Capitalism in the Making
By Pico Iyer
One day Deng Xiaoping decided to take one of his grandsons to visit Mao Tse-tung.
"Call me Granduncle," Mao offered warmly.
"Oh, I certainly couldn't do that, Chairman Mao," the awe-struck child replied.
"Why don't you give him an apple?" suggested Deng.
No sooner had Mao done so than the boy took a healthy bite out of it, then happily chirped, "Oh, thank you, Granduncle."
"You see, "said Deng, "what incentives can achieve."
--A story told around Peking
In the once sleepy fishing village of Shenzhen, a new golf course stretches out from the Honey Lake Country Club. High-rise apartment buildings tower above newly created avenues, and a 48-story trade center is nearing completion. Scores of foreign-owned operations, including those of such giants as PepsiCo, Citibank and Sanyo, have streamed into the area, where a decidedly unsocialist billboard exhorts, TIME IS MONEY! EFFICIENCY IS LIFE! In the midst of those developments, many peasant families own three-story houses furnished with stereo systems, refrigerators and color TVs (sometimes two per family so that parents can watch one program and children another). When Deng Xiaoping, 79, China's de facto leader, paid a visit in January, he asked one resident how much he earned. Upon hearing the reply (more than $300 a month), the leader observed, with as much amusement as amazement, "You make more than I do."
In the outskirts of Canton, the ballads of Country Singer Kenny Rogers boom across a small store where four youngsters are huddled over a Space Invaders screen. In the streets of Peking, long-haired young men in dapper trenchcoats walk arm in arm with girlfriends in high heels. Near by, in neon-lit consumer emporiums, grizzled countryfolk peel off huge sheaves of banknotes to buy TV sets to take back to their villages. The Jianguo Hotel is a replica of the Holiday Inn in Palo Alto, Calif. Not far away, Maxim's de Pekin serves haute cuisine at $70 a head. The regiments of bicycles that clog the streets have been joined by Mercedes sedans and Japanese-made Hino tourist buses. Earlier this month, the Peking Daily (circ. 500,000) ran a photo of an attractive woman and her family standing next to a new Toyota. Thanks to an income of more than $18,000 last year, Chicken Farmer Sun Guiying had just become the first peasant in the 35-year history of the People's Republic to buy a private car.
These are but a few examples of how dramatically China has changed since a U.S. President last came to visit. The China that Ronald Reagan will see bears little resemblance to the drab and sullen nation glimpsed by Richard Nixon in 1972 and Gerald Ford three years later. The giant billboards that once displayed Mao's quotations now bear gaudy advertisements for cameras, calculators and computers. The farming communes of the countryside, that ubiquitous trademark of the Maoist republic, have in effect been dismantled. Like the imposing fac,ade of the main gate to Peking's Forbidden City, which is shrouded by scaffolding, all China is undergoing a radical facelift.
In the eight years since the death of Mao, Deng has installed the revolutionary notion that people produce more if offered incentives. Without upheaval or fanfare, without blatant feuds at the top or bloody purges at the grass roots, Deng and his pragmatic colleagues have brought about the most sweeping reforms ever attempted under the banner of Marxism. They have transformed the nation's agricultural system, awakened its cultural life and quintupled the income of millions of peasants. Their ambitions, moreover, seem almost limitless: they aim to quadruple the gross national product, double the nation's output of energy, and raise per capita annual income from the present $300 to $800 by the year 2000. "Deng sees the Mao era as an interregnum between dynasties," notes a Western diplomat in Peking. "He sees his own epoch as the real beginning of the People's Republic."
As befits such grand expectations, the post-Mao leadership has also overhauled the structure of China's relations with the world. From the Daqing oilfields in the north to Canton in the south, from Shanghai in the east to sooty Lanzhou in the west, 1,600 foreign specialists are working to boost China's economy. Some 128 American firms have offices in Peking; this year trade between the U.S. and China will amount to $5.5 billion, a fiftyfold increase since 1972. Ten years ago, almost no Chinese were allowed to go overseas; today there are 10,000 students in the U.S. alone. Fifteen years ago, China kept only one ambassador abroad (in Cairo); today, with representation in 128 countries, China has become one of the world's most diplomatically active nations. Proclaimed Premier Zhao Ziyang during his triumphant tour of the U.S. in January: "China has opened its door and will never close it again."
Yet, as momentous as such developments are, they have so far touched only a fraction of the country. With a quarter of the world's people scattered across 3.69 million sq. mi., China is so vast and complex that even the most far-reaching reforms will take years to filter down to every farm, village and faraway province. Nor can any regime transform almost overnight a proud nation saddled with a 3,000-year history of turbulence.
Deng's regime has done little to eliminate corruption, repression or inertia, and has in fact given rise to some new problems. The swelling of riches in a few areas has made for inequity and envy. The open door has admitted a host of unhealthy and unwanted foreign influences. Many diehard Maoists, still entrenched in the bureaucracy or established in the military, have managed to resist, and even reverse, the new direction. Though China has, at last count, 1.1 billion people, its G.N.P. is less than half that of France (pop. 55 million). Above all, in its attempt to balance freedom with control, capitalist methods with Marxist assumptions, the present regime has often swung violently between extremes. After more than a century of shifts and countershifts, political twists and ideological turns, many Chinese are disenchanted and disoriented. They, together with their leaders, cannot help wondering how long the latest developments will last.
The basis of Deng's pragmatic philosophy is summed up in his oft quoted dictum "It doesn't matter whether a cat is black or white as long as it catches mice." The practical effects of that maxim have centered on the area in which Mao made his costliest errors: agriculture. During 25 years in power, Mao channeled the vast bulk of all investment into heavy industry, while neglecting to ensure a corresponding rise in food production. At the same time, he encouraged his people to maintain the country's explosive birth rate. Because of this, and a striking rise in life expectancy (from 40 in 1950 to over 60 today), China's population has risen by more than 500 million since World War II. That is roughly the equivalent of moving all the people of Western Europe and the U.S. into the already overcrowded Middle Kingdom.
Even before Deng effectively assumed power in January 1979, he began to experiment with a "contract" system of incentives for farmers. In just three years, that scheme boosted agricultural production in Sichuan province by 25% and industrial output by 80%. Encouraged by those startling results, Deng soon began replacing the Maoist commune, an unwieldy aggregation that often included tens of thousands of peasants, with a system of smaller economic units, sometimes no larger than a household.
Not only were farmworkers liberated at last from the cruel and often capricious authority of the "team leaders" who supervised the communes, they were soon given tangible inducements to work hard, earn more and live well. In 1979 Deng introduced an "agricultural responsibility system," whereby China's 800 million peasants could make contracts with the state to sell a fixed amount of produce at a set price each year. After that level was reached, the workers could then sell any surplus to the state at a markup of 50% or on the open market at whatever price they could get. To swell production further, Deng hiked the price the government would pay for grain by 23%, while urging farmers to supplement their incomes by raising vegetables, poultry or pigs on the side.
Almost immediately, the incentive system began to pay off. Between 1978 and 1982, according to official reports, agricultural production grew at a steady annual rate of 7.5%, while the average annual income for peasants doubled from $65 to $135. In South China some households are now bringing in more than $5,000 a year. Best of all, the new prosperity has produced a new resourcefulness. In Henan province, several groups of peasants banded together earlier this year to do what had long seemed unthinkable: buy their own ultralight aircraft for crop spraying. Buoyed by such success stories, the party Central Committee has promised that households may continue enjoying the fruits of the "responsibility system" until the end of the century.
Not surprisingly, the flood of new wealth has begun to produce a Chinese version of the affluent society. At the Xiang Jiang state farm near Mao's birthplace in Hunan province, which was renowned a dozen years ago for its spartan housing and inadequate sanitation, TV antennas now protrude from rooftops and pop music blares from tape recorders. Local Party Secretary Qiu Huaisheng proudly points out that "of the 200 households, 126 have bought TV sets and 112 own cassette recorders." Sometimes, however, the peasants' purchases, as well as their entrepreneurial skills, are both illicit and posilively profligate. A group of peasants in Fujian province pooled its resources to buy a dozen video recorders and a stash of blue-movie tapes. They then charged $5 admission for every showing.
Prosperity has come less sweepingly to the main cities. A few individuals have managed to form their own lucrative businesses (see box). But Chinese industries, thanks to their system of guaranteed payment and employment--the absence, in effect, of incentives--remain largely paralyzed by their traditions of featherbedding and low productivity. One possible solution is represented by the four coastal enclaves, including Shenzhen, that the government has designated as "special economic zones." These areas, set up to be thoroughfares for the free passage of foreign investment and ideas, have flourished so vigorously that the government plans to create 14 more, from Dalian in the far north to Zhanjiang in the far south.
Meanwhile, in city and in country, new fads and features from the West have begun to change the face and shape of the people. In Peking, women sometimes pay plastic surgeons $20 (half a month's wage for the average urban worker) to have their eyes enlarged, their eyelids folded or their noses straightened. Men think nothing of putting down $5 for a permanent wave. Others spend $5 for disco-coordinated aerobics classes with Oriental Jane Fondas like former Star Gymnast Qi Yufang.
After seeing its cosmetics sales soar last year by 31.5%, the Wangfujing Department Store, Peking's largest, carries more than 300 kinds of makeup; during a recent sale, Peking's No. 7 Clothing Factory sold off all its Western suits in three hours. Few people batted a mascaraed or folded eyelid last month when the China Silk Fashion Color Association announced its forecast in seasoned Parisian tones: "Sprightly beach colors and bronzes of primitive simplicity will be popular in China this spring and summer, with cheerful pastels taking over in the autumn and winter."
Such signs of trendy "me" generationism from the West are bound to disrupt a culture famous for both its antiquity and its insularity. As it has tried to yank itself into modernity while preserving its respect for history, to sustain simultaneously its dedication to progress and its devotion to the past, Deng's China--like contemporary Japan in its very different way--has often lost its balance.
The loser, say China's leftists, is all too often idealism. Tolerance, they believe, is encouraging decadence; capitalist practices and perks, they suspect, are tempting Chinese citizens to abandon the Maoist values of struggle, self-sacrifice and subservience to party in favor of such Western vices as self-interest, elitism and cynical moral pragmatism. Last year a Shanghai newspaper printed what it took to be the inspiring story of Zhang Hua, a medical student who lost his life while trying to save a drowning peasant. More than 1,600 readers wrote to the paper, many of them indignant. Was it not terrible, they complained, that a young man whose training cost the state thousands of dollars should give up his future on behalf of a 69-year-old man?
There are many other signs that Deng's innovative policy has begun to undermine the values of both history and ideology. Peasants are reluctant to join collective projects or to tend such communal needs as village irrigation when they can make more money by tilling their own fields. Self-sufficiency has prompted others to evade the law. To curb population growth, the government has forced women to use birth-control devices, agree to be sterilized or undergo abortions, while also decreeing that those with more than one child must lose 10% of their income for at least five years. Some affluent farmers, however, are no longer deterred by the financial penalty. As more and more young men have begun looking westward, enrollment in the once prestigious Communist Youth League, the party's junior partner, has plummeted. "People are now very pragmatic," observes a 27-year-old student in Peking. "They no longer care about ideology but are only preoccupied with personal wellbeing. The young worry about love and marriage, the workers about bonuses, the peasants about getting rich, and the intellectuals about going abroad. We've all become slick and sly."
Not to mention sexually audacious-- by Chinese standards. Last year, according to Chinese press reports, 700 of the 800 pupils at a Shanghai high school enjoyed subscriptions to Story, a tabloid filled with teasing tales of lechery and lust. Feng Bing, 17, a typical teenage inmate in a Shanghai reform school, told a visitor that he was committed to the institute for watching foreign movies. Later, his principal disclosed that Feng was actually found guilty of seducing twelve-year-old girls. Even premarital and unorthodox sex have come out into the open. "Many of the abortions we perform are on unmarried girls," says a Peking gynecologist. "A few weeks ago, I performed one on a 23-year-old worker. It was her third." A pedestrian on Shanghai's bustling Nanking Road may find himself solicited by tight-jeaned, leather-jacketed homosexuals.
Such developments have bolstered the suspicions of those who fear that free enterprise is ushering in some dangerous kinds of freedom. When Deng issued a routine warning against "bourgeois decadence" at the Central Committee plenum last October, middle-level cadres jumped at the opportunity to crack down. Deng Liqun, head of the party's propaganda department, launched scorching tirades against "obscene, barbarous and reactionary materials," and official party newspapers ran finger-wagging articles under headlines like WE WANT TO IMPORT JAPANESE COMPUTERS, NOT STRIPTEASE.
But in redressing the balance, the authorities soon went to extremes. As party officials tried to eradicate foreign imports from pornography to humanism, from Jean-Paul Sartre to Jonathan Livingston Seagull, much of the country was tightened to the point of suffocation. By December, the campaign against what came to be known as "spiritual pollution" seemed on the brink of turning into a full-scale and perhaps uncontrollable assault against all foreign matter. Intensely alarmed by that prospect, Deng instantly set about quelling it. Within a month, the leaders had quietly let the entire issue drop. By March, it is said, they had eased Deng Liqun into a powerless corner.
Yet the regime cannot easily cure the jadedness of China's 250 million citizens between the ages of 30 and 45 who became, quite literally, rebels without a cause. Millions of them passed through adolescence as Red Guards who looted stores, destroyed buildings and persecuted intellectuals, all in the name of Maoism. Only much later did they realize that they had been nothing but pawns in their leaders' power struggles. "We were scarred and disillusioned," recalls a 34-year-old former Red Guard who today works as an interpreter in a foreign bank in Peking. "After all the filthy politics and empty sloganeering, we had no lofty ideals left."
Even those who had no ideals to lose feel lost after three decades of watching the party line zigzag. Yihua (alienation) has become a fashionable buzzword on many campuses. "What kind of society do we have now?" is a catch phrase heard around the nation. Nor has the present government, with its constant revisions and fluctuations, helped answer that question. Earlier this month, the official party newspaper, the People 's Daily, first denounced the "poisonous legacy" of the left, then deplored the "moral laxity" of the right. As yesterday's hero becomes today's reprobate and tomorrow a rehabilitated hero, many grow wary and weary of all ideology. "All these negations of the negation are naturally baffling to us," says a 56-year-old painter. "In the end, you ask, 'What do I believe in? What should I believe in?' "
These questions are raised most urgently by the persistent victims of the political flip-flops: the 20 million Chinese who by virtue of being educated are considered to be "intellectuals." Though the new regime is undoubtedly less merciless than Mao's, it has shown a frightening propensity for relapsing into violent bouts of puritanism and dogmatism. In 1979 Deng released the country from the cultural straitjacket of the Mao era, admitting Shakespeare and Updike, Mickey Mouse and Muhammad Ali, the Beatles and the Boston Symphony. In the following year, however, he endorsed a brutal backlash. By 1981 leftist ideologues were publicly censuring Playwright Bai Hua, who had dared to let one of his characters ask her father, "You love your motherland, but does she love you?" The following month, Bai was given a national award for his poetry by the Ministry of Culture. When Bai wrote another play last year, he took the precaution of setting it in the uncontroversial past. Sure enough, however, King of Wu 's Spear and King of Yue's Sword was castigated for "attacking the present by explaining the past." Says another noted playwright: "The general attitude of intellectuals is wait and see. There are still gusts of wind. It will take time to cool down."
If the educated thinkers threaten the government with their novel ideas, the uneducated peasants alarm it with their abiding devotion to superstition. Last spring the official press reported a chilling revival of gruesome rural rituals. Fathers were burning their families to death in the belief that they would thus earn a short cut to heaven; charlatans were posing as "emperors" in order to win sexual favors from credulous country women. An epidemic of public rites of exorcism led to a series of grisly deaths. In one notorious incident, Party Member Liu Wenxue enlisted a self-styled witch to exorcise his wife, who had just received hospital treatment for heart disease. The witch proceeded to puncture the woman's nose with a knife, string her up to the ceiling and jerk her neck with a whip. Four days later, the patient died. Liu received only a mild official reprimand.
Most alarming of all, peasants who believe the birth of a female child is a sign of divine disfavor have revived the practice of drowning baby girls at birth. They have indirectly been encouraged by the government's preference for single-child families. In Xiaogan county of Hubei province last year there were almost four times as many boys as girls under the age of three.
The success of the government's economic programs has also given rise to a clutch of unprecedented problems. So many curious visitors want to witness the economic miracle of Shenzhen firsthand that the government has had to erect a metal fence, complete with patrol road and sweeping arc lights, along the length of the zone's 54-mile border. Workers in the cities, whose $40-a-month wage used to be twice as high as that of the average farmer, must now watch uneducated villagers take home $400 a month. Jealous, or "red-eyed," party cadres vent their resentment against prosperous peasants by resorting to extortion or exploitation.
The greatest discrepancies are those that separate party officials from the common man. Millions of families in cities like Shanghai are squeezed into apartments of 90 sq. ft. or less. Yet a party survey last November revealed that some 21,000 party officials enjoyed living quarters that, on an average, were six times that size. Since living space has become the nation's most precious commodity, those who control housing permits and those in the construction business wield inordinate power. Numerous blocks of apartments have remained empty for months while different groups bickered over how to divide the spoils. Some officials have made a killing in the confusion. Zheng Suzhi, party secretary in Zhejiang province, blithely canceled more than $200,000 in debts owed the state by some Hong Kong merchants, who had bought apartments in China. Zheng was rewarded by the beneficiaries with an invitation to Hong Kong and $6,000 worth of electronic equipment. When his racket was exposed, Zheng received no punishment beyond "discipline within the party."
This kind of double standard has become especially glaring ever since the government launched an unprecedentedly severe crackdown on crime last summer. Although 6,000 Chinese have been executed, high-level party leaders continue to escape prosecution, let alone imprisonment. "Is everybody really equal under the law?" asked the People's Daily. Earlier this year, the paper published the shocking story of Duan Yuanlai, former director of the Changde City Tobacco Plant. In 1969 he was charged with murder. A witness's false evidence won his acquittal. In 1978 he was charged with rape, but no action was taken when he adamantly denied the charge. In 1981 he was placed under investigation for corruption, but friendly officials refused to pursue the inquiry. The same thing happened two years later. Last year, after party leaders elected Duan a "model worker," he was caught raping another woman. Still nothing happened. Only when Peking's investigators discovered he had defrauded the state of more than $13 million, was Duan finally arrested.
The man in the street has no such luck. He is watched more closely than even his comrade in Moscow. Much of the spying is conducted by unofficial, unobtrusive snoops who belong to street committees, party-run groups formed to monitor local communities. These self-styled voyeurs and vigilantes, often middle-aged women, pry into such matters as whether a woman is illegally pregnant or whether a neighbor owns a cassette recorder (just in case the government chooses to make foreign tapes illegal). Officials of the Public Security Bureau, a national police force, can arrest a citizen at any time, using "administrative measures" that involve no lawyer, no court and no appeal.
One activity that leads to unpleasant investigation, and sometimes to forced relocation, is unauthorized contact with foreigners. Uniformed policemen armed with pistols stand guard over Peking's residential compounds for foreigners to keep unapproved Chinese visitors out. Observes Michel Oksenberg of the University of Michigan: "The previous totalitarian system under the domination of a single dictator is yielding to an authoritarian system with a collective leadership at the top. The instruments of totalitarian control have yet to be dismantled."
Six months ago, Deng launched what may be his final attempt to put his own mark, and some irreversible spin, on the history of China. Frankly admitting that it was "currently beset with many serious problems," the Communist Party leadership announced a three-year plan to review the ideological credentials of its 40 million members. The drive is designed in effect to purge the party of around a million unregenerate leftists, the majority of them ill-educated Maoists who have been desperately clinging to power.
The new "rectification" campaign requires all party members endure selfcriticism, attend weekly study sessions and digest three volumes of prescribed readings. All, ironically, are techniques pioneered and perfected by Mao (who once declared, "Selfcriticism is like eating dogmeat: if you haven't tried it, you don't know what you're missing"). But the reformers have taken care to avoid the mass rallies, shrill tirades and media fanfare of purges past. Says a Peking party functionary: "Deng doesn't want this to develop into a movement that will create chaos and instill fear."
For all its delicate handling, however, the campaign is sputtering. Much of China's leadership remains an immovable object of orthodoxy. The staunchest Maoist loyalists are within the 4.2 million-strong People's Liberation Army, whose upper ranks have become a stagnant gerontocracy. The youngest of the nine men on the Central Military Commission is 70; three of its four vice chairmen, like Chairman Deng, have passed their 80th birthday. Even the People's Daily has been moved to complain that "some of our leading cadres are like document-reading machines, speaking rather than acting and just sitting there unless they get a push from above."
But Deng is singularly adept at accommodating his opponents without ever letting them escape his control. In particular, he has deployed some deft dialectical sleight of hand to dismantle Maoism without entirely discrediting Mao. He can hardly afford to denounce the former leader too vehemently: 50 years ago, after all, Deng was a participant in Mao's epochal Long March, and some 25 years ago he was helping Mao administer brutal punishment to hundreds of thousands of intellectuals. But since he assumed power, Deng has published his belief that "every Chinese knows that without Chairman Mao there would be no new China." At the same time, he has not restrained the official press from indicting the shaping hand of Chinese Communism for "subjectivity, one-sidedness, hauteur and lack of humility." Most cunning of all, Deng has stretched the procrustean bed of Maoism to fit his own needs. By adapting such Maoist phrases as "seeking truth from facts" and "the mass line" to his own purposes, he has given the impression that he has been more faithful to "the thought of Mao" than the Great Helmsman himself.
Meanwhile, Deng has forced China out of the ethnocentricity developed over two millenniums of imperial supremacy and resuscitated by the almost religious xenophobia of Mao, while urging it to look outward for its economic models. "The Chinese have rediscovered that they are the center of the world," observes a Western diplomat in Peking. "They have put themselves in the position of being courted by everyone."
Most impressive has been the aplomb of Peking and its fresh, well-groomed teams of multilingual emissaries. China has succeeded in courting Pakistan without alienating India; it has wooed the moderate gulf states and also convinced the Palestine Liberation Organization that Peking alone understands its plight. Most important of all, China seems close to recovering sovereignty over the British colony of Hong Kong on its own terms. Last week, while visiting Peking for the twelfth round of talks, Foreign Secretary Sir Geoffrey Howe became the first British official to concede publicly that Britain will return the colony to China when its lease over the New Territories expires in 1997.
Remaining implacably nonaligned, China is happy to deal with all comers. This year it will boost its trade with the Soviet Union by 60%, yet receive $600 million in foreign investment from the U.S. Its foreign trade will exceed $40 billion, ten times as much as in 1968. To accommodate Western firms, Peking has passed new tax and patent laws. "We're talking megabucks," says a Washington official who has handled trade with China for several years. "American oil companies will be in China for the next 50 years."
But will the reformists? Only last month Deng told Japan's Prime Minister, Yasuhiro Nakasone, "In another five years, I don't expect to be alive." Adept at maneuvering behind the scenes (he has twice turned down the title of Premier), Deng has done everything possible to clear the way for his proteges. Eighteen months after he pledged his support to Mao's hand picked successor as Chairman, Hua Guofeng, Deng replaced him with General Secretary Hu Yaobang and installed Zhao Ziyang as Premier. Now most experts agree that although the "open door" will continue to swing on its hinges, it has been open so wide for so long that even if the leftists could close it again, they would only lock in Deng's changes. Says a Western diplomat in Peking: "If you gave Deng a 20% chance of succeeding in 1978, you would give him an 85% chance now."
But for more than 2,500 years the only certainty in China has been uncertainty. Again and again the country has endured civil tumult, foreign invasion and the eternal vicious circle of flood, famine and disease. A century ago, the country was courting modernity and Western technology under the slogan "Chinese Learning for the Essence, Western Learning for the Application." Fifty years ago, Chiang Kai-shek and his Nationalist government were encouraging economic growth, scientific advancement and managerial expertise. Both drives proved short-lived. In settling old scores, the present regime may have established new conflicts. In addition, its fondness for what Nakasone calls "a process of trial and error" makes any prediction especially precarious.
At the dawn of the Cultural Revolution, Mao wrote to his wife that after his death the rightists would seize power. But, he went on to assure her, leftists would soon take it back again. Deng and China have helped the first part of the prophecy to come true. For all their achievements, though, they know that the second part is by no means impossible.
--By Pico Iyer.
Reported by David Aikman and Jaime A. FlorCruz/Peking
With reporting by DAVID AIKMAN, Jaime A. FlorCruz