China: Better Rich Than Red

The Gray Helmsman

Jiang Zemin
Jiang Zemin casts his vote on the last day of China's 16th Communist Party Congress in Beijing, Nov. 14, 2002 (Photo: AFP).

Jiang Zemin may be remembered as the man who pulled off the political conjuring trick of the century by burying communism while saving the Chinese Communist Party. It all depends on what happens next. The 76-year-old president formally gave up his position as head of China’s communists this week, paving the way for a smooth hand-over to Vice President Hu Jintao, 59.

The watchwords of Jiang’s 13-year rule have been stability and economic growth. That is a remarkable achievement given the China he inherited in 1989, when Deng Xiaoping called him up from the relative obscurity of his post as Shanghai party chief to steer a traumatized nation through the rubble of the Tiananmen Square massacre.

Few would have predicted that the gray man with the goofy giant glasses would a decade hence be able to do as he did last week—stand on the stage of the Great Hall of the People and boast of “a magnificent upsurge” under his leadership that will “surely go down as a glorious page in the great rejuvenation of the Chinese nation.”

Signs of new prosperity are everywhere: rows of gleaming skyscrapers and busy neon-lit restaurants in the cities; neat white townhouses supplanting dusty huts in the countryside. Everywhere there are new roads, bridges, and airports.
China’s economy has doubled since 1990 at a mind-blowing annual growth rate averaging 9.3 percent. The country has foreign-exchange reserves 50 times greater than in 1989, its trade is five times greater, and direct foreign investment has grown on average at 24 percent a year. More than 400 of the world’s top 500 multinationals are there. China weathered the Asian financial crisis with scarcely a blip.

Jiang has overseen the peaceful return of Hong Kong to the mainland, the accession of China to the World Trade Organization, and victory in the bid for the 2008 Olympics. He has been remarkably successful in bringing China to the world stage as a player of influence, with policies showing a new level of maturity and sophistication. At the same time, he has successfully channeled nationalist feelings to boost the party’s legitimacy, for example by sharpening the campaign to reunite Taiwan with the mainland.

Jiang appears set to notch up another first for China—an orderly transition of leadership, although he is set to wield influence for some time to come, having stacked the all-powerful Politburo standing committee with his own men. Still, he can say with some justification that he has given the so-called fourth leadership generation (after Mao Zedong, Deng, and himself) a much better start than any of their predecessors enjoyed.

“But if you look a bit deeper down, you have to be a bit more concerned,” says Minxin Pei, a senior associate of the Carnegie Endowment for International Peace.

China’s economic boom is built on shaky foundations. The rich-poor gap is widening rapidly to a point that even Chinese economists have described it publicly as dangerous. The government acknowledges urban unemployment of about 8 percent and concedes the problem will worsen as moribund state enterprises restructure. But its figures don’t count the 100 million or so rural workers who have flocked to the cities in search of work or the estimated couple of hundred million surplus workers in the countryside.

Despite fledgling efforts, China has yet to build a comprehensive social security system, and its health-care system is ranked 144th in the world by the World Health Organization, after India, Indonesia, and Bangladesh. China’s banks, obliged by the government to keep bailing out state-owned enterprises, are crippled by bad loans estimated by some economists at up to one-third of gross domestic product. And the visible infrastructure boom has been funded almost entirely by the goverment, causing a government debt blowout estimated at more than 100 percent of gross domestic product. Given the inadequate tax system, a fiscal crisis threatens.

To consolidate party power, Jiang “has grasped the easiest reforms but postponed the most  difficult ones,” says Jean-Pierre Cabestan, head  of the French Center  for Research on Contemporary China in Hong Kong.

The problem of corruption is a huge threat to Jiang’s legacy. It remains endemic at all levels of government, amounting to China’s “greatest economic blight [and] biggest social pollutant,” according to a recent paper by academics Hu Angang and Guo Yong. They estimate that 80 percent of officials are corrupt but no more than 20 percent are caught.

According to street gossip in Beijing, Jiang agreed to cede power on the condition that Hu Jintao quarantine Jiang’s family from corruption investigations. Apocryphal it may be, but that it circulates at all is an indication of public cynicism.

Jiang has been a figure of fun among ordinary Chinese, mocked for his bad poetry, high-waisted trousers, and proclivity for bursting into song over dinner with foreign dignitaries. But although he is often described as lacking personal dynamism, that has been his key strength, argues Oxford University political scientist Steve Tsang. “His greatest achievement was that he was the gray and dull man of Chinese politics. That is tremendous progress from the madness of Mao Zedong to the strongman politics of Deng Xiaoping,” says Tsang.

Unlike Mao and Deng, whose revolutionary credentials and personal charisma gave them power to rule almost by divine right, Jiang has relied on negotiation, consensus, and maybe a ruthless Machiavellian streak. He has deftly engineered the downfall of key rivals and overseen a burgeoning and formidable public security apparatus.

Yet personal freedoms in China have never been greater. Academics have freedom to debate ideas and even publish papers openly critical of the regime’s policies. Members of the new middle class can not only send their children to private schools and travel overseas, but can also join action groups to keep life sweet in their new apartments.

Yet as Cabestan points out: “There is no one today who really, openly challenges the leading role of the party. This is because Jiang has been clever enough to turn freedom into a bribe, co-opting different segments of society with differing levels of freedom, which can be withdrawn at any time.”

So what will be history’s verdict on Jiang? China’s reform and opening is a challenge of such unprecedented proportions that there are large risks all the way, says Ross Garnaut of the Research School of Pacific and Asian Studies at the Australian National University. “But the risks and the challenges are less daunting than at any time over the past 24 years of reform,” he argues.

Tsang, on the other hand, says the party’s dependence on economic growth rather than a unifying ideology or political institutions makes it a hostage to fortune. Things could unravel quickly. If that happens, Jiang may go down in history as the man who buried both communism and the Chinese Communist Party.