Nothing to lose but their power

2005: China - The workers' party has become the party of a graduate elite, and its cells are require

How long can the Communist Party of China retain its monopoly over a burgeoning market economy, without conceding to political reforms or initiating some kind of democratisation? The question is even more acute now than it was when China embarked on economic changes 25 years ago.

During the first round of economic reforms in the mid-1980s, the need for matching political change was publicly discussed. A 1987 provisional law allowed for village elections throughout the country; there was talk of separating party from government. Even after the bloody suppression of pro-democracy demonstrators in June 1989, the notion of political reform lingered.

After 1992, however, once the economy had really taken off, the party shifted its stance. Except for a couple of isolated experiments, village elections were not extended to township level. The 1987 provisional law was upgraded to the level of formal law, but little improvement was made to it. In particular, no mechanisms were included for redressing the innumerable cases of official fraud or coercion. Worse, after the central government handed over fiscal responsibilities in rural areas to local authorities, and then used the state monopoly of trade in food grains to finance urban development, rural administrations ran deep into debt. Consequently, the main function of village committees and their heads has been to extract money from poor peasants and migrant workers to finance township and county governments.

Deng Xiaoping's death in 1997, followed by Hong Kong's return to China, marked a new phase in the party's search for legitimacy. "Democracy" as an official political aspiration could not quite yet be discarded, but the party now insisted that the Chinese were too ill-educated to be able to exercise it properly. When the east Asian financial crisis struck, China fended off Hong Kong demands for broader political participation by hoisting a new banner of "government accountability", in the British colonial tradition. Then, as social unrest increased on the mainland during 2000, the party brought the "accountability" catchword there, too. The city of Shenzhen was the first to announce a new round of "political reform" - yet failed to grant its citizens any right to vote directly for the authorities governing them.

A "Potemkin city" or two was clearly not enough to restore party authority at large. Jiang Zemin, hand-picked by Deng to be his successor, formulated the theory of the "three representatives" that has since become the party's official definition of itself. According to this doctrine, the party "represents the most advanced forces of production, the most progressive culture, and the interests of the whole nation". Thus the authority of the party was legitimised over that of the government.

Nowadays, the whole idea of democracy is mocked. Western democracy is criticised for its hypocrisy, and non-western democracy for risking destructive populism, a disorder supposedly rampant in Taiwan and threatening stability in Hong Kong. In so far as it still mentions democracy at all, the Communist Party restricts it to "the work of selecting and appointing cadres" within its own ranks, with a few experiments in strictly controlled elections to party offices in selected cities.

The party is no longer defensive about the collapse of communism in the Soviet Union and eastern Europe, which left it isolated in the early 1990s. Instead, it makes a virtue of it, claiming that by giving priority to social stability and material development, China has avoided the chaotic politics and economic dislocations of de-communisation.

Thus, in the 15 years since 1989, the Communist Party has gone full circle, from making compromises under the pressure of a worldwide wave of democratisation, back to rising proudly above that discourse, and reclaiming its absolute rule over both the national government and all levels of local government. In the process, however, the party itself has undergone fundamental transformations. One such change is in the criteria for recruiting members. Under Mao Zedong, especially during the years of the cultural revolution (1966-76), the army was the main training camp for recruits to the party.

Now, the priority is to recruit members from the "most advanced forces of production", the "most progressive culture" and "any advanced elements from other social strata". To this end, the party has set up two new central units: the financial work committee and the business work committee, to ensure that recruitment does not go astray in the hands of local authorities.

Meanwhile, college campuses have become a main recruiting ground for the party. It is estimated that more than a quarter of all party members have completed high school or above. According to official statistics, more than three-quarters of recruits since 1997 fall into this category. At top levels, the qualifications are higher: 92 per cent of delegates at the party's last national congress were college graduates. And the size of the party has been growing steadily, adding more than a million members a year over the past decade. Membership now stands at more than 68 million - the largest political organisation in the world.

In keeping with this new pattern of recruitment, the party has launched vigorous campaigns to set up new cells in the cities, targeting businesses and "intermediary social organisations" that fall outside direct government control. Its newly amended constitution lays down not only the duty to set up such cells wherever possible, but also the specific functions they should perform: ensuring, for example, a company's "healthy development". Chinese entrepreneurs are usually eager to join the party, and thereby control any potential threat from the workforce. Thus, today, one in four of the 100 wealthiest Chinese, according to Euromoney China, is a card-carrying Communist Party member. In January 2004 more than a third of the 50 model cadres, listed annually, were heads of businesses of one kind or another.

The party's ideology is increasingly adapted to these realities. In the first paragraph of its amended constitution, it has ceased to be "the vanguard of the Chinese working class" and instead become "the vanguard both of the Chinese working class and of the Chinese people and the Chinese nation".

What are the implications of these changes in the party? Two major trends stand out. The first is that the Communist Party of China is making a deliberate effort to establish long-term alliances between the country's political, economic and intellectual elites. In the late 1990s, Chinese scholars issued repeated warnings of the danger of newly privileged groups exercising arbitrary power over most of the population. Today, such warnings have metamorphosed into a celebration of the role of these elites in making China richer and mightier in the world.

At the same time, continuing economic growth and political stability depend on turning enough city residents into a huge pool of middle-class consumers, the new social base of the regime. So far, urban support for the government rests on a series of policies preferential to city-dwellers. The most notorious of these is the rigid control of population movement between the countryside and the towns. Since the 1950s, China has maintained a residential registration system that divides the country into two major groups, peasants and city-dwellers. Today, 100 of its cities have more than one million inhabitants each, and a third of China's population is urban. Most of these city-dwellers are homeowners, having benefited from the privatisation of public housing. The other side of the urban coin is the presence of roughly 100 million semi-permanent "migrant" workers, confined to dormitories - often no more than huts on construction sites or tables in a restaurant - provided by their employers, and risking harassment by the police if they stray outside lodgings. Such migrants can become legal residents of the city only by paying huge fees.

What will be the upshot of this pattern of development? The scene unfolding looks increasingly like a market version of China's centuries-old mechanism of upward social mobility through the civil examination system. In imperial China, these examinations every three years selected the 300 highest degree-holders for supreme administrative and economic power. Today, the selection mechanism is broader and the pool of recruits comes from the universities, party schools and financial institutions with international connections. The party hopes that the urban population will see it as the architect of a successful market economy while the rural population accepts its lot. In this way, it may be able to maintain its grip on power indefinitely.

Is this a realistic prospect? One snag is that, for the past ten years, the central government has been loosening the reins on local authorities. At the provincial level, the party retains great political and economic leverage. Below this level, however, it is no longer in a position fully to monitor the behaviour of local officials, and every kind of extortion and abuse has multiplied. According to official statistics, incidents of popular unrest have risen rapidly from a few thousand in 1993 to more than 50,000 in 2004. China's new leaders, Hu Jintao and Wen Jiabao, are clearly worried about such dangerous undercurrents, and have acted to ease fiscal burdens in the countryside.

But they are not prepared to allow the political changes that might avert an explosion. Amendments to the election law published a few weeks ago leave discrimination against the rural population untouched: every four peasant votes are still equivalent to one urban vote. Attempts to stem rising social unrest have focused instead on stiffening the penalties: people can now be arrested for "sit-ins and gatherings in front of government offices, and refusals to leave". If the party hopes to bring its local underlings to order, however, it will have to share more of the centre's cake with them. For that, it must at all costs avoid any serious blip in China's super-fast growth. If the economy were to stumble over the next few years, all political bets would be off.

Wang Chaohua edited One China, Many Paths (Verso)

12 issues for £12