Future Development Reads: Xi Jinping, China’s People’s Party, and the middle-income trap

I teach a course at Duke University’s Sanford School of Public Policy called ‘The Big Debates in International Development.” This map gives you an idea of the issues we debate in class. My own answers to these questions might surprise you; some of my answers surprised even me.


Next week, we’ll be discussing the middle-income trap. My practice is to anchor each debate in one country.  The question we’ll be debating is whether China will become a high-income economy. The timing is good since China is in the news because of the 19th Communist Party Congress, which began earlier this week. 

Xi takes center stage

The 64-year-old President Xi Jinping, who spoke for almost three and half hours, opened the Congress.  The speech was titled: “Secure a decisive victory in building a moderately prosperous society in all respects and strive for the great success of socialism with Chinese characteristics for a new era.”

Here’s an attempt by The New York Times to reduce it to five takeaways. Here’s another by the Guardian. You may find this article by the Financial Times former China bureau chief to be a useful guide to what’s ahead for Xi and China’s communist party. Be warned: their reports are not encouraging.

I found this biography of Xi in The New Yorker to be helpful in understanding what’s ahead for the Chinese people.  Here’s one excerpt:

Xi unambiguously opposes American democratic notions. In 2011 and 2012, he spent several days with Vice President Joe Biden, his official counterpart at the time, in China and the United States. Biden told me that Xi asked him why the U.S. put “so much emphasis on human rights.” Biden replied to Xi, “No President of the United States could represent the United States were he not committed to human rights,” and went on, “If you don’t understand this, you can’t deal with us… It doesn’t make us better or worse. It’s who we are. You make your decisions. We’ll make ours.”

First the party, then the people

Xi seems to have decided that preserving the power of the people’s party is the most important goal. With a membership of more than 80 million, the party is no small organization. Perhaps it will lead the other 1.3 billion Chinese to high income, much as Singapore’s People’s Action Party did under former Prime Minister Lee Kuan Yew.

In his older days, Lee Kuan Yew clearly grew to appreciate the Chinese political system.  But even he did not dismiss the importance of human rights.  Here’s a 2001 quote from the documentary Commanding Heights:

“I do not believe you can impose on other countries standards which are alien and totally disconnected with their past.  So to ask China to become a democracy, when in its 5,000 years of recorded history it never counted heads; all rulers ruled by right of being the emperor, and if you disagree, you chop off heads, not count heads. The agenda must include human rights. But I don’t think you can impose on them how they should govern themselves…”

The good news:  under Xi, the Chinese Communist Party will perhaps no longer insist that China can be a healthy democracy—or a democracy at all—with just one party.

The bad news: China may end up undermining democracy in its neighborhood. This is already happening in Southeast Asia.  In Cambodia, Myanmar, Thailand, the Philippines, and even in Malaysia, Chinese loans and investments have been encouraging erstwhile democracies to turn autocratic.

All this spells trouble. Liberal democracies invariably do better in assuring the human rights of citizens than other forms of government. I’m also convinced by Daron Acemoglu and his co-authors that democracies do better in bringing economic development to their people.

China and the middle-income trap

In 2015, 10 years after we introduced the term, Homi Kharas and I wrote a paper titled “The Middle Income Trap Turns Ten.” I did a Google search for the term yesterday and found hundreds of new references.  A good fraction are from or about China.  Xi Jinping uses the term often himself.

Meanwhile, Simon Cox has written an excellent special report on middle-income economies in last week’s Economist, in which he argues that there is no such thing as a middle-income trap. For China’s sake—and for the sake of Southeast Asia—I hope he’s right.

But most of the middle-income countries that have become high-income economies during the last two decades are in Central Europe, not in East Asia. What makes them distinctive is their membership in a union of European democracies. Indeed, the most important precondition for joining the European Union is to institute a liberal democracy. I fear that China’s leaders are taking their country in a direction that is different from that taken by those that have become advanced economies. It is also different from the direction China turned to after Deng Xiaoping.

It may be time to start worrying about China.