Martin Jacques - When China Rules the World

a gigantic social systems engineering project, which involves straightening out the relationships between the Party and the government, power and judicial organs, mass organizations, enterprises and institutions, and between central, local and grassroots organizations; it concerns hundreds of millions of people. This is an arduous and protracted task. [423] [423] People’s Daily , 1 July 1987, quoted in ibid., p. 186, also pp. 165, 178, 184.

The reform project has usually been seen in narrowly economic terms, as if it had few political implications. In fact Deng’s project involved not just an economic revolution, but also a largely unrecognized political revolution, which entailed a complete overhaul of the state, both in its modus operandi and its personnel, with the universalist, ideological model of the Maoist era being replaced by something closer to the developmental model of the East Asian tigers. An essential element in this transformation was the decentralization of the state, which was seen as a precondition for the reform of the economic system and economic growth. Decision-making, including the granting of de facto property rights and fiscal power, was decentralized to different levels of local government. [424] [424] Zheng Yongnian, Discovering Chinese Nationalism in China: Modernization, Identity, and International Relations (Cambridge: Cambridge University Press, 1999), pp. 31-2. As a consequence the central government budget, as a share of GDP, shrank considerably. [425] [425] Zheng Yongnian, Will China Become Democratic?: Elite, Class and Regime Transition (Singapore: EAI, 2004), p. 34.

Almost from the outset, economic growth rates were transformed from the 4–5 per cent of the Mao period to an annual growth rate of 9.5 per cent between 1978 and 1992. [426] [426] Zheng Yongnian, Discovering Chinese Nationalism in China , pp. 31-2. The momentum of reform, however, was seriously disrupted in 1989, little more than a decade after it began, by a massive student demonstration in Tiananmen Square that was brutally suppressed by the army. With the Party leadership seriously divided, it seemed likely that the reform process would be derailed, perhaps indefinitely. In the event, there was only a short hiatus before, in the grand style of Chinese emperors, and to coincide with the Chinese New Year in 1992, Deng made a ‘Southern Expedition’ to the coastal heartland of China’s economic revolution, during which he made a statement in Shenzhen — a brand-new city neighbouring Hong Kong — that not only reaffirmed the central importance of the market reforms but made a clarion call for the process to be intensified and accelerated, suggesting, in a famous passage, that there was nothing wrong in allowing the rich to get richer (and then eventually paying higher taxes to help the poor). [427] [427] Wang Zhengyi, ‘Conceptualising Economic Security and Governance: China Confronts Globalisation’, Pacific Review , 17: 4 (2004), p. 526; Gittings, The Changing Face of China , p. 252; Zheng Yongnian, Will China Become Democratic? , p. 241; Zhao Suisheng, A Nation-State by Construction: Dynamics of Modern Chinese Nationalism (Stanford: Stanford University Press, 2004), p. 217. Until this point the reform process had largely been concentrated in the south, but now it began to move to the interior provinces and, most crucially of all, to Shanghai and the Yangzi Delta, China ’s former economic powerhouse. There was a further wave of foreign investment, largely from the Chinese diaspora based in Hong Kong and Taiwan (which to this day remains the largest single source of foreign inward investment), while Chinese exports, mainly to the United States, increased rapidly. An economic fever began to grip the country, encouraged by Deng’s call to embrace the market economy and fuelled by the annual double-digit growth rate. Nothing more graphically symbolized the ‘new frontier’ economic spirit than the tens of millions of rural migrants, China ’s reserve army of labour, who left their farms and villages in search of the work and glitz of the city. [428] [428] Gittings, The Changing Face of China , p. 254. The Red Guards were now but a distant memory. There was barely a Mao suit in sight.

From the outset, Japan and the Asian tigers had been an important influence on China ’s economic reform. [429] [429] Deng offered his pragmatic support for the model of the East Asian developmental state; Zhao, A Nation-State by Construction , p. 30. These countries shared with Deng a pragmatic and non-doctrinal view of how to conduct economic policy. It was recognized, however, that none of them could, in themselves, provide a suitable model: the conditions, especially those flowing from China ’s enormous size and diversity, were simply too different. In the era of globalization that began around 1980, moreover, it was no longer possible for China, unlike Japan and the Asian tigers earlier, to grow its industries and companies behind a wall of tariffs until they were ready to compete in the international market. A further complicating factor was that China, as a Communist country, was still viewed with a certain amount of suspicion by the United States: as a result, its entry into the WTO took fifteen years and was the subject of the most detailed agreement ever made with any country — contrasting strongly, for example, with the far less demanding terms required of India a few years earlier. China, for a variety of reasons, had to invent its own way. [430] [430] Peter Nolan, Transforming China: Globalisation, Transition and Development (London: Anthem Press, 2005), pp. 185, 187-8.

Although China enjoyed nothing like the intimacy of South Korea and Taiwan’s relationship with the United States, it recognized the crucial importance of winning American support and cooperation in its pursuit of economic growth. Just as its approach to economic reform was informed by pragmatism, so too was its attitude towards the United States. The Mao- Nixon accord of 1972 marked a profound change in their relationship, with the establishment of formal diplomatic relations in 1979, the settlement of property claims, the unfreezing of assets and the granting to China of most-favoured nation treatment. These steps created the conditions for China subsequently to join the IMF and the World Bank in 1986 and be granted observer status to GATT in 1982. The value of the United States to China was increasingly evident during the 1980s: it became the most important destination for Chinese exports; growing numbers of Chinese students went to study there, including many sons and daughters of the Party elite; while the US model of capitalism came to exercise a growing influence. The collapse of the Soviet Union only served to accentuate that influence, and the US’s prestige was further enhanced by the economic dynamism associated with Silicon Valley and the internet. Increasingly during the nineties, however, there was a rising tide of nationalist sentiment directed against the US, which found expression in the bestseller The China That Can Say No and the demonstrations against the US bombing of the Chinese embassy in Belgrade. [431] [431] Zhao, A Nation-State by Construction , pp. 142-7, 242. Also, Shi Anbin, ‘Me diating Chinese-ness: Identity Politics and Media Culture in Contemporary China’, in Anthony Reid and Zheng Yangwen, eds, Negotiating Asymmetry: China’s Place in Asia (Singapore: NUSPress, 2009,), p. 16. American influence on China’s modernization, nonetheless, remained considerable. Even China’s own economic path and popular mood was to bear some of the signs of neo-liberalism: the worship of wealth, the embrace of entrepreneurs, acquiescence in growing inequality, the retreat of the state from the provision of public goods such as education and health, the rapid lowering of tariff barriers and the adoption of an extremely open trade regime [432] [432] Wang Hui, China’s New Order (Cambridge, Mass.: Harvard University Press, 2003), pp. 96-124; interview with Wang Hui, Beijing, 23 May 2006; interview with Fang Ning, Beijing, 7 December 2005; and Wang Xiaodong, ‘Chinese Nationalism under the Shadow of Globalisation’, lecture at the London School of Economics and Political Science, 7 February 2005. — all of which were closely associated with the reign of Deng’s pro tégé and successor, Jiang Zemin.