China: Fierce dragon or paper tiger?
EVER SINCE the late Deng Xiaoping, father of China's contemporary economic development, took China off of the path to revolution in 1978 and put it on the highway of economic modernization, China has experienced phenomenal economic growth of 9.5 percent a year and sought to play a larger role in global economic and political affairs. While China's rise has been rapid, many observers have prematurely crowned China a "superpower."
Deng wanted China to recover from the economically ruinous Great Proletarian Cultural Revolution (1966-1976) and felt that by spurring Chinese on with promises of wealth, they would produce more, faster.
"Some will get rich before others," Deng said. He was entirely correct! In today's China, the widening gap between the relatively small number of those who have gotten rich and those who haven't is readily apparent. The chasm is particularly clear when comparing the lifestyle of residents in a handful of coastal cities with those living in the inland provinces. The Chinese public generally assumes that the nouveau riche have gained their new status through bribery, smuggling, cheating, deception and all-purpose swindling. Given the omnipresence of the Chinese Communist Party in every facet of Chinese life, the complicity of party officials is widely recognized.
LAND USE ISSUES provide the grist for much of the corruption in China. Despite agricultural liberalization, the state still owns all land. If farming is your path to a better economic future, you have to negotiate with local party officials to lease farmland for cultivation. Contracts in China don't carry the weight that they do in the United States. If a local party official is convinced that leased farmland can be better used as a site for a factory, power plant, shopping mall or other enterprise, the party official will abuse his power by abrogating the contract and removing the farmer. Chinese law stipulates levels of compensation to be paid in such situations. However, the farmer normally receives a small percentage of the compensation, the bulk going into a party official's pocket or Hong Kong bank account.
A CLEAR EXAMPLE of such took place on Dec. 6 in the small fishing village of Dongzhou, 125 miles northeast of Hong Kong in China's Guangdong province. Farmers were being forced off the land in order for a coal generated power plant to be built there. The farmers felt that the compensation being offered was inadequate, and the power plant would harm air and water quality. For two months, they blocked the road into the construction site. Ultimately, the People's Armed Police, an arm of the People's Liberation Army, killed between 10 and 20 protesters, which resulted in the largest use of government violence to quell an uprising since the 1989 Tiananmen Incident.
Theoretically, the Chinese government has abolished agricultural taxes because local party officials purposely inflated the amount of tax that each farming family had to pay. After passing on the amount that Beijing mandated, they then kept the difference -- knowing that it was unlikely a farmer would go to court, given the collusion of local government and judicial officials and the piecemeal organization of the Chinese judicial system.
In Chinese, such a practice is known as "squeeze," and it has a long, deeply rooted history. It is only reasonable to assume that local officials will concoct some other system to supplement their income.
Like a wildly metastasizing cancer, corruption runs rampant. Chinese leaders realize that uncurbed corruption erodes popular public support. However, they are unable to stop it. To stop it requires using the party to clean up the party. A large-scale purge of corrupt party officials would turn large portions of the party against other parts of organization. As a result, China would be cast into a period of internal turmoil and instability -- exactly what no Chinese wants.
Westerners and many Chinese contend that if China had popular elections to directly elect political leaders at all levels and an uncensored press, the corruption problem would disappear. However, Chinese President Hu Jintao has resisted any suggestion for wholesale political change.
Instead, he has ordered a crackdown on public dissent against corruption. In Hu's view, corruption will be solved through re-education of the perpetrators. Hu had better be right because according to the BBC and CNN, 74,000 protests involving 3.7 million people broke out in China last year, largely due to land use and taxation issues. In 1994, there were only 10,000 protests. To counter further protests, the Chinese government announced the formation of elite police squads in 36 cities.
BEFORE DENG announced his economic reforms, China was committed to the "iron rice bowl" policy of providing everyone with a job. As economically inefficient as it was, a factory that required a labor force of 125 to operate might have 250 workers. Hoping to rationalize the Chinese economy through privatization and limited foreign ownership, work forces were trimmed. The government promised new jobs in new enterprises; however, a lot of that promise has yet to be fulfilled. Chinese unemployment is estimated at 30 percent, with an underemployment rate to match. Such a phenomen- on is particularly evident in Northeast China, a one-time industrial center that is now considered the Chinese rust belt.
Financial power is a key ingredient of superpower clout. Like Japan's banking system of the 1990s and banks in Thailand, South Korea and Indonesia, Chinese banks are poorly managed and have made billions of dollars of loans that will never be repaid. Loans often have been made based on political connections rather than solid managerial principles, or to keep faltering industries alive and workers employed. To bail itself out of this situation, China is selling interest in banks to foreign banks. Chinese stock markets in Shenzhen and Shanghai enjoy little trust among the Chinese and operate in a secretive, nontransparent way. As such, they are experiencing little vitality.
CHINA'S MILITARY power is growing, yet it is highly dependent on foreign technology. Cash-strapped Russia depends on China to buy a large portion of its arms to maintain its defense industrial base. Nevertheless, Russian military planners realize that China poses a potential military threat owing to historic Chinese claims to large portions of the sparsely populated, natural-resource-rich Russian Far East.
Thus, it does not sell China its most sophisticated military equipment. China has relentlessly urged the European Union to lift its arms ban, imposed after the Tiananmen Incident, reasoning that European radar and missiles will help them to better understand American weapons systems and tactics given the high level of cooperation between Europe and the United States. Nor is it surprising that the Chinese have developed an extensive espionage system in the United States to covertly acquire military technological information about such important advances as the W-88, America's smallest nuclear warhead that can be launched from a submarine, and the means of making submarines operate silently.
Perception determines policy. Thus, it is imperative to maintain an objective view of both China's strengths and its weaknesses.
About the author: Bill Sharp is adjunct professor of East Asian International Relations at Hawaii Pacific University. He writes a monthly commentary about events in Asia for the Star-Bulletin's Insight section.