On China (54 page)

In pursuing these objectives, Deng would move gradually. In Chinese terms, the leadership would “cross the river by feeling the stones,” charting a path in part on the basis of what worked. Mao’s continuous revolution was, in effect, jettisoned together with visions of utopian transformation. The Chinese leadership would not let ideology constrain their reforms; they would instead redefine “socialism with Chinese characteristics” so that “Chinese characteristics” were whatever brought greater prosperity to China.

To facilitate the process, China welcomed foreign investment, in part through Special Economic Zones on the coast, where enterprises were given wider latitude and investors were granted special conditions. Given China’s previous negative experience with “foreign investors” on its coast in the nineteenth century—and the prominent role this experience played in the Chinese nationalist narrative—this was an act of considerable boldness. It also showed a willingness—to some degree unprecedented—to abandon the centuries-old vision of Chinese economic self-sufficiency by joining an international economic order. By 1980, the People’s Republic of China had joined the IMF and the World Bank, and foreign loans were beginning to flow into the country.

Systematic decentralization followed. Agricultural communes were abandoned by encouraging the so-called responsibility centers, which, in practice, amounted to family farming. For other enterprises, a distinction was elaborated between ownership and management. Ownership would remain in the hands of the state; management would be left largely to managers. Agreements between the authorities and the managers would define the function of each, with substantial latitudes for managers.

The results of these changes were spectacular. Between 1978—the year the first economic reforms were promulgated—and 1984, the income of Chinese peasants doubled. The private sector, driven by the renewal of individual economic incentives, rose to constitute nearly 50 percent of the gross industrial output in an economy that had been ordered almost entirely by government fiat. China’s Gross Domestic Product grew at an average rate of over 9 percent annually throughout the 1980s—an unprecedented and nearly uninterrupted period of economic growth that continues as of this writing.
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An effort of such scope depended, above all, on the quality of the officials charged with carrying out the reforms. This was the subject of an exchange with Deng in 1982. In response to my question as to whether the rejuvenation of personnel was moving in the desired direction, Deng replied:

Five years later, Deng was still concerned with how to rejuvenate the Party. In September 1987, he gave me a preview of what he was planning for the upcoming Party Congress scheduled for October. Tanned, rested, and at eighty-three displaying undiminished vigor, Deng said that he would like to entitle the forthcoming congress “A Conference of Reform and Opening to the Outside World.” Zhao Ziyang would be given the key position of General Secretary of the Communist Party, replacing Hu Yaobang and necessitating the selection of a new Premier. Hu Yaobang had “made some errors,” Deng said—presumably in letting a set of 1986 student protests go too far—but he would remain in the Politburo (a distinction from previous periods when individuals removed from high office would also be removed from the policy process). No member of the Standing Committee (the executive committee of the Communist Party) would retain a dual position, speeding up the transition to the next generation of top officials. Other “senior people” would retire.

Deng would, he explained, now move from economic to political structural reforms. It would be much more complicated than economic reform because “it would involve the interests of millions of people.” The divisions of work between the Communist Party and government would change. Many Party members would have to change jobs when professional managers took over for Party Secretaries.

But where was the line that separated policymaking from administration? Deng replied that ideological issues would be for the Party, operational policy for managers. Asked for an example, Deng indicated that a shift of alliance toward the Soviet Union would be clearly an ideological issue. From my many conversations with him, I concluded that this would not be a frequent subject. On further reflection, I wonder whether by merely broaching such a previously unthinkable concept, Deng was not serving notice that China was weighing tacking back to greater freedom of diplomatic maneuver.

What Deng was proposing politically had no precedent in Communist experience. The Communist Party, he seemed to suggest, would maintain an overall supervisory role in the nation’s economy and political structure. But it would steadily withdraw from its previous position of controlling the detailed aspects of Chinese daily life. The initiatives of individual Chinese would be given wide scope. These sweeping reforms, Deng maintained, would be carried out “in an orderly manner.” China was stable now, and “must remain so if it is to develop.” Its government and people “recall [ed] the chaos of the Cultural Revolution,” and they would never allow it to recur. China’s reforms were “unprecedented”; this would inevitably mean that “some mistakes will be made.” The vast majority of people supported the current reforms, he said, but “courage” and “prudence” would be required to ensure their success.

As it turned out, these were not abstract issues: Deng would soon be forced to confront the tensions inherent in his program of “orderly” reform. While most of the world was marveling at the surging Chinese economic growth rate, the tens of thousands of students being sent abroad, and the changes in the standard of living inside the country, there emerged significant indications that new currents were churning within.

The early stages of the reform process tended to merge the problems of planning with those of the market. The attempt to make prices reflect real costs inevitably led to price increases, at least in the short term. Price reform caused a run on savings to buy up goods before prices went even higher, creating a vicious cycle of hoarding and greater inflation.

In a September 1987 meeting, Zhao Ziyang outlined a shift toward reliance on market forces for about 50 percent of GDP. Beyond the technical economic issues, this required a substantial recasting of the command system. There was to be greater emphasis, as in European states, on indirect control of the economy through manipulation of the money supply and intervention to forestall depression. Many central institutions in China would have to be dismantled and the functions of others redefined. To facilitate this process, a review of Party membership and a streamlining of the bureaucracy was ordered. Since this involved thirty million individuals and was carried out by the very people whose activities needed to be modified, the review faced many obstacles.

The relative success of economic reform produced constituencies at the core of the later discontent. And the government would face declining loyalty from the political cadres whose jobs the reforms threatened.

Administering a two-price system opened many avenues for corruption and nepotism. The shift to market economics actually increased opportunities for corruption, at least for an interim period. The fact that two economic sectors coexisted—a shrinking but still very large public sector and a growing market economy—produced two sets of prices. Unscrupulous bureaucrats and entrepreneurs were thus in a position to shift commodities back and forth between the two sectors for personal gain. Undoubtedly some of the profits in the private sector in China were the result of widespread graft and nepotism.

Nepotism is a special problem, in any event, in a culture as familyoriented as the Chinese. In times of turmoil, Chinese turn to their families. In all Chinese societies—whether it is mainland China, Taiwan, Singapore, or Hong Kong—ultimate reliance is placed on family members, who in turn benefit in ways determined by family criteria rather than abstract market forces.

The marketplace created its own discontent. A market economy will, in time, enhance general well-being, but the essence of competition is that somebody wins and somebody loses. In the early stages of a market economy, the winnings are likely to be disproportionate. The losers are tempted to blame the “system” rather than their own failure. Often they are right.

On the popular level, economic reform had raised Chinese expectations about living standards and personal liberties, while at the same time creating tensions and inequities that many Chinese felt could only be redressed by a more open and participatory political system. The Chinese leadership was also increasingly divided about China’s political and ideological course. The example of Gorbachev’s reforms in the Soviet Union raised the stakes of the debate. To some in the Chinese leadership,
glasnost
and
perestroika
were dangerous heresies, akin to Khrushchev’s throwing away the “sword of Stalin.” To others, including many in China’s younger generation of students and Party officials, Gorbachev’s reforms were a possible model for China’s own path.

The economic reforms overseen by Deng, Hu, and Zhao had transformed the face of Chinese daily life. At the same time, the reappearance of phenomena eradicated during the Mao years—income disparities, colorful and even provocative clothing, and an open celebration of “luxury” items—prompted traditional Communist cadres to complain that the People’s Republic was succumbing to the dreaded “peaceful evolution” to capitalism once projected by John Foster Dulles.

While Chinese officials and intellectuals often framed this debate in terms of Marxist dogma—such as a high-profile campaign against the threat of “bourgeois liberalization”—the split ultimately went back to the questions that had divided China since the nineteenth century. By turning outward, was China fulfilling its destiny, or was it compromising its moral essence? What, if anything, should it aim to learn from Western social and political institutions?

In 1988, the debate crystallized around a seemingly esoteric television miniseries. Broadcast on Chinese Central Television, the sixpart documentary
River Elegy
adopted the metaphor of China’s turbid, slow-moving Yellow River to argue that Chinese civilization itself had grown insular and stagnant. Blending indictments of traditional Confucian culture with a veiled critique of more recent political developments, the film suggested that China needed to renew itself by looking outward to the “blue ocean” of the outside world, including Western culture. The series catalyzed a national debate, including discussion at the highest levels of China’s government. Traditional Communists considered the film “counterrevolutionary” and succeeded in having it banned, albeit after it had first been broadcast.
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The generations-long debate over China’s destiny and its relationship with the West was active again.

C
RACKS IN THE Soviet monolith began to emerge in Eastern Europe at the start of 1989, leading to the fall of the Berlin Wall in November and the eventual dissolution of the Soviet Union itself. But China seemed stable, and its relations with the rest of the world were the best since the Communist victory in 1949 and the proclamation of the People’s Republic. Relations with the United States especially had made major progress. The two countries were cooperating in thwarting the Soviet occupation of Afghanistan; the United States was selling significant levels of arms to China; trade was increasing; and exchanges, from cabinet members to naval vessels, were flourishing.

Mikhail Gorbachev, still presiding over the Soviet Union, was planning a visit to Beijing in May. Moscow had met to a significant extent the three conditions put forward by Beijing for an improvement in Sino-Soviet relations: withdrawal of Soviet forces from Afghanistan; redeployment of Soviet forces away from the Chinese border; and a Vietnamese withdrawal from Cambodia. International conferences were routinely scheduled for Beijing—including a meeting that April of the board of directors of the Asian Development Bank, a multilateral development organization that China had joined three years earlier, which unexpectedly provided a backdrop for the unfolding drama.

It all began with the death of Hu Yaobang. Deng had overseen his rise in 1981 to General Secretary, the highest leadership post of the Communist Party. In 1986, when conservative critics blamed Hu for indecisiveness in the face of student demonstrations, he was replaced as General Secretary by Zhao Ziyang, another protégé of Deng, while remaining a member of the ruling Politburo. During a Politburo meeting on April 8, 1989, the seventy-three-year-old Hu suffered a heart attack. His stunned colleagues revived him and rushed him to the hospital. He suffered another heart attack there and died on April 15.