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Russia Vs China. Which Country Has a Better Path Toward Democratization?

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Olga Bitiyeva

201443125

Post-communist transition of Russia and China

To: Professor Hélène Thibault

For PLS140 Introduction to Comparative Politics

School of Humanities and Social Sciences

Nazarbayev University

May 1st, 2017

Throughout the period between 1989 and 1991, both the Soviet Union (subsequently Russia) and China decided that communism had become a dysfunctional type of system and that changes were needed. These two countries have faced the prospect of a transition to a democratic regime where authoritarian rule has long been the norm. However, the paths of transition to democracy have been different in China and Russia. The question of whether Russia or China has a more successful transition from a socialist economy and authoritarian regime to a capitalist economy and democratization has been a concern of comparative politics. This essay will discuss the differences that these countries faced with on the way to political and socio-economic liberalization and democratization and will argue that the Chinese post-communist transition presents the better potential for eventual democratization.

        The first factor to consider is the transformation of an economic system from a centrally planned economy, which is based on the state ownership of the means of production, to a capitalist economy, characterized by the free market system, private property and high standards of living. The traditional model of building a strong democratic regime is economic liberalization and development first, and then political democratization because “with continuous economic success, political reform is a more urgent social demand even within the Chinese Communist Party.”  The sequence of political and economic reforms that had taken place in both Russia and China after the collapse of communism was different. The Chinese transition to capitalism is considered more successful and is believed to be the main determinant of China’s further democratization (O’Neil, 2015).

Beginning with Russia, under the command of Mikhail Gorbachev it (being a part of the Soviet Union) went through a rapid political liberalization, which expressed through glasnost or the freedom of speech, improvement of relations with Western countries and reduction of military burdens (O’Neil, 2015). These policies simply gave rise to criticism of the current political and economical systems, thus leading to instability in the country. After the collapse of the Soviet Union, Russia initiated a rapid and radical transition to capitalism - a policy known as shock therapy (O’Neil, 2015). In order to eliminate central planning, the government began a mass privatization of state-owned property in the country. By 1995, about 70% of the nation’s most valuable assets fell into the hands of the old nomenclatura, a few private individuals supported by corrupt political leaders and state officials. Such a corrupted process of privatization of state assets had a negative effect on the institutionalization of democracy. The problems generated by unfair privatization made it difficult for Russians to invest. Foreign investors were also excluded from the most significant branches of the economy - oil and gas industry and metallurgy. The free entry to the market was limited. The inability of the government to control the supply of money as well as a decrease in production caused by the political crisis led to a high inflation. Because of high inflation, there was an increase in income inequality and a decline in standards of living (Rutland, 2008). The poor economic situation in Russia caused negative public attitude towards the regime change and democratization. The fact that Russia conducted political reforms before the economic situation in the country was improved as well as the way economic reforms were carried out are believed to be the main reasons for Russia’s failure on the way to economic liberalization.

In contrast, China’s economic reforms began much earlier in 1978 under the leadership of Deng Xiaoping. China has decided that the Communist Party and the market economy could coexist, therefore, there were no significant political changes. In general, the state demonstrated a balanced approach in the implementation of reforms. China has preserved its state-owned enterprises as well as stimulated individuals to create their own ones (Rutland, 2009). China maintained the dictatorship of the Communist Party, keeping the monopoly of political power to manage the course of economic reforms more effectively (the model different from Western liberal democracies), and gradually introduced the elements of capitalism - a policy called controlled transition (O’Neil, 2015). The Chinese government maintained the ownership of the largest sectors of the economy and started with “the phasing out of collectivized agriculture”, allowing individuals to own some lands and capital and gradually increasing autonomy for state enterprises (Rutland, 2009). China experienced an increase in factory labor and the expansion of private sector and agriculture. Unlike Russia, China had its market open for foreign investors. China averaged $12 billion foreign direct investments (FDI) per year throughout the period from 1985 to 1995, rising to $78 billion in 2006. During the same period, Russia had an annual average of $1.3 billion FDI and $12.5 billion in 2006, while experiencing an annual outflow of capital greater than those figures. There was a stable economic development in China with an annual output growth of 9.4% on average. All economic indicators have improved in China since the beginning of its economic reforms and it is now rapidly decreasing the economic gap with the developed world (He, 2008). From this, it can be seen that in terms of moving away from the socialist economy, China had a smoother experience and in comparison with Russia, the current economic position of China and its global standing in the world present the better potential for democratization because the Chinese government can focus primarily on its way to political liberalization.        

An important point to consider is that according to modernization theory economic development leads to democratization through rising of the middle class, which demands higher political representation and participation. China experienced a dramatic rise in the middle class (earnings between $9,000 and $16,000 per year) from being 4% of the urban population in 2000 to 68% in 2012 and it is continuing to grow. Incomes of rural residents are rapidly increasing. In Russia in recent years, the situation is directly opposite: the incomes of the population are falling, and the share of the middle class is declining (Barton, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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