It’s often been said, including by my colleague Damien Ma in an excellent 2013 book, that China’s Communist Party has offered “prosperity without freedom” during the era of economic reform. To put this a bit differently, China’s people have been permitted by their Leninist rulers to grow rich and pursue material gains—so long as they accept the Party’s writ and forego organized challenges to its rule.
But if this does accurately describe China’s post-1978 grand bargain, then last month’s 19th Congress of the Chinese Communist Party makes clear that it no longer holds.
Hundreds of millions have grown prosperous during 39 years of economic reform. For these teeming millions, prosperity alone is, quite clearly, no longer sufficient. Their expectations now transcend wealth and economic mobility. Increasingly, they demand not just material gains but social ones too—equitable life chances, better welfare protections, safer food, drinkable water, cleaner air, and more responsive (if still unrepresentative and undemocratic) government.
The Congress’ underlying political message was unmistakable: “north, south, east, west, and at the center, the Party leads everything.” Party supremos aimed to project the image of a confident, unified, strengthening elite, pursuing the “great rejuvenation of the Chinese nation” while assuring control and molding social and economic institutions in the Party’s preferred image.
But what exactly does it mean for the Party to “lead everything” when those who are being led—Chinese citizens—expect something different from what the Party has hitherto provided to them?
Party leaders appear to be asking themselves this question. And so it’s important to recognize how much fragility and uncertainty about the non-material aspects of governance and development lies behind the Leninist triumphalism.
Xi’s cohort seems to understand that China’s prevailing social and political contract has frayed.
THE “PRINCIPAL CONTRADICTION”
Surely, this is why Xi launched his second five-year term at the Congress by endorsing a major doctrinal change—one that implicitly recognizes the fraught circumstances of China’s economic reality and the growing expectations for change of an increasingly demanding citizenry.
Chinese Marxists have long stressed the need to think in terms of “contradictions”—the dialectical opposition of different forces or influences. Mao Zedong, the Party’s longtime chairman, made an intellectual career out of emphasizing the various “contradictions” and these formed the central thesis of one of his most famous essays, a 1937 piece titled “On Contradiction.”
When constructing their post-1978 reform edifice, Mao’s successors moved away from the chaos he had unleashed by defining their own so-called “principal contradiction” to guide the Party’s future work. The principal contradiction, they decreed, would be the gap between “the ever-growing material and cultural needs of the people and backward social production.”
In simplest terms, this meant that China’s new leaders sought to focus on modernizing the economy, lifting living standards and meeting material needs. This, they hoped, might also let pressure out of the political “balloon” that, in the aftermath of the chaos of the Cultural Revolution and the stasis of the mid-1970s, threatened further political fragmentation and perhaps could bring down the Party itself.
Enter Xi Jinping.
At the 19th Congress, Xi’s team changed the “principal contradiction.”
Instead of continuing to focus on the gap between people’s needs and backward economic production, the Party has now declared that it will focus on social needs and demands for welfare and equity. Indeed, Xi put this point rather bluntly in his speech: “What we now face,” Xi declared, “is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life.”
Put differently, Xi pitched a sort of “new deal” for China—one that moves beyond delivering prosperity to delivering improved governance and greater welfare gains. And while this is mostly rhetoric for now—with execution still to come—it is, in a sense, both an accurate assessment and formal recognition of the massive changes in Chinese society.
Bluntly put, the Party had dropped the ball in dealing with citizens’ new demands.
And that is probably why someone who is said to be “the chairman of everything” and “China’s most powerful leader since Mao Zedong” is now spending at least some of his time on matters as mundane as launching a “toilet revolution” aimed at “improving [the] people’s life quality.” Want to know what Xi Jinping is giving speeches about this week? Toilets.
CHINA’S THREE NEW CONTRACTS — SOCIAL, POLITICAL, ECONOMIC
But here’s the problem:
If one looks at how the Party is pursuing its efforts to address the new principal contradiction—if one looks, in other words, at where the Party actually appears to be taking China—then it’s clear that the story is not so straightforward as a simple effort to deliver “a better life” to the Chinese people.
Xi’s team means to meet heightened public expectations at the same time that it attempts to rearrange China’s three prevailing public “contracts”— elements of its social contract, political contract, and economic contract—all of which are fraying.
The “Social Contract”
The prevailing social contract is, in a sense, the “grand bargain” described above—an exchange between Party and public of economic opportunity for acceptance of constricted political space.
But the Party is moving away from this grand bargain not only because of pressure to deliver something more than merely material gains. It also faces threats from social dislocation, rising popular discontent, and slowing growth.
Many of the economic and structural reforms necessary to address these problems were shelved during Xi’s first term. So the Party’s challenge of meeting social, as opposed to just material, expectations has grown tougher because it now has to bridge a significant credibility gap with the Chinese public.
The “Political Contract”
China’s political contract, meanwhile, is also coming apart. The country’s post-1978 leaders, led by Deng Xiaoping, promised responsive, but not representative, government. The Party rejected demands for direct representation, much less democracy, by arguing that those things were unnecessary to meet public expectations and governance needs.
And yet much like the “social” contract, which has frayed in the face of rising expectations, this “political” contract has also frayed.
That is because China’s prevailing governance model is failing—badly—to deliver sufficient social services and other needs.
An unrepresentative government that China’s leaders claimed could nonetheless manage to be “responsive” just doesn’t look too responsive anymore, either.
This has happened, in part because Beijing has failed to replace the old system of welfare guarantees with a new one. In the past, China’s unrepresentative but ostensibly “responsive” state provided virtually all aspects of job security, social security, and retirement security, usually delegated through state-owned enterprises (SOEs) and other work units. That changed in the 1990s when SOEs were forced to dramatically curtail these functions and shed many of their welfare obligations.
The problems this introduced for millions of ordinary Chinese have finally caught up with Beijing. Many Chinese people now view the lack of a new system as an example of unresponsiveness, and even indifference, from their government.
The “Economic Contract”
And that brings us to the economic contract.
When the state began to retreat in the 1990s, it permitted China’s private sector to grow and pick up some of the slack. People could try to meet their needs through the most basic private function—precautionary savings of their money. But they could also pick up slack by increasing their incomes via activities in private firms, private smallholdings, private exchanges of goods and services, and other forms of private transactions.
The state insisted that it continue to control the commanding heights of the economy—entrenching state-led oligopolies in resource sectors (such as oil and minerals), key services sectors (including banking, telecoms and insurance), natural monopolies (such as public utilities), and strategic sectors (such as defense production). But it left many other sectors to private players—for example most of agriculture and much of China’s manufacturing sector.
Xi’s team is now corroding this contract as a deliberate strategy—viewing a stronger state role in the economy as a means to deal with social and political challenges.
This means that, where Xi’s predecessors opened up space for the private sector and even brought private entrepreneurs into the Party, his team is doing much the opposite—pushing Party cadres back into private firms, taking public stakes in private companies, imposing new regulations on the private sector, and closely monitoring and cracking down on the business activities of private oligarchs.
In short, an economic contract that had seemed to be bifurcating and segmenting the public and private spheres in China is being corroded in new ways. The public role has begun to expand in fresh directions.