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to build a strong enough new reform coalition at the national level. But regional and local reform coalitions can be formed with a combination of the initiatives of forward-looking local elites and pressure from societal forces. Although the devolution of power has led to the decentralization of prcdation, two developments can potentially generate more positive dynamics for reform. Devolution of power will, in some cases, result in greater political accountability for local elites. More important, devolution of power in China’s context has encouraged interregional competition for capital, labor, and markets. Local accountability and interregional competition may jointly motivate local elites and civil society groups to experiment with new institutional reforms that can address the ills of a trapped transition at the local level. It is worth noting that, in the 1990s, the most innovative governance reform attempts, such as the township-level elections and refining village elections, were “middle-up” initiatives—risk-taking ideas implemented by progressive local officials to remedy local problems. If more jurisdictions take the middle-up route, at least some of the social and political ills caused by a trapped transition can be ameliorated at the local level. In the end, local initiatives will probably encourage governance divergence across China, as some areas manage to get out of a trapped transition through reform and others continue to stagnate or even deteriorate further.

Implications for the International Community

One must not rule out the possibility that a country such as China can be stuck in a trapped transition for an extended period. It is conceivable that a developmental autocracy can continue to use the same mix of repression, co-optation, and adaptation to maintain an elite-based ruling coalition for decades. Deteriorating governance and economic performance may be the necessary—but not sufficient—conditions for the emergence of a fatal crisis. A combination of tactical adaptation, improvisation, luck, and mass apathy may allow the ruling elites to stay in power even as the country is mired in misrule.

The likelihood that China’s transition to a market economy and open society has stalled has serious implications for policy. For Chinese leaders, a transition process trapped in a partial reform equilibrium endangers their ambitious goal of becoming a full-fledged global power. The combination of flawed economic and political institutions creates market distortions, inefficient uses of resources, and opportunities for massive systemic corruption. The rapid economic development China was able to achieve in the first twenty-five years of its transition will unlikely be sustained. Instead of becoming a global economic power, China may enter a prolonged period of stagnation.

In addition, the risks of domestic instability will likely increase, both as a result of the social frustrations caused by poor economic performance and the political dissatisfaction against an authoritarian, exclusionary, corrupt, and ineffective regime. Given the difficulties and costs associated with forming viable coherent opposition groups capable of opposing and offering a credible alternative to the CCP, it is difficult to imagine that the CCP behemoth can be dethroned by an organized coalition from below. Absent a deep and wide fracture that shatters the CCP from within, the collapse of the CCP may be a low-probability event. Thus, the unavailability of a credible alternative and the slim possibility of a regime implosion suggest that political stagnation would accompany economic stagnation, with further erosion of state capacity, the decline of the CCP’s legitimacy, and increases in lawlessness, corruption, and social disorder. Ultimately, such stagnation will progressively increase the risks of regime collapse or state failure, as the strains accumulate in the dysfunctional political and economic systems.

For the international community, a China trapped in prolonged economic and political stagnation poses a set of challenges