How Deng Xiaoping Helped Create a Corrupt China

Posted on June 8, 2015 by

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Bao Tong on June 3, 2015 (NYTimes) — For the past month, I have been banned from giving interviews, and so I am offering this essay to mark the 26th anniversary of the crackdown of June 4, 1989, when the authorities suppressed dissent in cities across China.

The big news these days is the Communist Party’s campaign against corruption. In the three years since the 18th Party Congress, which installed the current generation of China’s leaders, the government has called on officials to “slay tigers and swat flies” — a metaphor for targeting all kinds of corruption, big and small.

While the government has periodically cracked down on graft, there has not been an anti-corruption campaign on this scale. But that doesn’t mean there wasn’t corruption.

In fact, during the two decades after Deng Xiaoping’s famous Southern Tour of China in 1992 — when, in semi-retirement, he traveled to Guangdong Province to forcefully promote economic liberalization — officials at all levels of the Communist Party quietly got rich. Tolerating corruption was, in fact, part of what Deng unleashed.

Deng, China’s paramount leader from 1978 until his death in 1997, is today revered as a hero. And, like Mao Zedong before him and Xi Jinping after him, Deng is portrayed by the party as a political theorist. But there was no such thing as a Deng Xiaoping Theory, any more than there was such a thing as Qin Shihuang Theory.

Like Qin Shihuang, the first emperor, who centralized political authority in China, Deng used force, not theory. He leveraged the power that Mao had won for the Communist Party to march China along his new “Deng Xiaoping Road” — toward an abyss of corruption.

There is one difference. Few people today commend Qin Shihuang’s policy of burning books and Confucian scholars. But smoke from the incense burned in praise of the Deng road continues to reach the heavens.

Focusing on the widespread corruption in China today while forgetting the role of Deng is like blaming the Gang of Four for the tumultuous destruction of the Cultural Revolution (1966-76) while overlooking the role of Mao.

Let Some People Get Rich First

Deng famously said that to open the economy, the party would have to “let some people get rich first.” This was one of the most creative policies ever advocated by a Communist Party leader, as it was in direct contradiction to the party’s founding aim.

At the time of Deng’s Southern Tour, I was in prison, having been removed from office in 1989 along with my patron, the former prime minister and party general secretary Zhao Ziyang.

At first, when I read the publicly available texts, I didn’t really get what he was driving at. What made a deep impression was his hard tone, exemplified by three lines, quoted everywhere: “If we don’t change, we are at a dead end! Whoever doesn’t reform will have to step down! Some people will get rich first!”

Despite Deng’s tough talk, neither the outline nor the substance of his policy was clear. Who were these people who were going to get rich first?

Deng might have meant those the Communist Party supposedly represented: the “worker-peasant alliance.” Or, perhaps, those classes that had then only recently been rehabilitated by the party: “landlords, wealthy peasants, counterrevolutionaries, the bad elements, the rightists.” He might even have been talking about intellectuals, with their knowledge and technological skills. But the correct answer was none of the above: Those who got rich first turned out to be party members and their families and close associates.

The question of who should get rich first was no abstraction. Deng would have understood very well that — as the saying goes — a waterfront pavilion gets the moonlight first: In other words, certain groups would be best positioned to take advantage of the new opportunities.

In a post-1989 society in which the party’s power kept the lid on social dissent, political reform had been strangled, and potentially influential organizations were prohibited from stirring unrest, the prospects for ordinary people who plunged into the sea of business were not bright. Far from striking riches, they were lucky if they didn’t drown. Consider the vast ranks of peasants who were legally prohibited from moving into cities (because of household registration requirements, which restrict families from relocating from their home provinces without approval) or the legions of workers laid off by state-controlled enterprises as a result of Deng’s economic reforms.

The upshot of Deng’s revolution was that those with significant power got significantly rich, those with modest power got modestly rich, and those with no power remained in poverty.

How to Do Business in China

During Deng’s Southern Tour, he coined his most famous catchphrase: “It doesn’t matter if a cat is black or white; as long as it catches mice, it is a good cat.” Deng’s endorsement of market economics stirred a tide of business activity that swept across China and far beyond its shores. China’s sea of business was distinctive because the party controlled everything. Effectively, it operated a great number of shoals that those afloat on the sea had to navigate. Beneath the surface were dangerous waves.

In these rough seas, if you don’t pay for the right to do business, then you are likely to encounter interference from party officials. State-owned enterprises also make doing business difficult. Chinese officials have a real talent for giving people a hard time.

In the story of China’s rise, the unsung heroes are Deng’s “good cats.”

Whom should they pay? In the abstract, party authority, and specifically, party officials — from the former Politburo Standing Committee member Zhou Yongkang all the way down to county and village cadres.

A Communist Party propaganda poster of Deng Xiaoping in Shenzhen, Guangdong province, still draws tourists.  (Tyrone Siu/Reuters)

A Communist Party propaganda poster of Deng Xiaoping in Shenzhen, Guangdong province, still draws tourists.
(Tyrone Siu/Reuters)

Subterranean streams of the market economy that had been buried for decades broke forth little by little and flooded the socialist dikes. The market economy was incorporated into the party-state, along the way losing the characteristics of truly free choice and competition. Instead the market worked compliantly for the good of the party high-ups: From venture capital to initial public offerings, from signing contracts to quality inspections, this was the way things were done. No exceptions.

Party officials are the body of the party. The new economic order means paying for the services of this body. Entrepreneurs join officials to push up G.D.P. This is not only a good solution for businesspeople, but it also gives officials opportunities to notch up career achievements. In a broader sense, it drives the development of the party-state.

This system of market distortion wrecks livelihoods, wastes natural resources, destroys the environment and threatens calamity for future generations. But political priorities require that such collateral damage be forgotten.

These priorities are expressed by slogans like “remember the big picture,” “pay attention to the whole situation,” “smaller principles should be sacrificed to larger ones” and “main priorities trump lower ones.” Rather than admit that they are doing what economists call rent-seeking — extracting a share of the wealth for themselves, rather than creating wealth — officials would prefer to imagine that they are faithful to the party line of “doing big things.”

In China, if you want to “do big things,” you need to buy plenty of backup. How high an official you must pay rent to depends on whether you plan to make an impact at the village, county, provincial or even national level. Party officials at even the lowest levels can determine who within their domain will succeed and prosper.

Once his interests are secured, an official becomes a major stockholder who can be relied on for green lights. So long as he gains, it’s irrelevant whether a venture helps or hurts the public. Its owner can be assured the official will channel “positive energy” to clear obstacles. Such an arrangement may do nothing to protect the environment, satisfy domestic needs or bolster public integrity, but it will no doubt drive up G.D.P.

It’s been more than 65 years since China has had any form of democracy. The legitimacy of the party-state today rests on statistics about economic growth. For officials, there is no more brilliant evidence of achievement. Corruption and development rise together.

Mao Zedong turned private property into state property. Deng Xiaoping transferred national assets, at generous and largely symbolic prices, to party elites. As a result today’s “princelings” — the descendants of the party’s founding revolutionary generation — control much of China’s wealth.

These events were noticed by the public, but the party rank and file largely stayed silent. They understood what was happening, and knew they had no choice but to enact this policy. This was the purpose of the Southern Tour, to ensure stability throughout the party as the new line was implemented.

The Legacy of 1989

On June 4, 1989, Deng ordered the People’s Liberation Army to forcibly suppress large numbers of peaceful volunteers — in Tiananmen Square and in cities across China — who were calling for an end to corruption and to an accelerated pace of reform.

The trauma of June 4 was a sea change. In a situation in which no one dares speaks out, everyone loses their right to speak, everyone loses the right to shape reform, and everyone can be pushed around. One result was that the aim of reform in the 1980s was radically subverted. The party-led economic liberalization was supposed to unchain both workers and business owners, unleash their energies and permit profit-making and profit-sharing. But after the sea change of 1989, profits and resources were distributed according to power.

Deng, through his actions on June 4, drew new demarcation lines to define enemies. The party would protect corruption, and anyone who opposed party-supported corruption was a deadly foe of both the party and the army.

Following the 18th Party Congress, the movement to “slay tigers and swat flies” struck China like a series of thunderbolts. The anti-corruption crackdown seems like an epochal event, but perhaps its greatest usefulness has been in opening people’s eyes. China’s red flag, dyed in the blood of martyrs, has become a shelter for evil people and practices. The legions of corrupt officials exposed may be only the tip of the iceberg, but these revelations have already eclipsed other reported instances of corruption in China or abroad. There is no longer any way of concealing this top-to-bottom corruption, no chance of erasing knowledge of it from people’s minds.

But while the party’s fight against corruption is presented as a public service, if independent citizens — members of civil society — take up the cause, it is a crime.

Popular movements to combat corruption are, as they were in 1989, sternly repressed. China’s put-upon and bullied citizens are denied legal redress, through the court system or petitions to the central government. Indeed, people who have exposed corruption have found themselves put on trial or in prison. Universal values like transparency and accountability are smeared as tools of overseas enemies causing trouble. Meanwhile the limitless power of the party to meddle has only increased, as it co-opts concepts like the rule of law, technology and globalization.

Does the party-state have the heart to truly fight corruption, even to the point of risking the destruction of the party? As many have said, only the top tier of leaders really knows.

I want to say two things. First, as long as China travels on the road charted by Deng Xiaoping, it will not fundamentally end corruption. “Slaying tigers and swatting flies” is not a root-and-branch cure; it can’t even alleviate the worst symptoms. Tigers roam wild, and flies cover the sun: You can attack 100 or 1,000 of them, and it won’t change the essential fact of a corrupt road. But I remain an optimist, because if Chinese leaders are willing to abandon the Deng Xiaoping road, then there is hope.

Second, the June 4 anniversary is here again. Many people long for the party leadership to voluntarily admit the injustice and illegality of the killings. This is also my hope. But I am not optimistic, because so far there have not been many signs to suggest that this will happen. As for whether it might be possible one day, down the road, this I can’t say.

*http://www.nytimes.com/2015/06/04/opinion/bao-tong-how-deng-xiaoping-helped-create-a-corrupt-china.html?_r=4

Posted in: Socio-cultural