October 2, 2009
by John Lee
As the week-long celebrations marking the 60th anniversary of the founding of modern China roll on, the message coming out of Beijing is that China's evolution into a confident, strong, just and prosperous country under the Chinese Communist Party might be gradual, but is assured.
Many Western observers agree. One is former MP for Parramatta Ross Cameron. In a Sydney Morning Herald opinion piece published yesterday, he says China under Mao Zedong's rule was terrible, but now "the Chinese people are basically happy".
Commentators such as Cameron are correct in one respect. China has changed a great deal since Mao passed away in 1976 and Deng Xiaoping assumed power as paramount leader in 1978 and began reforms in 1979.
Yet, on October 1, 2009, the reform period since Deng Xiaoping took power will be nearing the completion of its 30th year - exactly half the age of modern China. The reform period will have exceeded Mao Zedong's 27 years of terrible rule. Assessing progress in China today by comparing what it was like under Mao is a much less useful and convincing yardstick than it once was. Assessing the speed and direction of reform since Deng came to power is a better measure.
While Western commentators are rightly sceptical of their own government's spin, they too readily accept the carefully constructed propaganda put out by Beijing and targeted at both local and foreign audiences.
China's GDP numbers are indeed spectacular. But we frequently need to be reminded that the health, wealth and wellbeing of China and the party are not the same as those of its people. Indeed, the rise of China is deliberately designed to benefit party interests, increasingly at the expense of its own people. Partial free-market reforms have been used to entrench rather than dilute the party's power. After the 1989 Tiananmen protests, Beijing realised that authoritarian regimes become irrelevant at their peril. By controlling the most important industries, the bulk of the country's capital (through state-owned banks), and overseeing an extensive system of awards, promotions and regulation, the government dispenses a dominant share of the most valued economic, professional and intellectual opportunities.
More than 90 per cent of the richest 10,000 people in China are CCP officials or members. Only about 50 of the largest 1000 companies in China are genuinely privately owned and controlled. More than 1400 of the 1500-odd companies listed on China's two stock exchanges are state-controlled. About a dozen key segments of the economy are reserved for state-owned enterprises. The state still owns more than two-thirds of the country's fixed assets and receives more than three-quarters of the country's capital. More than 95 per cent of the recent $US586 billion ($665bn) stimulus package went to SOEs.
Built on rising state-controlled wealth, the CCP has conducted a tireless and largely successful campaign to co-opt, and in many respects create, the rising educated and economic classes. This means that entrepreneurs, professionals, intellectuals, academics and journalists are better off doing business as a "partner" of the state. Not surprisingly, the most influential and successful within China's 50-200 million-strong middle class (depending on how we define the term) are the greatest supporters of the party. These are Cameron's "happy Chinese people".
Far from being an independent class and the harbingers of Chinese democracy, these privileged middle classes are unlikely to jump political horses midstream and put their new-found economic and political power at risk.
It gets worse. A little-known fact is that 80 per cent of poverty reduction in China took place in the first 10 years of reform (1979-1989) - a time when the party was releasing its grip over the economy. After Tiananmen, poverty alleviation slowed dramatically. Since 2000, those in absolute poverty have doubled. About 400 million people have seen their net incomes stagnate or decline over the past decade.
Within one generation, China has gone from being one of the most equal to the most unequal country in all of Asia in terms of distribution of income. Extolling the modern wisdom of the CCP ignores the one billion people who are missing out on the fruits of prosperity. China's "bottom billion" are outsiders in China's state-led model of development. They have little prospect of rising up and suffer under the yoke of frequently corrupt and incompetent rule. Nor is there "order" throughout the country. In 2006, according to official statistics, there were 90,000 instances of "mass unrest". Observers in Hong Kong believe the true figure is closer to 300,000.
When Mao proclaimed the founding of the People's Republic of China, he declared "the Chinese people have stood up". Sixty years later, and after 30 years of reform, the truth is that the vast majority of its people have not yet been allowed to do so.
John Lee is a Hudson Institute Visiting Fellow and an Adjunct Associate Professor and Michael Hintze Fellow for Energy Security at the Centre for International Security Studies, Sydney University. He is the author of Will China Fail? (CIS, 2008).
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