Blowback, Second Edition: The Costs and Consequences of American Empire

by Chalmers Johnson

  An ideological shift from an all-embracing communism to an all-embracing nationalism has also helped to hold Chinese society together, giving it a certain intellectual and emotional energy and stability under the intense pressures of economic transformation. One of the weaknesses of communism was its quasi-religious claim to scientific truth, which, once exposed as fraudulent, undermined the values and ideological cement of the regimes that had embraced it. Since the collapse of communism in Eastern Europe and Soviet Russia, the Chinese Communist Party has tried to foster a consensus among mainland and overseas Chinese based not on scientific but on historical claims to power, prestige, and wealth—as well as on a belief that China is once again destined to reclaim its position as the preeminent civilization in Asia and become a global superpower. The People’s Republic of China used to proudly call itself Communist China. Today, the term commonly used is just China, and this new “China” borrows endlessly from its past glories but also plays powerfully on its century-long experience of humiliation at the hands of European, American, and Japanese imperialists. Present-day China is clearly in transit toward some new self-concept, not to speak of a new system of relationships with other countries; it is not yet clear, however, what form or forms these will take.

  To be sure, there are factors that could derail China’s emergence as a major power, the most obvious of which are inadequate education and uneven development within the country. In the Republic of China on Taiwan during the 1990s, for example, the president, premier, and half the cabinet had doctoral degrees. In fact, its impressive record in producing a college-educated populace is one explanation for Taiwan’s increasingly successful transition to democracy in a context of high, reasonably equitable per capita income distribution and huge reserves of foreign currency. Such educational achievements—close to 40 percent of Taiwanese aged eighteen to twenty-one are enrolled in institutions of higher learning—are almost unimaginable on the mainland. China, with a total population of 1.2 billion, has the staggeringly low total of about 7 million college graduates to help run a massive and massively modernizing economy and society. There are a total of 1,065 institutions of higher learning in China today, with about 2.5 million students.7

  China also sends thousands of students abroad for advanced degrees, but many of them do not come home. This means China has no access to the sort of meritocratic officialdom with which Japan, South Korea, Taiwan, and Singapore have managed their systems of privately owned but publicly guided enterprises. The Communist Party itself currently has a total of about fifty million members, but only some two million of them are college educated. It can compensate for this educational weakness to some extent by tapping into the talents of overseas Chinese and of interested foreign investors, but such a lack of widespread technical competence may in the long run prove a serious and potentially catastrophic constraint.

  Uneven development is a potentially explosive problem. Although in times of dynastic decline or internal weakness China has been prey to strong centrifugal forces, warlordism, and regional movements for independence, this is unlikely to be a major concern in the foreseeable future. A wealthy province like Guangdong, adjacent to thriving Hong Kong, for example, has nothing to gain and much to lose in the civil war that would undoubtedly result from any attempt to separate itself from the rest of the country. The issue of the present moment is not so much keeping wealthy provinces in line as keeping poor provinces quiet and functional with not much more in the way of compensation than the promise that sooner or later the wealth of the country is bound to begin to trickle down to them.

  An estimated one hundred million people, more than the entire population of Mexico, are now adrift in China, largely migrants from the interior looking for work in rich coastal areas. They represent what “trickle down” there may be for the poorest rural areas, remitting part of their meager earnings to the interior. The vast and controversial Three Rivers Dam under construction on the Yangtze River will aid interior areas more than any other part of the country by providing cheap electric power to them; for the time being, however, the migrants tend to evade taxes and ignore the country’s draconian one-family, one-child policy. There is also the danger, from the ruling party’s point of view, that they might organize. This would not only reduce their value as an ultra-cheap labor force contributing to the present export-driven boom but also raise the possibility that migrant groups could grow into a Chinese version of Solidarity, the union movement that largely dismantled communism in Poland. This would be the regime’s worst nightmare and is the primary reason for the sometimes harsh application of its otherwise soft totalitarian policies to political dissidents of all sorts, but to union organizers and religious movements in particular. Part of the unholy alliance between China’s domestic autocrats and its foreign investors is that both hate unions and any movement toward workers’ rights, even if for different reasons.

  The global economic crisis that began in 1997 in East Asia and subsequently spread elsewhere threatens China almost as much as other Asian nations. But there are several factors in the Chinese situation that leave it in a more advantageous position than many other developing nations. As a start, the country is insulated from currency speculators because its currency is not freely traded on world markets. A year after the crisis began Malaysia, one of East Asia’s earliest-stricken economies, in order to regain control over its own economic affairs, took a page out of China’s book and imposed controls over capital flows so that foreign speculators could no longer freely bring in or take out huge amounts of Malaysian currency. China has one of the highest levels of external debt in the world, of around $120 billion; but more than 85 percent of that debt is in medium- and long-term loans, not the short-term ones that bankrupted South Korea, Thailand, and Indonesia when international lenders began demanding immediate repayment. Most foreign investment in China is also in major manufacturing projects, not in stocks, so there is less danger of sudden capital flight. In addition, China holds the world’s second-largest foreign currency reserves (after Japan), around $130 billion, which exceed its external debt.

  China’s main structural weakness is its banking system. The People’s Bank of China estimated that during 1997 at least 22 percent of the nation’s loans, worth more than $200 billion, were nonperforming—that is, they were not being repaid. The borrowers of these funds are the one hundred thousand sometimes woefully inefficient and unprofitable state-owned enterprises left over from the Maoist era, which together employ some fifty-six million people. These companies are the main legacy of the old Soviet-type economic system that the Communists adopted in the 1950s. In 1996, the state-owned sector turned in an overall loss for the first time. By contrast, collective enterprises, owned by local political units but subject to market forces, have doubled their productivity since 1978, while the privately owned sector now accounts for more than 11 percent of all Chinese industrial output.

  At the 15th Congress of the Chinese Communist Party, held in September 1997, the party launched a new drive to transform the majority of state-owned enterprises into share-holding or limited-liability companies. If they remain unprofitable, they can then be closed one by one. Zhu Rongji was appointed prime minister primarily to manage this delicate operation, endangering as it does the previously guaranteed lifetime jobs of so many workers. His main problem has been that if he restricts bank credit to state-owned enterprises in order to rehabilitate the banking system, he risks soaring unemployment when many such enterprises go under. Despite the “no pain, no gain” ideology being urged on China by the Western business press, officials are proceeding very slowly with these changes, for overzealous liquidation of state-owned enterprises, with its ensuing massive unemployment and dislocation, could destabilize the entire society. In July 1998, as part of the effort to reform the old economic structure, President Jiang Zemin ordered the People’s Liberation Army to liquidate the fifteen thousand commercial enterprises it runs, often of much greater interest to officers and troops
than military preparedness. A distinctive characteristic of the Chinese economy has long been the extensive business activities of the armed forces (and the widespread corruption that has followed in their wake). Intended to increase the competitiveness of state-owned enterprises by stamping out corruption and smuggling, getting the army out of business will not be easy.

  China’s long-range economic strategy is to transform its state-owned enterprises into versions of Japan’s industrial groups, the zaibatsu (renamed keiretsu after the war), or South Korea’s chaebol (which, unlike Japan’s groups, are more likely to be family-owned). By grouping profitable and risky enterprises together into developmental conglomerates and supplying bank credit to them on a preferential basis, China hopes to forge its own versions of Mitsubishi, Sumitomo, Daewoo, and Samsung. Needless to say, this will divide the labor force into labor aristocrats working for strategic corporations and ordinary workers in medium and small enterprises who sell intermediate goods to the big companies. This structural feature has long inhibited labor solidarity in Japan and South Korea, and it will have the same effect in China. While American economic theorists generally disapprove of the zaibatsu-type of corporate organization, something Japan invented in the late nineteenth century, the postwar descendants of the original zaibatsu were crucial to the economic development of Japan, South Korea, and Taiwan. China has every reason to try to emulate them.

  The real economic model for mainland China, although never mentioned for all the obvious reasons, is undoubtedly neither Japan nor South Korea but Taiwan, where the state and the ruling Nationalist Party own outright or directly control about 50 percent of all corporate assets and account for close to 30 percent of Taiwan’s gross national product. Numerous and successful state-owned enterprises are the single most striking feature of Taiwan’s economic landscape. Even though one of the richest places on earth, largely untouched by the economic meltdown of the late 1990s, it is structurally less orthodox in terms of the American model of capitalism than any other East Asian country.8

  But Taiwan is not just a covert economic model for China; it is also one of China’s greatest political conundrums. Although an unquestioned part of China according to international law, the island has become so rich that many of its inhabitants would far rather see their country secede and become independent than find themselves integrated into the poorer, more politically repressive mainland. If Taiwan did declare its independence, any number of dreadful developments could follow, ranging from a nationalistic backlash in China that could lead to the overthrow of the regime to an attempted invasion of Taiwan to keep China’s territory intact and a possible larger war involving the United States. The Taiwan problem at the end of the twentieth century is, as it was at the midpoint of the century, still the single most complicated issue of Chinese foreign policy and the most dangerous place where Chinese and American interests intersect. If it is mishandled by either side, the various kinds of blowback that might result could dominate global politics in the next century.

  CHINA: FOREIGN POLICY,

  HUMAN RIGHTS, AND TRADE

  In addition to its desire to maintain national security, advance its economic interests, and repress dissidents, China’s ruling Communist Party emphatically plays upon the country’s experience as a victim of imperialism and on its newfound nationalism. In its foreign policy, its primary focus has not been on expanding its territory or influence at the expense of other nations but on settling old, irredentist claims. The term “irredentism” derives from the name of an Italian political party of 1878 that sought to recover adjacent regions inhabited largely by Italians but under foreign control; by extension it now refers to any policy aimed at recovering territories lost to foreigners.

  In the Chinese context irredentism applies to places formerly claimed by Imperial China, whose last dynasty ended in 1912, and allegedly lost due to foreign activity. Without regard to their relative importance, the primary ones in question have long been 1) Hong Kong, 2) Taiwan, 3) various island groups in the South China Sea, and 4) Tibet. The issues surrounding these contested areas have varied depending on whether each was occupied by China or others, on the nature of the historical record that lay behind each claim, and on the relative power of the claim holders. In addition, there is the question, seldom directly raised by the Chinese but to one degree or another taken into consideration, of the costs today of pursuing old claims, no matter how well founded. Each of the remaining claims—the Hong Kong one having been peaceably settled in 1997—is much exacerbated by the regime’s increasing reliance on nationalism to solidify a base of support for its rule. The need to invoke the inviolable nature of “the Chinese motherland” as a basis for power has spurred the government to right old wrongs even when doing so violates another nation’s sovereignty or tramples on the human rights of peoples who were never in any sense part of the Chinese empire. This is only complicated by China’s stated willingness to use military means to achieve its irredentist aims.

  Hong Kong is indeed no longer at issue. It began its colonial existence in the nineteenth century as the booty of the English opium cartel after a successful war fought to prevent China from cutting off trade in the substance. On June 30, 1997, it was returned to China by the British government in an elaborate, ceremonial, and nondisruptive manner. Consistent with their penchant for publishing only bad news about China, the New York Times, the Wall Street Journal, the Washington Post, Time, and Newsweek all predicted that the reversion of Hong Kong would go badly and questioned whether Beijing could administer the territory successfully as the capitalist financial hub it had long been. And yet nothing out of the ordinary has happened. The government of Hong Kong is today similar to the colonial one under British rule from 1841 to 1989. Only after the Tiananmen repression, with reversion in sight, did Hong Kong’s British rulers introduce elements of democracy to the colony. China has retained some of these late democratic reforms but rescinded others. Much was at stake for the Chinese government in a peaceful and successful reversion. Hong Kong was certainly seen as a model for the future incorporation of Taiwan into the Chinese nation and evidence to the Taiwanese that the process, despite disparities between the two societies, need not be painful or punitive.

  Taiwan is, in fact, similar to Hong Kong in one respect: the cultural gap between citizens of the mainland and of either Hong Kong or Taiwan is now far greater than it was fifty years ago, when the Communists came to power in Beijing. Taiwan was settled by immigrants from Fujian province in the seventeenth century and then became a Japanese colony from 1895 to 1945. For China, the “liberation” of Taiwan remains a fundamental goal, a final task left over from the revolution that Mao led in the 1930s and 1940s against Nationalist Party leader Chiang Kai-shek, who retreated to Taiwan with what was left of his defeated forces at the end of a bitter war.

  The Nationalist exiles who evacuated to Taiwan in 1949 have slowly died off or been assimilated into the island’s preexisting Chinese population. Today, the Nationalist Party (the Kuomintang) is led by a native Taiwanese, who must compete for power against other Taiwanese not hobbled by old Nationalist affiliations. The hostility that existed after World War II between mainland exiles and long-resident Taiwanese has been slowly ameliorating, not only due to the deaths of first-generation exiles but also to intermarriage, the growing wealth of both groups, and a gradual political democratization that has in its own way been a form of decolonization. The emergence of Taiwanese-led political parties has signaled the end of a mainlander monopoly over politics. One result of this is that today few Taiwanese of any stripe particularly want to “rejoin” the mainland. Yet they do not dare declare their independence, fearing that this would force the hand of the mainland government. Serious political instability on the mainland, however, might prompt a unilateral declaration of independence, which would probably draw China and the United States into a war that neither wants and neither could win.

  In the spring of 1995, the U.S. government permitted a visi
t by the president of the Republic of China on Taiwan, Lee Teng-hui, a native Taiwanese, even though the United States had broken diplomatic relations with Taiwan in 1978, when it recognized the People’s Republic. He was ostensibly to attend an alumni gathering at Cornell, his alma mater. Although this was billed as a private visit, the House of Representatives had voted 396-0 and the Senate 97-1 in resolutions calling on President Bill Clinton to admit Lee. To add insult to injury, Chinese officials first heard the news on CNN rather than through diplomatic channels. They were outraged and said so, pointing out that China has a legal claim to Taiwan older than the United States itself and accusing Congress and the president of meddling in their “internal affairs.”

  Lurking here, as elsewhere, is a classic American error: the superpower’s mistaken belief that its role is pivotal in any context. Taiwan has been actively complicating the mainland’s decision making in ways far more effective than bluster from Washington. Taiwan is, for example, by far the largest investor in Vietnam and has risked more than $15 billion on Southeast Asian projects. Vietnam, a member of the Association of Southeast Asian Nations (ASEAN), has the longest and best record when it comes to countering Chinese pressures on its southern neighbors. The Taiwanese, in other words, have done their best to ensure that any Chinese attack on the island would involve the region as a whole, including ASEAN, which is slowly emerging as one of three major poles, along with Japan and China, in East Asia’s new balance of power.