China at the crossroads: are the reformers winning the argument?

China has reached a crossroads. After years of political stability and enviable economic growth, the regime has been facing a stark choice about how the country should move forward. But two crucial recent political events have turned Chinese politics on its head, and are forcing it to decide whether to regress or reform.

Over the last year villagers in Wukan, in Guangdong province, rose up and ousted their corrupt local leaders after months of protest. Meanwhile, Bo Xilai, the Communist Party secretary in Chongqing, who used Maoist rhetoric and violence to push his vision of economic development, was ousted from his post in March.

In a new ECFR essay, ‘China at the crossroads’, François Godement argues that these two events signal that the Chinese government may be choosing the path of legal and political reform, promoting sustainable growth to reduce macroeconomic imbalances and overreliance on the dollar. François argues that with seven of the nine Politburo Standing Committee members due to be replaced this year, there has been a battle for influence with reformers warning that China is facing a ‘success trap’ of an economic and political model unsuited to the current stage of development, and capture by vested interests.

The Wukan uprising and Bo Xilai’s fall have been followed by a resurgence in debate about economic liberalisation and censorship of nationalist, populist and conservative websites and spokesmen.

Chinese economic policy began to change from the summer of 2011. Beijing has started to sell US Treasury holdings, cool inflation and slow down investment. Its trade surplus became a $31 billion monthly deficit in February 2012. These figures suggest the voice of reformers is gaining ground.

To read the full article, click here.

Click here for a PDF of ‘China analysis: one or two Chinese models’ (2011) which examined the debate over Chinese economic development.