CHINA: Fast with Market Reforms, Slow on Democratic Change

By IPS Correspondents Reprint | | Print |

Analysis - Antoaneta Bezlova

BEIJING, Sep 17 1997 (IPS) - In his landmark address to the 15th Congress of the Communist Party last week, Chinese President Jiang Zemin tore down the last ideological barriers to mass privatisation in the country’s ailing state enterprises.

By enshrining Deng Xiaoping Theory as the continuation of Mao Zedong Thought, Jiang laid down the ideological basis for selling off shares in state-owned firms across the country.

His speech before the congress, which began on Sep 12 and ends on Friday, also gave the green light to a privatisation phenomenon that has already been happening in some regions, where local officials are struggling to turn around the state sector. Forty percent of China’s state firms are money-losing ventures.

The congress’ adoption of Jiang’s policy ranks among the most major economic reforms undertaken by the Chinese government in past years.

But in contrast, little has been said about the restructuring of China’s one-party political system.

In fact, fears are growing that the contradiction between the China’s stiff political framework and its swift-changing economic system would sooner or later lead to an explosion.

At the congress’ opening ceremony, Jiang devoted a lengthy part of his two and a half hour speech to the necessity for China to uphold the “people’s democratic dictatorship” instead of copying Western models.

He pledged that the scope of democracy at the grassroots level would be extended, but stopped short of saying that the Communist Party is prepared to go beyond the village-level elections first tried out in 1987.

“I don’t think that the 15th Party Congress would resolve the issue of China’s democratisation,” said Wang Shan, a controversial writer and political commentator.

He believes that most officials in China’s governing circles are willing to achieve some combination between traditional power patterns for ruling society and the free-market system. “They believe that this would ensure political stability,” Wang said.

However, others think the success of newly-endorsed privatisation reforms cannot occur without corresponding restructuring in China’s political sphere. There have been growing calls for political reforms among intellectuals, especially in the run-up to the party congress.

The government has proven to be relatively tolerant toward appeals for greater democracy and political restructuring. But Tony Saich, a Western academic based here, says this is just a “smokescreen” for the general public.

“I don’t think anyone really believes there will be more serious commitment to further political reforms than the one stated in Jiang’s address,” he said.

Still, he says China’s need to maintain economic efficiency will make political reforms inevitable. In fact, this is already happening, Saich points out.

Shang Dewen, professor of economics at Beijing University, says that without political reforms, the attempt to privatise the industrial sector is bound to fail.

This is because Communist Party officials are likely to launch Jiang’s privatisation policy as they would a political movement — and stunt its very nature. For instance, they could begin setting quotas for privatisation.

And since the state will continue to keep a strong grip on major economic sectors such as telecommunications and infrastructure and have a controlling stake in most large state- run industries, party officials are likely to run state-owned firms in response to political orders and not market forces.

Wu Jinglian, one of China’s leading economists, outlined some of the difficulties that the privatisation drive would pose for the country’s political framework. “Who should be killed (shut down), and who should be taken over, and who should be excluded from the market, should all be decided by the market,” he wrote in the ‘Shanghai Securities News’ recently.

“Many of the things we are now doing have the colour of the planned economy. If all this is decided by leading officials, this will bring negative effects,” Wu said.

A politically directed privatisation drive would provide fertile soil for corruption, analysts say. Already, Wang says, China’s top leaders fear that corruption may seriously undermine reforms in the state sector.

As if to address this concern, the Communist Party, just days before the 15th congress, resolved the corruption case involving Chen Xitong, the mayor of Beijing and Communist Party head in the capital. His case had been pending for more than two years.

At a plenum convened in preparation for the congress recently, the Central Committee of the Communist Party announced that Chen had been expelled from the party and would face trial on corruption charges.

His crimes include the embezzlement of 2.2 billion U.S. dollars, the financing of personal businesses for his children, mistresses and friends in Beijing and Hong Kong, and the acquisition of several villas and apartments and a personal fortune of 312 million dollars.

“Without Jiang’s personal order, the Chen Xitong case would have never come through,” Wang remarked.

Since Mao’s era it has been an unshakeable rule that no matter what the offense, party cadres are out of reach of the law. But Deng broke this dictum by organising show trials for the extremist members of the ‘Gang of Four’ at the end of China’s Cultural Revolution (1966-76).

Analysts say the punishment of Chen, a former Politburo member and key Beijing official for 12 years, also helps consolidate Jiang’s status as the new paramount leader of China and to set an example for other party members.

“But this is only one exposure,” Wang warned. “I’m afraid there are many more corruption cases around the country.

He expressed doubts that the move to discipline Chen just ahead of the crucial congress would do much to win impress people with the government’s will to crack down on corruption.

As a researcher at Great Wall Social Research Institute, a privately-run think-tank, Wang Shan had conducted a public survey on people’s reactions about Chen’s case as early as 1995 — the year Chen was first detained and consequently stripped of his Politburo post.

Wang’s study found most respondents cynical about the revelation of the Beijing mayor’s crimes. People were not surprised or shocked because “they’ve seen a lot of similar things already and because there has been already a distance between the Communist Party and ordinary Chinese people.”

The 1995 study showed “people did not regard the party as a representative of their interests,” Wang said. “The way they saw Chen Xitong’s case was more like, ‘this is your family’s business not mine’.”