Authoritarian Adaptation and Great Power Competition

The United States and its liberal partners—notably Japan, the European Union (EU), and the United Kingdom (UK)—have entered an era of great power competition against authoritarian states. Over the past decade, Russia has been using various tools of statecraft, most recently its full-scale military invasion of Ukraine in February 2022, likely with the goal of recreating a sphere of influence in its near abroad. China is regarded as America’s “pacing challenge”: a great power that is assuming a larger role in global governance and that is increasingly asserting its interests with the threat of military force. Some observers interpret remarks by Chinese Communist Party (CCP) General Secretary Xi Jinping as signaling the goal of “reunification” with Taiwan by 2049, although others warn that China could take military action much sooner.^[1] Achieving control over Taiwan would include China’s assertion of greater control over democratic Taiwan—minimally through punitive diplomatic and economic statecraft, or maximally through the use of military force via a blockade or invasion. This era of geopolitical competition between liberal and authoritarian great powers will affect the peace or instability of the international system, the nature of economic development and global trade, and the character of international order.^[2]

Many observers believe that authoritarian countries are competing at a significant disadvantage.^[3] Such scholars draw upon prominent theories about the effects of domestic institutions on economic growth and innovation.^[4] In a globalized age in which information technology underpins both economic competitiveness and military power, many of these scholars argue that democracies have an advantage, claiming that autocracies with “extractive” institutions are unable to foster innovation. In this view, China will fail to transition from input-based growth to innovation-based growth, fall into what is known as the middle income trap, and see its rise sputter.

China may be a more formidable great power competitor than many observers currently predict.

In this essay, I argue that authoritarian states have proven themselves more capable than many scholars expect.^[5] At times, changes in the global economy indeed advantaged liberal regimes, making countries with more extractive institutions less competitive.^[6] However, some autocracies adapted, shifting their methods of control and adopting what are known as inclusive economic policies. This argument explains China’s success in terms of economic growth (and increasingly innovation). It also suggests that China may be a more formidable great power competitor than many observers currently predict. To be sure, skeptics who point to greater statism and repression under Xi may be correct that such policies will undermine innovation, slowing Chinese growth.^[7] Alternatively, the regime may do a better job than expected managing the tensions between the inclusive policies needed for innovation and the extractive controls required for the CCP to stay in power.

The first section of this essay briefly describes key elements of national power for great power competition. The second section lays out the argument about what scholars have called a “democratic advantage” and critiques it with an argument about authoritarian adaptation. The following two sections examine this phenomenon in the nineteenth and twentieth centuries, respectively. The fifth section examines authoritarian adaption in modern China, and then the essay ends with a discussion about China’s future innovation performance.

Debating China’s Rise to Great Power

Since the start of China’s stunning economic rise, observers have wondered if China could join the ranks of the world’s great powers. A vast literature debates the nature of power and great power, as well as how to measure it.^[8] Here, I define a great power as one of the world’s most materially powerful countries in terms of population, economic size, technological sophistication, and military power. Great powers need not only large economies but also high levels of technological sophistication.^[9] Technological innovations, as scholars Karen Rasler and William Thompson have written, “give rise to new commercial and industrial sectors (leading sectors) and ways of doing things that are highly significant in propelling industrial and economic growth.”^[10] The history of warfare shows that technological innovation, paired with the introduction of innovative tactics, confers significant military advantages as well.^[11]

China already satisfies many of the criteria to qualify as a great power. It has a massive population, at over 1.4 billion people.^[12] It has the world’s second-largest economy in terms of aggregate size (and the largest economy if one adjusts for purchasing power parity).^[13] Meanwhile, China’s military modernization and buildup has transformed the balance of power in East Asia, allowing Beijing to challenge the U.S. military’s ability to move safely around the region and threaten U.S. regional military bases.^[14] To be sure, China lacks the scale to rival the U.S. military globally,^[15] but it has developed the military capabilities to meet scholar John Mearsheimer’s benchmark for qualifying as a great power by being able to “put up a serious fight”^[16] against the world’s leading power. In this case, that refers to China’s ability to fight the United States in East Asia, where observers describe war over Taiwan as increasingly likely.^[17]

Skeptics have argued that authoritarian China will not be able to develop the technological capabilities of a great power.

Although China has the scale to rival the United States, observers have questioned China’s technological sophistication. Prominent studies have concluded that China “is at a fundamentally different technological level” than the United States.^[18] Furthermore, Andrea Gilli and Mauro Gilli have written that today’s vastly more complex weaponry “has exponentially raised the absorptive capacity requirements to assimilate foreign know-how and experience and to imitate foreign military platforms.”^[19] According to these studies, China—seen as reliant on imitation, intellectual property theft, and so forth—is unable to successfully innovate, and by extension unable to successfully shift to a growth model that requires innovation-based growth.^[20] Skeptics thus have argued that authoritarian China will not be able to develop the technological capabilities of a great power, asserting that Beijing will not be able to catch up to the United States technologically or economically.

The Democratic Advantage Argument

In debates about why economies thrive, a prominent body of literature emphasizes the role of domestic institutions. These are the so-called rules of the game that connect people to their government and the economy and regulate their participation therein. Political institutions include rights and rules about political competition (such as those related to elections, voting, and free speech and assembly). Economic institutions include rights and rules about economic participation (such as rules on property rights, corporate governance, finance, and so on).

An influential body of literature holds that relatively more inclusive institutions within democracies foster economic growth and innovation.^[21] In this view, democracies provide public goods, have higher levels of openness, and tend to create meritocratic bureaucracies that improve governance and reduce corruption.^[22] Property rights, independent judicial systems, and constraints on the executive branch are key institutional underpinnings that attract foreign direct investment (FDI), which provides capital and facilitates technology transfer. Democracies encourage innovation through a churn of ideas created by freedoms of information, speech, and mobility and through vibrant civil societies including private businesses, universities, independent media outlets, and civil society organizations.

Scholars argue that the dawn of the information age created particular advantages for democracies in terms of economic competition. The Third Information Age created profound productivity improvements, as well as what was billed as a revolution in military affairs, from the rise of computers, electronics, robotics, and telecommunications.^[23] Furthermore, innovation in transportation and communication technologies, and falling barriers to the flow of capital, encouraged the globalization of production.^[24] In this new era, countries thrived by fostering high levels of human capital, connecting to global trade and financial networks, and making themselves attractive destinations for FDI, which provides access to not only capital but also cutting-edge technologies. In the literature on new institutional economics, scholars thus argued that countries with open access orders and/or inclusive institutions enjoyed significant advantages in the global economy of the late twentieth century.^[25] Some international relations scholars argue that, because of these strengths, democracies have advantages relative to illiberal states in great power competition.^[26]

According to the literature on institutions, authoritarian countries are disadvantaged because they do not, and cannot, create conditions conducive to innovation.

According to the literature on institutions, authoritarian countries are disadvantaged because they do not, and cannot, create conditions conducive to innovation. To placate their political rivals and earn the loyalty of supporters, dictators pursue what are termed extractive policies. Rather than provide public goods to benefit the entire country, they provide private goods (rent-seeking opportunities) to a narrow group of people known as the selectorate.^[27] Such corruption, and the underprovision of public goods, inhibit economic growth. Under such conditions, human capital tends to remain underdeveloped given inadequate public spending on education and health care. A lack of constraints on leaders leads to expropriation and interference in monetary policy and exchange rates: such behaviors destabilize the economy and scare investors, undermining capital formation and technology transfer. Furthermore, to maintain control, dictators restrict speech, mobility, information, civil society, and other freedoms, impediments that reduce the exchange of ideas and creativity and inhibit the formation of regional and global networks that encourage innovation.^[28]

The Limits of the Democratic Advantage Argument

The democratic advantage argument is logically compelling, and one can think of many examples in which authoritarian regimes stagnated economically for precisely the reasons the argument specifies. However, the argument papers over significant heterogeneity among authoritarian regimes. As scholar Joseph Wright has written, “we are beginning to understand that variation among different types of authoritarian polities can perhaps be as important as the distinction between democracies and dictatorships.”^[29] Scholar Barbara Geddes’s pathbreaking work distinguished between different kinds of authoritarian regimes (such as “personalist” regimes, “single-party dictatorships,” and so on).^[30] A burgeoning body of literature on authoritarian politics explores differences in how authoritarian regimes govern—and how this affects their regime stability and resilience,^[31] economic performance,^[32] military effectiveness,^[33] and so forth.

From the First Industrial Revolution to the Third (and soon the Fourth), some authoritarians responded to changes in the world by adapting their economic policies and their tools of control, and as a result they have been more competitive than expected.

Furthermore, authoritarian regimes vary across not only space but also time. Several scholars have pointed out that in response to changes in the late twentieth century, autocrats have adopted new tactics, both offensive and defensive.^[34] Similar adaptations occurred after the First Industrial Revolution. From the First Industrial Revolution to the Third (and soon the Fourth), some authoritarians responded to changes in the world by adapting their economic policies and their tools of control, and as a result they have been more competitive than expected.

The Industrial Challenge to Authoritarianism in the Nineteenth Century

Dramatic changes confronted authoritarian governments in the eighteenth- and nineteenth centuries. The Industrial Revolution transformed how countries amassed wealth, challenging their political-economic systems. Changes in the global economy interacted with ideas from the Enlightenment about the relationship between people and governments;^[35] the Enlightenment advocated the triumph of ideas and reason over ignorance and superstition, and its advocates encouraged the scientific method as a means of understanding the world and bettering society.

Agriculture and a reliance on labor provided by peasants, serfs, or slaves were dominant features of economies in the preindustrial era. Handicrafts, which accounted for a small share of economic activity, were produced by individual craftsmen in workshops, with low productivity and output. Highly extractive institutions governed labor in these premodern societies. In Russia, for example, upon the emancipation of the serfs in 1861, they comprised over a third of the population;^[36] sold along with the land on which they labored, they had endured lives of horrific deprivation and abuse. In premodern times, economies were small and markets were isolated. Education was the realm of the church, not the state. Students fortunate enough to afford the fees attended church or convent schools, where curricula emphasized religious training. In 1650, the UK and the Netherlands led with the highest literacy rates in Europe, at 53 percent of the population.^[37]

The Industrial Revolution transformed how societies acquired economic wealth. New technologies dramatically raised productivity in the agricultural sector, allowing more food production with less labor. The agrarian sector shrank as the industrial sector grew. Industry shifted to the factory model of production, a move made possible by the invention of the steam engine and improvements in iron and steel metallurgy. The shift from a low-productivity agrarian and handicraft economy to higher-productivity factory manufacturing created staggering leaps in productivity and output, first in Great Britain and later across Europe.^[38]

Absorption of new technologies necessitated important societal and institutional changes. For example, the proliferation of factories led to urbanization as people moved from rural to urban areas. This required people to have mobility, which was lacking in many societies (a state of affairs that kept peasants or serfs legally tied to the land). Railroads connected people, goods, markets, and ports. Furthermore, industrialization required educating the workforce. In the preindustrial era, workers added little value, so they needed little to no education. But for industrial work, the labor force needed basic literacy and arithmetic skills.

Arguments about a liberal advantage related to technological progress would expect authoritarian leaders to reject many of these reforms, and many leaders initially did. Fearing uprisings, elites were preoccupied with maintaining control of serfs and peasants. Prussia’s Friedrich Wilhelm II and his namesake successor pondered reforming education but demurred as officials argued that a truly national education system would require erasing class distinctions. Frederick Wilhelm III feared that “‘our precious lower class’ (unsere schatzbare Volksklasse) might be corrupted to aspire beyond its station.”^[39] In the era of the Qing Dynasty in China, the vast majority of the population received at most a year or two of education. “The government’s attitude toward popular schooling was one of benign neglect; not only were no subsidies given to the general run of elementary schools, they were neither certified nor inspected.”^[40] Government officials were selected through the system of imperial examination: a long and costly process that was only an option for males from high-income families.^[41]

Some authoritarian leaders also blanched at the development of railroads out of concern that increased mobility would fuel unrest. Frederick Wilhelm III rejected state railroad development because “the railways improved the mobility of the people and therefore the diffusion of new ideas.”^[42] In Austria, Emperor Francis I responded to proposals to build a national railway system by saying, “No, no, I will have nothing to do with it, lest the revolution might come into the country.”^[43] Russian leaders viewed railroads with similar wariness, fearing they would create a “socially dangerous mobility”; before 1842, Russia had built just a single railway line.^[44]

In China, the Qing emperors—facing multiple uprisings, including the catastrophic Taiping Rebellion starting in late 1850—resisted absorption of new transportation technologies. The Qing viewed railroads as “an explosive force too dangerous to handle” and saw them as threatening “the overthrow of time-honored custom and tradition, disturbance, and ruin.’”^[45] The Qing also limited the spread of steam-powered ships, fearing that the men who piloted junks (wooden ships powered by sail) would be unemployed and grow restive. Indeed, many such workers had joined the Taiping Rebellion.^[46] As one viceroy advised the court, “When myriads of rustic, hard-fisted people, trained to a single line of labor, like boating or carting, are suddenly superseded by steamers or locomotives, their privations from such forced idleness may prove a serious calamity and real danger to their rulers . . . .”^[47]

Some authoritarians also resisted adopting the factory model of production. Austrian and Russian leaders feared that workers would be more easily mobilized by anti-government agitators as they congregated in urban areas for factory work. Emperor Francis I of Austria thus banned the construction of new factories in Vienna in 1802.^[48] Similarly, in Russia under Tsar Nicholas I, the finance minister (Count Egor Kankrin) opposed the development of industry, prohibiting industrial expositions (a key means by which technologies diffused across Europe in this era). In 1849, when the Second Industrial Revolution was sweeping through Western Europe, Russia tightly restricted the construction of new factories in Moscow, explicitly forbidding cotton-spinning machines.^[49] In China, Qing leaders worried that the spread of new technologies would create unemployment among people working in handicrafts, which they feared would fuel uprisings.

These countries, which continued to produce textiles by hand weaving, saw their output lag dramatically behind countries that adopted the factory method of textile manufacturing. More generally, as the Industrial Revolution spread, economies that adapted—by building railroads, investing in human capital, and so on—thrived, while those that resisted reforms were left behind.

Countries that were slow to respond to the Industrial Revolution not only faced a growing wealth gap but also found themselves increasingly disadvantaged militarily. Nineteenth-century battlefields displayed an emerging gap between countries that were innovating with new technologies and those that were not.^[50] Navies that sailed iron ships powered by steam devastated wooden ships powered by sail.^[51] For example, a U.S. government report in 1855 noted the invaluable advantage of steam power, admiring the “remarkable ease” with which the British and French sent soldiers and supplies to Crimea.^[52] In China, a few thousand better-equipped British soldiers from halfway around the world defeated the Qing court’s military forces.^[53] Of the national humiliation, China’s Marquis Tseng wrote in a famous essay, “By the light of the burning palace which had been the pride and delight of her Emperors, she commenced to see that she had been asleep whilst all the world was up and doing; that she had been sleeping in the vacuous vortex of the storm of forces wildly whirling around her.”^[54]

Countries that laid railroad tracks and employed steam locomotives could more quickly mobilize and dispatch a larger number of military forces. The railroads spared troops punishing marches and supplied the front with food, clothes, tents, and medicine, in contrast to soldiers who historically often had perished from injury, disease, cold, or lack of provisions. Railroads could get troops into battle much more quickly, enabling more rapid reactions to attacks. The Opium Wars showed that, without railroads, “It took months to move military units on foot from one province to another, only to arrive short on supplies and exhausted.”^[55]

In addition to helping armies grow larger and become better supplied, technological advances made them far more lethal. Nineteenth-century battles showcased a dramatic evolution in artillery, ordnance, and firearms. As William J. Perry wrote, “Soldiers who had these new weapons had an order of magnitude more firepower than those who did not.”^[56] Russia’s defeat in 1856 in the Crimean War, observers argue, was in large part caused by its failure to capitalize on the technologies introduced in the Industrial Revolution. Austria-Hungary’s similar shortcomings led to its disappearance from the ranks of the great powers and its eventual collapse in 1918.^[57] In the Opium Wars, meanwhile, British troops fielded new flintlock and percussion cap muskets, whereas “the majority of Qing troops relied on traditional weapons such as the bow and arrow, spear, sword, and halberd. Those Qing soldiers who used firearms carried outdated matchlocks, unreliable and sometimes deadly to the user.”^[58]

Nineteenth-Century Authoritarian Adaptations

Economic problems and military disasters led countries that were previously skittish of reform to embrace new ways. An initially reluctant reformer, Prussia, saw the light after its 1806 military catastrophe at Jena-Auerstädt, which fueled the Prussian Reform Movement. Reforms included significant educational changes that extended educational opportunity not only to elites but to the broader public.^[59] These reforms reflected a new view of the people as “educable beings,” and they “established the state rather than the church as the final authority on matters related to education.”^[60] By 1837, 80 percent of Prussian children (ages six to fourteen) were enrolled in primary education.^[61] Authoritarian Germany became a science and technology (S&T) powerhouse, building industries around key “general purpose technologies” such as chemicals, electricity, and the internal combustion engine.^[62] The Prussian state embraced railroad development, using it to tremendous effect in the wars of German unification.

Russia’s awakening came later, in the wake of economic crisis and catastrophe in Crimea. Tsar Alexander II implemented sweeping educational, military, judicial, governmental, and financial reforms.^[63] Serfdom, specifically a policy known as ascription, had confined Russia’s serfs to rural areas. Russia’s most profound reform was the 1861 elimination of serfdom, which freed the serfs and allowed laborers to move to cities. Tsar Alexander II also reformed education and sought to improve the flow of ideas. A national education system provided free and secular education in primary schools, and the lower classes could now compete for spots at secondary schools.^[64] Reforms also targeted Russian universities: the tsar loosened government control, granting them greater independence such as control over their curricula (which the government had regulated under Tsar Nicholas I).^[65] Tsar Alexander II also sought to improve the level of intellectual activity in Russia by lifting censorship regulations that governed the dissemination of books and the media. For example, foreign works could now be read in universities without government censorship. Passports were issued, and foreign study, which had previously been prohibited, was encouraged.^[66]

Another important turnaround in Russia was its embrace of railroads. Tsar Alexander II oversaw massive railway expansion, implemented by reformer Sergei Witte: between 1850 and 1900, Russia went from having 500 kilometers of railroads to over 50,000.^[67] Better infrastructure enabled a dramatic expansion in grain exports.^[68]

Reforms were slow to come to China, and they ultimately floundered as the country descended into revolution. In the wake of China’s defeats in the Opium Wars, several leaders during the Self-Strengthening Movement argued for adopting new technologies and for changes in education, trade, and other institutions. Reformer Xue Fucheng argued the following:

unless we change, the Westerners will be rich and we poor. We should excel in technology and the manufacture of machinery; unless we change, they will be skillful and we clumsy. Steamships, trains, and the telegraph should be adopted; unless we change the Westerners will be quick and we slow . . . unless we change the Westerners will cooperate with each other and we shall stand isolated; they will be strong and we shall be weak. ^[69]

The reformist Self-Strengthening Movement failed amid conservative backlash. In the wake of China’s defeat at the hands of Japan, a state whose leaders once kowtowed to the Chinese emperor, further reforms were attempted (during the Hundred Days of Reform in 1898). These measures sparked a coup launched by Empress Dowager Cixi. China exploded into revolution, and the Qing dynasty fell in 1911.

Authoritarian rulers found ways of adapting their tools of control to the new industrial era.

Authoritarian rulers found ways of adapting their tools of control to the new industrial era. For example, though they had feared the prospect of giving ideas to the masses, elites discovered that national education provided both a powerful nation-building tool and a means of disseminating pro-regime ideas.^[70] In Prussia, education reforms were conducted in ways to encourage conservatism and national unity. Officials “saw in schooling hope for controlling the social fluidity of early nineteenth-century Prussia”; conservatives believed that more effective national education would inculcate a sense of national unity that would reduce division and revolutionary tendencies.^[71]

In sum, in response to the Industrial Revolution, some autocracies successfully adapted their economic policies and tools of control. As a result, these regimes were able to amass wealth and develop cutting-edge technologies, which they used to compete in the brutal wars and competition for influence in the nineteenth and early twentieth centuries.

The Informational Challenge to Authoritarianism in the Late Twentieth Century

Developments in the late twentieth century again challenged authoritarian regimes. Once again, economic and technological changes threatened to undermine the competitiveness of authoritarian regimes relative to more inclusive societies.

After World War II, great power competition divided the global economy. To the east, the Soviet Union and its partner countries through the Warsaw Pact and the Council for Mutual Economic Assistance (COMECON) operated according to authoritarian (Communist) political institutions and centralized economic planning. They faced a rival, U.S.-dominated sphere that included Western Europe, Canada, and U.S. allies in East Asia (notably Australia, Japan, South Korea, and Taiwan). Most of these countries were democracies, except for South Korea and Taiwan, which liberalized in the 1990s. Though highly diverse, all of their economies operated according to capitalist market systems.

Each of the two spheres was integrated internally but had limited ties with the other. Within the COMECON bloc, for example, the Soviet Union dispersed economic aid, encouraged scientific and cultural exchanges, and pursued economic and technological cooperation. The United States and its partners imposed sanctions (under the Coordinating Committee for Multilateral Export Controls) to prevent the Warsaw Pact countries from accessing militarily relevant advanced technologies.^[72]

The United States and its partners developed innovations that once again transformed the global economy. Starting in the 1960s, breakthroughs in information technologies ushered in the Third Industrial Revolution. This era saw the rise of computers, electronics, aerospace technology, robotics, and telecommunications.^[73] In particular, computers, semiconductors, and the internet were key general-purpose technologies that sparked innovations across entire economies. The Western countries built on these innovations in communications and transportation technologies, combined with a lifting of capital controls to facilitate FDI, so as to create a globalized network of production.^[74]

The Soviet-led bloc, by contrast, was left behind in the Third Industrial Revolution, as many authoritarians had been in the first. The planned economy model disincentivized innovation, and political isolation from the more innovative bloc deprived the COMECON countries of cutting-edge technologies. The Soviet Union was the world’s fastest-growing economy (aside from Japan) between 1928 and 1970.^[75] In the early years of the Cold War, Soviet scientists and engineers produced cutting-edge technologies in chemistry, physics, and aerospace engineering. However, with the development of information technology, the Soviet system was unable to keep pace.^[76] Soviet economic growth slowed after the 1960s and dropped even more steeply in the 1970s. After 1985, according to estimates highly favorable to the Soviet Union, “the United States had on average grown 1 percent per year faster than the Soviet Union over the preceding decade.” ^[77] A yawning gap in GDP per capita emerged between the two spheres and their superpower leaders.

In the fierce geopolitical competition of the Cold War, the Soviets were grimly aware of the military implications of falling behind the technological cutting edge. As scholar William Odom has written, “It was becoming clear to Soviet military leaders that they were facing a third wave of new military technologies. The developments in micro-electronics, the semi-conductor revolution and its impact on computers, distributed processing, and digital communications were affecting many aspects of military equipment and weaponry. . . . [The] new revolution in military affairs was demanding forces and weapons that the Soviet scientific-technological and industrial bases could not provide.”^[78]

The Soviets lagged. East Germany lagged. North Korea, whose fast economic growth after the Korean War had terrified the South, similarly faltered. China, which had enjoyed some economic growth under the centralization overseen by Chairman Mao Zedong, was engulfed in the turmoil of the Cultural Revolution. The kinds of policies that fostered growth in a globalized information age seemed incompatible with centrally planned, Communist economies and with authoritarian governance more broadly.

Success in the information age depended on a range of policies. First, countries had to cultivate high levels of human capital. High-quality scientific and engineering personnel were necessary to foster innovation in increasingly complex and interconnected fields. Second, countries needed to engage with the open trading and financial system and allow mobility among societies. Such mobility included encouraging their scientists and engineers to connect with global S&T networks. Furthermore, countries that could attract FDI benefitted from access to capital as well as cutting-edge technology. Developing countries also could rely on assistance from the post–World War II development banks and institutions, which had become an important source of development finance and expertise.^[79] Attracting investors and winning the support of the development banks meant staying in the good graces of the rich Western industrialized economies.

The democratic advantage argument expects these policies to conflict with the demands of authoritarian control. As noted earlier, authoritarian regimes provide private (not public goods); their methods of control undermine macroeconomic stability, spooking investors and development banks. To prevent revolution, dictators restrict speech, information, mobility, civil society, and other freedoms, reducing creative or critical thought and the flow of ideas.

Twentieth-Century Authoritarian Adaptation

Just as some autocracies successfully adapted to the challenges of the First and Second Industrial Revolutions, some also did so in response to the challenges of the third. During and since the twentieth century, smart authoritarians have recognized that traditional methods of control made their economies less competitive. Thus, some leaders adapted, changing both their methods of control as well as their economic policies.^[80]

Smart authoritarians cultivated the high levels of human capital necessary for economic competitiveness.

Smart authoritarians cultivated the high levels of human capital necessary for economic competitiveness. For example, investments in education and other public goods underpinned the rapid economic rises of the Four Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan).^[81] Clever dictators provided public goods while withholding what are termed coordination goods, which empower people to move against the regime.^[82] Furthermore, dictators figured out how to provide the private goods that kept their domestic supporters happy, while minimizing the economically enervating effects of rent-seeking: they did so by engaging in less economically damaging kinds of corruption and by confining corruption to certain inward-facing ministries while creating professionalism in key economic offices.^[83]

Smart authoritarians also accepted greater institutional constraints. In contrast to personalist dictatorships, single- or multi-party regimes created political parties and legislatures, and many even held elections.^[84] With an eye toward attracting global capital, many regimes upheld property rights, maintained macroeconomic stability, and repaid loans.^[85] Scholars have noted that autocracies also vary in the efficiency and fairness of their judicial systems.^[86] In Singapore, for example, the dominant People’s Action Party uses the courts to weaken its political opponents, yet the judiciary is formally independent, an arrangement designed to convince inventors and foreign investors that their property rights will be upheld. As scholar Gordon Silverstein has argued, “Singapore forces us to recognize the error so many Western politicians, pundits, and academics make in conflating liberal democracy—and its maximization of individual liberty—with the rule of law.”^[87]

Furthermore, smart authoritarians, having recognized the many benefits of civil society, created a version of it compatible with their interests. Civil society helps negotiate reforms between governments and their citizens, communicates people’s concerns, provides some public services, and encourages the flow of ideas.^[88] Autocrats also created government-operated quasi-nongovernmental organizations.^[89] Some authoritarian leaders allowed the rise of nominally private media (albeit outlets still controlled by the government). In response to the rise of digital media, dictators moved beyond censorship to adopt innovative tools of information control.^[90] In these ways, authoritarians enjoyed the benefits of private media (such as increased information flows and monitoring of government performance and public opinion) without suffering the costs of political instability.^[91]

Smart authoritarians, wary of an increasingly bright global spotlight, shifted from “high” to “low”-intensity repression.^[92] Sergei Guriev and Daniel Treisman have argued that autocrats are changing their strategies of repression; they “use violence sparingly. They prefer the ankle bracelet to the Gulag.”^[93] Instead of violently suppressing opposition, as scholars Steven Levitsky and Lucan A. Way have written, modern autocracies rely more on carrots and on less obvious methods of repression.^[94] Dictators today are more likely to undermine opponents using character assassination and lawsuits for nonpolitical crimes. “Informational authoritarianism,” as Guriev and Treisman have called it, is “better adapted to a world of open borders, international media, and knowledge-based economies.”^[95] In making this point, they have noted examples such as Singapore’s former leader Lee Kuan Yew, former president Alberto Fujimori of Peru, Prime Minister Viktor Orbán of Hungary, and others. Through such adaptations, authoritarian regimes have grown more resilient, have presided over more economic growth, and have reversed the trend of democratization that characterized the late twentieth century.^[96]

Authoritarian Adaptation in China

China’s nineteenth-century decline, its weakness under Mao, and its twentieth-century rise exemplify the phenomenon of authoritarian adaptation (both failed and successful). As described earlier, the Qing Dynasty’s delayed adoption of key technologies of the First and Second Industrial Revolutions precipitated China’s defeat in the Opium Wars, which led to punishing indemnities and internal uprisings. Once the dominant country in the region and the world’s largest economy, China slid into decline, hacked apart by other great powers. After a tumultuous period in which China was essentially a failed state, Mao and the CCP founded the People’s Republic of China in 1949.

Mao’s highly extractive and repressive rule kept China in poverty until his death in 1976. Repression under Mao was widespread, brutal, and highly public.^[97] Mao presided over numerous campaigns, notably the Great Leap Forward and the Cultural Revolution, the former of which led to the deaths of tens of millions of Chinese people.^[98] The Cultural Revolution, which targeted intellectuals and closed universities, set back Chinese scientific prowess a generation. Mao ruled as a personalist leader with total control: the party was not a check on his power but a vehicle for advancing Maoism. He allowed no civil society: the CCP relied on “a giant press apparatus under rigid control and tight supervision” as a tool of political education, and no private media existed.^[99] Under Mao, China was diplomatically and economically isolated, even—after the early 1960s—from its previous Soviet patron.

After Mao’s death, the CCP shifted to a less extractive and less repressive regime under Mao’s eventual successor, Deng Xiaoping. Deng institutionalized the party by creating term limits for top government posts and seeking to professionalize the civil service.^[100] Experimental economic reforms overseen by Deng and CCP general secretary Zhao Ziyang transformed the economy, giving rise to a private sector that expanded over time.^[101] Seeking to attract FDI, the government improved property rights, passing an intellectual property rights law (the Patent Law of the People’s Republic of China) that took effect in 1985. It amended intellectual property law in the early 1990s “to make it more aligned with those of many industrial nations.”^[102] Reforms required for China’s ascension to the World Trade Organization also strengthened China’s intellectual property laws, which increased FDI inflows and technology transfer.

During the early decades of this reform era, the CCP also allowed civil society to expand. As demands on the government grew during the transition to a more market-based economy,^[103] the party began permitting nongovernmental organizations, and the number of registered civil society organizations soared.^[104] As part of the Three Represents policy under Deng’s successor Jiang Zemin, the CCP embraced the private business sector into the party.^[105] The CCP also allowed the rise of private media, yet the government controls these nominally independent outlets through a range of sophisticated strategies.^[106] Scholars have found that Chinese people do not feel the presence of censors: over time, censorship has become normalized.^[107] Yet China’s media landscape remains highly extractive: Reporters Without Borders ranked China 177 out of 180 countries in terms of press freedom.^[108]

Finally, the CCP monitors perceived opponents to the regime and engages in intense control measures. Dissidents often face house arrest and often worse penalties. However, in contrast to the Mao era, the CCP has used a variety of strategies to shift repression from public view to the private sphere, such as “dissident calendars,” “relational repression,” and other methods.^[109] By relying on advanced facial recognition technology, big data, and a “social credit” system, repression is becoming more invasive yet less overt.^[110]

Smart Authoritarianism and Chinese Innovation

Many observers argue that although authoritarian growth is possible (as is evident from the experience of the newly industrializing economies of East Asia and Deng’s China), such growth will not be sustainable past the middle-income level.^[111] At that stage, these scholars contend, growth must come from fostering innovation. These skeptics argue that authoritarian China will fail to create the necessary conditions for innovation.^[112]

The skeptics are correct that many extractive practices in China undermine innovation there. Innovation scholars, including domestic academics, note that China has problems with the “software” or micro-foundations of innovation. these problems include matters like the relationships between universities, the government, and the private sector; the way labs are managed; corruption in how promotions and grants are handed out; and problems in institutions such as publishing and peer review.^[113] Furthermore, several CCP policies inhibit connectivity and mobility among the Chinese people, undermining the formations of networks that encourage innovation.^[114] Censorship, propaganda, and Xi’s crackdown on civil society also undermine creativity and slow the exchange of ideas.^[115] Critics of Xi’s assertive foreign policy posture characterize this policy as self-defeating because it is souring China’s relationships with key economic and technological partners (although Xi may be softening his policies).^[116]

Striving for Innovation

Although many CCP policies discourage innovation, the regime supports innovation in numerous ways.

Although many CCP policies discourage innovation, the regime supports innovation in numerous ways.^[117] The CCP is investing heavily in expanding its high-skilled S&T workforce.^[118] For example, China is increasing the overall level of university attendance among its citizens; from 2000 to 2018, enrollment in higher education rose from around 8 percent to 50 percent. Chinese universities now graduate more than 8 million students per year, a number forecasted to grow by 300 percent by 2030.^[119] Through the Made in China 2025 program and many other initiatives, the CCP is expanding S&T graduate programs, subsidizing research in key frontier technologies, and trying to recruit scientists (notably Chinese abroad) to China. The country’s education system still requires tremendous development: most of the population still does not receive a high school degree.^[120] However, China’s education system has improved significantly in recent years as part of the government’s innovation push.

The CCP also encourages connections with global networks. China is highly engaged in the global economy: it is the top trading partner for most countries in East Asia and for many others around the world. China sends more than 1 million students abroad to study each year, more than any other country in the world.^[121] And Chinese researchers are co-authoring with overseas partners (most commonly with Americans, although this may change given souring relations). Despite many extractive institutions, Chinese cities now rank among the top ten global innovation clusters. Three Chinese cities have the world’s highest amount of venture capital investment (Beijing, Shanghai, and Shenzhen); three have the highest number of unicorn startup companies (Beijing, Shanghai, and Hangzhou), and two Chinese areas lead in patent filings (Shenzhen–Hong Kong and Beijing).^[122] The Pearl River Delta region in southern China has over 100 million residents, and it features nine Chinese cities (including Hong Kong and Macau). The region surpassed Tokyo to become the world’s largest megacity in 2015.^[123] It “resembles Silicon Valley in being not a singular geography but a globally interconnected one, attracting foreign investment and collaboration and exporting its influence on the world’s technology infrastructure.”^[124]

China’s Innovation Successes

As a result of these investments, China’s economy is succeeding in innovating in many high-tech sectors. In consumer electronics, Lenovo and Huawei topped a list of Chinese brands with growing global prominence, which also featured Xiaomi and Anker.^[125] In telecommunications, top competitors include Cheetah Mobile, China Mobile, and China Telecom: the latter two rank in the top ten globally in terms of revenue.^[126] Huawei is both a well-known global brand as well as the world’s largest global telecommunications equipment producer (while another Chinese firm, ZTE, is fourth).^[127] Chinese firms made up four of the ten largest internet companies in the world as of December 2022 (Tencent, Alibaba, JD.com, and Baidu).^[128] China also leads the world in the commercial drone market, in which it has introduced new applications such as photography, film-making, construction, and ecommerce delivery.^[129] Chinese automakers, improving products due to joint ventures and foreign acquisitions, are increasingly exporting to several countries, ^[130] and China is intent on dominating the electric vehicle (EV) market. Success in the EV industry will be supported by success in battery design and manufacturing—an area in which China is already dominant.^[131] Additionally, China is a global leader in high-speed rail, a sector in which it held a 75 percent market share as of 2019, and the country has also produced the “world’s fastest [Maglev] train.”^[132] 

Meanwhile, Chinese firms are increasingly influential in display screen innovation and manufacturing. Chinese firms conquered the market for liquid crystal display screens by undercutting South Korean firms, and they are now seeking to supply Apple with the next generation of displays—namely organic light-emitting diodes (OLED) displays, which are much more challenging to produce.^[133] OLEDs are key components not only in smartphones and tablets but also in vehicle-mounted displays, televisions, and emerging tech such as wearable gadgets and virtual reality devices. Samsung still dominates, but “Korea [is] on its toes as China catches up.”^[134]

Finally, Chinese firms represent the cutting-edge in financial technology. Over time, the highly innovative and competitive industry has used digital technology to pursue what the financial sector calls inclusive banking and investment: connecting hundreds of millions of Chinese people with no financial history to the economy. Chinese consumers rely heavily on mobile payments, which they used to spend $42 trillion on digital payments in 2020.^[135] The Chinese market has thirteen fintech unicorn firms started by domestic entrepreneurs. As a report from McKinsey & Company has noted, “The country leads the world when it comes to total users and market size; financial-technology (or fintech) start-ups are mushrooming, as are company valuations; capital markets are aggressively pursuing the Internet finance industry; and consumer behavior is altering dramatically.”^[136]

Across a range of high-tech sectors, Chinese firms are winning market share (away from American, European, Japanese, and South Korean firms), while achieving greater global recognition.

In sum, across a range of high-tech sectors, Chinese firms are winning market share (away from American, European, Japanese, and South Korean firms), while achieving greater global recognition. China faces many challenges, particularly in the semiconductor industry—a vital sector in which Chinese efforts to climb up the technology ladder will be slowed by U.S. export controls (although China will likely maintain access to technology from other advanced countries).

China’s Innovation Compared

China’s innovative economy is reflected in global innovation metrics, which show the country rising to be an innovation leader over the past decade.^[137] First, China now receives the world’s fourth-largest number of triadic patents. Such patents capture high-quality inventions as they are granted by three of the world’s most demanding patent offices (those of the EU, Japan, and the United States). On this metric, China falls far short of the two leaders, Japan and the United States (as do the rest of the pack). However, in recent years, China has overtaken highly innovative countries such as South Korea, Singapore, Israel, France, and the UK.

Second, China is producing high-quality research, as measured by highly cited S&T journal articles. China has risen above the world average and now Chinese researchers are credited for writing the third-largest number of highly cited articles, below the United States and the EU. The respected Nature Index also shows Chinese S&T research growing more influential. According to this index, the United States still leads, but since 2012, China’s score has risen from 24 percent to 67 percent as high as the United States’ score, as Andrew Kennedy has pointed out.^[138] A Nature article commented that China’s rise in the rankings for high-quality science publications has been “meteoric,” while noting that China is “closing the gap [with the United States] with astonishing rapidity.”^[139] In sum, contrary to the views of skeptics who argued that China’s autocratic institutions would prevent it from fostering innovation, China has developed cutting-edge S&T capabilities.

Furthermore, China appears to be a leader in the technologies of the nascent Fourth Industrial Revolution. Several frontier technologies—including artificial intelligence (AI), quantum technologies, and biotechnology—are expected to drive productivity and thus economic growth. As researcher Jon Bateman of the Carnegie Endowment has noted, “China has already become the global leader in 5G telecommunications equipment (a crux of the future digital backbone), as well as commercial drones, Internet of Things devices, mobile payments, solar cells, and smart cities, among other technology areas.” Bateman added, “And where China does not lead, it is often a world-class competitor.”^[140] In particular, AI is seen as the most significant engine of future economic productivity and growth. As in the cases of mechanization, electricity, and computers, AI is expected to be a “general purpose technology” that transforms all sectors of an economy, as well as military technology and tactics.^[141] China is investing heavily in AI and other frontier technologies and is emerging as a top competitor.^[142] In AI, China and the United States are the two global leaders, vying for first place according to various metrics.^[143] China ranks first in the world in terms of high-tech AI exports and educational investment; it ranks second to the United States in terms of AI talent concentration and patenting.^[144] Despite a significant American head start in AI research, China has made remarkable strides catching up.

Conclusion

Many observers of great power politics today see the United States as operating at a significant advantage as it competes with two major authoritarian challengers, Russia and China. Skeptics of China’s capacity for innovation doubt that the country can sustain its economic rise, arguing that it faces numerous domestic challenges and that its authoritarian institutions will prevent the country from fostering the innovation necessary for sustained growth.

Arguments about a democratic advantage, however, fail to explain significant variation in authoritarian regimes across both time and space. And critically, they neglect to consider how authoritarian leaders have adapted to changes in global norms and the global economy. From the First to the Third Industrial Revolutions, instead of being felled by adverse shifts that favored more liberal countries, a subset of smart authoritarians adapted their methods of control. Such governments adopted less repressive tools and more inclusive economic policies such as providing public goods. Smart authoritarians have thus been more competitive than many observers expected. China’s spectacular economic rise was due in part to a shift from totalitarianism under Mao to a smarter brand of authoritarianism under Deng. And recently, China has become an innovation leader, a trend that likely indicates that its economy will continue to grow (albeit at slower rates than before).^[145]

Just as the CCP shifted before, it could shift again. Some observers have described a neoauthoritarian turn that they have argued will undermine China’s future economic performance. Such scholars have argued that, in the past decade or so, the CCP has been cracking down on what it sees as dangerous levels of openness, with the goal of returning the party to a leading role with greater political control.^[146] As was starkly evident at the Twentieth Party Congress in October 2022, Xi is consolidating political power (moving toward greater personalism and away from the institutionalization pursued by Deng).^[147] The CCP’s efforts to reduce the size of the state-run economic sector have slowed, and the party is seeking greater control over private-sector innovation. Many observers have argued that these trends will have a pernicious effect on China’s ability to innovate, which is essential at this stage of its growth and which is essential for China to be able to compete against the United States.

Such observers may be correct; in this view, China’s shift to smart authoritarianism enabled it to innovate, but then its shift back toward a blunter, more repressive form of authoritarianism will choke off innovation and lead China to fall off the technological frontier. This view may be proven true. If this is the case, it would be a victory for the institutions-focused arguments (and modernization theory): smart authoritarianism was a brief but unsustainable interlude.

But there are two points to keep in mind. First, even if this period was just an interlude, in China the interlude lasted for four decades, during which China rose to great-power status and acquired the industrial and technological capabilities to engage in a rivalry with the United States.^[148] This is notable even if smart authoritarianism proves unsustainable.

Although Xi’s brand of authoritarianism is more repressive and statist than those of previous Chinese leaders, it may prove smart enough to permit innovation.

The second point is that the skeptics may be wrong: Chinese innovation may continue. The world is in new territory here. Although Xi’s brand of authoritarianism is more repressive and statist than those of previous Chinese leaders, it may prove smart enough to permit innovation. The future of Chinese S&T depends on specific CCP policies—whether it continues to develop the microfoundations that support innovation, or whether an interfering and corrupt party stifles S&T progress. Furthermore, no one (including Xi) knows how much repression a modern, globalized economy can tolerate and still generate innovation, just as no one knows how resilient the CCP will be, given its unprecedented tools of control.^[149] Although observers argue that Xi’s policies will stifle innovation, they will likely affect different types of innovation (including science-based, customer-focused, efficiency-based, and others) quite differently.^[150] For example, China may excel at science-based projects (such as nuclear fusion, supercomputing, and quantum science), while consumer-based innovation suffers under increasing party interference.

Although the future is unclear, this paper, by using the lens of authoritarian adaptation, has explained how China got where it is today. China’s rise to become a more formidable competitor has important implications for the balance of power (suggesting a shift to a system characterized by bipolarity). As a great power, China is seeking to rewrite the rules of international order.^[151] The end of American primacy has important implications for U.S. foreign policy including questions about the rising costs and risks (and thus credibility) of its security commitments and a need for Washington to adapt to a world (like the one it faced during the Cold War) with a peer competitor.^[152]

About the Author

Jennifer Lind is an associate professor of government at Dartmouth. She is a faculty associate at the Reischauer Institute for Japan Studies at Harvard University and an associate fellow at Chatham House in London. Professor Lind is the author of Sorry States: Apologies in International Politics (Ithaca, NY: Cornell University Press, 2008).

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