Transcription
The next 10-15 years, I would venture this prediction. We're going to see the unraveling of the current Chinese system. Uh, the biggest challenge for the US, actually, is not to be afraid of China's rise, but to be afraid of China's unraveling, uh, in America.
Let me not mention those numbers. Let's just mention some different numbers. Okay. The, the three pillars of American democracy: Congress, presidency, and the court. Approval rating for Congress, 11%. Approval rating for the presidency, in its 30s. Approval rating for the core system has fallen below 50%. Vast majority of the American people expect their children to be worse off than they are today. All right? If, if you want China to adopt, this is like asking Apple to turn itself into RIM. Don't make the iPhone start on Blackberries unless they're stupid.
What you just heard was an intense exchange about the future of China from an event that took place 13 years ago in July of 2012 at the Aspen Ideas Festival. On one side was the renowned scholar Minxin Pei. At the time, his argument represented a powerful consensus within Western academia. That China's economic miracle was coming to an end and that its model, built on what he called an extractive system, was set to collapse from its own internal contradictions within 10 to 15 years.
On the other was Eric Lee, a venture capitalist from Shanghai. He countered with a view that was at the time quite heretical, that China's system would not only avoid collapse, but that it possessed a unique resilience and adaptability backed by an undeniable track record. 13 years have passed. It is now October 2025. The predicted unraveling has not occurred. Instead, we've seen a China that has become an even more potent competitor on the global stage under its existing system. So, looking back at this debate, which line of reasoning has better withstood the test of time? And why did a prevailing Western forecast about China's future seem to diverge so sharply from the reality that followed?
In the content that follows, we will open this 13-year-old time capsule to witness a profound debate on China's destiny and see how both sides clashed on fundamental issues of economic models, the roots of corruption, and the very definition of political legitimacy. Let's continue.
Let me start with Minxin Pei, who you have argued, you know, certainly in your previous book, you said the strains in the system would reveal themselves just about now. Make your case that the Chinese system is nearing a point of crisis and why you think that's so, and what you think will happen next.
Well, uh, first of all, thank you, uh, for having me here again. Uh, there are two reasons for saying that the China, uh, the Chinese miracle is about to be over. One is economic, the other is political. Uh, economically speaking, I think we're already seeing this slowdown, and the slowdown is not cyclical, it is structural. That is, there are very powerful forces, uh, that are slowing down the Chinese economy. The Chinese economic growth, uh, has been driven by, uh, primarily investments at home and, uh, exports to developed countries, and both of which delivered enormous growth for the last 20 years. Uh, but that path, uh, is not sustainable. Uh, we can go into the details later.
But politically, I think it's even more problematic. That is because the, uh, based on what we know about one-party systems or non-democratic systems, uh, they may vary in terms of their, uh, institutional arrangements, but they all share one fundamental weakness. That is, these systems tend to benefit a relatively small group of elites at the expense of society. In academic jargon, we call such systems extractive systems or predatory systems, and the Chinese system is no different. Uh, the ills of that kind of system eventually all manifest in either very high levels of corruption or inequality, both of which tend to impede economic growth, uh, and both of which tend to undermine the legitimacy of the political ruling elites. And we're now seeing signs of that as well.
Let me just end by saying, what does that mean for the future of China? I would say, actually, the next, the last 20 years is, uh, can be said, viewed as the two decades of China's rise. The next 10 to 15 years, I would venture this prediction. We're going to see the unraveling of the current Chinese system. Uh, the biggest challenge for the US, actually, is not to be afraid of China's rise, but to be afraid of China's unraveling. Uh, it, uh, because it's actually very difficult to manage the transition from a, uh, for such a big country, from a one-party system to a more democratic system, especially a country where you have enormous ethnic diversity, uh, and, uh, disputed borders with neighbors, and so deeply connected economically with the rest of the world.
So, Eric, thank you very much. Minxin Pei. So, Eric, you've heard Minxin Pei argue that economically it is reaching a limit, politically it's reaching a crisis, and the next 10 or 20 years ahead will be the time of China's unraveling, as opposed to its continued growth. How do you see these issues?
Thanks, James. Um, let me sort of step back a little bit. Uh, the title of the discussion is China and Democracy. So, I think we ought to define the term democracy. I mean, the term democracy has gotten to be a meaningless term. Kim Jong Un claims he's running a democracy, right? So, so I've written down a definition for us to share. Democracy, as you read in the papers, means one person, one vote in a multi-party system where parties rotate through elections plus direct participation by the people in various degrees, such as referendums. Is that okay? Is that a, I think that's a pretty good definition. Yeah.
If we could agree on that definition, of course, China is not a democracy. It is a one-party state. It's written in the constitution, one-party rule. So, the question is, will China or should China change its current system to adopt a system of democracy as we define it here? Um, I'm a venture capitalist. So, my habit is to look at track record. That's the first thing I, I do when I look at everything. All right. So, so let's step back and look at the track record of the one-party state. It's been around for 63 years since 1949. All right. So, in 1949, as you know, the country was suffering, has suffered for a century of foreign invasions and civil wars. A lot of people were dying. A 2,000-year-old civilization is completely shattered. Average life expectancy in 1949 was 41. 41 years old. Okay. Literacy rate, 15%. GDP, irrelevant. Okay.
Today, this year, 2012, life expectancy, 75. And by the way, it was already 65 in 1979 when Deng Xiaoping took over and started reform. So, I don't, a lot of people tend to separate the two. I don't. Okay. In 1979, life expectancy had already gone from 41 to 65. Literacy rate today, 80%. In 1979, it was already 70%. And among the young people, it's 100%. Right? Uh, GDP, of course, I don't have to mention. You read in the paper, average income, all of that. Of course, monumental mistakes had been made, but I think they dwarf in front of, before the achievements.
So, I'm a venture capitalist. I'm having a board meeting. You've got a company that was in bankruptcy and had been turned around like this one. If someone comes to me and proposes that we ought to fire the CEO, change management team, and adopt a new management system, I'd be looking at him and say, "Let me try what you're having. What, what's going on?"
China's ability to adapt. I mean, crisis, of course, it's got enormous challenges, like everything Minxin has mentioned, I agree to. But think about the 1970s, the Cultural Revolution. How big a challenge was that? What kind of crisis was that? It didn't collapse. It went on to achieve and become the second largest economy in the world under the one-party system. So, if the one-party system could take the China of 1945, 1949 to the China today, if it could take the China of the Cultural Revolution, I don't know if you read about the Cultural Revolution. Okay. If the one-party system could take the China of the Cultural Revolution to the China today, I'm not sure I, I, what would be, I'm a venture capitalist. I look at track record and I make my assessment about about the future based on track record. I think the answer is, yeah.
Um, so, uh, thank you very much. And Eric properly reminds us and me that the formal title of our session is China and Democracy, which is, uh, which, which we'll get into, uh, more, more explicitly too. I, I, I will turn this back to to Minxin first with the, uh, I guess the reminder that sometimes track record shows you only so much. The Wang computer company had a very strong track record until, until it didn't. But how would you address Eric's argument that a system that has, that was not overthrown during the Cultural Revolution, that was not overthrown during the Great Leap Forward, and was able to adapt to the current success, will be able to withstand the, the relatively minor strains you're talking about?
Well, I, I think this is a track record that has a lot of cliff-hanging moments. Uh, I think it came very close to unraveling because it's a track record that involved, uh, deaths of, uh, probably 50 million people. I think the Great Leap Forward famine, 36 million. Uh, the initial stage of consolidating the communist, uh, system, uh, killed five, six million. I, I've checked some numbers. It's a, it's one of the most violent episodes in Chinese history. The Ming regime simply outdid all the other emperors. Uh, and Chinese history is full of bloody emperors. Uh, so that's, so I think when you look at the track record, you have to look at how close the country came to monumental disaster, or actually experienced monumental disaster. Does the human cost aspect have to be looked at?
So, uh, but then you look at the future, because a venture capitalist, not only a smart venture capitalist, which Eric, whom Eric is, not only looks at the past, but looks at the future, because he's investing not in the past, he's investing in the future. So, when you look at the future of this system, then you have to ask two fundamental questions. How does this system compare with similar companies? Right? Because you look at IBM, you look at, with Wang. So, so, uh, uh, is this company in a sector, uh, that actually shows future growth? And here, I can share with you two, uh, pieces of data that is, uh, that will make Eric think twice about investing in this system.
One is that, uh, similar, uh, one-party systems in the world actually do not last very long. Uh, they last much longer than military dictatorships. Uh, China is classified as a one-party regime or one-party system. The longest surviving, uh, the long, the party, the one-party system that survived the longest was the Soviet Union, 74 years. Then Taiwan, uh, 73 years. Pre-Mexico, 71 years before it was voted out of office. Yesterday, it was voted back in office, but it's not a democracy. So, so you have the system has been in place for 63 years. So, if you believe that there's something to this 70-plus year upper limit of its lifespan, then you have to worry, I may be investing in a company that will not be around in 10 to 15 years' time. So, that's it.
And another is that, look at the level of income of countries. Is that political scientists have looked at, uh, the time frame, not the income level, at which one-party systems or military dictatorships make the transition to democracy. And there's a rule: once income hits $6,000 per capita in purchasing power, very few non-oil producing, uh, systems can survive, maintain a one-party system. So, China today is $8,500 in terms of PPP. Uh, the world has about 180 countries. 120 of them are electoral democracies, which means they elect their national leaders. China is, uh, uh, there are about 25 countries richer than China. 21 of them are oil-producing countries that are not democracies. They're only about four countries that are not democracies and not oil-producing countries. What are they? Singapore, Tunisia, Lebanon, and Belarus. In other words, China is already in a group of countries where two-thirds of countries are already democratic. So, if Eric looks at this company, and this is a company with enormous political risks, shall I still put money in?
So, just respond.
That's what they said about Apple Computer 10 years ago. Everything was going to be open system. Steve Jobs is going to flop. Of course, he proved everyone wrong. And back to the numbers. As we define democracy, the history of democracy as we define it today, as we agreed on a definition, it's actually very short. In America, if you define democracy as one person, one vote, three elections, it's generously speaking 92 years old. And a more less generous definition will be 47 years old since the Voting Rights Act of 1965. So, so one person, one vote has a shorter history than the one-party state in China. It's certainly shorter than even the shortest dynasty in Chinese history. Um, so that, that's one thing. So, I wouldn't, I wouldn't be so optimistic about democracy. I think we ought to compare both vertically and horizontally.
So, let's compare horizontally. Look at the, I mean, I would say, however, the ideas of democracy had contributed a great deal to the rise of the West as the world's dominant power, but it is now in big trouble in both America and Europe. Electoral politics is in disarray on both sides of the Atlantic. It's captive of money and special interests. Political system is completely incapable. The democratic electoral democratic system in the West and the developing countries are completely incapable, proven itself so far. You could still fix it, but so far incapable of dealing with the monumental challenges and distress that they're experiencing right now. You know, I, I look back to, back to some numbers I jot down some numbers. Okay. Um, um, the, um, in, in China, this is based on public opinion polls conducted by Pew and Gallup. All right. Then the percentage of people who are satisfied with the direction of the country, 87%. And it's been above 80% in the last 10 years, every single year. People who felt that they've had progress in their lives in the past five years, 66%. People who are confident and optimistic about the future, a whopping 75%. This is data from two months ago. Has been above 70% for years. In America, let me not mention those numbers. Let's just mention some different numbers. Okay. The, the three pillars of American democracy: Congress, presidency, and the court. Approval rating for Congress, 11%. Approval rating for the presidency, in its 30s. Approval rating for the core system has fallen below 50%. Vast majority of the American people expect their children to be worse off than they are today. All right. If, if you want China to adopt, this is like asking Apple to turn itself into RIM. Don't make the iPhone start on Blackberries unless they're stupid.
So, so let me ask a question about that. And, and with respect, I think comparative superpower dumb is probably not the most fruitful avenue for us to to go down, even though we've all spent our, our, uh, our time in that. The point that Minxin was making about the political tensions evolving. Now, let me just, just finish this about whether, uh, it has been so far very, you know, effective. The degree of corruption has been very effective. Is it, in your view, is there anything about the recent scandals and corruption scandals, political scandals, which is different from the last 10 or 20 years and will change popular support?
Corruption, that's my favorite subject.
Yeah.
So, I live and do business in China. I've been doing so for the last 20 years. Corruption is a major problem. Big, big problem. Okay. And, and, and, and the party itself, the party is the last one to say corruption is not the problem. They're saying it every day on the front page of People's Daily. Corruption is a big problem. But I think we've got to put it in proper context, horizontal, vertical. Okay. The data I like to use is an American organization called Transparency International. TI. They rank countries every year based on corruption. You know, the clean and not clean, whatever. Every single country, the top 20, which means the cleanest top 20 countries, all of them except four are Western countries, developed world. Okay. The four countries that are non-Western are Japan, Singapore, Hong Kong, and Qatar. Three out of four are authoritarian regimes. Three out of four non-Western countries ranked top 20. China this year is ranked is 75. It's been moving up. It was in the 80s, gradually moving up to 75. All right.
So, what's, I think the key here is, what is the source of corruption? Is it inherent to the political system, or is it a byproduct of development? So, Greece is ranked at 80, a democracy, below China. India, 95 and dropping, a democracy. Philippines, 129. Indonesia, 100, electoral democracies, all of them. Argentina, 100. Italy, 69. All right. So, so is, is corruption inherent to the political system, or is it a byproduct of rapid development? So, so another, a vertical comparison I like to do is to look at America 100 years ago when it was very similar to China today. Rapid industrialization, rapid urbanization. And there are three movies I love about that period: There Will Be Blood, Gangs of New York, and Chinatown. Okay. Four families controlled the entire economy of the entire state of California. Think about that. All right. Yet, it moved on and solved these problems when it was growing. So, so vertically, horizontally, I'm not saying China's system is perfect, but I think based on track record, it should have at least as good a chance of solving the problems of corruption as any other system.
Minxin, uh, you're feel free to address anything there, you would, including the idea the system is the last point Eric made, the system is adaptable, will be self-correcting, will show the same ability to respond whatever the pressure points are and continue to maintain, uh, popular consensus, you know, popular approval.
Well, uh, I would say, first of all, popular opinion surveys are highly variable. And they, uh, uh, in the case of China, I'd say that a huge influence on how people evaluate their current situation is their past experience. Uh, and the past experience, the Maoist era, uh, which I lived, uh, through myself, uh, was so horrible that the improvement over the last 20, 30 years is spectacular. And this is, uh, most Chinese would, uh, would accept. But whether that truly reflects their acceptance of the current system, I would say you have to give them the ultimate test. That is, give them a vote, right? Uh, I think there's a good reason the Chinese government allows allows opinion surveys but does not want a vote because it sees it may actually get the endorsement from the voters, but, but it may also get voted out of office. So, uh, I would be careful, uh, in using opinion surveys as a basis of legitimacy because in the case of the United States, we may feel very, uh, upset about what current system of government, we never, uh, question the legitimacy. We say these are incompetent, ineffective people, but we're not going to say they've stolen power, they maintain power through violence, through lies, through cheating. This, we are not going to say. Uh, and then, uh, in terms of democracy, I want to add one, uh, uh, again, as a political scientist, one interesting, uh, observation that is, the world today has about 120 countries that, uh, elect their leaders, forms of dictatorship to electoral democracy in the last 40 years, which means it's actually a huge, be some historical trend, and China is really the exception. And then finally, let me get to corruption. Uh, I admit corruption exists in all political systems. But we observe one thing is that in democracies, the countries listed as the least corrupt, the majority of them are democracies. The exceptions are Singapore, Hong Kong. But what about these exceptions? You notice one thing, they're all city-states, very small. The monitoring costs are relatively low. And then another observation is that while democracies cannot eliminate corruption, autocracies, dictatorships have no hope of eliminating, uh, dictator, uh, corruption because eliminating corruption demands three ingredients: one is a free press, another is the rule of law, and third is NGOs, civil society monitoring. None of which can exist in a non-democratic system. We're not saying that these things are sufficient to eliminate, they, uh, to reduce corruption. They are necessary conditions. So, in a dictatorship, we simply don't have the necessary conditions to fight, uh, for a clean government.
And so, Eric, instead of having you answer that directly, let me ask you a different question. One is to clarify your argument. Are you saying the current Chinese system essentially is the optimum Chinese system for the long run? Are you saying this is a transitional period to some more democratic system later on, but that's in the foreseeable future? Second, if you would sort of spell out how you imagine the next 10 or 15 years of Chinese development going.
Well, I am saying the former, which is the current system is somewhat optimal. It doesn't mean it won't change. I think it will change a great deal, as it has in the last 63 years. Um, one quick note about the point about, uh, dictatorships and autocracies about cheating to to stay in power. I've been here for a few days. I've been watching American television because there's an election going on in this country, talking about cheating to gain power or keep power. It's hard to outdo the Americans. I've been watching these commercials, my friends. You guys got to be careful. Uh, cheating to maintain power. But let's, let's come back to your, um, I, I think, um, the, uh, going forward, the system will need to adapt and change, but I am fairly confident, again, based on track record. Think about the last 63 years, right? From 1949, the country through those 63 years, from every phase to the next, as the establishment, as the at the establishment of the People's Republic in 1949 to the 50s, to the 60s, through the Cultural Revolution, the country is irreconcilable from one phase to the next. And if you've been to China for the last 30 years, you'll know the country is irreconcilable. The leaders are irreconcilable. Their political outlooks, the policies they pursue, under all under the same one-party system. So, the breadth of change the one-party system has been able to embrace and implement is much wider than any multi-party election countries that I see today. Think about, I mean, you picking Romney and and Obama is like between Coke and Pepsi compared with the changes that have been happening, the breadth of changes been happening in in the one-party state in China.
Well, I would just, uh, invite you to, uh, look at, uh, pictures of China's, uh, People's Congress and China's Party Congress. Uh, I think soon you're going, uh, when you go back to your room and to on YouTube and type in China's National People's Congress. Today, uh, uh, they convene every year and look at the pictures over the last 30 years. I bet you hardly notice any change because the country has changed, the, the society has changed, the economy has changed, the people have changed. The one thing that has not changed very much is its political system. That's right. And that worries, that worries people like me to no end because, uh, it shows that we're, I'm not a Marxist, but there has to be some kind of compatibility between the kind of political system and the kind of economy in society. When the gap is too big, then either the political system changes, or you slow down social economic change. And one aspect that we are seeing in China today is that the political system refuses to change. It wants society to change slower, at a slower pace. And that means internet censorship. That means more restrictions on civil society, more restrictions, uh, on press freedom. And so, I, I think at some point, either the political system gives, or social progress slows down. You just cannot have your cake and eat it too. I mean, China managed to do some of that in the last 20 years, but not forever.
And just before having a response from from Eric, if you could address what you think is the most likely path of, say, the next 10 years.
Uh, again, I always fantasize about how China can become democratic. So, let me share with you, uh, one of those fantasies. Possible paths is that, uh, uh, the economy, economic performance is the key. Uh, if economic performance stays, uh, as good, slight, as good as it, it's in the past, then there's one particular path of transition. But if the economic performance in China for the next 10, 15 years deteriorates rapidly, as a lot of people believe, if China does not make the necessary economic changes, uh, then I think the Communist Party will, uh, find itself facing rising social discontent, and the party's elites will split because some of them believe that the party will have to change, and some of their colleagues will disagree. So, there will be a split within the party, and then part of the splinter group will try to, uh, tap into social discontent to gain political edge. So, you're going to have, uh, reformers versus conservatives, that kind of fight, splitting, spill, splitting over into the open, and that can start the transition process. No transition to democracy in the world has occurred without the split of the ruling elites, and I think China will not be the exception.
Eric, yes, so, so on this question of split in elite politics or social tensions, you were wanting to respond to what Minxin was saying earlier.
Um, well, I, I think the party is, you know, I, I do. I think it's a fallacy to say that China's political system has not changed. If you've gone to China consistently in the past decades, the country is irreconcilable.
Of course, I mean, I think you ought to look at the pictures of the ruling class of the Politburo, and you will notice enormous differences. A big one, an easy one, is they're younger. Why? Because they instituted term limits. Huge change, huge institutional adaptation. Term limits around the country. This was adopted, you know, 20 years ago and continues to improve. Okay. So, that's just one example. If you look at the decision-making process within the bureaucracy at the provincial level, central government level, city level, it's completely different from 20, 30 years ago. You know, when they promote people, they can. Yeah. I'm, I'm associated with a polling company in China. It's the, the largest private polling company in China. Do you know who their biggest customer is? They do work for P&G, all these companies, market, but government, not the central government, not just the central government, provincial government, city government, down to neighborhood districts, they're conducting polling every month. Are you happy with the street cleaning? How are you happy with college education? What your concerns are? And, and these, the officials, when they move up the ranks, it's a big thing when they evaluate officials, when they promote them. Unheard of 20 years ago or even 10 years ago, but it's happening. So, so enormous changes are taking place within the political system, uh, that's not being reported because, I guess, Western reporters are not interested in that. They are much more interested in a dichotomy: democracy wonderful, dictatorship terrible. And, you know, if, so, so let me ask, um, we're, I'm going to go to questions from the audience soon. I just want to ask one or two more questions here. Uh, this is one for for Eric that I'd like to hear your response, then Minxin's answer. Each society has certain indicators which are worrisome for its long-term health. In the United States, the polarization of income, the decline of the public sphere. I would think in China, one of the indicators would be the way in which the ruling elites increasingly seem to have their assets, their children, their interests outside China and other parts of the world. What significance do you place on that? So many of their their their offspring are in the US and Britain and Japan.
It, it, I think it's significant. It's an issue they need to address. It affects the, the legitimacy of the, the political system, you know. Um, and, but I think it's being overplayed. Um, the pie is growing so big that I think it, the, what's happening in, in, what you're mentioning is a marginal effect, but it's significant. It ought to be addressed. Um, second is, I want to come back to the question of legitimacy. I think it's a fallacy to equate election with legitimacy. In the vast majority of countries, electoral democracies in the world, governments get elected and they fall immediately below 50%, even 40%, down to 30%. Now, what kind of legitimacy is this? I mean, election voting is a legal concept. It's like if you sign a piece of paper that gives your consent to a to a sub-mortgage loan. Is that legitimate? It's not morally legitimate, but it's legally binding. It's legally, it's, it's so, so there's a difference between legally binding consent and moral legitimacy.
So, Minxin, would you address that point about legitimacy and also these signs of high-level expatriation from China?
Yeah. Uh, I think legitimacy is a much more, uh, substantive concept than popularity. I think, again, take the example of signing a contract. You sign a contract, you regret later, you regret, but you do not believe that you were under duress. You sign it willingly, and you are not going to go back and try to undo to sign. You simply, uh, wait. In the case of, uh, electoral democracies, you wait another four years and throw this bad government. You made a mistake. You threw the government out of office through a legal process. But during that period, the government is legitimate. The government is highly unpopular. President Bush, uh, George W. Bush, he was highly unpopular, but nobody thought he was illegitimate. At least the second term, not the first. The first was much more controversial. Uh, but then you think about the, the China, what, what's the act of conveying popular consent? This just not such a public act. When you go to the post, actually, it's a very serious act. And then, I, I would say, thinking about who is voting with their children's future, their, uh, their family wealth. I don't know whether you've been reading the press. A lot of Chinese middle-class people are pregnant women are rushing through Chinese borders to Hong Kong to give birth, uh, so that their children can be born in Hong Kong and Hong Kong citizens because they trust Hong Kong. You look at anecdotal reports, the data are very difficult to come by. Uh, senior Chinese officials are voting with their feet. Their children, uh, their family wealth are coming to this country. I've not heard a single case of an senior American official trying to apply for Chinese passport. Uh, but I think there were hundreds and hundreds of cases of Chinese officials and their children trying to apply for American passport. So, I think let the facts speak for themselves. Uh, you know, on voting by that definition, every single government in this country since George Washington to Lyndon Johnson were illegitimate.
Or partially legitimate.
Illegitimate. So, few come on. Landed property owner, male till when? I mean, you know, so could not be legitimate. So, so, so I think the voting and legitimacy is, is, is, is not valid.
So, I have a short question for each of you that is, I'm soliciting a short answer from each of you, and then we'll go back to, so Minxin, the question for you is, what time period, what would be a time span in which you say it is probable that China will become democratic? 20 years from now? 50 years from now?
Got to put, got to put money down. I would say because, uh, it's, it's great we have so many people here. I would say that, uh, no more than 15 years.
Uh, but, uh, no less than 10 years. So, we're talking about a 10, 15-year timeframe.
So, I won't ask you that question here. I'll ask you a different question. You've made the case strongly that China's model is a, is the right model for China. Will it be propounded, do you think, as a Chinese ideal for the world, or is it a Chinese-specific model?
It's a Chinese-specific model. Uh, China's model is not exportable. It cannot be emulated by others. It is unique to the cultural traditions, historic circumstances of today's China. Uh, it is not universal. It cannot be universal. But there's only one idea that may be universal is that what works for each individual country should be something that's different. Should be something that's consistent with your own culture, with your own history, with your own circumstances. Don't blindly copy other people's models.
So, if, so everybody who would like to answer the question, if you would hold up your hands now so I have a sense of the room. Okay. So, first on the aisle there in the light blue shirt. Yes. Or sorry. No, back if you turn backwards. There you go. That man with a beard. Yes. Uh, thank you. I'm Spencer Arian. I'm a writer with Wired. Um, I'm less interested in the durability of the Chinese system than I am in its justice. Eric, is material wealth, uh, the only virtue we should, you know, seek to look for, to measure the system? Is there not a room for political liberty? Uh, is there not a room to say that there are certain things by, you know, virtue of an inherent value of the individual that the state cannot do to them? And just, I feel compelled to just give a quick anecdote, uh, because of all the poll data you cited. I remember being in Iraq and hearing a lot of poll data about how happy the Iraqis were and how faithful and optimistic they were in their future during the Iraqi civil war.
I think the idea of political liberty is based on the idea of rights. The individual has some kind of unalienable rights to exercise them. And my challenge to you is, where do you think these rights come from? From whom? Who says? Says who? Your answer has to be God.
I don't.
Okay. So, if it's from men, then these rights could be negotiated, could be increased, reduced based on circumstances of society. Right? If you think those rights are absolute, you have to claim some kind of authority above man, otherwise where do they come from? You're shaking your head. So, where would they come from? If they're coming, great. So, men ought to talk about and negotiate. So, they're not absolute. If they're from men, they're not absolute. I mean, the question implies that there's some kind of absolute degree of rights. Uh, but I just don't think that's.
So, so Minxin, stipulating this is an enormous question we've opened. I invite a quick response from you if you want.
I would say it's a, let's follow the golden mean. Okay. Uh, I don't know what rights are in absolute terms, but I want to follow one very simple rule that I would do, and Confucius, actually, has said the same thing. The golden mean. I do not want to be treated, uh, I want to have the same, uh, uh, if I want to enjoy the same rights, I want other people to respect these rights, and I will do the same in return. I think this, this is the minimum. So, if I want to enjoy free speech, I will reciprocate, uh, the respect for free speech. If, if I want to enjoy my secure property rights, I want to respect other people. I demand, ask for no more, no less. But in the non-democratic society, what you have is there are two classes of people. Uh, there's this very small privileged elite that wants all the rights in the world to themselves, that these are the privileges, and then they deny the same rights to other people simply because they don't have the political power.
Uh, yes, in the yellow shirt on the aisle, and then we'll go here and here, and so I'll try to get as many people. The shorter the question, the shorter the answer is, the more we can do.
Eric, my my question is, if you look at Taiwan and Korea after the wars, they were bankrupt. They were military dictatorships, but when they got to the middle class, they became democracies. China has gone through the same thing. The internet exists. You can try to shut it down, but you can't. I would say the Chinese system at this point is doomed unless you want to be North Korea.
Well, good question. Um, um, if you look at the few success stories of non-Western developing countries who achieve first-world status in the last few decades, almost all of them did so under authoritarian regimes, uh, or some form of one-party rule. Japan. All right. So, Singapore, South Korea, all of them. And some of them adopted electoral democracies after they became wealthy. But it's only been barely a generation since they did so. And I would caution, I would caution us from making passing judgments so quickly and with so much confidence that it's working for them. It's been merely 10, 20 years. In Taiwan, the only elected former president is in jail for corruption. The only one in South Korea, half of them has either been sent to jail for corruption or committed suicide because he was about to be sent to jail.
All right.
It's a sign of democratic success. Once China has a president in jail, once the country has arrived.
Yes. Many, many people will say.
Democracy is working when its presidents are in jail.
I, yeah, democracy is working when they keep electing presidents that will end up in jail. I mean, I, that's not a good, uh, bar. But anyway, you know, I, I think I think it's too early to pass judgment.
So, we have two questions up here. I'll ask you, temp, two gentlemen, one after the other, to ask your questions if you could. So, first in the second row and then right in front. Yes.
Uh, Khan Ross is my name. I'd love the panel's comments on two extraordinary recent episodes which offer contrasting pictures. The Bo Xilai episode, what the hell is that about? And the Wukan village uprising. Uh, Wukan, the village uprising in Wukan. What, what do these two stories tell us?
Yeah. And yet. Yes. And can you follow on to add, add your question too?
It's actually completely different, but I, I, I basically wanted to say that probably politically I'm closer to you than to my friend Eric. However, I find myself moving closer to Eric in recent times because that we should differentiate, I think, between just formal democracy and the true practice of democracy. And I will say what you have in most of the world when you cite the example of 120 countries, uh, countries that democracies in name, such as my country, Nigeria, because if you can pay somebody $5 to vote for Eric and not for you, then you cannot not reasonably call it a democracy. So, we should be very careful about how we use this kind of data to make.
On the table, formal democracy, the village uprising, Bo Xilai.
Yeah. Uh, the two incidents actually show the system, uh, in distress. Uh, uh, in the Bo Xilai case, this is a very powerful politician, uh, who was supposed to be, uh, promoted to be one of the top nine people governing China. Uh, and all of a sudden, he was, uh, purged because his wife allegedly murdered somebody or was involved in murder. Uh, whether he had anything to do with it remains shrouded in secrecy. Uh, then this Wukan case, where villages really staged a collective uprising. They, uh, uh, surrounded the village, barricaded the village, 30,000 people demanding some sort of justice, uh, and the government thankfully handled it in a very, uh, rational way and avoided, uh, bloodshed. Uh, but the strain in society remains because it's not an isolated episode. Where the formal democracy and, uh, we, what we call, what political scientists call quality of democracy, uh, it's, but you cannot aspire to be a high-quality democracy right away. Actually, Nigeria is not considered a full democracy, it's kind of partial democracy.
Vote. Oh. Yeah. Yeah. But it's the quality is very low. Yeah.
So, so Eric, on especially on these two episodes, Bo Xilai and the village.
Bo Xilai.
McBth Shakespeare.
Yeah.
Uh, incredible incident. Does it show the system is, is strained? Yes, of course. But let me again remind you, the system had been under much greater strain. The first lady of the People's Republic was sentenced to death. Sentenced to death. Mao's wife. What kind of strain was that? But the one-party system moved on and succeeded. Wukan village, of course, corruption. Villagers get pissed. They uprising and get fixed. So, what do you expect from a country of 1.3 billion people experiencing the largest scale, most rapid transformation mankind has ever seen? All right. 1.3 billion. Do, let me give you, during the Chinese New Year, more people move, immigrate than countries. Okay. Think about, so what do you expect from a from a country that's urbanizing at a scale and rapidity unparalleled in human history by far. So, of course, Wukan, you expect more. I expect more Wukans in the next 10, 20 years. Doesn't mean the system will collapse.
Uh, yes, gentleman here in the front row in the blue shirt, and then we'll go to the two behind you after that.
Thank you. I'm David Jones, also a venture capitalist, but my question is for Professor Pei. Um, I first lived in China in the early 80s, and there's no question in my mind that Eric is 100% right about the degree of change that has occurred within China, within the way it's governed itself. In those years, people couldn't choose their own jobs, they couldn't choose who to marry, etc. Um, the changes have been fantastic. Um, Deng Xiaoping's famous cat has caught the mice, right? Um, I'm curious why you think, um, we're at the point of change now. You cite outside statistics from other countries, but what about China says it's time for the big inflection?
Uh, we look at, uh, the economic side. Well, let me just pick up on, uh, the forces that, uh, drove China's rapid economic growth. The benign factors are either disappearing or have disappeared. You look at demographics, you look at export growth, uh, you look at the role of investments in the economy. Uh, it's a highly unbalanced economy, and if the imbalances continue, economic growth is not going to be as good as before. So, that will bring about a lot of pressure on the political system. Then you look at, uh, some of the social, uh, indicators. It's a completely different society, uh, compared with the 80s. Urbanization, early 80s was under 20%. Now it's 50%. When you have more than 50% of the people living in cities, it's much more difficult to maintain a one-party system because the so-called organizing costs for organizing political action dramatically dropped. And then you factor in communications revolution, the information revolution, and then you look at, uh, the growth in college-educated, uh, demographics. Uh, today, China produces 7 million college graduates a year. Only 1 million can be admitted into the Communist Party. So, you leave outside the Communist Party, 6 million highly educated, highly ambitious, but highly frustrated people. And you don't need six million to rise up against the party. All you need is about 5%. Just do your math over the next 10, 15 years. So, we look at social, economic, IC factors. You would say that this probably is a system that is not going to be able to deal with these changes without opening up the channels for political participation because you cannot tell highly educated Chinese that, trust the party. The party will do the right thing for you. They're not going to take that for granted.
Do you want to make a short reply?
I actually think the 7 million and 1 million number is a great number. It actually shows the Chinese Communist Party is highly competitive, highly selective. It's highly attractive to the best and the brightest young people of the country. They compete to join, and it's highly meritocratic. Uh, and that's the foundation of the party's success. And, you know, to say that 6 million left behind that couldn't join is like saying, you know, mass, vast majority of college graduates in America cannot make it to Wall Street and they're going to rebel. I, I don't think that's the case. Secondly, yes. Yes. I agree with Minxin that we need more, there's going to be, the society is becoming more complex, so there will be more plurality. Yet, I think the party, as an institution, has proven itself to be highly flexible. It's becoming more and more inclusive. You know, at the beginning, it was a proletarian party. Think about that Leninist party, only workers, and they were shooting even farmers who, who were just rich farmers, not even landlords. Today, they had the theory of the Three Represents. I won't bore you with the details. Um, but essentially, it says capitalists could join the party. Of course, only if I applied, but never heard back. Uh, but, but think about that, entrepreneurs. And then one more point, sorry, about the point about the Chinese, China's economic success was due to benign forces. I don't think that's the case. China's economic success is based on the extraordinary vitality and inventiveness of the Chinese people. It's the most entrepreneurial society, most entrepreneurial economy in the world today. I'm a venture capitalist. I know it. Um, um, you know, the, the most successful internet IPOs in the United States and NASDAQ had been Chinese companies in the last five years. Two biggest ones, Baidu and Youku, Chinese companies. Okay. So, and, and small businesses are being started every single day. That's, that's the source of China's economic success.
What we have just revisited was more than just a debate. It was a time capsule from 2012, a precious historical record. 13 years have acted as an impartial judge, giving us a unique rearview mirror to re-examine this high-stakes intellectual bet. With the benefit of hindsight, the outcome seems clear. The China collapse narrative articulated by Professor Pei and widely accepted in the West at the time has not come to pass. The predicted 10 to 15-year window for its unraveling is now more than halfway closed, and the system remains intact. Conversely, Eric Lee's arguments about the resilience and adaptive capacity of China's system appear, over the past 13 years, to be more aligned with reality. The track record he spoke of has continued, and his critiques of the West's own democratic dysfunctions arguably resonate even more strongly today. This brings to mind another symbolic figure, Gordon Chang. For over two decades, Chang has built a career on predicting China's imminent collapse. Despite reality repeatedly proving him wrong, he remains a fixture on mainstream media outlets as a go-to China expert. The debate we saw, coupled with the Gordon Chang phenomenon, compels us to ask some difficult questions. First, why has this narrative of imminent collapse been so persistent in the West, even when contradicted by events? To what extent is this narrative driven by objective analysis versus an ideological preference for a story that the West wants to be true? Second, have the fundamental problems Professor Pei diagnosed within China's system—corruption, inequality, and a lack of external checks and balances—truly been solved? Or have they simply been suppressed or papered over by a more powerful state apparatus and continued economic performance, leaving the underlying pressures to build? And finally, and most critically, after witnessing this clash of ideas from 13 years ago, how much of your own perception of China has been shaped by the narratives of the mainstream media? Has what you've seen today challenged your assumptions, or has it reinforced them? We are eager to hear your thoughts in the comments below. If you believe this episode, which offered a valuable perspective for re-examining Western perceptions of China, has provided you with value, please like this video, subscribe to our channel, and share it with others. Thank you for watching.