A Singapore sling is inadequate for unwieldy China

This time last year, Singapore’s first prime minister, who currently holds the title of ‘Minister Mentor’, was plugging his book. It expressed concern about China’s rise in unusually blunt language. As The Grand Master’s Insights on China, the United States and the World puts it: “China tells us that countries big or small are equal, that it is not a hegemon. But when we do something they do not like, they say you have made 1.3 billion people unhappy. So please know your place.”

If any other former or current national leader made such statements, they would be condemned by Beijing and probably banned from entering China. Yet, Minister Mentor Lee remains feted by Chinese Communist Party leaders and is still invited to discuss politics and policy with the CCP’s elite.

Why? Because Beijing is obsessed with watching, analysing, and replicating the success of Singapore. Despite a mediocre global ranking for political freedom (even if many other civil rights are protected), Singapore is confident, prosperous and orderly. Meritocracy is highly valued, its people are generally contented, and its society is vibrant. Most appealing of all, as far as Beijing is concerned, the approval ratings for Singaporean leaders (although slipping) would make many democratic leaders envious.

If there is a successful ‘Asian way’ of enlightened authoritarian leadership, then Singapore is by far its best example. Unfortunately, the vision is seductive but way out of reach for Beijing. In reality, China is moving rapidly away from the Singapore example.

The history of Singapore proves that authoritarian systems are not always agents of economic decline. But long before Singapore became a model for authoritarian leaders around the world, the Harvard political scientist Samuel Huntington suggested that ‘authoritarian transition’ could be a better way toward development for poorly industrialised countries.

He also argued that authoritarian systems ought to give way eventually to democratic ones. After all, Europe did not gain universal suffrage until it had industrialised. The per capita income in China is still one eighth that of America’s. Over 600 million people still live on less than US$2 a day. Democracy under these circumstances might actually bring regression and chaos rather than greater prosperity and a better life for the many.

Singapore and Hong Kong are pioneers in this regard. Few gave the tiny island much chance of success when it became a self-governing state in 1959, joined the Federation of Malaysia in 1963, and left it in acrimonious circumstances two years later.

Yet in addition to outstanding leadership, Singapore had two advantages which China does not enjoy: the advantage of size (or more precisely the lack of it); and pre-existing institutions that were protected and improved upon. 

When it comes to effective policy implementation, size matters. The smaller, the better. Singapore is easy to govern because it is a country of roughly only 4.5 million people. China has 1.3 billion people. There are 45 million officials in China and only 2 percent are central authorities. No matter how enlightened Beijing’s leaders are, they are reliant on around 44 million unsupervised, poorly trained and often corrupt local officials to execute and implement policy. In China, there is a well-known saying that resonates throughout the whole country: Heaven is high and the emperor is far away. Outside of major coastal city centres, local officials frequently run counties like feudal lords overseeing personal fiefdoms.

This brings us to China’s second major limitation. Effective policy implementation would be much more effective if the Chinese Communist Party built better institutions. For example, Hong Kong and Singapore achieved their economic success within an authoritarian set-up. However, these city-states shared the commonality of limited government interference and predation in the economy, as well as sound institutions such as enforceable property rights and rule of law.

Singapore’s Lee Kuan Yew had few cultural hang-ups about praising and preserving many British institutions left behind in the country. An admirer of many aspects of Western civilisation, Lee was not enthusiastic about the ‘Asian way’ of organising civil society and institutions when it came to modern, industrialised societies. 

Similarly, China needs a strong civil society where rule of law exists and is enforced. Courts need to be independent and officials need to be accountable. Private property needs to be protected, individual enterprise needs to be given a chance to succeed, basic human rights must be enforced, and the government needs to be restrained. Singapore has these virtues.

True, the Peoples’ Action Party in Singapore was ruthless against political dissidents but it either left existing British-built institutions in place or built better civil ones where needed. Remember that Lee Kuan Yew was a University of Cambridge trained lawyer who understood the intimate relationship between good laws and their enforcement, and strong civil societies. In contrast, these in China are weak. Deteriorating institutions have actually coincided with the increased role of the Chinese Communist Party in the Chinese economy and society that occurred after the Tiananmen protests in 1989. 

For example, the number of officials before and after the protests more than doubled from 20 million to 45 million. Since the mid-1990s, the CCP has retaken control of the economy. State-controlled enterprises receive over three-quarters of the country’s entire capital each year, reversing the situation prior to 1989. The private sector is denied both formal capital (bank loans) and access to the most lucrative markets, which are reserved for the state-controlled sector.

Only around 50 of the 1,500 odd listed companies on the two stock exchanges are genuinely private. Fewer than 100 of the 1,000 richest people in China are not linked to the Party. This state-corporatist model favours a relatively small number of well-placed insiders. Meanwhile, a majority of the people in the country are largely missing out on the fruits of GDP growth. In fact, 400 million people have seen their net incomes decline over the past decade. Absolute poverty has doubled since 2000.

This extensive role of the CCP has coincided with a rise in systemic corruption. The Party, after all, dispenses the most valued economic and professional opportunities in Chinese society. Courts at all levels are still explicitly under the control of Party organs. According to studies by the Chinese Academy of Social Sciences, stealing from the public purse by officials amounts to around 2 per cent of GDP each year – and that figure is rising.

Over the past decade, more than 50 million households have had their lands illegally seized by corrupt and unaccountable local officials to build luxury residential condominiums, which are largely left empty. 

Levels of dissatisfaction with local authorities are so bad that there were over 128,000 instances of mass unrest in 2012 according to official figures, rising from a few thousand in the mid-1990s. To appease unhappy citizens, Beijing has instituted a system of ‘petitions’, whereby aggrieved citizens can appeal to higher authority against their local officials. A good idea perhaps – except for the fact that of every 10,000 petitions lodged, only three are heard. 

It’s true that China is still developing, but that excuse is wearing a bit thin. Reforms began in 1979. The reform period – 35 years and counting – has now lasted longer than Mao’s 27 years of terrible rule. Since then China’s economy has doubled every ten years. The middle class is approaching 100 million–200 million people depending on the definition. The building of institutions should be speeding ahead. Instead, since the Tiananmen protests in 1989, institution building in China has, in many respects, gone backwards. 

Look beyond grand cities like Shanghai or Shenzhen, and China is looking nothing like Singapore. Instead, the fear amongst many Chinese officials and experts is that without genuine and far-deeper economic and other institutional reforms, the oligarchy of Russia could be China’s future.

Dr. John Lee is the Michael Hintze Fellow and Adjunct Associate Professor at the University of Sydney, non-resident senior scholar at the Hudson Institute in Washington DC, and a Director of the Kokoda Foundation.