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Satisfying China’s Rising Middle Class in an Era of Economic Uncertainty

Protesters confront police in China

SOURCE: AP Photo

Protesters, right, confront with police officers, left, near the local government office building in July in Qidong, Jiangsu Province, China. Protests are becoming more commonplace, as Chinese citizens begin to demand higher quality of life from Communist Party officials.

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This is the third in a six-part series highlighting the research and recommendations of a recent Center for American Progress report, “China’s Real Leadership Question.” The report explains the major players and factors in China’s upcoming political transition and describes the numerous challenges the country faces during the transition and well into the future.

For the past three decades, the Chinese Communist Party has maintained power by offering its citizens a bargain they could not resist: The citizens support the Communist Party’s authoritarian grip on power, and in return the party keeps the economy growing and uses the cash to give everyone a better life. As China moves into its next development phase, it’s going to be harder for the party to keep up their end of the deal. To complicate matters further, instead of accepting less, the Chinese people are going to be demanding even more.

Many Chinese people—particularly in China’s growing middle class—already have decent homes, cars, and plenty to eat. Now they want a more transparent government, cleaner air and water, safer food and drug supplies, and a judicial system that actually works. That creates a big problem for the Chinese Communist Party because those benefits are very hard for an authoritarian regime to deliver without losing its grip on power.

Beijing may not have a choice, however, because when the party does not give the Chinese people what they want on some of these quality-of-life issues, the people increasingly have been responding by going to the streets in mass protests. That strikes terror in the hearts of the Chinese leadership because any time their citizens protest, they worry that the unrest could spread and trigger another Tiananmen-style crisis. If that were to happen, it would likely bring an end to the Communist Party regime because in the modern Internet era, Chinese leaders cannot launch another Tiananmen-style crackdown and maintain any vestige of popular support.

To survive, Chinese leaders must find a way to deliver enough quality-of-life improvements to keep their citizens—particularly the urban middle class—from protesting. Unfortunately, that will not be easy to achieve. Whether the new leadership can manage to do so will depend to a large extent on economic growth.

Current state of protests

It is difficult to say for sure exactly how many protests erupt in China every year. Statistics vary depending on how different government agencies define the term “mass incidents,” but over the past few years the central government’s annual protest statistics have ranged between 50,000 and 100,000 per year. This is despite the fact that the Chinese central government budget for “public security” (preventing and stopping mass protests) has eclipsed the country’s national defense budget for two years running. The 2012 budget allocated more than RMB 700 billion ($110 billion) to domestic police and paramilitary forces—$5 billion more than Chinese leaders gave the People’s Liberation Army for national defense.

Here are just two examples of the types of protests incoming Chinese leadership will face if demands do not start being met:

  • This July in Qidong, a coastal city near Shanghai, thousands of residents took to the streets to protest a waste-discharge pipeline that would have decimated fisheries and polluted drinking water. Enraged protesters, however, did more than just march through the streets. They also attacked city government buildings and overturned cars.
  • That same month in Shifang City, Sichuan Province, thousands of citizens surrounded and attacked government buildings to protest a copper factory.

These protests are sprouting all over China and presenting Beijing with a major red line. If the incoming Chinese leaders cannot address the corruption problems in government and quality-of-life issues, then the protests will likely get bigger and more frequent until they grow into something the party cannot shut down. Chinese leaders need look no further than Hosni Mubarak’s regime in Egypt to see what that would entail.

The Chinese people basically want a lifestyle that looks a lot like what we have here in the United States. Problem is, the United States is a democracy—and China is not. Beijing answers to no one, and local governments are their own corrupt little kingdoms. The leaders in Beijing know they have to fix problems such as environmental pollution and poisonous food products to keep people from protesting. Local governments are generally more interested in making money, however, and not so interested in enforcing regulations to improve quality of life.

Beijing can order them to do so, but China is a big country, and Beijing is—for the most part—far away. Local businesses are much closer, and they have a lot of cash. When local officials have to choose between following Beijing’s orders and protecting business in exchange for kickbacks, the latter often looks like a much better deal. That creates major corruption problems.

Infrastructure development projects in particular are hotbeds of corruption. Businesses can site those projects anywhere in China so regional governments compete with one another to attract investors and win the tax revenues and kickbacks those deals can bring. That often involves ignoring the laws that protect citizen rights. Local officials kick people out of their homes with little or no compensation, lease the land to a developer at extremely low rates, and then allow that developer to violate a whole host of environmental standards. Businesses save millions in construction costs, but citizens suffer—first by losing their land and homes, then by exposure to dangerous pollution.

As protests over these and many other practices have grown, China’s central leadership has taken measures to try and appease the masses, but often hasn’t gone far enough.

Attempts to quell protests

One way Chinese leaders are trying to solve these problems is by borrowing strategies from western democracies, without going so far as to actually democratize. Chinese leaders are trying to improve the functioning of their courts, for example, so that their citizens can sue local officials when they ignore Beijing’s laws (for example, by kicking people off of their land without providing adequate compensation). Beijing also is giving Chinese journalists and nongovernmental organizations a bit more leeway to expose problems such as environmental pollution and food-safety incidents.

Problem is, they never go quite far enough. The courts are still not independent, so cronyism derails most cases. Journalists and social organizations are still kept on a tight leash. Local governments can still have journalists or activists fired if their investigations get too political, and that cuts many watchdogs off at the knees. Overall, Beijing flirts with elements of a democratic society but never goes far enough to enact real change. The end result is that they are not fully addressing their citizens’ growing complaints, raising the question of whether Chinese leaders will be able to keep things going in a more economically developed era.

Some foreign observers saw China’s reaction to the Wukan protests (in Guangdong Province) last fall as a sign of progress. Party leaders in Wukan had to decide how to reassert control after local officials and police clashed with angry residents over corruption problems and then retreated, ceding Wukan Village to protesters. Instead of sending in tanks—as Deng Xiaoping did to clear Tiananmen Square in 1989—Guangdong party leaders sent in representatives to hear the people’s complaints, and they even allowed the villagers to hold a special election to appoint a protest leader as the new village party chief.

This was a fascinating and positive development, but Wukan’s experience is not likely to be repeated nationwide. Wukan is located near Guangzhou and Hong Kong, two major international cities—meaning the Wukan crisis attracted international media attention, which made the party’s response as much about public relations as it was about maintaining social stability. With most Chinese protests, local officials are more likely to respond with crackdowns than elections.

Looking toward the new regime

As China ushers in a new cadre of leaders, those leaders will have to understand that, at a fundamental level, there is only one way forward. They have to give their growing middle class more of what they want, and what they want is looking more and more like the kinds of government goods, services, and accountability that Western democracies deliver. Marginal reforms and small political concessions will not achieve that, though they will buy time, which alone is a big accomplishment. The question is how much time they have left.

That will be largely determined by how well China fares on an economic front. As long as the economy is booming, most Chinese people can put up with some political frustrations, because as long as the political frustrations don’t get too bad, they still seem like a worthwhile price to pay for economic growth. If the economy slows down too much, however, that bargain no longer looks like a good deal, and protests may grow stronger and louder.

To read the full report, “China’s Real Leadership Question,” click here.

Melanie Hart is a Policy Analyst for Chinese Energy and Climate Policy at the Center for American Progress. Alex Lach is an Assistant Editor at the Center.

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