Let the Pendulum Swing a Little

Thanks to the media, the speed of the Internet and satellite communications, the pendulum of American perceptions on China’s cycles of repression and liberalization has shortened from years to months and even weeks. But this real-time information skews the judgment of observers of China by hampering their ability to take a long-term view of China’s development.

While it is necessary to monitor the development of human rights in China, it is equally vital to remember the bigger picture of the world’s most populous country grappling with substantial economic and social pain as it transitions toward a market economy.

In the past 15 months, China has speeded up this process. The nation’s latest constitutional amendments to protect the private economy confirm this. China’s Party Congress has resisted the influences of the Asian financial crisis and approved joint stock and privatization measures to reform state-owned enterprises. The government has restructured the central government, firing almost half the bureaucrats overseeing a planned economy and severely restricting the licensing and quota powers of those who remain. The same surgery will be performed on the party apparatus later this year, despite expected opposition. Meanwhile, the People’s Liberation Army has been told to stop operating business enterprises. Such military-run companies have heavily distorted the developing market economy.

Yet the financial crisis in Asia remains a threat to the transition because it has triggered a domestic economic downturn. There is overproduction as well as decreased exports resulting from China’s promise not to devalue its currency, which has put some products at a price disadvantage. As a result, the reforms of state-owned enterprises have brought much pain to tens of millions of workers. The real rate of unemployment may run as high as 22%--that is, 100 million unemployed or underemployed. Worker strikes, rural riots and bomb blasts have increased dramatically. And a growing suicide rate is a significant psychological indicator of the pain being felt. There is pressure building for a suspension of reforms.

Chinese reforms are not limited to the economic sphere. China has signed the United Nations Convention on the political rights of citizens and has loosened its restraints on the formation of associations. President Clinton’s visit last year contributed in part to these political liberalization measures. Intellectuals called it the Little Beijing Spring. But the government did not expect the level of enthusiasm for political reforms, which included creation of the independent China Democracy Party by a group of dissidents. For the government, these developments were akin to a volcano about to blow, similar to Tiananmen. It worries leaders that a potential alliance between nascent political opposition groups and disaffected workers and farmers may bring chaos that could swallow the future of reforms. Preventive control is necessary to defuse such a calamitous eruption.

Chinese foreign policy initiatives also have met with challenges from ideologues and strong nationalists unhappy with compromises with the United States and Japan. In particular, after President Jiang Zemin’s visit to Japan last fall failed to bring an unconditional apology for Pacific War cruelties, nationalists publicly demanded that China’s foreign minister resign.

Chinese reformers are at a crossroads. Some people worry intensely that the country is on the edge of great chaos after years of high-speed growth. Its fate will depend on its handling domestic challenges deftly. But a favorable international environment will help China manage its transition peacefully.

The United States is the most important country in China’s calculation. Under the leadership of Premier Zhu Rongji, China is ready to make major concessions in order to make its entry into the World Trade Organization. The government has a strategy to bind itself to international obligations in order to spur domestic market reforms and hold off a reversal of the transition. By strengthening its connections with the world’s biggest markets, China can increase its chances of avoiding the pitfall of economic crisis.

Zhu will work hard to pursue this strategy in his upcoming visit to America. The benefits accrue both to China itself and to the world economy. If a new “Red scare” in America forces the Chinese reform ship to drift helplessly in hostile waters, the failure of China’s reforms will affect economic confidence 10 times more than that those from Southeast Asia. It will be a big bang certain to shake the world.