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
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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
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
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
Initernatiotnal Affairs 68, 2 (1992) 279-292 279
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
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),
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
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
' Stummtary of World Broadcasts (hereafter SWB) FE/1286, 24 Jan.
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 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
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,
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
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
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
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
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
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
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,
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
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
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.
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
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
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.
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?
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
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326]Review: untitled [pp. 326-327]Review: untitled [pp. 327]Review:
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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:
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336]Review: untitled [pp. 336-337]Review: untitled [pp. 337]Review:
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Politics, Social Affairs and LawReview: untitled [pp.
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Energy and EnvironmentReview: untitled [pp. 353-354]Review:
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HistoryReview: untitled [pp. 356]Review: untitled [pp.
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Western EuropeReview: untitled [pp. 362]Review: untitled [pp.
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364]Review: untitled [pp. 364-365]Review: untitled [pp. 365]Review:
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366]Review: untitled [pp. 366-367]Review: untitled [pp. 367]Review:
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Middle EastReview: untitled [pp. 371]Review: untitled [pp.
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AfricaReview: untitled [pp. 381]Review: untitled [pp.
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Asia and PacificReview: untitled [pp. 384]Review: untitled [pp.
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North AmericaReview: untitled [pp. 389-390]Review: untitled [pp.
390]Review: untitled [pp. 390-391]Review: untitled [pp.
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Latin America and CaribbeanReview: untitled [pp. 393]Review:
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Other Books Received [pp. 395-403]Back Matter [pp. ]