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Russian and Soviet Shadows over China's Future? Author(s): Peter Ferdinand Reviewed work(s): Source: International Affairs (Royal Institute of International Affairs 1944-), Vol. 68, No. 2 (Apr., 1992), pp. 279-292 Published by: Blackwell Publishing on behalf of the Royal Institute of International Affairs Stable URL: http://www.jstor.org/stable/2623215 . Accessed: 16/11/2011 05:36 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Blackwell Publishing and Royal Institute of International Affairs are collaborating with JSTOR to digitize, preserve and extend access to International Affairs (Royal Institute of International Affairs 1944-). http://www.jstor.org

Russian and Soviet Shadows over China's Future?...Russian and Soviet Shadows over China's future? PETER FERDINAND The major differences between the apparently similar communist regimes

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  • Russian and Soviet Shadows over China's Future?Author(s): Peter FerdinandReviewed work(s):Source: International Affairs (Royal Institute of International Affairs 1944-), Vol. 68, No. 2(Apr., 1992), pp. 279-292Published by: Blackwell Publishing on behalf of the Royal Institute of International AffairsStable URL: http://www.jstor.org/stable/2623215 .Accessed: 16/11/2011 05:36

    Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

    JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

    Blackwell Publishing and Royal Institute of International Affairs are collaborating with JSTOR to digitize,preserve and extend access to International Affairs (Royal Institute of International Affairs 1944-).



  • Russian and Soviet Shadows

    over China's future?


    The major differences between the apparently similar communist regimes of the former USSR and the People's Republic of China (PRC), both before and after the introduction of economic and political reforms, are outlined in this article by Peter Ferdinand. He suggestsfurther that the PRC is unlikely to suffer the same kind or degree of ethnic disintegration that has been seen in theformer USSR. He also argues, however, that the PRC is still confronted by many of the same problems that confronted and defeated Gorbachev. These require decisive action, but the Chinese leadership still prize stability at all costs. They may learn from the Soviet experience. But do they have the vision, the vigour and the decisiveness to devise an overall strategy which would prevent a similar fate?

    The collapse of the Soviet Union and the continuing disintegration of ties which previously held together the peoples of the various Soviet republics raise the question of the durability of that other communist great power: China. The purpose of this article is to discuss how far developments in the former USSR cast light upon the future prospects of the Chinese communist regime.

    Divergence and convergence

    It is necessary first to outline the extent of the similarity between the two regimes in the past. The basic relationship could be described as one of diversity within unity. At the most fundamental level the two regimes shared common characteristics. They both claimed to be 'communist ', and drew their ideological origins from the common sources of Marx, Engels and Lenin. They were both either one-party regimes, or one-party-dominant regimes. The ruling party operated on the basis of democratic centralism. And they were committed to a strategy of economic development which was based upon Marxist principles and administrative direction rather than market rationality.

    Yet within that general framework of institutional and ideological similarity, there was a great deal of diversity. The two regimes coexisted for 42 years after the founding of the People's Republic of China (PRC) in I949, yet the general trend of their development can only be said to have been similar during two

    Initernatiotnal Affairs 68, 2 (1992) 279-292 279

  • Peter Ferdinand

    periods, totalling six years in all. The first was between I953 and I957, when China was implementing its first five year plan, which involved the establishment of a centrally planned command economy, collectivization of agriculture and a strategy of industrialization with the primary emphasis upon heavy industry. At this time China was consciously following the Soviet 'model' of development, while the Soviet leadership saw no reason for thoroughgoing economic or political reform of the system they had inherited from Stalin.

    The second period came in I988-9. Once again there appeared a convergence of policies in both countries, or at least they began to follow parallel lines. This time, however, both were talking of a combination of political and economic reform of the Stalinist system. Although Gorbachev was already placing the chief emphasis upon political reform as a prerequisite for the success of perestroika, while the Chinese leadership under the tutelage of Deng Xiaoping was stressing the primary importance of economic reform, neither denied the need to combine the two. The thrust of the economic reform processes in both countries was to introduce market structures which would be harmonized in some way with a retained national macroeconomic planning process, albeit one reduced in size. The thrust of the political reforms in both countries was to make these economic reforms succeed.

    But apart from these relatively brief periods, for the rest of the time the leadership of the two regimes sought to differentiate themselves from each other. From I958 onwards the Chinese leadership under Mao Zedong began to attempt a Chinese road to socialism with the Great Leap Forward, and even though it failed catastrophically, as Khrushchev had predicted it would, the effect was to make the Chinese leadership even more truculent towards Moscow. Then from I966 to I978 there followed the Cultural Revolution and its aftermath, during which the Chinese leadership was stridently anti-Soviet. And then, from the introduction of serious economic reforms in China at the end of I978 until the death of Chernenko in I985, China adopted the position of pragmatic but systematic reformer at a time when the Soviet leadership was still trying to find ways of making their administratively dominated, planned economy more efficient. Finally, after the massacres in and around Tiananmen Square in June I989, the PRC turned its back upon political reform, while the Soviet leadership concentrated more and more attention upon political rather than economic reform.

    Even on an international level, where the ideological nature of these regimes might have been expected to lead them into a common confrontation with the capitalist West, they actually pursued quite different priorities after the Sino- Soviet split came into the open in the early I960s. And from the time of Nixon's visit to China in I972 until the death of Chernenko China actually regarded the USSR, which it characterized as 'socialist imperialist', as the more serious threat. Indeed, for most of the I970S the official line of the PRC was that war between socialism and imperialism, the latter category including the USSR, was inevitable.


  • China's future ?

    This comparison of the development paths of the two regimes since I949 should remind us that it would be unwise to expect similar reforms to lead to identical achievements, or failures, in the two countries. China, it has been argued, 'will continue to undergo profound changes, but at its own pace and in its own distinctive way . Nevertheless, it would be equally unwise to assume that outcomes will be completely dissimilar. The origins of the regimes, their fundamental institutional principles, and the nature of the challenges facing each regime are sufficiently similar, as has been the range of reforms which each regime has attempted, for it to be reasonable to seek at least insights from the Soviet experience which might illuminate the outcome of reform efforts in China.

    The rest of this article will examine this question in more detail. First of all it will ask whether Russia represents China's future. By this is meant: if the centripetal tendencies in Russia continue to grow, there is a serious danger that Russia itself will split into two or more entities. Is this a serious possibility in China? Then afterwards it will ask the question whether the Soviet Union is China's future. By this is meant: will China be able to reform its communist regime more successfully than the Soviet Union was able to do?

    The disintegration of Russia: a parallel for China?

    The year I99I saw the collapse of the Soviet system, and also the continuing disintegration of the ties linking nations and nationalities in the former Soviet Union. In the latter respect, one of the most striking developments during I99I was the readiness of some Russians in republics other than Russia to vote for independence in the Baltic states and the Ukraine, even though this would mean that they would then become the citizens of a 'foreign' state, where they would comprise a minority rather than the majority. This process has now continued into Russia itself. In part this is still a matter of relations between Russians and non-Russians. There are now strident demands for the establishment of a fully fledged Tatar republic ('Tatarstan') for the large Tatar community around Kazan, east of Moscow; and more extreme Tatar nationalists have asserted claims to other places, such as Samara on the Volga, as 'traditional' Tatar cities, which three centuries ago they were. Other regions with valuable natural resources in Siberia, such as Tiumen' and Tuva, have also declared themselves fully 'sovereign', whatever that might mean in practice. This might lead to the break-up of the Russian state along geographical as well as ethnic lines. In other words, one of the phenomena we have witnessed has been the fragmentation of the ethnic solidarity of the former dominant nation of the USSR, namely Russia.

    Are similar centrifugal forces likely to gather momentum in China? Is China going to disintegrate as Russia seems to be doing? Th-, E)alai Lama recently

    1 A. Doak Barnett, After Deng, what? Will China follow the USSR?, Johns Hopkins Foreign Policy Institute Papers: New World-New Directions (Washington DC: Johns Hopkins University Press, 1991), p. 23.


  • Peter Ferdinand

    claimed that China would indeed disintegrate as the Soviet Union had done in the Iggos.2 There is no doubt of some disaffection in autonomous regions on China's periphery. In Tibet, for example, the regime has encountered periodic public protests from the native Tibetan population, especially the monks, and although these have been roughly repressed, with the region being under formal military rule for over a year in I990-9I, the problem has not gone away. Similarly in Xinjiang, in China's north-west, there have been periodic protests by Uighurs during the I980s over the past suppression of their culture and civilization during the period of the Cultural Revolution, over the use of the territory for nuclear testing and over restrictions on the practice of the Muslim religion. The regime responded in I990 and I99I by closing a number of mosques, banning the construction of others previously approved, and closing a number of private schools, some of which had been funded from the Middle East. More recently, too, Inner Mongolia has witnessed unrest, partly as a result of the democratic revolution which has taken place in Outer Mongolia.

    Yet three distinctions need to be taken into account here. The first is that Russia is considerably larger than China. Distance, and the sense of people at the periphery of lack of concern at the centre for their needs, as a factor which has weakened cohesion, is not as important a factor in China as it has been in Russia, especially as the bulk of the Chinese population are crowded close to the coast.

    The second point is that China is unlike Russia in that the Han Chinese represent the overwhelming majority of the population of China, as Russians never did in the USSR. Han Chinese account for about 93 per cent of the population, while Russians represented only just over 50 per cent of that of the USSR, although inside Russia itself Russians account for about 8o per cent of the population. By contrast, in China, even in autonomous regions which bear the name of an ethnic minority, Han Chinese account at the very least for a significant part of the population, and in some, for example Inner Mongolia and Xinjiang, they are actually in the majority. Thus ethnic frictions can never present as fundamental a threat to the survival of China as they did to the USSR and Russia.

    This is not to say that the regime can afford to contemplate ethnic protest in China with complete equanimity. For one thing, the autonomous regions represent about 60 per cent of the total territory of the PRC. For another, these are largely frontier regions. Russia's replacement of the USSR as China's neighbour has revived anxieties in Beijing about stability along its more than 4,000-mile northern frontier, with various minorities living along both sides of it. Are the borders stable? Is there any danger of nationalism and protest on the Russian side of the frontier spreading to their kin on the Chinese side, for example Uighurs and Kazakhs? And what attitude might a (however temporarily) nuclear-armed Kazakhstan adopt towards repression of protest among Kazakhs and Uighurs in China? Moreover, these frontier regions are among the poorest in China. They are heavily dependent upon Beijing for

    ' Stummtary of World Broadcasts (hereafter SWB) FE/1286, 24 Jan. 1992.


  • China's future ?

    funds to be transferred to them from richer parts of the country, and therefore represent a significant cost to the rest of the country.

    The PRC leadership has been devoting considerable attention to the problems of ethnic minorities in I99I and early I992, with speeches on the subject by leaders such as Jiang Zemin and the announcement of new measures to encourage the use of minority languages. In addition, as long as Beijing can be effective in assisting underdeveloped regions (the annual budget for this purpose is to be increased by 25 per cent in I99I3), and as long as Beijing itself does not feel that this economic and security burden is too great for it, then it will still no doubt be able to exercise fundamental control.

    The third general point to make in this regard is that the PRC has always been considerably less centralized than the USSR. In the Soviet Union, until the I980s, the dominant ethic was one of centralization. It was seen as one of the key elements of Leninism the desire to achieve optimal allocation of scarce resources from an all-seeing centre. Therefore, regional political leaders were never encouraged to think that demands for greater autonomy were legitimate. The only exception was a brief flirtation with decentralization under Khruschchev between I958 and I964, and this experiment was the exception that proves the rule, in that its failure led to the relaunching of centralization, this time relying upon massive computing power to try to achieve 'Leninist' control of the economy under improved technological conditions.

    The Chinese political tradition, by contrast, has seen centuries of dispute between Beijing and the provinces over the appropriate degree of central control. The centre has perforce had to accept the fact that it cannot control everything, and that a significant degree of autonomy is positively desirable. The only partial exception to this rule occurred during the first five year plan (I953-7), when the regime was striving to recreate a unified China after decades of warlordism, and when it was deliberately introducing a Soviet model of development. But even then it did not achieve the same degree of centralization as existed in the USSR at the same time; and the experience was precisely enough to convince the party leadership that Soviet-style centralization was at the very least premature for a China which was less developed even in I957 than the USSR had been in I929. China lacked both the trained cadres who could perform all the tasks of highly centralized economic planning and the transport and communications systems which allowed Moscow to exercise unified control over the economy.

    So already with the Great Leap Forward which began at the end of I957, the PRC leadership made a virtue out of necessity in proclaiming the need for decentralization. It affirmed the principles of 'self-reliance', sending people down to lower levels and to the villages (xiafang and xiaxiang). Instead of centralized control of the economy, administration and the management of the careers of cadres characteristic of the USSR, the PRC relied upon ideology to keep the provinces in line. Then, after the death of Mao and the dissolution of the ideological glue which had been holding the country together, the 3 SWB FE/1277, 14 Jan. 1992, B2/4-


  • Peter Ferdinand

    administration which had always been potentially more decentralized became so in reality. Effective control by the centre declined sharply, as many individual provinces raced to take advantage of the new opportunities to pursue their own local development strategies, whatever Beijing might think.

    The difference between China and the USSR in terms of relative centralization can be illustrated by the fact that in I988 in the USSR the central ministries employed 85,000 people. In China in the same year, the equivalent figure was around 50,000.4 This was despite the fact that the population of China is almost four times that of the former USSR.

    Periodic efforts by Beijing to rein in the provinces (the most recent being in I989) have never been successful. China still seems to be in a long-term cycle of decentralization. At present this causes problems for the centre because of the lack of clarity which surrounds much of the specific administrative activity linking Beijing and the provinces. This will lead to increasing calls for formal codification of the powers of provinces and lower-level administrations vis-a- vis the centre as a way of rationalizing what is still a chaotic and informal network of relations, which costs everyone time and money as they try to make sense of it.5 Equally importantly, however, the centre in China has had years of experience in living and coping with this problem, whereas for the Soviet Union it was a sudden and very disruptive experience.

    It should also be noted that none of this decentralization seems to have hindered economic development in China. Throughout the I980s the national economy grew at an average annual rate of almost io per cent. Indeed, the fact of decentralization, even within an economy still heavily dominated by administration and planning, no doubt contributed to China's success and the Soviet Union's failures. In the Soviet Union in I98I the State Planning Commission and the central industrial ministries were responsible for the allocation of about 65,ooo products throughout the economy as a whole. In China the equivalent figure was 837 products, and it was rapidly reduced after that. Roughly, therefore, this meant that the Soviet planning process was about I00 times more detailed and centralized, and it certainly proved more brittle.6

    In addition, despite fears to the contrary, decentralization and reform seem actually to have contributed to an equalization in the levels of development across the provinces.7 This is not to say that inequality is disappearing completely. The gap between Guangdong and Tibet in terms of per capita output has widened over the decade. Indeed, the gap between Han Chinese provinces as a whole and those regions inhabited by minorities has probably 4 Narodnoe Khoziaistvo SSSR v 1988g (Moscow, I989), p. 36; Inside China Mainland, citing Xinhua

    News Agency, May I988, p. 6. For a fuller account of the processes of decentralization in the PRC, see Peter Ferdinand, Communist regimes itn comparative perspective: the evolution of the Soviet, Chinese and Yugoslav models (Hemel Hempstead: Harvester/Wheatsheaf, 1991), pp. 231-40.

    6 Gene Tidrick and Chen Jiyuan, eds, Chiita's itndustrial reform (New York, Oxford: Oxford Uiniversity Press for the World Bank, 1987), p. 176. David L. Denny, 'Provincial economic differences diminished in the decade of reform', in Joint Economic Committee, US Congress, China's economic dilemmas itn the il9os: the problems of reforms, modernization atnd initerdepetndetnce (Washington DC: Government Printing Office, Apr. I99I), Vol. i, pp. I86-208.


  • China's future ?

    widened, and that will aggravate Beijing's relations with them. But within the category of Han provinces, the per capita output has become more homogeneous. None of this suggests, therefore, that ethnic Han-dominated provinces are likely to be at all tempted by the possibility of seeking a future outside a united China. The same is not necessarily true for all the Russian provinces of Russia. Thus there seems little likelihood of a disintegrating Russia being an appropriate parallel for the future of China.

    The disintegration of communism in the USSR: a parallel for China?

    There was no doubt that the Chinese leadership felt a special interest in the coup in Moscow in August I99I. In part this was because of the agreements which had been signed earlier in the year between the two countries over the supply by the USSR at low prices of more advanced military equipment, especially SU-27 fighters and artillery. If the Soviet military were to gain a stronger hand in the new government, then the prospects for cooperation with the Chinese military would be enhanced. But more fundamentally, Chinese leaders could see the similarities between reform processes at work in the USSR and China. They definitely saw the relevance of Soviet developments to their own situation, and had been growing concerned that the USSR was deviating from 'socialism as they understood it. Deng Xiaoping had reportedly been predicting for some time that a coup would take place in Moscow, because of popular unrest. Now the Chinese leadership suddenly felt that the USSR would turn back towards 'socialism'. This sense of relevance was reflected in the sudden tide of information provided by the Xinhua News Agency and the rest of the media in China about events in Moscow. Xinhua covered these events in Moscow both more quickly and in greater detail than normal. Apparently internal party documents at this time were even more positive in their assessment, rejoicing in the changes. Once the coup collapsed, however, a profound sense of disappointment set in. The media became extremely nervous about making any comment on subsequent events, and the leadership was increasingly dismayed by the subsequent collapse of 'socialism' as even Gorbachev understood it.8

    Can these events in the former USSR, however, provide parallels for processes in China? Here again, at least in the short term, the answer has to be no. To repeat the point already made, the Chinese economy has been performing very impressively in the 1980s, in total contrast to the Soviet economy. There is nothing like the same popular discontent in China over worsening standards of living. From a material point of view, people in general in China live better lives than ever before. It is true that the government's plans for the I99OS anticipate a slowing down of the growth rate from almost io per cent per annum to roughly 6 per cent. In time this may increase popular

    8 For an account of the Chinese press handling of the coup, see Oskar Weggel, '... da verschlug es den Chinesen einfach die Sprache', CHINA aktuell, Aug. I99I, pp. 5ii-i5.


    1 IAF 68

  • Peter Ferdinand

    discontent if a gap opens between what people have grown accustomed to expect in terms of improvements in living standards and what they can actually achieve. But this disparity will not be tangible for a few years yet, and in any case, some provinces such as Guangdong may continue to develop at a rate little different from before. However aggravating this may be for Beijing, it will lessen the dissatisfaction over a slowdown in the rate of improvement of living standards.

    It is also the case that China pursued during the I980s more successful reform strategy than the Soviet Union. This gave highest priority to economic reform, and although individual leaders did on occasion suggest that political reform would also be necessary to keep the economic reform momentum going, this was very definitely regarded as secondary. Deng Xiaoping, for example, maintained that direct elections to the national parliament, the National People's Congress, would be unlikely before the hundredth anniversary of the revolution, that is, 2049. Though clearly events in I989 showed that these relative priorities might be difficult to sustain, it is still the case that the accent remains upon economic reform and economic progress. The contrast with the Soviet Union could not be greater. Here, from the Central Committee plenum in January I987, the primary goal of Gorbachev was to force through political reform as a prerequisite for economic reform with the consequences that all can now see.

    Nor, at the moment, is there any sign of the Chinese regimne tolerating, let alone encouraging, a movement for democratization such as occurred in the Soviet Union with Gorbachev's active support, and which had such a powerful effect in undermining the position of the Communist Party there. Not only did the events around Tiananmen Square in June I989 bring home the message that the leadership was prepared to fight to stay in power at more or less any cost, but also the course of events in the Soviet Union, and in particular the chaos into which the country has fallen, has served as a kind of warning inside China against excessively radical reforms.

    It is also noteworthy that the leaders of the CCP have not demonstrated the same kind of public disagreements over the pace of reform as did the leaders of the former CPSU. The gradual emergence of such disputes in the Soviet Union was an important factor in stimulating the open display of democratic sentiments within the population at large. The sense that the party was not the monolithic entity that it claimed to be contributed to the vigour of public debates. Similarly, the fact that the leadership of the CCP is not monolothic is widely appreciated inside China as well as outside. Yet within the Chinese leadership one thing does count which did not inside the USSR, at least not once Brezhnev was dead. This is deference to seniority within the communist movement. The most senior figures still alive still exercise authority and even power, however infirm they may have become.

    In addition, and perhaps most important of all, China has not yet seen an equivalent of Yeltsin, that is to say, a former member of the central party leadership, who originally acquired a high public profile because of his position


  • China's future?

    within the ruling party, and then turned against them to such an extent that he became the leader of the opposition. Yeltsin then used the position which he had acquired through the party to struggle against the party. This is why he is regarded with particular enmity by the current Chinese leadership, who consider him a 'traitor' to socialism. By contrast, none of the Chinese leaders who opposed the use of force on Tiananmen Square and were subsequently dismissed above all, Zhao Ziyang-have for whatever reason made public their disagreements since June I989. Indeed, one consequence of the collapse of socialism in the USSR may well have been to convince leaders within the CCP of the vital important of avoiding excessive disunity, for fear that 'chaos ' might come to China too. InJune I99I, for example, three former CC secretaries who were removed after June I989 were allowed to return to public life as deputy ministers. Therefore, although there are undoubtedly groups within Chinese society who remain completely alienated because of the Tiananmen Square episode, there is no equivalent individual public figure around whom their opposition can gather.

    Thus in terms of political institutions China may still hope to avoid the fate of the USSR. Also, in terms of some key policies China faces different problems from those of the Soviet Union, and therefore by evolving its own solutions may also hope to avoid the fate of the USSR. Take, for example, agriculture and the peasantry. Agriculture is still a more important sector in China than it was in the USSR. This is partly because of the proportion of the population in China still engaged in agriculture, and partly because the spectre of food shortage has always loomed closer in China, thus concentrating the mind of the government on the need to heed its problems. Reform in the countryside was initiated in the early I980s, and this proved extremely popular with the peasants. Nearly 50 per cent of the population still live on the land, and they remain a major social force upon which the regime can largely count. Or take the issue of price reform. The PRC has already managed to carry out a much more fundamental price reform than the Soviet leadership was ever able to do. It has also been able to open its economy more to market forces from the outside world.

    Practical policies of economic reform, then, have been much more successfully devised in the PRC already. Indeed, the ethos of reform within the administration now is one of pragmatism and practicality. Whatever lip-service may still have to be paid to ideological concerns, what really matters is that policies should work and that the economy should develop. It is understandable, therefore, that the leaders should be encouraged by past successes into hoping that this will serve as the basis for a continued reform of the whole system.

    China's future: the problems of government and party overload

    Yet for all this, it is by no means clear that 'pragmatism' and a concern with ' stability' will be sufficient to ensure the regime's survival. A number of extremely difficult decisions will have to be taken in the medium to long term,


  • Peter Ferdinand

    which will determine the survival of the regime as a whole. A failure to address these issues in their full complexity will itself undermine the regime.

    As is often mentioned, uncertainty shrouds the future leadership once Deng Xiaoping and the rest of the revolutionary generation of leaders finally die. None of the next generation who currently hold high office, such as Jiang Zemin or Li Peng, can be regarded as having a secure power base. For example, will disputes within the top elite of the party over responsibility for the killings around Tiananmen Square lead to open divisions within the party?

    Also, the regime cannot be entirely confident about its popular support. A recent report in a Hong Kong magazine suggested that the State Council General Office and the People's Daily had presented a secret report to the government, claiming that the political and social situation in I4 out of China's 30 provinces was either unstable, or not stable enough.9 Whatever might be meant by 'stability', this would suggest that divisions within the leadership, if brought into the open, could arouse a popular response.

    These are issues specific to China, and potentially destabilizing. But in addition, despite all the major differences between the PRC and the USSR, there are fundamental problems which have confronted them that are similar. To take one extremely important example, the central government in China is facing an enormous problem of overload. The demands for services and resources from it is increasing at the same time as its finances are being squeezed, above all as a result of pressures from the provinces which hang on to more taxes which they collect than the centre thinks they should. By now the central government's official budget represents only about 20 per cent of total national income, whereas in I979 it represented 32 per cent. This is at a time when the needs of the country for increased investment in infrastructure are almost universally acknowledged. Transport, communications, power supply, not to mention renewed investment in agricultural infrastructure, are all clearly in need of expansion. There is also growing interest in the creation of a state system of welfare benefits, especially for unemployment insurance, as a way of persuading workers to accept economic reform and the possible closure of their enterprises. All of these tasks could be regarded as essential for the success of the economic reform strategy. Yet the ability of the central government to satisfy these demands is even less than before.

    This is in part the result of the increasing burden of the cost of government administration. In I979 the state budget for central and local governments was supposed to pay for I5 million employees. By I990 this figure had risen to 28 million. Now roughly 40 per cent of the total state budget goes on administration. Moreover, the problem of administrative costs, if not addressed, can only get worse with more decentralization. Provinces and counties have been the main levels of government which have expanded their staffs dramatically in the I980s, as they assumed greater responsibilities for managing their local economies. At least one province has seen its staff rise threefold over

    9 SWB FE/I266, 3I Dec. 199I, B2/2.


  • China's future ?

    the past decade. Counties have seen even larger increases.10 Against this it can be argued that some of the problems of regional infrastructure can be handled by groups of provinces collaborating among themselves instead of relying upon the centre. There is now, for example, a four-lane highway running between Hangzhou and Shanghai which was built entirely by the local authorities, without recourse to funds from Beijing.

    In so far as the central government is still expected to finance major inter- regional projects, one of the main obstacles preventing it from doing so remains the extent of its subsidies to loss-making enterprises, especially the large and medium-sized ones. Roughly one-third of the total official state budget goes on subsidies either to prices or to loss-making enterprises. If this figure is added to the share of the budget assigned for administration mentioned above, it becomes clear that roughly three-quarters of the state budget is pre-allocated to salaries and subsidies. This does not leave a great deal of room for manoeuvre in terms of new investment or economic restructuring. A reduction in these obligations is a sine qua non for further economic reform. Already China is one of the few countries in the world where subsidies for agriculture are held back by state subsidies for industry, and now the regime has identified agriculture as a high priority sector for the I99Os.

    How can these other costs be trimmed? A significant reduction in the size of the state machine will risk provoking delaying tactics from the officials involved, and even outright opposition. This was one of the key factors which sabotaged Gorbachev's attempts at economic reform. Also, it would risk antagonizing provincial leaders, thereby putting at risk the success of the decentralization strategies. Equally, the prospect of reducing subsidies by closing significant numbers of enterprises, causing widespread unemployment among industrial workers, is extremely unsettling, especially when the regime is fixated upon the principle of 'stability' at any cost. On the other hand, an attempt to 'manage' the problem by maintaining subsidies will lead to renewed inflation and the danger of disturbances such as that which took place in I989. Even as it is, the budget deficit in I99I represented about 3 per cent of GNP,"1 whereas in I989 the government was talking about eliminating the deficit entirely over three years.

    Clearly the regime will need to do something about making these enterprises more profitable, and, if not, closing them. Of course, one way in which the regime might attempt to improve the efficiency of the loss-makers would no doubt be to sell off shares in them, if not to private individuals, then to other state enterprises or financial institutions, as seemed imminent in I989. The hope would be that other commercial institutions might be better than administrative departments at imposing market disciplines upon weak businesses. It is, of course, also obvious that the government might want to pass on to someone else the ultimate responsibility for closure, so as to avoid public blame. Yet it is not

    10 Deng Shuisong and Wen Zhihua, 'Xianji "yamen" weihe zheiyang da?' Zhongguo Jingji Tizhi Gaige, 12 (1988), p. 54. 11 SWB FE/WO207 A/I, 27 Nov. I99I.


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    clear why these other institutions should wish to take on responsibility for making such enterprises more efficient, or even closing them if absolutely necessary. The potential benefits which might accrue to institutions which successfully restructured loss-making enterprises would be more than likely offset by the potential social opprobrium which they might incur if they had to make closures.

    This problem might be addressed by the use of party discipline to 'persuade' lower-level officials to take on this responsibility. But again, the conflict of interest between higher and lower levels of officials within the party and outside it would be sufficient to ensure that such a reform would not be implemented smoothly. This in turn raises the other question of overload, namely, that of party overload. The problem which confronts the CCP leadership, as it did the leadership of the CPSU and the other communist parties of Eastern Europe, is that of conflicts of interest inside the party itself, which obstruct market reforms. Given the pre-eminent role of the CCP in society at present, local party officials derive a great deal of their power through patronage, through being able to 'solve' immediate economic problems of the supply of raw materials or components. Local enterprises become dependent upon 'their' party officials to solve these problems, which affect the livelihood of whole communities. Thus local officials who were originally in favour of economic reform then lose the incentive to push ahead further, or even acquire an incentive to obstruct further reform, because this would involve the progressive introduction of market methods, which would undermine their own position and status.12

    This problem of overload for the party, and the danger of its paralysing the reform process, remains a fundamental similarity between the CCP now and the CPSU under Gorbachev."3 Whatever the differences in specific policies between the two regimes, and the much greater success of economic reformers in China, this was a problem which Gorbachev recognized much sooner than his Chinese counterparts. It is now easily forgotten, but Gorbachev himself began the process of reform in I985 by prioritizing the economy. However, he quickly realized that economic and social measures alone would not be enough to revive the economy. Also to be tackled was the obstruction, or at least the refractoriness, of officials in both the party and the state bureaucracies. This was why Gorbachev, from relatively early in the reform process, tried to force officials into carrying out the reforms which he thought essential hence the stress upon democratization, as a way of bringing popular pressure to bear from below, while he imposed pressure from above.

    We now know that in the end Gorbachev failed, as did every other reformist communist leadership in Eastern Europe. Maybe Gorbachev was too impatient.

    12 For a good analysis of the processes by which groups initially accept market reforms and then turn against them, see Barbara Krug, 'Blood, sweat or cheating: politics and the transformation of socialist economies in China, the USSR and Eastern Europe', Studies in Comparative Commnitlisttm, 24: 2 (June I99I), pp. 137-50.

    13 For China, see David Lampton, 'China's biggest problem: gridlock, not revolution', in Clhina's economic dilemmas in the il9os: the problems of reforms, modertnization atnd interdepetndetnce, Vol. i, pp. 65-9.


  • China's future ?

    Maybe, if he had been willing to accept a slower rate of change, many more apparatchiks would have come to accept his view of the need for change and been converted into committed supporters. Maybe the Chinese leadership could derive some comfort from the fact that the bureaucracy in China has been significantly smaller than in the USSR, and therefore in absolute terms an easier body to reform. Nevertheless, this will require vigour and determination on the part of the Chinese leadership. The failure of reformers in Eastern Europe and the USSR remains a powerful warning for them.


    In the late I98Os Zhao Ziyang formulated a memorable image for the reform process in China. He likened it to groping for stepping stones while crossing a river. In fact, in some ways this is both an oversimplification and over optimistic. However fast the current may be and however deep the water, at least when crossing a river it is normally clear where the other bank is. For the reformers in China now, this problem of maintaining the direction of reforms is much more complicated. After the turmoil of I989, and the failure of every other ruling European communist party to devise a successful reform strategy from which the Chinese could learn, the problem is as much one of direction as of finding stepping stones. Indeed, the reform process might better be compared to the difficulties of marching through the mountains of Sichuan, as the CCP had to do on its Long March over 50 years ago. Here there are precipitous winding valleys, rushing streams, convoluted trees blocking the way, narrow paths and sometimes no paths at all. Finding a way through these valleys while keeping the same direction is no small task. It requires boldness, determination, flexibility, a plan and a compass.

    Yet this is also a time when, again after I989, the leadership wants to keep people from looking too far ahead. What is emphasized is the need for 'pragmatism', finding solutions to current problems rather than more distant ones. By and large the regime wants people to keep their heads and eyes down as they follow their leaders. In itself this can cause problems, in that it can hinder strategic coordination, and a poorly coordinated reform strategy may increase problems over the long term, as China's own experience in the I980s has demonstrated. 14 Yet China's is a gerontocratic leadership with declining eyesight and vitality. It may be that they still have remarkable strategic vision. It may be that they will simply be lucky. But they may get lost or tired. They may become complacent; the Chinese foreign minister, Qian Qichen, was recently quoted as saying: 'We sit tight in the fishing boat despite the rising wind and the waves'.15 At least Gorbachev, however indecisive he proved over internal reform, never lacked vigour and never became complacent. Yet still he failed.

    All this explains why people outside China will continue to ask themselves

    14 Liu Chenxiang and Ye Yai-fei, 'Wo guo caizheng kunjinig yu chulu', Jilgji Kexl4e, 2 (I990), P. 2. 15 SWB FE/1259, I9 Dec. i99i, C/i.


  • Peter Ferdinand

    about possible parallels with the USSR, particularly with the approach of the next CCP Congress, due in the last quarter of I992, and particularly as the Chinese leadership seems so reluctant to debate the issue publicly at home. Like the smile of the Cheshire cat, the problems of the USSR remain to haunt China even after the disappearance of the USSR itself.


    Article Contentsp. 279p. 280p. 281p. 282p. 283p. 284p. 285p. 286p. 287p. 288p. 289p. 290p. 291p. 292

    Issue Table of ContentsInternational Affairs (Royal Institute of International Affairs 1944-), Vol. 68, No. 2 (Apr., 1992), pp. 223-406Front Matter [pp. ]European UnionEuropean Union after Minsk and Maastricht [pp. 223-231]

    Cracks in European Unity?Testing Times for European Political Cooperation: The Gulf and Yugoslavia, 1990-1992 [pp. 233-253]

    Breakup of the Soviet Nuclear ArsenalNuclear Weapons and the Former Soviet Republics [pp. 255-277]

    China's Future?Russian and Soviet Shadows over China's Future? [pp. 279-292]

    The Politics of ClimateThe International Politics of Climate Change [pp. 293-310]

    A UN PerspectiveThe United Nations in 1992: Problems and Opportunities [pp. 311-319]

    Book ReviewsInternational Relations and OrganizationsReview: untitled [pp. 321-322]Review: untitled [pp. 322-323]Review: untitled [pp. 323-324]Review: untitled [pp. 324]Review: untitled [pp. 324-325]Review: untitled [pp. 325-326]Review: untitled [pp. 326]Review: untitled [pp. 326-327]Review: untitled [pp. 327]Review: untitled [pp. 327-328]Review: untitled [pp. 328]Review: untitled [pp. 329]Review: untitled [pp. 329]Review: untitled [pp. 329-330]Review: untitled [pp. 330]Review: untitled [pp. 330-331]Review: untitled [pp. 331]Review: untitled [pp. 331]

    Security and Arms ControlReview: untitled [pp. 332]Review: untitled [pp. 332-333]Review: untitled [pp. 333-334]Review: untitled [pp. 334]Review: untitled [pp. 334-335]Review: untitled [pp. 335]Review: untitled [pp. 336]Review: untitled [pp. 336]Review: untitled [pp. 336-337]Review: untitled [pp. 337]Review: untitled [pp. 337-338]Review: untitled [pp. 338-339]Review: untitled [pp. 339]

    Politics, Social Affairs and LawReview: untitled [pp. 339-340]Review: untitled [pp. 340-341]Review: untitled [pp. 341]Review: untitled [pp. 341-342]Review: untitled [pp. 342-343]Review: untitled [pp. 343]Review: untitled [pp. 343]Review: untitled [pp. 344]

    Political Economy, Economics and DevelopmentReview: untitled [pp. 344]Review: untitled [pp. 345]Review: untitled [pp. 345-346]Review: untitled [pp. 346]Review: untitled [pp. 346-347]Review: untitled [pp. 347]Review: untitled [pp. 348]Review: untitled [pp. 348]Review: untitled [pp. 348-349]Review: untitled [pp. 349-351]Review: untitled [pp. 351]Review: untitled [pp. 352]Review: untitled [pp. 352]Review: untitled [pp. 352-353]

    Energy and EnvironmentReview: untitled [pp. 353-354]Review: untitled [pp. 354]Review: untitled [pp. 355]Review: untitled [pp. 355-356]

    HistoryReview: untitled [pp. 356]Review: untitled [pp. 356-357]Review: untitled [pp. 357]Review: untitled [pp. 357-358]Review: untitled [pp. 358]Review: untitled [pp. 358-359]Review: untitled [pp. 359-360]Review: untitled [pp. 360-361]Review: untitled [pp. 361]Review: untitled [pp. 361-362]

    Western EuropeReview: untitled [pp. 362]Review: untitled [pp. 362-363]Review: untitled [pp. 363-364]Review: untitled [pp. 364]Review: untitled [pp. 364-365]Review: untitled [pp. 365]Review: untitled [pp. 365-366]

    Eastern Europe and Former Soviet StatesReview: untitled [pp. 366]Review: untitled [pp. 366-367]Review: untitled [pp. 367]Review: untitled [pp. 367-368]Review: untitled [pp. 368]Review: untitled [pp. 368-369]Review: untitled [pp. 369]Review: untitled [pp. 369-370]Review: untitled [pp. 370]

    Middle EastReview: untitled [pp. 371]Review: untitled [pp. 371-372]Review: untitled [pp. 372]Review: untitled [pp. 372-373]Review: untitled [pp. 373]Review: untitled [pp. 373-374]Review: untitled [pp. 374-375]Review: untitled [pp. 375-376]Review: untitled [pp. 376]Review: untitled [pp. 376-377]Review: untitled [pp. 377-379]Review: untitled [pp. 379]Review: untitled [pp. 379-380]Review: untitled [pp. 380]Review: untitled [pp. 380]

    AfricaReview: untitled [pp. 381]Review: untitled [pp. 381-382]Review: untitled [pp. 383]Review: untitled [pp. 383]Review: untitled [pp. 383-384]

    Asia and PacificReview: untitled [pp. 384]Review: untitled [pp. 385]Review: untitled [pp. 385-386]Review: untitled [pp. 386-387]Review: untitled [pp. 387]Review: untitled [pp. 387-388]Review: untitled [pp. 389]

    North AmericaReview: untitled [pp. 389-390]Review: untitled [pp. 390]Review: untitled [pp. 390-391]Review: untitled [pp. 391-392]Review: untitled [pp. 392-393]

    Latin America and CaribbeanReview: untitled [pp. 393]Review: untitled [pp. 393-394]Review: untitled [pp. 394]Review: untitled [pp. 394]

    Other Books Received [pp. 395-403]Back Matter [pp. ]