A paper by JonLi as part of his discussion about JonLi/International Commentary/China’s Future Challenges
China’s Future Challenges: An American Perspective
Jon Li
Institute for Public Science & Art
1075 Olive Drive #4, Davis CA USA 95616
jli@yolo.com, (530) 753-0352
June 2007
China has the potential to dominate the world economy in the 21st Century, in the same way that Britain ruled the seven seas in the 19th Century and the U.S. dollar created economic dominance in post World War II global reality. With a quarter of the world’s population, China has made tremendous strides since 1978. China’s emergent market economy is now the number one exporter in the world, and its rapidly growing middle class wants all the symbols of American conspicuous consumption. The successes of China’s blossoming economy is a mixed message: there are growing societal inequalities and environmental challenges apparent in every other country on the planet, especially quality control, air and water pollution, and global warming.
This analysis examines the emergence of the Chinese Communist Party; the transition to a market economy; a brief assessment of societal problems such as health care, education, transportation, energy, quality control, economic inequality and demographics; a look at political problems of corruption and repression; and, the growing problem of environmental degradation, and a question about the world’s concerns in reaction to the Chinese initiation of the SARS epidemic and the recent detection of melamine in Chinese exports. China has become the world’s workshop; can China transcend its contradictions and become a world leader?
Part 1: Political History
“Study the past if you would define the future.” Confucius
For most of recorded history, China (“The Middle Kingdom”) had no tolerance for non-Chinese, which they considered to be uncivilized barbarians. Until China lost the Opium Wars in 1842 to the Europeans, it WAS the universe. Then the Europeans (especially the British) began a century of humiliations, as they repeatedly violated China’s sovereignty: after each victory, the Europeans imposed escalating Unequal Treaties which gave the outsiders legal jurisdiction and tariff control, and the right to intrude their uncivilized cultures into more of daily life. European invasion in the name of protecting their embassies during the Boxer Rebellion that ended in 1901 humbled the Emperor’s court, and set the stage for the internal Revolution of 1911 and the end of centuries of Confucian government. After the Nationalist revolution of 1911, warlords terrorized the countryside, disrupted the agrarian routine, and the peasants struggled to survive. Urban society was characterized by Shanghai, which was dominated by the industries of the European powers. The Chinese Communist Party (CCP) tried to organize urban workers, but the Party was chased out of Shanghai in the late 1920s. The CCP was forced to flee westward, away from the urban centers, and they eventually established their base in Yan’an. There they refined a moderate program of rural land reform. Subsequent feeble attempts by the Nationalist Party under Sun Yat-sen and later Chiang Kai-shek to manage various warlords left the country ill-prepared to fight off the devastating invasions of the Japanese, who dominated from 1937 until their defeat by the Allies in 1945. In 1949, the Chinese Communist Party and its People’s Liberation Army quickly defeated the Nationalists, who escaped to Taiwan (Formosa).
When the Communist Party came to power in 1949, eighty percent of the population still lived in rural communities. Since the Party had little experience with urban/industrial reality they took their lead from the Russian Soviets and established the “Walk on Two Legs” program: heavy industrial development in the cities (especially inland, away from the European influence) and the moderate rural message of Liu Shaoqi establishing a tone of successful peasant survival within the context of traditional family-based community networks and minimal social disruption in the CCP’s first Five Year Plan (1953-1958). This led to internal Party struggle between the moderates, who wanted slow social change and the Maoists who called for a more radical revolutionary approach. The First Five Year Plan was a success, encouraging continued improvements in grain production. This success built confidence in the Party, its leadership and its message of a better future.
A major turning point occurred in 1956, when new Soviet leader Khrushchev announced a public repudiation of Stalin. Mao was so paranoid about the potential for later criticism that he rejected the 6,000 Soviet technical advisors who had been guiding China’s industrialization as well as their industrial and technical expertise. The Russians left and took their working plans with them.
Mao established the Great Leap Forward (1959-1961), and rejected all technical expertise as being subservient to Party decision makers, who all too often were inexperienced and misinformed. They made bad decisions that increased human suffering and wasted resources and time: a devastating famine, and reports of exaggerated grain productivity that led to higher grain taxes, inadequate grain in the countryside to feed the masses, leading to starvation and death to 30 million people.
Party moderates responded during a brief open period, encouraging criticism, called A Hundred Flowers Blooming. This theme recalled the time immediately following Confucius’ death, considered the most creative period in Chinese history. But the opportunity for creative thought was short lived, as Mao quickly declared any criticism of the Party as counter-revolutionary, and began purging the country of the educational/technical experts and Party elites who did not follow his definition of correct thought. It became known as the Cultural Revolution (1966-1976). Mao called on millions of college-aged students who were born after the 1949 Revolution to leave the cities and go into the countryside to engage in political struggle, criticizing the Established Party Leaders as “capitalist roaders.” During this ten year period, Mao wiped out two generations of intellectual maturity: the professors who were humiliated in political struggle and removed from their jobs, and the students who were expected to limit their thought to the dogma of Mao’s Little Red Book.
Political Process within the Party: Radical Mao and Moderate Deng
In the ebb and flow of power, there are no absolutes. Even Mao experienced periods when his influence waned: in the middle of the First Five Year Plan, when the moderates’ pragmatic approach to economics was leading to increasing productivity, Mao seemed to be in the back seat of the power elite. Later, the Hundred Flowers Blooming campaign encouraged the intelligentsia to criticize Party officials and Mao’s revolutionary rhetoric was challenged. Then the challenge was addressed: Mao reviled the moderates as revisionist, and demanded a return to a revolutionary commitment. The Party structure responded with the disastrous Great Leap Forward, with Mao’s guerrilla leadership style of ad hoc decisions unquestioned. But after 30 million deaths from famine and starvation, the Party reconsidered, and the Party inner circle restored collective decision making in an effort to restrain Mao. Mao felt so out of power, so ignored by other leaders within the Party-state, that he had to restructure his own power base to regain power with his call for a new generation of students to go to the countryside with the message of the Cultural Revolution. By attacking the Party leadership, Mao was simultaneously building his own cult following, and eroding the established power structure.
While Mao won the political battle during his lifetime, the moderates laid the foundation for the economic revival that has blossomed since Mao passed away. Even more than Stalin was feared, Mao was venerated during his lifetime, and his program rejected after his death in 1976. Mao’s legacy includes the positives of improved primary literacy of the population, and barefoot doctors in the countryside bringing preventive primary health care that lowered mortality rates. Beyond that, Mao’s message was largely been repudiated: China’s per capita economic productivity struggled, especially compared to Japan, and even Taiwan and South Korea.
In the history of the Chinese Communist Party, no one has had a more checkered career than Deng Xiaoping. As a teenager, Deng went to France on a work-study program that included future Chinese leader Zhou Enlai. He did industrial jobs, studied Marxism, and became a member of the Chinese Communist Party. Returning to China, he participated in local organizing, and joined the Long March and became friends with Mao, eventually being named General Secretary of the Central Committee of the Communist Party. Active in the military, Deng served in campaigns against the Japanese and then against the Kuomintang in the Civil War. Soon after the formation of the People’s Republic of China, Deng was named by Mao to several important posts in the new government. Deng played a key role in Mao’s Anti-Rightist Campaign of 1957, and Mao made him General Secretary of the Communist Party in 1959, in charge of running the day to day government with President Liu Shaoqi.
After the failure of the Great Leap Forward, Liu and Deng argued that people were motivated by material incentives: rewards, bonuses and higher wages when they excelled or worked harder than others. Liu and Deng claimed these methods were more effective than the moral encouragement, persuasion, and propaganda advocated by Mao. They criticized Mao’s leadership, and established a Socialist Education Campaign with large teams of Party cadres, when Mao was openly questioning the Party cadres. They deemphasized class struggle, and Mao was scandalized; he was convinced the Chinese revolution was in danger.
Mao created the Cultural Revolution with a call to the students to be the vanguard in the class struggle to destroy the four olds: old ideas, habits, customs, and culture. Mao’s targets were Liu and Deng, who were strongly criticized and subjected to often physically painful struggle meetings. In the summer of 1967, they were put under house arrest. In 1968, Liu was tortured and beaten by Mao’s Red Guards; he died of pneumonia without medical care. Deng was humiliated, then sent to exile. The Gang of Four emerged as the advocates of the Cultural Revolution, and their pronouncements were supported by Mao. Then in 1974, with the Gang of Four leading the Red Guard propaganda campaign against the Party leadership, Mao’s designated successor Zhou Enlai was so sick that he was moved to a hospital, and Mao surprised everyone by bringing Deng out of exile back to Beijing to be First Vice-Premier. Deng called for speeded-up industrialization by introducing foreign technology, putting quality first, and restoring material incentives. Mao publicly backed Deng, but encouraged the radical Gang of Four to put forth their own views. In 1976, Zhou Enlai died, setting off massive demonstrations in Tiananmen Square, which supported Deng as Mao’s successor. Mao ordered Deng be stripped of all his posts, naming Hua Guofeng as his heir apparent. Deng went into hiding. Mao died in September, and a year later, Deng was re-appointed to his former posts, although still subordinate to Hua. Deng was pragmatic, and his team was known as the Practice faction, for “Practice is the sole criterion of truth” where Hua only had Whatever, for “Whatever Mao said…” In 1978, the Party announced that the Tiananmen Square incidents of 1976 were not counter-revolutionary, but revolutionary, exonerating Deng, and Hua was on his way out.
Marx versus Deng via Mao:
The Communist Party has dominated China since 1949. It is hard to tell what Karl Marx would have thought about an Asian rural Communist Party. Marx focused his theory on an inevitable evolution based on the modes of production as he viewed them in industrializing Germany and Great Britain: feudal society controlled by the landlords, and then an emergent industrial society controlled by the capitalists, finally leading to a communist society of the future controlled by the workers. There was no room in his model for a feudal society like Russia or China to make the leap into industrialized communism. East German Rudolf Bahro critically referred to Stalin’s description of Russia’s Communist Party-dominated government as “actually existing Socialism,” a totalitarian bureaucracy ruthlessly manipulating by fiat.
Mao used the Marxist criticism of European industrial capitalism, and the Soviet model of one party government. Where the Confucius model of governance ruled China with only 25,000 officials to manage a society of several hundred million people, the Maoist command model created a need for extensive bureaucratic organization for perhaps 75 million government, party and military officials for a population of over one billion. That is one official for every thirteen people, which seems tremendously more bureaucratic than the seemingly efficient Confucian regime.
Few would claim that the Chinese Communist Party “serves” the people, as Marx presumed would happen in a communist society, with the withering away of the state. Marx failed to recognize the emergence of the professional/technical class as a consequence of the knowledge industry and the emergence of bureaucracy. The privileged class in China ever since the 1949 Revolution has been the families of Party members. Mao’s conflicting legacy is a Party structure known for its nepotism and internal corruption. One of the biggest problems facing China today is the entrenched Party and its inability to respond to the growing social and environmental problems fostered by the rapid dynamism of the emergent economic engine. The Party is accountable only to itself. Western concepts of balance of power in general, and judicial review in particular remain foreign ideas without consistent practical application. The key to economic success in China continues to be knowing which Party officials to bribe. In the name of Marxism, the working class is subservient to a dictatorship of the Party, which is out of date and obsolete. The Party has become the greatest obstacle to social progress in China.
China’s Modern Version of Accepted Religion:
After Mao, China shifted from Maoism to Dengism (economic success), its current religion, or as Marx said, opiate of the masses. Almost over night, Deng converted China into a modern developing economy. China now pursues economic growth at all costs.
One of the contradictions of Marxism that is official policy of the Chinese Communist Party is the rejection of the idea of religion, and a wholesale rejection of the human need for a sense of spirituality. Ironically, during the Mao years, the population was expected to respond instantaneously to Party dictates – with all their heart and soul, even more than Catholics are expected to obey the Pope. Especially during the Cultural Revolution, the Party intention of the Mao Cult of Personality was so strong that the only way to describe the expected behavior was reverence towards the latest announced whim of Chairman Mao. It is referred to historically as “deification” – making Mao into a God-like figure to be worshiped by all.
After Mao died, the Chinese culture went through a two year period of confusion and lack of direction. Then Deng Xiaoping provided the new direction with his push towards opening the Chinese labor force towards exporting goods to the world’s consumer economy. Deng replaced worshiping the dictates of Chairman Mao with the pursuit of economic wealth, offering the Chinese people the same empty reward that provoked Marx’s criticism of capitalism in the first place.
The Party continues to ban and harass organized religions, as well as indigenous spiritual movements as a threat to Party supremacy and control.
In an recent article titled “Confucius makes a comeback” the Economist reports that there is an increasing awareness of “the downside of growth, such as widening regional disparities, wealth differentials, corruption and rising social tension.” Some Party leaders are urging a return to Confucian values for a harmonious society of order and balance. While that might work for the people who are already inside the power structure, it does not seem that attractive to those who are dissatisfied with material gratification.
Part 2: Emergent Market Economy
“To get rich is glorious.” Deng Xiaoping
In December, 1978, Deng emerged as the top leader at the Third Plenum of the Eleventh Central Committee. Deng translated reform era policies into Marxist analysis: where Marx had declared that modes of production defined stages of economic development, Deng turned around Mao’s attack on intellectuals, to see production of science as work by the mind. Deng decreed this to be the ongoing evolution of socialist theory, to reconcile Marx and the advanced market economy:
“Science is part of the productive forces. Since science is becoming an increasingly important part of the productive forces, are people engaged in scientific and technological work to be considered workers or not?” Contrary to what Mao had pushed during the Cultural Revolution, Deng argued that scientists and technical experts are workers – Red workers, not counter-revolutionaries, just as much as factory workers.
The goals of Deng's reforms were summed up by the Four Modernizations: agriculture, industry, science and technology, and the military. The strategy for achieving the aim of becoming a modern, industrial nation was the socialist market economy. Deng argued that China was in the primary stage of socialism and that the duty of the party was to perfect so-called “socialism with Chinese characteristics.” This interpretation of Chinese Marxism reduced the role of ideology in economic decision-making and deciding policies of proven effectiveness. Downgrading communitarian values but not necessarily the ideology of Marxism-Leninism itself, Deng emphasized that "socialism does not mean shared poverty."
Although Deng provided the theoretical background and the political support to allow economic reform to occur, few of the economic reforms that Deng introduced were originated by Deng himself. Premier Zhou Enlai, for example, pioneered the Four Modernizations years before Deng. In addition, many reforms were introduced by local leaders, often not sanctioned by central government directives. If successful and promising, these reforms were adopted by larger and larger areas and ultimately introduced nationally. Many other reforms were influenced by the experiences of the Japan, Hong Kong, Singapore, Taiwan and South Korea .
Deng's reforms included the introduction of planned, centralized management of the macro-economy by technically proficient bureaucrats, abandoning Mao's mass campaign style of economic construction. However, unlike the Soviet model, management was indirect through market mechanisms.
Deng sustained Mao's legacy to the extent that he stressed the primacy of agricultural output and encouraged a significant decentralization of decision making in the rural economy teams and individual peasant households. At the local level, material incentives rather than political appeals were used to motivate the labor force, including allowing peasants to earn extra income by selling the produce of their private plots at free market.
In the move toward market allocation, local municipalities and provinces were allowed to invest in industries they considered most profitable, which encouraged investment in light manufacturing. Thus, Deng's reforms shifted China's development strategy to an emphasis on light industry and export-led growth.
Light industrial output was vital for a developing country coming from a low capital base. With the short gestation period, low capital requirements, and high foreign-exchange export earnings, revenues generated by light manufacturing could be reinvested in more technologically-advanced production and further capital expenditures and investments.
However, in sharp contrast to the similar but much less successful reforms in Yugoslavia and Hungary, these investments were not government mandated. The capital invested in heavy industry largely came from the domestic banking system, and most of that capital came from consumer deposits. One of the first items of the Deng reforms was to prevent reallocation of profits except through taxation or through the banking system. Hence, the reallocation in state-owned industries was somewhat indirect, thus making them more or less independent from government interference. In short, Deng's reforms sparked an industrial revolution in China.
These reforms were a reversal of the Maoist policy of economic self-reliance. China decided to accelerate the modernization process by stepping up the volume of foreign trade, especially the purchase of machinery from Japan and the West. By participating in such export-fed growth, China was able to step up the Four Modernizations by attaining foreign funds, markets, advanced technologies and management experiences, thus accelerating its economic development.
Deng attracted foreign companies to a series of Special Economic Zones, where foreign investment and market liberalization were encouraged with policies of low tax rates, the establishment of transportation networks, the construction of industrial plants, and a well-trained cheap labor force.
Deng aggressively opened the window of China to the outside economic world that could provide the resources, technical expertise and financial capital to drive the modern Chinese economic miracle of sustained growth, which Barry Naughton puts at per capita Gross Domestic Product increase of 7% per year for the entire 1978-2005 period – the most sustained period of rapid economic growth in human history.
Comparing China’s Expanding Economy with King USA:
Where India has become the service center of the First World with exported services climbing to over 50% of its Gross Domestic Product, China has become the First World’s source of goods. 21% of China’s exports are headed for the U.S., accounting for 13% of the U.S.’s imports. The May 19th, 2007, British magazine The Economist reports: China’s trade surplus with America increased to $233 billion last year, accounting for almost 30% of America’s total deficit. Worse still, in the first four months of 2007, China’s trade surplus jumped by 88% compared with the same period in 2006.
The U.S. debt to China is due to the U.S. consumer buying a disproportionate share of China’s exports. The argument is that the Chinese currency, the yuan, is undervalued, making Chinese goods too inexpensive compared to U.S. produced goods. The current rate of exchange is 7.7 yuan per U.S. dollar. If the yuan were raised in value compared to the dollar, for example to 5 yuan per dollar, then Chinese goods would be more expensive in the U.S., and U.S. consumers would be less likely to buy them, improving the balance of trade between the U.S. and China. But then U.S. consumers would not benefit from the bargain of Chinese goods, and the cost of living and inflation would increase in the U.S.
That is the currency issue, the big picture comparison of the two countries. On the major specifics, Lester Brown of the World Watch Institute has laid out how China has reached new standards in comparison with the U.S., the previous super consumer. Keep in mind that China has 1.3 billion people, about four times as many people as the U.S. population of 297 million.
“Although the United States has long consumed the lion’s share of the world’s resources, this situation is changing fast as the Chinese economy surges ahead, overtaking the United States in the consumption of one resource after another.
“Among the five basic food, energy, and industrial commodities—grain and meat, oil and coal, and steel—consumption in China has already eclipsed that of the United States in all but oil. China has opened a wide lead with grain: 382 million tons to 278 million tons for the United States last year. Among the big three grains, the world’s most populous country leads in the consumption of both wheat and rice, and trails the United States only in corn use.
“Although eating hamburgers is a defining element of the U.S. lifestyle, China’s 2004 intake of 63 million tons of meat has climbed far above the 37 million tons consumed in the United States. While U.S. meat intake is rather evenly distributed between beef, pork, and poultry, in China pork totally dominates. Indeed, half the world’s pigs are found in China.
“With steel, a key indicator of industrial development, use in China has soared and is now more than twice that of the United States: 258 million tons to 104 million tons in 2003. As China’s population urbanizes and as the country has moved into the construction phase of development, building hundreds of thousands of factories and high-rise apartment and office buildings, steel consumption has climbed to levels not seen in any other country.
“With oil, the United States is still solidly in the lead with consumption triple that of China’s—20.4 million barrels per day to 6.5 million barrels in 2004. But while oil use in the United States expanded by only 15 percent from 1994 to 2004, use in the new industrial giant more than doubled. Having recently eclipsed Japan as an oil consumer, China is now second only to the United States. With Chinese consumers placing greater emphasis on the personal auto, China is expected to surpass the U.S. in petroleum consumption.
“Looking at energy use in China means also considering coal, which supplies nearly two thirds of energy demand. Here China’s burning of 800 million tons easily exceeds the 574 million tons burned in the United States. With its coal use far exceeding that of the United States and with its oil and natural gas use climbing fast, it is only a matter of time until China will also be the world’s top emitter of carbon. Soon the world may have two major climate disrupters.
“In addition to steel, China also leads in the use of other metals, such as aluminum and copper. Not only has China overtaken the United States in use of these materials, but it is widening the gap, leaving the United States in a distant second place.
“In another key area, fertilizer—essentially nitrates, phosphates, and potash—China’s use is double that of the United States, 41.2 million tons to 19.2 million tons in 2004. In the use of the nutrients that feed our crops, China is now far and away the world leader.
“In China’s consumer economy, sales of almost everything from electronic goods to automobiles are soaring. Nowhere is the explosive growth more visible than in the electronics sector. In 1996 China had 7 million cell phones and the United States 44 million. By 2003 China had rocketed to 269 million versus 159 million in the United States. In effect, China is leapfrogging the traditional land-line telephone stage of communications development and going directly to mobile phones.
The use of personal computers is now also taking off in China. After a late start, the number of personal computers jumped to 36 million in 2002 compared with 190 million in the United States. But with the number of computers in use doubling every 28 months, it will only be a matter of time before China, a country of 1.3 billion people, overtakes the United States.
“With household appliances, such as television sets and refrigerators, China has long since moved ahead of the United States. By 2000, for example, TV sets in China outnumbered those in the United States by 374 million to 243 million. With refrigerators, perhaps the most costly household appliance, production in China overtook that of the United States in 2000.
“Among the leading consumer products, China trails the United States only in automobiles. By 2003, it had 24 million motor vehicles, scarcely one tenth the 226 million on U.S. roads. But with car sales doubling over the last two years, China’s fleet is growing fast.
“But the consumption race is far from over. With a per capita annual income in 2004 of $5,300, one seventh the $38,000 in the United States, China has a long way to go to reach U.S. per capita consumption levels. For example, despite China’s wide lead in total meat intake, the meat consumed per person is only 49 kilograms (108 pounds) a year compared with 127 kilograms (279 pounds) in the United States. As Chinese incomes rise at a world record pace, use of foodstuffs, energy, raw materials, and sales of consumer goods are continuing to climb.
“China is now importing vast quantities of grain, soybeans, iron ore, aluminum, copper, platinum, potash, oil and natural gas, forest products for lumber and paper, and the cotton needed for its world-dominating textile industry. These massive imports have put China at the center of the world raw materials economy.
“China’s eclipse of the United States as a consumer nation should be seen as another milestone along the path of its evolution as a world economic leader. Its record-high domestic savings and its huge trade surplus with the United States are but two of the more visible manifestations of its economic strength. It is now China, along with Japan, that is buying the U.S. treasury securities that enable the United States to run the largest fiscal deficit in history.”
Part 3: Complications
The following analysis looks briefly at some of China’s major societal problems in health care, education, transportation, energy, quality control, economic inequality and demographic consequences. That is followed by an examination of the costs of China’s economic miracle, as seen in corruption within the Party, loss of democratic freedoms, and environmental degradation.
Major Long Term Societal Issues:
Health Care: During the Mao years, local governments and communes invested in barefoot doctors – people within the local population with limited training who provided primary preventive care, which led to expanded life expectancy. In the transition to the market economy, basic health resources have suffered. People are expected to pay for their own care, and institutional resource management is inconsistent. This became an international media concern during the SARS epidemic of 2003.
Education: Like health care, education is a local responsibility. In traditional Confucian culture, education was the advertised avenue out of poverty, but only a tiny minority was allowed to succeed. During the Mao years, the Party made a strong commitment to basic literacy, with each successive generation having a higher literacy rate. But during the decade of the Cultural Revolution, higher education was aggressively assaulted and society lost the institutional memory of its teachers as well as the next generation of students.
With the emergence of the market economy, anything more than the most basic education must be purchased by parents for their children, and better schools are in high demand. Since education is recognized as fundamental to future economic success, many people see it as a necessary investment. While the government has made a commitment to building educational institutions in large numbers, standards of quality have not been maintained. Schools are producing competent technicians but the Party has little room for thoughtful innovators.
Transportation: the primary symbol of the growing middle class is the ownership of a private automobile. China has 33 million cars now, with plans to expand to 130 million by 2020. Beijing is adding 1,000 cars per day. China started closing Beijing’s streets to bicycles to make way for cars in 1998, and is currently engaged in a massive highway-building program. They are designing an exclusively auto based transportation system with highways and little public transit. It plans enormous shifts of population from rural areas to cities and manufacturing and business, and shifts from rail, bicycle and pedestrian travel to roads for motor vehicles on rubber tires – a colossal transformation in the wrong direction. The arrow is in the direction of increasing problems for the Chinese, in terms of greater congestion, less efficient use of petroleum, minimized plans for public transit, and more danger to pedestrians and bicyclists.
Energy: China relies on poor quality coal for 62% of its energy production, which causes tremendous and growing air quality problems. The government’s strategic goal is to build 32 nuclear power plants by 2020, and 300 more by 2050, with little regard to the environmental consequences. China uses seven times as much energy as Japan per unit of production, 3.5 times as much as the U.S., so it also has problems in terms of how it uses what energy it has.
Inconsistent Quality Control: Perhaps the biggest problem of Mao’s legacy on the Chinese consciousness was the reliance on the Party to define quality, especially the naïve Red Guard during the Cultural Revolution, in defiance of expertise and long term practical experience. Now, as can be seen in health care, education, transportation and energy, with the impatient rush to the market economy, the emphasis is on quantity at the expense of quality. While quality usually adds to the cost of production, its absence creates greater problems in the long run.
Economic Inequity: During the Mao years, the economic emphasis was on equality. Most people who lived in the cities had a modest job, which tied them to housing, health care, and a pension. The rural majority shared in the common struggle for survival. The new economic reality in China has brought greater opportunity for many, but some have benefited more than others. Economist Barry Naughton describes a measure for relative comparison:
“The Gini coefficient is a summary measure of income distribution, ranging in a value between 0 and 1. Zero would signify that income is perfectly equally distributed, and one would indicate that all income is concentrated in the hands of a single individual. Examples of relatively equal economies include Sweden, 0.25, Japan, 0.25, and Germany, 0.28. Examples of high inequality include Brazil, 0.59, and Mexico, 0.55. In 1983, China’s Gini index was 0.28, but by 2001, it had increased to 0.45, surpassing the U.S.’s .41.”
Demographics: With a current population of 1.3 billion people, China’s goal is a steady state population managed by the seemingly draconian one-child policy. After the 1949 Revolution, the government’s commitment to basic food and health care meant that death by starvation was less rampant, and people’s average life expectancy grew from 59 years to 73 years. With fewer children, and longer life span, the population is aging, and by 2030 will face a problem of a shrinking work force supporting a growing elderly population.
Party Corruption:
Shang you zhengce, xia you duice
There are polices on high but those below have countermeasures
The governing structure of China is defined by the Party. However, words on paper are subject to the interpretation of individuals and varies from place to place. The equivalent of the Western concept of judicial review is Party analysis. At any point in time, the Party is balancing a traditionalistic approach of the status quo versus emerging political expectations. Local government has many responsibilities, which translate into how the labor market is fed. More jobs means a less demanding populace, so there is tremendous incentive for local Party and government officials to create jobs.
The key to economic development inside China is graft and corruption within the Party. Guanxi, political connections, are greased by payment to friends and relatives of Party officials. While the Party leadership may speak high words condemning immoral acts, it is the same old story as always: talk without implementation. While the national leadership worries about the economy overheating, and calls for a slow down in commercial and residential development, the real money is at the local level. So local officials appropriate adjacent rural land from the peasants who have no land use rights, turn it over to friendly developers, who create short term construction jobs using migrant workers (who are paid minimum wages).
Every economic transaction is subject to Party scrutiny, potential rejection, and squeeze/graft/payoff. For every honest Party official who is not taking a cut, there are others who expect that they deserve to be paid more than they are getting, and many consider it a normal cost of doing business.
Political Repression:
“Does Deng Xiaoping want democracy? No, he does not.” Wei Jingsheng
While Deng opened the door to market capitalism, he shut the door to any efforts to liberalize the political society. Where the Chinese constitution claimed four big freedoms - to speak out freely, air views fully, engage in great debates, and write big-character posters - the constitution was revised in 1978: four cardinal principles set boundaries on these freedoms: “All activities in opposition to socialism, in opposition to the proletarian dictatorship, in opposition to the leadership of the party, or in opposition to Marxism-Leninism-Mao Zedong Thought… are prohibited by law and will be prosecuted.”
The Tiananmen Square protests of 1989 began in mid-April 1989 triggered by the death of Hu Yaobang, the former party General Secretary. Hu was widely seen as a liberal-minded person and was forced to resign from his position by Deng Xiaoping, an unfair treatment in many people's view, especially intellectuals.
Although the government declared martial law on May 20, demonstrations continued. After deliberating among Communist party leaders, the use of military force to resolve the crisis was ordered. Soldiers and tanks from the People’s Liberation Army were sent to take control of the city. These forces were confronted by Chinese students in the streets of Beijing and the ensuing violence resulted in both civilian and army deaths. The Chinese government refused to acknowledge that any deaths had occurred as a result of the violence.
Estimates of civilian deaths that resulted vary: 400-800 (New York Times), and 2,600 (Chinese Red Cross). Student protesters maintained that over 7,000 were killed. Following the violence, the government conducted widespread arrests to suppress the remaining supporters of the movement, limited access for the foreign press and controlled coverage of the events in the mainland Chinese press. The violent suppression of the Tiananmen Square protest caused widespread international condemnation of the government. Deng Xiaoping, along with other hardliners, were generally blamed for the events. Critics accused Deng of suppressing any signs of political freedom that would undermine the direction of his economic reforms.
The government’s repressive responses to the Tiananmen Square demonstrations of 1976 and 1989 are the tip of the iceberg of how much the government controls thought within society. The most well known large scale example is the effort of the government to create its own Internet with sufficient control that individuals cannot go “outside of China.” Some religions are considered counter-revolutionary, and prohibited, and their followers arrested. Tibet is treated as an occupied territory; a new railroad has made it easy for Han-Chinese to immigrate to Tibet in order to become the majority population, to overwhelm and eliminate the native culture.
The basic question is the right to individual thought. Scientists, artists, writers, and other intellectuals are restricted by the Party, and expected to stay within the Party’s bounds. The real lesson taught by the national repression following the 1976 and 1989 Tiananmen Square incidents is that the Party cannot afford the society to exercise much freedom of thought or expression.
Environmental Degradation:
“Growth must be sustainable to deliver its benefits” Barry Naughton
Industrialization by the First World has had a devastating impact on the environment. Global air and water pollution is particularly bad in Europe and North America, as the centuries long drive for the economic imperative has disregarded ecological consequences. Now China and India make the claim that they should have the same right to environmental negligence in the name of the drive for economic prosperity.
Only 15% of China’s land is productive for growing food. For the most part, China has mined its productive land, abusing it as a resource, as though it is somehow naturally renewable. Of China’s 1.3 billion people, at least 400 million breathe heavily polluted air, and over 300 million have no safe water supply. According to official statistics, about 30% of China’s rivers are so dirty they aren’t fit for even industrial or agricultural uses, let alone human consumption.
China feels justified in following the bad example of the U.S. and Europe: the economic imperative drives political decisions at the expense of the environment. Local officials ignore polluting industries, until they cause a big accident or create obvious health problems like children dying in large numbers. When groups of people try to petition the national government in Beijing, they are usually stopped by the local officials, then given the run around at the national level. Tying together China’s three institutional problems identified in this analysis (corruption, democracy and environment), environmental problems have become so severe that they have become the leading motivation for people to organize to demand a response from the government.
A quality finished product requires quality inputs. China’s economic engine has relied on an environment that is deteriorating. While the economy may continue to succeed in the short run, the potential future has diminishing returns. According to a December 2000 report by the U.S. Embassy in Beijing, pollution costs the Chinese economy anywhere from 3 to 8 percent of GDP each year. In addition, ecological damage potentially costs another 5 to 14 percent. Even at the low end of these estimates, environmental damage is roughly equivalent to annual economic growth, meaning that the economy is producing little or no new net national wealth.
Elizabeth Economy, the Director of Asian Studies at the Council on Foreign Relations, has written extensively on Chinese domestic and foreign policy. Her publications include: The River Runs Black: The Environmental Challenge to China’s Future, China Joins the World: Progress and Prospects, and The Internationalization of Environmental Protection. In a 2003 interview in the Harvard Asia Quarterly, Economy lays out the current status of China’s place in the environment:
“While China’s spectacular economic growth over the past two decades or so has provided a significant increase in the standard of living for hundreds of millions of Chinese, it has also produced an environmental disaster. There has been a dramatic increase in the demand for natural resources of all kinds, including water, land, and energy. Forest resources have been depleted, triggering a range of devastating secondary impacts, such as desertification, flooding, and species loss. At the same time, levels of water and air pollution have skyrocketed. Small-scale township and village enterprises, which have been the engine of Chinese growth in the countryside, are very difficult to monitor and regulate and routinely dump their untreated waste directly into streams, rivers, and coastal waters.
“More than 75% of the water in rivers flowing through China’s urban areas is unsuitable for drinking or fishing. Sixty million people have difficulty getting access to water, and almost three times that number drink contaminated water daily. Desertification, which affects one-quarter of China’s land, is forcing tens of thousands of people to migrate every year and now threatens to envelop Beijing. In terms of air pollution, in 2000, China’s State Environmental Protection Administration tested the air quality in more than 300 Chinese cities and found that almost two-thirds failed to achieve standards set by the World Health Organization for acceptable levels of total suspended particulates, which are the primary culprit in respiratory and pulmonary disease.
“China is also exerting a significant impact on the regional and global environment. Its reliance on low quality, high sulfur coal is responsible for roughly half of all sulfur dioxide emissions, which cause acid rain, throughout East Asia – a situation that has contributed to some tensions with Japan and South Korea. Globally, China is one of the world’s largest contributors to ozone depletion, biodiversity loss, and climate change. There is some positive movement in all these areas, but it is very slow to materialize in terms of the actual implementation of new policies.
“Much of China’s environmental challenge currently stems from its overwhelming reliance on coal as its primary source of energy. China depends on coal to supply almost three-quarters of its energy needs. In contrast, in Japan, the U.S., and India, energy from coal accounts for 14%, 22%, and 53% respectively. Burning coal is responsible for 70% of the smoke and dust in the air and 92% of the sulfur dioxide in China. Since the early 1980s, the country’s coal use has doubled from just over 600 million metric tons to more than 1.2 billion metric tons, making it the world’s largest consumer of coal. Over the next few decades, China will also likely face significant challenges to its air quality from rapidly increasing automobile use.
“Certainly, over the past five to ten years, China has made substantial strides in developing alternative sources of energy, including hydropower, natural gas, and to a much lesser extent nuclear, solar, and wind power. The Three Gorges Dam, the West to East Pipeline from Xinjiang to Shanghai, and many other smaller scale projects will help to reshape China’s energy mix over the long term. The Three Gorges Dam will not only produce benefits as an alternative source of energy but also cause problems, such as biodiversity loss, loss of farmland, loss of precious artifacts from ancient Chinese civilizations (because they will be submerged), and a likely dramatic increase of water pollution in the reservoir area – certainly, the ideal would have been to build several smaller dams along the river. For most of the country, there are neither sufficient economic incentives nor enforceable regulatory standards that make alternative sources of energy or even new clean coal technologies viable.”
SARS as a symptom of the problems facing China:
In China, government reports are treated as state secrets. National Party officials announce new campaigns and catchphrases which mostly end up just being rhetoric without substance or real change in official behavior.
The most public example of many of the problems facing the Chinese political structure occurred in 2003, when a previously unknown, highly infectious, and often fatal disease – severe acute respiratory syndrome, or SARS – spread rapidly out of Guangdong Province. The disease quickly leapt to most of China’s largest cities, including Beijing, causing near panic. During the first ten days of May, over 4 million rural migrants fled the cities, in some cases bringing the disease with them. From Guangdong, people went to Hong Kong, and from there to Vietnam and via plane to all over the British commonwealth. As a consequence, a major SARS outbreak occurred in Toronto.
China’s health system has deteriorated so much that there was no way to care for most of these people, or even track their progress, or respond to further spread of the infection. Within China, over 8,000 people were affected, and 774 died.
The government at first acted as if there was no problem. Then it tried to censor information about the disease and its victims. The need for the Party to control the information worked against the public health within the country and around the world, and the Party/government lost credibility.
More recently, the addition of melamine, a residue of the production of coal products, has been consistently added illegally to food inputs to raise the measures of protein. The basic chemistry of protein is some combination of amino acids, and “amino” means that it is a special kind of organic molecule that includes nitrogen; melamine raises the tested measure of how much nitrogen is in a product, falsely indicating that it has more protein than it actually has. Hundreds of pets in the U.S. have died from pet food that includes melamine-laced wheat gluten.
Many food and nutritional products sold in the U.S. contain ingredients made in China. The world has again raised its suspicions about the quality of Chinese products entering the world market.
Conclusion: Attempting to Balance the Future
It is difficult for an American to fathom the Chinese experience. The U.S. has many environmental and political faults, so a critical view from this perspective must balance the shoulds with the cans, and appreciate how far China has come economically, especially since Mao died in 1976.
China claims that it has the right to environmental damage in its efforts to catch up to the developed countries. For example, China is exempt from the Kyoto Protocol, and it is under no obligation to cut green house gas emissions.
China’s government seems to be ignoring long term environmental and social costs for the sake of short term profits. It has enormous and growing social and economic inequalities. It is battling with how to define its totalitarian Party/government within some struggling definition of democracy and human rights, with increasing awareness of devastating environmental problems. The Party’s domination of society is dependent on its ability to minimize fringe opposition. There are indications that the environmental problems are so pervasive that there are thousands of frustrating demonstrations against the government’s indifference to increasing pollution.
The Party only has a thin veneer of stable control over the population. Citizen recourse via the superficial court structure and the unresponsive bureaucracy is mostly unsuccessful. That can only lead to more frustration and political demonstrations in reaction to growing ecological and health damage. The Party’s traditional response to criticism is repression, which could lead to greater internal friction and distrust within society. Ultimately, the national identity of this quarter of the world’s people who think of themselves as “Chinese” may have to decentralize into smaller political units – such as the provinces becoming independent countries, much as the Soviet Union did.
The Summer Olympics of 2008 will bring unprecedented global media attention to China in general and Beijing in particular. That will increase the political pressure on the Party to respond to environmental and social problems.
For the Chinese, the concepts of energy and industry are nouns but they are also verbs.
China’s potential is incredible, a cause for concern, and a challenge for hope.
Jon Li writes about communities as evolving social systems.
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