Hu Ping
In this probing essay about the relationship between the June Fourth crackdown and China’s economic “miracle,” Hu Ping, editor of the Chinese-language Beijing Spring magazine, argues that because the economic reform initiated by Deng Xiaoping in the late 1970s was in effect a refutation of the legitimacy of the Communist Party, government concession to the demands for political reform in the 1989 protests would have meant the end of Communist rule in China. It was only by suppressing the protests that Deng was able to forestall further challenges to the Party regime. The result was the recipe for China’s economic “miracle”: enforced social stability and an iron grip by the government on the economy, mixed with a spiritual vacuum, individual greed, and an unprecedented emancipation of material desires among the people.
This year is the 20th anniversary of the June Fourth massacre. Twenty years ago, China erupted into a democratic movement of the greatest scope in history, which ended when the Communist Party of China (CPC) authorities brazenly deployed tanks and field forces in an appalling massacre of unarmed students and citizens. In China today, the regime that carried out the massacre is still in power and continues with its one-party dictatorship.
At the same time, the economy has achieved astonishing development, which many people refer to as the “Chinese miracle.” Of course, this kind of development Has many problems, including the ingredients of a bubble economy. Also, there is the gap between rich and poor, and the clash between government officials and regular folks. Environmental pollution is destroying the balance of the ecosystem. Nevertheless, we have to admit that China’s economic development was rapid. So, how did this so-called Chinese miracle happen? There are, naturally, many reasons, but in my opinion, the most important reason is the June Fourth massacre. Without the massacre, there would have been no “Chinese miracle.”
The Reform Has Led to the Negation of the CPC Revolution and the Legitimacy of Its Regime
As everyone knows, the Chinese government started a market-oriented and capitalist-oriented economic reform in 1978. The reform had three results.
First, it boosted China’s economic development.
Second, it led to the self-negation of the Chinese Communist Party revolution and the legitimacy of its regime. The purpose of the communist revolution and the regime it created was to destroy capitalism and establish socialism. Now that the CPC has turned around to dismantle socialism and reintroduce capitalism, shouldn’t it be admitting that the revolution was a mistake? How can it still justify the so-called dictatorship of the proletariat? Therefore, this economic reform has not been the self-perfection of the revolution and the one-party dictatorship, but their self-negation.
The CPC officials who were the most vigorous advocates of the economic reform were very much aware of its character. I’ve heard the following story. In 1979,Yuan Geng was dispatched to Shenzhen in Guangdong Province to establish China’s first special economic zone—the Shekou Industrial Zone. Yuan Geng was from Shenzhen. Thirty years earlier, as an artillery regiment commander of the PLA, he had led troops to Shenzhen to “liberate” the city. Before he took up his post in Shenzhen in 1979, his son asked him: “Thirty years ago, you led troops to occupy Shenzhen and transform private ownership to public ownership. Now you are going there again to establish a special economic zone and transform public ownership back to private ownership. So what is it exactly that you are doing?”Yuan Geng was dumbfounded for a good while. Finally, he said: “Well, we can’t let the Chinese be this poor forever!”1
The third result of the economic reform is corruption. As the economic reform deepened, especially as it came to the cities and industries and the dual-price system was put forward, business wheeling and dealing and profiteering by state and party officials became widespread, and corruption thrived.
We all know that China used to practice planned economy, in which prices were controlled by the government. In the mid 1980s, China started to reform the price policy. At that time, many economists proposed opening up prices all at once and allowing the market to decide them. However, this opinion was strongly opposed by the conservatives. Some people then proposed a compromise: some goods would continue to be sold at the government-set prices; the price of other goods would be set by the market. The role of the market would expand over time. This method, known as the dual-price system, was the one adopted by the authorities.
Today, China’s mainstream economists and many western economists heap praises on the dual-price system. They think it opened the way for Chinese-style gradual Reform that avoided the social turmoil caused by shock therapy in Russia and East Europe. This assessment is totally wrong. Many people warned when the dual pricing system was first proposed that it would give government officials a perfect opportunity to allocate resources and profit from the price differential, which would inevitably lead to widespread corruption. Indeed, China’s first batch of overnight millionaires was created while the dual-price system was being put into effect. The widespread corruption, needless to say, caused intense popular discontent and became one of the main reasons for the 1989 Democracy Movement.
The 1989 Democracy Movement and the June Fourth Massacre
The 1989 Democracy Movement had two basic slogans. One was “freedom and democracy,” and the other was “no business wheeling and dealing by officials, no corruption.” One can imagine that if the June Fourth massacre never occurred and the democratic movement had succeeded, the path of the so-called gradual economic reform and the dual-pricing system would have been reversed. Then China would have proceeded much like Russia and Eastern Europe.
The 1989 Democracy Movement caused an unprecedented split within the CPC leadership. The moderate faction led by Zhao Ziyang opposed resorting to martial law and suppression. At the time, as far as I know, a quarter or even a third of the Party and state officials in Beijing joined the protesters. Most of those who didn’t were sympathetic to the students. This is how unprecedented the split within the Party was.
The reason for this split was quite simple. The moderates did not endorse the use of military force to crack down. Why? Because they were unable to talk themselves into suppressing a democratic movement. They knew that the popular demand for democracy and opposition to corruption was valid. Moreover, when the CPC suppressed freedom and democracy in the past, its magic weapon had been to pin the label “bourgeois liberalization” or “advocating capitalism” on its opponents. Now that the CPC itself had turned to capitalism and become a capitalist, what reason could it find to suppress the Democracy Movement?
Nevertheless, Deng Xiaoping used the army to cruelly suppress the Democracy Movement. Why? Was it because he still believed in socialism? No. Most certainly not. Deng stopped believing in socialism a long time ago. As early as the beginning of the 1980s,Deng advised a visiting African leader not to adopt socialism.2 Deng suppressed the Democracy Movement for the sole purpose of maintaining the CPC’s autocratic power. As the first generation leader of the CPC who miraculously fell from and rose back to power three times,3 Deng enjoyed personal authority within the Party and the army that younger leaders could not match. This is why he dared order a military crackdown on the Democracy Movement. It is conceivable that without Deng Xiaoping at the time of the 1989 Democracy Movement, the results could have been completely different.
Why Did China’s Economic Reform Accelerate after June Fourth?
The June Fourth massacre set the reforms in China down the wrong path. During the first year or two after the massacre, as it witnessed the dramatic changes in the Soviet Union and Eastern Europe, the CPC was in panic. To maintain power, the new generation of CPC leaders proposed further steps in guarding against “peaceful evolution.”They were opposed to capitalism not only politically, but economically as well.4 As a result, capitalistic economic reforms came to a sudden halt and were even reversed. But in the spring of 1992, Deng Xiaoping proposed accelerating economic reforms without asking whether they were socialist or capitalist.5 He clearly understood that the socialist economic system was not working, and that without reform it had run into a dead end. He knew that, after the June Fourth Massacre and the changes in the Soviet Union and Eastern Europe, socialist ideology was already bankrupt, and the CPC regime had lost its ability to cheat and had become only a naked, brute force. If it claimed to be the people’s government after slaughtering the people in broad daylight, who would believe it? The only reason people were not rebelling was because they were not able to. In this situation, it was impossible, and unnecessary, to maintain a socialist facade. Violence had its advantages. It required no ideological pretense and therefore was subject to no ideological restraint. Earlier economic reformers were handicapped by the fear of being labeled capitalistic. Now there was no need for fear, and more capitalist elements could be introduced without questioning. Consequently, China’s economic reforms moved faster and further after 1992.
Why Did the Most Abominable Reform Model Create the Fastest Economic Development?
The biggest irony is that this kind of reform, while morally the most shameless and abominable, was perhaps the easiest to carry through successfully in terms of effectiveness. This is the case because the economic reform of communist countries basically consists of turning public ownership to private ownership, of turning planned economy into market economy. It is a task much easier said than done. Some people have pointed out the difficulties in the process at the very beginning of economic reforms in communist countries, comparing it to “turning fish soup back into fish.”
Russia and Eastern Europe mainly used the method of “division”: all assets were converted into stocks, and the shares awarded equally to everyone. The advantage of this method is that it is fair and acceptable to all. Since the assets nominally owned by the people belonged to everyone, the most rational privatization plan was indeed to award each individual an equal share. This is the so-called privatization among the masses.
But this method has one big problem: it creates excessive fragmentation of the assets. Every individual in the country has a share, but everyone has only one share. This is really no different from the original state-owned companies and collective ownership. Just as before, no one cares about the company. So, for a period of time, not only can it not promote economic development, it will inevitably lead to a drop in operational efficiency. Only after a period of competition during which will emerge a certain number of rich individuals who can consolidate sufficient capital, get control over a greater concentration of shares, and become capitalists, will capitalism take off and the economy start developing.
China did not adopt the privatization among the masses approach. Without democratic participation and public oversight, the privatization in China has become the privatization among the powerful. Party and government officials of all ranks have made public assets their own. Today’s communist government is China’s Board of Directors, and the government officials the CEOs. In this way, China has avoided the economic downhill slide of Russia and Eastern Europe. Stimulated by the workings of capitalism, China’s economy has kept a sustained growth.
Because China remains a one-party dictatorship, the government can act arbitrarily. It can disregard public pressure and change whatever it wants in the manner it pleases. It can raise prices, lay off workers, sell a state-owned enterprise at whatever price it feels like, or even give it away to whomever it wants to for free. Because the society lacks the power to oppose the government and keep it in check, and because the government has a formidable suppression power, it has the ability to implement its own decisions without any difficulties.
Because China remains a one-party dictatorship that “nips any and all sources of instability in the bud” (for example, by banning independent workers’ and peasants’ unions), it has achieved a high degree of social stability. In the absence of any opposition or any prospect of a change in leadership, the government’s control over the economy is strong and its behavior highly consistent and predictable, which makes it all the more easy to attract massive foreign investment, while also providing the domestic economy with resilience against international economic shocks.
Because China remains a one-party dictatorship, many domains—especially the political domain—have been designated “off limits,” leaving the majority of people with no choice but to focus on economic activities. These restrictions, combined with the emergence of a spiritual vacuum, individual greed, and an unprecedented emancipation of material desires, have all added fuel to the fire of economic development. Meanwhile, those at the bottom of the social ladder who have suffered at the hands of bigwig officials and their manipulation of privatization have no outlets to pursue justice within the present system. Chinese labor was cheap to begin with, but this manipulation has made it slave-like and, naturally, even cheaper. This has given China the greatest advantage in global economic competition.
As we know, one of the most important strategies the Chinese government uses in economic development is export processing. It attracts huge amounts of foreign capital into China, uses China’s low-cost labor for production, and then exports the products for sale overseas. The Chinese government has become very rich this way, but the purchasing power of the ordinary people has not increased accordingly.
The Biggest Problem of the Chinese Model Is that It Lacks Legitimacy
China’s model [of economic reform] has a fatal flaw: it has no legitimacy whatsoever. We know that the CPC rose to power by toppling landlords and capitalists, but now it has become the biggest landlord and capitalist itself. First, in the name of revolution, it turned the private property of common people into the public property of the people as a whole. Now, in the name of reform, it has turned the public property of the people as a whole into the private property of its own members. First it plundered in the name of revolution, and now it has divided the spoils in the name of reform. These two opposite crimes were both committed by one and the same party in the space of 50 years. Has the world ever seen anything more shameless and abominable?
Ten or so years ago Dushu (“Reading”) magazine published a short piece, quoting an old peasant from Shanxi: “Deng Xiaoping says we should let some people get rich first. Well, before the liberation in 1949,my village already had one landlord and two rich peasants—some people already got rich first, you might say. Had we known how things would turn out, we needn’t have bothered [to get rid of them] in the first place.”5 Last year, a worker from Changsha by the name of Chen Hong, who had just been laid off, wrote on his own blog: “The planned economy definitely needs reform. To have reform, a price must be paid. Still, the planned economy was not an invention of us workers, but of you, the Communist Party. So why is it that the workers and not the Communist Party are paying the price? Why have we been turned into daily laborers without permanent employment, while you Communist Party officials have become capitalists?”6
Speaking of the widening gap between the rich and the poor in China today, I want to emphasize that not only is this problem most serious in terms of degree, but the nature of it is particularly abominable. China’s economic disparity problem was not created by history or by market forces, but by autocratic rule. In China, the reason why the poor live in poverty is because the wealth they create is seized by those in power; the rich are prosperous because they use their position to plunder the wealth created by others. In China today, 0.4 percent of the people own 70 percent of the country’s wealth.7 Ninety-one percent of those whose personal wealth surpasses 100,000,000 yuan [US$14,656,223] are the sons and daughters of high Communist Party officials.8
Speaking about corruption among government officials, there is a popular saying: “Executing all of them would possibly result in injustice, but executing only half would certainly let some off.”CPC leaders say they want to combat corruption, but in fact they tolerate it because they need it. Deputy Secretary of China’s Economic Restructuring Research Committee, Wen Tiejun, is frank in his assessment that today’s China cannot adopt American-style democratic reform: “For one, I’m afraid that over 90 percent of our officials spend more than they officially earn; the more powerful their department, the bigger this problem is. Can we ferret them all out? We can’t. Can we hope that these problematic officials will play fair in implementing our policies? We can’t. Second, the great majority of our intellectuals have untaxed income . . . . Third, many of our entrepreneurs engage in illegal management practices.”9 They all know that if China were to become a free and democratic country, they would most likely end up on trial for economic crimes. This is why they are even more hostile and fearful of freedom and democracy than they were in the past.
The Chinese Model Is an Enormous Threat to the Freedom and Peace of All Humanity
China’s communist leaders know very well that the so-called “Chinese miracle” is built upon the foundation of the June Fourth Massacre, an unfair and unprincipled foundation that goes against reason and humanity. On one hand, they use China’s economic development to justify the June Fourth Massacre; on the other, they stubbornly persist in maintaining the one-party dictatorship and oppression. They worry that if they relax their stranglehold for even a moment, the tide of popular demand for the settling of economic accounts will become unstoppable. China’s communist leaders say that they hope for an additional 20 to 50 years of stability to do an even better job of strengthening China. They are simply hoping to continue with the reforms and development under their dictatorial power, buying time to launder their ill-gotten gains and ease the gap between the rich and the poor. In the end, “China will definitely develop into an even greater power.”10 But what we can be certain of is this: a powerful nation built by such reprehensible means will only become an even more self-confident, overbearing, and powerful autocratic regime. Such a regime will be increasingly contemptuous of and hostile to the values of democracy and justice, and pose an ever greater threat to the freedom and peace of all humankind.
