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Economic Reforms and Contradictions
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16729 |
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Section : |
SPECIAL SECTION
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10 / 1989 |
2,991 Words |
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Bertrand Renaud
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The prodemocracy demonstrations last spring brought to us via television the expectations of the Chinese population with an intensity and immediacy they had never had before. The bloody suppression of those protests shattered the confidence that the international community had in the stability of China, the goals of the present Chinese government, and that government's capacity to liberalize its economy successfully.
China's economy was already in trouble in 1988; the reformers had run out of easy things to do. Like other reforming socialist economies, China had introduced market mechanisms into its state-controlled system. However, the leadership was divided over the results, and there never was a consensus to go all the way with market socialism. Moreover, even if such an agreement existed, the right sequence of reforms is still unknown because no socialist country has yet completed this transition successfully. Bigger, deeper, and more complex changes in price, enterprise, and property rights reforms would be needed to continue to modernize the system and make it more dynamic. Major budgetary and financial reforms would also be required to regain control over price levels as inflation in China is accelerating sharply.
Unfortunately, further reforms would create more winners and losers, with many of the losers among the 48 million members of the Chinese Communist Party. The crackdown ordered last June by senior party leader Deng Xiaoping and his aging comrades has fractured what remained of a consensus. The Chinese economy is now stuck halfway. Can it stay in a holding pattern for very long? Will it decline? A historical perspective may throw some light on the future of the Chinese economy.
Toward a modern industrial society
The prodemocracy demonstrations were the latest milestone along the long road toward the transformation of traditional China into a modern industrial society. This gigantic task began more than a century ago and is far from being completed.
With a territory the size of the continent of Europe, traditional China was not really a single country. Like Europe, it has had a unity of civilization but rarely a real political and economic unity. China's historical burdens have been its very large population and a strong regionalism, which make its governance difficult. The inability to develop intermediary bodies between the center and the provinces is as much a historical Chinese problem as a current communist problem. It contributes much to the tensions caused by the recent reforms.
For endless centuries, the traditional order in China consisted of power imposed by a remote imperial center on a large, disparate, immobile population living in local agricultural economies of very unequal wealth. The agricultural technology was static. The local social order was rigid and confined for most Chinese to a limited geographical horizon. Rulers could rule because nothing would really change at the bottom. Armed with superior technology, foreign powers began carving out pieces of China, starting with the Opium War of 1840. Since these disruptive encounters, China has been living through an endless revolution.
The communist victory and the foundation of the People's Republic in October 1949 freed China from its
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