China could be a democracy by 2017 assuming the economy grows and annual incomes rise to $15,550 a head.
According to the report,
The report asserts that democracies are “immortal” above the per-capita GDP level of $10,000, which probably now includes
The big exception are energy producers, notably in the
The $6,000 per capita GDP seems to be a crucial level, marking the point where a country is likely to shift to democracy. Tunisia, which early this year triggered the wave of uprisings against autocracy across the Arab world, recently crossed that threshold.
Conversely, democracy is most fragile at the lowest income levels and when incomes are shrinking.
China: democracy by 2017?
Of the 25 richest autocracies, all but six are significant energy producers. The exceptions are the city state of Singapore, Cuba, Tunisia, Thailand and China, as well as Belarus, which has been given subsidised energy from Russia. Of these, Singapore has just experienced the most challenging election in 2011 since the 1960s, Belarus is facing protests with shrinking incomes since the devaluation, Tunisia has just had a revolution and Thailand has elections scheduled for this year.
This leaves Cuba as a country with apparently high per capita GDP but no energy exports; but we are inclined to doubt that its per capita GDP figure is actually higher than that of Brazil or Romania.
Given this, it is much easier to understand: 1) why the authorities have been so anxious about a Jasmine revolution at this time, and it helps explain 2) the intention of the authorities to double incomes by 2015, despite the risk of inflation. Unfortunately for China, we see inflation as a potential trigger for demonstrations, given the saving habits of the population, so we think the government is actually stuck between a rock and a hard place.
Theoretically, China may hope that if it can boost per capita GDP above $10,000, then political risk will decrease. Perhaps it may become another Singapore. This is a highly unlikely scenario, in our view. Non-energy exporting countries always become democracies.
To conclude, the Communist Party of China is right to fear a revolution, and history suggests it will be lucky to avoid democracy by 2017, assuming per capita GDP has reached $15,550 by then.
The positive news for the world economy is that the move to democracy did nothing to impede the growth of Taiwan and South Korea. Per capita GDP continued to rise by roughly $1,000 annually in Taiwan and South Korea after democratisation. Also positive is that once a country becomes a democracy at this wealth level, it becomes an immortal democracy.