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The One-Party Solution

There are different evaluations of the dominant one-party system in China. CCP leaders see the system as a true and tried platform for China’s success.

By Prof. Baogang He | November 2021


On the first of July this year, the Chinese Communist Party (CCP) celebrated its centenary anniversary, noting among its list of achievements, e.g. the transformation of China’s economy, the elimination of absolute poverty, and the rise of China as a great power. China rose from a developing country with a per capita Gross National Income of $US200 to a middle-income country with more than $US100,00 in 2020. China’s GDP surpassed Canada in 1993, Italy in 2000, France in 2005, the UK in 2006 and Germany in 2008. In 2010, China overtook Japan to become the world’s second-largest economy and, in 2014, overtook the United States in purchasing power parity (PPP) terms. Given the current crisis of Western democracy, the success of China offers a clear example for other developing countries to follow but at what cost? Is China’s one-party dominant system applicable to Pakistan, Bangladesh and Sri Lanka?

While the search for a “one-party solution” in South Asia may be seen to accentuate the perception of a rivalry between democracy and autocracy - an ideological dichotomy the Biden administration willingly promotes - such a view overlooks the fact that both the US and China fall into the capitalist system, with the former featuring the domination of private capital and the latter the domination of state-owned enterprises (SOEs). The rivalry between the US and China, therefore, ought to be seen rather as a competition between different economic models within the capitalist system. Treating China’s one-party dominant system instead as a function of its state capitalism system, will help us better understand its advantages and disadvantages.

A distinct advantage of the CCP is that it controls all governmental organisations, other eight “democratic parties”, 97 national SOEs, and 460,000 local SOEs (which makes the CCP the wealthiest party in the world). The CCP also has comparative advantages in its institutional ability to develop and implement long-term plans or policies necessary for the completion of large-scale infrastructure projects. Its scope to mobilise national wealth and resources and deliver a high level of efficiency is unparalleled. In the two-party system, by contrast, defeated parties are often witness to the termination of infrastructure projects when opposing parties come to power. Even when parties are in power, projects can be debated for months and sometimes years on end without any results due to the blocking of motions by other parties or due to checks and balances of the branches of the government itself. A good example, is the separation of political powers in the US system.

The CCP has other comparative advantages. The intrinsic value of SOEs is that they are controllable entities that can be relied upon to toe the Party line – they can be deployed overseas to implement China’s global expansion. Answerable to the CCP, SOEs have a political utility – and can be leveraged by the CCP, often in pursuit of non- or semi-economic objectives. For example, the China Export-Import Bank (EXIM), established with a mandate and model that covered costs without necessarily making a profit, is a noteworthy manifestation of this. Unlike Britain and the United States that ‘succumb(e)‘ more and more to the money-lending classes dressed as ‘imperialists and patriots’ in the words of Hobson, the CCP is unique in that it controls five central state-owned banks plus other banks like EXIM. Within China’s one-party-dominant system, its banking CEOs are merely implementors of the decisions of the CCP; their mandated job is to ensure financial stability and suppress financial speculators. Under its party-controlled financial system, the CCP successfully defeated George Soros’s speculation in Hong Kong during the Asian financial crisis in 1997 and withstood the global financial crisis in 2008-2009. Remarkably, China has not generated a major financial crisis in the last 40 years. The key feature of its party-controlled system is its ability of preventing colossal scale speculation in China’s financial markets and accordingly providing economic and financial stability.

China’s party-controlled capital system does, however, have its problems and deficiencies. As Chinese leaders seek to develop an offshore market for the Renminbi (RMB), the CCP maintains strict controls on capital flows, thus preventing the RMB from developing into a global currency. In growing its global financial system, China has ironically sown the seeds of its demise. To compete with the USA, China attempts to expand the channels for foreign investors to enter the Chinese market and for domestic investors to issue Yuan-denominated financial products overseas. This policy would inevitably encourage a version of speculative capitalism. China might follow the example of the US by reducing its incentives in the production sector to earn quick money in the financial market.

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Professor Baogang He is an Alfred Deakin Professor and Chair in International Relations since 2005, at Deakin University, Australia. With a PhD in Political Science from Australian National University, he is widely known for his work in Chinese democratization and politics. He has published 7 books and 63 articles. He has also held several honorary appointments and research fellowships at renowned universities, including Stanford, Cambridge, Columbia, Leiden and Sussex. He can be reached at baogang.he@deakin.edu.au

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