China's central challenge now is remedying the social consequences and cleavages that its growth has wrought.
Twenty years ago this month, the octogenarian Deng Xiaoping embarked on his "southern tour," a journey that would turn out to be one of the most significant acts of modern Chinese history. Although Deng would die five years later at 92, his organs donated to medical research, the elder leader's bold maneuvering in the winter of 1992 made the China of today possible. Deliberately ambiguous in intention, the trip was in fact a political campaign of sorts aimed at achieving two crucial objectives: First, to sustain the political conditions that would facilitate continuous reform and economic liberalization; and, second, to rescue the Communist Party -- via a reform agenda - -from reducing itself into a speck in the dustbin of history.
Indeed, Deng was thrusting himself into a political climate that was entirely anathema to his "reform and opening up" policy. The conservatives in the party seemingly emerged victorious after the Tiananmen crackdown three years earlier, only to have the collapse of the Soviet Union hand them another convenient justification to block economic and political reforms. A considerable conservative faction vehemently discredited further reform, claiming that it would bring the party to its knees. To them, the Tiananmen tragedy of 1989 and the Soviet disintegration were all products of "peaceful evolution," which they viewed as the clear and present danger. Peaceful evolution was the most serious and threatening in the economic sphere, they claimed, and any economic reforms must be first and foremost subject to the question, "is your surname socialism or capitalism"?
Deng had attempted to shred this ideological straitjacket in 1991, in which he ordered a series of pro-reform essays to be penned under the pseudonym Huangfu Ping (皇甫平). But given the conservative zeitgeist, he could only publish the pieces in the Shanghai-based Liberation Daily, not the more authoritative central mouthpiece People's Daily. His messages were simple but sharp, directly taking the conservatives to task. Deng believed that without reforms and economic development to improve peoples' livelihoods, the CCP was writing its own death sentence. He had little patience for the ideological battles that paralyzed the political system from pursuing a rational course of development. Instead of managing the economy, the political elites were ensconced in petty "left" vs. "right" battles that obscured the larger prerogative of nation-building. One of Deng's most poignant comments to rewire China's ideological mindset was, to paraphrase, "going 'right' can bury socialism, and going 'left' can also bury socialism. China should remain vigilant against moving too far right [toward capitalism], but must primarily prevent returning to the left [toward Mao-style revolutions]."
Needless to say, the commentaries immediately ignited a furor within the party. The conservatives countered forcefully, and Deng did not get the effect he had intended with the public ideological fisticuffs. Having risen from the ashes of political purges three times, Deng was anything but a quitter. When he realized that he needed a closing act to solicit political allies, he orchestrated his month-long trip through central and southern China to win "hearts and minds." Win he did. The southern tour proved highly successful, sending reverberations through Beijing and knocking conservatives off balance. Those who remained on the fence, such as future Chinese president Jiang Zemin, understood the ground had shifted and swiftly coalesced behind Deng's agenda. When the 14th Party Congress opened in October 1992, it was unambiguously clear that Deng had, with persistence and political acumen, once again set China on a course that would dictate its development for the next two decades.
What a course it has been, as the record speaks for itself. Since 1978, China's economy has grown more than 100-fold, while per capita GDP has risen roughly 80 times (not adjusted for inflation or exchange rate differences). It has far exceeded Deng's expectation of reaching a per capita GDP of $4,000 by mid-21st century--a milestone that was achieved forty years ahead of schedule. China's steel output is now north of 600 million tons, an incredible feat considering that the Great Leap Forward in the late 1950s mobilized nearly 100 million Chinese only to end up with 11 million tons of steel.
I recount this snapshot of history on the anniversary of the southern tour not for its own sake, but because I believe it is instructive for observing China today. As China proceeds through a political transition, culminating in the new 18th Party Congress this fall, there are echoes of 1992. The Jasmine Revolution, Arab Spring, Wukan violence, increasing civil disobedience, and pluralism on social media, are new manifestations of peaceful evolution, as Hu Jintao's culture essay elliptically warned against. The unusually public campaigns for political office--primarily construed as a two-way contest between Bo Xilai and Wang Yang--appear to be fundamentally about a referendum on the direction of reforms.
Indeed, the entire edifice of the reform agenda appears to be called into question. Except that the conservatives in 1992 have been replaced by vested interests, having deduced that "reform" is but another name for transferring wealth away from themselves. Therefore, many state-owned enterprises, which indirectly means the central government, are the special interests that would prefer to stall reform rather than facilitate it. Adding to this perception of the increasing role of the state is the fact that Beijing is flush with cash, with fiscal revenue increasing from 15.7% of GDP to nearly 23% in 2011. In fact, the central coffer broke the 10 trillion yuan mark (or about $1.6 trillion = the size of the Canadian economy) last year, reinforcing the notion that the accumulation of state wealth is coming at the expense of the individual citizen and private sector.
Yet the core of it is fundamentally about distributional justice and social fairness. Deng's spirited defense of reform may have created an economic engine that leaped to the world's #2 in record time, the central challenge now is remedying the social consequences and cleavages that this growth has wrought. In other words, "reform" will increasingly be sapped of momentum if the public no longer has a buy-in because they are on the losing end of what passes as reform. A recent essay by a Tsinghua University sociologist captures the phenomenon thusly:
What is the most common feeling in China today? I think many people would say disappointment. This feeling comes from the insufficient improvement in their lives that people are achieving amid rapid economic growth. It also comes from the contrast between the degree to which individual social status is rising and the idea of the "rise of a great and powerful nation."...
...Imbalances in social rights, the reduction of social mobility and the hardening of the social structure will inevitably lead to the rich getting richer and the poor poorer, the strong permanently strong and the weak permanently weak.
The stagnation of social mobility will inevitably bring about a series of consequences. The biggest harm may not be in the gap between rich and poor itself, but the deterioration of the overall societal ecosystem and the fall of civilization. The social ecosystem is similar to the natural ecosystem. "Running water doesn't stink" is an old Chinese saying that indicates that a pool of standing water will become putrid. The deterioration of the social ecosystem resulting from stagnating opportunity is evident, and the picture is not pretty...
China is caught amid a peculiar situation of acute social inequality as a developing country with immature markets. Because the market is not always capable of efficiently delivering public and social goods, the government usually assumes that role to provide a sense of social fairness and welfare. But ironically, the Chinese public seems to perceive the government as a self-interested entity that is primarily concerned about protecting its own wealth rather than investing in public welfare, despite the official rhetoric.
Herein lies the rub. China's impressive global economic might seems to have little resonance to many of its own citizens, who fear that the potential formation of a intractable crony capitalist society is stacked against them. It is no wonder gallows humor that went viral on the Chinese internet included phrases such as "rather fight to the end for the right father than a PhD" (拼搏不如拼爹) or "why kill yourself over physics and chemistry when you can have a 'good' daddy" (学好数理化，不如有个好爸爸).