China’s impressive growth record has been facilitated by a unique relationship between Beijing and the provinces that encourages experimentation and incentivizes officials for driving economic growth—and for the most part this helped maintain political stability. While these arrangements spurred economic liberalization, political liberalization was put on hold. But rapid growth has not spared China from increasing social unrest given frustrations over widening disparities both in opportunities and outcomes and mounting conflicts over use of resources. Some now question the regime’s capacity to deal with society’s concerns. This paper examines recent politically charged events that have intensified discussions about the potential for economic and political reforms that would be acceptable to the Communist Party and still supportive of China’s broader objectives.

Three decades of economic liberalization have restored much of the vibrancy that China last displayed two centuries ago when it accounted for a significant share of the world’s economy. Yet its political system seems to have been caught in a time warp. Ever since the Arab Spring began dominating headlines, there has been renewed speculation that social unrest could foment a similar cascade of change in China. Even Premier Wen Jiabao concluded at last March’s National People’s Congress that dealing with pressures for political reform will be a high priority for the future leadership. But the Bo Xilai affair significantly escalated what is at stake by casting the issue as a conflict between reformers and those wedded to the past. This is now seen as influencing the transition to China’s next generation of senior leaders.

Discussions about China’s political evolution are normally grounded in debates over democratization, military security, and human rights. More attention, however, needs to be given to whether the nature of China’s economic transformation, supported by its unique form of regional decentralization, has contributed to a stalemate regarding political liberalization.

Read the full paper in the SAIS Review.