While the mutual-responsibility principle and the criminalization of job performance produced innocent convicts, the redemption policy and imperial amnesty created unlawful commoners. The punitive system was designed neither to restore the vicious parts of criminals to virtue nor to remove the wicked and evil from society. Various punishments, including some death penalties, could be redeemed via money, rank, or the labor of other people. Crimes, punishments, and rank could all be reduced to economic values and were therefore exchangeable. Furthermore, the emperor could use redeeming punishments as a resource to raise revenue during financial crises, calling for the purchase of rank or the direct donation of money or grain to redeem or mitigate punishments. Although no theories explicitly stated that the punitive system was formulated according to the calculation of economic gain, its practice benefited the government financially. Redemption functioned as a form of political economy.

I argue that the Qin and Han legal system excessively punished administrative errors as crimes. Performance-oriented legislation criminalized a large number of officials, including those industriously devoted to their jobs. Excessive punishments made officials guilty of administrative errors suffer the same bodily pain and economic loss as those who caused serious harm to society with intentional violence. This legal practice can be traced to its philosophical roots in Shang Yang and Han Feizi, who eloquently articulated the effectiveness of performance-based law and severe punishments. They asserted that heavy punishments aim to create a crime-free utopia. However, I demonstrate that when brutal instrumentalism and idealism were applied to real-world politics, they generated a monstrous legal system that distorted justice. Resentment arose against the law, and sympathy developed for the condemned. This prominent and unjust problem triggered heated criticism, but no legal reforms ever occurred. This chapter shows the dangerous application of perfectionism in the real world and explains some historical roots of the long-standing Confucian tradition against rule by law.

Chinese politics has been dominated by leaders hailing from Shanghai. Xi Jinping was its party secretary; so was Li Qiang, China’s current premier. After Tiananmen, Jiang Zemin and Zhu Rongji scaled the Shanghai Model to the whole of China. The Shanghai Model, the genesis of the China Model, was statist and extractive. An illustration was the development of Pudong, which relied on mass evictions of rural residents, offering low or no compensation, and auctioning off land to highest bidders. The huge spreads between acquisition costs and auction prices fueled Shanghai’s development but brought modest benefit to the average Shanghainese. The poorest segment of the Shanghai population lost relatively to other segments of the population but also lost absolutely to its former self. The income level of Shanghai’s individual proprietors was also low, relative both to rich provinces such as Zhejiang but to a poor province such as Yunnan. The statist Shanghai Model was not innovative. Shanghai lagged Zhejiang and Jiangsu in patents. By measures that track more closely the welfare of the individual citizens, the Shanghai Model is not a resounding success, and yet this is the model that has prevailed in China since 1989.

The Chinese economy has entered its most challenging period. The China Model, while less effective in growing personal income, was able to grow GDP in the past. Now even its ability to grow GDP has deteriorated, both because of the structural problems created by the China Model and because of the self-inflicted damage of the CPC’s policy choices in domestic and foreign affairs. The economic slowdown accentuates social tensions that can be destabilizing politically, all the more so because the costs of running Chinese government are exorbitant, as measured by the payroll size of the government employees. Unlike the Mao era, when low GDP growth was matched with low outlays, or the Deng era, when high growth was matched with high outlays, Xi’s China faces a rising disequilibrium in which there is a mismatch between low growth and its costly expenditures. China needs to make a consequential judgment call – whether to break away decisively from the China Model or to continue on its current path. This is ultimately a political, not an economic call, and given the opacity and the centralized nature of the Chinese political system it is a prediction we cannot make with any degree of certainty.