REFORM--DUBBED CHINA'S "SECOND REVOLUTION"--was one of the most common terms in China's political vocabulary in the 1980s. Reform of the Chinese Communist Party and its political activities, reform of government organization, reform of the economy, military reforms, cultural and artistic reforms, indeed, China's post-Mao Zedong leaders called for reform of every part of Chinese society. The leaders of the People's Republic of China saw reform as the way to realize the broad goal of the Four Modernizations (announced by Premier Zhou Enlai in 1975: the modernization of industry, agriculture, science and technology, and national defense) and to bring China into the community of advanced industrial nations by the start of the new millennium. The reform movement had antecedents in Chinese history in the Han (206 B.C.-A.D. 220), Song (960-1279), and Qing (1644-1911) dynasties, when concerted efforts were made to bring about fundamental changes in administrative methods while keeping the overall institutional framework intact. Thus, the reform movement of the 1980s--which has been attributed largely to the insights and determination of Deng Xiaoping, the most important figure in the post-Mao Zedong leadership--took its place in the broad spectrum of Chinese history. As with previous reform movements, history will measure this one's success.

Late twentieth-century Chinese society has developed out of some 3,300 years of recorded history and, as archaeological finds indicate, several millennia of prehistoric civilization. For thousands of years, the Middle Kingdom (Zhongguo--the Chinese name for China) was marked by organizational and cultural continuity, which were reaffirmed in a cyclic rise, flourishing, and decline of imperial dynasties. Short-lived, vibrant, but often tyrannical dynasties frequently were followed by long periods of stability and benevolent rule that were built on the best features of the preceding era and that discarded or modified more authoritarian ideas. An ethical system of relations--governed by rules of propriety attributed to the School of Literati (also known as the Confucian school)--carefully defined each person's place in society. In this system, harmony of social relations rather than the rights of the individual was the ideal. The highest social status was held by scholar-officials, the literati who provided the interpretations needed for maintaining harmony in a slowly evolving world. Hard-working farmers, the providers of sustenance to society, also occupied an important place in the societal structure.

China's development was influenced by the alien peoples on the frontiers of Chinese civilization, who were sinicized into the Chinese polity (see fig. 1, frontispiece). Occasionally, groups arose among alien border peoples that were strong enough to conquer China itself. These groups established their own dynasties, only to be absorbed into an age-old system of governance. The importation of Buddhism, too, in the first century A.D. and its gradual assimilation had a fundamental impact on China. Early contacts with the premodern Western world brought a variety of exchanges. The Chinese contributed silk, printing, gunpowder, and porcelain. Staple foodstuffs from Africa and the Americas were assimilated by China, as was the Western-style chair. In later centuries, Chinese scholars studied Western astronomy, mathematics, and other branches of science. Westerners arrived in China in the nineteenth century, during the decline of the Qing dynasty, in search of trade and colonial empires. Through force of arms the Westerners imposed unequal treaties compelling China to accept humiliating compromises to its traditional system of society and government.

China reacted to intrusions from the West--and from a newly modernized Japan (to which China lost a war in 1895)--in a variety of ways, sometimes maintaining the traditional status quo, adapting Western functions to Chinese substance, or rejecting Chinese tradition in favor of Western substance and form. As the Qing dynasty declined, reforms came too late and did too little. The unsuccessful reform efforts were followed by revolution. Still burdened with the legacy of thousands of years of imperial rule and nearly a century of humiliations at foreign hands, China saw the establishment of a republic in 1911. But warlord rule and civil war continued for nearly forty more years, accompanied in 1937-45 by war with Japan.

The Chinese civil war of 1945-49 was won by the Chinese Communist Party, the current ruling party of China, led by its chairman and chief ideologist, Mao Zedong. The Communists moved quickly to consolidate their victory and integrate all Chinese society into a People's Republic. Except for the island of Taiwan (which became the home of the exiled Guomindang under Chiang Kai- shek and his successors), the new government unified the nation and achieved a stability China had not experienced for generations. Eagerness on the part of some Communist leaders to achieve even faster results engendered the Great Leap Forward (1958-60), a program that attempted rapid economic modernization but proved disastrous. Political reaction to the Great Leap Forward brought only a temporary respite before a counterreaction occurred in the form of the Cultural Revolution (1966-76), a period of radical experimentation and political chaos that brought the educational system to a halt and severely disrupted attempts at rational economic planning. When Mao Zedong died in 1976, the Cultural Revolution era effectively came to an end.

Eager to make up for lost time and wasted resources, China's leaders initiated China's "second revolution"--a comprehensive economic modernization and organizational reform program. Deng Xiaoping and his associates mobilized the Chinese people in new ways to make China a world power. Starting with the Third Plenum of the Chinese Communist Party's Eleventh National Party Congress in December 1978, Deng reaffirmed the aims of the Four Modernizations, placing economic progress above the Maoist goals of class struggle and permanent revolution. Profit incentives and bonuses took the place of ideological slogans and red banners as China's leaders experimented with ways to modernize the economy. Mao's legendary people's communes were dismantled and replaced by a responsibility system, in which peasant households were given greater decision- making power over agricultural production and distribution. Farm families were allowed to lease land and grow crops of their own choosing. In the urban sector, factory managers were granted the flexibility to negotiate with both domestic and foreign counterparts over matters that previously had been handled by central planners in Beijing. Exploitation of China's rich natural resources advanced significantly in the late 1970s and throughout the 1980s. As China's industrial sector advanced, there was increasing movement of the population to urban areas. China's population itself had surpassed 1 billion people by 1982 and was experiencing an annual rate of increase of 1.4 percent. As in times past, foreign specialists were invited to assist in the modernization process, and joint ventures with foreign capitalists and multinational conglomerates proliferated. Increasing numbers of Chinese students went abroad to pursue advanced degrees in a wide range of scientific and technical fields.

All this change was not without cost--both political and monetary. Efforts at fundamental transformation of economic, governmental, and political organizations caused discontent among some people and in some institutions and were resisted by those who clung to the "iron rice bowl" of guaranteed lifetime job tenure. Beijing's reform leaders made repeated calls for party members and government bureaucrats to reform their "ossified thinking" and to adopt modern methods. Older and inappropriately trained bureaucrats retired in great numbers as a younger and more technically oriented generation took over. In the ongoing debate between those who emphasized ideological correctness and those who stressed the need for technical competence--"reds" versus "experts"--the technocrats again emerged predominant. But developing and successfully applying technological expertise--the very essence of the Four Modernizations--cost vast sums of money and required special effort on the part of the Chinese people. In a rejection of the time- honored concept of "self-reliance," China entered into the milieu of international bank loans, joint ventures, and a whole panoply of once-abhorred capitalist economic practices.

As politics and the economy continued to respond to and change each other, China's reformers had to balance contending forces within and against their reform efforts while maintaining the momentum of the Four Modernizations program. In doing so, Deng Xiaoping and his associates were faced with several unenviable tasks. One was to create unity and support for the scope and pace of the reform program among party members. There was also a necessity to deliver material results to the broad masses of people amid economic experiments and mounting inflation. Failure to achieve these balances and to make mid-course corrections could prove disastrous for the reform leadership.

A sound ideological basis was needed to ensure the support of the party for the reform program. Deng's political idioms, such as "seeking truth from facts" and "socialism with Chinese characteristics," were reminiscent of reformist formulations of centuries past and had underlying practical ramifications. The supporters of Deng held that theory and practice must be fully integrated if success is to be hoped for, and they articulated the position that the Marxist-Leninist creed is not only valid but is adaptable to China's special--if not unique--situation. The ideological conviction that China was still in the "initial stage of socialism"--a viewpoint reaffirmed at the Thirteenth National Party Congress in October and November 1987--provided a still broader ideological basis for continuing the development of the Deng's reform program in the late 1980s and early 1990s. This ideological pronouncement also emphasized reformers' fundamental tenet that since the end of the "period of socialist transformation" (turning over private ownership of the means of production to the state) in 1956, there had been numerous "leftist" errors made in the party's ideological line. Mistakes such as the Great Leap Forward and the Cultural Revolution had produced setbacks in achieving "socialist modernization" and had kept China from emerging from the initial stage of socialism. It was, perhaps, the very failure of these leftist campaigns that had paved the way for the reforms of the 1980s.

Political confrontation over the reforms was pervasive and, to many foreign observers, confusing. In simplistic terms, the "conservatives" in the reform debate were members of the post-Mao "left," while the "liberals" were the pro-Deng "right." Being conservative in China in the 1980s variously meant adhering to the less radical aspects of Maoist orthodoxy (not all of which had been discredited) or accepting the goals of reform but rejecting the pace, scope, or certain methods of the Deng program. Thus, there were both conservative opponents to reform and conservative reformers. While many reform opponents had been swept away into "retirement," conservative reformers until the late 1980s served as members of China's highest ruling body and locus of power, the Standing Committee of the party's Political Bureau. Such leaders as Standing Committee member Chen Yun, one of the principal architects of economic reform, objected to the "bourgeois liberalization" of the modernization process that came with infusions of foreign, especially Western, culture. In the conservative reform view, the application of Chinese values to Western technology (reminiscent of the traditional tiyong [substance versus form] formulation evoked in the late-nineteenth-century reform period) would serve the People's Republic in good stead.

In the 1980s China's intellectuals and students frequently tested the limits of official tolerance in calls for freer artistic and literary expression, demands for more democratic processes, and even criticisms of the party. These confrontations reached their apex in late 1986, when thousands of students throughout the nation took to the streets to make their views known. In the resulting crackdown, some prominent intellectuals were demoted or expelled from the party. Even its highest official was not invulnerable: General Secretary Hu Yaobang was demoted in January 1987 for having dealt unsuccessfully with public activism and criticism of the party. Hu's ouster paved the way for the chief implementer of the Deng reforms, Zhao Ziyang, premier of the State Council, to assume command of the party and more firmly establish Deng's ideology as the status quo of reform. At the time of the writing of this book, it remained to be seen what degree of success the conservative reform elements would have in effecting a compromise, having placed their own representatives in the Political Bureau Standing Committee and the State Council's highest offices in late 1987.

Self-proclaimed successes of the reforms of the 1980s included improvements in both rural and urban life, adjustment of the structures of ownership, diversification of methods of operation, and introduction of more people into the decision-making process. As market mechanisms became an important part of the newly reformed planning system, products circulated more freely and the commodity market was rapidly improved. The government sought to rationalize prices, revamp the wage structure, and reform the financial and taxation systems. The policy of opening up to the outside world (the Chinese eschew the term open door, with its legacy of imperialist impositions) brought a significant expansion of economic, technological, and trade relations with other countries. Reforms of the scientific, technological, and educational institutions rounded out the successes of the Deng-inspired reforms. For the first time in modern Chinese history, the reforms also were being placed on the firm basis of a rational body of law and a carefully codified judicial system. Although reform and liberalization left the once more-strictly regimented society open to abuses, the new system of laws and judicial organizations continued to foster the stable domestic environment and favorable investment climate that China needed to realize its modernization goals.

Amid these successes, the authorities admitted that there were difficulties in attempting simultaneously to change the basic economic structure and to avoid the disruptions and declines in production that had marked the ill-conceived "leftist experiments" of the previous thirty years. China's size and increasing economic development rendered central economic planning ineffective, and the absence of markets and a modern banking system left the central authorities few tools with which to manage the economy. A realistic pricing system that reflected accurately levels of supply and demand and the value of scarce resources had yet to be implemented. The tremendous pent-up demand for consumer goods and the lack of effective controls on investment and capital grants to local factories unleashed inflationary pressures that the government found difficult to contain. Efforts to transform lethargic state factories into efficient enterprises responsible for their own profits and losses were hampered by shortages of qualified managers and by the lack of both a legal framework for contracts and a consistent and predictable taxation system. The goals of economic reform were clear, but their implementation was slowed by practical and political obstacles. National leaders responded by reaffirming support for reform in general terms and by publicizing the successes of those cities that had been permitted to experiment with managerial responsibility, markets for raw materials, and fundraising through the sale of corporate bonds.

National security has been a key determinant of Chinese planning since 1949. Although national defense has been the lowest priority of the Four Modernizations, it has not been neglected. China has had a perennial concern with being surrounded by enemies- -the Soviets to the north and west, the Vietnamese to the south, and the Indians to the southwest--and has sought increasingly to project itself as a regional power. In response to this concern and power projection, in the 1970s China moved to augment "people's war" tactics with combined-arms tactics; to develop intercontinental ballistic missiles, nuclear submarines, and other strategic forces; and to acquire sophisticated foreign technologies with military applications. In the international arena, China in the 1980s increasingly used improved bilateral relations and a variety of international forums to project its "independent foreign policy of peace" while opening up to the outside world.

March 8, 1988

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After the manuscript for this book was completed in the summer of 1987, several momentous events took place in China. Some were alluded to as imminent in the various chapters of the book. From October 25 to November 1, 1987, the Chinese Communist Party held its Thirteenth National Party Congress. Dozens of veteran party leaders retired from active front-line positions. Not least among the changes was the alteration of the Standing Committee of the party Political Bureau--the very apex of power in China--both in personnel and in stated purpose. Deng Xiaoping, Chen Yun, and Li Xiannian stepped down, and Hu Yaobang's demotion to mere Political Bureau membership was confirmed. Only one incumbent--Zhao Ziyang-- was left on the Standing Committee. In place of the party elders and Hu Yaobang, a group of mostly younger, more technologically oriented individuals were seated. The Political Bureau's Standing Committee comprised Deng's protege, sixty-eight-year-old Zhao Ziyang (who relinquished his position as head of government to become general secretary of the party); Li Peng, a sixty-year-old, Soviet-educated engineer, who became acting premier of the State Council in Zhao's place (he was confirmed as premier in spring 1988); Qiao Shi, a sixty-four-year-old expert in party affairs, government administration, and legal matters; Hu Qili, a fifty- eight-year-old party Secretariat member in charge of ideological education, theoretical research, and propaganda; and veteran economic planner and conservative reform architect Yao Yilin, the new party elder at age seventy-one. In regard to function, the Political Bureau no longer was conceived of as a group of influential individuals but as a consensual decision-making organization. The party constitution was amended to make the party Secretariat a staff arm of the Political Bureau and its Standing Committee, rather than the somewhat autonomous body it had been since 1982. By mid-1988, the Chinese Communist Party announced that its increasingly well educated membership had risen to 47 million, an all-time high.

The retirees were not left without a voice. Deng, eighty-three and still China's de facto leader, retained his positions as chairman of the party and state Central Military Commissions, the latter of which designated him as commander-in-chief of the Chinese armed forces. (Zhao Ziyang was appointed first vice chairman of the party and state Central Military Commissions, giving him military credentials and paving the way for him to succeed Deng.) Eighty- two-year-old Chen Yun gave up his position as first secretary of the party Central Commission for Discipline Inspection but replaced Deng as chairman of the party's Central Advisory Commission, a significant forum for party elders. Li Xiannian who relinquished his position as head of state, or president, to another party elder--eighty-one-year-old Yang Shangkun--to become chairman of the Seventh Chinese People's Political Consultative Conference in spring 1988, was left without a leading party position. Hu Yaobang, far from being totally disgraced after his January 1987 debacle, retained membership on the Political Bureau and enjoyed a fair amount of popular support at the Thirteenth National Party Congress and afterward.

Below the national level, numerous leadership changes also took place following the Thirteenth National Party Congress. More than 600 younger and better educated leaders of provincial-level congresses and governments had been elected in China's twenty-nine provinces, autonomous regions, and special municipalities.

The Seventh National People's Congress was held from March 25 to April 13, 1988. This congress, along with the Seventh Chinese People's Political Consultative Conference, held from March 24 to April 10, 1988, was marked by a new openness and tolerance of debate and dissent. The opening ceremony of the National People's Congress was televised live, and meetings and panel discussions were recorded and broadcast the same day. Chinese and foreign journalists were permitted to attend the panel discussions and question the deputies in press conferences. Dissenting statements and dissenting votes were widely publicized in the domestic press. A spirit of reform prevailed as laws and constitutional amendments were ratified to legitimize private business and land sales and to encourage foreign investment. The State Council was restructured and streamlined. Fourteen ministries and commissions were dissolved and ten new ones--the State Planning Commission and ministries of personnel, labor, materials, transportation, energy, construction, aeronautics and astronautics industry, water resources, and machine building and electronics industry--were established. Many of the ministries that were dissolved were converted into business enterprises responsible for their own profits and losses.

Li Peng was elected premier of the State Council, as expected, and Yao Yilin and fifty-nine-year-old financial expert Tian Jiyun were re-elected as vice premiers. Sixty-six-year-old former Minister of Foreign Affairs Wu Xueqian also was elected vice premier. State councillors, all technocrats chosen for their professional expertise, were reduced in number from eleven to nine. All state councillors except Beijing mayor Chen Xitong and Secretary General of the State Council Chen Junsheng served concurrently as heads of national-level commissions or ministries. Although seven of the nine were new state councillors, only Li Guixian, the newly appointed governor of the People's Bank of China, was new to national politics. On a move that seemed to bode well for reform efforts, long-time Deng ally and political moderate Wan Li was selected to replace Peng Zhen as chairman of the Standing Committee of the Seventh National People's Congress. The conservative Peng had been considered instrumental in blocking or delaying many important pieces of reformist legislation. It also was decided at the Seventh National People's Congress to elevate Hainan Island, formerly part of Guangdong Province, to provincial status and to designate it as a special economic zone.

In September and October 1987 and again in March 1988, riots erupted in the streets of Lhasa, the capital of Xizang Autonomous Region (Tibet). Calls for "independence for Tibet" and expressions of support for the exiled spiritual leader, the Dalai Lama, were made amid violence that claimed the lives of at least six people in 1987 and at least nine more (including policemen) in 1988. Many more were reported to have been badly injured. Although Chinese authorities condemned the riots, their initial response was restrained in comparison with actions they had taken against earlier anti-Chinese demonstrations in Xizang. In addition, the authorities accompanied their censure of the Lhasa riots with a plethora of publicity on advances made by the inhabitants of Xizang in recent years and a lifting of travel restrictions on foreign correspondents. The March 1988 rioting spread to neighboring Qinghai Province, where there is a sizable Tibetan (Zang) minority. This time the authorities resorted to sterner measures, such as military force and numerous arrests, but only after offering lenient treatment to rioters who turned themselves in voluntarily. By mid-1988, it appeared that both the Dalai Lama, concerned that violence and bloodshed in his homeland was out of control, and the Chinese government, worried about instability in a strategic border area, were displaying greater flexibility in their respective positions.

The January 1988 death of Taiwan's leader, Chiang Ching-kuo, brought expressions of sympathy from Zhao Ziyang and other Chinese Communist Party leaders and renewed calls for the reunification of China under the slogan "one country, two systems." Implicit in the mainland's discussion of the transfer of power to a new generation of leaders--Taiwan-born Li Teng-hui succeeded Chiang--was regret that the opportunity had been lost for reaching a rapprochement with the last ruling member of the Chiang family. Beijing appealed to the patriotism of the people in Taiwan and called for unity with the mainland but, at the same time, kept a close watch for any sentiments that might lead to independence for Taiwan.

In foreign affairs, Beijing continued to balance its concern for security with its desire for an independent foreign policy. China reacted cautiously to the signing of a nuclear arms treaty by the Soviet Union and the United States and refused to hold its own summit with Soviet leader Mikhail Gorbachev. Despite a lessening of tensions between Beijing and Moscow and greatly improved Chinese relations with the governments and ruling parties throughout Eastern Europe, China continued to insist that the Soviet Union would have to end its support for Vietnamese occupation of Cambodia, withdraw all of its troops from Afghanistan, and significantly reduce Soviet forces deployed on the Sino-Soviet border and in the Mongolian People's Republic before relations between the Chinese and Soviet governments and parties could improve. By mid-1988 there were indications that the Soviet Union was taking steps to remove these "three obstacles" to improved Sino-Soviet relations. As early as the fall of 1986, the Soviet Union announced the pullback of a significant number of troops from Mongolia and the Sino-Soviet border. In May 1988 Moscow began withdrawing troops from Afghanistan with the goal of evacuating its forces from that country by early 1989. But China remained skeptical of Vietnamese government announcements that it would withdraw 50,000 troops from Cambodia by the end of 1988, and China's leaders continued to pressure the Soviet Union to exert more influence on Vietnam to secure an early withdrawal of all Vietnamese troops from Cambodia. Already strained Sino-Vietnamese relations were exacerbated when Chinese and Vietnamese naval forces clashed in March 1988 over several small islands in the strategically located Nansha (Spratly) archipelago.

In Sino-American relations, disputes over trade and technology transfer in 1987 were further clouded by United States concern over reported Chinese Silkworm missile sales to Iran, sales of Dongfeng- 3 intermediate range missiles to Saudi Arabia, and disclosures that Israel allegedly assisted China in the development of the missile system later sold to the Saudis. Another concern was China's protest over an October 1987 United States Senate resolution on the "Tibetan question" that focused on alleged human rights violations in Xizang. A visit to Washington, by then Minister of Foreign Affairs Wu Xueqian in March 1988, however, had salutary effects on bilateral relations: China made assurances that it would cease Silkworm missile sales to Iran and the United States pledged to continue to make desired technologies available to China. The perennial Taiwan issue and problems in Xizang apparently were subsumed by larger national interests.

In February 1988 Beijing China achieved its long-sought goal of establishing diplomatic relations with Uruguay, one of the few nations that still had state-to-state ties with Taipei. With this accomplishment China increased its diplomatic exchanges to 134 countries, while Taiwan's official representations were reduced to 22.

The dynamism of China's domestic activities and international relations will continue the new millennium approaches. Developments in the all-encompassing reform program and their resulting impact on Chinese society, particularly the efforts of China's leaders to bring increasing prosperity to the more than 1 billion Chinese people, and China's growing participation and influence in the international community will remain of interest to observers throughout the world.

July 15, 1988
Robert L. Worden, Andrea Matles Savada, and Ronald E. Dolan

Data as of July 1987