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In this succinct, modest, and refreshingly clearheaded book, John Bryan Starr introduces to the uninitiated reader the background, the basic data, and the issues at stake in China's present, crisis-ridden present situation.
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In this succinct, modest, and refreshingly clearheaded book, John Bryan Starr introduces to the uninitiated reader the background, the basic data, and the issues at stake in China's present, crisis-ridden present situation.
As a first step toward understanding China, one can hardly do better than to spend some time with a good atlas. It is vital that we begin by understanding China's diversity, and a key element in that diversity is its geography.
Superimposing an outline of the United States on an outline of China shows us two important geographical similarities between the two countries. China, covering some 3.7 million square miles, is nearly identical in size to the United States, which covers just over 3.6 million square miles. The two countries are located at more or less the same latitude; New York and Beijing are at roughly the same latitude, as are New Orleans and Shanghai.
A topographical map, on the other hand, shows us important geographical differences between China and the United States. Only about a third of the United States is taken up with mountains and desert, and the remainder is reasonably flat and easily habitable; but in China, these proportions are reversed. The difference in the amount of land available for cultivation in the two countries is even more striking: 40 percent in the United States versus only 10 percent in China.
In any country, rivers serve as arteries for transportation and as sources of both irrigation and energy. Silting improves the fertility of river basin fields, but flooding destroys crops and houses and often claims lives. The major river systems on the North American continent run from north to south, while China's three major river systems flow from west to east. The northernmost is the Huang He (Yellow River), which runs for more than three thousand miles from the western territory of Tibet to its mouth in Shandong Province. The river takes its name from the color of the extraordinary amount of silt it carries, deposits of which continuously raise its level; it now flows well above the level of the North China plain and is contained between high dikes.
The second major river system, the Yangzi or Changjiang (Long River), also originates in Tibet. It is somewhat longer than the Yellow and has ten times the discharge. It is navigable by oceangoing ships from its mouth near Shanghai as far upstream as the city of Wuhan. About three hundred miles upstream from Wuhan lies the very large and controversial Three Gorges Dam. When fully operational in 2011, the dam will extend the navigability of the river to the city of Chongqing, produce some 100 terawatt hours of hydroelectric power, and regulate the flow of the river to control downstream flooding.
The Xi Jiang (West River) in Guangdong Province, the third of China's major river systems, is the shortest of the three, flowing 1,650 miles before merging with the Zhu Jiang (Pearl River) in the delta, at the mouth of which are located Guangzhou (once more familiarly known to Westerners as Canton), Hong Kong, and Macao.
China's most fertile agricultural regions are in the deltas of the Yellow, Yangzi, and West rivers. A fourth area of high fertility is along the upper reaches of the Yangzi River in the Sichuan basin, just south of the center of the Chinese landmass.
A striking difference between the North American and the Chinese landmasses is found in the nature of their western borders. In the United States, of course, it is an ocean coast, while in China it is marked with mountains, plateaus, and deserts. This difference accounts for major dissimilarities in the prevailing climates of the two landmasses. America's weather is governed by the movement of the jet stream, carrying moisture-laden Pacific storms across the continent. China's weather is determined by monsoon winds that between December and March blow northwest to southeast; coming from the Siberian landmass, the air crossing the northwestern provinces is very dry and provides little rainfall. Then, during the summer months from April to November, the monsoon winds reverse themselves, and now moving across the South China Sea, they are heavily laden with moisture, which descends as rainfall on China's southeastern coast; the winds are relatively dry by the time they reach the northwestern provinces. Annual rainfall on the southern coast exceeds seventy-five inches, but along the Mongolian border, it is no more than five inches.
Temperatures along the southeastern coast of China are moderate enough even in the winter that there is a year-round growing season, and as many as three crops of rice can be harvested. North of the Great Wall, by contrast, the growing season is only 140 days, and farmers consider themselves fortunate to harvest a single crop of spring wheat.
Energy resources and raw materials are somewhat more equally distributed across China than is its scant supply of agricultural land, for coal is found in substantial quantities across the eastern half of the country as well as in Xinjiang, while principal onshore oil fields are located in Gansu, Xinjiang, Shanxi, Sichuan, and Heilongjiang.
The distribution of China's population accords closely with the location of fertile soil and adequate growing seasons. Approximately 75 percent of the population lives on 15 percent of the landmass, being most heavily concentrated in the fertile river basins, where densities in excess of two thousand people per square mile are not uncommon. (This compares with a population density of fewer than four hundred people per square mile in the northeastern United States, the most highly populated area.) Compared with the river basins, western China is sparsely populated, but even these wide-open spaces have a fair number of people. The autonomous region of Xinjiang, China's largest province, is also the country's least densely populated, with some twenty-six people per square mile. (By comparison, Wyoming and Alaska have five and one per square mile, respectively.)
Nearly six hundred million people—45 percent of the Chinese population—reside in China's 570 cities, and the density of the network of these cities generally conforms to the pattern of population density shown in the map. This is a more even distribution than is the case with many other countries at a comparable level of economic development, and for three distinct reasons.
As the territory over which China's sovereignty extended began to expand as early as the third century B.C.E., the central government established administrative seats from which its officials exerted control over the populace. At the beginning of the nineteenth century, a network of some two thousand cities and towns covered all of what we now think of as Chinese territory, with, at the center of each, a walled compound housing the local representative of imperial authority. Each administrative seat was part of a hierarchy organized according to the respective ranks and positions of the imperial officials. Beijing, the imperial capital, stood at the apex of this hierarchy, provincial capitals formed its mid-levels, and county seats formed its base.
A second reason for the rise of urban aggregations in China was commercial. The exchange of agricultural goods and handicraft products and, subsequently, the exchange of both of these for manufactured items led to the rise of itinerant merchants, moving periodically from village to village, and then to a whole stratum of society devoted entirely to commerce. While some villages were centers of commercial activity only occasionally, others, by virtue of their locations, proved more durably convenient for marketing purposes. Market days in these villages became more frequent; eventually the markets became permanent. Thus was created a hierarchy of commercial centers that was integrated with, but at the same time distinguishable from, the hierarchy of administrative centers.
Whereas the administrative centers were laid out from the topdown in a reasonably orderly fashion so as to exert imperial control as uniformly as possible over China's hinterlands, the network of market towns grew naturally from the bottom up. The former were called cheng, a word that also means "wall" and that conjures up an image of a formally laid-out and enclosed urban space; market towns were called zhen, which connotes an outpost or a garrison without a formal layout or walls. Administrative centers were large—the smallest had a population of between three and ten thousand—while the market towns were much smaller, the lowest ranking among them being mere hamlets of as few as five hundred people, half or more of whom were full-time farmers.
The third force that gave rise to urban agglomeration in China came much later in the country's history and resulted from the government's unsuccessful effort to prevent or at least to limit foreigners' commercial and cultural contact with China. One result of the series of defeats that the Chinese endured in the modern period at the hands of Westerners superior in modern armaments and the tactics to employ them was that for the first time in its history China was forced open to the influence and influx of non-Chinese. Because Western nations were themselves in rivalry with one another for slices of what came to be called the Chinese melon, the Chinese used this rivalry to their advantage in order to restrict the points of Sino-Western contact to a few locations called treaty ports. Unlike administrative and market towns, treaty ports were part of neither a hierarchy nor an effective network. To the extent that the Chinese government was able to control their designation, they were situated where contact between Chinese people and nefarious foreigners would be minimal and easily controlled. To the extent that Western powers succeeded in imposing their preferences, the treaty ports sprang up where Western entrepreneurs found maximal ease of access to what they sought in China: cheap labor, cheap raw materials, cheap maritime transport, and abundant consumers.
Today even the smallest of China's 570 cities seem very large to Americans; at the other end of the scale, 170 cities in China have more than one million people. There are only nine cities with more than a million people in the United States.
China is by modern standards inadequately interconnected, with less than 1.6 million miles of highways and roads, about 85 percent of which are paved—roughly half the highway network in the United States. Moreover, the roads are unequally distributed: dense in China's eastern provinces and sparse in the west. About three-quarters of the country's freight traffic and more than 90 percent of its passenger traffic are carried on these roads and highways, and highway construction is a high priority in the country's economic development program. Close to a hundred thousand miles of new highway,much of it at the expense of China's limited supply of arable land, are being added annually.
The rail network covers about forty-eight thousand miles, 40 percent of which is double tracked. (The United States currently has a rail network three times that size.) This rail system carries about 35 percent of the country's freight and passenger traffic (coal accounting for nearly half the freight). As China's economy expands, its railways are operating at or close to capacity and are meeting less than 60 percent of the demand for rail transport. Major construction is under way to add six thousand miles of track to the system. The largest of these projects, a second north-south rail corridor connecting Beijing and Guangzhou and paralleling the existing line to the east, was opened to traffic in 1996. Building high-speed rail lines connecting China's major cities is a current priority. Nonetheless, projections suggest that the railroad system's share of passenger and freight traffic will decline to about 30 percent each over the next fifteen years, with highways and airlines attracting away passengers and trucking absorbing the difference in freight traffic.
China's system of navigable inland waterways, both rivers and canals, is nearly twice as long as its rail network. About 12 percent of freight traffic and 1 percent of passenger traffic move on inland waterways.
The twelve hundred domestic commercial air routes in China (a number that shows an increase by a factor of six in the thirty years since the economic reforms began) now cover about a third of the distance covered by highways, though the volume of air transport remains small. Until the mid-1980s, air transport was handled by a single state-owned corporation, the Civil Air Administration of China (CAAC). Between 1985 and 1995, CAAC was broken up into more than a dozen local companies, which have taken over domestic and some international routes; CAAC, operating under the name Air China, is now an exclusively international airline. A shortage of equipment and trained personnel has hampered the expansion of air transportation, which in any case has a dauntingly bad safety record. Currently, less than 1 percent of China's passenger travel and a tinyfraction of its freight movement are completed by air. As with the network of roads and highways, so with waterways, railways, and air routes: eastern China is well linked; western China is much less accessible.
Mountains and deserts rendered interaction with China's neighbors to the north and west problematic throughout the nation's history, and for most of that time, the ocean on the east was also a barrier to, rather than an avenue for, interaction. Capable of an autarkic existence, China cut itself off from contact with the outside world for much of its long history. Exceptions to this habit of isolation are seen with the expansion of maritime trade during the Tang and Song dynasties, in the tenth and eleventh centuries, and with the opening of the overland Silk Road, connecting China to central Asia and the Middle East, during the Yuan dynasty in the thirteenth century.
In the nineteenth century, the European nations, Japan, and the United States began to push on China's closed door. They initially came to buy tea and silk; later they began to think of China as a potential market for Western manufactures and a source of inexpensive labor to produce those goods. Almost all the intercourse into which China was reluctantly forced took place at ports on the eastern littoral, a pattern that was revived when China rejoined the world economy in the late 1970s. The preponderance of China's now extensive interaction with the outside world occurs in the major coastal cities that were once treaty ports—Tianjin, Dalian, Shanghai, Fuzhou, Xiamen, and Guangzhou. To be sure, there is cross-border economic interaction with Russia and the former Soviet Central Asian republics to the north and west and with Myanmar and Vietnam in the south. But this economic activity pales by comparison with the volume of transactions initiated in the coastal provinces.
In ethnic terms, the Chinese population is unusually uniform. Despite great cultural differences among various groups, more than nine-tenths of the population consider themselves of the same Hanethnicity. The remaining population is divided among fifty-five distinct minority nationalities, each with its own language. This small fraction of the total population, however, inhabits nearly two-thirds of the Chinese landmass, including northern, western, and southern China.
Beneath the ethnic uniformity of the Han Chinese population lies a strong sense of local loyalty that is reinforced by language, cuisine, and a remarkably persistent regional stereotyping. The Chinese term difang guannian, best translated as "sense of place," has great importance in the individual Chinese psyche, despite the homogenizing tendencies of a rapidly modernizing society. Ask an American where he or she is from, and you are likely to get some variation of a current zip code as an answer. Ask that same question of a Chinese, and you are likely to receive an answer that will call into question your command of the first lessons of elementary Chinese.
"Where are you from?" I have asked a new acquaintance. "I am from Shanghai," comes the answer. "Shanghai is changing very rapidly," I respond. "When is the last time you visited there?" "I've never been to Shanghai," he replies, and I wonder where my simple conversation went astray. As it turns out, my Chinese is not at fault. My friend has in fact never been to Shanghai, nor has his father. It was his grandfather who was born in Shanghai and who left at the age of twenty never to return, yet at some important level, my friend continues to consider himself a Shanghainese and to identify with the fortunes of his "native" place.
Local dialects are an important ingredient of this persistent sense of place. All of the Han population share the same written language, and about three-quarters of them speak a more or less mutually intelligible version of the language that we Westerners often refer to as Mandarin. The remainder, who live in the southeastern quadrant of the country, speak mutually unintelligible dialects that adhere to seven major dialect groups and countless local subgroupings. The northern dialect, or Mandarin, forms the basis of what the Chinese call putong hua (the common language), which is taught in schools throughout China, is used as the medium of spoken communicationin official life, and until quite recently was the only language spoken in radio and television broadcasting.
Diet and cuisine vary by region in China, as they do in many countries, and constitute an important part of this strong regional self-identification. The most significant distinction is found between the northern provinces, where wheat is the principal grain, and the south, where rice predominates. Northern cuisine is best known for its flavorful sauces; southern cuisine features fresh ingredients with light, often sweet sauces that enhance the fresh flavors. South-central Chinese cuisine makes copious use of the red pepper. Fish and seafood figure prominently in the coastal provinces; pork and chicken predominate inland. In areas inhabited by Muslim minorities, lamb is the preferred meat. Throughout China, grain and vegetables are still the principal sources of protein, though with growing affluence a preference for meat is increasing, a trend viewed with concern by those worried about feeding a growing population on a limited supply of arable land.
The enduring regional identities have created over the centuries regional stereotypes that Chinese people never abandon. As is the case in other parts of the Northern Hemisphere, northerners in China are often thought of as reserved, formal, and aloof; southerners, by contrast, are seen as more outgoing, volatile, and spontaneous. Residents of Beijing, like those who live inside our Washington Beltway, have a reputation for being highly political and power seeking; like New Yorkers, people from Shanghai consider themselves, and are considered by others, sophisticated, cosmopolitan, and managerially capable. Residents of Guangzhou are often characterized as having a highly developed commercial sense; natives of the south-central provinces of Sichuan and Hunan, perhaps because of their peppery cuisine, are called hot-tempered and impetuous.
The People's Republic of China is divided administratively into twenty-two provinces and five so-called autonomous regions, where the majority of the population is non-Han. In addition, there are four directly administered cities—Beijing, Tianjin, Chongqing, andShanghai—which with their surrounding counties are treated, for administrative purposes, as equivalent to provinces. Finally, there are the Hong Kong and Macao special administrative regions. The provinces are divided into prefectures, of which there are 333, or about 10 per province. Prefectures in turn are divided into counties, of which there are just under 3,000 nationwide, and cities. Under the supervision of the county governments, rural political and economic administration is conducted at the level of the township or town. Each county has, on average, some two dozen townships and towns, with a national total of 40,000 townships and 20,000 town governments. There are just under 800,000 village governments, the lowest level of rural administration, or about two dozen per township. The average village population is a little over 1,000, though the villages vary significantly depending on whether they are located in densely or sparsely populated regions.
Translating China's geographical inequalities into economic terms, one begins to sense the significance of regionalism in China today. Consider the data in Table 2 on economic output in coastal, central, and western China. They show that the significant advantages enjoyed by the coastal region are long-lived. The table also confirms that the coastal region, with a very substantial lead in foreign investment, is set to widen the gap in the years ahead. The distinction between coastal China and the rest of the country is obvious, but the lead of the center over the west is less clear-cut. The output of foreign-invested firms is significantly higher in the central provinces, and per capita gross domestic product is slightly higher. On the other hand, the average growth rates in all three regions are barely distinguishable.
Were we to disaggregate the data in Table 2 to consider individual provinces, we would see that some provinces and cities have altered their relative positions significantly between 1952 and 2007. The southern coastal provinces of Guangdong and Fujian, for example, stand out as late bloomers, while provinces in China's northeastern Rust Belt have slipped significantly.
The information in Table 2 substantiates the hypothesis that the policies of the economic reform period have caused the influence of China's geographical inequalities to reemerge. Before, development policy in China operated according to a different logic. Mao Zedong's first principle of economic development was egalitarianism. Mindful of the regional differences and geographical inequalities, he argued that resources should be preferentially allocated to the poorest regions, allowing them to develop to the level already achieved by the richest; only then would the richest regions be encouraged to move forward, and the pace of their development would be kept to a rate that could be matched by China as a whole.
The reform policies inaugurated in the late 1970s shifted away from Maoist egalitarianism. Deng Xiaoping and his like-minded colleagues believed that egalitarian development for China was inevitably development at an unacceptably slow pace. Arguing that the Chinese people could not be persuaded to delay gratification any longer, the reformers adopted a policy of building on the best. Resources once devoted to developing China's poorest regions were reallocated to its most promising regions—that is, the coastal provinces.
Moreover, the reform policies themselves, substituting market forces for central planning in the national economy, gave a significant advantage to the well-endowed coastal regions, since they favored areas that could generate capital through agricultural surpluses, or had surplus labor with skill levels appropriate to new industrial processes, or had access to domestic and foreign markets in which new products could be sold, or, finally, could develop global connections to potential sources of investment capital. The coastal provinces possessed all these characteristics; the provinces in central China, some of them; and the poorest provinces in western China, few, if any. So the coastal provinces, perfectly positioned to take full advantage of the policies of market reform and opening to the world economy, benefited accordingly. As we shall see, the central provinces have only recently begun to be able to take advantage of the reform policies, and the western provinces are still unable to do so. While it is useful to think of coastal China as a single, well-endowedeconomic region, it is important to understand that its provinces are rivals for scarce resources, particularly as regards their foreign economic relations. As is clear from Table 2, foreign investment is concentrated almost exclusively on the coast, and many of the coastal provinces have been disproportionately successful in cultivating economic ties with a specific foreign nation; as a result, after two decades of growth one sees a pattern that looks like the spheres of influence into which foreign powers carved China a century ago.
Hong Kong is the principal source of outside investment in China, contributing almost 40 percent of the $75 billion placed in China by external investors in 2007. These Hong Kong investments are heavily concentrated in Guangdong Province. Taiwan is contributing just over 2 percent, according to 2007 figures, much of it in Fujian Province. Shandong Province has been especially successful in attracting South Korean investors, while foreign investment in the northeast—in Heilongjiang, Jilin, and Liaoning provinces—is dominated by Japan. U.S. investment in China in 2007 amounted to just over $2.6 billion, or about 3.5 percent of the total, and is dispersed widely across the country.
These linkages differ in important ways from the spheres of influence in nineteenth-century China. First, the nations most active in "carving the Chinese melon" a century ago—Britain, Germany, and France—are not the most important investors in the Chinese economy today, nor have they concentrated in particular areas. Second, the spheres of influence were created by means of decisions made by foreign governments and firms, whereas in the current situation, Chinese economic actors are as involved in soliciting investment as the investors are involved in selecting the areas of China where they will invest.
This brief geographical foray gives us a background for trying to understand some of the major issues with which China's political and economic systems must contend in the near term. One of them involves that critical fraction that will determine China's ability torealize its economic potential, the numerator being food and water supply and the denominator, population. A second set of issues concerns energy resources—how they will be developed and the effect of that development on the environment of China and that of the world. A third set of issues arises from the consequences of China's very rapid economic growth: Will development result in greater equality or greater inequality in the standard of living of the country's 1.3 billion people?
Copyright © 1997, 2001, 2010 by John Bryan Starr
|II||Patterns from the Past||42|
|III||China's Political System: The Party-State and the Power Grid||58|
|IV||China's Economy: Who Owns What, Who Works Where, and Who Makes the Decisions?||78|
|V||The Chinese Armed Forces||97|
|VI||Sources of Rural Discontent||114|
|VII||China's Cities: Unemployment, Corruption, and Inflation||134|
|VIII||The Centrifugal Forces of Regionalism||149|
|IX||The Challenge of Environmental Degradation||167|
|X||One Billion Plus: Controlling Population Growth||183|
|XI||Human Rights and the Rule of Law||197|
|XII||Intellectual Freedom and Chinese Education||213|
|XIII||Artistic Freedom and China's Contemporary Culture||229|
|XIV||Hong Kong: Beyond 1997||246|
|XV||Democratization on Taiwan: Model or Rival?||266|
|XVI||China's Foreign Relations||287|
|Conclusion: China in the Next Century||305|
To the limited extent that Westerners pay attention to what is going on beyond their shores, China commands a disproportionate share of that attention. Moreover, those of us who have some knowledge of what is going on in China tend to have strong feelings about the country, acting as cheerleaders for its successes and harsh critics of its failings. We find it difficult to be indifferent.
There has been a great deal of good news coming out of China in recent years. China has one of the world's fastest growing economies. Indeed, there are those who predict that, at its current rate of growth. China's will be the world's largest economy by 2040, surpassing those of Japan and of the United States. Economic growth has substantially improved the standard of living for most if not all Chinese people. Rural incomes are three times what they were in 1978, the beginning of the current period of economic reform, and urban incomes are up nearly five times. Economic liberalization has been accompanied by some relaxation of the tight control the Chinese government maintained over its population. Most of the Chinese people are enjoying substantially more freedom from government interference in their lives than they did fifteen years ago.
There is also bad news. American enthusiasm for an opening and reforming China ten years ago had the unintended effect of filtering out much of the bad news, but that filter ceased to function when, on the night of 3 June 1989, tanks clattered through Beijing, clearing the streets of demonstrators and killing many hundreds of them in the process. Since then we have been attentive to the repressive measures taken against its own people by a government deeply concerned about the consequences of political instability.
Our attentiveness to China's shortcomings in governance was amplified with the collapse of the Soviet Union in 1991. The demise of what Reagan had called "the evil empire" and the emergence of a new democratic state from its ashes made the resilience of authoritarianism in China all the more repugnant. To those of us with a Manichaean streak, who like identifying a principal adversary, the shoes just shed by the Soviet Union seemed to fit China perfectly.
Economic success has made the Chinese government--and perhaps also the Chinese people--much less malleable and easy to deal with than they once were. They have run up a trade surplus with the United States second only to Japan's. They demand full membership in the world economy but balk at playing by the rules. Recently they have taken actions outside their borders that may be evidence of a dangerous new military expansionism on the part of Asia's largest power.
Complicating any attempt to resolve the contradictions that China presents us with is the fact that, with the death of Deng Xiaoping, the country passed a critical milestone in its recent history and is experiencing all the uncertainties that accompany major change. A succession crisis is virtually inevitable. No socialist system has made a smooth transition following the death of its principal leader. China itself experienced a rocky changing of the guard when Zedong, leader of the Chinese Communist Party for forty years and of the People's Republic of China since the time of its founding, died in 1976. Having maneuvered his way through those rocky shoals, Deng tried three times to put in place a group of capable leaders whom he could trust to carry on his political program. By avoiding the top positions and by retiring early from the positions he did hold, he hoped to make himself thoroughly dispensable and thus easily and smoothly replaced. He failed on all counts. His trusted successors proved insufficient to the task. He had to abandon his efforts to retire to the distant role of eminence grise when student demonstrators called into question his authority and his legacy.
Any succession crisis is difficult to weather, but this one is particularly difficult for China, for it marks the end of a unique political generation, the generation of the leaders of the Chinese Communist revolution and the founders of the contemporary Chinese political system. Rapid change has been a permanent feature of China for the last half century. As a result, members of each political generation after Deng's have had very different lives, careers, and experiences. The people who make up those generations differ in training, perceptions, connections, and aspirations,
Although Deng was not wholly characteristic of his generation, most of his revolutionary cohorts were born in China's hinterlands, ill-educated in a formal sense, and limited in their knowledge of and experience in the world outside of China. The next generation, born too late to have been active in the revolution and civil war, grew up in a China heavily dependent on the Soviet Union. They were educated in schools modeled after Soviet schools, they learned the Russian language, and many of them spent time studying or working in the Soviet Union. They are technologically adept, ideologically cautions, and instinctively bureaucratic. By the time Mao died and reforms began, they were late-middle-aged dogs who found the new tricks difficult to master.
The next generation had their lives and careers shaped by their participation in the chaos of the Cultural Revolution launched by Mao in the 1960s. It rendered many if not most of them at best skeptical, at worst highly cynical. As such, although they are significantly better educated and their opportunities to interact with the outside world were infinitely greater than those available to their elders, the new ideas they have encouraged did not engender great optimism in them. Having lost their idealism at an early age, they now find the materialism of contemporary China a comfortable fit.
The youngest generation has come to maturity since the post-Mao reform period began. It is made up of bright, brash, hardworking, and cosmopolitan people, but they are more self-interested than public-minded. Their goal is personal wealth, and that is best pursued in the rapidly expanding private sector. Devoting their energies to solving major problems in the public realm is out of the question.
Given the diversity of these generations, the transition period will surely be protracted. Unfortunately, there does not appear to be a group of capable, intelligent, honest, forward-looking, and enthusiastic political leaders waiting in the wings. But then, China is not the only country about which one can say that.
The purpose of this book is to look beyond the immediate situation and to explore three questions: What are the principal problems confronting China today? What is the capacity of the Chinese political system to deal with these problems successfully? And, given the answers to these two questions, how might the political situation play itself out in the near term?
My answers to these three questions, which I will elaborate on in the chapters that follow, are first that the extraordinary serious problems that China confronts would tax the capability of the strongest and most able of governments. But, second, the capacity of the Chinese government is severely diminished and its capability is weak. Hence, third, China's near-term future looks rather dark.
At least a dozen critical problems face China's leaders. Each of them threatens the nation's ability to continue on its current trajectory of economic development. Some of them threaten the viability of the state itself. Four of them affect primarily the one-quarter of the Chinese population that lives in cities. Three of them affect primarily the remaining three-quarters of the population that lives in the towns and villages of China's countryside. Three are problems that affect Chinese society as a whole, and the others concern China's relations with the outside world.
Overheated economic growth is the first problem that has affected primarily China's urban population. By most assessments, the overall rate of growth of the Chinese economy from mid-1992 through the end of 1994 was unsustainably high. It was targeted at 6 percent in 1994 but came in at more than double that rate by year's end. By the end of 1995 the rate had slowed to a somewhat more reasonable 10.2 percent: anything more than 10 percent is high in itself, and if the figure is disaggregated, the growth rate in certain sectors was many times that. State-owned enterprise in 1995 grew at a modest rate of 4 percent, but output from collective enterprises grew at 15 percent, and from privately owned enterprises at 52 percent; foreign-invested private enterprises grew at a rate of 37 percent for the year. Stringent measures adopted in the summer of 1993 to try to rein in the economic growth rate have met with limited success and widespread resistance.
Closely related to these rapid growth rates is a second problem, that of high inflation. After more than thirty years of a nearly flat cost of living, inflation began to mount sharply in the late 1980s. It was brought under control in part through a retrenchment program put in place in late 1988 and in part through the slowdown caused by economic sanctions imposed by foreign powers outraged at the massacre of students in Tiananmen Square in June 1989. When the lid was removed again in the early 1990s, the economy and foreign contacts burgeoned and inflation once more became a serious issue, particularly for the urban population, some of whom experienced rates in excess of 30 percent. In the past, a decline in purchasing power has been of enough concern to bring people out into the streets in protest demonstrations. Mindful of this danger, the government took steps to curb inflation and succeeded in cutting the rate in half in 1995. Avoiding recurrence of runaway inflation is a high priority for the authorities.
The third urban problem is the serious financial straits of most state-owned enterprises. More than half of the hundred thousand industrial enterprises owned by the government are losing money, some at a staggering rate. They are kept alive by government loans and subsidies that, in 1994, amounted to $28.7 billion (equivalent to more than a third of China's total national budget). So-called triangular debt--that is, money owed by state-owned enterprises to other state-owned enterprises--amounted to $71 billion that year (equivalent to one-third of the total output of the state-owned industrial sector). The government has avoided the obvious solution--allowing money-losing enterprises to go out of business--because it would put so many workers out of a job. It is a solution the government also avoids for ideological reasons. China claims to be a socialist system "with Chinese characteristics." Whatever its characteristics, a socialist system that closes down its state-owned sector risks becoming an oxymoron.
Employment-related issues are the fourth problem the Chinese state faces in the urban economy. The official unemployment rate stands at 3 percent and is not in itself a cause of concern, but concealed unemployment is. Because of financial problems, many state-owned enterprises have put their workers on reduced hours or temporary furlough. Underemployment of those who remain on the job is a related problem. One reason for China's financial crisis in the state sector is that its workforce is excessively large. Estimates vary, but they suggest that up to one-fifth of the state-sector workforce is superfluous to production processes. Enterprises are attempting to downsize gradually; about two million workers lost their jobs in 1995. While the private and collective sectors are growing rapidly, they cannot absorb all those who are jobless or underemployed.
The most serious employment-related problem facing municipal authorities concerns the more than 100 million workers who have come from the countryside into China's cities in search of more lucrative work. These floating workers are hired on a short-term basis, most frequently as day laborers in construction. Because they are not official residents of the cities they are living in, they are not entitled to housing or social services and tend to camp out wherever they can find shelter--often in exurban shantytowns.
As a large group of people outside the organizational web that controls the population, the floating workers are a novel anomaly in China. Municipal officials look on them as a dangerous necessity. On the one hand, they are needed to do the unskilled labor that even the unemployed among urban residents spurn as too hard and too ill-paid. On the other hand, they are blamed for an increase in violent crime in China's cities, and it is assumed that they will be a dangerous source of political unrest if they can no longer find regular work.
There are serious problems in the countryside as well. First among them is the growing gap in the standard of living between urban and rural China. Average urban income has always exceeded that in the countryside, but during the early years of reform the gap began to close. Beginning in the mid-1980s, the gap widened once again and is now as large as it has ever been, and, worse, with the agricultural economy growing at about 3 percent and the urban economy growing at more than 20 percent, it is certain to widen still further. The difference between rural and urban incomes used to matter very little, since country people were only dimly aware of living aware of living conditions in the cities, and even if they knew that life was better there, they were prevented by the government from moving. Neither of those conditions prevails today.
A second source of dissatisfaction in the countryside is excessive taxation. Although taxes are nominally restricted to 5 percent of household income, the local governments' need for additional revenue leads them to impose every imaginable kind of fee, fine, toll, and levy so that peasant households are regularly paying between 15 and 50 percent of their income to the local authorities. This would be unsatisfactory to most citizens under any circumstances, but it is especially galling here because a significant portion of that revenue ends up being used by local officials in ostentations personal expenditures.
To add insult to injury, local governments frequently experience cash-flow problems that interfere with their ability to pay farmers for the commodities they have contracted to sell to the state. Farmers bring their harvested crops to state purchasing depots where, instead of cash, they are given chits, or "green slips," redeemable for cash when the cash flow improves; meanwhile the money that would have gone to pay the farmers for their grain is often invested by entrepreurial officials in speculative ventures that promise a large return. These unredeemed green slips are a major source of dissatisfaction in the rural communities and have led on many recent occasions to demonstrations--occasionally violent ones.
Then there are issues affecting all Chinese people, whether they live in the city or the countryside. Two are interrelated: How will it be possible to feed a growing population on a rapidly shrinking amount of arable land? The government is dealing with a fraction, the numerator of which is agricultural production, the denominator of which is population. Its task is to increase the numerator and keep the denominator as small as possible.
The government's population-control program, or "one-child policy," addresses the denominator. And though the government credits the policy with reducing the rate at which the population is growing, the average family in China still has 2.3 children; the one-child policy is only fully effective when draconian measures are used to enforce it, measures that serve to alienate further a population already highly dissatisfied with its government. At its current rate of growth, the Chinese population will reach 1.5 billion by 2015, having trebled in less than a hundred years.
As for the numerator, grain production currently stands at 480 million tons per year. That is a substantial increase over what was being produced forty years ago, but the growth rate in production has begun to slow. Per-acre yields are already impressively high, and many observers are skeptical that they can be raised much higher. Meanwhile, arable land, already a scarce commodity in China, is being taken out of cultivation with alarming speed. China feeds 20 percent of the world's population on less than 7 percent of the world's arable land; recent economic development has resulted in substantial quantities of this land being taken out of cultivation and used for factories, roads, and houses. Finally, like that all of developing societies, the Chinese diet is evolving. As the living standard improves, consumption of meat and eggs is increasing, raising the demand for grain. Taking all these factors into account, pessimists forecast a grain deficit in 2030 so large that it will be impossible for world grain exporters to fill it.
Another grave issue that affects not only the Chinese population but the rest of the world as well is that of environmental degradation. Two-thirds of all factories in China are polluting the air and water in violation of the state's environmental regulations, which are hardly as strong as in Western countries. Nine-tenths of Chinese cities do not meet Chinese clean-air standards. A quarter of China's freshwater is polluted, and 90 percent of the water flowing through cities is impotable. At its current rate of economic growth, by 2025 China will produce three times the amount of greenhouse gases currently produced in the United States.
As though this domestic agenda were not a sufficient challenge, China has problems in its interaction with the outside world. The most immediate challenge is to handle the transfer of Hong Kong's sovereignty from Great Britain to China in such a way as not to disturb the delicate equilibrium on which the remarkable success of that territory rests. Over the period since the Sino-British agreement on Hong Kong was signed, considerable rancor developed on both sides; reactions in Hong Kong to the Tiananmen Square massacre in 1989 fundamentally altered China's view of that city and Hong Kong citizen's view of their future. These changes are expressed in some of the specific provisions that filled in the vague outline of Hong Kong as a Special Administrative Region contained in the Joint Declaration of 1985. Hong Kong has thrived, many argue, because of its government's light hand on the tiller of the economy. Will the Chinese government prove willing and able to maintain an equally light hand? It is normally heavy-handed in its own domestic affairs; even if it were willing, will it be able to lighten its touch in dealing with Hong Kong?
The relationship between Taiwan and the mainland is closely related. Hong Kong is intended to be a model of the Chinese government's ability to keep the promise of "one country, two systems" that it has extended to Taiwan as well. A successful transition in Hong Kong, so the argument goes, will arouse confidence in Taiwan that, under Beijing's rule after reunification, its political, economic, and social systems will remain unchanged.
Beginning in 1987, the Taiwan government began a process of opening up contact with the mainland. That process has eventuated in a sizable amount of trade and investment closely linking the two economies. Informal talks between the two sides aimed at facilitating their relations began in 1993, but the process of coming together was interrupted in 1995 by a strong reaction on the Chinese side to what the Taiwan government calls its "flexible diplomacy": what the Taiwan authorities depict as efforts at securing informal recognition of Taiwan's standing in the world as a political and economic power, the Beijing authorities construe as moves in the direction of a declaration of independence, which is absolutely unacceptable to them, and they have pledged to use force to ensure that it does not come about.
All too closely intertwined with relations across the Taiwan Strait is China's relationship with the United States. With the Shanghai Communique in 1972, the United States attempted to recuse itself from this entire issue, but in the ensuing years, politicians in all three capitals have worked to prevent that from happening. Chinese leaders have sought U.S. assistance in bringing Taiwan to accept their terms for reunification. Taiwan authorities have sought U.S. endorsement of their claim to being other than merely a province of China. And some Americans, mindful of the special relationship between the United States and Nationalist China, argue for a revival of American guarantees for Taiwan's interests.
The Taiwan question is but one of a series of conflicts between Beijing and Washington that in 1996 brought Sino-American relations to a low point reminiscent of the near rupture of relations following the Tiananmen massacre in 1989. Americans are repulsed by the Chinese government's violation of the human rights of its citizens and alarmed by the mounting deficit in U.S. trade with China. Chinese see the United States as reviving a Cold War policy of containing China and thwarting its taking a deserved place as a nascent world power.
The last foreign-policy issue with which the Chinese government must deal is its relationship with Japan. What is now a complementary economic relationship is very likely to become a competitive one as China's economy expands. China's armed forces are growing and flexing their muscles, and Japan feels pressure to respond in kind. Its doing so will confirm long-standing Chinese concerns over a revival of the Japanese militarism of which China was the victim in the first half of the twentieth century. In short, the two nations must come to a new strategic and economic understanding that takes into account the altered circumstances in which they both find themselves at the turn of the millennium.