In the aftermath of the 15^th Party Congress, many observers were disappointed, noting that Congress failed to address the issue of political reform. This came as something of a surprise, given statements by both Qiao Shi and Jiang Zemin prior to the Congress that indicated political reform might be on the agenda. In particular, observers were disappointed by the explicit rejection of Western-style democracy, the refusal to reverse the verdict on Tiananmen, the dismissal of Qiao Shi, and the political survival of Ding Guangen. In light of these developments, some have asked whether China is committed to that pattern of change characterized by open economic policies and rigid political control known as "Market Leninism" and whether political reform will remain "off the table."

Observers' disappointment in the results of the Party Congress, however, should be tempered by a broader historical perspective. The Congress did nothing to reverse the substantial degree of political change that has been occurring over the last two decades. China has come a long way since 1976, when a Party Congress would have been characterized by intense, ideologized political competition, factional conflict, and "struggle." In contrast, this year's Congress was "sane" and regularized, and although some leaders lost power, there was no evidence of sweeping political purges. Instead, there emerged a Central Committee, a Politburo, and a Standing Committee dominated by technocrats. The shift to a technocratic leadership has been characterized by a recruitment process that emphasizes selection on the basis of merit rather than political orientation. The Party leadership incorporates more civilian and less military thought. Here we see a return to the patterns of the pre-Cultural Revolution period, a period also marked by a small political role for the military.

The change in the political role of the military is also reflected in trends internal to the military-trends toward greater professionalization, regularization, and modernization. The reduced military role in politics, however, can be viewed in both positive and negative terms: a smaller role for the military may mean a PLA less able and less likely to meddle in politics and more focused on its own development. On the other hand, the retreat of the military could be a signal that the organic link between Party and Army has been broken and that the military might be more likely to intervene in politics to prevent developments it views as threatening to its corporate interests.

On the whole, the Congress was a reflection of a more rational and regularized policy-making process. In addition, the Congress evidenced a growing interest in law. Of course, it is necessary to distinguish between the rule of law and rule by law. China falls into the latter category, in which law is viewed as an instrument to be used by the leadership. China's leaders remain unconstrained by the law, as they would be under condition of the rule of law. Nevertheless, law has become a "straw in the wind" in China and has become part of the political agenda. The growing role of law in Chinese politics and society is evidenced by an increased number of antigovernment lawsuits, in addition to some releases of political prisoners. The Chinese Government is beginning to come under some legal regulation.

Furthermore, the recent rounds of local elections, which by all accounts saw genuine competition, are evidence of the beginnings of a public sphere in China. The government has also been more tolerant of nascent nongovernmental organizations (NGOs).

Despite some positive developments however, progress has been slow, and many negative trends are asserting themselves as well. Corruption continues to be a problem, as shown in the expulsion from the Communist Party of Chen Xitong. The press remains highly restricted, and accurate information on sensitive issues is still scarce. The legislature's role in the political process has shrunk, despite Qiao Shi's efforts to carve out a greater role for the National People's Congress. Now, with his demotion, further legislative reform seems unlikely. Tight limits on the public sphere and free expression, especially on political commentary, still exist.

This concatenation of positive and negative trends seems to herald a move from totalitarianism to a technocratic authoritarian system. Recognizing the inherent uncertainty of such efforts, it is possible nevertheless to make some generalizations about future trends in Chinese political development.

Political reform will inevitably emerge as an item on the agenda in China. It is important to note, however, that the Chinese by and large hold a decidedly instrumentalist view of democracy. The Chinese people do not view democracy in quite the same way Westerners do, as an end in itself. Instead, for the Chinese, democracy is a means; to build a strong China, they see a need for a responsive government and they realize that China will not achieve what see as its rightful international status without economic change. Some scenarios for change in the future:

• Continued Reform: Political change occurs and China evolves toward a Taiwan-style political system. Local officials will be chosen in competitive elections while the center remains authoritarian in character. Elections will move "up" from the local levels and some degree of electoral competition will emerge. This type of change requires an "optimal gap," that is, a delicate balance between pressure for change from below and flexibility at the top will be critical. China's leadership is most likely to exhibit this kind of flexibility if it is confident that change will be gradual and not immediately threaten their status as leaders or regime survival. If the pressure from below is too great and the top is too unyielding, another Tiananmen-type tragedy could occur.

• Political Decay: Societal grievances begin to outstrip the government's ability to cope with them, and the system begins to disintegrate. Notably, the "optimal gap" that functions in the continued reform scenario collapses and protest, instability and disorder result.

• Repression: This would entail a reassertion of political and social controls, a "backtracking" on reform. Of the three scenarios, this is the least likely to occur in the long term, as the Chinese Government simply does not have the resources to sustain a long period of repression.

Douglas Paal: Do the trends elucidated by Dr. Harding have policy implications for the United States? Do they really matter for U.S. interests? If so, what do policy makers do?

The 15^th Party Congress was disappointing in its failure to initiate any institutional change. Progress in the critical areas of political, legal, and banking reform would have provided a degree of comfort to policy makers trying to gauge China's progress. Because such steps were not taken at the Congress, from a policy perspective it is still necessary to have some way to measure progress in China; timeline benchmarks are a useful tool in that regard. If no significant change occurs in the next 5 years, from a policy standpoint the United States should begin to worry that reform may not continue.

Of Harry Harding's scenarios, the continued reform scenario has the best prospects over the long term. Following the Party Congress, however, the likelihood of its realization has dropped to about 50 percent.

In light of the looming, massive failure of China's banking system, the decay scenario has a 35 percent likelihood, and the United States must be prepared to face the possibility of a failed state in China. American China policy needs to hedge its bets on the decay scenario and should reflect an understanding of the implications of state failure on as large a scale as China for broader U.S. policy.

Repression is least likely, having a 15 percent chance of occurring, but could be strongly influenced by external factors, as distinct from internal pressures for change. Such external factors could include Western pressure on issues such as human rights and proliferation. Repression would occur at a moment in time when nationalism and the continued grip on power becomes the overwhelming priority for the leadership. The United States could expect the emergence of a proto-fascism, the elevation of martial values, and a reluctance to cooperate with international partners.

Turning to policy, the United States clearly needs to take a combined approach, proceeding on both the bilateral and multilateral levels. On the bilateral front, goals include promoting the continuation of reform. Continued change can be promoted in part by private American firms, which can do much to teach the Chinese modern business principles. These efforts will also do much to inculcate a respect for the necessity of the rule of law and rational political change. Private American firms are already working to promote preferable outcomes in China.

Nonetheless, this strategy may be insufficient and the United States must hedge against decay. A hedging strategy will hinge more on what we don't do than what we do. The United States must be careful not to trigger, or be perceived as triggering, an economic slowdown. U.S. behavior in world lending institutions or on issues such as most-favored nation (MFN) status could be pivotal in this regard. Likewise, we should carefully manage situations such as the 2000 Olympic bid. In that instance, American policy created a broad surge of anti-U.S. sentiment; the United States was widely perceived as having been the central obstacle in to China's hosting the Games. In sum, the United States needs to develop a more refined, sophisticated approach and, above all, keep in mind the price tag accompanying failed states-North Korea stands out as a telling reminder of that cost.

Multilaterally, we need to pursue an activist agenda, to include Taiwan. Our long-run goal should be to build a coalition of states sharing common interests in China, especially with those countries sharing a border with China. Unfortunately however, current American China policy is not at all conducive to coalition building. In fact, American Asia policy in general, and China policy in particular, are creating the perception of a split, not a coalition, between the United States and its friends in Asia. Asian nations are not moving closer to the United States and therefore by default appear to be moving closer to China. In recent years, the United States has found itself alone confronting China and Asia more broadly. Issues such as human rights pressure and a perceived U.S. unwillingness to participate in the bailout of the Thai baht damage American coalition-building efforts, while providing the Chinese opportunities to strengthen relations with their Asian neighbors.

On Taiwan, the United States must pursue a more vigorous, activist agenda that reflects a more consistent policy process, perhaps something resembling U.S. efforts in the Middle East peace process. On this issue, there is a tendency to backslide if measurable progress is not being made. Korea provides another opportunity to pursue an activist agenda and begin the process of integration and coalition building.