Abstract
One icy February day in 1998 I headed with my translator to a street in Beijing near the railway station that serves as an informal labor market for the unemployed. It was the first anniversary of the death of Deng Xiaoping and I wanted to write a story about his legacy from the point of view of those who had benefited least from his reforms.
“Deng took the meat of the reform process and left the bones for his successors,” a Chinese academic told me upon Deng's death a year earlier, and already the truth of that was becoming clear. Deng could claim credit for two decades of growth, but all he really did was unleash market forces onto a moribund economy that had been stifled by 30 years of Maoism.
Deng did not, however, offer any solutions to the longer-term problem of what to do about the monolithic state sector, the Mao-era factories still driven by socialist-style production quotas and fueled by endless injections of state cash. Indeed, Deng always made it clear that he never intended market forces to eclipse socialist ones. That was the point of the “socialist market economy,” the phrase he coined to describe China's neither-socialist-nor-market economy. The state could borrow from capitalist practices in order to generate capitalist-style profits, but the state should always dominate.
For a while, the surging economy could sustain and even mask the inefficiencies of a system that sucks in money at one end and churns out shoes, shirts, bicycles, televisions, motorcycles, and goodness knows what else at the other, without regard for whether anyone would ever want to buy it all, while continuing to provide housing, medical care, education, and pensions for armies of unneeded workers.
But by the time Deng died, state sector losses were piling up as fast as the stockpiles of unwanted goods. And for the first time, the phenomenon of unemployment was rearing its head in the socialist state as many companies simply ground to a halt, sending their workers home because they couldn't afford to pay them. These workers are often forced to pitch up on street corners such as this one near Beijing's railway station, where the newly unemployed rubbed shoulders with migrant peasants newly arrived from the countryside hoping to pick up day work.
May 1999: Military police at the U.S. embassy in Beijing after the NATO bombing of China's embassy in Yugoslavia.
Among the crowds of sullen, desperate-looking men, my eye was caught by two young girls huddling against a low wall. Their faces were blue and their lips were chapped with the cold. Shivering pitifully, they were clinging to their small bundles of possessions for extra warmth. I talked to them long enough to learn that they had come from an impoverished part of rural Sichuan three weeks earlier, with 300 yuan each in their pockets, a small amount even by Chinese standards. Their money was nearly gone and they were despondent; they'd heard there was easy money to be made in Beijing as waitresses or maids in the homes of rich city families, but in three weeks they hadn't even been offered one hour's work.
At that point, two policemen suddenly broke into our circle, waving electric batons and shouting to the small crowd that had formed around us to disperse. Everybody scattered. My translator and I were chased down the street and I didn't see what happened to the girls–I was too busy avoiding the electric batons they were swiping at our legs.
But I couldn't stop thinking about those two girls. They seemed so pitiful, so naïve, and so crushed by the reality of what they had encountered. I decided I would get them away from that mean-looking crowd and then give them back the 300 yuan each had come with–enough to buy a train ticket if they wanted to go home, or to make a fresh start in the city. The next day I sent my translator back to find them. But the girls were nowhere to be seen.
Instead, in the spot where they had stood, there were two policemen. They promptly arrested my translator, took him to the police station, and interrogated him for two hours, asking him over and over, “Why is the foreigner interested in those two girls?”
Eventually, he was released with a warning: “Don't go showing the foreigner the dark side of China again.” It was a cautionary experience.
Paying selective attention
First, I could have got the girls into trouble. It is against the law for foreigners to talk to Chinese and, more importantly, for Chinese to talk to foreigners, without official permission from the Foreign Ministry. Like most unenforceable laws in China, this one is routinely ignored. But it is there nonetheless, to be invoked whenever there is a conversation the police don't want to happen.
Second, it brought home the extent to which the security apparatus controls this vast, shifting, fluid society. There are 1.26 billion people in China. Of course it is impossible to monitor all of them on a daily basis, and the police don't even try. As a result, China today is undeniably freer and more pluralistic than at any time in its history. You won't find secret police hanging out in the bars where foreigners mingle with Chinese or in the karaoke clubs where China's nouveaux riches drink and sing their newfound wealth away. You can dye your hair green and start a punk rock band; you can have a sex change or open a transvestite bar and no one will bother you. Prostitution is rife and drugs are a growing problem, though both are illegal.
But wherever there are unemployed workers, discontented peasants, or otherwise disaffected citizens gathered together, you can be sure the police are there among them–or that they will turn up pretty quickly. Every street still has its street committee, and nosy neighbors can ensure that the authorities hear about it if anybody starts holding any unexplained gatherings.
It is perhaps the Party's greatest achievement over the past decade to have succeeded in drawing a line between the kind of freedoms that threaten its control and the kind that don't, enabling ordinary Chinese to lead lives that are fuller and freer than at any time before while allowing the state to focus its energies on potentially threatening behavior such as advocating democracy or holding political discussions. The controls aren't as visible as they were in Mao's era–they are simply more carefully targeted. But it would be a mistake to underestimate the extent to which they are there. Control is the Communist Party's ultimate priority, and any step, whether backwards or forwards, to the left or to the right, can be explained in terms of its desire to keep control.
That is why China's future is almost impossible to predict. For all its outward appearance of modernity and freewheeling hedonism, China remains a police state that ultimately relies on force to secure the loyalty of its citizens. And that makes it inherently unstable. It doesn't mean the Communist Party is about to fall tomorrow. It almost certainly won't. The point is that because China is a dictatorship, it is impossible to tell.
Gathering storm clouds
The Party can issue an order one day and rescind it the next–a source of growing frustration to foreign investors. It can tolerate something one day, then suppress it another, a source of even greater inconvenience to the dissidents who poked out their noses in the seemingly more relaxed atmosphere that prevailed last year, only to be locked up when the climate changed in 1999.
From the pinnacles of power to the lowliest peasant, there are no clearly defined mechanisms for the transference of power, the resolution of disputes, or the expression of opinions. When there is consensus at the top, when the economy is growing and the people are happy with their lot, none of these things matter. But what if leaders suddenly die, or fall out with one another? What happens if the economy slows, and the people lose faith in the Party's ability to deliver the standard of living to which they have become accustomed?
All of these eventualities are highly plausible in the future–indeed, they're already happening to one degree or another. How long then would the Party manage to keep control? As China prepares to close out a century of tumultuous change by celebrating the fiftieth year of communist rule, the question is inevitably looming large, not only in the minds of those analyzing the future of the country but also, evidently, of those charged with running it.
Since the beginning of the year, the Party has seemed almost obsessed with its own survival. Hardly a day passes without some kind of warning in the newspapers about the dangers of social instability. Virtually every policy announcement is couched in terms of the role it will play in preventing unrest. Most likely, the Party is simply overly anxious to make sure nothing goes wrong to spoil the big party it is planning to hold.
With storm clouds gathering over the economy, this is hardly a good time to celebrate communism. The Party can close out the century by boasting that it has delivered the most peaceful and prosperous decade in Chinese history. But the boom times are over and the economy is slowing.
Contrary to Deng's intentions, the socialist market economy these days is delivering the worst of both worlds to a nation stuck awkwardly between two systems. The socialist state with its welfare provisions and job security is crumbling away, but the market part of the equation is still too underdeveloped to provide the kinds of cushions and stimuli needed to protect citizens from calamity and to create new growth. You only need to visit one of Beijing's department stores to see that the consumer boom is over. Stores that opened too late to catch the wave are closing down within months. Those still open are often eerie–empty of customers, and sometimes also of goods.
Even Shanghai, the visionary mega-tropolis that is being purpose-built to serve as China's financial capital, has a hollow feel to it these days. After nearly a decade of frenzied construction, the scaffolding is starting to come down from the forests of skyscrapers constructed over the past decade, revealing a city of considerable grace and splendor. But look more closely and you will see that the office and apartment blocks are largely empty and the hotels rattle for want of guests. During the exuberance of the 1990s, China overreached itself, and it could be decades before it grows big enough to fill the giant shoes it has built, to rent out all the office space it has constructed, to sell all the luxury homes, and to find customers for all the automobiles its factories can produce.
Two children beg for money to return home.
Just because you're paranoid …
This doesn't add up to social instability, only to some major economic headaches in the years ahead. Indeed, none of the problems China faces today is unique. Everywhere in the world, rapid industrialization has led to significant social dislocation, and the overhaul of state industries has resulted in surges of unemployment. But in the constant harping about the risk of instability, it is possible to detect some real signs of insecurity on the part of the leadership. And just because the Party is paranoid, it doesn't mean there's no one out to get it.
There is no shortage of potential candidates. You can only imagine the horror felt by the Party's leaders in April when they awoke to find 10,000 adherents of an obscure Buddhist sect camped outside Zhongnanhai, the secretive compound in the heart of Beijing from which the Party rules China. No one could seriously believe that the elderly men and women who had gathered to demand legitimacy for the Falun Gong posed a meaningful threat to Communist Party power–except the Party itself, which took the threat very seriously. It cracked down in July, banning the group and arresting a number of its members.
Rather, it was the way in which they suddenly materialized on the doorstep of the leadership, evading all the layers of police control that are designed to avert just such an eventuality, that was so remarkable, symbolizing a major loophole that is looming in the Party's ability to control its citizens. Communism as an ideology is fast losing its relevance; the Party can still control its citizens' behavior, but it can no longer command the loyalty of their hearts and minds. The fact that it is so determined to try in the face of tremendous odds only underscores the very real danger that one or other of the many different beliefs, cults, and philosophies that compete for space in the ideological vacuum left behind by the fading of communist convictions will come into conflict with the authorities.
Millions are being left unemployed as China's state factories close or are revamped. Here a group of men wait for work at an illegal job market.
The Party is a jealous Party, and it brooks no rivalry, however harmless it may seem. Not for nothing are Roman Catholics among the most persecuted of all Chinese–they owe allegiance to an authority other than the Communist Party, even though (from the point of view of the Party) he is only a sick old man living on the other side of the globe.
Are the peasants revolting?
China's constitution defines the nation as a “people's democratic dictatorship led by the working class,” and Chinese workers were raised in a society that taught them their status was sacred and their jobs eternal. But these days the working classes are more likely to be found begging for work on the streets than exerting their dictatorial rights. In the northeastern industrial town of Shenyang, the unemployed line the streets in front of locked, abandoned factories. In a cruel parody of the denunciations of the Cultural Revolution, they hang signs around their necks advertising their trades in big characters–“Electrician,” “Lathe operator,” “Plumber.” Others sit on the sidewalk selling small necessities such as bicycle parts, shoe soles, cheap socks, and even rusting old machine parts produced by the factories from which they have been laid off.
On one such street, I stopped to talk to several of the idled workers. To avoid attracting the attention of nosy policemen, I invited a couple to sit in the taxi with me so that we could talk without being bothered. A larger group gathered around, although all the police would have seen was a group of workers talking to a taxi driver.
It is a good thing the police weren't listening in. “F___ the Communist Party!” said one, pounding the roof of the car. “Look what they've done to us!”
“If you're a journalist, why don't you go and investigate the corruption in Zhongnanhai!” said another. “Jiang Zemin and Zhu Rongji, they're the real thieves in China!”
As we drove away, I asked the taxi driver why, if the people were so fed up, they didn't organize protests to demand change, like their neighbors had in Russia not so far away. “Some did,” he said, with a grin. “But the police locked up the leaders, and no one's dared since then.” “Anyway,” he added, after a pause. “What's the point? It wouldn't change anything.”
As long as you stay out of sight and earshot of the police, evidence of the loathing felt by ordinary Chinese for the Communist Party isn't hard to find. But you don't need to look any further than the teachings of Mao to understand why it isn't acted upon. “Every Communist must grasp the truth: political power grows out of the barrel of a gun,” he wrote in 1931, and every Chinese grasped that truth with crystal clarity on June 4, 1989, when the Party used the army to shoot the people who challenged its power.
Since then, a soaring economy has helped soothe the rage felt by many citizens at the suppression of the student protests. But now that growth is slipping and market reforms are claiming their first victims, the power of the gun remains. In the past two years, there have been tens of thousands of anti-government protests across the country, but the state security apparatus has ensured that they remained localized. The labor activists who tried to organize worker protests have been locked up. So too have the democracy activists, who hoped to channel the rising anger into a new democracy movement. In some ways, therefore, the government has already passed one of the most difficult tests: it has severed the umbilical cord that bound workers to the state, without provoking a mass uprising. The workers may be disgruntled, but they are neither organized nor motivated.
These days, the Party is far more fearful of the threat posed by a bigger and less easily controlled segment of the population; the peasants. Most Western images of China tend to focus on the gleaming new cities that are springing up along the coast, or on the bourgeois behavior of its nouveaux riches, but in fact Mr. and Mrs. Average are peasant farmers, eking out a subsistence living on small plots of land. There are 900 million of them, accounting for 70 percent of China's population, and their lives improved immeasurably in the first decade of Deng's reforms, when the dismantlement of the collective system allowed them to farm their own land and sell their surplus produce.
Police officers shred literature from the outlawed Falun Gong sect at a mill in Huhhot Municipality, Inner Mongolia.
But they have not shared in the spoils of the urban boom of the 1990s. Peasant incomes have grown far more slowly than urban ones, and falling prices are hitting hard. A significant number of protests are taking place in rural areas, and in several instances the army has been called in to quell them. The Party is uniquely sensitive to the fact that it owes its own power to the most successful peasant rebellion in world history–the one Mao led 50 years ago.
To find out whether the threat of peasant unrest is serious, I took a trip to the province of Hunan, a place renowned for its hot weather, hot food, and hot tempers. A high proportion of revolutionary leaders, including Mao himself, and also Zhu, were born in Hunan, and if another revolution was brewing in China, the province would be a good barometer.
Sadly, I didn't get very far with my quest because I was arrested within five minutes of stopping to talk to the first peasant I encountered in the small village of Ba Tong, barely 30 miles from Mao's birthplace. It seemed, at least, to confirm that the police are on the ball, even in this remote locality. At the police station, I was interrogated as to the purpose of my visit. “Did you come because of the incidents?” one of the policemen asked me suspiciously.
“Incidents? What incidents?” I asked innocently.
“We're not going to tell you what incidents,” he shot back. “That's why we don't want you going around asking questions,” he added, partially confirming one of the reasons for my visit.
There had been a report of an uprising in the village after a peasant committed suicide because he was burdened by excessive taxes. The story would have illustrated one of the biggest headaches for the central government: the illegal taxation of peasants by rapacious local officials.
The leaders know that nothing is likely to turn the peasants against the Party more than the outright theft of their meager incomes by corrupt local cadres. But despite repeated edicts from Beijing that peasants should pay no more than three different kinds of taxes and no more than five percent of their income, the problem persists, as my brief conversation with the one peasant I talked to seemed to suggest.
In a good year, he said, he could earn 1,000 yuan (about $120). But with farm prices tumbling, this is not a good year, and he expects to lose money. Yet he is still going to have to come up with at least Y460 to pay 10 different levies demanded by the local authorities, including a hygiene tax (there is no running water in the area), a road maintenance tax (the roads didn't look as if they had been maintained in years), and a family control tax (not only are peasants forced to limit the number of children they may have, they also have to pay for the privilege).
You don't need a crystal ball to see that corruption poses a major threat to the survival of any government. But authoritarian ones are uniquely vulnerable to its corrosiveness. The Party can use the police to lock up political opponents, but who is going to police the Party? In a one-party state, if the party is corrupt, then the entire state is rotten.
The Party is acutely aware of the threat corruption poses to its own legitimacy, and it has made fighting corruption its top priority. Extensive reforms to the legal system are intended to provide aggrieved citizens with an alternative to taking to the streets when confronted with corrupt behavior. But it is an uphill battle. The courts too are controlled by the Party, and instances of judicial corruption are rife.
Solving the twin problems of corruption and sagging growth is key to the Party's survival. But to solve either problem, it is becoming clear that the Party is going to have to let go of many of the controls it currently enjoys.
In fear of the private sector
One of the greatest misperceptions about China is that somehow its market reforms have created a market economy. Nothing could be further from the truth. Millions of Chinese own small restaurants, hairdressing salons, and grocery stores, creating an impression of busy capitalist enterprises in the streets of Chinese cities. But 86 percent of all officially registered companies are still controlled by the state to some degree.
Collectively, the Chinese state presides over what is surely the world's biggest corporate conglomerate, a bewildering labyrinth of over five million different enterprises, from oil companies to soccer teams, hotels to banks, bars to golf courses. Most are only loosely administered by layers of local authorities and public institutions, including the police and the army, but also by universities, hospitals, academic institutes, and even orchestras. They rely on the income from their investments to survive and also, too often, to line the pockets of those who run them.
Smart minds in the leadership recognize the urgency of separating government from business if corruption is to be curbed. They also know that new sources of growth must be tapped if the economy is to continue to grow.
Enter the private sector. As the state sector shrinks and foreign investment flags, private business is China's last best hope for new growth. But the private sector is still minuscule, and hamstrung by the government's determination to uphold the state's dominant role. Private property is not protected by law, and it is common for the local authorities to appropriate profitable businesses without compensation. Private businessmen are easy prey for corrupt local officials who can threaten them with closure if they don't pay up. One private entrepreneur cheerfully told me he faced all manner of problems in building his restaurant empire until he became a Party member, after which his fortunes soared and he became a multimillionaire.
The consequences of allowing the private sector a free rein could be profound. The rise of an independent middle class, whose power and wealth derive not from its links to the Party but from its members' own enterprise, would transform the face of China. And you only need to look around Asia to see what happens when a newly prosperous middle class comes of age in the shadow of a dictatorship: it starts to demand a say in governance. The result is multi-party democracy, something the Communist Party has vowed will never happen in China.
It is no wonder, therefore, that the Party is nervous as it celebrates its fiftieth birthday. No matter which way it turns, threats loom. If it proceeds too slowly with reform, the pressures already building within the system could explode. If it moves too fast, it could find that it has reformed itself out of existence. Only one thing seems certain: that the revolution begun 50 years ago isn't over yet.