The Economist Intelligence Unit's 2010 democracy index ranks China 136th out of 167 countries (unchanged from its score in the 2008 index), putting it in the class of governments considered "authoritarian" regimes. This places China in the uncomfortable company of countries such as Egypt, Angola and Vietnam. China's failure to engage in any substantive form of electoral process involving its people is the main reason for its low overall score of 3.14 (out of 10). The government's mistrust of popular engagement in politics also results in a poor political participation score of 3.89, reflecting-among other factors-the absence of a multiparty system. The civil liberties category also receives a very low score, at 1.18, highlighting the subordination of judicial, trade union and religious bodies to the all-dominating Chinese Communist Party (CCP). The poor score for this category is also partly a result of China's lack of freedom in areas such as the Internet, newspapers and broadcast media.

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There will be no meaningful political reform

China's low overall democracy index score obscures respectable performances in government functioning and political culture for a country of China's level of development. This partly reflects a compromise whereby the Chinese people have tacitly accepted a very low level of political freedom in exchange for competent economic management by the CCP government. Officials, especially in central government, work hard to remain alert and responsive to public concerns. However, should there be a sharp slowdown in the economy at some point during the next few years, it would challenge this bargain and would lead to a notable increase in social unrest. China scores 0 in the electoral process category. This low score is justified by the fact that even though a major transfer of power will take place in 2012-13, with a new president and prime minister set to be appointed, the decision on who to select for the posts will be made entirely by top leadership of the CCP and will involve no consultation with the public. Meanwhile, corruption and a growing gulf between the country's political leaders and the mass of the public whom they are meant to represent-the most obvious consequences of the failure to introduce political checks and balances-will continue to be major problems. Against this background, the government is likely to grow less tolerant of political dissent. This, as well as the efficiency of the security forces, means that the chances of political reform remain extremely slim. On a more positive note, underlying social development, including the emergence of civil-society groups and legal and media activism, is likely to make gradual progress, especially at the local level, despite the heavy restraints imposed by the CCP leadership.

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Democracy index 2010: Democracy in retreat, a free white paper containing the full index and detailed methodology, can be downloaded from www.eiu.com/DemocracyIndex2010.

Note on methodology

There is no consensus on how to measure democracy, and definitions of democracy are contested. Having free and fair competitive elections, and satisfying related aspects of political freedom, is the sine qua non of all definitions. However, our index is based on the view that measures of democracy which reflect the state of political freedom and civil liberties are not "thick" enough: they do not encompass sufficiently some crucial features that determine the quality and substance of democracy. Thus, our index also includes measures of political participation, political culture and functioning of government, which are, at best, marginalised by other measures.

Our index of democracy covers 167 countries and territories. The index, on a 0-10 scale, is based on the ratings for 60 indicators grouped in five categories: electoral process and pluralism; civil liberties; functioning of government; political participation; and political culture. The five categories are interrelated and form a coherent conceptual whole. Each category has a rating on a 0-10 scale, and the overall index of democracy is the simple average of the five category indices.

The category indices are based on the sum of the indicator scores in the category, converted to a 0-10 scale. Adjustments to the category scores are made if countries fall short in the following critical areas for democracy:

• whether national elections are free and fair;
• the security of voters;
• the influence of foreign powers on government; and
• the capability of the civil service to implement policies.

The index values are used to place countries within one of four types of regime:

• full democracies-scores of 8 to 10;
• flawed democracies-score of 6 to 7.9;
• hybrid regimes-scores of 4 to 5.9;
• authoritarian regimes-scores below 4.