“China is not going to become a liberal democracy; if it did, it would collapse. I do not believe you can impose on other countries standards which are alien and totally disconnected with their past.” Lee Kuan Yew

In 2007 I was on board a flight heading to Shanghai for a business trip.  The flight crew were making the final preparations for our arrival when the realisation suddenly hit me; that I was for the first time in my life about to step foot in a communist country.  I think the thing I found most intriguing was that I had not previously given it a second thought; perhaps I should have thought more about the implications of being in a different political and cultural regime.  As it happened, the city was perhaps one of the most vibrant and active places I’ve visited and indeed from an economic perspective every bit like the other capitalist centres to which I have been. 

The nostalgic reflection on my business trip to China so many years ago was prompted by a piece in the Harvard Business Review by Professor Rana Mitter[i] and senior lecturer at MIT, Elsbeth Johnson, entitled ‘What the West gets wrong about China’.[ii]  In this piece the authors argue that western observers assume that the incredible growth and change in lifestyle in China will eventually lead to a convergence of political and economic ideologies with those of democratic countries.  They point to three myths that they believe underpin the misunderstanding:  Economics and democracy are two sides of the same coin; authoritarian political systems can’t be legitimate and, the Chinese live, work and invest like Westerners.

The first myth assumes that in a growing and strengthening economic environment, liberal democracy will become the prevailing ideology.  We believe this because we have witnessed it happen in many other countries, most notably with the collapse of the USSR and we saw economic growth occur at the same time as social improvement and the development of the rule of law.  In short, change led to improvement.  The authors argue that in contrast it is China’s stability through authoritarian rule that has enabled growth: “China is not an authoritarian state seeking to become more liberal but [one] seeking to become more successful…”.

The ideological underpinnings of Chinese Communist Party (CCP) form the basis of the second myth.  The authors argue that the fact that the CCP’s belief rests not only on Marxist doctrine, but Marxist-Leninist thought.  Marxism is concerned with economic outcomes, whereas Marxist-Leninism seeks economic results and control of the system.  It is the second element of control which strengthens and perpetuates the ideology, giving citizens the belief that they can trust in and rely on the system.

The final myth argues that because of the dramatic change of the country since and including Mao’s Great Leap Forward and the experiences witnessed by individuals born in the 50s, there is less sense of predictability about what the future holds.  As a result, risk aversion increases significantly over longer time horizons or, conversely, a preference for short-term gain.  This has permeated the culture, leading to much more focus on trading for profit.  The article tells of a survey of Chinese investors where 81% trade at least once a month, compared with 53% of US investors. 

I suppose I do fall into the camp the authors are seeking to educate, in other words I have tended to extrapolate the incredible economic growth in China as resulting one day in an open liberal, democratic nation.  I suppose the lesson learned is to not assume and to take a step into history to truly understand what exists today and what is likely to come.  In any event and in whatever societal form China takes, it will undoubtedly continue to be a significant powerhouse driving innovation and significantly contributing to global growth.

[i] Professor of History and politics of modern China at Oxford

[ii] Harvard Business Review, May-June 2021, pp.42-48

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