China and Egypt

Events in Egypt have, perhaps inevitably, led to questions about whether something similar could happen in another, bigger country ruled by an authoritarian political system: China. Some Western commentators have seized the occasion to argue that the popular rising in Cairo shows the weakness of a system that lacks popular political participation and must thus, by inference, threaten Communist control of the People’s Republic. But the distance from Cairo to Beijing is enormous, politically and socially as well as geographically, and the argument ignores the awkward fact that authoritarian regimes which have China as a friend, such as Burma and Iran, have been the ones which have withstood popular opposition recently whereas those in the US camp have fared less well.

Within the People’s Republic, the business magazine Caixin, a regular and strong advocate of political reform, wrote on its website at the weekend that “It is autocracy that creates chaos, while democracy breeds peace. Supporting an autocracy is, in reality, trading short-term interests for long-term costs.” Going a step further, the high-profile artist and blogger, Ai Wewei, wrote in a posting: “We are all Egyptian. It took only 18 days for the collapse of a military regime which was in power for 30 years and looked harmonious and stable … [The Chinese regime], which has been here for 60 years, may take several months.”

This is all a bit reminiscent of the flurry of reformist debate six months ago following Wen Jiabao’s remarks about the need for political and legal change. But, as I argued in a note at the time, the prospect of meaningful change, let alone anything like the events in Egypt, is minimal. Party orthodoxy swiftly reasserted itself and Wen has stayed silent, buckling under as the Communist Party Propaganda Department told websites not to carry his thoughts on the need for change.

The irony is that the reaction of the Chinese regime to events in Cairo might lead one to think it felt it had reason to worry. Media were instructed to use only reports from the state news agency, Xinhua. The main Communist Party newspaper, People’s Daily, buried reports of the demonstrations on an inside page and kept them to five paragraphs. Mentions of Egypt on Chinese social networking sites were blocked. As with the official denunciation of the award of the Nobel Peace Prize to imprisoned dissident Liu Xiaobo as an anti-China plot, the strength of the reaction suggested that the regime was, indeed, worried about Cairo setting off a repeat of the protests of 1989.

By the weekend the authorities had calmed down. The Communist Party tabloid, Global Times, splashed the end of Mubarak on its front page. The Foreign Ministry said China hoped "the latest developments help restore national stability and social order at an early date”. That stress on ”stability” and “order” encapsulates Beijing’s constant message when confronted by events such as those in Egypt or the collapse of the Soviet Union, and this points to one major reason why China will not be rocked by its own colour revolution.

Whatever its considerable shortcomings, the regime has been able to present itself as the guarantor of the stability, national unity and economic development China lacked for much of the century before the Communists took power in 1949. That is still a potent message, unavailable to other members of the Authoritarian International, as it is now dubbed.

Yes, there are tens of thousands of protests in China every year. Yes, corruption, wealth disparities and social tensions bred by the manner of China’s growth make a lot of people unhappy. Yes, polls show officials feeling that they are losing out in the wealth stakes and consumers worrying about rising prices.

But there is no discernible fulcrum for a regime-threatening uprising. The Communist Party and its government have shown themselves quite adept at buying off trouble.

The main conclusion to be drawn from domestic developments and the faraway example of Egypt is that economic policy will continue to be directed by short-termism and pragmatism. This is evident in the attitude towards inflation analyzed by my colleague Larry Brainard, in his latest report after his latest visit to China. Monetary policy will be selective and cautious. Measures to cool down the property market will remain prudent if only for fear of upsetting the middle class, which has invested heavily in real estate. Job creation will continue to be a big policy driver. There will be no significant changes in the value of the yuan.

Thus the lessons from Egypt can only induce Beijing to continue to avoid taking risks. That will serve its needs in the short term. But in time, say three or four years, the continuing reluctance to address structural issues – land, labour and capital market reforms, wealth disparities, market pricing, food supply – may well pile up challenges with global implications far greater than those evident on the streets of Cairo this month.