On China (53 page)

The architect of the opening to China, Richard Nixon, understood the world in the same way. In a memorandum to President Reagan after a private visit to China in late 1982, Nixon wrote:

Nixon went on to urge that, for the next decade, the United States, its Western allies, and Japan should work jointly to speed the economic development of China. He had a vision of an entirely new international order emerging based essentially on using China’s influence to build the Third World into an anti-Soviet coalition. But not even Nixon’s prescience extended to a world in which the Soviet Union had collapsed and, within a generation, China would be in a position where much of the world’s economic health depended on its economic performance. Or where the question would be raised whether China’s rise would make international relations bipolar again.

George Shultz, Reagan’s redoubtable Secretary of State and a trained economist, came up with another, American conception of concentric circles, which placed the Sino-U.S. relationship into a context beyond the Soviet-American conflict. He argued that overemphasis on China’s indispensability for dealing with the Soviet threat gave China an excessive bargaining advantage.
¹⁵
Relations with it should be on the basis of strict reciprocity. In such a diplomacy, China would play its role for its own national reasons. Chinese goodwill should result from common projects in the joint interest. The purpose of China policy should be to elaborate these common interests. Simultaneously, the United States would seek to reinvigorate its alliance with Japan—the country in which Mao, a few years earlier, had urged American officials to “spend more time”—a fellow democracy, and now, after decades of rapid growth in the aftermath of the Second World War, a major global economic player. (Decades of intervening economic malaise have obscured the fact that in the 1980s Japan’s economic capacity not only vastly outmatched China’s, but was assumed by many analysts to be on the verge of surpassing that of the United States.) This relationship was given a new footing by the personal camaraderie that developed between Reagan and Japan’s Prime Minister Yasuhiro Nakasone—or, as it came to be known in the media, the “Ron and Yasu show.”

Both the United States and China were edging away from the previous alignment in which they saw themselves as strategic partners facing a common existential threat. Now that the Soviet menace had begun to recede, China and the United States were in effect partners of convenience on selected issues on which their interests aligned.

During the Reagan period, no fundamental new tensions developed, and inherited issues like Taiwan were handled undramatically. Reagan performed with characteristic vitality during a 1984 state visit to China—at several points even conjuring up phrases from classical Chinese poetry and the ancient divination manual the
I Ching
or
Book of Changes
to describe the cooperative relationship between the United States and China. Attempting more Mandarin Chinese than any of his predecessors, Reagan even invoked the Chinese idioms
“tong li he zuo”
(“connect strength, work together”) and
“ hu jing hu hui”
(“mutual respect, mutual benefit”) to describe the U.S.-China relationship.
¹⁶
Yet Reagan never developed a record of close exchanges with any Chinese counterpart as he had with Nakasone—for that matter, no American President did with his Chinese counterpart—and his visit was given no major issues to settle and confined itself to a review of the world situation. When Reagan criticized a certain unnamed “major power” for massing troops on China’s borders and threatening its neighbors, this portion of his speech was omitted from the Chinese broadcast.

As the Reagan years ended, the situation in Asia was the most tranquil it had been in decades. A half century of war and revolution in China, Japan, Korea, Indochina, and maritime Southeast Asia had given way to a system of Asian states on essentially Westphalian lines—following the pattern of sovereign states emerging in Europe at the end of the Thirty Years’ War in 1648. With the exception of periodic provocations from the impoverished and isolated North Korea and the insurgency against the Soviet occupation in Afghanistan, Asia was now a world of discrete states with sovereign governments, recognized borders, and a nearly universal tacit agreement to refrain from involvement in each other’s domestic political and ideological alignments. The project of exporting Communist revolution—taken up eagerly in turn by Chinese, North Korean, and North Vietnamese proponents—had drawn to a close. An equilibrium between the various centers of power had been preserved, in part due to the exhaustion of the parties and in part due to American (and subsequently Chinese) efforts to turn back various contestants for dominance. Within this context, a new era of Asian economic reform and prosperity was taking root—one that in the twenty-first century may well return the region to its historic role as the world’s most productive and prosperous continent.

What Deng labeled “Reform and Opening Up” was not only an economic but also a spiritual endeavor. It involved, first, the stabilization of a society at the edge of economic collapse and, then, a search for the inner strength to advance by new methods for which there was no precedent in either Communist or Chinese history.

The economic situation inherited by Deng was close to desperate. China’s collectivized agricultural structure was barely keeping pace with the needs of its massive population. Per capita food consumption was roughly the same as it had been in the early Mao period. One Chinese leader was reported to have admitted that 100 million Chinese peasants—the equivalent of nearly half the entire American population in 1980—went without sufficient food.
¹⁷
The closing of the school system during the Cultural Revolution had produced calamitous conditions. In 1982, 34 percent of China’s workforce had only a primary school education, and 28 percent were considered “illiterates or semiilliterates”; just 0.87 percent of China’s workforce was college-educated.
¹⁸
Deng had called for a period of rapid economic growth; but he faced the challenge of how to transform an uneducated, isolated, and still largely impoverished general population into a workforce able to assume a productive and competitive role in the world economy and to withstand its occasional strains.

The traditional tools available to those undertaking the reform compounded the challenge. Deng’s insistence on modernizing China by opening it to the outside world was the same kind of effort that had thwarted reformers since it was first attempted in the second half of the nineteenth century. Then the obstacle was the reluctance to abandon a way of life Chinese associated with what defined China’s special identity. Now it was how to overturn the practices on which all Communist societies had been operating while maintaining the philosophical principles on which the cohesion of the society had been based since Mao’s time.

At the beginning of the 1980s, central planning was still the operating mode of all Communist societies. Its failures were apparent, but remedies had proved elusive. In its advanced stage, Communism’s incentives were all counterproductive, rewarding stagnation and discouraging initiative. In a centrally planned economy, goods and services are allocated by bureaucratic decision. Over a period of time, prices established by administrative fiat lose their relationship to costs. The pricing system becomes a means of extorting resources from the population and establishing political priorities. As terror by which authority was established eases, prices turn into subsidies and are transformed into a method of gaining public support for the Communist Party.

Reform Communism proved unable to abolish the laws of economics. Somebody had to pay for real costs. The penalty of central planning and subsidized pricing was poor maintenance, lack of innovation, and overemployment—in other words, stagnation and falling per capita income.

Central planning, moreover, provided few incentives to emphasize quality or innovation. Since all a manager produced would be bought by a relevant ministry, quality was not a consideration. And innovation was, in effect, discouraged lest it throw the whole planning edifice out of kilter.

In the absence of markets that balanced preferences, the planner was obliged to impose more or less arbitrary judgments. As a result, the goods that were wanted were not produced, and the goods that were produced were not wanted.

Above all, the centrally planned state, far from creating a classless society, ended up by enshrining class stratification. Where goods were allocated rather than bought, the real rewards were perquisites of office: special stores, hospitals, educational opportunities for cadres. Enormous discretion in the hands of officials inevitably led to corruption. Jobs, education, and most perquisites depended on some kind of personal relationship. It is one of history’s ironies that Communism, advertised as bringing a classless society, tended to breed a privileged class of feudal proportions. It proved impossible to run a modern economy by central planning, but no Communist state had ever been run without central planning.

Deng’s Reform and Opening Up was designed to overcome this built-in stagnation. He and his associates embarked on market economics, decentralized decision making, and opening to the outside world—all unprecedented changes. They based their revolution on releasing the talents of the Chinese people, whose natural economic vitality and entrepreneurial spirit had long been constrained by war, ideological dogma, and severe strictures on private investment.

Deng had two principal collaborators on the reforms—Hu Yaobang and Zhao Ziyang—though he later fell out with both when they attempted to carry the principles of economic reform into the political field.

One of the youngest participants in the Long March, Hu Yaobang emerged as a Deng protégé and later fell with Deng in the Cultural Revolution; when Deng returned to power, he elevated Hu to some of the highest leadership posts in the Communist Party, culminating in his appointment as General Secretary. During his tenure, Hu was associated with relatively liberal stances on political and economic issues. With his forthright manner, he consistently pushed the limits of what his party and society were willing to accept. He was the first Communist Party leader to appear regularly in Western suits and provoked controversy by suggesting that Chinese abandon chopsticks for knives and forks.
¹⁹

Zhao Ziyang, appointed Premier in 1980 and General Secretary of the Communist Party in January 1987, had pioneered agricultural decollectivization while Party Secretary in Sichuan. His success in producing a significant rise in living standards earned him the approbation of rural Chinese, as expressed in a pithy pun on his last name (a near homonym for the Chinese word “look for”): “If you want to eat grain,
Zhao
(look for) Ziyang.” Like Hu Yaobang, he was politically unorthodox. He was ultimately removed as General Secretary by Deng at the height of the Tiananmen crisis.

Deng and his colleagues were impelled, above all, by the shared rejection of the Cultural Revolution. All the leaders who governed China had survived degradation, and many of them physical abuse. The experiences of the Cultural Revolution permeated the conversation of Chinese leaders. I had a wistful conversation with Deng in September 1982 when I was in China on a private visit:

There was little experience on which to draw for the reform effort. When I returned in 1987, Zhao Ziyang gave me an advance explanation of a program to be submitted to the Party Congress that October. He emphasized that China was on a complicated and very long course of meshing capitalism with socialism: