Restless Empire (54 page)

The regime’s brutal suppression of student protesters destroyed in one swoop the outside world’s image of China as being at the forefront of global change. Almost all elected governments condemned the use of force, and many of them, including the United States and the European Union, imposed sanctions on China. But the new administration of President George H. W. Bush, the former US representative in Beijing who had succeeded Reagan as president in January 1989, also tried its best to keep the relationship with Deng Xiaoping intact. Less than a month after the massacre at Tian’anmen, Bush sent his national security adviser, Brent Scowcroft, on a secret mission to Beijing. Scowcroft told the Chinese that

President Bush recognizes the value of the PRC-US relationship to the vital interests of both countries. Beyond that, he has a deep personal desire to see the friendship between the Chinese and the American people maintained and strengthened. This commitment derives from his experience in China and his personal friendship for so many
of China’s leaders. How the G[overnment of the] PRC decides to deal with those of its citizens involved in recent events in China is, of course, an internal affair. How the USG[overnment] and the American people view that activity is, equally, an internal affair. Both will be governed by the traditions, culture, and values peculiar to each.
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A Reagan moment it was not. But Bush had his reasons. The United States, he felt, could not continue the pressure on the Soviet Union without at least tacit Chinese support. It was a sign of China’s importance for the United States in international affairs that the president would risk sending signals to the Chinese leaders that so contravened what most Americans thought and felt.

T
HE EVENTS AT
T
IAN’ANMEN
set political reformers within the party against those who opposed changes in China’s political structure. Among the latter—those who preferred the existing patchwork of Leninist ideas and authoritarian practices—there were some who were also against the economic and social reforms (which they termed a counter revolution) that were being carried out by Deng’s supporters. Having summarily dismissed the party leader, Zhao Ziyang, who wanted political reform, Deng after 1989 turned on his leftist critics. In a tour of the southern provinces in 1992 the leader spurred on the turn toward a market economy and more interaction with the world.

We should be bolder than before in conducting reform and opening to the outside and have the courage to experiment. We must not act like women with bound feet. Once we are sure that something should be done, we should dare to experiment and break a new path. That is the important lesson to be learned from Shenzhen . . . where conditions permit, some areas may develop faster than others; those that develop faster can help promote the progress of those that lag behind, until all become prosperous.
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But Deng also warned against the effects of the increasing foreign influence in China. He cited the example of the collapse of the Soviet Union in 1991. “The imperialists are pushing for peaceful evolution towards capitalism in China, placing their hopes on the generations that will come after us. Hostile forces realize that so long as we of the older generation are still alive and carry weight, no change is possible. But after we are dead and gone, who will ensure that there is no peaceful evolution?”
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Deng’s answer was to strengthen the dictatorship through a new generation, while making sure the country became rich and strong.

The Tian’anmen massacre did frighten off all sorts of internal dissent for two decades or more. But without the massive opening up of the economy that happened in the 1990s—and the prosperity that it gave all sorts of elites in China—it is unlikely that the dictatorship could have reimposed itself as easily as it did. Deng’s final bargain with his people—he died in 1997—was the prospect of a good life in return for party control of politics. At the regional level, many CCP leaders threw themselves into the government-inspired dismantling of the old socialist system, in part as repentance for the political repression they had gone along with in the post-1989 crackdown on dissidents. The 1990s did not become the decade of political change at the top that some had hoped for. But it did become the decade of economic and social change on an unprecedented scale. By 2000 the country was integrated into the global economy to an extent that it had not been since the 1920s, and the socialist state was becoming submerged by networks of private, and often international, enterprise.

When foreign investment returned to China in the early 1990s, after the shocks of the Tian’anmen events, it was at a pace and level never seen before in China’s history. The combination of a dedicated and cheap workforce and the foreign hope of buying into China’s own domestic development led to the country leap-frogging all others in terms of foreign direct investment (FDI). Over the course of the decade, China was second only to the United States in attracting FDI—
a remarkable change, given that foreign investment of any kind had not existed in Communist China prior to 1980. Up to today the changes in China’s economic system have to a large extent been driven by the needs created by foreign investors. For instance, a legal framework of ownership had to be created to serve those who wanted to invest in China. The same framework could then serve China’s own embryonic capitalists. Similarly for stock exchanges, insurance arrangements, and quality control. China’s bid to join the World Trade Organization (WTO), which finally succeeded in 2001 (very much thanks to the goodwill of the United States), was intended to serve China’s export potential, but also made the country sign up to stringent regulations concerning state subsidies (or rather the absence thereof), industry standards, copyright protection, and not least opening the Chinese market to foreign competition. The international drove the domestic in terms of economic change.

By 2000, the socialist economy in China had lost out to a market economy encouraged by a party dictatorship that was still Communist in name. For China’s population it was clear that they were living in a new society in which market forces were dominant. State-owned enterprises were sold off, down-scaled, or allowed to go bankrupt (at least 5,000 such companies have gone bankrupt each year since 2000).
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Those that survived are publicly listed and under the same management regulations as all other Chinese companies. For ordinary people this rearrangement means that employers that may not have paid them much money, but otherwise looked after them and their children from the moment the state assigned them to the factory to the day they died—now such employers were a thing of the past. No more free health care, kindergartens, schools, housing, holidays, or homes for the elderly. Instead, people had to—gingerly—enter a private housing market, search for a good job, and save for their children’s college education. Millions of people had to travel elsewhere to find work. China’s capitalism, when it finally broke through in the 1990s, was very unlike the European and
the Japanese variants, with their safety nets and entitlements, but remarkably like that of the United States, with its emphasis on mobility, opportunity, and personal responsibility.

B
UT IT WAS NOT ONLY
the Chinese population that had to learn a new way of living in the 1990s and 2000s. The state had to learn, too. Having given up direct ownership of the economy, it had to create new instruments of indirect control, most of them borrowed wholesale from the West and based on legislation, regulation, and fiscal and monetary policy. It was, in many ways, a return to China’s preoccupations of the interwar period, only with a much larger segment of the population involved in the industrial economy. Some critics called it a counter revolution, since the state increasingly saw its main task as serving market-led economic growth. By the 2000s the Chinese Communist state had adopted concerns about inflation, interest rates, credit flows, and property rights that sounded very similar to those of Reaganite America or Thatcherite Britain in the 1980s. Capitalism was in the driver’s seat, even if CCP leaders would not admit it, and the role of the state in advanced capitalist economies—minus electoral democracy—was what Beijing was aiming for. China’s capitalist revolution of the past twenty years has brought the country closer to the outside world—and especially to the United States—in terms of the aims many people set for themselves or how the Chinese state operates than ever before, or at least since the Mongol dynasties of the thirteenth century.

Why did the party do it? The CCP was founded on an anticapitalist creed in a China in which many people—not only Communists—felt that capitalism had brought nothing but suffering, exploitation, and humiliation. Now, the move from Maoism to market demanded a remarkable turnaround not just in ideology but also in mentality. For critics of the CCP inside and outside of China, the answer is simple: The party’s much-lauded “flexibility” was a consequence of its long history of manipulating the truth and deceiving those who believed in it.
Party leaders embraced capitalism to enrich themselves and their families, and because the plans for the future they had once promoted had utterly failed. There is obviously some truth to these assertions, but they are far from the whole truth. The main reason why the CCP chose the market was that from the position of the early 1990s there seemed to be no other way out. Modernity was capitalist. The USSR had—very unexpectedly for the Chinese—collapsed, as had the socialist states in Eastern Europe. The United States led the way toward an increasingly integrated capitalist world economy, and those who opted out of it would fall behind. The risk of falling behind was what first and foremost animated China’s leaders from Deng Xiaoping to Hu Jintao. If the race to modernize could be better run with Nike trainers, then the Chinese Communists would put them on (especially if the shoes themselves were made in China).

The new generation of returned students played a big role in China’s capitalist transformation. Even though, as we have seen, a very large number of Chinese who had studied abroad wanted to remain abroad into the 2000s, those who did go back to China had the expertise and the status to begin introducing new practices, first, in private enterprise, and, later, in the state and even in the party. By the late 2000s one could get the impression that the CCP itself had taken over many of the management methods of foreign enterprises. Quantifiable results for young party brass were all the rage among top cadre. One high-level CCP member I spoke with in 2009 described his training at the party academies in terms that anyone with an MPA or MBA from Harvard or LSE would recognize. At the same time foreign-educated academics are transforming China’s own higher education. Research output is crucial to promotion, and the output is supposed to be of international standard. Student concerns are increasingly taken seriously by their professors (since they are paying customers). When party control and academic ambition collide, it is as often the latter that wins out as the former.

Although consumer choice meant nothing in China before the late 1980s, it now means a lot to most Chinese, even those who live far from the main cities. The preoccupations are very similar to those of the pre–World War II era. How can modernity—preferably of an international kind—be best expressed in terms of products? Young people in China today are among the most fashion- and brand-conscious in the world. Foreign-produced goods generally have the edge, even though some Chinese brands are beginning to catch up. Music is often American, with liberal doses of Canto-pop thrown in. Clothes styles and hairstyles are Western, mediated through Hong Kong and Taiwan. For other products, concerns such as environmentalism or sustainability are beginning to find their way in, but not on key issues that really matter to the Chinese consumer, such as buying a car. In China—the world’s largest market for new cars in 2010—the American habit of buying the biggest engine your pocketbook can afford is still the rule (with foreseeable consequences: China today has twenty of the thirty most polluted cities in the world).
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Mass consumption is only one part of China’s capitalist revolution at the ground level. The other is the way people invest in the new economy. The main aim for many in China today is to buy their own house or apartment. In the cities a young couple can only do it through immensely hard work, because property prices are almost at European levels and salaries are much lower. Even though the Chinese savings rate is still very high, more and more of it—within an extended family—contributes in one way or another to paying off debt. Meanwhile many Chinese are investing directly in the market and have sometimes found that their investments can earn them as much as their salary. There is an increasing number of Chinese investors in property and stocks. Even though they are not likely to be more democratic or less nationalistic than their fellow citizens, they have, quite literally, bought into a development pattern for China that is quite similar to that of Western nations, Japan, and South Korea.

The one area in which China stands out from other East Asian states, including Taiwan, in terms of development is—ironically enough, given the pretensions of its Communist government—the matter of equality. While the early Communists had dreamed about a China that was modern and strong and socially just—and Mao had pursued the topic of equality endlessly in his campaigns—China today is one of the most socially stratified societies on earth. While more than a third of the population—those who have not joined the industrial economy—live on slightly more than $2 income per day, China has 128 billionaires and half a million millionaires.
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Its Gini coefficient (the standard used for measuring levels of income inequality) is higher than that for any other country in its region, and just slightly lower than the most unequal countries on earth, such as Brazil.
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While presiding over increasing levels of inequality, CCP leaders defend themselves by quoting Deng’s maxim that some people have to get rich first. In some areas of the country, social unrest is increasing, with local organizers claiming that the party is a tool of foreign exploitation of China. For minorities, in Tibet and Xinjiang but also in the south, the same party that tried to drown their identity in blood during the Cultural Revolution, now drowns it in consumer products and market adjustments, while increased mobility leads to ever more Chinese in minority areas. Capitalism, though victorious in China, is in no way uncontested.