China’s Reform Summed Up: Politics, No; Economics, Yes (Sort of…)

A near-schizophrenic bifurcation has informed Chinese-style reform as implemented by the six-month old administration of General Secretary Xi Jinping and Premier Li Keqiang. On the one hand, the preserving stability (weiwen) apparatus has pulled out all the stops to shackle dissidents and stymie other “destabilizing elements” in society. With the same strong-armed efficacy with which he has consolidated his hold over the military and police forces, supremo Xi is imposing a quasi-Maoist straitjacket on the ideological arena. On the other hand, more signs have appeared that the Xi-Li leadership is mapping out a package of economic and financial reforms that will be unveiled at the Third Plenary Session of the 18th Central Committee scheduled for October or November. Big questions, however, hang over whether genuine and comprehensive economic liberalization is possible in a climate of political repression.

Xi, who is also president and commander-in-chief, indicated soon after taking power at the 18th Chinese Communist Party (CCP) Congress last November that party authorities will do whatever it takes to firm up the people’s “self-confidence in the road” (daolu zixin) of socialism with Chinese characteristics. There was no bigger threat to the CCP’s status as China’s “perennial ruling party” than a “calcium deficiency of the spirit” among certain party members (Xinhua, March 17; People’s Daily, February 16). It is therefore not surprising that commissars in CCP units, including the Propaganda Department, are pushing through draconian measures to prevent Chinese intellectuals, especially college students, from going down what Xi called “the deviant path” of Westernization. In an unpublished internal party document entitled “Concerning the Situation in the Ideological Sphere,” the CCP General Office called upon departments handling education, ideology and the media to tackle “seven serious problems in the ideological sphere that merit attention.” The circular added that these problems reflected “the sharpness and complexity of struggle in the ideological sphere.” What these challenges are is revealed by the fact that the document asked teaching staff in universities nationwide to steer clear of “seven unmentionable topics” (qige buyaojiang): universal values; press freedom; the civil society; citizens’ rights; the party’s historical aberrations; the “privileged capitalistic class” (quangui zichan jieji); and independence of the judiciary (South China Morning Post [Hong Kong], May 14; Apple Daily [Hong Kong], May 12; Tianya.cn [Beijing], May 10).

Xi, who turns 60 next month, is not the first leader to establish “forbidden zones” for Chinese intellectuals. In his speech in December 2008 commemorating the 30th anniversary of the start of the Era of Reform, then-General Secretary Hu Jintao warned the CCP would never adopt Western norms or “go down paths that involve altering the [party’s] flags and standards” (Xinhua, December 18, 2008). Former Politburo Standing Committee (PBSC) member and chairman of the National People’s Congress (NPC) Wu Bangguo raised eyebrows in 2011 when he issued the “Five No’s” call: “no to multiparty politics; no to diversification of [the party’s] guiding thought; no to the separation of powers; no to a federal model; and no to privatization” (China News Service, March 10, 2011). General Secretary Xi, however, has gone further. Firstly, specific instructions have been given to college teachers not to discuss the “seven unmentionables” in class. Similar strictures regarding “seizing control of the lectern” were only laid down and enforced during the first year or so after the Tiananmen Square Incident of 1989. A number of leading liberal intellectuals have criticized the new edict as a stunning retrogression. Beijing Institute of Technology economist Wu Xindou pointed out that “this move to bring the weiwen campaign to the colleges indicates the party is entering a blind alley.” For respected party historian Zhang Lifan, the “seven unmentionables” represented “a return to the days of [Mao’s chosen successor] Hua Guofeng, who said that whatever Mao said and did was correct” (Radio Free Asia, May 15; Ming Pao [Hong Kong], May 11).

Much more so than previous leaders such as Deng Xiaoping, Hu Yaobang, Zhao Ziyang, Jiang Zemin and Hu Jintao, Xi has refused to let party members or ordinary intellectuals talk publicly about aberrations of the CCP, especially those committed by Chairman Mao and his close allies. That Xi is as deferential to Mao as the disgraced Politburo member Bo Xilai became evident just days after he rose to party chief. In a late November speech on the “spirit of the 18th CCP Congress,” Xi proclaimed “We must never give up Marxism-Leninism and Mao Zedong Thought.” Otherwise, he warned, “we will lose the foundation [of party rule]” (Xinhua, November 19, 2012; People’s Daily Online, November 19, 2012). In a widely-read internal speech delivered in Guangdong Province a month later, the general secretary asserted that a prime reason behind the collapse of the Communist Party of the Soviet Union (CPSU) was “the shake-up of beliefs and faith [in party leaders].” Xi stated “The wholesale negation of the history of the Soviet Union and the CPSU, the negation of Lenin and Stalin…spawned historical nihilism and the confusion of thoughts…Various levels of party organizations [in the U.S.S.R.] almost lost all their functions” (People’s Daily Online, April 10; Hong Kong Economic Journal, February 15). Last January, Xi put forward his now-famous theory that the party should “not differentiate [post-1949 CCP] history into the pre-reform period and the post-reform period.” “While socialism with Chinese characters was initiated during the period of the reform and open door, this [creed] was established on the basis of more than 20 years of [socialist] construction [after 1949],” he said, “These two periods should not be [arbitrarily] cut off one from the other—and one period should not be used to negate the other” (People’s Daily, January 6; Xinhua News Agency, January 5).

Xi’s view—which has come to be known as “the theory of the two cannot  negates” (liangge buneng fouding)—amounted to a no-holds-barred defense of the standing and contributions of Chairman Mao despite the horrific catastrophes of the Anti-Right Movement (1957–59), the Great Leap Forward (1958–61), the Three Years of Famine (1959–62) and the Cultural Revolution (1966–76). In a commentary early this month in the official Guangming Daily entitled “The major political significance of ‘the theory of the two cannot negates’,” party theorist Qi Biao lauded Xi for “correctly upholding and defending party history and consolidating the foundation of party rule.” Qi, who is a senior staff in the Party History Research Office of the CCP Central Committee, claimed that, while mistakes were made during the Great Leap Forward and the Cultural Revolution, they were “minor tributaries in the river of time” that did not detract from “the CCP’s great attainments” during that epoch. Other articles by conservative ideologues have accused intellectuals who have vilified Mao of indulging in “historical nihilism” (Guangming Daily, May 7; China Review News [Hong Kong], April 19; Global Times Online, January 12; Qiushi, January 1).

The problem with this politically-motivated interpretation of history is that, while the CCP propaganda machinery has for the past two decades or so prevented academics from holding conferences and other commemorative events to learn from the mistakes of the Mao period, well-documented books about the disastrous blunders of Mao and his ultra-leftist colleagues have appeared regularly in Hong Kong and abroad. It is perhaps for this reason that the Xi administration has begun a large-scale campaign to whitewash history. In a recent article in the party’s theoretical journal Seeking Truth, the Vice President of the Chinese Academy of Social Sciences, Li Shenming heaped praise on Mao’s myriad “political and economic accomplishments.” Li blamed “unbalanced media reports” on supposed misperceptions of historical events, such as the Anti-Rightist Movement. Professor Li wrote “During the Anti-Rightist Movement, 550,000 [intellectuals] were labeled rightists, but not a single person was sentenced to death. However, the [campaign] was described as a bloody one by [biased] media.” Li also claimed that estimates that more than 30 million Chinese starved to death during the Three Years of Famine were “gross exaggerations” (Sina.com, May 15; South China Morning Post, May 14).

While the Xi administration seems to be turning back the clock in the ideological and political fields, pieces of evidence have surfaced to indicate the Xi-Li leadership’s commitment to economic reforms—or at least those that will not make a dent in the CCP’s overall control of economic resources. The Chinese, Hong Kong and Western media have reported that Xi and Li have asked senior cadres in planning and research departments to come up with reforms in at least seven areas whose leitmotif is boosting the market’s contribution to growth. These changes include fine-tuning the monopolistic powers of the 120-odd centrally held state-owned enterprise (SOE) conglomerates (yangqi); incrementally loosening state control over interest rates; seeking a more judicious mix of market forces and “macro-economic adjustments” in the determination of the prices of land and other resources; gradually reducing the government’s control over capital-account transactions; speeding up full convertibility of the renminbi in the coming decade; encouraging private firms to play a bigger role in the economy; and narrowing the rich-poor gap through means including overhauling the national taxation system. The new initiatives will be folded into a central document on economic reform that is set to be endorsed by the Third CCP Central Committee Plenum slated for late autumn (Caixin.com, May 16; Apple Daily, May 14; Sydney Morning Herald, May 13; South China Morning Post, May 13).

Some of these reformist ideas were discussed in a video conference that Premier Li held on May 13 with regional officials on how to wage a “national mobilization [campaign] for the change of the institutions and functions of the State Council.” The 58-year-old head of government and PBSC member made it clear that he was interested in “storming fortresses” so as to realize “big breakthroughs.” “We must further stimulate the creative powers of the market and of society,” Li noted, “The market is the creator of social wealth. Let go of the powers that should be let go.” As examples of curtailing government and boosting the market, Li pledged that “administrative approval procedures” implemented by State Council departments would be slashed by more than one third. Pointing to the fact that some 60 percent of fixed-assets investments come from the non-state sector, Li vowed to provide more of a level playing field for private firms through means such as making available more bank loans and slashing government red tape. The State Council chief also promised to streamline government departments and cut state intervention in order to bolster the market’s function in “nurturing superior enterprises and throwing out inefficient ones.” “Enterprises must enthusiastically take part in market competition so that they will always be motivated to modernize technology and to create new products,” he said (People’s Daily Online, May 15; China News Service, May 15).

That Li, who is China’s first “Ph.D. prime minister,” seems serious about reform is attested by the fact that some inchoate moves are afoot to tackle ingrained malpractices, particularly the monopolistic privileges enjoyed by the yangqi—many of which are run by either princelings (kin of party elders) or current and former senior cadres. For example, individual yangqi’s taxes and other contributions to state coffers will likely be increased by 10 percent this year (China Daily Online, May 8; International Business Times [New York], February 5).

On a deeper level, irreconcilable contradictions persist between the economic goal of nurturing the marketplace and the political imperative of consolidating the CCP’s hold on power. For instance, senior cadres and princelings, including Xi, have a vested interest for personal as well as ideological reasons in perpetuating the special powers of vouchsafed SOE groupings in sectors ranging from banking and energy to telecommunications and aerospace (“18th Party Congress to Showcase Rising Status of Private Business,” China Brief, October 19, 2012). The political sensitivities associated with such control make challenging the status quo difficult if not impossible.

The “seven unmentionables” mentioned above include universal norms, press freedom, civil liberties and the independence of the judiciary, which are deemed integral components of relatively successful market economies in Western as well as Asian countries. For example, corruption—one of the worst scourges of the Chinese economy and society—cannot be effectively eradicated without a free press and a non-party-dominated legal and judicial system. Earlier this month, however, police arrested three Internet whistle blowers, Yuan Dong, Zhang Baocheng and Ma Xinli, for their advocacy of a law obliging senior cadres to disclose their assets and those of their close kin (Canyu.org [Beijing] May 11; Freeweibo.com [Beijing], May 9). This is despite the fact that both Xi and Li have given vague support to just such a “sunshine legislation.” Moreover, despite numerous reports by the domestic and Western media that prominent families within the party’s elite—including Xi’s family—have amassed multi-billion yuan fortunes largely due to their sterling political connections, precious little has been done to pare down the economic base of the red aristocracy. It is perhaps for this reason that the Xi-Li leadership has listed the “privileged capitalist class” as an “unmentionable.”

Particularly in comparison to ex-president Hu, who is known for his diffidence and indecisiveness, Xi has striven to strike the pose of a gung-ho strongman who does not mince words. Immediately upon becoming Chairman of the Central Military Commission, he told different units of the People’s Liberation Army “to be ready when called upon, to fight effectively and to win wars.” On improving party discipline, Xi indicated that “to forge iron, you need a strong hammer.” Regarding his favorite concept of “self-confidence in the road [of the party],” the party chief laid down this down-to-earth aphorism: “Where is the road? It’s just under our feet.” While late patriarch Deng advised his colleagues “to cross the river while feeling out for the boulders,” Xi’s recommendation as bold as it is straightforward: “Open up a road if you are blocked by mountains; build a bridge if you come across a river” (Apple Daily, April 16; Xinhua, November 14, 2012; People’s Daily, December 5, 2012).

When it comes to sensitive subjects that touch upon the vested interests of the party elite—or the CCP’s many failings—the would-be “core of the Fifth-Generation leadership,” however, appears evasive if not duplicitous. The same reluctance to go the distance also characterizes a number of initiatives on the economic front. Until the Xi-Li administration can grapple honestly with the many contradictions that have haunted Beijing’s political and economic reforms, however, it is difficult to be optimistic about the new leadership’s ability to attain the “China Dream” any time soon.