Deng Xiaoping and the Transformation of China (103 page)

In addition, Deng urged the military itself to make available some of its facilities and technology for the civilian economy. For example, on November 1, 1984, in a talk to a forum called by the CMC to discuss the military's role in the civilian economy, Deng suggested that military airports could be opened for civilian use and naval ports could be used for both civilian and military purposes. As the new policy took hold, military units turned mess halls into commercial restaurants, guest houses into commercial hotels, supply centers into stores, and military hospitals into military-civilian hospitals that accepted paying civilian patients. Between 1985 and 1990 the value of production by PLA enterprises increased by an estimated 700 percent.
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Another area that offered opportunities for diversification away from military-only purposes was agriculture. State farms run by the military were encouraged to diversify their products and, after the creation of markets, to sell some of their produce in local food markets. Because the military had access to a considerable amount of land, it could also rent out land to developers and other government units or to enterprises for a fee—or even become a stakeholder in these new enterprises. As foreign firms began seeking sites to set up factories, many military farms supplied some of their valuable real estate in exchange for equity in joint ventures that drew on Western technologies.
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When the military shifted to civilian-related business activities, officers had a chance to improve their military units' housing, medical care, and recreational facilities. Those who were being retired were assisted with housing and given other benefits. Even the situation for ordinary soldiers improved when their military units made profits.
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These new sources of income helped to make military officers and servicemen stakeholders in Deng's reforms.

One of the biggest problems Deng faced was in adapting inland civilian and military factories to the new market economy. It was almost impossible to turn factories deep in inner China, with such high transport costs, into profitable enterprises that could compete in open markets with those along the coast. In 1978, more than half of defense industrial production was located in inner China, in the “third front” factories that Mao had moved inland to reduce vulnerability to foreign attack. Now that China had developed peaceful relations with other countries, some factories, or at least parts of factories, were allowed to relocate to the coast where they could not only reduce transport costs, but also make better use of foreign technology and management strategies as well as commercial opportunities.
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For example, inland factories producing electronic products for the military established
branches in Shenzhen to produce radios, TVs, calculators, and other electronic equipment for consumers both at home and abroad. Doing so gave them faster access to foreign technology as well as to civilian markets, as well as the opportunity to transfer new technologies to any remaining inland factories.

In 1978 China's military technology was far more advanced than its civilian technology, but Deng took an interest both in how technology could be “spun off” from military to civilian uses and how it could be “spun on” from advanced global civilian technology to Chinese military uses. Deng took great interest, for example, in learning how Japan, immediately after World War II, had begun converting its military industry to civilian industry.
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But he also learned from Japan's experience in making good use of “spin on.” On June 28–29, 1978, he suggested that China should learn from Japan's handling of shipbuilding after World War II: it made great advances in civilian shipbuilding by transforming the production processes, which then enabled Japan not only to sell ships, but also to build more modern ships for the navy.
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In 1982, following the 12th Party Congress, large parts of the PLA were converted to civilian status and given opportunities to earn money in the marketplace—a move that helped reduce the size of the PLA after 1985. The large military railway and engineering construction units, for instance, were placed under the Ministry of Railways and the Capital Construction Corps. And the civilian construction companies that played the key role in transforming Shenzhen from a rural town to a large city within a decade were largely formed from former military construction units that had been demobilized.

Prior to these changes it was rather easy to engage in science and technology planning, but the complexities due to the opening to global civilian technology required new broader coordination. In 1982 a new organization, the Commission for Science, Technology, and Industry for National Defense, was established to provide some overall coordination of planning for the rapid changes in civilian and military technology. And in 1986, the “863 program” was established as a new cooperative program between civilians and the military for the development of advanced technology.
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The commercialization of military operations in the 1980s was a messy, confusing process that created nightmares for some bureaucrats trying to coordinate the process. But in the end it brought many of the benefits that Deng had intended. It eased the demands on the government budget, helped
meet pent-up consumer demand, assisted firms in becoming more efficient, improved living conditions for both officers and ordinary soldiers, provided employment opportunities for those discharged from military service, and enabled the advances in civilian technology and efficiency to be used to improve military production. Even so, it was just a start. Although Deng's redirection of the national defense industries and military enterprises led to some progress in the 1980s, the process of relocating from inner China to the coastal areas, of overcoming the bureaucracy, and of upgrading personnel would require several decades to complete.

Despite all the advantages of the commercialization of military activities, the mixing of military and private affairs also created opportunities for corruption and greed that detracted from the spirit of dedication to the military mission. Many military leaders became concerned not only about illegal profiteering, but also about the erosion of the patriotic fighting spirit due to the new preoccupation with making money. After several years of struggling with these problems, lower-level military units were forbidden to engage in commercial activities. Higher-level, specialized commercial activities continued, however, and although many PLA businesses failed, some joint ventures spawned in the early years of reform became successful enterprises, with a few later emerging as world-class international businesses.

A Foundation for a Modern Military

The Persian Gulf War of 1991 showed leaders how much military technology in other countries had advanced in the 1980s and just how far behind China had fallen while Deng was restraining the military budget and channeling resources to the civilian economy. Yet by keeping the risk of conflict low, Deng succeeded in promoting rapid economic growth without sacrificing the nation's security.

In 1995, however, Deng's successors, confronted with a real possibility that President Lee Teng-hui might declare an independent Taiwan, decided the risk was sufficiently great that China must be prepared militarily not only to attack Taiwan but also to deter the United States from supporting Taiwan in the event of a conflict. China would raise the cost of U.S. involvement by endeavoring to deny American ships, planes, and troops the access they would need to defend Taiwan. Since 1995, under Jiang Zemin's concerted drive for military modernization, the increase in the military budget has been far greater than the increase in GNP. Chinese military modernization was soon
extended beyond denying Americans access to Taiwan; because China was dependent on sea lanes for its energy, it began to develop a navy and to aim to become a top military power overall. Deng did not begin that process nor did he plan for his successors to build up a modern military. But he left his successors with a smaller, better-educated military force; a better understanding of the requirements for modern warfare; and a stronger civilian economic and technical base that his successors could build on to modernize China's military.

On August 18, 1980, a Chinese citizen gave one of the most biting and comprehensive criticisms of Chinese officials made during the entire Deng era. In scathing terms, he accused them of abusing power; divorcing themselves from reality and the masses; spending time and effort putting up impressive fronts; indulging in empty talk; sticking to rigid ways of thinking; overstaffing administrative organs; being dilatory, inefficient, and irresponsible; failing to keep their word; circulating documents endlessly without solving problems; shifting responsibility to others; assuming the airs of mandarins; reprimanding and attacking others at every turn; suppressing democracy; deceiving superiors and subordinates; being arbitrary and despotic and practicing favoritism; offering bribes; and participating in other corrupt practices. The citizen? Deng Xiaoping.
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Like Mao, he was seeking to ensure that officials maintained the support of the people.

When Deng gave this speech in August 1980, Communist parties in Eastern European countries were losing popular support. A month before his speech, Poland's labor union, Solidarity, had launched Poland's largest and longest-lasting strike. Many Chinese leaders, initially sympathetic with Solidarity, thought it was reasonable for workers to have their own organization. But they also worried about what would happen if Chinese workers went out on strike. Deng and Hu Yaobang, trying to reassure Chinese officials who worried about similar disruptions, said that Chinese leaders, unlike Eastern European leaders, did not have to bend to unpopular demands from the Soviet Union. Furthermore, the reforms in China beginning with the Third Plenum were popular with the working people.
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Nonetheless, Deng and Hu Yaobang were sufficiently concerned that they decided that to reduce the risk
of such problems in China, they should expand freedoms, provide opportunities for people to voice legitimate complaints against Chinese officials, and make an effort to resolve the problems causing these complaints.

Deng's speech of August 18, 1980 was a high point of Deng's efforts to grant more freedoms. In the speech, he gave a positive evaluation of democracy. He did not go so far as to advocate voting, nor did he suggest changing the role of the Communist Party. In fact, he criticized Western democracy, using the well-known code words “bourgeois thinking,” “ultra-individualism,” and “anarchism.” But Deng aimed his sharpest criticism at “feudalism”—the code word for leftism—and its vicious attacks on those who spoke out. His appeal for more freedoms and for party leaders to listen to criticism aroused expectations among intellectuals who even years later pointed to this speech as a beacon of hope.

Within weeks after the speech, as the Polish situation dragged on, the atmosphere in high Chinese party circles began to change. Leaders started to worry that Deng had given too much encouragement to protestors and that events in China could quickly spin out of control, as they had in Poland. A long letter from Hu Qiaomu to General Secretary Hu Yaobang, written scarcely a month after Deng's speech, helped crystallize support for a firmer response to disorder. Hu Qiaomu's letter also reflected the views of Chen Yun, the former union leader who had helped organize demonstrations in Shanghai but had told workers in the Jiangxi Soviet that because the proletariat was in charge, one of the major responsibilities of the labor union was to increase production. In his letter, Hu Qiaomu warned that an independent labor union could enable dissidents to unite and cause great difficulties.

Hu Yaobang, who was more sympathetic to independent worker organizations in China, did not respond to Hu Qiaomu's letter. He continued to believe that the real lesson from Poland was that China should speed up reform and opening.
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But the tide had already turned. On October 9, two weeks after Hu Qiaomu sent his letter, the party Secretariat distributed it, in a slightly revised form, to various units. Wang Renzhong, conservative head of the Propaganda Department, also sent out a directive saying that discussion of Deng's August speech should end. And on December 25, 1980, at the closing session of the Central Party Work Conference, Deng, backpedaling, declared that they should proceed cautiously with political reforms.
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Deng's reactions to the 1980 Polish strikes resembled Mao's reactions to the Hungarian and Polish uprisings in 1956. First, allow more open criticism to help correct some of the worst features of the bureaucracy and to win over
those critics who felt some changes were needed. But if hostility to the party threatened party control, clamp down. Having noted how Mao's virulent anti-rightist campaign in 1957 had destroyed the support of intellectuals, Deng in 1980 tried to walk a fine line between curbing expressions of freedom and retaining intellectuals' active support for modernization.

Deng did not engage in a full-blown campaign against intellectuals as Mao had (with Deng's help) in 1957. Still, it was clear that Deng was clamping down. In his December speech, Deng did not directly disavow anything he said in his August speech and he continued to use the term “democracy” positively, but he insisted also on “democratic centralism,” meaning that once a party decision was made, party members were expected to carry it out. In addition, after Hu Qiaomu's letter was distributed, Deng was careful not to appear as permissive as he had in his August speech, and he reiterated the importance of following the “four cardinal principles.” Deng did not give up the idea of undertaking political reform, but he would only bring it up again when he judged the time to be ripe. That time would not arrive until 1986.