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Since the launch of its reform and opening-up policies in 1978, China has experienced unprecedented economic development, evolving from a largely rural and impoverished society into a modern society and economy. At the time, many observers believed that this economic development would lead to the liberalization of the political system, as the emerging Chinese middle class would demand greater participation and political accountability. However, these expectations remained unmet: China continues to be governed by a single-party regime, in which the Chinese Communist Party (CCP) maintains primacy over the state. Prospects for political opening appear even more distant under Xi Jinping, who has, in many respects, reverted to a model of personalistic rule, concentrating power in his own hands.
However, not only has China failed to democratize, but its economic model also only partially meets the standards of a market economy. This is demonstrated by the Bertelsmann Transformation Index (BTI), which has just published its eleventh edition, covering more than two decades of analysis. The index enables comparison of China’s performance over this period through the lens of democracy and the social market economy.
Since 2006, the BTI has analyzed 137 developing countries every two years, assessing their progress toward liberal democracy and a social market economy. To this end, a total of 57 indicators are assessed, scored from 1 (worst) to 10 (best), and grouped into criteria that in turn form three analytical dimensions: political transformation (democracy status), economic transformation (economy status), and the governance index. While the first two dimensions assess the legal framework and the political and economic realities of each country to evaluate their level of development, the governance index analyzes the extent to which necessary reforms are implemented in line with principles of good governance.
China’s performance in the BTI from 2006 to 2026 shows that the transformation processes the index seeks to evaluate have hardly taken place in the People’s Republic (see Figure 1). Political transformation (+0.13), economic transformation (+0.35), and the governance index (+0.14) all show only marginal increases over the period. Accordingly, every BTI edition has classified China as a hard-line autocracy, with a limited market economy and moderate levels of governance quality. The following sections analyze these results, covering the BTI evaluation period from February 1, 2003, to January 31, 2025.
Political Transformation
Political transformation toward liberal democracy is not an objective of the Chinese government led by the CCP. The last opportunity for political opening occurred during the 1989 student protests, which was missed when the leadership decided to crack down, culminating in the Tiananmen Square massacre. Instead, political dissidents calling for democratization have been systematically imprisoned, and under Xi Jinping, this repression has only intensified. The scale of this repression is illustrated by the number of political prisoners in China. According to data compiled by the Dui Hua Foundation, 7,157 cases have been documented of individuals imprisoned for expressing opposition to the government, practicing unauthorized religions, belonging to ethnic minorities, or petitioning against expropriations, corruption, or injustice. Additionally, nearly 2,000 political prisoners have been recorded in Hong Kong since the mass protests of 2019, according to the Hong Kong Democracy Council.
The lack of democracy explains China’s low scores in the political dimension of the BTI. Globally—i.e., among the 137 countries analyzed—China has consistently ranked among the 30 lowest-scoring countries in this dimension since the BTI 2006, with a score close to 3 points (see Figure 1). A closer look at the criteria comprising the political dimension (see Figure 2) reveals, however, that China’s scores are elevated by the “stateness” criterion, which evaluates the existence and basic functioning of the nation-state. By contrast, scores for democratic quality (political participation, rule of law, institutional stability, and political and social integration) average below 2 points in most BTI editions.
Figure 2: China’s political transformation performance in the Bertelsmann Transformation Index 2006-2026
Author’s own elaboration based on data available at www.bti-project.org
Among these criteria, “political and social integration” is the only one showing a clear upward trend, due to improvements in the “social capital” indicator, which rose from 3 to 5 points, reflecting levels of interpersonal trust and social organization. Conversely, declining scores in “free and fair elections” and “freedom of expression”—both receiving the minimum score in the last three BTI editions—explain the negative trend in “political participation.” Meanwhile, fluctuations in “rule of law” reflect two opposing developments: improvements in the “prosecution of office abuse”, attributed to Xi Jinping’s anti-corruption campaign, and a deterioration in the protection of civil rights, which has fallen by two points since the BTI 2006, reaching the minimum score from the 2024 edition onward.
Though beneficial for China’s score in the rule of law criterion, Xi Jinping’s anti-corruption campaign has gone hand in hand with efforts to concentrate power in his loyalists. Its contribution to political transformation is therefore ambiguous, and reflects Xi’s commitment to stronger central control over the state bureaucracy. This concentration of power was further consolidated at the 20th National Congress of the CCP in 2022, when officials from other party factions were replaced in the Politburo Standing Committee, leaving Xi in full control of the party. The resulting absence of checks and balances and political pluralism is evident in other indicators that consistently receive the lowest scores: “separation of powers”, “stability of democratic institutions”, and the “party system”.
In this sense, the BTI’s political transformation framework is both uninformative and revealing in the Chinese case. On the one hand, the political opening it seeks to measure is not observable. On the other, the persistence of low scores demonstrates that democratization is not a goal of the Chinese government. On the contrary, the promotion of constitutional democracy, the universality of human rights, and “the West’s idea of journalism” are among the seven prohibited positions outlined in the CCP’s internal 2013 directive known as Document 9.
Economic Transformation
The promotion of neoliberalism is also among the positions warned against in Document 9, which rejects economic models based solely on market forces and private enterprise. Evaluating China’s economic system under these premises is therefore equally unpromising. Indeed, while the world’s second-largest economy receives relatively high scores (7–10) for macroeconomic stability and performance, the BTI assigns mid-range scores (5–6) to structural and regulatory indicators concerning market organization and private property. This reflects the Chinese government’s ambivalent relationship with the market economy, whose policies display neo-mercantilist characteristics. On the one hand, China stands out for its trade-oriented economic power and global leadership in key sectors such as technological innovation. On the other hand, the CCP and state-owned enterprises maintain control over economic activities and rules, especially in strategic sectors, restricting the autonomy of market actors.
Notwithstanding, freedom of action and choice for the population is a key component of economic development in the BTI framework. The index is based on the conviction that development also entails the eradication of poverty, which is why it includes aspects of social justice and inclusion in its analysis. It is noteworthy here that, despite advanced levels of economic performance, the BTI has consistently rated China’s “level of socioeconomic development” at 5 points since the 2006 edition. The BTI’s country reports attribute this score to persistent inequalities in society, whether regarding wealth, income, or level of education, or due to discrimination based on gender, age, sexual orientation, ethnicity, religion, or origin. The limitations of China’s welfare system (the corresponding BTI criterion has received a score of 5.5 since 2016) are closely linked to these socioeconomic barriers, creating a system where opportunities are distributed unequally.
Thus, the BTI classifies China as a “limited” market economy in all its editions, although its scores place it above the global average. The economic dimension has been China’s strongest area in the BTI; however, recent editions show a downward trend. By 2026, the slight increase observed until the 2020 edition has almost reversed, reaching its second lowest score in the series: 6.14 (see Figure 1). Contributing factors include the economic effects of the COVID-19 pandemic, international tensions, and the trade war with the United States, the real estate crisis, rising debt and public spending, deflationary pressures, and low domestic consumption. It remains to be seen how the government will respond to these challenges to maintain its legitimacy, which is rooted in the promise of prosperity.
Governance Index
The Chinese government’s capacity to develop and implement reforms is rated as “moderate” in the BTI, with scores oscillating around 5 points since the BTI 2006. This dimension evaluates the government’s steering capability, whether it uses resources efficiently, its ability to create consensus over policy goals and cooperate internationally. While the criteria “steering capability” and “international cooperation” are China’s highest-rated areas of governance, with scores above 6, its weak point—the “consensus-building” criterion (with scores ranging from 3.8 to 4.4)—once again reflects the lack of democratic processes and the fact that democracy is not a government objective. In terms of resource efficiency, China’s authoritarian governance does not outperform democratic systems. Compared to all democracies in the BTI, China matches their average, ranking 57th in 2026, behind Argentina.
In addition, the score for the “consensus-building” criterion has declined since the BTI 2008, when it had reached a high of 4.8 points. By the BTI 2026, however, it had returned to the levels seen in the BTI 2006, with an average of 3.8 points. This trend reflects declines in the indicators “consensus on goals”, “anti-democratic actors”, and “conflict management.” In contrast, the indicators “public consultation” and “reconciliation” have remained unchanged since the BTI 2006, with scores of 3 and 4, respectively. Together with “anti-democratic actors”, which dropped to the minimum score of 1 point, reflecting the anti-democratic nature of the government itself, these two indicators demonstrate that there are no trends in China toward greater levels of civil society participation and inclusion in governance.
In this same area, the “consensus on goals” indicator stands out with relatively high scores, ranging from 6 to 7 points throughout the analysis. However, this result should be interpreted as an indication that China’s political elites agree that democracy is not a long-term strategic objective. Also noteworthy here is the recent drop in the BTI 2026 score, which points to mixed signals regarding the Chinese government’s commitment to market economy and the consolidated policy of controlling economic competition under Xi Jinping.
Governance has generally been evaluated strongest in “steering capability” and “international cooperation”, ranging from 6.3 to 7.7 throughout the analysis. Generally, policy prioritization and implementation through five-year plans is effective, though some inefficiencies arise, in part, from increased pressure and control exerted by the national government over local authorities. The temporary rise in the governance index in the 2022 BTI (see Figure 1) can be attributed in this regard to institutional lessons learned during the COVID-19 pandemic, particularly in the areas of e-government, crisis management, organization and propaganda, and the adaptation of priorities at the onset of the pandemic.
However, aside from the isolated increase in the BTI 2022, China’s governance performance has declined since the BTI 2014, a regression that appears to be driven primarily by worsening results in the “international cooperation” criterion. Growing tensions in the South China Sea, as well as the People’s Liberation Army’s military modernization, which casts doubt on China’s peaceful intentions, have strained regional cooperation during this period. Consequently, China has lost credibility in the international system, despite Xi Jinping’s efforts to elevate China’s global status and reputation, particularly with the Global South. This is explained by a combination of factors, including a lack of transparency during the pandemic, the suppression of Hong Kong’s autonomy and the rights of the Uyghur people in Xinjiang, the use of “wolf warrior diplomacy” tactics, threats against Taiwan, and the persistent alliance with Russia.
Conclusion
China’s role as a global actor cannot be ignored. The country is likely to fill some of the gaps left by the partial withdrawal of the United States from multilateral spaces, driven by ambitions to expand its global political and economic influence. However, engaging with Beijing requires a clear understanding of its objectives, which fundamentally conflict with the principles of the liberal order. The BTI analysis from 2006 to 2026 shows that China’s unprecedented development has not been accompanied by democratization or the protection of fundamental freedoms. On the contrary, under Xi Jinping, authoritarianism has deepened, characterized by power concentration and harsh repression of dissent and cultural diversity, as reflected in allegations of crimes against Tibetans and Uyghurs.
