China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [17]
Even the CCP Central Committee’s assessment of China’s progress in economic reform in late 2003 painted a picture full of difficult challenges ahead. According to the communiqué of the third plenum of the CCP’s 16th Central Committee, “China’s economic structure is not rational, the redistributional relationships have not been smoothed, peasants’ income growth remains slow, contradictions of employment are growing salient, resource and environmental pressures are increasing, and the aggregate competitiveness of the Chinese economy is not strong.”41
The most serious threat to the viability of China’s gradualist approach, however, is the weakness of the institutions critical to the functioning of a market economy. Such institutions include, among other things, a modern legal system and a constitutional order that can protect private property rights and enforce contracts, as well as a political system that enforces accountability and limits state opportunism. A quarter century after China began its transition to a market economy, these institutions remain relatively underdeveloped. It is worth noting that, starting in 2001, Wu Jinglian began to emphasize the rule of law, rather than market forces, as the key to China’s future success. He publicly declared that, without completing the necessary political reforms, which would be required to strengthen the institutional foundations of a market economy, China risked falling into the “trap of crony capitalism.” 42 Reflecting on the evolution of his own thinking, Wu admitted that Chinese economists like him were naive at the beginning of reform. They thought that “once the practices of a planned economy were jettisoned and a set of market-based relationships was established, everything would be smooth-sailing.” But the problems that emerged twenty-five years into China’s transition cannot be solved by “pure economics.” “Although a market economy is gradually emerging in China, problems such as social anomie, rising inequality, and rampant corruption are getting worse.” Wu concluded that a “good market economy should be built on the foundations of the rule of law.”43
Why No Autocracy Has Opted for the Big Bang
The focus on output growth, incremental institutional change, and the merits and flaws of the gradualist approach misses a key issue: the connection between an authoritarian regime and the type of economic strategy it is forced to adopt. To be sure, most researchers recognize the role played by political constraints on the course of economic reform. Gérard Roland, for example, identified two such constraining factors. First, the uncertainty of outcomes, especially in terms of the distribution of costs and benefits of reform, constrain policymakers and hamper their ability to build proreform coalitions. Second, “complementarities and interactions among reforms” also matter because individual reform measures rarely produce their intended effects without other complementary measures. In political terms, implementing a reform package deemed, at least economically, as having a higher degree of complementarity (so that various components of the reform work better with each other) may actually undermine reformers. Such a package can hurt more entrenched interests and, at the same time, galvanize their opposition to change.44 Implicit in the complementarity constraint is the assumption that this type of constraint forces reformers to adopt a gradualist or incremental approach to divide and conquer the opposition.
Proponents of gradualism seem to have overlooked the greatest political constraint on economic reform: an authoritarian regime’s fear of losing power during reform most likely far outweighs its worries about encountering opposition to such reform. The most important political logic that drives economic reform under autocracy is not one based on a Machiavellian calculation of coalition-building, but one that is centered on regime survival. According to this perspective,