In China, leaders’ acceptance of risky change began with the dismantling of the communes. These were the Communist Party’s principal lever of power, giving them total control over people’s jobs, incomes, location and family circumstances.

When peasants in Anhui province began taking back their family farms, this threatened the core of Communist power, but it also generated rapid economic growth. Led by Deng Xiaoping, top leaders decided to make a bet — seemingly very risky at the time — that such growth would continue and would consolidate government income and increase popular support for the Communist Party.

To economists exercising 20/20 hindsight, this looks like an obvious decision. But at the time, politically, it was more like betting the farm. In retrospect, it was clearly a winning bet, and it was followed under Jiang Zemin and Zhu Rongji by a similar winning bet in the management of urban industry.

Leaders in normal national situations don’t take such risks. Likewise, in normal national situations the population doesn’t accept the kind of social stress that occurred when Zhu Rongji eliminated 45 million industrial jobs in a decade.

Indeed, by the end of that decade popular fear of collapse had dissipated and popular anger at Zhu’s market reforms was intense. Intense reformism gave way to Hu Jintao’s reassuring promise of a "harmonious society" that would eschew such disruption.

Even more dramatically, today’s national economic plans call for further intense market reforms, under the 2013 Third Plenum’s rubric of market allocation of resources, but political resistance is intense and Xi Jinping has instead chosen to emphasise political control over market reforms.

The counterpart today of the trade-off Deng and Zhu made - that is, abandoning some forms of direct political control in favour of socially beneficial marketisation - would be for the Party to step back from direct control of state-owned enterprises and the legal system. Instead Xi has chosen to strengthen political control of all enterprises and of the judicial system.


The China model of today no longer works, even in China. The long-term negative effect on the economy will likely be severe.

Politically, the long-term consequences may be equally or more severe. Under Deng Xiaoping and Jiang Zemin, the Chinese Communist Party was a social vanguard, sacrificing its own levers of power to improve the lives of the people. Now it is an interest group, grasping to acquire and retain every available political lever even at great cost to national economic plans.

Eventually people will regard it as an interest group rather than a vanguard.

This model cannot be emulated, in any comprehensive sense, by normal developing countries. The model is not unique to China, but it is unique to a group of countries that suffered terrible traumas in the 1940s and 1950s and had to risk political control and impose extreme social stress to address those traumas decisively.

Chinese thought leaders have largely recognised that the model is not widely replicable.

Western leaders’ fears that the Chinese model will be made universal are misplaced. If Xi Jinping mistakenly tries to export the model, Cold War style, he would not succeed.

The limitations of the Asian miracle model do not validate Western claims that either Washington- or Westminster-style democracy will prove optimal everywhere.

The contrast between the Asian miracle economies’ successes in improving the lives of the most deprived sectors of the population, and the failure of the Western democratic model to do so in countries like India and the Philippines, can indeed inspire developing countries to seek alternative paths to growth.

Xi Jinping’s careful insistence that all countries should be allowed to choose their own path attracts an enthusiastic audience.

Dr William H Overholt is Senior Research Fellow at the Mossavar-Rahmani Center for Business and Government of the Harvard Kennedy School, Harvard University. This article is part of a series from East Asia Forum (www.eastasiaforum.org) at the Crawford School of Public Policy in the ANU’s College of Asia and the Pacific.