China is experiencing a rapid slowdown in reform and development and showing signs of economic, political, and societal instability, according to Professor Chenggang Xu of the University of Hong Kong. On the day before the 25th anniversary of the now legendary Tiananmen Square protests, Xu considered how long the country of over 1.3 billion can go on without functional constitutionalism, including constitutional rules that confine the power of the government, political pluralism, and separation of powers.

Xu, once an ardent believer in Marxism and communism, ultimately became a political prisoner after making remarks and participating in activities that authorities under China's former Communist Chairman Mao Zedong saw as “revolutionary.” He spent 10 years in solitary confinement, followed by a sentence in a labor camp under very harsh conditions,

Professor Chenggang Xu of the University of Hong Kong talks about China's economic and political challenges. Image credit: CEU/Daniel Vegel

noted Xu's colleague and friend, Janos Kornai, professor emeritus, Corvinus University and Allie S. Freed professor of economics emeritus, Harvard University, who introduced him at the CEU event. After the death of Mao, Xu returned to Beijing to continue his studies and ultimately attended Harvard. Xu's father, a physicist who translated Einstein into Chinese, was also a target of the regime who, after expulsion from the communist party, and the Chinese Academy of Sciences (of which he was a founding member), remained under police surveillance until the end of his life.

Xu noted that the necessity of reforming China's political and legal institutions by establishing the constitutional rule has been a hotly debated issue, particularly right before the 18th National Congress of the Communist Party of China in 2012. Even setting aside democratic tenets such as human rights and pluralism, Xu said those who care only about the economy also have reason to despair.

“Ranked by total GDP, today's China is the second largest economy in the world,” Xu said. “However, by per capita GDP ranking, China is worse than USSR in the 1980s. China is a fairly poor nation with a very poor Human Development Index (HDI) ranking that is getting worse and worse.”

In the post-WW II world, all the developed economies in the world are constitutional democracies, Xu stated, and almost all of the most important inventions in last century came from democratic countries. In addition, Xu, a specialist in economic development, pointed out that constitutional rules are a precondition for functioning financial markets.

“Without constitutional rule, the government violates property rights repeatedly,” he said. “This is the key reason the Chinese financial market doesn't work.”

Professor Chenggang Xu of the University of Hong Kong recommends feasible, peaceful steps toward a constitutional system in China. Image credit: CEU/Daniel Vegel

Social instability brought on by the lack of property rights is a huge concern as well. Xu explained that the government engages in large-scale urbanization in which huge areas are being converted from agricultural to urban use. “They grab the land from peasants and convert to state ownership and sell use rights to developers (there is a coalition between the government and the developers). They make large profits but they squeeze both the peasants and the urban citizens – they force demolition and people have to move.”

Anti-corruption campaigns have also failed because of the nature of China's Regionally Decentralized Authoritarianism (RDA), characterized by highly centralized political and personal control power and highly decentralized administration and economic powers. A remnant of this system, appointed bureaucrats are only accountable to their bosses, not to their constituencies.

Xu recommended feasible, peaceful steps toward a constitutional system, including aiming at a democratic federal state, starting from local elections; improving existing village/town elections; implementing local (municipality/provincial) elections; and a timetable for general national election.

Regarding reform of the ruling party, Xu would like to see an institutionalization of competing factions of the party as well as open elections within the party. Judicial independence and the establishment of private property rights are also of utmost importance to a constitutional government and national stability, he concluded.

The lecture was sponsored by CEU's School of Public Policy (SPP), the Department of International Relations and European Studies, and the Department of Economics.