Costs of maintaining stability in China

Author: David Kelly, UTS

A month ago, a report from a team of sociologists at Tsinghua University claimed that ‘this year’s (Chinese) budget for internal security has reached 514 billion yuan.’ The report went on to note that public safety expenditure increased by 16 per cent last year and will be augmented by a further 8.9 per cent this year.’ This increase has put expenditure on internal security in the same league as national defence spending. In light of this, the report warns that, ‘if the existing way of working is not changed, stability maintenance costs will become an increasingly heavy burden. More ominously, a number of reforms that are important for the improvement of the market economy and building a harmonious society may be delayed.’

Demons seemed to possess China last year. These demons had their source respectively in ideology, politics, and arrogance, and caused an extraordinary sensitivity in China’s attitude towards much of the outside world. Australia was affected by this sensitivity, which manifested itself in events such as the Rebiya Kadeer affair. Despite some lingering problems, this extreme sensitivity has passed, and those particular demons have eased their grip. But now China is engulfed by the demon of internal sensitivity and insecurity.

For years, China has publicly worried about the need to maintain social stability. Previously, this could be discounted as rhetoric, or as an easy way for the government to clamp down on things it didn’t like. It could even be seen as a rationalisation for economic policies such as artificially low or high grain prices. But the current massive investment in maintaining stability indicates that something more than mere rhetoric is at stake.

The Tsinghua study discusses the implications of the current focus on stability.  It is an important report that deserves to be widely read.  It argues that the current focus on stability has three major implications.  These relate to:

•               policy costs;

•               the ‘China model’; and

•               governance and technical assistance.

Policy Costs

The report describes the current leadership’s obsession with implementing stability as a self-fulfilling recipe for complex and expensive paranoia. In implementing its strategy, the government must rely upon a closed bureaucracy. This produces two undesirable results; government policies face limited external scrutiny, and the government is unable to receive honest feedback on the effectiveness of its policies.

The report also points out that the government’s obsession with stability produces a series of perverse incentives. Striving to avoid any imputation that stability has weakened in their jurisdiction, officials make payments from ‘stability funds’ to buy off potential troublemakers. Over time, ‘making a fuss’ becomes a move in the game: ‘a major fuss for a major settlement; a small fuss for a small settlement; no fuss, no settlement.’

The relationship between developers and residents is a practical illustration of the contradictions of the ‘stability’ strategy. A prerequisite for balancing the interests of developers and residents is that residents’ voices be placed on an equal footing with those of the developers so that genuine negotiation may take place. But as collective negotiation by residents is blocked there is no such voice; local government then has to deal with the social and economic cost of quelling protests by disaffected residents. So ‘the work of maintaining stability becomes an instrument for the interests of unscrupulous companies and contractors, a tool for developers in carrying out predatory evictions and relocations.’

Ultimately, the policy of stability escalates costs, and increases the very risks that it was designed to address.

The ‘China model’

The government’s obsession with maintaining stability also has implications for the long-term viability of the China model.

Specifically, as the report points out, the state lacks functional ways of delivering on social justice, and this may eventually undermine the Chinese model. Mao Yushi, economist and executive director of the  Beijing Unirule Institute of Economics think-tank, also makes this point in a recent article. Social justice was highlighted at the 17th National Party Congress in 2007, but little progress has been made at the operational level. This is a crucial problem, as citizens in China are affected not by the official direction of government policy, but rather by the way in which this policy is implemented in local areas. Officials who achieve development and stability targets are rewarded with promotions; meeting social justice targets brings few rewards and many risks. Yet social justice, as Mao Yushi points out, is the best long-term recipe for stability. It is by the same token the best recipe for the credibility of the China model.

Governance and technical assistance

The Tsinghua report calls for a series of steps to combat the dystrophy that has resulted from the Chinese state’s policies on social stability. This step-by-step approach is based on a set of measures that include the separation of powers, at least at the local level. Much of it looks like a utopian wish-list. But some of its prescriptions, like the recommendation that, ‘rather than eliminate conflicts of interest, stability maintenance should establish rules,’ can be interpreted in a way that is considerably more practical in nature.

The report is of practical value to the international policy community, governments and NGOs.  Specifically, they can use its recommendations as guidance in providing technical assistance on governance to China, assisting in transition away from counter-productive stability maintenance.

It is sometimes argued that technical assistance to China is no longer warranted.  Critics of such assistance point out that China is a country with a space program, able to produce such lavish spectacles as the Beijing Olympics and the Shanghai World Expo. A reading of the Tsinghua report effectively qualifies these arguments.  After all, it may be easier to mount a technical space program than to reduce the social tensions driving ‘stability maintenance.’

Achievement of democracy, the rule of law or the separation of powers should not be the focus of such assistance, as these goals explicitly threaten one-party rule, which remains sacrosanct to the Chinese state. But tension reduction through institutions for consultation, open government, public accountability and capacity-building programs should not meet the same objections.

There is a clear relation between inward and outward sensitivity: each county, each city, each government agency faces the temptation to ascribe responsibility for social instability to ‘outside actors.’ At the apex of the system, the Chinese state similarly faces the temptation to ascribe responsibility for domestic instability to nebulous foreign hands. Current attempts to shut down foreign-funded NGOs are a telling example of this temptation in action.

The Tsinghua report indicates that concern about the negative impact of institutionalised state paranoia is rising in influential, even official, circles. The time has clearly come for the pendulum to swing of in favour of seeking long-term reductions in tension rather than quick fixes. The international policy community needs to develop thinking and strategies that are sympathetic to this trend.

David Kelly is Professor of China Studies at the China Research Centre, University of Technology Sydney.