The Two Chinas

T he national-security law that the Chinese Communist Party is using to complete its takeover of democratic Hong Kong has pretty much everyone agreeing that the era of the “One Country, Two Systems” framework developed for Hong Kong’s handover from the British to the PRC is over. From the time of the 1997 handover until now, the framework has allowed Hong Kong to exist as a semi-autonomous administrative region that has its own economic and political system but is technically a part of the PRC. But since Beijing unilaterally imposed the national-security law in June, Hong Kong elections have been canceled, pro-freedom professors have been fired or arrested, and democrats have been banned from politics. For Hong Kong, “one country, two systems” is finished.

On the mainland, though, “one country, two systems” isn’t a framework so much as an accurate description of the status quo. Ironically, Beijing is all too happy for the world to focus on the demise of the official “one country, two systems” policy in Hong Kong if it distracts from the decay and systemic weakness that plague the mainland. The CCP’s crackdown on Hong Kong, its trade standoff with the U.S., its growing militarism in the Pacific, and other ostentatious public displays of Chinese strength are meant to hide the rot underneath.

For in truth, on the mainland today, there are two Chinas. There is the China of densely populated, modern urban centers such as Beijing, Shanghai, Guangzhou, and Chongqing, and there is the China of everywhere else. The China of everywhere else is dollars-a-day poor, uneducated, and aging. It is also vast, containing some 600–700 million people, or about half of the total Chinese population.

The two Chinas are the direct result of government policy — and the source of a structural weakness that cannot be remedied as things stand now. The country’s internal-passport, or hukou system, requires families to register in their region of origin and entitles them only to the social, education, and economic benefits allocated to that region by the government. It extends back centuries but was enshrined as a tool of economic and social control under Mao Zedong. Designed to limit economic mobility and tilt economic benefits toward the urban elite, it has created a kind of caste system, an unbridgeable gulf between China’s wealthy city-dwellers and its rural poor.

CCP general secretary Xi Jinping is seen as an advocate for reform of the system, but his motives are not altruistic. He knows that the existence of the two Chinas has created the conditions for social unrest, as employment and income in the countryside decrease while the social safety net frays. He also knows that the import-substitution model of economic development that China has followed must eventually end if national income is to rise further. The continued prosperity of Chinese cities depends on low-cost labor, and the country has plenty of that; it’s just in the wrong places.

Even so, the Communist government knows it must continue to control internal migration. At about 20 million and 25 million people, respectively, Beijing and Shanghai owe much of their population growth in recent years to such migration, which has offset the negative natural-growth rate stemming from the CCP’s infamous one-child policy. About a third of Shanghai’s residents come from another part of China, according to the University of Hong Kong’s Minhua Ling. Ling titled her recent study of Shanghai migrants “The Inconvenient Generation,” in reference to the burden that such migrants place on municipal systems, which has created a sense of otherness that the CCP authorities harshly reinforce.

The caste system has been particularly disastrous for China’s rural regions. Stanford University economist Scott Rozelle founded the Rural Education Action Project in 2006 to examine the long-term impact of what he has described as an “education apocalypse” in rural China. For about a decade, Rozelle’s project has included a central focus on the health of the country’s poor, rural schoolchildren. His work suggests significant long-term, structural challenges for “the other China.” He and his researchers believe that more than half of rural eighth-graders on the mainland have IQs below 90, and that as many as 400 million children “are in danger of becoming cognitively handicapped.”

Rozelle is not alone in pursuing such avenues of inquiry. The demographics of China, affected by what the peerless Nick Eberstadt correctly identifies as “Beijing’s ruthless population-control programs,” have led to many documented negative pathologies, including a growing number of poor old people whom relatively few uneducated young people will be forced to support over time. The U.S. Census Bureau projects that China’s population will peak in 2027, while its working-age population is set to continue declining dramatically. The hundreds of millions of poor, rural schoolchildren now receiving a shockingly substandard education will come of age incapable of filling the holes in the labor force and sustaining China’s modern, technology-dependent economy. It’s not because of current policies that this combination of trends is taking shape. It is locked in because of disastrous past policies.

It’s not possible to predict exactly how these worrisome trends will play out for China in the years to come, but it is clear that they will play out, and one can make some educated guesses about how the government will respond. It seems reasonable to expect more official displays of strength meant to distract both domestic and international audiences from the decay that has set in across the Chinese system. It also seems likely that the regime will lean hard on brutal repression in the face of internal threats and ramp up its regional aggression as needed.

The important thing for the world to remember before reacting to these moves is that they will all be for show, a smokescreen meant to hide the weaknesses of an unsustainable system. To the West, China may appear to be a rising global superpower; in truth, it’s an aging, slowly crumbling, totalitarian machine.