A Partial View of China’s Governance Trajectory

Minxin Pei’s new book China’s Crony Capitalism: The Dynamics of Regime Decay recites in detail the morass of corruption and collusion in which the People’s Republic of China (PRC) party-state finds itself. Encyclopedic in scope, the book addresses corruption, extraction, and network formation in many of modern China’s formal settings—including in the Chinese Communist Party (CCP), the nomenklatura system, state institutions, enterprises, the investment sector, and the real property market, among others—but also in nonformal contexts such as the rise of the “local mafia state.” The book’s basic storyline is this: the PRC’s radical devolution of intertwined political power and governance authority over productive assets in the early 1990s, matched with the accelerating creation of property rights, delivered on the party’s mission to lift China out of poverty and create sustained economic development. It did so, however, at the cost of generating uniquely harmful incentive structures and resulting extractive and efficiency-defeating behavior that has contributed to regime decay and the frustration of any future advance to democratic and rule-of-law governance structures.

Passionate as the book is, there are aspects that detract significantly from its power and coherence. This review identifies three of those aspects: the data under examination, the theoretical framework, and the extended concluding argument of the book.

The first aspect is the data employed and how it is used. Pei’s study is largely based on 260 cases of party discipline (and rarely criminal prosecution) culled from the state media over several decades—ranging from semi-autonomous sources like Caixin to party-state propaganda organs such as the People’s Daily and Xinhua. The limited data set employed in the book and its origins have at least three implications. First, the substance of the book is largely determined by data originating from central-level propaganda and thus only rarely captures central-level party-state misdeeds. This would not be a negative if the data could be controlled for the fact that it is rife with often unproven (and some, in my knowledge, untrue) allegations deemed essential to a propaganda campaign or political attack. Second, there is a concern as to how representative these cases are of the different contexts prevailing in China today and over a period of more than three decades. Third, while Pei cautions readers that the data he invokes is not representative, he nonetheless draws rather robust conclusions based on such data. One example can be seen in chapter 3:

Even though the fifty cases…in the sample were not randomly chosen, they provide useful clues for understanding how this form of collusion [maiguan maiguan] is carried out. Geographically, the fifty cases are drawn from twenty-two provinces, indicating the prevalence of this practice. Nine cases are from Anhui, a poor province with a high incidence of maiguan maiguan, at least according to press reports. Henan, a relatively poor agrarian province, and Guangdong, the booming manufacturing powerhouse, have five cases each. Hainan and Shandong have three cases each. As the sample includes both poor and prosperous regions, it appears that this practice exists in regions at all levels of economic development, although, without more data, it is impossible to determine its exact distribution (pp. 80–81, emphasis added).

In essence, this passage states that because the limited sample of 50 cases includes an equal number of 5 cases from poor Henan Province and rich Guangdong Province, “it appears that this practice exists in regions at all levels of economic development.” Or does the caveat in the final clause deny that? This conclusion touches on a key question for development scholars—the relationship between economic development and governance—but is rendered on data that social scientists may find problematic for the reasons discussed above.

While I appreciate the attempt to theorize the phenomenon of collusive capitalism, the book’s second shortcoming concerns some of the assumptions supporting its theoretical analysis. For instance, Pei points out repeatedly that crony capitalism was not observed in China until the 1990s. This is true, but that is because the “capitalism” side of...