Line in the Sand
When Fei Xiaotong died at 95 in 2005, China lost one of its last effective voices for democratic reform from within establishment ranks. Fei’s classic, Peasant Life in China, reminds us of how rural Chinese paid the price for change in the formative years of Chinese communism (Thurston 2005). Now, likewise, they are paying for Chinese capitalism. The difference is that the former gave them some actual benefits in return. They not only got minimal health care, but the psychological satisfaction of knowing that however bad things were, the hardship was broadly distributed. Anyone who thinks those are insignificant benefits should consider becoming a World Bank economist.
Having so much to like about current PRC (People’s Republic of China) policies, corporate CEOs and their neoliberal scribes have developed a political double vision about the erstwhile Second World. Even as they vilify Cuban communism, they refuse to process the grim realities of the PRC power structure (Parenti: 27). This double standard also infects assessments of China’s economic performance. CCP (Chinese Communist Party) policies have generally been considered beneficial for the vast majority of Chinese, which is a myth. Deng’s economic restructuration tipped China like a seesaw, with the spotlight aimed at the winning side. Even by the mid-1980s inflation of up to 28 percent was sorely felt on the losing end of the seesaw (Yee 1989). Public resentment was natural, but lacked a political outlet. Reformist officials such as Hu Yaobang struck terror in the CCP Old Guard by broaching the subject of political reform. That not only killed Hu’s chance to be Deng Xiaoping’s successor, but probably killed him literally. Many suspect Li Peng of giving the order. In any case Hu conveniently expired on April 15, 1989.
It will be left for historians to debate how close the Hu faction had been to effecting political reform from within CCP ranks. The Tiananmen Papers (documents smuggled out of CCP archives and published early in 2001) suggest that China’s power elite was divided over the proper course of development, but the bottom line was the fact that the Army answered only to Deng (Thornton, Fire: 31). He had never been the budding liberal that neoliberal commentators like to imagine. The one who came closest to fitting that mold was the CCP general secretary Zhao Ziyang. Zhao did his best to cushion the CCP crackdown that was all but inevitable by late 1986 and early 1987, after Fang Lizhi (the dissident physicist known widely as China’s Sakharov) lit the fuse on a string of pro-democracy demonstrations across China.
It was encouraging that although Fang was thrown out of the Party (for the third time), he was allowed to continue his academic career and even permitted to travel abroad. The message this sent to his mostly silent intellectual sympathizers, inside and outside the Party, was almost as stunning as the crackdown itself. Even Fang was plainly surprised, during an interview with NBC anchorman Tom Brokaw, when he was shown footage of an interview with Zhao the day before. Here was the general secretary giving assurance that although Fang would be ousted from the Party, his freedom and that of other intellectuals would be respected in their capacity as citizens (Schell 1988). The CCP Old Guard was angered by Fang’s speeches, but it was even more appalled by Zhao’s temperate response. The decision was made to slam the door on such tolerance. Far from a panicked reaction to unforeseen events, the government’s action at Tiananmen was part of a carefully scripted CCP plan to abort Zhao’s reformism while accelerating GDPism. From this point on the hardliners took the offensive, or rather the counter-offensive.
A key player in this rearguard shift was the future president, Hu Jintao, who in December 1988 was appointed to the dismal post of Party Secretary of TAR (the Tibet Autonomous Region), replacing the relatively liberal-minded Wu Jinghua. This was the Chinese equivalent of Siberia, and Hu — complaining of altitude sickness and Tibet’s “lack of culture” — would avoid physical location in Tibet as much as possible. In retrospect it is obvious that this posting was no demotion. It put Hu in close working contact with the military, which was more active in TAR than in any other Chinese province or region.
This was in fact a warm-up exercise for an ominous new development strategy, fusing international globalism with domestic fascism. The day after Hu’s appointment was announced, a large demonstration erupted in Lhasa, Tibet’s capital. It was savagely suppressed by the People’s Armed Police, which targeted Tibetans carrying their outlawed national flag (“Background” 2005). The violence so exceeded the threat that its real point was patently not restricted to Tibet. The PLA (People’s Liberation Army) was practicing for bigger things to come, much as the Japanese Army once practiced in Manchuria, the German Nazis in Spain, and the Bush administration in Afghanistan, prior to its more ambitious Middle East incursion.
The next month, shortly after his belated arrival in Lhasa, Hu attended a meeting in which he sat next to the legendary Panchen Lama, the second highest Tibetan spiritual leader. To everyone’s dismay, this deeply spiritual man delivered a riveting speech condemning Chinese oppression. He had just signed his death warrant. A few days later he would die under conspicuously mysterious circumstances, leaving behind a leadership vacuum in Tibet which remains to this day. Massive demonstrations followed, in which the police fired wildly, killing not only dozens of demonstrators but also innocent people in their homes. And that was just the prelude.
In March Hu ordered full martial law, including the arrest of hundreds of Tibetans. The extended sentences they got, and the unspeakable torture they suffered, had Hu’s fingerprints all over it, just as his Tibet assignment bore Deng’s fingerprints. The Tibetan rising was no surprise to either. It allowed the hardliners to send a suspiciously well-timed message: that economic reform should not be misconstrued as a road to democracy. “People power” had recently come to fruition in the Philippines, and similar democratic eruptions had shaken the ruling orders of South Korea and Taiwan. Deng’s circle was determined to keep China off this reform list. Lhasa became the PLA’s model for how to deal with political dissent (“Background 2005).
Hu Yaobang’s death ignited demands for more and faster reforms, and soon thousands of students were converging on Tiananmen Square. As many as a million camped out at Tiananmen at one point, and by late May another three to five million unemployed workers were roaming the streets of Beijing protesting inflation and corruption (“Tiananmen Square” 2002). Many workers joined the students in the hunger strikes that began on May 13. On May 17 several of China’s top leaders visited Deng’s home to get his word on how to proceed. He artfully summed it up for them: “If things continue like this, we could even end up under house arrest” (Bernstein 2001). Deng knew he could count on the CCP rank and file to back him, because the demonstrators were demanding not only democracy but an end to corruption. That was hitting too close to home.
Martial law was declared at the end of May, and on June 3 Deng gave the green light for the Army to apply its well-honed Tibetan tactics on the unarmed demonstrators.[1] The tragic events of June 4, 1989 (the day that Polish Solidarity won its first national election) marked the deadend of any serious hope that economic liberalization would foster democratic reform. Hu Yaobang and Zhao had been the last direct links between those Senian twins, development and freedom. For advocating reform, and for opposing the use of military violence, Zhao would spend the rest of his life under house arrest.[2] His top aid, Bao Tong (lambasted by Li Peng for wearing blue jeans inside the Forbidden City), would get six years in prison (Cheng 2001). Even at Zhao’s death in January 2005, extraordinary security measures were taken, lest his political ghost might come back to haunt (Hilton 2005).
It is important to realize, however, that the seeming reversal of 1980s reformism was entirely in keeping with Deng’s lifelong habits. Much as Hu Jintao was sent to Tibet as Deng’s personal axe-man, Deng himself had been handpicked by Chairman Mao for the same role in the aftermath of the 1957 “let a hundred flowers bloom” crackdown on reform-minded intellectuals. Only then, with the Party firmly in his grip, would Mao launch his infamous Great Leap Forward (Caplan 2000). Deng similarly used Tiananmen for ideological housecleaning before launching another great leap: China’s bid for geoeconomic supremacy in Asia.
Lhasa and Tiananmen were integral parts of that leap, sending a message as unambiguous as Truman’s message at Hiroshima and Nagasaki. Finally the students got the point: Beijing was not going to be Manila or Seoul. Here there would be just one party, and one ruling faction within it. The only question was how the world community would take this seeming reversal. Tiananmen drew a line in the sand, and global capitalism could no longer duck the issue. It either stood for or against democracy.
The CCP/TNC Partnership
It says much about the real priorities of neoliberal globalization that China’s mega-growth of the 1990s, fueled largely by Western investors, took place under the long shadow of Tiananmen. The PRC’s pogrom on its own best and brightest was a high-stakes gamble that TNCs (transnational corporations) would put profits over principles. They did exactly that, throwing their enormous political weight behind a policy of forgive-and-forget “engagement.” Business was roaring by 1992, but for added impetus China tossed further market reforms into the bargain. Capital inflows responded on cue.
There was no ambiguity in the message this sent to the developing world: the unreformed Chinese development model had received a green light. There would be no geoeconomic penalty for the worst police state atrocity of the post-Mao era. Little international pressure would be exerted on China to add political reform to the four modernizations (agriculture, industry, science and technology) set forth by Deng Xiaoping and Zhou Enlai in 1975. By dropping all significant qualifiers to US engagement, the Washington Consensus added its signature to Lhasa and Tiananmen.
On the economic side, labor reform would have been perfectly in keeping with Deng’s pledge to forge a capitalism with “socialist characteristics,” whereas wholesale privatization could benefit only bureaucratic elites and their cronies (Wu 2005). Such reform could also have delivered higher aggregate demand for Western products — that being a stated goal of Washington’s China agenda, as reaffirmed by Secretary of the Treasury John Snow on his 2005 China tour (Andrews 2005). This long-term benefit, however, was dwarfed by the instant gratification of cheap labor and quick profits. Deng’s economic reform was in fact a device to buy off the local and global forces that might have pressed for matching political development. But with the carrot came the stick: the rights of ordinary workers were drastically curtailed, and peasant farmers were increasingly disenfranchised.
In the early 1980s Deng himself gave the order to limit legal appeals, thereby freeing provincial courts to strip workers of their most basic socialist rights. One especially heinous result has been the rise of an Eichmann-style industry of capital punishment. Somewhere between 10,000 and 15,000 death sentences are issued per year. The exact number remains a “state secret,” but not because the government fears that a large number would spark unrest. Rather it fears the number might be too small to contain unrest. The magnifying effect of rumor works better, yet even that has not been enough to staunch rural protests.
No longer trusting provincial courts to do Beijing’s bidding, the People’s Supreme Court reversed Deng’s decentralization order as of October, 2005. This, however, only restored the Maoist system of judicial subordination (Yardley 2005). The fact that Beijing deemed this necessary is suggestive of how desperate matters have become. The problem traces to the grand bargain that Deng brokered with bureaucratic and entrepreneurial classes at the expense of workers and farmers. Lower strata comrades are offered much the same “trickle down” that Ronald Reagan and Margaret Thatcher promised their workers. In China and America alike, however, the effect of Sino-globalization could better be described as “trickle up.”[3]
That is just one more reason for the loyalty that TNCs have showered on Beijing. In turn, the Chinese handling of FDI (foreign direct investment) has departed from the miracle-era formula of the East Asian tigers by not building the Chinese economy behind a stiff tariff wall. Although FDI has been largely restricted to SEZs (special economic zones), Chinese capitalism has joined hands with neoliberalism in labor practices that ensure a global “rush to the bottom.” Much as Western workers saw the American dream slipping away from them, Chinese workers lost their grip on their “iron rice bowl.” On both sides this has produced the kind of insecurity that was common throughout the Pacific Rim after the Crash (Hart-Landsberg 2004). Insecurity is what keeps wages down and profits up, and that is what the CCP/TNC bargain is all about.
It should be noted, however, that while Chinese policies often serve globalist interests — promoting global capitalism better than any democracy could have (Thornton, New: 109) — they have never followed the neoliberal script. China has been exempted from IMF-style restructuration pressures. It has been welcomed into the global community despite the fact that it rigidly controls capital flows, closely oversees external trade, and sustains a large state-owned system of heavy manufacturing (Middleton 2005). Meanwhile there has been only modest protest as the PRC trade surplus goes off the charts, tripling in 2005 alone. Most of this surplus is with the United States. In fact, excluding America, the PRC ran a trade deficit of about $12 billion, mainly with Japan and China’s oil providers (Barboza 2006).
There is, of course, full reciprocity, as China supports American consumerism as well as militarism through massive purchases of US debt instruments. The question is how far deficit spending can be pushed before this house of cards collapses. A US recession would spell a Chinese depression, for private consumer spending is too low in China to cushion an economic slump (“Fearing” 2006). In the long run both sides would be better served by slower-paced trade, which for China would mean less dependence on foreign capital. But there are political as well as economic reasons for the PRC’s FDI addiction. Growing inequality gives the CCP good reason to fear working class unrest. But most of all it dreads the “perfect storm” of combined working class and bourgeois resistance. That partly explains why Beijing favors soporific SOEs (state-owned enterprises) on the one hand and rapacious TNCs on the other (Gilboy 2004: 34).
Beijing regards FDI as a Trojan Horse, yet cannot bring itself to close the globalist gates. It is torn between fear of domestic reformism and suspicion that the US is using foreign investment in a “war without the smoke of gunpower,” as Deng Xiaoping put it (Ong 2002: chapter 6). Without a heavy injection of FDI, Chinese industrialists could quickly gain the upper hand. Thus foreign capital has been keeping the CCP on political as well as economic life support. But how dependable is this? Foreign investors stand to profit as the Chinese development model is packaged for export to other developing nations.
Neoliberals point to China’s capital dependency as reason to dismiss the dangers of engagement. Labor may still be cheap here (though upward wage pressures have been noted in major industrial cities) (Barboza 2006), but resource costs are not. Poor productivity means that to manufacture a product of like value in China requires seven times more resources than in Japan, six times more than in the US, and three times more than in India (“Chinese Miracle” 2005). Globalists reason that so long as Chinese firms remain instruments of CCP privilege, China will require massive doses of foreign investment and expertise, not to mention balance of trade forgiveness, simply to function. This dependency permits neoliberals to imagine that they, not the CCP, are ultimately in charge.
Sino-optimists still insist that engagement is a sure route to political reform as well as mega-profits (e.g., Gilboy: 34-35). They see no need for contingency plans in case engagement collides head-on with Tiananmen-style reality. What evidence is there that FDI will favor liberal democratization and human rights, especially when foreign investors are openly playing on the CCP team? Rupert Murdoch, for example, had no qualms about banning the BBC from his Star TV network after it ran reports about human rights violations in China (Rosenberg 2005). Such “see no evil” accommodation is a basic operating principle of the CCP/TNC accord.
“Business is Business”
Some of the worst corporate complicity in the making of Sino-globalization now comes from that celebrated force of liberation, the Internet. In the short run it did show some promise. China’s online generation has been quick to convert to Net news sources, which they trust more than state-supported print papers. Just one such online source, Sina, has a readership thirty times that of the government-run People’s Daily (Fang 2003), though obviously both are heavily censored. The biggest challenge for the authorities has been personal Internet messages. Reporter’s Without Borders, the Paris-based advocacy group, has designated China as the “world champion” of Internet censorship,[4] with an estimated fifty-thousand full-time net detectives (McLaughlin 2005 and Hogge 2005).
Without assistance from Western firms these online police would be hunting in the dark. Firms such as Microsoft, Yahoo and Google have trashed any possible claim to a higher purpose beyond profitability by signing contracts with China to actively control Internet content. While Microsoft and Cisco were selling China firewalls and other security tools, Yahoo went the extra mile by helping authorities track down and convict Shi Tao, a journalist who got a ten year prison sentence in April 2005 for exposing what Beijing calls “state secrets,” which is to say any information that the government finds embarrassing. First Yahoo claimed that under Chinese law it had no choice but to comply in every way with Beijing’s wishes. This turned out to be an utter fabrication, since Yahoo was registered in Hong Kong, where no such legal obligation obtained (Rosenberg 2005). Finally the company’s chief in China, Jack Ma, shrugged the matter off with three words: “business is business.”[5] A commentator in the South China Morning Post compared this attitude to that of the IBM executives who supplied punch-card technology to the Nazis during the Holocaust (Logan 2006).
The bottom line is that the American Internet population of about 203 million is fast reaching its saturation point, while China’s 103 million users represent less than 8 percent of the Chinese population (Zeller 2006). Any free speech and human rights concerns that Bill Gates might have had are swamped by these numbers. Instead of Western corporations spreading democratic values by way of example, they are behaving exactly as Chinese companies would if they had the technological means. If such conduct can be excused by way of the bottom line — “business is business” — so can prostitution, arms sales, the drug trade, and human trafficking, not to mention the PRC’s house specialty, organ sales, whose supply tends to correlate with the frequency of Chinese executions.
American arms dealers envy their European counterparts the contracts they are now planning with China, assuming the EU arms embargo can be lifted. The consolation prize is that Taiwan will also have to step up its US arms purchases, but clearly the Soviets and now the Europeans are fishing in a bigger sea. So far American capitalists can enter this market only indirectly, through technological transfers that are tagged “civilian” but in fact are “dual purpose.” The Taiwan government might be expected to complain about such sales, except that their capitalists are just as busy selling out Taiwan’s national interests.
Suffice it to say that neoliberal delusions of “peace through trade” have long since lost credibility. These myths persist only as camouflage for TNC interests. Ever since Tiananmen the democratic argument for engagement has had to borrow heavily on the collateral of future democratization, yet nothing obstructs that future so much as unqualified “engagement” policies: the complete disconnection of trade and human rights that was the prime goal of the unregistered lobbying firm Kissinger and Associates.
Are neoliberal investors oblivious to all this? The more astute ones surely know what democratic development would entail. First, it could spawn social legislation that would almost certainly drive up the cost of labor. To some degree that loss could be offset by a rise in domestic purchasing power. But this expanded market would probably not redound to a surge in imports from America, since Chinese nationalism would tilt the competitive playing field (Zhao 2005). Foreign firms would then lose the inside track they have enjoyed with the CCP. This is just one more reason why TNCs prefer to keep democracy on permanent hold. The support they shower on the CCP makes good business sense, for the same reason that American capitalists on the board of I. G. Farben’s US subsidiary found it expedient to fund the Nazis.[6]
It should not be surprising, therefore, that US engagement policy chugs along as usual. Neoliberals profess to believe that the market will align China with the Washington agenda for democracy and human rights, a goal that until 2000 was enshrined at least nominally in US tariff policy. The next year, with China’s entry into the WTO, a purely economistic agenda was unveiled, driven by the dream of double-digit growth in a Chinese economy half-owned by US investors.[7] Short of that, US multinationals just want to avail themselves of low-cost production in a country that promises legions of non-unionized workers and a dearth of environmental protection (Juhasz 2005).
Given this capital injection, and the geopolitical indifference that money can buy in Washington, CCP strategists are confident of the party’s staying power. This was reflected in the decision of President Hu to dust off the official good name of Hu Yaobang. As usual, the point of this action has been misunderstood in the West. Coming at a time when controls are being tightened on intellectuals, journalists, lawyers, and human rights activists, Hu Yaobang’s resurrection is anything but a backdoor admission that he was even partially right in his stand for concurrent political and economic development. Quite the contrary, this seeming exhumation is actually a political internment. President Hu is in effect proclaiming that the gamble of 1989 has been won. The Tiananmen era is history.
Neoliberals tacitly agree, which has cash value. What is harder to explain is why many on the Left, who would be expected to contest this capitalist amnesia, have been reticent about the plight of China’s working classes under the CCP/TNC bargain. Some go so far as to reduce the whole case against the CCP to a neoconservative plot (e.g., Leupp 2006) on the apparent assumption that the enemy of one’s enemy is by definition one’s friend: If Bush and Cheney are rotten, Hu and Wen must be great guys. Unquestionably they are the better propagandists. Taking a lesson from Singapore’s Lee Kuan Yew, today’s CCP has learned to sugar-coat its global image, wrapping its militarism in “soft power” rhetoric and its domestic repression in double-digit economic growth.
Joshua Ramo’s conception of the emerging “Beijing Consensus” takes this wrapping for the genuine article — but then Ramo is an affiliate of Goldman Sachs. One would expect the Left to be more discerning, and certainly not to fall for the Manichaean notion that to condemn the Washington Consensus requires categorical approval of the Beijing Consensus. Somehow it escapes notice that the two, despite their show of acrimony, are locked in a warm capitalistic embrace. The one sells out democracy while the other sells out communism, yet they are united in their mutual willingness to sell out the working classes.
Fortunately there are exceptions to the Left’s inattention to this mutuality. David Harvey, for example, charges in The New Imperialism that the end product of Sino-capitalism is class oppression. He would have us burn the infamous thing. Conversely, one of the most vocal proponents of the CCP/TNC partnership has been Henry Kissinger, who urges us to abandon any idea of reforming the Chinese junta. In his well-remunerated viewpoint this engine of maldevelopment is “inherent in the global economic and financial processes that the United States has been prominent in fostering” (Kissinger 2005). In short, it is TINAesque. When many on the Left find themselves at odds with David Harvey and in perfect agreement with Henry Kissinger, it is time for some serious reflection on our stance concerning the Great Leap Backwards which is Sino-globalization.
NOTES:
[1] The Tiananmen Papers show that the five-man standing committee was deadlocked over what course to take, so it fell on Deng to make the fateful decision. This supports the recent claims of Li Peng that Deng, the Paramount Reformer himself, was the prime mover. On the Tiananmen papers see “The U.S. ‘Tiananmen Papers’” 2001.
[2] Zhao was never seen in public after May 9, 1989, when he went to Tiananmen Square and made an empassionated plea for students to withdraw. When he died in January 2005, his former secretary, Bao Tong, lashed out at the government, calling their actions a “show case of shame.” Zhao’s daughter simply said he was “free at last.” In April 2005 Ching Cheong, a Hong Kong reporter, was arrested in China for trying to obtain Zhao’s interview transcripts. See Marquand 2006, “Chinese reformer” 2005, and Cheong 2006.
[3] It is no surprise that Chinese workers lack the political leverage to demand a better deal, but it is startling how American labor finds itself a political orphan. Neither the Democrats nor Republicans will take up the working class cause. Labor leaders are telling workers that the issue is no longer how to secure better pay and benefits, but simply how not to be laid off. They are well aware that one in five manufacturing jobs was lost between Bush’s first inauguration and September 2005, when his approval ratings finally took a dive. Unions are either unable or unwilling to confront corporate political priorities. China’s rise serves that agenda as a global enforcer of neoliberal downsizing.
[4] Of the 62 “cyberdissidents” known to be imprisoned around the world, 54 are in China. See Zeller 2006.
[5] Falk 2005. He might have added that business is also geopolitics, and vice versa. Consider the case of the telecom giant, Global Crossing, which in January 2002 went under the fourth largest bankruptcy in US history, and until that time had been the biggest spender of them all on campaign contributions. Its board included William Cohen, the Secretary of State under Clinton, the most pro-China president of modern times; and one of its close cronies was former president and pro-China stalwart George H. W. Bush, who got $80,000 in Global stock options for a single speech in Tokyo. It is no accident that Hutchison Whampoa Ltd. of Hong Kong, with its close ties to the Chinese Army, and with commercial control of both ends of the Panama Canal, has tried to buy Global Crossing. See Vernon 2002.
[6] Three American board members were found guilty at the Nuremberg War Crimes Trial, though others such as Edsel B. Ford were never bought to trial. See Sutton 2000: chapter 7.
[7] The special target of this new agenda is China’s state-owned banks. Currently foreign investors can own no more than 25 percent of a Chinese commercial bank. Likewise the prime target in Japan has been the Japanese postal service, which doubles as the country’s major savings institution. See Andrews 2005.
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