China – A Study of Economic and Political Evolution

China – A Study of Economic and Political Evolution

In the last thirty years China has undergone the most dramatic transformation seen in the modern era. Its economy has become the second largest in the world and its international influence has grown immeasurably. These two factors make China the topic of much discussion and analysis. It is however, extremely difficult to investigate China in an ordered and coherent way. Economic, political and social factors have a dynamic relationship and, as such, no one facet can be considered in an analytical vacuum. Furthermore, changes are occurring so rapidly that it is difficult for even the most learned academics to keep track. It is therefore vital to limit the scope of any analysis and to make only qualified and reasonable statements. As such, this essay will briefly outline the changes in the Chinese economy in the last 35 years, and discuss some probable causes and effects of China's phenomenal economic growth. It will then look at the student uprisings of 1989, considering the response of the ruling Communist Party and some of the long term effects of the uprising on China's leaders. Finally, with the economic reforms and social upheaval of the recent past in mind, it will ask – where to from here for China?

China on the Rise

Much of modern China's economic success has come as a result of the major economic reforms of the post Mao era. In the late 1970's Deng Xiaoping started China down the path of reform by changing rural organisation. Mao's rural communes were replaced with the 'household responsibility system', which allowed individual families to profit from their labor, lifting peasant income and boosting industrial demand (Medeiros, 2012, Zhu and Wan, 2012). Having reformed the rural economy Deng's focus broadened and, in the early 1980's, he began the process of 'opening-up' China by allowing foreign investment and trade to spark the manufacturing sector. In these endeavours Deng often faced opposition within the Communist Party of China (CPC) from the conservative leftist faction. However, Deng's gradualist approach – introducing reforms one at a time, often in individual provinces – helped him to avoid open conflict with conservative elements of the CPC. In accordance with this approach Deng set up 'Special Economic Zones' in the south of China, most notably in the Guangdong Province, chosen for its proximity to the trade centres of Hong Kong and Macau (Kuhn, 2009). Deng used these zones as a model for 'market socialism', which was, in effect, an attempt to gain the benefits of a market economy while maintaining a high level of public ownership and political control.

The next major round of reforms came in the early 1990's. Deng, then in his late 80's, mounted a final campaign to increase economical liberalisation after a tour of the Special Economical Zones of Southern China. He used the last of his political clout and stamina to influence the third generation of leadership in modern China. Jiang Zemin had come to power at this time, with a mandate for renewed economic reform. Firstly, Jiang established a stock exchange in the city of Shenzen in the Guangdong Province, and then reopened Shanghai's defunct exchange. A symbol of 'bourgeois liberalism' a stock exchange would have been unthinkable just fifteen years before (Kuhn, 2009). Secondly, Deng's southern model was allowed to spread to other regions of China. New technologies, commodities and trade opportunities, as well as foreign capital and the associated in-flow of expertise, amounted to the nation wide 'opening-up' which Deng had envisaged. The spread of these reforms had their impact; Brandt and Rawinski sum it up succinctly “China's progression from near-isolation to extensive openness to international trade and investment added a new dimension to economic growth” (2008, pp12).

What followed was unprecedented. China's GDP grew at an average 9% a year in the thirty years after 1978, which has led to its economy becoming the second largest in the world (Tian, 2011, Rowan, 2011). This increase in wealth dramatically increased per capita income and lifted millions of people out of poverty (Zhu and Wan, 2012, Anwar and Sun, 2012 ). Whether the success of these reforms was achieved because of, or despite Deng's gradualist approach is disputed. Classical economists, before the so called 'China Model', believed that reform should be dynamic, with rapid privatisation, to allow market forces to work to full effect. Some however, like Guthrie, in his China and Globalisation (2009), argue that the gradualist approach, which in this instance was forced upon the reformers by political conditions, may have greatly contributed to the economical success. Gradually decentralising the economy and granting increased provincial and individual autonomy to economic actors meant that the CPC could introduce market incentives and competition without compromising its authoritarian control (Guthrie, 2009). However, no matter how carefully planned and executed the reforms were, the speed at which China was growing inevitably lead to social tension. The most notable example of civil unrest in this period was the student uprisings of 1989, which are perhaps best known for the events that occurred in Tiananmen Square, Beijing.

The Student Uprising of 1989

On April 22, 1989, 50,000 students assembled in Tiananmen Square, Beijing. The funeral of Hu Yaobang, a former general secretary of the CPC, had brought the students there. Hu had been a leading advocate of both economical and political liberalisation within the CPC and, in 1987, resigned from his position as secretary of the party after a failed student uprising the year before. This had made Hu popular amongst students in China, and his death acted as a catalyst for the protests. However, the true origin of the students' anger was more deeply rooted and complex. The students listed seven core demands, some of which were; the restoration of Hu's reputation; greater freedom of speech and the press; increased transparency about the salaries of the leadership and greater funding for universities and professors (Zhao, 2001). These demands offer some insight into the social tensions in China at this time. The students wanted more personal and political freedoms as well as increased economic equality.

Within five days the protests had escalated despite the CPC labelling them as 'anti-revolutionary', a clear sign that the protests were unlikely to be tolerated. Students from every university in Beijing were involved with some estimates of 100,000 to 150,000 participants. Strong rhetoric from the government only exaggerated the protestor's anger, leading to the CPC announcing martial law. As with previous attempts at intimidation this move served to galvanise the movement resulting in approximately one million people marching on Tiananmen Square on May 23^rd (Cox, 2009). The response of the CPC on the night of the 3^rd of June 1989 is infamous. The People's Liberation Army (PLA) entered the square with orders to clear it by dawn. The soldiers opened fire on the crowd, and though the precise figure is unknown, it is believed the fatalities numbered in the hundreds (Zhao, 2001).

It is impractical to discuss and analyse these events in full in this essay. However, one of the most important outcomes of Tiananmen square was the destruction of the idea of a single minded and united CPC. There was much political manoeuvring occurring within the CPC during the protests. The violent display of force which occurred on the night of June the 3^rd was the result of the victory of the politically conservative left faction over more moderate elements within the CPC, and within the PLA. Indeed, eight retired generals from the PLA wrote a letter to Deng during the protest asking him to withdraw the troops and lift martial law (Shirk, 2007).

The outcome in Tiananmen, therefore, was not certain and there was the distinct possibility that the protests could have made real gains for the people of China. However, this did not eventuate and in the years that followed there was a predictable period of renewed political conservatism. Robert Kuhn, a regular visitor to China for the last thirty years, notes that before Tiananmen “... politics was a hot topic, openly discussed at virtually every gathering” (2009, pp 196.) – this was not the case thereafter.

The broader historical implications of Tiananmen are more difficult to gauge. The perspectives on Tiananmen are indicative of the larger debate on Chinese development. Some argue that Tiananmen represents an example of a people ready for democracy, coming in direct conflict with a ruling elite unwilling to cede its power. Conversely, others believe that Tiananmen and subsequent examples of civil unrest are tell tale signs of a country moving through the early stages of democratic development. The question now becomes: Where to from here for China?

Where to from here?

There are many differing views on modern China and where it is headed. In his article The China Fantasy Paul Levine neatly divides the views on China's future into three main categories (2011). The first is what Levine calls a 'soothing scenario', where economic freedoms inevitably lead to political ones. This is a view which Rowan shares; he talks about the “...world-wide pattern, which shows a strong correlation between economic development and democratic freedoms” (2011, pp37).

Another of Levine's scenarios, the one which he appears to consider most likely, is of continued economic growth and political control by the CPC. This is the view of many in America, who do not believe that the structural changes which could lead to democracy in China are occurring. Levine describes the 'Beijing Consensuses', a scenario of consolidated power for the CPC and an ideological war with the US. Susan Shirk shares similar views in her China, Fragile Superpower (2007). She looks at increasing social disunity and instability, and a CPC who look outwardly, with aggressive foreign policy, in order to maintain domestic control. A third scenario he proposes, is one of economic and political collapse. Some, Galberth, Hsu and Zhang (2009) for example, note that much of China's recent growth has come from real estate and market speculation, leading to the possibility of an economic bubble. In their article Beijing Bubble, Beijing Bust (2009), they outline the growing economic inequality and the way that capital investment in China has shifted from trade and manufacturing to speculation.

There is extensive literature covering these three arguments, most of which appears inherently reasonable. The lack of academic consensus is indicative of the complexity involved in analysing a rapidly growing and changing society. The inevitable collision of disparate groups and interests further complicates the matter. Therefore, in this instance, it could be argued that an institutionalist approach may be an effective analytical tool. As Guthrie (2009), Rowan (2011) and Kuhn (2009) point out, China's social institutions have changed dramatically in the years following Deng's economic reforms – particularly in the years following Tiananmen. There is a burgeoning middle class; an increasingly independent judicial system, and a modern press with broadening freedoms, all of which amounts to what Guobin Yang, in his article The Internet and Civil Society in China: a preliminary assessment, describes as a “Chinese civil society” (2003, pp453.). Yang goes on to discuss the importance of the internet in creating a public sphere in China, where there is a free exchange of ideas and information. Jurgen Habermas wrote extensively of the importance of the public sphere in the early democratic development of the Western World (Goode, 2005), and it could be argued that, though uniquely modern and Chinese in nature, these developments are precursors to democratic development. Furthermore, Kuhn (2009) notes that there is a new generation of Chinese leadership who are aiming to build the institutions that will have a “long lasting democratic impact” (pp.439).

Conclusions

Over the last 35 years, China has undergone one of the most rapid processes of modernisation ever seen. Deng's gradual reform of China's agricultural, industrial and financial organisation has had the unexpected and somewhat paradoxical effect of prodigious economic growth. This growth was so rapid that it made social upheaval inevitable. The student protests of 1989 showed a people ready for change and, at the time, a government unwilling to give it. However, Tiananmen, and subsequent uprisings, have had an effect on the thinking of the modern leaders of China. Furthermore, as wealth, education and exposure to more open forms of social organisation have increased, there has been an emergence of what may be termed democratic institutions.

The future of China is uncertain and difficult to predict, however, it appears reasonable to suggest that if these institutions continue to grow in number and in influence, there will be an associated dilution of power away from the central body of the CPC; whether or not this results in democracy as the Western World understands it is a different question.

Reference List

Anwar, S, Sun, S, 'Trade liberalisation, market competition and wage inequality in China's manufacturing sector', Economic Modelling, Vol. 29, No. 04, pp 1268-1277.

Brandt, L, Rawski, T, 2008, China's Great Economic Transformation, Cambridge University Press, New York.

Cox, Cindy, 1990, Chronology of Events Related to the 1989 Tiananmen Square Incident, World Affairs, Vol. 152, No. 03, pp 129-134.

Galberth, J, Hsu, S, Zhang, W, 2009, Beijing Bubble, Beijing Bust: Inequality, Trade, and Capital Inflow in China, Journal of Current Chinese Affairs, Vol. 38, No. 02, pp 3-26.

Goode, Luke, 2005, Jurgen Habermas: Democracy and the Public Sphere, Pluto Press

Guthrie, Doug, 2009, China and Globalization: The Social Economic and Political Transformation of Chinese Society, Routledge, New York.

Kuhn, Robert, 2011, How China's Leaders Think Revised Edition, John Wiley & Sons, Singapore.

Levine, Paul, 2011, 'The China Fantasy', American Diplomacy, May 2011 ed., viewed 29 August 2012, <http://www.unc.edu/depts/diplomat/item/2011/0104/comm/levine_chinafantasy.html>.

Medeiros, C, 2012, Income Concentration, Financial Liberalisation, and Decoupling Between the United States and China, Journal of Economic Issues, Vol. 46, No 02, pp 439-447.

Rowan, Henry, 2012, China: Big Changes Coming Soon, Policy Review, Vol. 170, pp 35 – 43.

Shirk, Susan, 2007, China, Fragile Superpower: How China's Internal Politics Could Derail its Peaceful Rise, Oxford University Press, Cary NC.

Tian, G, 2011, On Deep-Rooted Problems in China's Economy, Front. Econ. China., Vol. 06,

No. 03, pp 345-358.

Yang, Guobin, 2003, The Internet and Civil Society in China: a preliminary assessment, Journal of Contemporary China, Vol. 12, No. 36, pp 453-475.

Zhao, Dingxin, 2001, Power of Tiananmen: State-Society Relations and the 1989 Beijing Student Movement, University of Chicago Press, Chicago Il.

Zhu, C & Wan, G, 2012, 'Rising Inequality in China and the Move to a Balanced Economy', China & World Economy, vol 20, no. 01, pp 83-104.