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China's Gilded Age

March 5, 1997

The death of de facto emperor Deng Xiaoping two weeks ago has left China and the world wondering what will happen next. When Deng came to power in 1978, he instituted the economic reforms that made China's economy the third largest in the world. Deng chose his successor, President Jiang Zemin, eight years ago, so the transfer of power may be smooth. But how well Jiang can negotiate the competing claims of an increasingly capitalist economy and a repressive, authoritarian regime remains to be seen.

In "China's Gilded Age" (April, 1994, Atlantic), Xiao-huang Yin, a professor at Occidental College, describes the changes in China's society wrought by Deng's drive toward a free-market economy. Yin reports that since he left China in 1985 there has been an urban economic miracle that has resulted in the creation of "Chinese Carnegies and Rockefellers" who are "more successful than their American counterparts." Also newly emergent, Yin writes, is a middle class that can afford color TVs and refrigerators -- considered luxuries only ten years ago. But with money has come pervasive corruption, and the national government has been loath to crack down on it for fear of losing control of the direction of China's economic growth. While increased economic prosperity has for the moment weakened calls for democratic reform, Yin argues that "as China's newly emerged middle class gains strength, it will demand more political power."

Not everyone has been caught up in the economic tide. The income gap between the urban and rural (billion-strong) population is growing -- along with a sense of resentment that the government is ignoring the rural population's needs. After painting a scenario of potential instability, Xiao-huang speculates on what effect the "paramount leader's" death might have on China:

How China after Deng's death can combine a capitalist economy with its legacy of communism is anybody's guess. Most Chinese agree that the economic reforms may continue and outlast Deng's political system. There is a great risk of chaos in the prospect.... People wait in uneasy anticipation. The looming future may hold continued economic prosperity along with political freedom, but it may also hold an eruption of upheavals and disunity like that after the collapse of the Manchu Empire, in 1911. In any case, China's prospects are extremely uncertain.

The United States will be watching China carefully to see whether the change in leadership leads to a change in Chinese economic policies, since maintaining a strong trade relationship with China is important for our own economic health.

For more Atlantic writing on China see the Flashback "One China?", a collection of articles that explores U.S.-China relations since the turn of the century and sheds light on how the United States has responded to previous upheavals in China.

  • See the Flashbacks archive

    Copyright © 1997 by The Atlantic Monthly Company. All rights reserved.
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