Neal Ulevich / AP

China’s native chroniclers have long thought that Chinese history moves in circles. Anniversaries resonate with eerie significance, promising opportunities to celebrate progress but also reminding everyone of the possibility of repetition. Divining China's future direction at the start of the twenty-first century must begin with a reading of its anniversaries at the end of the twentieth. And China has seldom experienced a year so replete with the contradictions of overlapping, politically potent anniversaries as 1999.

For China 1999 was the eightieth anniversary of the May Fourth movement, when the Chinese intelligentsia first advocated the adoption of Western science and democracy. But it was also the fiftieth anniversary of the establishment of communism in China. And the twentieth anniversary of the beginning of the era of economic reform under Deng Xiaoping. And the tenth anniversary of the Tiananmen Square democracy movement and massacre.

Which anniversary means the most to China now? The May Fourth movement and the Tiananmen movement suggest that China is heading toward democracy, if haltingly. The massacre revives the grim spectacle of China as a fascist juggernaut. Deng's reforms herald economic freedom and the victory of business over ideology. But it may well be the anniversary of the establishment of communism that has circled back most unexpectedly.

Tiananmen was commemorated last June at Harvard University, where the democracy movement's most influential student leaders—Wang Dan, Shen Tong, Chai Ling, Wu'er Kaixi, and a dozen of their fellows—were reunited, over dinner, for the first time since 1989. The centerpiece of all the events was a stirring speech by Coretta Scott King; remarks followed from Representative Nancy Pelosi, of California, and emissaries of Vaclav Havel and the Dalai Lama. Pelosi declared the movement to be at a turning point, with victory over the Communist regime in sight.

The message was bold and inspiring, but the reality is more complicated. Pelosi has been the dissidents' stalwart ally since 1989, when she first championed their cause in Congress, but since then her influence on this issue has waned on Capitol Hill. So has the clout of the dissidents themselves. During the 1992 presidential campaign they basked in Bill Clinton's good will, but today they must settle for a presidential candidate with more dubious prospects—Gary Bauer was the only other politician to join Pelosi at the Harvard events.

The dissidents, all exiles, are not just at a loss for new American political patronage; they have also become estranged from their own generation in China and from their Chinese successors at American universities. After Bauer and Pelosi left the Harvard events, a furious discussion in Chinese erupted among the dissidents, led by a woman who had just arrived from Beijing. "For ten years since Tiananmen I've fought to keep the movement alive underground in China," she complained bitterly. "But the only thing our classmates want to do now is make money. They're only interested in business!" At Harvard a few weeks earlier a public meeting of Tiananmen leaders had been marred by a volley of angry questions that a younger Chinese Harvard student aimed at Wang Dan. He blamed the students of 1989 for creating a bloodbath and setting democracy in China back, not moving it ahead.

China experts friendly to the Tiananmen dissidents have begun to admit that the movement is of questionable significance for China today. An especially pessimistic assessment came from Chantal de Rudder, a senior editor at Le Nouvel Observateur, in Paris, who had befriended the student leaders in Beijing in 1989. De Rudder had just returned from a long stay in China, so I asked her at the Harvard dinner what she made of Pelosi's optimism about the democracy movement. "In China now there is no nostalgia for 1989," she replied. "Even liberal intellectuals in China have done well by the economic reforms. They don't want to upset stability. They want gradualism." Casting an eye over the assembled dissidents, De Rudder shook her head sadly. "These activists are doing what they can, but it doesn't mean a lot. For the moment they have no influence in China."

Around the corner from where the anniversary dinner was held are the offices of the nation's most distinguished institute for Chinese studies, Harvard's Fairbank Center for East Asian Research. The center is named for the late John King Fairbank, widely admired as the father of Chinese studies in the United States. The director of the Fairbank Center, Elizabeth Perry, a professor of government at Harvard, considers herself a friend to China but harbors no illusions about the regime. Her specialty is Chinese popular protest from the nineteenth century to the present day. Perry's work suggests that resistance to the Communist regime today often has less to do with advocating an American-style political system than with reviving communism.

In the spring of 1989 Peter Schweitzer covered the student protests in Beijing for CBS. Now a senior producer, he recalls with chagrin how he and his colleagues threw journalistic objectivity to the winds. “In Poland,” he remembers, “the weakening of the Communist regime had made the Western press corps into hopeless romantics. We became friends with the Chinese students, even exchanging material about democracy with them. We believed that it was going to happen, that democracy was inevitable.”

The origins of the movement among Chinese students were less romantic, and less clearly about democracy per se. At the time. I was a student at Beijing Normal University, where I had been studying for two years. Living and work­ing on the same campus as Chai Ling and Wu’er Kaixi. who would soon take com­mand in Tiananmen Square. I knew that the students were primarily upset about the unfairness of economic reforms. I ad­mired the gumption of my classmates—they were furious that Deng Xiaoping’s fondness for capitalism was making the watermelon vendors outside the universi­ty gate wealthier than the students them­selves could ever hope to become. The Party had a new penchant for black Mer­cedes limousines, and this irked them too. But as Perry Link, a Princeton professor who helped to spirit the famous dissident Fang Lizhi to safety in the American em­bassy that year, puts it, "The students were mainly frustrated that corruption in the Communist Party was blocking nationalist progress. They wanted themselves and their country to get rich.”

The students’ political style, too, was not so democratic. Many China watch­ers, especially those who were on Bei­jing campuses and in Tiananmen Square, agree that the students knew little of American-style democracy beyond its catchphrases and icons, and were react­ing more to their own irrelevance in the reform program than to their country’s political system.

For China's leaders, the threat of Tian­anmen came more from workers than from students. After Tiananmen. Robin Munro, a researcher at the Hong Kong office of Human Rights Watch, teamed up with George Black, the foreign editor of The Nation, to study the movement. Months of exhaustive interviews revealed that the students and the government had close ties, sharing not only a political culture but also an elitist hostility toward the rumbling tide of working-class dissent. To be sure, the Goddess of Democra­cy that students erected in the square in­sulted the government, but, Munro and Black wrote in their final report, “the crude red and black banner of the BWAF (Beijing Workers’ Autonomous Federa­tion], less than a hundred yards away, sig­nified the more terrifying power.”

Indeed, the regime’s economic reform­ers—Deng Xiaoping and his proteges—had reason to be afraid. Throughout the1980s the promises made to workers, in­cluding the celebrated "iron rice bowl,”had melted away as the reforms un­leashed limited-term contracts, cheap migrant labor, income inequality, in­flation, and official profiteering. Surveys of working-class opinion in the mid-1980s had exposed fury at factory man­agers who were acting like the unscrup­ulous capitalists of old China. On Oc­tober 1, 1985, Beijing bus workers had staged a strike that affected the entire capital. By 1988 an average of two or three strikes a day were being called in China. The students in Tiananmen Square were of little consequence along­side the worker unrest their movement was inspiring. There is evidence that when the government finally resorted to terror to suppress the movement, it de­liberately dealt a more brutal blow to workers than it did to students.

This is why Elizabeth Perry says that Tiananmen was most significant as a Marxist movement. Perry quotes from a manifesto issued by the rebellious BWAF at the height of the 1989 protests: “We have carefully considered the exploita­tion of the workers. Marx’s Capital pro­vided us with a method for understand­ing the character of our oppression. … Bureaucrats use the people’s hard-earned money to build luxury villas … to buy luxury cars, to travel to foreign countries.” Against a Communist Party that was con­verting itself into a class of capitalists, the workers held the moral (and Marxist) high ground.

In 1989 it was ground that conserva­tives in the Communist leadership were eager to exploit. For them, Deng’s eco­nomic reforms had already gone too far. In 1966 the Cultural Revolution had begun with student radicals in the streets; it had led to a revival of pure Communist ideals and the toppling of economic pragmatists. The most powerful of those pragmatists had been Deng himself; he was unlikely to make the same mistake twice. In the weird calculus of Chinese politics—and contrary to the conventional wisdom on Tiananmen—Deng’s 1989 crackdown on dissent was as much a rejection of hard­line communism as a return to it.

In one of China’s industrial cities a Western manager I’ll call Carl runs a small factory. The housing block where he and his wife reside is average by West­ern standards but luxurious for locals; most of its occupants come from China’s nouveaux riches. Carl drove me there in his modest Chinese-made car. To reach the guarded gate we negotiated an endless stream of bicycling citizenry; on the way in we barely avoided a lumbering donkey cart piled with dirty peasants and recy­cled cardboard. Once inside, Carl parked among the cars of his Chinese neighbors: several brand-new Mercedes Benzes, a selection of shiny Cadillacs, an Italian sports car, and an American stretch limo.

In the mid-1980s the city’s factory managers were given unprecedented freedom to pursue profits. Today the downtown is thriving: new businesses are everywhere, and even in the state-run market one can buy almost anything. One vendor offered me a comrade’s dis­count on a cigarette lighter in the shape of a Cupid, with glowing red eyes and a flame penis. Behind an unmarked rub­ber curtain I found a market where mobs of consumers jostled through a long hall of stalls selling pirated movies and soft­ware on CD. I calculated that for the price of a lunch in the United States, I could pick up ten or twenty of the latest American films and the newest version of Microsoft Windows NT. Carl had told me that most of the fancy cars parked outside his apartment building had been smuggled into the city from abroad.

The illicit side of reform in the city is a reminder that corruption and inequal­ity have permeated the process— and generated festering reserves of ill will. I asked a U. S. Foreign Service officer and an American automobile executive, both of whom worked in the region, whether Party cadres retained any credibility. They had similar reactions. The city’s government officials, they said, infuriatingly corrupt and keen to skim profits, used their new entrepreneurial skills at every turn to block progress toward efficient management.

Carl’s factory, however, is a clean, friendly place with modern machinery and proper pollution control. One of two Western managers overseeing a staff of local workers, Carl speaks Chinese flu­ently and enjoys an easy rapport with his employees. On the day I visited, I lunched with the workers on tasty cafe­teria food and then joined them to cheer as one of their own trounced Carl in a good-natured game of Ping-Pong, a com­mon occurrence in the factory’s spacious recreation room.

The scene across the street was far more representative of the city: there sprawled a decrepit state-owned factory, shoddily constructed of brick, now crum­bling and dusted with a heavy layer of soot. Until recently workers had toiled there in exchange for government IOUs. Declared bankrupt under China’s new market system, the factory had been aban­doned. “We’ve seen a lot of protests and riots lately,’’ Carl told me. “Laid-off state workers want their back pay—not to mention their jobs. I’ve been late for work a few times when crowds of state-owned-factory retirees were protesting in the streets. They haven’t gotten a pension payment for many months.”

The recent history of labor strife in this area of China has attracted the atten­tion of Elizabeth Perry, of the Fairbank Center. She considers the region one of China’s most volatile—indeed, it has been a hotbed of Communist revolt for several years. An example of labor unrest she gives occurred just a few years ago, when more than 5,000 workers at the local steel works took to the streets shouting “Down with the newborn bourgeoisie,” “Yes to socialism, no to capitalism,” and “Long live the working class.” A similar pro­test took place in front of the govern­ment offices the following year.

It is estimated that about a quarter of all state workers in the city had been laid off by 1994; that’s probably too few to prevent the ailing state-owned sector from dragging the economy into collapse and taking the country along with it. For decades China's industries simply fol­lowed the government’s economic plan; they never learned how to keep proper accounts, be efficient, or turn a profit. Almost half of them lose money; they are kept afloat by government debt, and generally they employ far more workers than they need. Gao Shangquan, former­ly a vice-minister of China’s powerful State Commission on Economic Restruc­turing, now a professor at Beijing Uni­versity and the director of an economic think tank, told me recently that he cal­culates the number of redundant workers still clogging China’s state industries to be around 24 million.

Some observers have been impressed not by how much worker unrest China has seen but by how little. China’s re­formers managed to appease many laid-off state workers in past years by fur­loughing them on reduced salaries, with benefits, rather than firing them outright. However, the plight of the workers ap­pears to be getting worse. Chinese gov­ernment statistics indicate that in 1998 the ranks of state workers fell by almost 20 million, a huge reduction over pre­vious years. Admittedly, this figure is dif­ficult to interpret, because part of the change may simply be due to the reclas­sification of furloughed workers as no longer employed by the state. But the government does anticipate additional large layoffs in textiles, steel, railroads, coal mining, and the military over the coming months.

Thomas Rawski is a China special­ist in the economics department at the University of Pittsburgh. “Employment growth in other sectors has stalled, and government policies to boost employ­ment are ineffective,’’ he told me not long ago. “And yet the reform process can’t be undone. The lower levels of government have already been told they can lay off workers. Even if the policy­ makers at the top change their minds, it’s too late to reverse direction.”

While the Tiananmen generation reflects on the past promise of democracy, a new generation of Chinese students, both at home and abroad, is looking ahead to the overwhelming challenges facing China in its risky bid to move toward a market-based economic system. Unlike their predecessors, these young Chinese tend to favor working within the limits set by the regime. Like their predecessors, they are dreamers—but they're keeping at least one eye open. They know that in the short term the crux of China's future is those 24 million excess workers. To their credit, though many of them are studying in the United States, they are keen to return to China and make a difference.

Yet the system within which they are so eager to work is hopelessly mismanaged. Perry Link, of Princeton, and his colleague Liu Binyan, one of China's most seasoned independent journalists, wrote a scathing critique of Chinese "reform" for The New York Review of Books in 1998. They used the research of an unorthodox economist named He Qinglian, whose work made a bad joke of the idea that economic reform in China has led to anything that deserves to be called progress. Officials in charge of implementing economic change were never made accountable to the people through accompanying political reforms, so the entire system became corrupt. The result, the economist showed, has been not the production of wealth but simply its transfer. The growing "free" market in China is mostly about well-connected entrepreneurs speculating with public funds, pocketing the profits, and assigning the losses to the state. When Chinese workers pen Marxist manifestos and take to the streets against their new capitalist oppressors, it is these government opportunists about whom they are up in arms.

Contrary to conspiracy theories about a small clique of robber barons, however, just about everyone in China's burgeoning middle and upper classes is implicated. When I lived in China, in the late 1980s, ordinary transactions were for my Chinese friends a matter of identifying the government official who could help and slipping him something under the table. David Goodman, a China expert in Australia, has documented such corruption extensively and concludes that as long as the Communist Party remains committed to its version of reform, Chinese citizens who are making money have a vested interest in playing along. "Far from being alienated from the party-state or seeking their own political voice," Goodman writes in a chapter of The Paradox of China's Post-Mao Reforms (1999), the new middle classes "appear to be operating in close proximity and through close cooperation" with the government. Laborers in the ailing state-owned sector, who number somewhere around 70 or 80 million, are clearly losing out, as the wealth they produce is squandered on the one hand and the security they have enjoyed is revoked on the other. China also has at least 70 million workers toiling in semiprivate industries in townships and villages. Several million more work in enterprises financed by capital from outside mainland China. Martin King Whyte, a sociologist at George Washington University, studies how workers in these latter two groups are faring and compares their plight with the worsening lot of state employees.

"Working conditions in TVEs [township and village enterprises]," Whyte has written, range "from paternalistic to dreadful." In 1994 China passed a labor law relating to such enterprises that specified workers' rights, in terms of maximum hours per week, maximum overtime, minimum wages, and the like. But the law is widely ignored, particularly because many of the workers in these factories are rural migrants who are thus a long way from home and easy to exploit. Their working conditions are appalling: toiling twelve hours a day or longer, seven days a week, they operate unsafe equipment and have accidents at high rates, meanwhile earning miserable pay. Injured workers are simply replaced, and arbitrary wage reductions and firings are common. In most factories financed from outside mainland China the picture is even worse. About 80 percent of such enterprises are established with capital from Hong Kong, Taiwan, and South Korea; they exhibit the harsh regimens and abusive treatment of the stereotypical sweatshop.

If China's private sector can keep growing enough to absorb excess labor, and if economic-cum-social solutions similar to those advanced by the emerging post-Tiananmen elite succeed, a long-term transition away from repression and toward a regulated capitalism could well get under way. Enough new laws have been passed that Chinese citizens are now able to sue government officials over unfair treatment, and they are beginning to do so; on the village level elections are being instituted that might eventually provide a model for the country as a whole.

If, on the other hand, China's economy falters while masses of workers are laid off, the prospects are bad. Since a nationwide revolution against the status quo seems unlikely, worker revolt would probably result only in a protracted war of attrition by the government. The recent crackdown on the religious sect Falun Gong would look like a mild warm-up exercise by comparison.

The United States can do very little to affect the trajectory of Chinese history, but what it does do could be significant. Western corporations that subcontract in China with unscrupulous East Asian operators should be called to account, and human-rights organizations must continue to monitor the plight of Chinese labor. But cutting off direct U.S. business dealings—whether investment or exports—with China, as many human-rights activists demand, is likely only to pamper our consciences at the expense of desperate Chinese workers. In the short term, by joining the World Trade Organization, China does risk increased layoffs, owing to international competition. In the longer term, though, the more Westerners there are doing business in China (like Carl in his factory), the better Chinese working conditions are likely to become. Punishing China economically in an effort to encourage American-style political change could, by undermining the power of economic reformers, have quite unintended consequences. "If China's elites once again fragment into conflicting factions," Martin Whyte writes in The Paradox of China's Post-Mao Reforms, "it is not unlikely that more-conservative leaders will denounce exploitation of workers and attempt to recruit proletarian support for their cause." In attempting to kill off the last vestiges of Chinese communism, the United States would have orchestrated the rise of old-school Marxists instead.

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