Despite doomsday predictions from all sides, Communist China has successfully transformed its command economy into a market system after two decades of reforms. While China observers may point to some economic areas that require decisive changes, the improvement has been difficult mainly because of technical complexities and not political barriers. In the mid-1990s, corruption suddenly exploded in China and since then has remained the top concern. Urban unemployment remains serious while China's rural economies lie on the verge of bankruptcy. Even socially dislocated groups do not oppose the market system, blaming corruption instead of markets for their suffering.
The start of the 21st century marks the beginning of China's third decade of reforms, which is bound to be a struggle for political change driven primarily by the need to curb corruption. In addition to jeopardizing investment, corruption generates domestic discontent by challenging the legitimacy of the government. Corruption derives from a market economy combined with the monopolistic control that the Chinese Communist Party (CCP) exerts on the government. Curbing corruption, therefore, requires political reform that will institutionalize checks and balances among major government branches.
Three major issues will shape the agenda in this first decade of political reforms: the path of reform toward democracy or legalistic rule of law; the ability of reformist leaders to survive setbacks and to consolidate power; and the question of whether the United States will allow China to focus on its domestic political restructuring.
The 16th Party Congress in November 2002 clearly announced the official intention to improve "socialist democracy" and build "socialist rule of law." But the exact nature of this reform program was not specified. "Socialist" could be read as capitalism with "Chinese characteristics," or simply as capitalism under CCP leadership. The CCP is limited to three choices: the status quo regime, rule of law, or democratization. Having carefully studied the example of the former Soviet Union and Yugoslavia, the CCP deems democratization to be suicide for both the Party and the nation. Maintaining the status quo is the most likely choice for any cautious leader of such a huge and diverse country.
Yet how sustainable is the status quo regime? If corruption continues to worsen, democratization might be the unintended result of the existing regime's total failure. The legalist option is more feasible, with successful legalist precedents in two small Chinese political entities, Hong Kong and Singapore. Through firm rule of law CCP executive power would be reduced by an emergent system of checks and balances, engendering an independent judiciary and civil service and eventually institutionalizing justice and stability. Specifically, such a rule of law system would consist of six neutral and independent pillars: a civil service, a judiciary, an anti-corruption agency, an auditing system, an extensive consultation system based on China's central and provincial parliaments, and the codified civil freedoms of speech, press, assembly, and association.
Many doubt that, because of its interest in governing, the CCP would curb its own authority through legalist reforms. But this argument misconstrues the CCP. Unlike usual partisan politics in other countries, the CCP per se has no particular social base; its power rests instead on achievement, like the British colonial rule in Hong Kong and the People's Action Party in Singapore. The CCP is, in a sense, a supra-party institution that represents neither a social class nor a particular interest group. The CCP's legitimacy thus lies in the perception that it has served the country well. When this perception fades, the Party could collapse and disappear overnight, like its counterparts in the former communist Europe.
The CCP currently has over 60 million members, but few claim that they joined based on matching interests. …