Contents | Preface | Introduction | Chapter 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |

 

 

SOCIAL, ECONOMIC AND POLITICAL DEVELOPMENTS
IN THE PEOPLE’S REPUBLIC OF CHINA

Thomas Chan

 

There is a big difference between the People’s Republic of China before 1979 and the People’s Republic of China after 1979. Before 1979 we can say that the PRC was under the control of the Communist Party and especially under the dominance of one person, Chairman Mao, and his ideas about socialism. But since the December 1978 Party Congress, the PRC has engaged on a path towards reform. At that time the Chinese leaders, including Deng Xiaoping, did not know exactly what they going to lead the country into. Because of the Cultural Revolution and the disasters that have been imposed on the People’s Republic, they thought that the only way to save the country from disaster and from the confusion and chaos at that time was to engage in some sort of reform. So in December 1978 they formulated a kind of manifesto for reform -- but they did not know in what direction to reform.

Since 1979, the Chinese have experimented with many ideas, and there you notice two tendencies in the Chinese leadership. One may be represented by Hu Yaobang, the present party general secretary, who believed that the main enemy of Chinese society at this time is feudalism, not capitalism. So in order to overcome feudalism, capitalism could be used. Even the present Prime Minister has said that a bit of capitalism won’t do any harm to socialist society. What they know about capitalism is what they know from Hong Kong. So what they try to do is to imitate Hong Kong, and the best example is centred on the special economic zones. In the past few years, Shenzhen was placed as the model for the PRC’s urban reform, and many things that happened in Shenzhen were actually a copy of what had been done in Hong Kong. So there are some things to learn from Hong Kong, and the whole country is to learn from Shenzhen.

But there is another tendency in Chinese leaders, Chen Yun and others, who have a more concrete conception of a reformed PRC: that it should remain socialist, although in a different way from the Stalinist conception of socialism. These leaders believe that the PRC should be basically a planned economy, but supplemented by some free-market regulations. The planned economy should allow enough scope for individual freedom and individual initiatives. But at the same time there should be a boundary that this economy should not go beyond, otherwise the country will become not socialist.

There has been a long period of struggle between these two tendencies. In 1980 there was an economic readjustment, which was in fact the success of Chen Yun’s idea over Deng Xiaoping's, and which has led very loosely to a market-oriented, Chinese-style socialism. At the Party Congress held just last week, Chen Yun’s idea was reasserted, and he has emerged as the most powerful person in the Chinese political arena.

In accordance with the prevailing economic views, all the major coastal cities were opened, following the example of Shenzhen. In fact at the end of last year and early this year, there was a plan to designate the whole eastern coastal part of the PRC as some sort of an open zone. The reason this has not been successful has to do with several factors. The main one is that Shenzhen is not a success. It’s a sort of failure, if we go by the original objectives of the Chinese leaders. Shenzhen succeeded not only in building some high-rise buildings but in engaging itself in entry-port trade. Shenzhen was functioning as a port for the PRC -- foreign goods went to Shenzhen and then were exported to other parts of the PRC. In this process Shenzhen gained huge profits, which it used to finance its infra- structural development and construction work. And in this process the PRC’s foreign exchange reserves become less and less, because all the foreign exchange reserves were used to buy these foreign goods, including food, from Shenzhen and from overseas. This disrupted the whole financial and economic situation in the PRC and therefore in February this year, Shenzhen came under criticism. Because of this, the rest of the "open door" policy, including opening up the coastal cities, was also criticised, and actually this was a starting point for the decline of Deng Xiaoping's influence in economic policy.

Another factor that has contributed to the decline of Deng Xiaoping’s influence is that while the other reform measures may seem very good on paper, once they are implemented, they will become stalled. If there is a good policy but no good machinery to carry it out, then the policy may have no effect, or may turn to the opposite effect. The problem with the PRC nowadays is that with the start of the reform, because of the experience of the Cultural Revolution, the party leaders have tried to downplay the role of the party and minimise its influence in the country. The most typical example is in the countryside with decollectivisation. The state and the party lost control of the economic, social and political activities in the countryside. But the former machinery was still there; the officials were still there, although they changed their positions. Formerly they were the head of the commune, but now they have become the government official in charge of the shan administration. With this reform, with this emphasis of decentralisation on the free play of market, they did not receive enough supervision from above. At the same time they were not supervised by people down below, because they were not elected -- they were appointed. Therefore they can set up their independent kingdoms in the countryside. With the emphasis more on the economic aspect, they transfer their political power into economic power. So although decollectivisation started first as a reaction towards too much control over the peasants by the state administration, it resulted in still too much control, not by the state administration but by individual state officials, and the peasants are still not very happy. Although in the official press there is news about a peasant household with 10,000 yuan income, these households are the minority, and quite a few of them are themselves party officials or the relative of party officials. Very few of them are peasants who have no official connection and have become rich on their own effort.

Early this year then, there was a criticism of the party’s rural policy, that it did not result in the common well-being of the peasants but rather in polarisation in the countryside. And although agricultural production has increased considerably in the past years, the central government, especially the Ministry of Finance, has said that all this increase in production has been a result of material incentive. The government gives incentives to peasants to grow more by raising the prices of agricultural products. This has two results: a heavy budgetary deficit of the central government, and high inflation not only in some of the major cities.

All of this creates confusion in the country. Therefore this reaction from the central leaders who have a better, more sober understanding of the situation in the PRC, that Deng Xiaoping’s policy is now not in favour. Beginning earlier this year, there is a policy of economic readjustment. In the recently published suggestion of the party Central Committee on a seventh five-year plan, it was stated that the first two years of that plan will be spent to correct the mistakes committed since last year.

On the political side, not much is happening in the PRC. Deng Xiaoping stated very clearly in 1980 that the general policy of the party should be to allow more liberalisation in the economic aspect of the society, but at the same time have more political control. That is, he would promote a free play of market forces, but he won't allow any political liberalisation. The Beijing Spring lasted only one winter. I understand in the PRC that there are still quite a number of cases in which people who criticised the present policy, government officials, etc., have been punished and/or jailed.

Economic liberalisation, however, will naturally lead to some loosening of political control. The countryside might be a good example: when the communes were abolished, when the state officials at that level become only state officials --although they may translate political power into economic power -- they can no longer control politically the personal business of individual peasants. They can use their economic power to exploit peasants or their political position to ask the peasants to contribute to their well-being, but they no longer control the total life of the individual peasant. The peasants in the countryside can move about freely; they can escape the control of one state official by going to another place -- to a city, for example. Even from Guangzhou you can go to Inner Mongolia to escape political controls Therefore there may be real political progress in the PRC.

On the other hand, when the state enterprises are no longer under direct control of the state administration and are allowed to go after profits, in order to go after profits you have to give the workers more incentives. In this sense I think that because of the economic liberalisation, political control is decreasing and nobody believes any longer in 4he authority of the central leaders. Even Deng Xiaoping, who used to enjoy good popularity in the first few years of the economic reform, is losing his credibility now, because even children of the high officials are engaged in this kind of legal or illegal economic activities.

And because of the economic liberalisation, the PRC no longer can claim that it is the one socialist country in the world. It cannot say that it’s different from the Soviet Union. In fact in the classical sense of socialism, the Soviet Union may be much better planned than the PRC. This is why in the last year Chinese leaders had to say to the Soviet Union that we are both socialist countries -- which was the first time that the PRC admitted that the Soviet Union is a socialist country and that the PRC is no longer superior to the Soviet Union. This created a serious problem for the party, because at least the people in the PRC will still remember the difference between the PRC and the Soviet Union. In the PRC there is higher inflation, more corruption, smuggling, and all the common economic and social crimes that could be found in some of the Third World countries. Even Deng Xiaoping admitted recently that some illegal activities that were eliminated during the early years of liberation have now reemerged, because the people no longer have any faith in the party, because the party destroyed its own credibility by destroying Chairman Mao. Therefore the party is no longer a revolutionary party in the PRC, and the people will not have any faith in them but only in themselves. There’s a very common belief in the PRC that it’s best to get more money; there’s no longer any idealism or faith in a utopian society, and even the party leaders are fully aware that they do not have the kind of political credibility that they enjoyed in the past. Even the party high officials do not believe in Marxism, or in the revolutionary phase of the party.

In the past, before liberation, China was divided because of lack of communication, historical factors, etc. After liberation, using the tight organisational tools of the Communist Party, the PRC was reunited; but this reunification was based not on persuasion but more by coercion. Therefore, the PRC did not achieve integration. After 1979, the party lost its own organisational control of society, the forced reunification was broken down, and now there is confusion and chaos. Not even a change in policy can reach the lower level. The best example is Shenzhen. When the central government publishes a policy, Shenzhen can disobey it, saying that it is very special; so you can engage in all kinds of illegal activities just to gain profits.

I think Chairman Mao was right to criticise Deng Xiaoping that he’s not a Marxist, he’s just a very pragmatic person. Foreign policy is also very pragmatic; it’ s no longer governed by Marxism, and therefore the PRC will not support any revolutionary movements in Asia. This is very clear not only to the Chinese but also to those overseas.

Last year there was some change, however. Before last year, the PRC was only open to the West under the control of Deng Xiaoping; but in the latter half of last year, there was a decision that the PRC is opened to three sides: not just the West, but also the East -- the Soviet Union and the East European countries -- and also the Third World. Recently there was a complaint from the USA that at the United Nations the PRC always votes with the Soviet Union against the USA. But that may be an indication of Chinese change -- not just pragmatism, but rather a policy that is based on peace. The PRC calls its foreign policy an independent foreign policy, not one that follows one of the great powers.

The recent changes in leadership is a good achievement of the Chinese leaders, and can be compared with the changes in the Soviet Union under Stalin -- except that Stalin used purges to achieve it, and Deng Xiaoping used retirement. I think the Chinese way is more peaceful, more civilised, with better implications for future political development. As the Chinese have said, they have established a system of retirement which the Soviet Union took quite a long time to establish after the death of Stalin.

But the change in personnel is not anything really significant in terms of the political decision-making process, because most of the old officials were too old, actually, to make decisions, and the decisions and their implementation have been made not by them, but by their assistants, the younger people that have recently been promoted. These promotions are just a legitimisation of the actual situation, that those who have in fact been in control of the situation are now given the official position to carry out the work they have done for a few years in the past. So although it is a great achievement, the achievement is not so great, in a sense. There’s no complete change, no discontinuity -- it’s still just following the past. There is not much change except that with the old people all retired, they could not make so much noise and their children may not have so many favours. Now the children have become high officials, so their favours become legitimised. There is more regularity, more continuity.

* Thomas Chan is an expert on the economy of China. Research Fellow in the Centre of Asian Studies, Hong Kong University.

 

Contents | Preface | Introduction | Chapter 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |