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  • Good morning.

  • My name is Eric Li, and I was born here.

  • But no, I wasn't born there.

  • This was where I was born:

  • Shanghai, at the height of the Cultural Revolution.

  • My grandmother tells me that she heard

  • the sound of gunfire along with my first cries.

  • When I was growing up, I was told a story

  • that explained all I ever needed to know about humanity.

  • It went like this.

  • All human societies develop in linear progression,

  • beginning with primitive society, then slave society,

  • feudalism, capitalism, socialism,

  • and finally, guess where we end up?

  • Communism!

  • Sooner or later, all of humanity,

  • regardless of culture, language, nationality,

  • will arrive at this final stage

  • of political and social development.

  • The entire world's peoples will be unified

  • in this paradise on Earth

  • and live happily ever after.

  • But before we get there, we're engaged

  • in a struggle between good and evil,

  • the good of socialism against the evil of capitalism,

  • and the good shall triumph.

  • That, of course, was the meta-narrative

  • distilled from the theories of Karl Marx.

  • And the Chinese bought it.

  • We were taught that grand story day in and day out.

  • It became part of us, and we believed in it.

  • The story was a bestseller.

  • About one third of the entire world's population

  • lived under that meta-narrative.

  • Then, the world changed overnight.

  • As for me, disillusioned by the failed religion of my youth,

  • I went to America and became a Berkeley hippie.

  • (Laughter)

  • Now, as I was coming of age, something else happened.

  • As if one big story wasn't enough,

  • I was told another one.

  • This one was just as grand.

  • It also claims that all human societies

  • develop in a linear progression towards a singular end.

  • This one went as follows:

  • All societies, regardless of culture,

  • be it Christian, Muslim, Confucian,

  • must progress from traditional societies

  • in which groups are the basic units

  • to modern societies in which atomized individuals

  • are the sovereign units,

  • and all these individuals are, by definition, rational,

  • and they all want one thing:

  • the vote.

  • Because they are all rational, once given the vote,

  • they produce good government

  • and live happily ever after.

  • Paradise on Earth, again.

  • Sooner or later, electoral democracy will be

  • the only political system for all countries and all peoples,

  • with a free market to make them all rich.

  • But before we get there, we're engaged in a struggle

  • between good and evil.

  • (Laughter)

  • The good belongs to those who are democracies

  • and are charged with a mission of spreading it

  • around the globe, sometimes by force,

  • against the evil of those who do not hold elections.

  • (Video) George H.W. Bush: A new world order ...

  • (Video) George W. Bush: ... ending tyranny in our world ...

  • (Video) Barack Obama: ... a single standard for all

  • who would hold power.

  • Eric X. Li: Now --

  • (Laughter) (Applause)

  • This story also became a bestseller.

  • According to Freedom House,

  • the number of democracies went from 45 in 1970

  • to 115 in 2010.

  • In the last 20 years, Western elites tirelessly

  • trotted around the globe selling this prospectus:

  • Multiple parties fight for political power

  • and everyone voting on them

  • is the only path to salvation

  • to the long-suffering developing world.

  • Those who buy the prospectus are destined for success.

  • Those who do not are doomed to fail.

  • But this time, the Chinese didn't buy it.

  • Fool me once ...

  • (Laughter)

  • The rest is history.

  • In just 30 years, China went from

  • one of the poorest agricultural countries in the world

  • to its second-largest economy.

  • Six hundred fifty million people

  • were lifted out of poverty.

  • Eighty percent of the entire world's poverty alleviation

  • during that period happened in China.

  • In other words, all the new and old democracies

  • put together amounted to a mere fraction

  • of what a single, one-party state did without voting.

  • See, I grew up on this stuff: food stamps.

  • Meat was rationed to a few hundred grams

  • per person per month at one point.

  • Needless to say, I ate all my grandmother's portions.

  • So I asked myself, what's wrong with this picture?

  • Here I am in my hometown,

  • my business growing leaps and bounds.

  • Entrepreneurs are starting companies every day.

  • Middle class is expanding in speed and scale

  • unprecedented in human history.

  • Yet, according to the grand story,

  • none of this should be happening.

  • So I went and did the only thing I could. I studied it.

  • Yes, China is a one-party state

  • run by the Chinese Communist Party, the Party,

  • and they don't hold elections.

  • Three assumptions are made

  • by the dominant political theories of our time.

  • Such a system is operationally rigid,

  • politically closed, and morally illegitimate.

  • Well, the assumptions are wrong.

  • The opposites are true.

  • Adaptability, meritocracy, and legitimacy

  • are the three defining characteristics

  • of China's one-party system.

  • Now, most political scientists will tell us

  • that a one-party system is inherently incapable

  • of self-correction.

  • It won't last long because it cannot adapt.

  • Now here are the facts.

  • In 64 years of running the largest country in the world,

  • the range of the Party's policies has been wider

  • than any other country in recent memory,

  • from radical land collectivization to the Great Leap Forward,

  • then privatization of farmland,

  • then the Cultural Revolution,

  • then Deng Xiaoping's market reform,

  • then successor Jiang Zemin took the giant political step

  • of opening up Party membership to private businesspeople,

  • something unimaginable during Mao's rule.

  • So the Party self-corrects in rather dramatic fashions.

  • Institutionally, new rules get enacted

  • to correct previous dysfunctions.

  • For example, term limits.

  • Political leaders used to retain their positions for life,

  • and they used that to accumulate power

  • and perpetuate their rules.

  • Mao was the father of modern China,

  • yet his prolonged rule led to disastrous mistakes.

  • So the Party instituted term limits

  • with mandatory retirement age of 68 to 70.

  • One thing we often hear is,

  • "Political reforms have lagged far behind economic reforms,"

  • and "China is in dire need of political reform."

  • But this claim is a rhetorical trap

  • hidden behind a political bias.

  • See, some have decided a priori

  • what kinds of changes they want to see,

  • and only such changes can be called political reform.

  • The truth is, political reforms have never stopped.

  • Compared with 30 years ago, 20 years, even 10 years ago,

  • every aspect of Chinese society,

  • how the country is governed,

  • from the most local level to the highest center,

  • are unrecognizable today.

  • Now such changes are simply not possible

  • without political reforms of the most fundamental kind.

  • Now I would venture to suggest the Party

  • is the world's leading expert in political reform.

  • The second assumption is that in a one-party state,

  • power gets concentrated in the hands of the few,

  • and bad governance and corruption follow.

  • Indeed, corruption is a big problem,

  • but let's first look at the larger context.

  • Now, this may be counterintuitive to you.

  • The Party happens to be one of the most meritocratic

  • political institutions in the world today.

  • China's highest ruling body, the Politburo, has 25 members.

  • In the most recent one, only five of them

  • came from a background of privilege, so-called princelings.

  • The other 20, including the president and the premier,

  • came from entirely ordinary backgrounds.

  • In the larger central committee of 300 or more,

  • the percentage of those who were born

  • into power and wealth was even smaller.

  • The vast majority of senior Chinese leaders

  • worked and competed their way to the top.

  • Compare that with the ruling elites

  • in both developed and developing countries,

  • I think you'll find the Party being near the top

  • in upward mobility.

  • The question then is, how could that be possible

  • in a system run by one party?

  • Now we come to a powerful political institution,

  • little-known to Westerners:

  • the Party's Organization Department.

  • The department functions like a giant

  • human resource engine that would be the envy

  • of even some of the most successful corporations.

  • It operates a rotating pyramid

  • made up of three components:

  • civil service, state-owned enterprises,

  • and social organizations like a university

  • or a community program.

  • They form separate yet integrated career paths

  • for Chinese officials.

  • They recruit college grads into entry-level positions

  • in all three tracks, and they start from the bottom,

  • called "keyuan" [clerk].

  • Then they could get promoted

  • through four increasingly elite ranks:

  • fuke [deputy section manager], ke [section manager], fuchu [deputy division manager], and chu [division manger].

  • Now these are not moves from "Karate Kid," okay?

  • It's serious business.

  • The range of positions is wide,

  • from running health care in a village

  • to foreign investment in a city district

  • to manager in a company.

  • Once a year, the department reviews their performance.

  • They interview their superiors, their peers,

  • their subordinates. They vet their personal conduct.

  • They conduct public opinion surveys.

  • Then they promote the winners.

  • Throughout their careers, these cadres

  • can move through and out of all three tracks.

  • Over time, the good ones move beyond the four base levels

  • to the fuju [deputy bureau chief] and ju [bureau chief] levels.

  • There, they enter high officialdom.

  • By that point, a typical assignment will be

  • to manage a district with a population in the millions

  • or a company with hundreds of millions of dollars in revenue.

  • Just to show you how competitive the system is,

  • in 2012, there were 900,000 fuke and ke levels,

  • 600,000 fuchu and chu levels,

  • and only 40,000 fuju and ju levels.

  • After the ju levels,

  • the best few move further up several more ranks,

  • and eventually make it to the Central Committee.

  • The process takes two to three decades.

  • Does patronage play a role? Yes, of course.

  • But merit remains the fundamental driver.

  • In essence, the Organization Department runs

  • a modernized version of China's centuries-old

  • mentoring system.

  • China's new president, Xi Jinping,

  • is the son of a former leader, which is very unusual,

  • first of his kind to make the top job.

  • Even for him, the career took 30 years.

  • He started as a village manager,

  • and by the time he entered the Politburo,

  • he had managed areas with a total population

  • of 150 million people

  • and combined GDPs of 1.5 trillion U.S. dollars.

  • Now, please don't get me wrong, okay?

  • This is not a put-down of anyone. It's just a statement of fact.

  • George W. Bush, remember him?

  • This is not a put-down.

  • (Laughter)

  • Before becoming governor of Texas,

  • or Barack Obama before running for president,

  • could not make even a small county manager