TEN YEARS AFTER MAO
A decade has passed since the death of Mao Zedong. During these years, China has embarked on a course of reform that Deng Xiaoping has called a "new revolution" and Premier Zhao Ziyang asserts represents "an extensive, profound and sustained transformation" of the country's economic structure. In a 180-degree change of direction from Mao's last years, the Chinese have moved rapidly from ideological dogmatism toward eclectic pragmatism, from extreme totalitarianism toward liberalized authoritarianism, from a command economy toward "market socialism," and from autarkic isolationism toward international interdependence. These trends signal a major new stage in China's long march toward modernization.
The central theme in the historical drama that has unfolded in China since the mid-nineteenth century has been the search for "wealth and power" and a respected role in the modern world. Repeatedly the Chinese have started a new phase with great expectations, only to end in failure. The collapse of the Manchu dynasty in 1911 led to the creation of a republic, but soon China disintegrated into warlordism. In the 1920s the Kuomintang, or Nationalist, regime began a process of national reintegration, and for a decade it made real progress. Then, in the face of Japanese aggression and communist revolution, the Nationalists also failed; during the civil war after World War II, China again disintegrated.
The victory of the Chinese Communist Party (CCP) in 1949 was a major watershed. The new regime rapidly established an effective central government that reunified the country for the first time in the twentieth century. Within a few years, taking Moscow as a model but drawing also on their own three decades of revolutionary experience, China's new leaders built a strong totalitarian system and instituted a centralized, planned economy. They extended Beijing's power to the grass-roots level to an unprecedented degree, mobilized the nation's resources more effectively than any previous government, launched the most ambitious program of industrialization in the nation's history, and vigorously asserted China's claim to big-power status.
In many respects the regime's accomplishments under Mao were impressive, especially in the 1950s. Yet during the final decade of Mao's life the Communists, too, failed in basic respects. Beijing's leadership split apart, the economy encountered growing problems, and the Cultural Revolution again brought China close to disintegration. For a brief period during the mid-1950s China had appeared to be entering a post-revolutionary period of stability and sustained growth, but by the end of that decade Mao, pursuing his personal vision of an egalitarian society, pressed again for radical policies and called for "uninterrupted revolution." The Great Leap Forward in the late 1950s resulted in a disastrous economic depression, and the Cultural Revolution in the late 1960s caused a devastating breakdown in the country's political system. Recovery during the early 1970s was partial at best.
The final, climactic year of the Maoist period, 1976, was one of successive tragedies and disasters. The atmosphere, in fact, was like that at the end of a traditional dynasty. Early in the year Premier Zhou Enlai died; his principal deputy, Deng Xiaoping, was purged for the second time (he was first purged early during the Cultural Revolution); and a virtual unknown, Hua Guofeng, emerged as Mao's probable successor. In midyear China suffered one of the most destructive earthquakes in its history, a sign, in the view of some tradition-minded Chinese, that the leadership had lost its "mandate of heaven." Then, on September 9, Mao died; in less than a month the leaders of the radical palace guard most closely associated with him in his declining years were arrested, and Hua became party chairman. Mao's death marked the end of an era; what was not clear was who would lead China and in what direction in the era to come.
Hua Guofeng's ascendancy proved to be a brief interregnum. Because his power base was weak, his legitimacy rested essentially on his link to Mao; not surprisingly he clung to many Maoist principles, including continued class struggle. During 1977-78 Hua adopted a few limited reforms, but they were palliative rather than fundamental. They did not satisfy many Chinese leaders who were determined to repudiate the Cultural Revolution, reject the radical policies of Mao's final years and introduce new reform policies. In early 1978 Hua launched China on an ambitious ten-year program of "four modernizations." But this hastily formulated plan called, unrealistically, for a new "economic leap forward," and it immediately caused more problems than it solved; by year-end China had begun to abandon it.
The turning point that finally set China on a new course toward genuine reform of its political and economic system came at the end of 1978. At a historic meeting of the Central Committee, Deng Xiaoping called for fundamental policy changes. At that time he was also able to achieve personal political primacy, even though Hua continued for a brief period as titular head of the regime. Deng-who had been general secretary of the party from the mid-1950s until the Cultural Revolution-was one of two surviving members of China's pre-Cultural Revolution Politburo Standing Committee (the other being Chen Yun). Deng, along with leaders like Liu Shaoqi, Zhou Enlai and Chen Yun, had played a key role in three attempts (1956-57, 1961-62 and 1974-75) to move China in a more pragmatic direction. Pragmatism was, in fact, Deng's hallmark and was the main charge leveled against him during the Cultural Revolution by China's radicals, who denounced him for having once said that he did not care whether a cat was black or white as long as it caught mice. Twice purged by Mao, Deng was rehabilitated for the second time in 1977.
In 1978 Deng mounted a major campaign to abandon ideological dogma and to adopt pragmatism-symbolized by the slogans "practice is the sole criterion of truth" and "seek truth from facts." By the end of the year he persuaded the party to give highest priority to economic development instead of class struggle and to adopt an "open door" policy toward the world. Thereafter, although it took him several years to consolidate his power fully, he was finally able to do so in a remarkably orderly, peaceful fashion, gradually easing most opponents out of leadership positions, neutralizing others and broadening the coalition that backed basic reform. By the 12th Party Congress in September 1982, Deng was in full command.
While the top leadership continued to include-and still does today-critics of certain of his policies, by 1982 a strong majority supported the general direction of Deng’s reforms. Continuing disagreements focused not on whether reform was necessary, but on how much and how rapidly China's political and economic systems should be changed.
The problems facing China's reform-minded leaders at the time of Deng's latest rise to power were enormous. After a decade of intense conflict China was still in the midst of an acute political crisis; after two decades of experimentation with two very different development strategies-the Soviet model of a centralized planned economy and the Maoist model of revolutionary mobilization-China faced a wide range of chronic economic problems.
The country still had not recovered from the political breakdown of the Cultural Revolution years, when the leadership had been crippled by factionalism, the regime's institutions had been paralyzed, and social order had been undermined. Communist Party cadres were demoralized. Large numbers of ordinary Chinese, exhausted by years of mass mobilization, disillusioned by the recent conflicts and restive because of stagnating living standards, had begun to lose faith in both the party's leadership and its ideology; most Chinese yearned above all for stability and a better life. The country clearly faced a fundamental crisis of confidence.
The chronic economic problems facing Deng and his supporters were less obvious, perhaps, but they demanded urgent attention. They were the result of cumulative trends that had started in the 1950s and had become more serious over time. Despite China's economic accomplishments during the Maoist era, which had included fairly rapid (even if extremely erratic) overall economic growth, the creation for the first time of a strong industrial base and a relatively equitable distribution of output, living standards remained very low and the inefficiency of the economic system was apparent to the majority of China's leaders. Many of these leaders believed that without far-reaching reforms growth could not be sustained; they also recognized that even with the growth achieved, China's development had lagged far behind that of most of its East Asian neighbors.
The economic system inherited by China's post-Mao leaders was overplanned, overcentralized and overbureaucratic. It was extraordinarily inefficient and wasteful. Past growth had been achieved through huge investments, which had precluded significant increases in living standards. The economy was plagued by imbalances, bottlenecks and shortages. Much of China's capital stock was obsolete. The factor productivity (of labor and capital combined) was actually declining. Although agricultural output had grown, it lagged seriously behind the country's needs. Virtually all consumer goods were in short supply, and most were of poor quality. Unemployment was sizable, underemployment was endemic. China's educational and research institutions were in a shambles as a result of the Cultural Revolution; after years of isolation Chinese science and technology had fallen far behind that of advanced nations.
Problems such as these convinced Deng and other reform-minded leaders that what was required was not just minor modification of past policies but basic systemic reform. The breakdown of the political system during the Cultural Revolution had weakened resistance to change, making it possible to consider far-reaching political and economic reform.
In 1978, however, neither Deng nor anyone else in China had a clear blueprint for either political change or economic reform. Yet Deng and his closest supporters did have a strong sense of the directions in which China should move. In the political realm, they were determined to break old ideological shackles, reject Maoist-and all other-dogmas and reinterpret Marxism-Leninism and Mao Zedong Thought to permit fairly freewheeling experimentation. They saw a pressing need to restore stability, to institutionalize the political system and to reform the bureaucracies while restaffing them with younger and more competent cadres. Sensitive to the need to strengthen the regime's legitimacy and build popular support, the reformers recognized that it was also imperative to loosen controls, liberalize politics and broaden mass participation.
In economics the primary aim of the reformers was to create a more efficient system capable of sustained, steady growth; but they also recognized an urgent need to improve living standards for ordinary Chinese as well as build national power. Having rejected past development strategies, they began gradually to evolve a new one. They accepted from the start that it was imperative to introduce more effective incentive systems throughout the economy. Very soon they started to reduce central planning and to shift from direct to indirect methods of planning. In agriculture they initiated decollectivization, and in industry they began to decentralize decision-making and grant greater autonomy to enterprises. The broad trend was toward increased marketization and commercialization of the domestic economy. They also decided, right at the start, that China should become increasingly involved in the world economy.
As they have moved in these new directions, China's reformers have been remarkably eclectic and experimental, introducing new policies incrementally. They have borrowed ideas from numerous foreign sources-the major capitalist nations, Eastern Europe and their East Asian neighbors-yet none of their borrowing has been mechanical; whatever they have drawn from others' experiences they have modified and adapted. Moreover, they have innovated a great deal on their own. As a result, the mix of policies that is evolving is distinctive. Their pragmatic approach has involved a good deal of backing and filling; attempts to solve some problems have created new ones, and each step toward partial reform has demanded additional steps. They have encountered some serious, though temporary, setbacks and failures, but the process of reform has continued.
Although it is not yet possible to predict confidently what either the political system or economic system will look like after Deng's reform program has run its course, there is little doubt that the reforms already have begun to transform China in important ways. The key question is how much further this transformation is likely to go in the years ahead, especially after Deng passes from the scene.
Although their overriding goal was economic modernization, Beijing's new leaders knew that in order to reform China they had to start with political changes. They also recognized that economic and political reforms would inevitably be intertwined. Since the late 1970s, therefore, changes in both spheres have proceeded in conjunction, though not on identical paths or at the same pace.
The leaders' basic goals in introducing political reforms have been instrumental in some respects and less far-reaching than their economic reform objectives; that is, certain political reforms have been seen as essential prerequisites for economic modernization rather than as priorities in their own right. Nevertheless, some of the reforms have gone further than outside observers expected-and probably further than some conservative Chinese leaders believe is desirable.
Basic to the entire process of political change has been the decline of ideology. Deng and his closest supporters have rejected the Maoist concepts of uninterrupted revolution and class struggle. While they periodically denounce "bourgeois liberalism" and other "unhealthy tendencies" and insist that they will continue to adhere to the four "basic principles"-Marxism-Leninism-Mao Zedong Thought, the dictatorship of the proletariat, the socialist road, and the leadership of the party-the meaning of all but the fourth of these principles is now ill defined; even the principle of party leadership has been modified. Ideology now imposes few constraints on the experimentalism of the regime's reform leaders; many Chinese are now ideological agnostics. The reform leadership regularly calls for the creation of a new kind of "spiritual civilization," but realism and pragmatism appear to have superseded virtually all dogmas in most policymaking.
This trend has created something of an ideological vacuum in China, which is seen as a potential weakness by some Chinese-and some foreign observers as well. However, the degree to which the decline of ideology poses political problems should not be exaggerated. Appeals to patriotism, as well as to the universal desire for a better life, are now replacing old ideological dogmas in China as they already have in most other modernizing nations in East Asia.
In reinterpreting the Thought of Mao Zedong, China's reformers have reassessed the chairman's historical role. In doing so they have tried to redefine the nature of political leadership in the Chinese political system. The CCP's official verdict on Mao, codified after intense debate in a 1981 "Resolution on Certain Questions in the History of Our Party Since the Founding of the People's Republic of China," is similar to that of many foreign observers, namely that he was a great revolutionary leader but a flawed head of state who, from the late 1950s on, made repeated, costly mistakes and exercised what the Chinese now label a "feudal" form of one-man rule. One major objective of China"s present leaders has been to eradicate all personality cults surrounding the country"s rulers and to establish as firmly as possible the norm of collective leadership in order to prevent the reemergence of arbitrary one-man rule.
Authority has been deliberately dispersed among China's top institutions and leaders. No longer is power concentrated in a deified party chairman. In fact the chairmanship was abolished in 1982; the titular head of the party is now a less influential general secretary. Power today is shared more broadly among the Politburo and its Standing Committee, the Secretariat and the State Council (the government's cabinet)-and various other individuals heading major institutions, including the head of the party's Central Military Commission, the state president, the chairman of the National People’s Congress (NPC) Standing Committee and party elders in a new Central Advisory Committee. Overlapping positions have been greatly reduced and limited terms have been set for some top positions.
Will the attempt to institutionalize collective leadership succeed? Deng has continued from the background to exercise ultimate authority, which is still essentially personal. However, his style of leadership is profoundly different from Mao's; he exercises his influence not by fiat but by building coalitions. He has steadily delegated power to others. It is certainly possible that in the long run one-man rule could reemerge. This kind of leadership has been the traditional pattern in China; rooted in a centuries-old emperor cult, it persisted under both Chiang Kai-shek and Mao. Nevertheless, the current effort to create a collective leadership, the memory of Mao’s excesses and the lack of any obvious, charismatic leader on the horizon could well mean that China's immediate post-Deng leadership will be essentially collegial. The constraints on personalized, individual leadership will probably continue to be strong, at least in the years immediately ahead.
Another trend of undoubted historical importance has been the establishment of clear civilian primacy over the military. Politics in China has been militarized since the nineteenth century. The decline of the Manchu dynasty was paralleled by the rise of local military forces. When the dynasty collapsed, the country disintegrated into provincial warlordism. Thereafter, from the 1920s through the 1940s, the struggle between two militarized, revolutionary movements, the Nationalists and the Communists, as well as conflict with foreign aggressors, ensured that military men would play dominant roles in national life. Following the CCP victory and the Korean War, the regime began to professionalize China's military establishment and reduce its political influence, but this effort was shortlived. During the chaos of the Cultural Revolution, when China's civilian bureaucracies were paralyzed, the People's Liberation Army (PLA) moved into the vacuum and regained a dominant position throughout society.
The effort to civilianize the system began while Mao was still alive, especially after the abortive coup and death in 1971 of Marshal Lin Biao (the defense minister whom Mao had designated as his successor), but the process was far from complete when Mao died. Deng Xiaoping, who has continued to exercise personal control of the PLA through his chairmanship of the Central Military Commission, has carried the process of establishing civilian control much farther. The size of the PLA is now being cut by a fourth to three million; a cap has been placed on its budget; many of the industries it controls are being converted to civilian production; its aged officer corps is being rapidly replaced by younger men; and the PLA is now being retrained and converted into a professionalized national defense force. Most important, its political roles have been drastically reduced. There are now fewer military representatives in the regime’s top leadership bodies than at any time since 1949. In the Politburo elected in 1985 there are only two active military commanders (one a regular Politburo member, the other an alternate) and, apart from Deng himself, two political-military leaders (both regular members).
The PLA is still a powerful force in China, one, moreover, that is essentially “conservative” and therefore resistant to some of the reformers’ policies. But if present trends continue, which now seems likely, the primacy of civilian rule in China will be more firmly established than at any time in the modern period. This is a change of profound significance-one of the most fundamental trends that has begun to alter the nature of Chinese politics; it is also a change that enhances the prospects for continuation of the present leadership’s reforms.
Deng has worked steadily to improve the regime’s institutions and procedures for formulating and implementing policies. In the late Maoist era decision-making was highly concentrated and major policies were often adopted, sometimes by Mao alone, with little careful analysis of problems or serious consideration of policy options. Today, policymaking is much more systematic and regularized. Policy options are debated vigorously within party and government bodies and differences are sometimes expressed openly (at times by political leaders themselves in public speeches but more often by scholars or journalists in their writings). The top leadership now calls upon a wide range of specialists for their expertise and professional advice. The leadership has explicitly repudiated the “campaign” approach characteristic of the Maoist era, which relied on periodic surges of nationwide mass mobilization; instead it is attempting to carry out its policies through the established bureaucracies and procedures.
This has made bureaucratic reform more urgent. Chinese reformers have taken numerous steps to curb officialdom’s abuses and make the bureaucracies more efficient-as well as more responsive to the demands of both the leadership and the population at large. A major effort has been made to reduce the direct intervention of the party into specialized fields and to separate the organizational and ideological activities of party functionaries from the specialized tasks of directing and administering the country’s economic and other non-party institutions. The CCP remains the ultimate source of authority, however, responsible not only for defining but also for monitoring major policies, and the party’s 42 million members (including nine million cadres) still dominate virtually all top institutional positions.
Nevertheless, the roles of party generalists have been significantly reduced while those of experts and professional managers of all sorts have increased. Even though the majority of the latter, especially those who hold key positions, are party members, the path to success in China increasingly depends more on specialized knowledge than on the old criteria of ideological and political orthodoxy. For many Chinese whose personal goals now are either professional achievement or material success, careers as party functionaries have much less appeal than in the past. Although only a few Chinese question the basic fact of party rule, the party’s prestige and influence have clearly declined.
To reform both party and government bureaucracies, Deng and his supporters launched a major effort in late 1980 to restructure them, adjust their relationships and restaff their leadership positions with new personnel. In a major move toward bureaucratic reform in 1982, the regime announced a plan for reducing the number of ministries, commissions and agencies directly under the State Council from 98 to 52. For example, four bodies concerned with foreign economic relations (the import-export and foreign investment control commissions and the ministries of foreign trade and economic relations with foreign countries) were merged into a new Ministry of Foreign Economic Relations and Trade, and there were similar mergers of other top-level bodies.
Serious efforts have also been made to cut the size of the bureaucracies, reduce red tape and in general make them more efficient. A basic objective has been to clarify the responsibilities of different institutions and make them more accountable. How much effect these particular reforms have had is debatable, however. China invented bureaucracy, and bureaucratism, in the pejorative sense, is a deep-rooted problem. China's bureaucratic hierarchies are still huge, inefficient and relatively rigid-but less so than before the reforms began.
The organizational and power relationships among the bureaucracies have been undergoing significant changes as a result of the regime’s policies of decentralization and decontrol. A great deal of authority-political as well as economic-has been passed downward, strengthening local governments and enterprises at the expense of many central bodies. Governmental institutions (as opposed to the party apparatus) have become more important, and institutions responsible for economic activities have acquired greater influence.
The greatest changes affecting the operation of China's bureaucracies, however, have resulted from new personnel and personnel policies. China's reformers have engineered a remarkably rapid and sweeping generational change of leadership at every level. They have adopted new professional criteria for selecting future leaders, set age limits (or at least targets) for positions at different levels and initiated a regularized retirement system. The aim has been to promote younger, better-educated and more professional leaders throughout the bureaucracies, and the results have been spectacular. Few if any established regimes have carried out such a far-reaching turnover of personnel in such a short period. More than one million senior cadres recruited before 1949 have been retired, and 44 percent of leading officials at the provincial level and close to half at the prefectural level have been replaced.
In 1985 the top leaders instructed the party apparatus to select 1,000 potential leaders for promotion at the central and provincial levels, 30,000 at the prefectural level and 100,000 at the county level. Overall, the average age of central ministers and vice ministers has dropped from the mid-60s to the high 50s, while that of provincial officials has fallen to around 55. There has been a comparable turnover in the PLA. Not only have these personnel changes reduced bureaucratic deadwood, they have begun to create a new kind of technocratic elite, including an increasing number of individuals who possess the skills required to guide China into the modern world and who generally support the regime’s reform policies.
The turnover in the very top leadership in Beijing has also been dramatic, and this unquestionably has strengthened the political base for continued reform. Major milestones in the early stages, during 1981-82, were Hu Yaobang’s replacement of Hua Guofeng as party chief and Zhao Ziyang’s replacement of Hua as premier. Of the 348 regular and alternate members of the Central Committee chosen at the 12th Party Congress in 1982, 210-three-fifths of the total-were new members, and seven new members replaced an equal number of superannuated leaders in the new 22-member Politburo (20 regulars and two alternates). At a special party conference in September 1985, 64 more new members replaced 65 old leaders in the Central Committee, and six younger leaders replaced ten veterans who were rotated off the Politburo. The average age of the new regular and alternate Central Committee members is 51, and over three-quarters have had a college education. Of the six new Politburo members, three are in their 50s and three are in their 60s. (The ten Politburo members they replaced included four in their 80s, four in their 70s, and two in their late 60s.) There has been resistance at every stage in the retirement of the older generation, but the process has been remarkably orderly and peaceful; instead of denouncing those ousted, the regime has treated most with respect, allowed them to retain their previous salaries and perquisites, and appointed a large number to honorific advisory posts.
Deng’s most notable moves to put a new leadership in place have been those taken to plan for his own succession. He has selected and groomed with great care not just a second echelon of future top leaders, but a third one as well. Since the early 1980s, Hu Yaobang (who turned 70 in 1985) and Zhao Ziyang (four years younger than Hu) have been viewed as Deng’s immediate successors. More recently, with their cooperation Deng has cultivated the third echelon. The rising stars among this group are four men, three of whom are in their 50s and one of whom is just over 60. Two, Hu Qili and Qiao Shi, have had careers mainly in the party apparatus, and two, Li Peng and Tian Jiyun, have risen to prominence as vice premiers. All were elected to the Politburo in 1985. The expectation in China is that men from this group will eventually replace Hu and Zhao as leaders of the party and state.
Some observers speculate about another possibility. China's top leadership still includes several men of Deng’s own generation who are more cautious or conservative than he is. The most influential is Chen Yun, a leader in his early 80s who has been China's ranking economic specialist since the 1950s. Chen, who can best be described as a “cautious reformer,” has openly criticized aspects of current policies, stressing the need for greater planning and stability. President Li Xiannian, who is also in his early 80s, is more “conservative” than Beijing’s more enthusiastic reformers and is predisposed even more than Chen to stress the importance of planning. Peng Zhen, now in his mid-80s, is chairman of the NPC Standing Committee; with major responsibility now for law and order, he may question the extent of recent liberalization.
Some argue that if any one of these men survives Deng and is able to assert his authority-perhaps through younger protégés-the reform program might be significantly altered or slowed. This does not, however, seem probable. All three are aged, and while they have great prestige, it is unlikely that they could achieve control and shift policy very much, especially in light of the success Deng has had in steadily strengthening the coalition backing current policies.
Successions are inherently unpredictable, of course, and there is no certainty that the men Deng has groomed will retain power, be effective leaders and cooperate among themselves after Deng dies or fully retires. One test of how much progress China has made toward real institutionalization will be whether there eventually is an orderly transfer of power through accepted institutional procedures. What can be said is that rarely, if ever, has a leader planned as carefully and systematically as Deng has, and at this point the prospects for a relatively smooth succession-one that will maximize the chances for continuation of present policies-appear reasonably good.
All of these changes have had a significant impact on political life in China; one could argue, however, that some have little to do with systemic reform. Nevertheless, the system has begun to change, primarily because of new attitudes about what relationship should exist between the rulers and the ruled.
The reform leaders under Deng recognized from the start that after the turmoil of the Maoist era a major effort would be required to reconcile China's elite and the mass of the population and to broaden popular support for the regime. Their basic approach has been to move cautiously toward political relaxation and liberalization, taking greater account of local, group and individual interests and aspirations. They have allowed-within limits-increased diversity and pluralism, and have permitted a greater circulation of information and ideas. They have stressed “socialist legality” and have tried to broaden grass-roots participation in political life. The state’s penetration of society has been substantially reduced and many areas of life have been depoliticized. In earlier years the pursuit of private, nonpolitical goals and virtually all signs of nonconformist behavior were considered dangerous. Now one can wear T-shirts, raise goldfish, read foreign books and visit temples or churches without being harassed or even criticized.
The gradual creation of a legal system since the late 1970s has been an important part of the broad trend toward a more stable, institutionalized, post-revolutionary society. The leadership has adopted many individual laws and regulations and is developing systematic codes; it is improving the courts and procuratorates, training legal personnel and attempting to educate the public about “socialist legality.” One goal has been to create an effective legal framework for contractual economic relationships. However, the leaders also have wished to impose constraints on the country’s bureaucrats and to increase popular support by guaranteeing certain basic rights, including that of due process.
The evolving legal system still places primary emphasis-as law traditionally has in China-on protecting the state and preserving social order rather than on individual rights. The regime still imposes harsh punishments on anyone who violates important party-defined norms or challenges the existing political system, as well as on those guilty of crime and corruption. It maintains a large public security apparatus and still operates a system of labor camps. Moreover, ordinary Chinese still try to steer clear of the legal system if they can and place greater reliance on personal connections than on legal procedures to protect their interests. Nevertheless, the trend toward legality has imposed new limits on arbitrary rule and has given citizens a greater sense of normalcy. Fear of those in power is much less intense now than in earlier years.
The trend toward greater toleration of diversity and pluralism has created a political and social climate very different from that in the Maoist era. China has seen an extraordinary information explosion. Facts of all kinds now circulate widely throughout the society via books, journals, the press, radio and television, greatly expanding the horizons of most Chinese. China is rediscovering its past and also discovering the outside world, really for the first time since 1949. There is open and frank discussion of almost all of China's problems, and debate on alternative solutions to them is fairly free-so long as it does not suggest open dissidence or fundamental opposition to the political system.
The status of intellectuals as a group is higher today than it has been at least since the 1950s. The present leaders recognize that to promote China's modernization it is imperative to utilize effectively all of the country’s existing talent. The party is now attempting to recruit larger numbers of intellectuals into its own ranks, and many intellectuals now either hold important positions in or serve as consultants to the party, government and other institutions.
The political relationship between the regime and the mass of ordinary Chinese also has changed substantially. In some respects the involvement of such people in political life has decreased as a result of the loosening of the regime’s controls and its abandonment of old-style mobilization campaigns. In other respects, however, mass participation of a more regularized sort has increased. In an effort to give the electoral system more substance, the government has extended direct elections up to the county level, and it has encouraged multiple candidacies in local elections. The effects so far have not been as great as hoped for; according to most reports, local cadres still manipulate the electoral process in most places. Nevertheless, public pressures on the cadres from below have increased.
The regime’s efforts to revitalize the government’s people’s congresses have given to these bodies (which are the principal “representative” bodies in the Chinese government but in the past had few responsibilities, even of a symbolic sort, and virtually no power) a substantially increased role. This is particularly true of the National People’s Congress, but lower-level congresses have also undergone some change. The NPC still bears little resemblance to legislatures in Western democracies since its role is essentially consultative, but its new visibility symbolizes the leadership’s desire to make the political system more participatory.
How much have these trends altered the political system and process in China? If one judges the changes from a Western democratic perspective, the answer is, not fundamentally. China still has what is essentially a one-party system (in spite of the continued existence of a few small groups labeled minor parties). Its leaders still are not prepared to accept a free press, real opposition parties or groups, or a genuinely competitive electoral process. Yet from the perspective of the Chinese, who for years lived under an extreme form of totalitarianism, the changes have been important. In a relatively short period of time the system has evolved into a looser, less repressive and more pluralistic form of authoritarianism.
Have recent trends released forces that will gradually lead the country toward much greater democratization in the Western sense? The answer, at least for the short run, is probably no. To create a system that is more effective and enjoys broader popular support, China's reform leaders may be prepared to liberalize politics somewhat more. But they do not want a pluralistic democracy. China's authoritarian tradition, the Communist Party’s principle of elite leadership, deep-rooted Chinese fears of chaos, plus the built-in problems of maintaining unity in a country as huge and diverse as China, all reinforce the predisposition of China's leaders toward authoritarian, even if liberalized, rule.
Beijing’s present leaders probably hope to avoid either an uncontrolled growth of pluralism or a return to more repressive totalitarianism. Whether in the long run the evolving political system will be viable, however, remains to be seen. The regime’s leaders may be under conflicting pressures in the years ahead. While present policies clearly enjoy broad support, rapid social change has created new social tensions and cleavages. The loosening of political controls has weakened social discipline. Old patterns of Chinese behavior, based on personal ties, have reemerged strongly. Growing corruption, nepotism and inequalities have evoked considerable criticism. Xenophobic impulses lurk under the surface. Moreover, in the new climate of political relaxation, criticism and complaints are more open. If these were to increase significantly there could be strong pressures to tighten political controls.
On the other hand, over time there also could be counter-pressures for increased democratization. Since at least the early part of this century, some Chinese intellectuals have pushed for genuine pluralism and democracy (the most recent manifestation of this was the short-lived “democracy movement” of 1978-80), and such pressure will almost certainly reappear at some point. More fundamentally, as economic and social life undergo further pluralization, the impact on politics could increase. Economics and politics do not necessarily evolve in parallel in any country; authoritarian regimes persist in many developing nations where economic pluralism has grown. Yet even in these countries there have been increased pressures for political liberalism over time. In the near future, however, if any major shift of political direction were to occur in China, it probably would be back toward somewhat greater control. In short, political reform probably has run its course for the present, and something close to the present system of liberalized authoritarianism seems likely to persist in the foreseeable future.
The reform program already has changed China's economic system more than its political system. Since Beijing is still at midstream in its attempt to alter the economy, this is the area in which the greatest changes can be expected in the period ahead.
The attempt to launch economic reforms was greatly complicated at the beginning by the consequences of Hua’s call in 1978 for a “new leap” toward modernization. The resulting overheating and destabilizing of the economy exacerbated old problems and created new ones. By 1979 the regime was compelled to adopt a policy of “readjustment” that stressed economic stability. Nevertheless, Deng and China's other reform-minded leaders soon launched steps toward real systemic economic reform, and the process, once started, gained momentum over time. Looking back to 1979, there has been a logical sequence of reforms. In the first phase, between 1979 and 1984, the leaders’ focus was on changing China's foreign economic relationships and reforming the country’s agricultural system. In the second, under way since late 1984, China has moved toward comprehensive reform of its urban industrial and commercial system, and this is the priority goal of Beijing’s 7th Five-Year Plan, initiated in 1986.
Beijing’s first dramatic change was its adoption of an “open door” policy, which has led to an enormous expansion and diversification of China's foreign economic relations. During the 6th Plan years (1981-85), foreign trade more than doubled, rising to almost $70 billion in 1985. (At the end of 1985 the preliminary estimate was $59 billion, but two months later the State Statistical Bureau revised this upward to almost $70 billion, with a $15-billion trade deficit.) As a percentage of gross domestic product, the exchange of goods and services roughly doubled, rising to close to 20 percent. China has purchased abroad increasing amounts of equipment and technology, as well as other commodities needed for its modernization. To pay for growing imports, China has vigorously promoted exports and has rapidly expanded earnings of foreign exchange from tourism, labor projects in other countries, and even arms sales. An import spree during 1984-85 produced a large trade deficit and an alarming drop in foreign exchange reserves; as a result the 7th Plan calls for a somewhat slower growth of trade-about 40 percent over the next five years-but the regime’s stress on the need to expand both imports and exports is still strong.
Beijing’s basic trade policy remains one of import substitution. Yet there are numerous signs that it has moved gradually in the direction of a more export-oriented policy. In March 1986 Premier Zhao, in his report to the NPC on the 7th Plan, promised new incentives for export industries and said that China should continue to strengthen “bases for the production of export commodities and build export-oriented factories.”
As trade has expanded, Beijing has decentralized decision-making to local authorities and individual enterprises, allowing them to establish direct ties with foreign suppliers and buyers and permitting them to retain for their own use some of the foreign exchange they earn. This, like many of the regime’s other decentralizing policies, has created problems. Nevertheless, decentralization clearly has contributed to China's ability to compete in world markets.
Significant as Beijing’s new trade policies have been, other changes in its foreign economic policy have been more dramatic. The Chinese have fundamentally altered their position on foreign loans and foreign direct investment and are now actively soliciting both. Since 1979 they have gradually increased their borrowing abroad from various sources, including international organizations (such as the World Bank), foreign governments (most notably Japan) and international bankers. By the end of 1985 China had “used” $10.3 billion of foreign loans according to official statements-although the figures on loan commitments made to China are higher. Its foreign borrowing probably will increase substantially during the 7th Plan; according to some estimates, it might total more than $20 billion during the five years of the plan.
Of all the innovations resulting from the open door policy, the decision to solicit direct foreign investment from capitalist nations has been the most startling, since even discussion of such a possibility was taboo in the Maoist era. The Chinese have attempted rapidly to create the legal framework necessary to attract investment-including a joint venture law and special laws regulating cooperative ventures in offshore oil development. Beijing has shown remarkable flexibility in its willingness to accept diverse forms of cooperation with foreign corporations. China's preference clearly has been for joint equity ventures, but it has also promoted coproduction agreements, compensation trade, countertrade and even wholly owned foreign enterprises in China. It has created four special economic zones and granted special rights for dealing with foreign traders and investors to many other cities, provinces and regions, especially those in coastal areas. By the end of 1985, according to Zhao, China had attracted $5.3 billion in direct foreign investment, and it had obtained commitments for more. (According to one Chinese source, total foreign investment contracted during 1979-85 was over $16 billion.)
The development of new kinds of foreign economic relationships has not been easy for either the Chinese or the foreign businesses involved. The foreign corporations complain about Chinese bureaucratism and inefficiency, limits on their access to the domestic Chinese market (which is the prime aim of most foreign businesses interested in China), the inflated prices charged for local labor and materials, and the obstacles to obtaining foreign exchange for purchasing supplies abroad and repatriating profits. These problems have become more serious since 1985 as a result of the drop in China's foreign exchange reserves. The Chinese, whose priorities have been to develop exchange-earning export industries and to obtain advanced technology, have been disappointed by the overall level of foreign capital investment to date, by the relatively small size of most cooperative ventures, and by the reluctance of foreign corporations to transfer high technology. Nevertheless, foreign investment is making a valuable contribution to China's modernization. The greatest impact of cooperative enterprises in China may well be the “demonstration effect” they have on Chinese enterprises.
The open door policy also has led to a broad range of other changes in China's foreign economic relationships. Beijing has become a major participant in virtually all important international economic organizations. It has signed a large number of economic and technical agreements with foreign governments. Chinese scientific and educational institutions have established broad ties with counterparts abroad. Perhaps most important, China has sent more than 30,000 scholars and students (the majority in scientific and technical fields) to capitalist countries-something no other communist country has done.
These developments have involved China more deeply in the world economy than ever before and have created new patterns of economic interdependence. Many Chinese whose ideal is still self-reliance are either ambivalent about recent trends or openly critical of growing foreign influence. Nevertheless, Deng and other reform leaders appear determined to make the opening of the country a long-term policy. The door is not likely to be closed unless the entire reform program fails, forcing future leaders to consider a basically different developmental strategy.
The second sector in which far-reaching changes began almost immediately after Deng’s rise to power was agriculture. The first steps aimed at stimulating the rural economy were taken in 1978-79 when the regime decided to raise prices for many agricultural products. At almost the same time, the reformers began to experiment with the organization of agriculture. Varied forms of contractual “responsibility systems” were tried; in the end the leadership decided to promote nationwide a contract system based on individual households. The result has been de facto decollectivization and a return to family-based farming.
The regime has abolished the communes (Mao’s dramatic innovation of 1958), at least as units controlling agricultural production. Some communes and brigades have continued to run local industries, and in quite a few places their production teams still have some functions. Formally, agricultural land remains collectively owned. Responsibility for farming, however, has been decentralized to individual households. Peasants now are guaranteed use of their land for at least 15 years; they have substantial authority to decide what to grow; they manage their own land independently; and, after paying taxes and various other levies, they are free to dispose of their net produce any way they choose-by consuming it, selling it on the open market or selling it to the state. For a time the government continued to set mandatory quotas for compulsory sales to the state, but in 1985 it abandoned these; now it contracts each year with households to purchase specified products from them. In sum, even though the regime still exercises considerable control over agriculture, its direct intervention has been greatly reduced.
The changes in the organization of agricultural production have not been the only factors affecting rural economic growth. The regime’s price policies have provided a large stimulus. Inputs into agriculture, especially fertilizers, have increased. There has also been a rapid diversification of crops. Many families that the Chinese now call “specialized households” have shifted from farming to local industries, sideline activities and work related to transportation, services and other non-agricultural pursuits; rural industry has expanded at a phenomenal rate; and the transfer of rural labor to nonagricultural employment continues at a rapid pace.
The effects of these trends on agricultural output and on the rural economy in general have been spectacular-unprecedented for China and perhaps for any developing nation. In the early 1980s, compared to the previous quarter of a century, the rate of increase of productivity of agricultural labor more than quadrupled; that of agricultural land more than doubled. Overall agricultural output during the 6th Plan rose over eight percent a year-more than double the long-term trend from 1953 to 1980. And the average annual increase in rural per capita income during the 6th Plan was 13.7 percent.
With success have come new problems. The development of infrastructure has lagged due to low investments by either the state or the peasants. The rural marketing system is still inadequate. There has been a decline in rural public works, education, social welfare and other services formerly handled by the communes. Inequalities among areas, groups and families-highlighted by the great publicity given at one point to a few newly rich peasants-have caused concern. The reforms have had an adverse effect on the regime’s population control policy, since peasants now benefit from increased labor power and therefore desire more children, especially sons. And the reforms have required large subsidies to keep prices of food low in urban areas.
These problems are high on the agenda of China's planners for the period ahead, and they will not be easy to solve. But they are not likely to be unmanageable, and there is reason to believe that agricultural performance will continue to be a success story. Although the recent extraordinary rates of growth cannot be sustained, agricultural output will probably continue to grow at a rate sufficient to meet China's needs. Beijing’s planners call for an average annual agricultural growth rate of four percent during the 7th Plan—roughly half that of the last five years but still above the long-term trend in China. There is very little possibility in the near future of any basic reversal of recent policies; most peasants now have a strong vested interest in the present system. The success of agricultural reform was crucial to the regime’s broader plans for systemic change and laid the foundations for urban reform.
Reform of the industrial and commercial economy began experimentally during the early 1980s, but most of the steps were tentative and limited until 1984; it was only after the “Decision of the Central Committee of the Communist Party of China on Reform of the Economic Structure” that the regime launched an ambitious program of urban reform, which is still in process.
China's leaders now define their ultimate economic goal as the creation of a new kind of “socialist commodity economy” (which can be read to mean a Chinese form of “market socialism” although the Chinese do not themselves use this term). This calls for changes to create a mixed economy in which the market plays a much larger role and state planning a much reduced and different role.
In 1984 the number of major industrial products subject to centralized, direct mandatory planning was halved in one stroke from 120 to 60; present plans call for further substantial reductions. Beijing now claims that by the end of the present plan central control will be restricted to a “few vital commodities.” A steady shift is also under way from mandatory planning to guidance planning, that is, from direct control to looser, more indirect regulation. This means that Beijing intends to rely more on policies relating to prices, taxes, credit, interest rates, exchange rates and broad fiscal and financial policy than on specific quantitative quotas to guide the country’s development. The state is thus increasingly relying on regulatory tools to direct the economy.
In his March 1986 report on the 7th Plan, Premier Zhao listed three key goals: to “further invigorate enterprises,” to make “further efforts to develop a socialist commodity market,” and to “establish a new socialist macroeconomic management system.” One fundamental objective of the regime’s reform program, therefore, is to continue the devolution of economic decision-making to individual enterprises. This decentralization of power has been resisted, not surprisingly, by the entrenched bureaucrats of what Zhao labels the old “petrified economic structure.” Nonetheless, it has gone quite far. Not only have the central bureaucracies been compelled to give up direct control over most enterprises and many products, they no longer have the control they formerly had even over investments. More than half of all investment in China is now outside the central plan and state budget-a fact that has created serious problems. Consequently, Beijing has tried, but with only limited success, to reestablish greater control over investment.
Numerous steps have been taken to try to increase the decision-making authority of enterprises. Formerly, enterprises operated essentially as subunits of central ministries and equivalent organs at lower levels. The goal now is to give them much more autonomy. Experiments in this direction began in the early 1980s. One early step was the introduction of a profit-sharing system. Gradually, the percentage of profits that enterprises were allowed to keep-and use for reinvestment, wage and bonus hikes, and other purposes-was increased; since 1984 an entirely new system of taxation of profits has been introduced to replace profit sharing.
The aim of enterprise reform has been to create stronger incentives to increase productivity and to make enterprises accountable for profits and losses. However, the potential benefits of the reforms will not be fully realized until many of the regime’s other reform efforts-above all, comprehensive price reform-have taken effect. Nevertheless, the reforms seem likely to accelerate in the period ahead. By 1990, according to the regime, “a great majority of the enterprises should be solely responsible for their own profit and loss.” While this may not be achieved by then, if the overall reform program proceeds as planned, Chinese enterprises should gradually become more effectively autonomous.
The effort to expand markets and commercialize the economy-the second priority listed by Zhao in his report-is another critically important aspect of the regime’s overall program, and it has progressed faster than most observers thought possible a few years ago. China's reformers are committed to create a system in which the state’s allocation and distribution system plays a greatly reduced role, most commodities and products circulate throughout multiple channels subject to state regulation rather than direct control, and prices increasingly are determined by supply and demand.
In recent years markets of many kinds have proliferated. Starting with steps to revive and enlarge traditional small-scale free markets, the regime has actively encouraged the growth of new kinds of markets. Wholesale markets, some dealing with producers’ goods, have reemerged. Transactions between enterprises and regions have increasingly been carried out through direct negotiations rather than through the state’s commercial channels. Gradually, regional and national markets are developing. There are no reliable statistics on how far the process of marketization has gone; even officials in Beijing probably do not have a very clear picture of what is taking place. Some Chinese economists privately estimate, however, that already a third to half of all commodity transfers in the country take place outside the state allocation system and official commercial network.
The regime’s plans also call for “systematic measures . . . to open up markets of capital and technology and promote a rational flow of labor.” So far, the steps in this direction have been small, but the trend is significant. The state no longer simply allocates funds for investment and working capital to enterprises. Enterprises must now borrow such funds from government banks (although interest rates are still unrealistically low). The most intriguing development has been experimentation with the issuing of shares. A few selected enterprises have sold stocks to their employees and other organizations, and although these stocks are not at present transferable among individuals, the Chinese are seriously considering the creation of officially sponsored stock markets.
No real labor market yet exists in China, but steps to reform existing labor and wage systems and encourage some increase in labor mobility are being taken. Early in the reform process Beijing raised wages and reintroduced bonuses to increase workers’ incentives. Enterprises now have the right to hire and fire employees, although few managers are yet prepared to break the “iron rice bowl” of even their most inefficient employees. Now, however, the regime intends to end the national eight-grade wage system under which most urban laborers work, and will actively encourage enterprises to relate pay more directly to performance. So far, labor mobility has increased only marginally, but there is a gradual trend in this direction.
As part of its overall reform program the regime is also deliberately attempting to diversify the pattern of ownership in China. The state still owns all large, urban industrial and commercial enterprises, which continue to dominate the economy. Nevertheless, with Beijing’s active encouragement there has been a rapid growth in recent years of urban collective enterprises (which are small- and medium-sized industries and commercial enterprises that are owned and run by groups rather than by either the state or individuals) and, on a lesser scale, of small private enterprises. In 1985, while state industry still accounted for 63 percent of total industrial output, the share of urban collective industries had risen to 25 percent, and although small private businesses account for less than one percent of industrial output, they now handle close to one tenth of all retail trade and play an important role in providing services of all kinds in China'’s cities.
The most important-and difficult-aspect of Beijing’s efforts to change the system is price reform. Effective price reform is a prerequisite for the success of most of the regime’s other efforts to reform enterprises and develop markets. The leadership has proceeded cautiously in this area, for good reason. Most price changes create ripple effects throughout the economy and involve clear risks of inflation, which could not only have a destabilizing economic impact but could also create social unrest. China's leaders recognize, however, that “reform of the systems of pricing and price control is the key to the establishment and improvement of the socialist market system.”
China is now moving gradually toward a multitier system of prices under which the state will still set some-but many fewer-prices. Some will be negotiated between buyers and sellers, some will be allowed to float between upper and lower limits established by price control agencies, but a steadily increasing number of prices will be determined by the forces of supply and demand in relatively free markets. After inflationary pressures increased suddenly in late 1984 and early 1985, this trend was slowed. Chinese officials have stated that in 1986 no major changes in the price system will be attempted; the emphasis for some time, they say, must be on “systematic adjustment of the planned prices.” Despite the official slowdown in price changes, what might be called “creeping price reform” has continued as, under a looser system, negotiated and free prices have increasingly responded to market signals.
Progress toward a new price system probably will continue to be incremental due to the leadership’s fear of losing control and stimulating inflation. Twice since the late 1970s (in the period immediately after 1978 and again in 1984-85) major steps toward decentralization resulted in a temporary but serious loss of macroeconomic control. In the most recent case, this caused a surge of local investment, excessive increases in currency and credit, a large rise in wages and bonuses, a far too rapid rate of industrial growth (23 percent in the first half of 1985, over the comparable period in 1984), strong inflationary pressures, and a precipitous drop in foreign exchange reserves (roughly from $17 billion to $11 billion). According to official figures, the general rate of inflation in 1985 (measured by the national income price deflator) was slightly under seven percent; the official retail price index rise was 8.8 percent, but it probably was considerably higher, and in some cities it may briefly have been well over 20 percent for many essential consumer goods. By midyear Beijing tightened its grip, and by year-end it was able to bring the situation under reasonable control. But some of the effects have persisted. Erratic fluctuations of this sort create widespread unease and dissatisfaction; they also reinforce the arguments of those in the leadership who favor less, and slower, reform. Hence the leaders of reform clearly are determined to avoid such fluctuations in the future, and as the regime improves its financial and other economic levers, its ability to avoid the erratic ups and downs of the past should improve.
What have been the quantitative results of all the changes that have occurred in the decade after Mao? Broadly speaking, they have been impressive. Agriculture has experienced extraordinary growth; the growth of industry during the 6th Plan averaged 12 percent a year (including rural industry)—a rate less spectacular, compared to past performance, than that in agriculture but still somewhat above China's long-term rate of industrial growth. Because of agriculture’s exceptional performance, the overall growth of China's GNP during the 6th Plan averaged ten percent a year, close to double the long-term rate since the 1950s.
A rate that high is neither sustainable nor desirable, for it creates imbalances and tensions in the system. The 7th Plan calls, therefore, for average rates of growth of 7.5 percent in both industrial output and total GNP; these, however, could well be surpassed. China needs a sustained GNP growth rate of roughly seven percent a year over two decades in order to come close to quadrupling the value of its national industrial and agricultural output by the year 2000 (compared to 1980) and about a five percent per capita annual GNP increase to raise per capita national income from about $300 to roughly $800—goals set by Chinese leaders at the start of their current modernization drive. The Chinese may fall somewhat short of these targets, but they could come close. A 1985 World Bank report took a generally optimistic view of the prospects for growth and concluded that “over the next two decades, China-now a low-income country-will become a middle-income country.”
The problems confronting the leadership are still enormous, but the reformers are facing most of them realistically. Growth will, therefore, probably continue at a fairly rapid rate. Even in the period from the 1950s to the late 1970s, when major policy mistakes resulted in serious setbacks, long-term growth (despite huge ups and downs) averaged five to six percent.
But will the current reforms succeed in creating a new kind of socialist economic system? At every stage in the reform process there has been not only resistance in China but also skepticism both in China and abroad about whether structural reform of the economy of the kind now being attempted is really feasible. Skeptics in China have argued for slower and less far-reaching reform. Those abroad, while generally approving the direction of reform in China, have argued-often citing the failures of reform efforts in Soviet bloc nations-that an economy that attempts to mix incompatible features of a command economy and a market system is not viable and that ultimately the reform efforts are likely to fail in China as elsewhere.
There is good reason to believe, however, that the skeptics could be wrong. China's leaders are strongly committed to reforms that, as Premier Zhao has put it, will continue "the elimination of the old structures and the building of the new"; this commitment probably will continue under the next generation of leaders. Problems and setbacks certainly will occur, but these will not necessarily deflect Chinese leaders from their present course unless China experiences a major economic disaster, which does not seem probable in the near future. In fact, the pressures to move further and faster in reform could increase; many of China's reformers-especially younger ones-recognize that the full benefits of reform cannot be realized unless they are taken even further.
Is the mix of planning, regulation and market forces that the Chinese are trying to achieve viable? In practice, the economies of most non-communist developing nations mix, in varying ways and proportions, state planning, regulation and reliance on the market. There is no intrinsic reason why China cannot create its own distinctive mix. A new kind of Chinese economy could prove to be viable even if it too continues to have to deal with conflicting pressures toward greater or less government regulation and control. In sum, China's reformers may be able to create a new form of market socialism.