China today is roiling with turbulent economic and social change. As a result, Chinese politics is transforming as well. The Communist Party (CCP) struggles to maintain its authority in the countryside, where peasants have given up on corrupt officials and seek community in clan organizations and new religions. In the cities, persistent nationwide efforts to establish a formal opposition party have left communist leaders scrambling to shore up their control. Information, once easily monopolized by the state, now flows through cell phones and computer networks, enabling communication and organization among those disaffected with failed Leninism. The territorial integrity of the state is being challenged by the separatist aspirations of Uighurs and Tibetans. At no time in its fifty years of power has the CCP faced such a wide array of potentially disastrous problems.

How the People's Republic of China manages these various perils, and in what condition the country emerges, is a matter of great moment for the world at large. If growing domestic frustration is deflected into a more aggressively nationalistic foreign policy by a desperate CCP, a catalogue of international issues could be adversely affected, from Taiwan to trade balances to thermonuclear weapons. Conversely, the long-standing U.S. policy of engagement looks forward to a gradual transition to capitalism and a subsequent democratization that is expected to moderate Chinese diplomacy. It would seem that, for American policymakers, nationalism is the enemy and capitalism the hero of China's tumultuous reformation.

Two recent articles in The National Interest challenge both of these formulations. John Fitzgerald argues that the discourse on dignity inherent in any nationalist narrative may lay the conceptual groundwork for democratization in China. And David Zweig demonstrates that Chinese economic reform may work against the more optimistic hopes of engagement supporters. Is nationalism, then, really the hero and capitalism the enemy of Chinese democratization? Not quite. Each of these respected authors is only partially correct in his analysis. Indeed, the ineluctable logic of nationalism and economic reform may turn out to be less a determinant of China's future than the simple will of Chinese democrats and their oppressors.

Nationalism

John Fitzgerald, an accomplished historian of Republican-era China (1911-49), makes a convincing argument that national identity is rooted in a struggle for human dignity. Politics, he says, cannot simply be reduced to a calculated clash of material interests; it is driven by seemingly "irrational" aspirations and desires. People yearn for recognition and dignity, which are often found in the "imagined community" of the nation, and they will kill and die for the sense of solidarity that nationality imparts.

But what happens, Fitzgerald asks, when the state, in the name of the nation, tramples upon personal dignity? In China, momentous political disasters such as the Cultural Revolution, institutionalized corruption and official repression have robbed many individuals of their self-respect. When instructed by state leaders in the glories of the nation and the need to sacrifice for the collective, disillusioned individuals hesitate to identify with the common cause. The subsequent resentment produces the belief that national dignity must be built upon the personal dignity of the members of the nation. And here, Fitzgerald argues, is an opening for a move toward liberal democracy. In emphasizing communal dignity, nationalist rhetoric indirectly supports the ideal of individual dignity, the starting point for the defense of individual rights and the institutions that protect them. In his own words: "The politics of individual dignity, far from being antithetical, appears to be parasitical on the idea of national dignity."

Nationalism, by this reckoning, is a prerequisite for democracy. Indeed, Fitzgerald is willing to suggest that even chauvinistic arguments, such as those expounded by the authors of the various China Can Say No books, may inadvertently contribute to democratization. Although they blame foreigners for China's economic and political troubles, the resentment of the Say No nationalists also reflects their shame for a regime that denies its citizens their personal dignity. Their desire to invigorate China's national greatness will, therefore, set them on a path that "leads inevitably to challenging head-on existing constraints on thought, speech and assembly." Ironically, some of the most pointed Chinese nationalist critics of the 1989 democracy movement implicitly share the goals of that movement.

But there is a problem here. Nationalism is an obstacle to democracy--at least to liberal democracy. While Fitzgerald may be right in pointing out that the discourse of national dignity can enliven an appreciation of personal dignity, it is also true that state managers and jingoistic commentators regularly and powerfully assert a need to sacrifice individuals to protect the nation. This is especially true of nationalisms that are not explicitly built upon individualistic-libertarian ideals, which is to say most nationalisms. Liah Greenfeld points to the authoritarian tendencies of various European nationalisms:

"Originally nationalism developed as democracy. . . . But as nationalism spread in different countries and the emphasis in the idea of the nation moved from the sovereign character to the uniqueness of the people, the original equivalence between it and democratic principles was lost."

The problem is seen most clearly in the resurgence of ethnic nationalisms, collective identities that emphasize the cultural or racial "uniqueness of the people." The exclusionary possibilities are obvious: if the state is said to serve the nation, those who are not of the unique national community will not have a legitimate claim to be afforded full rights before the state. Koreans in Japan, Russians in the Baltic states, Turks in Germany all experience this kind of discrimination. In more extreme cases--Kosovo, Rwanda, Indonesia--ethnic outsiders are slaughtered and driven out to preserve an imagined ethno-national purity. Nationalism, in all of these cases, is quite actively used against democracy.

Chinese nationalism, in its official rendition, is not ethnically based; it is political and civic. But its anti-democratic tendencies are prominent. People of various ethnic backgrounds are recognized as members of the Chinese nation, so long as they accept the legitimacy of the regime. A common political life, defined by the state apparatus and ideology, is central to the definition of the nation. Socialist China promises equal status for all who faithfully adhere to the "Four Cardinal Principles" (Marxism, Socialism, the Dictatorship of the Proletariat, the hegemony of the CCP), and equal opportunity for all who assiduously pursue the "Four Modernizations" (Industry, Agriculture, Science, Defense). If a person works against the state, however, he is not just politically suspect; he is, in the Maoist formulation, an "enemy of the people."

The problem of Chinese nationalism, then, is the failure of its civic promise. For the common political life is seen by many millions not as a glorious socialist fraternity, but as a corrupt and repressive ordeal. The subsequent resentment has, as Fitzgerald suggests, led some to a fervent belief in democracy. It has also led to other reconstructions of Chinese national identity centering on geopolitical power or neo-traditional greatness, neither of which supports a more democratic politics.

Military ideologues promote the idea of China taking its "rightful place" among the world's Great Powers and castigate anyone, particularly the United States, they see as thwarting China's rise. National reunification and territorial integrity are central to this project, producing a belligerent approach to the issues of Taiwan and Tibet. In this image of the Chinese nation, democracy is quite clearly subordinated to the drive for power and unity. Similarly, the CCP has worked hard since the massive legitimation crisis of 1989 to revive traditional cultural symbols and practices. As a part of an ongoing patriotic education campaign, Standing Committee member Li Ruihan undertook the most un-communist of acts when he laid a wreath at the tomb of the Yellow Emperor, the legendary progenitor of the Chinese people. Such actions are designed to link the CCP with China's past, a heritage that is used not to bring forth Confucian humanism, but to justify hierarchy, obedience and autocracy.

In these instances, nationalism is no friend to democracy. Indeed, for democratization to proceed, collectivist-authoritarian national narratives must be explicitly rejected in favor of individualistic-libertarian identities. Nationalism's democratic connotation must be clearly and completely articulated.

Capitalism

A more widely held view is that democratization will emerge from economic reform. Faced with daunting inefficiencies and all too aware of the fate of the Soviet Union, Chinese leaders have gradually reduced the role of the central state bureaucracy in the economy. For twenty years they have improvised their way from one problem to another, from inflation to unemployment to international crisis, but they have, by and large, succeeded in creating a dynamic economy. Although CCP ideologues insist that they are building "socialism with Chinese characteristics", it looks more like a fitful transition to capitalism. Might this change, then, bring with it a new regime of property rights and an expanding bourgeoisie interested in protecting its hard-won wealth by means of democratic restraints on state power?

Probably not, argues David Zweig, a shrewd analyst of China's political economy. His case makes three key points: In China, markets are not free, workers cannot find work, and the world economy is not as significant as some may think.

China's economic reform, Zweig contends, involves not a decisive move to free markets but merely a shift of the locus of economic power. While central government bureaucrats in Beijing have given up a good portion of their previous authority, the beneficiaries of this change have not been private entrepreneurs. Instead, lower level public officials have seized strategic economic positions. Their corrupt rent-seeking behavior limits the rise of an independent bourgeoisie, and their vested interests sway them against private property and democracy. Why should they encourage change that might endanger the institutional basis of their wealth?

Beyond this powerful anti-democratic constituency, Zweig points to a mind-boggling unemployment level that brings threats of rising crime and social instability. Violence has erupted, confirming for CCP patriarchs their suspicion that democratization is a recipe for disaster.

A third impediment to democracy, Zweig maintains, is the institutional sclerosis that has characterized China's opening to the world economy. In theory, integration into world markets should spark competitive pressures to deregulate and privatize the domestic economy. The PRC, however, has resisted the liberalizing effects of global capital. "Opening China to the world, therefore", writes Zweig, "does not necessarily translate into opening China within itself."

Zweig thus makes a formidable case against the democratizing potential of Chinese economic reform and the more naive expectations surrounding U.S. engagement with China. While generally supportive of engagement, he cautions against placing too much faith in an "inevitable, rapid and smooth democratic transformation." This counsel is wise, but Zweig may be overly pessimistic.

Specifically, three recent policy initiatives suggest that an influential sector of the Chinese leadership is working hard to overcome the problems Zweig outlines. First, in July 1998 the CCP leadership announced that military, police and judicial units would have to divest themselves of their business interests. Hu Jintao, a member of the Standing Committee of the Politburo and a close political ally of President Jiang Zemin, was quite clear about the intent of this measure:

"Facts show that the practice of engaging in business activities by these organizations not only seriously interferes with their performance of duties and affects their impartial enforcement of laws, but it could also breed corrupt and unhealthy practices, such as influence-peddling and 'putting money above all else.'"

Actually implementing this ban will be difficult, as wily officers find ways to protect their spoils. But it is apparent that anti-corruption crusaders at the very top of the Party hierarchy take their missions seriously. Senior military officers, for example, forcefully championed the business closure campaign at the most recent session of the national parliament in March 1999.

Second, and at that same parliamentary conclave, an amendment to the state constitution was passed that enhances the formal recognition of private enterprise. The amendment defines private companies as "important components of the country's socialist market economy", and pledges that the state will "protect legitimate rights and interests of the private economy." Although hardly an adequate legal protection of private property, this measure is designed to promote, in the words of one parliamentary delegate, "a rule-based market that guarantees equal competition for state-run and private companies." And there are signs that more concrete actions are in the works to support private business: for example, the governor of China's central bank, Dai Xianglong, announced plans to increase commercial credit for private enterprises.

Third, in the run-up to Prime Minister Zhu Rongji's trip to the United States this year, Chinese representatives showed remarkable flexibility in World Trade Organization (WTO) negotiations with the United States. By one account, China offered "huge openings of its markets--in telecommunications, banking, insurance and agriculture--in return for getting the country into the WTO." Only political considerations on the American side kept the deal from being closed during Zhu's visit. The Chinese initiative highlights the reform strategy of an important part of the PRC elite, for the WTO will be powerful leverage against domestic protectionists.

Taken together, these three policies do not signal an imminent outbreak of free-market capitalism in China. They do not disprove Zweig, but they suggest another side to the story. Economic reform in China continues to move, however imperfectly, toward liberalization and privatization. Although Jiang Zemin and Zhu Rongji believe in the "superiority of socialism", they are pragmatic enough to recognize that the crushing economic problems they face, especially the specter of mass unemployment, can only be addressed by enlivening private enterprise and attracting global capital. In twenty years, Zweig's "quasi-private managerial class" may well be challenged by a rising bourgeoisie. While such a development would reinforce liberalization, it would not guarantee democracy, for bourgeoisies are, in general, politically ambivalent. If a repressive regime promises reliable profits, they may willingly accept limitations on political rights and activities (as they have, for instance, in Singapore). Moreover, the exigencies of capitalism may foreclose democratically determined political choices: tax rates can increase and regulations constrain only so much before global capital quickly seeks a safer haven. Capitalism can work for democratization up to a point; but, in China as elsewhere, a more meaningful democratic outcome depends upon particular political struggles.

Democracy

Democracy cannot be reduced to either nationalism or capitalism. Nationalist rhetoric may convey democratic ideals, but unless these ideals are institutionalized they can be overwhelmed by the authoritarian command to subordinate individuals to the fatherland. As for economic reform, a 1997 comparative study by Adam Przeworski and Fernando Limogi in World Politics argues for a more voluntaristic view of democratization, one that avoids deterministic emphasis on conditions, whether socioeconomic or rhetorical, and focuses on the strategies and actions of the protagonists and antagonists of democratic struggles: "Democracy is or is not established by political actors pursuing their goals, and it can be initiated at any level of development."

Elsewhere, in a rigorous little book, Przeworski outlines the political logic of liberalization and democratization. A crucial prerequisite for a significant move away from dictatorship, he insists, is a reform group within the regime willing and able to act. Popular struggle alone rarely breaks authoritarianism.

A crisis of some sort, Przeworski suggests, may forge such a reform group and stir it to press against regime hardliners. A defeat in war, as with the Argentine loss in the Falkland Islands, might push a junta toward democratization; an international diplomatic crisis, such as Taiwan faced when the United States withdrew its recognition, might convince a Leninist party to accept real opposition; or widespread public demonstrations, which helped propel change in South Korea and East Germany, might present officials with a stark choice between heightening repression or compromising. None of these crises, in and of itself, automatically translates into liberalization, but any one may influence the political calculations of rulers in need of legitimation beyond sheer coercion.

Reformers, however, need partners in society, groups with whom they can compromise. Here, a moderate faction of opposition activists is required, people who are pressing for change but willing to accept some sort of accommodation with those in power. Moderates have to be able to control radical dissidents suspicious of outcomes short of immediate and complete democracy. If moderates can do this, they might be able to attract regime reformers away from hardliners and develop a strategy for liberalization. Such has been the pattern, Przeworski demonstrates, in many transitions to democracy.

In China, the political elements for liberalization are taking shape. Within the regime a reform group emerged in the 1980s, centering around Party Secretary Hu Yaobang. After the 1989 Tiananmen demonstrations, during which reformers momentarily outmaneuvered hardliners, the liberalizing project was weakened but not destroyed. In November 1997 Fang Jue, a former government official, circulated a report that was said to reflect the thinking of the "Democratic Faction", a group of "mid-level and high-level" CCP members frustrated with the repression of the 1989 democracy movement and the lack of meaningful political change. Although Fang himself is not a member of the Party, he is apparently close to some very important people, possibly Central Committee members, and his statement has been recognized by veteran dissidents Wei Jingsheng and Liu Qing as an "exciting first signal" that supporters of democracy are emerging within the CCP itself.

Fang and his fellow-travelers have called for competitive elections for all levels of legislative assemblies: local, provincial and national. The Democratic Faction supports the creation of formal political parties, to stand in opposition to the CCP, and informal non-political associations, a sort of Tocquevillian civil society. In the economic realm, it advocates further expansion of market forces and greater openness to global capital. It is also in favor of self-determination for Tibetans and the elimination of "all forms of armed threats and plans for armed solutions" in China's relations with Taiwan. The overarching theme is a comprehensive and consistent liberalism.

Fang has been jailed for advocating these ideas. The key point, however, is that political liberalization continues to be a contested issue within the Chinese power structure. Reformers are present and pressing for change. Indeed, some of China's highest ranking political leaders may be willing to contemplate political change, even if they would not go as far as the Democratic Faction's full agenda.

Li Peng, now chairman of the national parliament, is reliably hardline, and can be counted on to resist liberalization. Prime Minister Zhu Rongji, however, has revealed reformist sympathies. In his keynote address to the national parliament in March, he stated that the government should avoid "brutal measures" when confronted with popular dissatisfaction. He is more open to opposition to certain high-profile state projects, such as the Three Gorges Dam, and he has recognized the democratic aspirations of the 1989 Tiananmen demonstrations.

President Jiang Zemin sends more mixed signals. He was tacitly supportive of the relaxation of political speech from late 1997 to mid-1998, during which authorities allowed, even encouraged, discussion of a wide range of political topics. On the other hand, he has endorsed the call by Li Peng against any sort of "Western democracy" for China, and he has accepted the recent crackdown against dissidents attempting to create a formal opposition party.

If some top political leaders, in concert with the broader Democratic Faction of the Party, were to opt for modest political change, they would find a variety of potential allies in society. The activists involved in the Chinese Democratic Party, a formal opposition party founded in the summer of 1998 and still clinging to political life in spite of persistent government repression, have demonstrated a certain moderation in their strategy. They have attempted to work within the existing constitutional structure to maximize possibilities for political association and speech. They do not call for a wholesale transformation of the political order. Although their leaders are currently languishing in jail with harsh prison sentences, they could prove to be useful partners for regime reformers in any effort to stem more radical opposition demands. In addition, the families of victims of the 1989 Beijing massacre continue their campaign to "reverse the verdict" of that terrible tragedy. They, too, are not looking to overthrow the state, but simply for recognition that their fallen sons and daughters were not traitors.

A choice on the part of party-state reformers to accommodate any one of these groups would be a liberalizing move for the regime, not a sudden breakthrough to democracy but a fragile first step toward a less authoritarian political order. But such a choice is unlikely without some kind of pressure on the regime, a crisis that would embolden reformers and unbalance hardliners.

Not just any crisis will do. The costs of a cataclysmic meltdown of central authority might overwhelm any liberalizing tendencies. War is too dangerous and uncertain: the Clausewitzian fog might clear to reveal an even more repressive regime. A diplomatic crisis could be tricky as well. If such a situation was fomented from without, it could play into the hands of hardline military chauvinists eager to blame China's troubles on nefarious foreign forces. It would be utter folly and hubris, therefore, for U.S. policymakers to believe that they can engineer the emergency that pushes the CCP toward democracy. A dramatic reversal of U.S. engagement and a determined isolation of China would simply fulfill the prophecies of the Say No nationalists and strangle moderate political dissidents.

Perhaps the best prospect is an upsurge of domestic turbulence born of economic reform. If the hard-pressed working class, threatened by rising unemployment, organizes and gets out on the streets, what would--what could--the regime do? Call out the "People's Army" to again fire upon the people? A Solidarity-like trade union movement, generated from within China itself, might push regime reformers away from repressive political alternatives. Or what if the student movement were to regenerate and rally the millions of city dwellers exasperated with ever increasing official corruption? Or if a peasant-based, millennial religious movement were to challenge the state from below? Would the CCP leadership, some of whom have publicly rejected "brutal measures", be willing to take extreme action to prevail? While there is no guarantee that the choice for liberalization would be taken, power holders would at least have to contemplate seriously the merits of a political opening as against brutal suppression.

Is this far-fetched? Not really. Remember, a little over a decade ago, just before that remarkable Autumn of 1989, many of us were fairly convinced that totalitarianism was firmly entrenched in the Soviet Union and Eastern Europe. East German apparatchiks would never let the Berlin Wall crumble. Ceausescu was unmovable in Romania. Soviet militarists would never allow the Party to fall. How quickly things changed.