Liu Xiaobo and the Decline of China

By Bret Stephens

Liu Xiaobo, the dissident writer who became China’s first Nobel Peace laureate when he won the prize in 2010, died in state custody on Thursday, having spent almost the last nine years of his life in prison. 

His death is a tragedy and an outrage. 

It’s also a warning to his jailers.
To wit: No nation that defames and imprisons its best people is going to become great. 

No country that is afraid to let a man such as Liu speak freely can possibly be described as strong. Regimes that are fearsome are brittle, too.
That’s a thought that ought to vex those China enthusiasts who for years have been predicting that the country’s rise to global primacy is merely a matter of time. 

This is geopolitical analysis by way of grade-school math: If the United States, with a gross domestic product of $18.6 trillion, continues to grow at its current sub-2 percent rate a year, and China, with a G.D.P. of $11.2 trillion, grows at its plus-6 percent rate, then China will overtake us in about a decade.
Tick-tick-tick.
Then again, there’s a difference between trend and truth. 

The economist Paul Samuelson predicted in 1961 that the Soviet economy would surpass America’s sometime between 1984 and 1997. 

Japan’s G.D.P. was expected to overtake the United States’ by the year 2000. 

The European Union was another supposed contender for dominance.

A memorial in Hong Kong for Liu Xiabo.

Should China be any different from these also-rans? 

China’s official growth rate has slowed every year this decade; it’s now at its lowest point since the era of the Tiananmen Square massacre. 

Bad loans at Chinese banks are at a 12-year high, while productivity growth is at a 16-year low, according to Bloomberg. 

China’s working-age population is shrinking and lost nearly five million people in 2015 alone. 

Capital outflows from China hit $640 billion last year; China’s upper and middle classes are voting with their real-estate choices.

All this could mean nothing more than that China, like an athlete growing old, is tracing the same arc of most other economies that emerge quickly from poverty only to stall out thanks to rent-seeking elites, rising factory wages, demographic imbalances and so on. 

This is called the middle-income trap, and as the World Bank noted a few years ago, “of 101 middle-income economies in 1960, only 13 became high-income by 2008.”
For China, however, things are likely to be worse. 

Why? 

Liu Xiaobo knew the answer.
Westerners besotted by the “rising China” hypothesis often make the case that while the country’s human-rights record is lamentable, it has no bearing on its economic future. 

Economies, they say, run on inputs, not values. 

If anything, they believe that China’s dictatorship confers advantages in efficiency and decisiveness that fractious democracies can only dream about.
It’s an odd argument. 

Autocracies are sometimes rich but never modern. 

Efficiency can mean doing dumb things quickly. 

Political control over economic resources is a recipe for corruption and capital misallocation. 

To this day Beijing treats its economy as an extension of state propaganda, manufacturing statistics and mistaking trophyism for development.
The core mistake is to assume that values aren’t inputs. 

“The process of abandoning the ‘philosophy of struggle’ was also a process of gradual weakening of the enemy mentality and elimination of the psychology of hatred,” Liu wrote in a courtroom statement that would become his Nobel lecture (delivered in absentia).
“It was this process,” he added, “that provided a relaxed climate, at home and abroad, for Reform and Opening Up, gentle and humane grounds for restoring mutual affection among people and peaceful coexistence among those with different interests and values, thereby providing encouragement in keeping with humanity for the bursting forth of creativity.”
Creativity requires freedom. 

Ideas need room to compete and collide, free of social and legal penalties. 

As economies approach the creative frontier, the need for freedom expands commensurately. 

The gap between available information and necessary information needs to be as narrow as possible. Much of what is economically necessary information is also political information, making censorship and repression incompatible with the requirements of a dynamic economy.

Liu understood that the Chinese model of economic modernization without political reform was destined to fail: The insight is at the heart of the Charter 08 manifesto that landed him in prison. 

“The decline of the current system has reached the point where change is no longer optional,” it warned.

As if to prove it really didn’t get the point of Liu’s teachings, Beijing moved quickly to censor stories about him and expressions of sympathy on the internet. 

But at least one pointed anonymous message got out to the Wall Street Journal reporter Nicole Hong. China boosters, take note:

You want to bury him

bury into the dirt

but you forget

he is a seed.