China’s leaders begin a crucial debate

Eric Teo Chu Cheow – The International Herald Tribune

Copyright The International Herald Tribune
SINGAPORE The world’s attention has been focused on China in the past month because of the aborted bid by China National Offshore Oil Corp. to take over the American company Unocal, and the July 21 “repeg” of China’s currency, the yuan. But three other recent developments are much more important, because they provide subtle signals that a major debate has started within the Beijing leadership on China’s social, economic, cultural and political future.
On July 28, the People’s Daily ran a front-page commentary warning Chinese citizens to obey the law, saying that any threats to social stability would not be tolerated by the authorities. This editorial could have been aimed to deter anti-Japanese protests in the period leading up to commemorations of the 60th anniversary of the end of the Pacific War. But curiously, and significantly, it omitted the term “harmonious society” – President Hu Jintao’s populist catch-phrase for the effort to correct the lopsided excesses and widespread corruption resulting from China’s rapid development. Moreover, the editorial surprised many by its stance that widening inequality is an inevitable phase of development.
On Aug. 3, the Culture Ministry’s Web site announced that Beijing would bar new foreign television channels from entering China and step up censorship of imported programming, in order to “safeguard national cultural safety.” This announcement, backed up by a statement from the official Xinhua News Agency, could be perceived as a further tightening of popular culture in an effort to keep out liberal Western materials that could be politically and socially dangerous for Beijing.
Then on Aug. 5, Health Minister Gao Qiang was quoted in the China Daily criticizing China’s hospitals for being greedy and putting profit ahead of their social function, thus adding to the burdens on patients and undermining the image of medical personnel and public health departments.
These three statements are an indication that the authorities no longer refuse to discuss China’s growing social instability in public. Key officials in the Chinese government have lately expressed their concern about this instability, in the face of an increasing number of public protests and a widening rich-poor gap in a country that is still officially Communist.
The People’s Daily commentary is particularly significant, as it signals a debate among China’s leaders on whether to allow continuous rampant growth and economic liberalization, or to promote greater equality and redistribution in China, which historically has been wracked by social upheaval.
The People’s Daily commentary echoes liberal economists and politicians who argue for a continuous push toward “kai fang,” or opening up, of China’s economy and society along the lines of World Trade Organization tenets. Their argument is based on the fact that if the Chinese economy does not produce at least 8 percent growth per annum (based on at least $40 billion of annual foreign direct investments), the urban unemployment problem could rise to levels that would jeopardize social stability.
This liberal school, which hitched onto the WTO bandwagon under the patronage of former Prime Minister Zhu Rongji, believed China should aim to become a developed economy in 50 years’ time. The People’s Daily commentary reflects this school of thought, which considers that a widening revenue gap – and hence some inequality – is indispensable in pursuing economic development.
China’s “socialist economists,” on the other hand, have begun to criticize China’s current rampant development, questioning the need to accumulate more than $700 billion of foreign reserves at a time when social imbalances are increasing at an alarming rate.
Senior officials within the State Council, Finance Ministry and the Chinese Academy of Social Sciences have begun to warn of the need for a more social approach to maintaining stability, emphasizing social justice – including the authorities’ battle against corruption – and redistribution to dampen widening disparities. The health minister’s criticism of the public service’s “profit-chasing” ethos is a reflection of this school of thought.
The Culture Ministry’s regulations, for their part, indicate that the authorities may encourage a more nationalistic, less liberal, less Western cultural model.
These signals point to the tension that currently underlies Chinese society. There is clearly a growing contradiction between the ideological tenets of the Communist Party and Deng Xiaoping’s philosophy that “to grow rich is glorious.” This ideology-versus-economics debate will ultimately determine the direction of China in the next decades, as social tensions increase in a society that is revolutionizing much faster than Western societies have in the past century.
This growing debate could accelerate in the lead-up to the 17th Party Congress in autumn 2007, at which President Hu and his team are expected to fully consolidate their power. Potential rivals of Hu could exploit this debate to challenge his power, especially if the Chinese economy falters or social stability deteriorates.
This socio-ideological debate is critical not only for China but also for the rest of Asia, where a new socioeconomic model of development may emerge to “complement” the continent’s expected rise this century.
As the winds of change sweep through China, it is this philosophical and social debate – and not the yuan revaluation or the Unocal debacle – that will ultimately determine the direction of China’s economy and society, as well as its “peaceful rise” and its continuous social revolution.
Asia and the world should pay more attention to this fundamental debate, which could also determine the outcome of Hu’s political position at the 17th Party Congress and hence the ultimate stability of Asia’s rising dragon.
(Eric Teo Chu Cheow, a business consultant and strategist, is council secretary of the Singapore Institute for International Affairs.)

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