Mastering Modern World History

by Norman Lowe

  20.4 THE CHANGING FACE OF COMMUNISM IN CHINA

  China’s leaders were deeply disturbed by the collapse of communism in eastern Europe. Although they had clamped down on any political changes, Deng Xiaoping, Li Peng and Jiang Zemin were still committed to progressive ‘open door’ economic policies. Deng often warned that disaster awaited countries where reform proceeded too slowly. He hoped that a successful economy which enabled more and more people to become prosperous would make people forget their desire for ‘democracy’. During the 1990s the economy was booming; from 1991 to 1996 China led the world, with average GDP increases of 11.4 per cent, and living standards were rising fast. Eastern and southern China were especially prosperous: cities were growing rapidly, there was significant foreign investment and there were plenty of consumer goods for sale. On the other hand, some of the remote western provinces were not sharing in the prosperity.

  A new Five Year Plan, unveiled in March 1996, aimed to keep the economic boom on course by increasing grain production, keeping average GDP growth at 8 per cent, and spreading wealth more evenly among the regions. Although Deng Xiaoping died in 1997, Jiang Zemin, who became the next president, could be relied on to continue his policies in spite of criticism from the party hardliners. Public unrest had all but disappeared, partly because of China’s economic success, and partly because of the government’s ruthless treatment of dissidents. Jiang was determined to launch an assault on corruption within the Party; this was mainly to please the hardliners, who blamed the widespread corruption on Deng’s capitalist reforms; it would also help to silence the dissidents who had made corruption one of their favourite targets. In 2000 there was a series of trials of high-ranking officials, several of whom were found guilty of fraud and accepting bribes; some were executed and others received long prison sentences. The government even organized an exhibition in Beijing to show how well it was dealing with corruption.

  Jiang’s next step (May 2000) was to announce what he called the Three Represents, an attempt to define what the CCP stood for, and also to emphasize that no matter how much the economic system might change, there would be no dramatic political changes, and certainly no moves towards democracy, so long as he was in control. He pointed out that the CCP represented three main concerns – to look after:

  China’s development and modernization;

  China’s culture and heritage;

  the interests of the vast majority of the Chinese people.

  To help make good the claim that the Party genuinely represented all the people, Jiang announced (July 2001) that it was now open to capitalists. The hardliners, who still clung to the idea that communist parties were there for the good of the working class, criticized this move. However, Jiang thought it was reasonable since the capitalists had been responsible for most of China’s recent economic success, and he pressed ahead regardless. Many of the capitalists were delighted to join, since party membership gave them access to political influence. Restrictions were relaxed on trade unions: workers were now allowed to protest to employers about problems of safety, poor working conditions and long working hours. More good news came with the announcement that Beijing was to host the 2008 Summer Olympics.

  (a) Leadership changes

  Jiang Zemin, general secretary of the Party and president of China, together with several others among the older leaders, were due to step down from their posts at the Sixteenth Congress of the CCP, to be held in November 2002, the first to take place since 1997. In his final speech as general secretary, the 76-year-old Jiang voiced his determination that the CCP must remain in absolute power, and that this would involve broadening the power base of the Party so that all classes would be represented. ‘Leadership by the Party’, he said, ‘is the fundamental guarantee that the people are the masters of the country and that the country is ruled by law.’ With that, Jiang retired as general secretary, though he was to remain president until the National People’s Congress met in March 2003. Hu Jintao was elected CCP general secretary in place of Jiang.

  The National People’s Congress saw the completion of the sweeping leadership changes. Hu Jintao was chosen as the new president and he appointed Wen Jiabao as prime minister or premier. Wen had a reputation as a progressive, and was considered lucky to have survived the purges after the Tiananmen Square massacres in 1989. It was not long before the new leadership announced some important changes, both economic and political.

  Parts of some of China’s largest state-owned enterprises were to be sold off to foreign or private companies; some smaller companies were allowed to become private. However, the government emphasized that it was committed to retaining control of many large industries (November 2003).

  In December 2003, six independent candidates were allowed to stand in local elections in Beijing for the district legislature. They were standing against over 4000 official CCP candidates, so that even if all six were elected, their impact would be minimal. However, it was an interesting departure from the usual practice.

  Meanwhile China’s economic success continued, despite an outbreak of the deadly SARS (severe acute respiratory syndrome) virus during the early summer of 2003, which infected over 5000 people and killed around 350. Statistics showed that during 2003 the economy had expanded by over 8 per cent, its fastest rate for six years; this was thought to be largely the result of a shift towards consumer spending. The government claimed that it had created over 6 million jobs during the year. Many of the new factories were foreign-owned – multinational firms could hardly wait to set up business in China in order to exploit the cheap labour. By 2010 China had become the world’s largest manufacturer and exporter. It was the largest maker of steel and the biggest user of energy. In the words of Jonathan Fenby:

  The last major state on earth to be ruled by a Communist party plays a pivotal role in the global supply chain, assembling goods for foreign firms at prices they could not achieve at home. It has the largest monetary reserves of any country, topping $2.3 trillion. Its cheap labour, cheap capital, productivity and sheer competitiveness have exported price deflation to the rest of the globe, while its voracious appetite for raw materials laps up oil from Africa, the Middle East and Latin America, iron ore from Brazil, coal and more ore from Australia, timber from Russia, and key metals from wherever they are mined. … Growth and modernization have transformed society and demographics. Average annual per capita income has soared from 528 yuan in the early 1980s to 18,100 in urban areas and 5900 in the countryside. (The 2010 exchange rates were £1 = 10 yuan, $1 = 6.4 yuan, 1 euro = 8.7 yuan.)

  Nevertheless, there were many areas of concern.

  Prosperity was not evenly spread: incomes and living standards were improving steadily for the two-fifths of the total population of 1.3 billion who lived in towns and cities; but millions of rural Chinese, especially in the west of China, were still struggling on or below the poverty line. According to UN statistics, more than 200 million Chinese were still living in ‘relative poverty’, while over 20 million were living in ‘absolute poverty’. It was estimated that around 300 million people had no access to clean drinking water. At the other end of the scale, almost one million people were reported to be millionaires (in terms of dollars or sterling).

  The economy was expanding so fast that it was in danger of moving into overproduction, which could lead to a reduction in sales and a slump. For example, in 2009 excess capacity stood at 28 per cent in steel production and at 33 per cent in aluminium. It seems likely that within a few years car companies will have 20 per cent too much plant.

  China’s success caused strained relations with the USA, where manufacturers were feeling the competition from cheaper Chinese goods. Washington blamed the Chinese for the loss of millions of US jobs, complaining, with some justification, that the yuan was being deliberately undervalued in order to give Chinese exports an unfair advantage.

  Chinese banks were suffering from problems of overlending and bad debts. They had been guilty of overspending on a h
uge range of building projects in the main cities, new roads and railways, and what was deemed to be the world’s largest engineering project – the Three Gorges Dam. Many of the state-run companies which received the loans have failed to repay. In 2004 the Chinese government was forced to bail out two of the largest state-owned banks – the Bank of China and China Construction Bank – to the tune of £24.6 billion.

  In spite of all the economic progress, the government continued to oppose any demands for political change. Anybody who complained publicly or staged a protest demonstration would be ruthlessly suppressed. In fact China had signed an agreement accepting UN advice on how to improve its justice and police systems, and promising to improve its human rights record (November 2000). However, in February 2001, Amnesty International complained that China was actually increasing its use of torture in the questioning of political dissidents, Tibetan nationalists and members of Falun Gong (a semi-religious organization which practised meditation, and which had been banned in 1999 on the grounds that it was a threat to public order). Dissidents were making more use of the internet, setting up websites and communicating with each other by email; the government therefore began a determined clampdown on ‘internet subversion’, persuading Google and others not to include politically sensitive material in their coverage of China.

  As the decade progressed, discontent grew, especially among peasants in the countryside. They had done well from the break-up of the communes and had made good profits from selling much of their harvests. But now they were being taxed heavily and were also being exploited by local governments which illegally seized their land and sold it to offset their debts. In 2004 there were no fewer than 74 000 ‘mass incidents’ or public protests against a wide variety of malpractice – lack of democracy, high taxes, high prices, corruption in high places and safety scandals. The government stepped up its repressive policies and by 2012 it was estimated that between 5 and 6 million dissidents were being held in labour camps. Many of them had been tortured.

  Wen Jiabao was the only leading politician to show any sympathy with these dissenters. He publicly called for political and legal reform, and the need to respect people’s rights – including the ownership rights of farmers. But Hu Jintao had developed a consensus style of government in which, although different power groups exist, they restrain each other, so that only mutually beneficial policies are followed, and no real reforming progress can be made. Some commentators even think that Wen’s performance, as Jonathan Fenby puts it, ‘is all part of an orchestrated campaign to dangle the possibility of reform that will never be delivered’. Meanwhile the economy continued to perform well. In 2008–9, when the rest of the world was suffering from the global financial crisis (see Section 27.7), China seemed to emerge relatively unscathed. As the global economy continued in crisis, it was reported in 2011 that President Sarkozy of France, emerging from a summit meeting discussing how to save the eurozone, immediately telephoned Beijing to ask for help. The cry went up around Europe and the Americas: ‘Will China save the world?’

  (b) What of the future?

  Hu Jintao and Wen Jiabao were due to reach the end of their term in office in 2012. Determined to go out on a high, in 2011 they introduced another Five Year Plan, to be completed in 2015. This aimed to increase spending on research and development (R&D) so that China could move away from low-cost manufacturing and into more advanced industrial production. For example, work was in progress to produce a 220-seat airliner, to be flying by 2016, and a preliminary agreement had been signed with Ryanair, the low-cost airline. In 2012 China had 13 nuclear power stations, and was planning to have at least 120 by 2020. A Chinese astronaut had already walked in space, and there were plans to land a man on the moon by 2020.

  All this raises many questions. Will China overtake the USA as the world’s greatest power? If the Chinese ‘economic miracle’ continues, will this plunge Europe and the USA into mass unemployment and ruin? And does it also mean that the Chinese political system is more efficient than western-style democracy? There has been no shortage of people willing to answer that question. The American political scientist Francis Fukuyama argues that China’s one-party system enables decisive action to be taken, avoiding ‘the delays of a messy democratic process’. The financier George Soros believes that China has ‘not only a more vigorous economy, but actually a better-functioning government than the United States’.

  On the other hand, some western and Chinese observers take the opposite view. Critics argue that with the falling birth rate, demand will inevitably decline, leaving China with a large over-capacity problem; money has been wasted on vast infrastructure projects that will never bring any return, and there is an enormous problem of non-performing loans. Perhaps the most serious weakness is the steadily increasing social tensions. Ai Weiwei, the well-known Chinese artist, compared the country to ‘a runner sprinting very fast – but he has a heart condition’. But when he voiced his concerns publicly, he was arrested for ‘economic crimes’ in 2011. Others critics point to the increasing disparity between rich and poor, and between countryside and city, the poor quality and the rising expense of health care, and the vast amount of corruption. In 2011 there were a staggering 180 000 ‘collective protest incidents’. Roderick MacFarquhar, writing in 2011, argued that it was as though China were sitting on some massive geological fault which must one day split wide open, plunging the whole country into ruin. By the autumn of 2012 there were ominous signs as exports began to fall and large stockpiles of coal, steel and cars were reported, and many firms producing cheap clothing for export collapsed. One sales manager lamented: ‘I feel like a blossoming summer has turned into a dull winter. In 2008 we didn’t feel the crisis at all. This year we do feel that the crisis has really struck.’

  As China moved towards October 2012, preparations were under way for the handover of power after Hu and Wen stand down. The likely candidates seemed to be Xi Jinping, the party secretary in Shanghai, and Li Keqiang, a close associate of Hu. But behind the scenes there were competing factions, each with ambitions. For example, Bo Xilai of Chongquing seemed to have leadership ambitions. He became party secretary in Chongqing in 2007 and was responsible for what became known as the Chongqing experiment. According to Professor Wang Hui of Tsinghua University in Beijing:

  The Chongqing model operated within China’s existing political institutions and development structures which emphasise attracting business and investment, but involved quite distinctive social reforms. Large-scale industrial and infrastructural development went hand in hand with an ideology of greater equality – officials were instructed to ‘eat the same, live the same, work the same’ as the people – and an aggressive campaign against organized crime. Open debate and political participation were encouraged, and policies adjusted accordingly. No other large-scale political and economic programme has been carried out so openly since the reform era began in 1978 soon after Mao’s death.

  During 2011 the movement spread to Beijing, and it seemed that Bo and his policies had won the support of Xi Jinping. Unfortunately for Bo, this all coincided with decisions by Hu and Wen to put political reform on hold and to tighten up bureaucracy and control from the centre. The idea of different local models ran counter to this trend. Bo had also made the mistake of suggesting that the Chongquing model compared in importance with Mao’s Cultural Revolution. This gave Wen the chance to announce that the Chongquing reforms would lead to a repeat of the chaos caused by the Cultural Revolution. Therefore it must be condemned and placed on the list of subjects not available for public discussion. In March 2012 Bo was sacked as Chongqing party secretary on the grounds of corruption. In reality the government’s aim was to clamp down on political freedom so that it would be easier to continue pressing ahead with their unpopular neo-liberal policies. At the same time it got rid of a dangerous leadership rival. In fact Jonathan Fenby, in his reply to Professor Wang Hui (in the London Review of Books, 24 May 2012), is convinced that this was the real rea
son why Bo was removed. ‘He had simply become too big for his boots ahead of the selection of a new Politburo Standing Committee at the Communist Party Congress later this year. When word spread that he sought the internal security portfolio on the Standing Committee, his downfall was guaranteed.’ His ruin seemed complete when, in September 2012, he was expelled from the Communist Party.

  In November 2012, at the party congress in the Great Hall of the People in Beijing, Hu Jintao formally handed power over to the next leader, Xi Jinping. China had certainly changed in the ten years since Hu came to power. In 2002 it was the world’s sixth largest economy, now it is the second. For the first time it has become an urban nation, with just over half of its 1.4 billion people living in cities. However, Premier Xi Jinping and his prime minister, Li Keqiang, face serious problems. The economy is unhealthy, and many experts are advising that China’s state-owned enterprises should be privatized. But there is little sign of any such radical changes on the agenda. There is considerable social unrest, caused by the widening gap between rich and poor, the widespread corruption within the communist party, and the revelations that many of the party leaders and their families have amassed huge personal fortunes. According to Bo Zhiyue, a research fellow at the National University of Singapore, ‘corruption within the Chinese Communist Party is so rampant ... if they don’t do anything about this they will lose credibility very quickly. … Eventually the credibility deficit will become so huge that it could mean the collapse of the CCP as the ruling party’ (Guardian, 9 November 2012).

  FURTHER READING

  Chang-tai Hung, Mao’s New World (Cornell University Press, 2010).

  Dikotter, F., Mao’s Great Famine: The History of China’s Most Devastating Catastrophe (Bloomsbury, 2010).