In less than a decade China could be the world’s largest economy. But its continued economic success is under threat from a resurgence of the state and resistance to further reform.

AT THE HEIGHT of the Qing dynasty, back in the 1700s, China enjoyed a golden age. Barbarians were in awe of the empire and rapacious foreigners had not yet begun hammering at the door. It was a shengshi, an age of prosperity. Now some Chinese nationalists say that, thanks to the Communist Party and its economic prowess, another shengshi has arrived. Last year China became the world’s biggest manufacturer, displacing America from a position it had held for more than a century. In less than a decade it could become the world’s largest economy. Foreigners are again agape.

China’s rapid recovery from the global financial crisis, and the West’s continuing malaise, have had a profound psychological impact on many Chinese. Emotions ranging from pride to Schadenfreudepermeate official rhetoric. Diplomats treat their Western counterparts with a tinge of condescension. What is great about socialism, crowed the prime minister, Wen Jiabao, in March last year, is that it enables China “to make decisions efficiently, organise effectively and concentrate resources to accomplish large undertakings”. In the eyes of some Chinese, and even some foreigners, authoritarianism has gained a new legitimacy.

A big parade of missiles, tanks and goose-stepping soldiers in central Beijing in October 2009, the capital’s first such display in a decade, was described in official reports as a “grand ceremony of the shengshi”. A group of generals and senior officials enlisted 60 artists to commemorate the party’s 60th year in power that year by painting a 120-metre-long scroll called “A Picture of a Chinese Harmonious Shengshi”. The panorama depicted the soaring skylines of China’s great cities, interlaced with the mountains, rivers and clouds beloved of traditional painters. There were ethnic minorities dancing joyously in Tiananmen Square, a rocket taking off, a wind farm and even a mist-wrapped Taiwan. In the past couple of years the shengshi has brought the recalcitrant island closer, with cross-strait flights and a free-trade deal.

To some observers in an insecure West, the balance of global power is shifting inexorably in China’s favour. Recent book titles capture the mood: “In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony” (by Eamonn Fingleton, 2008); “When China Rules the World: The End of the Western World and the Birth of a New Global Order” (by Martin Jacques, 2009); “The Beijing Consensus: How China’s Authoritarian Model Will Dominate the Twenty-First Century” (by Stefan Halper, 2010). As William Kirby of Harvard University notes, anxious books about China’s rise have a long history in the West. There was a spate of them in the early 20th century: “New Forces in Old China: An Unwelcome But Inevitable Awakening”, by Arthur Brown, set the tone in 1904. But other rising powers—Japan, Germany and America—got even more attention. Today China is the chief object of worry.

Chinese publishers have been cashing in too. Bookshops (which stock only works of which the party approves) are stacked with volumes on the “China model” and the failure of liberal economics. The Chinese Academy of Social Sciences struck a rare note of modesty in a report last October. It rated China a mere 17th in a global league of “national competitiveness”. But it pointed out that the country had risen from 73rd place in 1990 and had left India, which was ranked 42nd, in the dust. China’s aim, the report said, should be to reach the top five by 2020 and be second only to America by 2050. Its universities are producing swelling legions of scientists, but it seems there are still not enough of them to allow the country to join the top ranks just yet.

All change

For all the chest-thumping, though, China’s leaders are more cautious than either their underlings or the state-controlled publishing industry. They avoid the term “China model” and do not publicly boast of a shengshi, eventhough they allow their media to talk of one. Indeed, they appear more nervous now than at any time for over a decade. They have massively increased spending on domestic security, which in this year’s budget has overtaken that on defence for the first time. The government has been reviving a Maoist system of neighbourhood surveillance by civilian volunteers. In the past few months the police have launched an all-out assault on civil society, arresting dozens of lawyers, NGO activists, bloggers and even artists. The Arab revolutions have spooked the leadership. From its perspective, the system looks vulnerable.

Chinese leaders have other reasons to fret. Late next year, probably in October, the party will hold a national congress, the 18th since its founding 90 years ago. This meeting, a smaller one of the party’s central committee immediately afterwards and a session of the legislature in March 2013 will endorse the biggest shuffle in China’s leadership for a decade. The president, Hu Jintao, and Mr Wen will step down from the pinnacle of power, the nine-member standing committee of the Politburo. A younger generation will begin to take over. Leadership changes on this scale always make officials anxious. Although the most recent one, in 2002, passed without incident, earlier such transitions triggered dramatic events: a coup in 1976, debilitating power struggles in 1986-89 and mass unrest in 1989. Just because the last one went well does not mean this one will.

Banks are still almost entirely in government hands. Their profligate lending to other parts of the state empire, in order to keep the economy booming after the financial crisis, will revive a bad-debt problem that China thought it had licked years ago. Many of the descendants of those who led the party when it came to power in 1949—the likely big winners in next year’s realignment—have strong ties with state-owned firms.

China is likely to disappoint those who believed that the country’s embrace of globalisation would usher in greater political freedoms over the next few years. James Mann, an American journalist, gave warning of this in a 2007 book, “The China Fantasy: Why Capitalism Will Not Bring Democracy to China”, suggesting that a quarter of a century from now China’s “current system of modernised, business-supported repression could well be vastly more established and entrenched”. A lot can happen in 25 years, but the line-up for next year’s change of leadership does not give cause for optimism.

–  James Miles