China's Challenge

March 26, 2007 RealclearPolitics.com By Peter Brown

Most Americans think of China as an economic and potential military rival that is taking their jobs and threatening their future. Although accurate, that view fails to acknowledge the complexity that makes China's exact course anyone's guess.

In truth, leaders of the world's most populous nation are walking a tightrope much like Western societies which try to balance the often conflicting interests of the poor and the middle class.

That is a major change in China, where for the previous half-century, helping the peasants and making sure all lived equally was the charge of the communist government.

But 21st century China is neither fish nor fowl; it is the world's fastest growing economy, where capitalism seemingly has replaced socialism as the financial model with a zeal that would make Adam Smith proud.

This has greatly raised Chinese living standards. But, in the process, it has created a tiered society; a growing middle class that has benefited enormously from the shift towards capitalism, and the largely rural poor who have been left behind.

China is still officially a socialist country, and only this month gave its first serious legal protections to private-property owners. Even so, especially in the rural areas, it is not completely clear what is owned by whom.

And, the new private-property law became reality only because the government squelched dissent from those who cling to the socialist ways of the past - highlighting the authoritarian political system that is little changed from the days of Mao.

As surprising as it may seem to those who see only the country's remarkable economic growth, there is significant opposition to capitalism within China.

It comes from the several hundred million of Chinese who have not shared in this rise in living standards. (For comparison's sake, remember the total population of the United States is about 300 million.)

Most of the improvement in Chinese living standards has occurred in the cities. Chinese officials, who could be expected to minimize the problem, said last year there were 23,000 "mass incidents," which is bureaucratese for riots.

And, that is the rub.

China has ostensibly embraced the free enterprise system for all it is worth, in many ways much more so, for instance, than European nations that still clings to the notion of a nanny-state economy with a large government role.

But that has created severe internal pressures in China that are often frustrated by the governmental system which sharply limits personal and political freedoms.

Historically, nations that opted for capitalism see their incomes rise, but they also experience an economic stratification in which some people do better than others, causing resentment and if the gap is wide enough, political unrest.

At the same time, history tells us that societies in which capitalism flourishes have been incompatible with authoritarian government control.

So far, China has been able to finesse these internal contradictions.

The question is how long it can do so and avoid embodying the worst of both systems; the brutality that laissez-faire capitalism can inflict on those at the bottom economically, and the rigidity that authoritarianism uses to stifle political change.

No one wants to stop the nation's economic march. The Chinese, for instance, live with pollution caused by industrialization that would be intolerable in the United States because of their single-minded goal of boosting the economy.

They have begun to enjoy the fruits of modern, middle-class life, and the Communist Party's leaders are frantic to keep living standards rising, which requires they smooth the way for capitalism and foreign investment.

By symbolically embracing private property, the Chinese have are moving full-speed towards capitalism. They understand the risks if they ignore the needs and wants of those who have not yet enjoyed the benefits of the new Chinese economy.

Yet, the tightrope they walk gives them little choice. Why else would the Communist Party, which in Chinese literally means "the public property party," use all its power to make sure the right to private property became enshrined in law?

Peter A. Brown is assistant director of the Quinnipiac University Polling Institute. He can be reached at peter.brown@quinnipiac.edu