0.196478
Trade
Openness
0.069795
Adult
Literacy
0.386652
Discussion of the Data
The first six graphs are the independent variables and the dependent variables over the years
between 1982 and 2008. To best illustrate the Freedom House aggregated score, I have compared
China to the United States. The indicators for Economic Growth: GDP and GDP per capita grow
consistently between 1982 and 2008. Similarly, the indicators for Globalization: FDI inflows and
Trade Openness show a definite and constant upward trend. However, the indicator for
democracy: the aggregated Freedom House score does not show much variation, certainly
nothing that can be considered a positive trend. The correlations between the variables (table 1)
are all far from a score of 1.0, indicating a null relationship. It is clear from examining the
correlations and the graphs that there is no relationship between the independent and dependent
variables. China persists in resting democratic transition in spite of increased economic growth
and embracing globalization.
IV: The Government is Still Strong: Liu Xiaobo, a case in point
The data shows that despite sustained growth and openness to the world market, China
has remained authoritarian with minimal to no respect for political rights or civil liberties. But,
what exactly does a score of 13 or 14 look like? What is life like in a country with a government
that does not respect the rights of its citizens?
22
As if the data does not speak loudly enough for itself, it will be useful to point out a
specific case in order to illustrate exactly to what extent the Chinese government represses the
Chinese people. This can be witnessed in no better a case than that of Liu Xiaobo, the human
rights activist and Nobel Prize winner who was unable to receive his award due to the fact that he
was imprisoned as an enemy of the state. I will be brief in explaining Liu‟s situation.
Liu Xiaobo has a history of human rights activism that goes back to the June 4 th incident
in Tiananmen Square, where he organized a hunger strike and sit in, calming the crowd and
preventing a violent confrontation. His human rights activities have continued ever since,
including the publication of several political criticisms of the Chinese government. He has spent
most of the years since 1989 either in prison, under house arrest or in “reeducation camps.”
Despite this, Liu continued in his activities.
The action that has gained him the most notoriety is his involvement with Charter 08, a
declaration in the style of Czechoslovakian Charter 77, which was initially signed by over 300
Chinese dissidents (many of which are individuals of high status within and outside of the party)
on the 60th anniversary of the Universal Declaration of Human Rights. Liu was a contributing
author to this 2008 declaration which called for governmental respect of human rights in China
as well as a multi-party democratic system, privatization of state industries among other demands
related to political liberalization. Although this demand is certainly troubling for the CCP, the
Chinese government has not made a public comment about Charter 08. Instead Liu Xiaobo was
arrested before the official online release of the Charter.
His role as a human rights activist calling for political liberation and reform in China has
earned Liu international acclaim, culminating in the award of the Nobel Prize for Peace in
23
October 2010. Liu was unable to attend the ceremony as he continues to serve his eleven year
sentence for “spreading a message to subvert the country and authority.”
The case of Liu Xiaobo is just one of countless examples of how the Chinese government
has suppressed the freedom of one of its citizens. This just goes to show that the CCP will go to
any length to ensure its predominance at the top of China‟s political hierarchy goes
unchallenged.
IV: Analysis: Why no relationship?
It is clear from the data that there is no noticeable relationship between the independent
and dependent variables. Neither economic growth nor embracing the global market has caused
China to politically reform. It is news to nobody that China continues to have one of the most
restrictive and powerful states on the globe. This begs the question: Why has China (the CCP in
particular) been able to successfully embrace economic reform while still maintaining strict
authoritarian rule over the political system? How is it that China is a country fully embracing the
international free market and also run by a “communist” party? The answers to these questions
lie in an examination of regime stability theories.
Rather than observe all regime stability theories in an exhaustive manor, I will try to be
brief in hitting the key points that best explain why the CCP maintains control in today‟s modern
China.
It is not an uncommon argument that the reason why the CCP continues to maintain
control in China is because they have chosen security and continuity over liberty. Under the
Party, China has quickly entered the modern world bringing about positive changes in the quality
of life that the Chinese people enjoy. Since the initial years of reform, leading up to the 1989
24
Tiananmen Square Incident, there have been no mass demonstrations calling for political
liberalization. This may be because of the massive government censorship apparatus, discussed
in the case of Liu.
Others argue that there are deeper reasons, and that the Chinese people feel that political
change will not better their quality of life. This idea can be broken down further into various
explanations. One approach claims that China has an authoritarian political culture that extends
back centuries. Therefore, the Chinese people have never lived under a healthy democracy (save
for a few years under the Nationalist Kuomintang which later developed authoritarian attributes.)
Another angle argues that there is almost a type of “social contract” between the government and
the people that says: „we will continue to provide economic growth and stability if you allow us
to maintain absolute political control.‟ These ideas are refined by several scholars. Here are a
few:
Andrew Walder in a September 2009 Current History titled “Unruly Stability: Why
China‟s Regime Has Staying Power,” endeavors to answer the very questions posed above. His
central thesis is that “The overall political situation in China is far more favorable for the regime
than it was during the relatively tumultuous and strife-torn first decade of economic reform.”34
This is true for four reasons: China‟s gradual approach to modernization has been successful;
China‟s political path looks good for the CCP, especially compared to other post-communist
regimes; China‟s educated youth are optimistic and patriotic; And, Chinese leaders are united on
the goals for the future of China 35
Walder points out that the situation that China is in today is vastly different compared to
the end of the first decade of reform: the 1980‟s, where tensions between reformed minded
34
35
Walder, Andrew. "Unruly Stability: Why China’s Regime Has Staying Power." Current History 108 (2009): p 257
Ibid p.257
25
students and their sympathizers clashed with conservative party elders culminating in the
Tiananmen Square Massacre. He notes that all of the four points mentioned above: uncertainty
about economic reform, political unrest, a disenfranchised youth and fragmentation within the
CCP were all at a peak by 1989. These issues, according to Walder, are simply no longer
significant or noteworthy. He also points out that the kinds of protests that China experiences
today are fundamentally different from the protests in the 1980‟s. Now, protests are rurally based
and scattered across the country. They arise from discontented workers, upset about the
privatization of state firms or local corruption cases; there is no call for change on the national
scale. This is different from the protests in the 1980‟s which were located in major cities and
focused at the total political reform and liberalization of the national government.
Walder also takes an interesting perspective in comparing China to the other 29 countries
that experienced a communist takeover in the early to mid 20th century. He noted that of these
30, only 4 are still communist. Two are still isolated and have failed to embrace the market:
Cuba and North Korea. The other two: China and Vietnam have fully accepted the free market
system while successfully maintaining (communist) regime stability. What is also interesting is
that of the 26 that experienced a regime change, only half have managed to emerge as multiparty
democratic states (all of which, save for Mongolia are in Eastern Europe). However, of all 30,
China and Vietnam have managed to maintain the highest and most stable growth in per capita
GDP. 36
In Capitalism without Democracy: the Private Sector in Contemporary China, Kellee
Tsai directly refutes some of the major claims of the modernization theory. She argues that the
CCP maintains control because the entrepreneurs in today‟s China are not a unified class and
36
Ibid p. 260
26
have no desire to rebel against the system that has allowed them to prosper. Her in depth analysis
of the entrepreneurs in China focuses on a national survey of registered private enterprises in the
country as well as an extensive set of hundreds of interviews spanning several years in the early
2000‟s. She concludes that there are several factors impeding the entrepreneurs in China from
becoming a unified class that has the capacity to jointly call for political change in the form of
democratic transition. Regional constrains as well as employment background and size of the
firm causes entrepreneurs to have different political preferences. These variant types of
entrepreneurs also have diverse interactions with the political apparatus. This, in turn, prevents
them from forming collective organizations to petition for political reform. Tsai states that
although her surveys suggest that many of these entrepreneurs have favorable views of
democracy (in theory); they are not likely to use their economic influence to incite democratic
reform and rather prefer to do business in China while moving their families overseas.
Beyond refuting the modernization theory, Tsai offers a very sophisticated explanation as
to why the central government has been so good at adapting its institutions to allow for free
markets while resisting total regime change and maintain absolute control. She claims that
institutional changes have taken place in China in order to better accommodate capitalists into
the political system (and thus ease their ability to operate). These changes are not proactive
choices by the central government but rather reactive decisions to what Tsai calls adaptive
informal institutions. According to the definition repeated in her book, an adaptive informal
institution exists when entrepreneurs devise habits for operating outside of formal institutions or
legal framework in order to pursue their interests.
An example is the case of peasants abandoning the collective farming model prior to it
being legal to do so (1978). The central government‟s decision to abandon the collective model,
27
Tsai argues, thus was in reaction to the success of the previously illegal family farming model.
Perhaps a better example would be how it was initially illegal to operate a private business with
more than eight employees prior to 1988. Private entrepreneurs got around this by simply
declaring that their private enterprises were “collective enterprises;” an adaptive informal
institution which Tsai refers to as “wearing a red hat” (戴红帽子 dai hong maozi) The decision
to allow private business owners to join the CCP in the early 2000‟s is also a form of government
reaction to something that was already going on in China. (many party members ran “red hat
enterprises”)
Stefan Halper enters the argument on an even more pessimistic tone. In his recent book
The Beijing Consensus: How China's Authoritarian Model Will Dominate the Twenty-First
Century, he directly refutes Fukuyama‟s claim that democracy is the only legitimate form of
government. Due to the successful modernization of China under the Communist Party‟s
leadership, Halper foresees a future where not only does the CCP maintain control in China,
butwhere China‟s authoritarian capitalist model becomes the new model for developing countries
around the world.
V: Conclusion: How might democracy develop in China?
To conclude, it is fair to say that the pattern that is exemplified by the empirical data is
likely to continue. Unlike the countries in the Middle East that are entering another period of
instability, the government in China remains strong and in total control. Therefore, it is likely
that China will remain a one party authoritarian state without political liberties while continuing
to embrace free market reform. Since the progression of economic growth and trade openness
28
have not, as of yet, produced the favorable conditions for democracy to flourish, I will end this
paper by suggesting, theoretically, how democracy might begin in China.
Given that the Chinese Communist Party‟s predominance in the government is so
solidified, it is extremely unlikely that a smooth transition to democracy would take place
without the consent of the Party. Therefore, if any transition were to take place it would occur
under one of two conditions: ONE: a section of society becomes discontented with the party and
rebels, calling for political liberalization. TWO: the party decides to lead the way in slowly
opening up to political reform. I will explore both of these scenarios in depth in this conclusion.
As a small disclaimer, the following is a departure from traditional literature and embarks upon
the shaky ground of developing predictions. I anticipate disagreement and will try to note where
this may occur. Yet, only history can be the judge.
The First Scenario: A Violent Uprising
In the situation in China today it is possible to find several fissures in society where the populous
could become discontented and call for political reform on the national scale. I will only mention
the most troublesome of these problems.
The first, and possibly most significant, is the growing income gap between rich and poor
in China. Several observers have noted the disparity in wealth between those that have benefited
from market reform and those that have become victims of it. Those that have benefited are the
most obvious to observers in the outside world: the new middle class and upper class elite that
have taken full advantage of the economic situation.
However, those that have been overlooked are the many that have suffered under
economic transition: millions of migrant workers from central and western China that have been
exploited by the new changes. Here is where the problems lies. These former peasants had been
29
among the first to benefit from the initial relaxation of state control, which began with the
agricultural sector: abolishing collective farming and allowing families to farm their own land as
they saw fit. This plan was a great success, creating crop surpluses and bettering the quality of
life for these peasants. However, this success in agriculture also meant a labor surplus due to
efficiencies in farming. These surplus workers are among the estimated 700 million migrant
workers who travel to major cities to get jobs in construction and other labor intensive industries.
These men (and women sometimes), leave their family behind to seek employment in Special
Economic Zones (SEZ‟s) where the economy is booming. Unfortunately, the conditions for these
migrant workers in the cities are less than favorable: these migrants, due to strict residency
standards, are temporary residents, and are unable to enjoy the benefits that the cities permanent
inhabitants benefit from (education, property ownership, etc). Therefore, this is a major sector in
society where discontent can be anticipated.
On top of the income gap, disparities exist in the difference between coastal and inland
provinces. All of the significant growth is located in coastal provinces, where the SEZs are
positioned, while inland provinces (home to the majority of the dying state owned industries) are
suffering from stagnation and inefficiencies. Needless to say, this situation is also a point of
concern and could play a part in a call for systemic political transition towards democracy.
Aside from inconsistency and disparity caused by economic transition, one other problem
that continues to exist (that could add fuel to the fire, so to speak, in the event of a democratic
uprising) is continued chaffing under state repression, as exemplified in situations such as Liu
Xiaobo, discussed above and many more. All of these activists have powerful sympathizers and
supporters around the world, including non-government human rights organizations and various
liberal democratic governments. Furthermore, there are many people in China that feel
30
inconvenienced by government intervention in areas like censorship and repression, but do not
act out on their dissatisfaction. They have the potential to act if they felt that they could make a
difference.
To combat my point, some observers, such as Tsai and Walder, think that these issues are
not significant enough to bring about demonstrations on the scale of 1989. Additionally, if such
protests were to take place, the government is in a good position to endure due to the fact that
their position is so solidified. This may be true, but I can image a scenario where these problems
could be exacerbated and become truly troublesome for the CCP. As of now, the Chinese people
have a favorable opinion of their government. They have a utilitarian view of politics: if it works,
it is a “good government.” In the past decades of reform the standard of living and the quality of
life for the majority of Chinese people has risen drastically. If the government somehow failed
to continue to offer favorable conditions for economic growth which resulted in a downturn,
mass political unrest would be sure to follow, as people would be less excepting of political
repression without economic benefits for doing so.
At any rate, if these problems did result in mass demonstrations calling for democracy,
and said demonstrations were somehow able to break the grip of the Chinese Communist Party
on society, the outcome would be very messy and a successful transition to democracy would be
uncertain.
The Second Scenario: a Peaceful Transition
If the above problems do not culminate in a democratic revolution, then is it still possible
for China to transition to democracy through other mean? Theoretically, yes. But this is unlikely.
It might be possible for a transition to democracy with the CCP at the helm. If the Party
leadership does decide to loosen its grip of control, it is possible for the CCP to lead the way in
31
reform. One could argue that this has already happened to some degree. The Party has already
implemented changes to better incorporate capitalists into the party and the communist system
by making private enterprises legal and by allowing capitalists to become Party members. Tsai
argues that such decisions are simply reactive responses to situations that have already happened.
(a perfect example of her “adaptive informal institutions.”)
So what does the future of democracy look like in China? As of now, the Chinese
Communist Party maintains ultimate control over all aspects of society. Elections only exist at
local and village levels and are relatively trivial as Party members are all but appointed by their
superiors. Civil liberties and basic human rights continue to be violated, as exemplified by the
data and in the extreme case of Liu Xiaobo. Although China is quickly entering the ranks of the
modern world in terms of economic strength, it simply does not resemble anything close to a
democracy. This is the status quo, and as Walder notes: it is likely to continue this way.
Furthermore, The CCP seems intent on staying and they are aware of the problems
discussed in the first scenario and intend to address them. The focus of the 12 th Five Year Plan in
China (2011-2015), drafted on March 14th 2011 is to combat the issues of income inequality and
direct investment away from the coastal provinces toward inland provinces. By paying attention
to these problems, the CCP is proving that it is conscientious and willing to make necessary
changes to fix the problems caused by the economic growth.
32
Sources and Further Reading
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Diamond, Larry Jay., and Marc F. Plattner. Capitalism, Socialism, and Democracy Revisited.
Baltimore, MD: Johns Hopkins UP, 1993. Print.
Diamond, Larry Jay. Developing Democracy: toward Consolidation. Baltimore: Johns Hopkins
UP, 1999. Print.
Dorn, James A.. " TRADE AND HUMAN RIGHTS: THE CASE OF CHINA The CATO
Journal 16. 1 (1996), http://www.cato.org/pubs/journal/cj16n1-5.html. (accessed April 3, 2010).
"Exports of Goods and Services (% of GDP) | Data | Table." Data | The World Bank. Web. 17
Mar. 2011. <http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS>.
Falk, Richard. "Interpreting the Interaction of Global Markets and Human Rights." in
Globalization and Human rights by Alison Brysk (2002): 61-76.
"Foreign Direct Investment, Net Inflows (BoP, Current US$) | Data | Table." Data | The World
Bank. Web. 17 Mar. 2011.
<http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD/countries>.
Fukuyama, Francis. The End of History and the Last Man. New York: Perennial, 2002. Print.
"GDP (current US$) | Data | Table." Data | The World Bank. Web. 17 Feb. 2011.
<http://data.worldbank.org/indicator/NY.GDP.MKTP.CD>.
"GDP per Capita (current US$) | Data | Table." Data | The World Bank. Web. 17 Mar. 2011.
<http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries>.
Howard-Hassmann, Ronda E.. "The Second Great Transformation: Human Rights Leapfrogging
in the Era of Globalization." Human Rights Quarterly 27.1 (2005): 1-40
Hu, Shao-hua. Explaining Chinese Democratization. Westport, CT: Praeger, 2000. Print.
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Mar. 2011. <http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries>.
Li, Quan, and Rafael Reuveny. "Economic Globalization and Democracy: An Empirical
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Lipset, S. M. "Some Social Requisites of Democracy: Economic Development and Political
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33
"Literacy Rate, Adult Total (% of People Ages 15 and Above) | Data | Table." Data | The World
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2010).
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Tsai, Kellee S. Capitalism without Democracy: the Private Sector in Contemporary China.
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108 (2009): 257-63. Print.
34