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Dilemmas of Reform in Jiang Zemin’s China, by Andrew J. Nathan, Zhaohui Hong, and Steven R. Smith (eds.)
3. In Search of Re-ideologization and Social Order
Zhaohui Hong and Yi Sun
At the Fifteenth Congress of the Chinese Communist Party, Jiang Zemin delivered a speech entitled “Hold High the Great Banner of Deng Xiaoping’s Theory for All-Round Advancement of the Cause of Building Socialism with Chinese Characteristics into the Twenty-First Century.” 1 Using the concept of Deng Xiaoping’s Theory (Deng Xiaoping lilun), Jiang signaled the beginning of ideological reconstruction in Jiang Zemin’s China.
As Guoguang Wu and Xiaonong Cheng mention in this book (in Chapters 2 and 7, respectively), the CCP has relied on economic performance to maintain its political legitimacy since the Tiananman incident in 1989. But due to inevitable fluctuation of the market economy, this legitimacy is tenuous. To sustain its legitimacy and stability, the CCP has to add ideology as a supplementary force in Jiang’s China.
A review of the changing roles of ideology since 1949 shows three different stages led by three generations of CCP leaders. Mao’s era (1949–1976) was characterized by “ideological fever,” in which ideology was an omnipotent and omnipresent force that governed ordinary people’s daily lives. In contrast, Deng’s era (1978–1997) can be seen as one of ideological deconstruction. 2 Deng’s economic pragmatism, expressed through his well-known “cat theory,” eroded Maoism and diluted the dominant force of communist ideology. 3 However, frustrated by the widespread new cult of wealth, accompanying value vacuum and money worship, Chinese intellectuals in the 1990s began to reassess the role of ideology in an attempt to rescue a society plagued by declining morality. 4 In response, Jiang called for a “reemphasis on politics” (jiang zhengzhi) in 1995 5 and advocated “upholding the banner of Deng Xiaoping’s theory” at the Fifteenth Party Congress in 1997. Jiang’s China seems to be undergoing a process of ideological reconstruction, which differs from both Mao’s intense indoctrination and Deng’s expedient pragmatism. The role of ideology, therefore, follows a dialectical circle: belief (thesis)–disbelief (antithesis)–reconstruction of belief (synthesis). 6
When Deng emerged as the paramount leader twenty years ago, he appeared as an advocate of Maoism, but this never prevented him from making creative policy adjustments. Deng shrewdly urged the public to “comprehensively and accurately” interpret Mao’s Thoughts, but to “differentiate Mao’s ideas from his mistakes.” Attributing “Maoist truth” to collective wisdom rather than to Mao himself, Deng’s strategy of championing “Maoism without Mao” 7 enabled him to select the “true essence” of Maoism by his own standard. Maoism became those ideas that Deng applauded, such as the emphasis on CCP leadership. On the other hand, Mao’s ideas and practices that Deng disliked became Mao’s “personal mistakes” awaiting “correction,” such as the initiation of the Cultural Revolution. In so doing, Deng managed to kill three birds with one stone, for he succeeded in pacifying the conservatives and meeting the demands of the liberal reformers, while at the same time creating a comfortable environment in which he could practice his own ideology without negative backlash. As a result, Deng’s China was actually governed by a composite ideology; that is, by “Mao’s bottle with Deng’s wine.”
Borrowing a page from Deng’s book, Jiang is likely to imitate what his predecessor did two decades ago. As Jiang reiterated in his report, it is the “sacred historical responsibility” of the new CCP leadership not only to uphold the “basic principles” of Dengism, but also to “enrich and develop it consistently through practice.” 8 Apparently, Jiang intends to distinguish Deng’s “correct ideas” from his “personal mistakes” by understanding Deng’s theory “comprehensively and accurately.” After all, Deng’s ideas were also the product of collective wisdom. Despite his public rhetoric, Jiang intends to create his own alternative ideology by inheriting Deng’s “useful” ideologies, updating his outmoded ones, and rectifying his erroneous ones in order to formulate Jiang’s own initiatives. By repeating Deng’s ingenious approach in dealing with Maoism, Jiang’s China may be governed by “Dengism without Deng” or “Deng’s bottle without Deng’s wine.” 9
In his report, Jiang emphasized the concept of the “preliminary phase of socialism” that he interpreted as an important component of Dengism, 10 although former premier Zhao Ziyang initiated it in 1987. It is worth noting that Jiang intended to extend Zhao’s application of the “preliminary phase” theory from the pure economic sphere to other areas as well, including the ideological realm, but it is not clear how Jiang defines the so-called preliminary socialist ideology and adapts it to the needs of the “preliminary socialist economy.” 11
Initially, the theory of the “preliminary phase of socialism” was designed to “justify the economic reforms that had introduced many semicapitalist methods into China’s economy,” 12 such as land speculation, class polarization, property privatization, and massive unemployment. According to orthodox Marxism, which advanced the theory of “economic determinism,” this “semicapitalist economy” would require a “semicapitalist ideology.” The early stages of China’s economic development made necessary the establishment of various types of ownership and different means of distribution, which in turn have called for a corresponding belief system. Obviously, Deng’s theory alone is insufficient to meet the new demands of socioeconomic development. The need for a new ideology, combined with the necessity for new legal and ethical codes, makes a period of ideological reconstruction imperative.
China’s history and culture have determined that ideology still plays an important role in maintaining political legitimacy and guiding the country’s socioeconomic development. Although Deng’s approach was de-ideologization, traditional Confucianism and radical communism generated a unique priority: thinking is more important than action, and in practice, “rule by ideology.” 13 As Yan Sun pointed out, ideology is “the decisive criterion for determining the degree of empirical change.” Analyzing the reasons for sustaining “an ideological hegemony,” she argues that ideology has contributed to political and social stability. In particular, “the Chinese concern for ideological and conceptual adaptation,” in her view, “is related to the national search for identity and resurrection that has faced the nation since its confrontation with the West in the last century.” 14
Ideological reconstruction in Jiang’s China must deal simultaneously with two issues—continuity and change. On the one hand, a modified Dengism will help legitimize the new regime and the power succession against conservative challenges, which will help preserve the fruits of economic reforms. On the other hand, maintaining “Dengism without Deng” will allow new ideas to develop. One of the main principles of Dengism, according to Jiang, is to “emancipate mind and seek truth from the facts.” Using this principle, in Jiang’s view, will be conducive to “solving new issues, promoting new perspectives, and realizing new leaps,” and will enable the creation of a new ideology. 15
This chapter analyzes Jiang’s ideological strategy from a historical and comparative perspective, and discusses the issues concerning the construction of new ideological, economic, and legal systems. This new ideology has to venture beyond the historical boundaries set by both Maoism and Dengism, thereby ushering China into a new age.
The Idea of Balance in the Reconstruction of Chinese Values
Jiang expounded on the urgency to build a “socialist spiritual civilization” by incorporating the rich historical and cultural legacies of China and positive aspects of foreign culture. 16 However, he did not have a clear and feasible proposal on how to accomplish this task.
A reconstruction of Chinese values requires the reevaluation of both Maoism and Dengism. Mao can be seen, to a large measure, as an idealist who was fervently devoted to ideology and revolution, whereas Deng was a realist who valued pragmatism and reform. Mao’s policies, such as instigation of the class struggle and the Cultural Revolution, were predominantly political in nature, whereas Deng’s polices centered around economic themes. Mao favored egalitarianism as practiced in the People’s Communes, whereas Deng liked efficiency and implemented the household responsibility system. Mao stressed spiritual values, whereas Deng paid more attention to economic productivity. 17 Wang Huning, political consultant to Jiang, once commented:
Mao’s strategy was to achieve [economic] development through political means, with mixed results of successes and failures. The main problem for Mao was the lack of economic progress. Following the end of the Cultural Revolution, Deng Xiaoping chose a different strategy with the economy at its center. . . . China’s political development has to be molded within this framework. 18
Jiang pointed out that the CCP must learn how to deal with the intricate relationships “between reform, development and stability, between economy and politics, between material civilization and spiritual civilization, between productivity and relations of production, and between economic foundation and spiritual infrastructure.” 19 However, Jiang did not offer any specific and convincing way to deal with these “intricate relationships,” which actually requires an approach of the most sophisticated balance.
The idea of balance, supported by the “three-sided coin” theory, is valuable in critiquing both Maoism and Dengism and developing a new perspective. Instead of two sides of a coin, this “three-sided coin” analogy argues that each coin actually has a third dimension, which is the middle side connecting the other two sides—a middle-of-the-road approach that often provides a necessary compromise between two opposing views. This kind of compromise or moderation may be the second-best choice in dealing with the dilemmas of China’s economic reform. 20 The three-sided coin theory suggests that Jiang’s China needs to maintain a meaningful balance between Maoism and Dengism, that is, a balance between idealism and realism, spiritualism and materialism, politics and economy, and egalitarianism and efficiency. Mutually complementary in nature, the balance will supply certain missing links in both Mao’s and Deng’s ideologies.
This idea of balance is essential for the development of a new ideology. The renewed emphasis on ideology may mark an initial departure from Deng’s ideological destruction, but it is by no means a replica of Mao’s ideological indoctrination. Failure to conserve aspects of Dengism will make it difficult to preserve the fruits of economic reforms and dodge criticisms from the left; on the other hand, failure to sustain certain portions of Maoism will render it difficult to tackle the negative aspects of reform such as corruption, and to avoid attacks from the right. Only by adopting a middle-of-the-road approach and skillfully combining both Mao’s and Deng’s ideologies will the new regime be able to provide effective leadership.
This kind of balance works from a cultural perspective as well. In fact, the essences of Chinese traditional (Confucian) culture are balance, moderation, and compromise. The majority of Chinese probably favor moderation as their ideological orientation. The extreme Leftist fever during the Maoist era left people longing for material benefits; yet rampant official corruption and massive unemployment in Deng’s era have made many people look back at the frugality and purity of life during Mao’s time. The inherently self-contradictory public sentiments—the desire for change and nostalgia for the past—provide a cultural and psychological condition that will make a balanced ideology and moderate leadership all the more welcome. 21
Balance will also benefit economic progress. From an economic standpoint, equality and efficiency are, in a sense, in perpetual conflict with each other. Maoist preaching and the practice of egalitarianism were pushed to the extreme and resulted in the “iron bowl” phenomenon without unemployment. Deng chose to experiment with a market economy, which emphasized efficiency rather than full employment. However, the resulting social disparities between the rich and the poor and between the urban and rural areas have given rise to widespread public discontent. The yardstick of productivity alone cannot measure social progress as it involves a multitude of other factors such as social and moral justice. In this sense, the current situation presents an excellent environment in which to create an equilibrium between equality and efficiency, poverty and prosperity, and stability and development through construction of a new ideology. 22
Balance is a means of making adjustments to existing ideas while creating a new governing philosophy. In the process of balancing, “the ideology of modernization” will be a new belief and value system rooted in traditional culture but incorporating Western ideas. It will fill the spiritual void felt by many, especially the young people. This new ideology selectively combines and incorporates Confucianism, religious beliefs, patriotic sentiments, and Western ideas.
Since the late nineteenth century, various reforms and revolutions, including the Western learning movement, the May Fourth Movement, the Nationalist-Communist struggle, the Cultural Revolution, and recent economic reforms, have leveled severe attacks on Confucianism. However, this ancient philosophy has demonstrated remarkable resilience, for it is ingrained in the Chinese mentality. As the guiding philosophy and code of ethical behavior for centuries, Confucianism still has much to offer. 23 The idea of “self-cultivation and social etiquette,” for instance, inculcates common courtesy and helps refine human conduct; the idea of “peace” promotes mutual understanding and cooperation; and the principle of “the golden mean” is conducive to moderation, compromise, and tolerance. The Confucian emphasis on education enhances respect for knowledge and those who transmit knowledge. The principle of “not doing to others what one does not want done to oneself” encourages treating others as equals and with consideration. Finally, the Confucian teaching of self-sacrifice for the public good is badly needed in a society that is enmired in crises about ethics and public morality. 24
Another ingredient of the new belief system derives from religion. The concepts of humanism and morality contained in many religions can help cultivate the feeling of love of humanity and generate a sense of optimism. Both Western Christianity and eastern Buddhism teach peace, universal love, and nonviolence. Jiang once asked people to reread Mao’s In Remembrance of Bethune with the purpose of reeducating the public on the “Bethune spirit”—one of selflessness, honesty, purity, and morality. 25 In a way, the Bethune spirit can be seen as a kind of religious expression of self-sacrifice for a worthy cause. However, if labeled as a “communist spirit,” it will probably fail to generate any enthusiasm from the public, which has become deeply disillusioned with communism. Religion must be kept separate from politics and religious freedom should be permitted. 26
A third component of this “ideology of modernization” is patriotism. Patriotism is an internalizing ideology that can galvanize domestic forces for a national course without jeopardizing the interest of other nations or states. In the past, patriotic education conducted under both Mao and Deng was ineffective because the government equated patriotism with devotion to the Communist Party and socialist system. Deng once said that motherland is not an abstract concept because “if you don’t love socialist New China led by the Communist Party, what motherland do you love?” 27 Due to this state-centered “communist patriotism,” 28 patriotism was heavily tainted with politics to the extent that some people now have a negative reaction to the word “patriotism.” The new version of patriotism, therefore, must distinguish the state from the party, and separate patriotic education from political indoctrination. At the same time, it needs to accentuate the richness of Chinese history, culture, language, land, and people so as to instill a strong sense of pride in the populace. The concept of the party-state should be replaced by one of the culture-state.
Western ideas should also be incorporated into the “ideology of modernization.” Jiang urged China to “open various channels of cultural exchange with foreign countries in order to absorb their best cultural elements.” 29 Isaac Newton once made an interesting analogy: if two people, each with an apple, exchange the apples, then each would end up with still one apple; yet if two people, each with an idea, exchange their ideas, then each would end up with two ideas. Today, with modern means of communication, this kind of exchange can often generate multiple ideas instead of two ideas.
Today’s young people are quick to embrace modern ideas as well as modern fashions and lifestyles. China can take advantage of this mentality to educate the youth on the characteristics of a “modern” citizen. Certainly, greed, selfishness, lawlessness, and extreme materialism are not the real characteristics of a “modern” individual. On the contrary, people should be law-abiding, hardworking, fair-minded, trustworthy, civilized, and willing to help others. Modernization not only bespeaks advancement of material life, but also connotes a high standard of values and ethics.
Defined as such, modernization thus becomes not merely short-term material gain and economic development as outlined by the CCP’s blueprint for “the four modernizations,” but also a new way of thinking—an ideology that encompasses the positive elements of Confucianism, religion, patriotism, and Western ideas. This ideology will enable China to balance and integrate existing ideologies, including Maoism and Dengism, in order to “promote social, professional and family morality.” 30
The Idea of Transition in Economic Development
Jiang’s report to the Fifteenth Party Congress outlined the government’s plan for reforming state-owned enterprises (SOEs) through promoting a shareholding system, but Jiang did not specify ways in which to accomplish this. His vagueness may lead to irresponsible bids for massive privatization and create chaos through mass unemployment. The experience of economic reform over the past twenty years has demonstrated that successful reform must be gradual, and must cross several “bridges” before its final destination. Impatient and radical tactics may be self-defeating.
According to the theory of “transitional development” (zhuanxing fazhan lilun), China must complete both “institutional transition” from a planned to a market economy and “economic development” from an agrarian society to an industrial one. 31 Instead of focusing on the ultimate results of the reform, “transition” places the priority on the specific stages of reform in order to formulate feasible policies and strategies for both institutional and economic changes. Additionally, gradualism is conducive to effective reform. In contrast to the Russian “shock therapy,” China needs to emphasize gradual but progressive changes. 32
To implement this idea of transition, reform of the SOE property rights is urgent. Jiang asserted that “the shareholding system (gufen zhi) is a form of capital organization in modern enterprises . . . , which can be used by either capitalism or socialism.” 33 One high-ranking government official has given a timetable to solve the SOEs’ problems within three years. 34 This kind of time line in a way resembles the overly ambitious and irrational approach that was adopted during the late 1950s, and might have serious repercussions. Clearly, this reform has to be carried out cautiously in order to prevent a wave of frantic bids for destruction of various SOEs. As pointed out by Guoqiang Tian and Hong Liang in Chapter 5, many experiments with the shareholding system have proven unsuccessful, demonstrating the incompatibility between Chinese culture and the Western concept of property rights. 35
For instance, the shareholding system stresses the importance of capital rather than human resources. This may conflict with the Chinese way of management, which emphasizes interpersonal relations, family connections, and feelings. Also, the Western shareholding system follows the policy of “one share one vote.” Chinese culture, however, does not have a democratic tradition with its principle of the minority following the majority. People are not familiar with this democratic practice; instead, they are accustomed to conforming to a strong leader. Paternalism and communistic mercantilism still constitute the basic principles of Chinese management. Besides, a shareholding system requires that the public have easy access to all the company’s records. This “open-door” principle would be alien to Chinese culture, which attaches great importance to “face saving” and favors guanxi (connections). 36 Additionally, distribution of the enterprises’ capital among workers would create tension and would be detrimental to the cohesiveness and productivity of the enterprise as a whole. If existing capital is divided among current employees, then future employees will be the “working class” whose incomes would never catch up with those of the senior members, despite the fact that the new workers are likely to be better-educated and have more technological skills.
Therefore, instead of implementing radical shareholding reform, it would be sensible to first change the SOEs into the cooperative shareholding system (gufen hezuo zhi) as a transitional bridge toward the modern shareholding system. The experience of property rights reform of the township and village enterprises (TVEs) in the 1980s showed that the cooperative shareholding system (CSS) has a unique “collective share” (jiti gu), theoretically owned by all shareholders in the enterprise. There are four basic characteristics of CSS, compared with the shareholding system. First, the collective share accounts for about 50 percent of total capital. Second, shareholders have the right to dividend income but do not individually own the shares, which are not transferable or inheritable. Employees who leave the enterprise cannot take the shares with them. Third, collective shares are not open for trading on the stock market, nor are they available for purchase by anyone outside of the enterprise. Finally, its voting policy is “one person one vote” instead of “one share one vote” as is practiced by the Western shareholding system. 37
By utilizing “one person one vote” and by distributing profits fairly among employees, this type of ownership encourages workers to make maximum contributions to their enterprises. The collective share system would ensure a smooth transition from public ownership. Employees in SOEs have an “iron bowl” mentality; it is unrealistic to expect them to adapt to the practices of private ownership within a short period of time. By retaining some “socialistic” characteristics, CSS can lessen the psychological and political resistance to reform on the part of the workers. In addition, SOEs have accumulated a large amount of public capital over the past half century, which in principle should be redistributed, together with the compounded interest, to the workers by making them the new collective owners. Similar to the principle of “the land to the tiller,” it is desirable to create a new concept of “the share to the worker.” 38
However, individual workers’ shares are always too few to have a strong voice in the process of decisionmaking. In practice, workers refused to buy their company shares because they suspected that without enough votes their investment might be squandered away by the managers. Many believe that leaders of their enterprises will collect the money in the name of shareholding ownership, and workers themselves will end up shouldering the financial burden of their enterprises. 39 If this is the case, the workers’ personal savings are cleverly changed into the enterprise’s property, which then will be misused by the officials in one way or another.
James Meade’s theory of “share economy” might be helpful in encouraging workers’ representatives to involve themselves in the operation of their enterprises. Meade argues that a share economy is designed for both labor and capital to share both revenue and risks. This kind of share approach will maintain workers’ “social loyalties,” which are more important than “any purely economic incentive relating to the level of the individual worker’s pay.” 40
But to share the firm’s ownership with capitalists, workers must have enough voting power in the process of decisionmaking. At this point, Meade designed a system, the so-called cooperative voting system between labor and capital. It aims at dividing the company’s decisionmaking process into two categories. One is to apply the “one person one vote” principle to those issues that are most relevant to the ordinary workers, which include capital raising and allocation, dividend distribution, and workers’ education and training, as well as electing the board of directors. Another is to apply the “one share one vote” principle to issues concerning business operation and management, such as production management, marketing, and sales decisions. 41
However, to support the voting power for workers in the long term, it is necessary for workers to control meaningful shares that are the fundamental base of voting rights in companies. Therefore, one possible way for workers to participate in SOEs’ decisionmaking process is to set up a “group share” that practices “one group one vote” instead of “one share one vote” or “one person one vote.” This group share allows a group of workers who cannot afford to purchase a large number of shares individually to buy enterprise shares collectively, and a representative of this group can cast one vote at the shareholders’ meeting. In doing so, those who own a small number of shares will have their own group representative participating in the management process with a powerful voice. This may be a happy medium between the system of “one share one vote” and that of “one person one vote.” It should be similar to “a labor-managed cooperative,” as designed by Meade, “in which the workers own the greater part of the equity of the concern and play the predominant part in the control of the concern’s operations.” 42
Thus, the collective shareholding with “one group one vote” principle has many advantages, for it combines the principle of “distribution according to contribution” and “dividend according to share ownership.” It is especially conducive to building a favorable relationship between labor and capital. In particular, it synthesizes elements of collective and private ownership, Chinese characteristics and Western practices, and traditional ideology and liberal regulations. CSS best addresses the issue of continuity and change by providing a middle-of-the-road solution. 43
However, CSS is an expedient appropriate during the transition from state ownership to real privatization, and the ultimate goal of SOE reform is to move to a system that is guided and regulated purely by the market with clarification of property rights.
The Idea of Order in the Legal System
Jiang’s report put forward the concept of “ruling the country according to the law,” maintaining that “policy-making concerning reform and development must be linked with the establishment of a legal system,” and that “by the year 2010, China will have a complete socialist legal system with Chinese characteristics.” 44 Jiang also stressed that “the goal of politics is to make sure that the economic and other activities are conducted in the right direction and in an orderly fashion.” He argued that “through politics, the legal codes and regulations can be implemented into China’s economic construction and various other tasks,” including “forcefully attacking criminal activities in various forms.” 45 Underlining the importance of systematizing legal control, Jiang said that China “must strive to build and perfect a legal system that can regulate economic activities, preserve economic order, and guarantee the government’s macro-management and control of economic operations.” 46
The idea of strengthening the legal system was not Jiang’s invention; almost all countries that have undergone the process of modernization have done so. The development of industrialized societies demonstrates that it is imperative to balance the double legacies of industrialization—freedom and disorder—in order to balance both personal liberty and social responsibility, both individualism and social stability, and both personal material desire and social ethics. An individual has the right to liberty and freedom, but must also abide by the law and observe certain moral principles. 47 The experiences of other Asian countries have demonstrated that, following economic progress, a sound legal system is more urgent than political democratization. The “four little dragons” in Asia have largely followed the pattern of “economic development first, followed by legal construction, and political democratization as a final destination.” 48 This model suggests that democracy may be premature or even counterproductive for social stability before the establishment of a well-functioning legal system.
The reconstruction of the legal system includes several principles. First, to protect the market economy and promote political democracy, “rule of law” is more important than “rule by law.” If Mao insisted on rule by man, Deng began to address rule by law, which issued various legal regulations. But for Deng, “law was a tool of power, not a tool for society.” 49 Therefore, the top leader (or king) has rights above the law. Jiang is the first chief of the CCP to declare a “rule of law,” 50 which aims at fair and just enforcement of the laws to everybody, including Jiang himself. 51
Second, the rules of “playing the game” are more critical than the “right to play the game.” While few had the right to participate in a free-market economy under Mao, the right to do so was valuable. Under Deng, however, more people had an incomplete or partial right to “play the game” in the market economy, yet the necessary rules were missing, and this gave rise to injustice, corruption, and monopoly. Therefore, making and improving the “rules of the game” have become all the more urgent.
Third, the idea of order means that care for the underrepresented and underprivileged is important because a healthy social order requires both fairness and caring. Caring for the poor is important in promoting long-term fairness and equality. For example, the principle of affirmative action in the United States may not be universal fairness, but is the result of special care for minorities and women. Absolutely fair regulations may turn out to have negative results as far as the underprivileged are concerned because, in practice, fairness to “everybody” is very likely to be harmful to “some.” While one emphasizes equal opportunity, equal results also should be of concern. Therefore, new rules have to be designed to minimize the current wide disparity between the rich and the poor, and between the urban and rural areas. 52
To implement the idea of order, priority should be given to building a legal mechanism to fight against rampant corruption in order to maintain fair competition and equal opportunities. Along with legal stipulations, a regulatory system and the use of public opinion are also necessary in combating corruption. 53 In light of these objectives, officials from the county level and up, first of all, should be required by law to publicize their personal net worth annually and explain periodically the reasons for certain increases. This will put strong psychological pressure on those who are involved in corruption and may curb further corruption. Additionally, every county needs to set up a special anticorruption committee placed under direct leadership of the Standing Committee of the People’s Congress rather than party organizations. These committees, combining the powers of the public security bureau, the procurators’ offices, and the judicial court, will be entrusted with the responsibility of registering and investigating corruption cases so that penalties can be imposed on the guilty. Also, the power of the mass media and public opinion should be used. Currently, there are no effective means to discourage corrupt officials except for damaging their “face” through the mass media. Major nationwide newspapers should open special anticorruption columns and the local radio and TV networks need to set up anticorruption hotlines to encourage people to get involved in exposing and denouncing corrupt activities. In particular, the power of the CCP Political and Legal Committee (zhengfa weiyuanhui) at various levels needs to be reduced and eventually eliminated. Receiving direct instructions from the CCP, these committees were designed to guarantee the party’s control of major criminal cases, and their existence has severely jeopardized the independence of the judicial court, since they give the party supremacy over the law. 54
In addition to anticorruption efforts, China must also set up rules governing the transfer of SOEs’ assets to avoid property losses. As Jiang announced, “It is crucial to establish a system to manage and protect national assets, guarantee their value and prevent their loss.” 55 But Jiang did not specify how to reach this goal.
Now that large-scale privatization of SOEs is imminent, there may be frantic scrambling for the “Last Supper.” Failure to set up a comprehensive system to preserve and control public assets will result in losses of state capital, rampant official corruption, and massive unemployment. A special task force responsible for appraising assets of the SOEs seems to be one necessary way to curtail public property losses. Currently those in charge of such appraisals are generally officials and accountants from the evaluated SOEs, or those from the same local area. These people may find it difficult to avoid the influence of departmentalism or regionalism or the temptation of material incentives in the forms of bribery or favoritism. As a result, appraisers sometimes deliberately underestimate the value of some SOEs, forcing them to sell their shares below their true value. Another additional danger is that those who lose high-ranking official positions due to the administrative reform of 1998 are going to be the government representatives who supervise the SOEs’ operation. Without official position and with no sense of loyalty, those former administrators will be likely to trade their power for private profit by underestimating the SOEs’ assets. 56 To remedy this situation, the appraisal committee should be staffed by experts and scholars from institutions and areas that are unrelated to the SOE under evaluation. Local officials can offer advice or suggestions, but they should not be involved in the decisionmaking. Mainland China at this point should learn from Hong Kong, where the government uses high salaries to reduce the risk of corruption (gaoxin yanglian); experts and scholars in charge of asset appraisal receive handsome monetary compensation, which serves to reduce the temptation to accept bribes or other material enticements. In fact, mainland China could hire experts from Hong Kong to ensure fair evaluation of the state assets.
In addition, the appraisal committees should be placed under direct leadership of the Bureau of State Property Management (guoyou zichan guanli ju), which, in turn, will be controlled by the National People’s Congress. It must be made clear that the appraisal of state assets is a legal procedure, not an administrative task. A national assets evaluation committee, which would parallel the Bureau of State Property Management, could be established to better assess the quality of work performed by the local appraisal committees. These procedures may be costly, but compared with the potentially disastrous loss of the SOE capital, which could be uncontrollable and unlimited, they are a wise and worthwhile investment that could generate a great deal of social as well as economic benefit.
Banks also should play a critical role in the process of shareholding reform and management of SOEs. Traditionally, banks and SOEs have been parallel and separate institutions, and banks have little incentive to help the latter make more effective use of capital, or to go after SOEs with bad credit. It is indeed shocking that the average deficit of SOEs at present has reached as high as 80 percent, and most of the bank loans have been uncorrectable and written off. 57 To combat this problem, banks can now become shareholders of SOEs instead of simply creditors. By forming this kind of industrial and financial combination, banks will gain a powerful incentive to become involved in the management and regulation of SOEs. They will automatically and accurately assess the SOEs’ total assets value, quality of the management, development potential, and overall credibility before extending significant loans. They will actively monitor how the loan is used, thus effectively curbing, if not eliminating, its misuse or waste.
Furthermore, graduated income taxes and a social security system should be designed to provide special care for underprivileged groups. A study of unemployment shows that while the urban unemployment rate was 7.5 percent, the rural unemployment rate was as high as 34.8 percent by the first quarter of 1997. 58 Unemployment is not only a potentially explosive social issue; it also has serious political implications. U.S. history in the late nineteenth century demonstrated that unregulated competition encouraged both farmer rebellions and labor movements. It resulted in a nationwide Progressive Movement and the New Deal, which promoted the creation of the graduated income tax and social security system partly aimed at diminishing the gaps between rich and poor. Drawing from the American experience, China can implement its own social security and taxation policies. The idea of “unfair” taxes and distribution may have to be applied in formulating a functioning graduated-income welfare system for the poor and a graduated-income tax system for the wealthy in order to provide the necessary relief for poverty. 59
Currently, the government is attempting to educate people on their responsibility to pay income tax, but there is no effective enforcement of the tax laws. Most people are not familiar with the concept and practice of paying tax, as they had never had to do so before the 1980s when their incomes were extremely low. Tax reform needs to focus on income taxes, although consumer taxes, real estate taxes, business taxes, and sales taxes should not be neglected. With personal income dramatically increasing, a reasonable income tax is not only necessary to provide the state with a stable revenue, but also critical for social stability.
Effective implementation of graduated income taxes needs several steps. First of all, a complete set of legal regulations against tax evasion must be firmly enforced. To do so, a computer network is necessary for the National Bureau of Taxation to conduct regular checking, searching, and auditing. China may need to set up a citizen tax record, which will serve as an important reference when people are applying for jobs, loans, welfare, passports, or identification cards. An effective tax system will also require the provision of better services, including free telephone consultation, free and simplified tax forms, regular seminars, written instructions, and professional accounting services. 60
Conclusion
The preceding analysis demonstrates that in facing the dilemmas of economic reform, establishment of a new belief system centering on the theme of modernization is crucial for ensuring further economic development. It is also imperative to build a comprehensive and effective legal system to facilitate both ideological reconstruction and economic development, and pave the way for the eventual democratization of politics and society. The ideas of balance, transition, and order are the three critical themes and challenges for the reconstruction of ideology. They are the “blind spots” in both Maoism and Dengism, and constitute the central concerns of today. The process of achieving all three goals provides challenges as China implements its “new deal” in a new era.
Although history once selected the CCP as China’s leader, it does not grant the party a permanent “mandate of heaven” and unchangeable legitimacy. 61 At this moment, China faces unprecedented dilemmas as well as precious challenges. Whether or not the country can achieve a theoretical breakthrough and implement creative policies will ultimately determine its destiny.
Endnotes
Note 1: Jiang Zemin, Gaoju Deng Xiaoping lilun weida qizhi, ba jianshe you Zhongguo tese shehui zhuyi shiye quanmian tuixiang ershiyi shiji [Hold High the Great Banner of Deng Xiaoping’s Theory for All-Round Advancement of the Cause of Building Socialism with Chinese Characteristics into the Twenty-First Century: Report Delivered at the Fifteenth National Congress of the Communist Party of China on September 12, 1997] (Beijing: Renmin chubanshe, 1997). The quotations from this document hereafter will be indicated as “Jiang Zemin, Report.” Back.
Note 2: Some scholars describe Deng’s China as “de-ideologization.” See X. L. Ding, The Decline of Communism in China, Legitimacy Crisis, 1977–1989 (New York: Cambridge University Press, 1994), p. 114. Back.
Note 3: At the onset of the economic reforms, Deng Xiaoping remarked that “whether it is a white or black cat, the good cat is capable of catching mice.” It has since been referred to as the “cat theory” to illustrate Deng’s economic pragmatism. Back.
Note 4: Luo Rongqu, Xiandaihua xinlun xupian—Dongya yu Zhongguo de xiandaihua jincheng [Reinterpretations of Modernization—East Asian and China’s Process of Modernization] (Beijing: Beijing daxue chubanshe, 1997), pp. 192–198; Wang Hengfu and Shi Zheng, Wenhua jingji lungao [Theory of Cultural Economy] (Beijing: Renmin chubanshe, 1995), pp. 118–166; Weng Jieming et al., eds., Yu zongshuji tanxin [Discussion with General Secretary of the CCP] (Beijing: Zhongguo shehui kexue chubanshe, 1996), pp. 250–281; Xu Ming, ed., Guanjian shike—Dangdai Zhongguo jidai jiejue de 27 ge wenti [The Critical Moment—The 27 Urgent Issues for Contemporary China] (Beijing: Jinri Zhongguo chubanshe, 1997), pp. 54–85, 452–455, 486–504; Chen Kuide, Zhujiu lun sichao [Discussing Ideology with Wine] (Taibei, Taiwan: Dongda tushu gongsi, 1997). Back.
Note 5: Jiang Zemin, Lingdao ganbu yiding yao jiang zhengzhi [Leadership Must Emphasize Politics] (Beijing: Renmin chubanshe, 1996). Back.
Note 6: Some scholars believe that the changing of apostates consists of four stages: (1) belief; (2) doubt; (3) disbelief; and (4) reformulation of belief. See Bill Brugger and David Kelly, Chinese Marxism in the Post-Mao Era (Stanford, CA: Stanford University Press, 1990), p. 6. Back.
Note 7: We borrow a concept of “Marxism without Marx” from Bill Brugger and David Kelly, ibid., pp. 171–175. Back.
Note 8: Jiang Zemin, “Shenru xuexi Deng Xiaoping lilun—Jinian Deng Xiaoping tongzhi shishi yi zhounian” [“Promoting Studies of Deng Xiaoping’s Theory at the One-Year Anniversary of the Death of Comrade Deng Xiaoping”], Renmin ribao (People’s Daily, Overseas Edition), February 18, 1998. Back.
Note 9: Recently, Jiang Zemin proves interesting in his “creative new ideas” (chuangxin siwei) to develop both Mao’s and Deng’s ideas. See Feng Zirui, “Jiang Zemin yiyu xingcheng ‘chuangxin siwei’” [“Jiang Zemin Intends to Establish His ‘Creative New Ideas’”], Jingbao (The Mirror) 256 (November 1998): 24–26. Also see Ruan Ming, “Jiang Zemin de yishi xingtai” [“Jiang Zemin’s Ideology”], Kaifang (Open Magazine) 134 (February 1998): 39–41. Back.
Note 10: Jiang Zemin, Report, p. 21. Back.
Note 11: Ibid., pp. 20–21. Back.
Note 12: X. L. Ding, The Decline of Communism in China, p. 166. Back.
Note 13: Yan Sun, The Chinese Reassessment of Socialism, 1976–1992 (Princeton, NJ: Princeton University Press, 1995), p. 18. Back.
Note 14: Ibid., pp. 16–19. Back.
Note 15: Jiang Zemin, “Promoting Studies of Deng Xiaoping’s Theory.” Back.
Note 16: Jiang Zemin, Report, p. 21. Back.
Note 17: For differences between Mao and Deng, see Zhaohui Hong, “The Subordinate Men and Social Stability in Twentieth-Century China,” Asian Thought and Society 60 (September–December, 1995): 253–256; and for Deng’s duplicity, see Merle Goldman, Sowing the Seeds of Democracy in China: Political Reform in the Deng Xiaoping Era (Cambridge, MA: Harvard University Press, 1994), pp. 16–18. Back.
Note 18: Wang Huning, Mingren riji: Zhengzhi de rensheng [VIP’s Diary: Political Life] (Shanghai: Shanghai renmin chubanshe, 1995), pp. 53, 194. Back.
Note 19: Jiang Zemin, “Guanyu jiang zhengzhi” [“On Stressing Politics”], Qiu Shi (Searching for Truth) 13 (1996): 3. Back.
Note 20: See Yuan Hong, “Hong Zhaohui de sanmian yinbi lilun” [“Zhaohui Hong’s Theory of the Three-Sided Coin”], Huaren (Today’s Chinese) (November 1997): 23–25. Back.
Note 21: See Yang Peng, Dongya xinwenhua de xingqi [The Emergence of East Asia’s New Culture] (Kunming, Yunnan: Yunnan jiaoyu chubanshe, 1997), pp. 140–211. Back.
Note 22: See Lin Zijun, Chenfu—Zhongguo jingji gaige beiwanglu [The Ups and Downs—The Memorandum of China’s Economic Reform] (Shanghai: Dongfang chuban zhongxin, 1998). Back.
Note 23: For details, see Lin Yusheng, The Crisis of Chinese Consciousness: Radical Anti-traditionalism in the May Fourth Era (Madison: University of Wisconsin Press, 1979). Back.
Note 24: Kong Zi (Confucius), Lun yu [Analects of Confucius] (Beijing: Hue jiaoxue chubanshe, 1994). Back.
Note 25: Jiang Zemin, Leadership Must Emphasize Politics, p. 2. Back.
Note 26: See Hong Zhaohui, “Shehui gaige yu Zhongguo de xiandaihua” [“Social Reform and China’s Modernization”], Zhonggong yanjiu (Studies on Chinese Communism Monthly) (May 1994): 63–69. Back.
Note 27: Deng Xiaoping, Deng Xiaoping wenxuan 1975–1982 [Selected Works of Deng Xiaoping, 1975–1982] (Beijing: Renmin chunbanshe, 1983), p. 347. Back.
Note 28: X. L. Ding, The Decline of Communism in China, pp. 162–163. Back.
Note 29: Jiang Zemin, Report, p. 42. Back.
Note 31: Li Yining, “Zhuanxing fazhan lilun” [“The Theory of Transitional Development”], Xinhua wenzhai (New China Digest) (July 1997): 50. Back.
Note 32: Zou Dang, “Di erci sixiang jiefang yu zhidu chuangxin xu” [“Preface for the Book Entitled The Second Ideological Liberation and Institutional Reconstruction”], in Cui Zhiyuan, Di erci sixiang jiefang yu zhidu chuangxin [The Second Ideological Liberation and Institutional Reconstruction] (Hong Kong: Oxford University Press, 1997), p. x. Back.
Note 33: Li Yining, “The Theory of Transitional Development,” p. 24. Back.
Note 34: See Premier Zhu Rongji’s Press Conference, Renmin ribao (People’s Daily), March 19, 1998. Back.
Note 35: Li Zhiping, “Guanyu woguo guoyou qiye gufen zhi gaizao de sikao” [“Review on Reform of SOEs Shareholding System in China: A Case Study on the Maaishan Steel Shareholding Corporation”], Jingji lilun yu jingji guanli (Economic Theory and Management) 1 (1997): 1–7. Back.
Note 36: Xu Ming, ed., The Critical Moment, pp. 210–211. Back.
Note 37: Zhaohui Hong, “The Shareholding Cooperative System and Property Rights Reform of China’s Collective Township-Village Enterprises,” Asian Profile 23 (October 1995): 359–369. Back.
Note 38: Wang Jue, ed., Laozhe you qigu: suoyouzhi gaige yu Zhongguo jingji luntan [The Share to the Workers: Forum of Reform and Chinese Economy] (Nanning: Guangxi renmin chubanshe, 1997), pp. 1–3. Back.
Note 39: Li Zhiping, “Review on Reform of SOEs Shareholding System,” pp. 1–2. Back.
Note 40: James Meade, “Different Forms of Share Economy,” in Susan Howson, ed., The Collected Papers of James Meade, Volume II: Value, Distribution and Growth (London: Unwin Hyman, 1988), pp. 212–213. Back.
Note 41: James Meade, Alternative Systems of Business Organization and of Workers’ Remuneration (London: Allen & Unwin, 1986), pp. 71–113. Back.
Note 42: James Meade, “The Different Forms of Share Economy,” p. 221. Meade also designs three other types of sharing arrangements: (1) Employee Share Schemes in which workers share in the fortunes of the firm by owning part of the ordinary shares in the business but do not in fact exercise any decisive control over the firm’s operations; (2) Profit-Sharing or Revenue-Sharing arrangements in which labor is paid wholly or in part by a share in the firm’s profit or net revenue but does not take part in the control of the firm’s operations; (3) A Labor-Capital Partnership in which the workers are not required to own any of the capital invested in the business but in which both workers and capitalists share the firm’s revenue and play a part in the control of the firm’s operations. Back.
Note 44: Jiang Zemin, Report, pp. 34, 36. Back.
Note 45: Jiang Zemin, “On Stressing Politics,” pp. 3–4. Back.
Note 46: Jiang Zemin, “Geji lingdao ganbu yao nuli xuexi falü zhishi” [“The Various Levels of Leaders Must Study Legal Knowledge”], Renmin ribao (People’s Daily), October 10, 1996. Back.
Note 47: Hong Zhaohui, Shehui jingji bianqian de zuti [The Themes of Socio-Economic Transition: Reinterpretation of Modernization] (Hangzhou, Zhejiang: Hangzhou University Press, 1994). Back.
Note 48: Hong Zhaohui, “Lun Denghou zhongguo de zhixu chongjian yu Jiang Zemin de jiang zhengzhi” [“The Reconstruction of Social Order in Post-Deng China”], Dangdai Zhongguo yanjiu (Modern China Studies) (January 1997): 64–65. Back.
Note 49: Merle Goldman, Sowing the Seeds of Democracy in China, p. 7. Back.
Note 50: Jiang Zemin, Report, p. 34. Back.
Note 51: Li Shenzhi, “Ye yao tuidong zhengzhi gaige” [“Promoting Political Reform Too”], Dangdai Zhongguo yanjiu (Modern China Studies) (April 1998): 17–19; Dong Yiyu and Shi Binhai, eds., Zhengzhi de Zhongguo—Mianxiang xintizhi xuanze de shidai [Political China—Facing the Era of New System Selection] (Beijing: Jinri Zhongguo chubanshe, 1998), pp. 73–82, 233–266. Back.
Note 52: For detailed information about the idea of order and rule of law, see A. V. Dicey, Introduction to the Study of the Law of the Construction, 10th ed. (London: Macmillan & Co., Ltd., 1961); F. A. Hayek, The Constitution of Liberty (Chicago: Henry Regnery Co., 1960); Lon Fuller, The Morality of Law (New Haven: Yale University Press, 1969); John Finnis, Natural Law and Natural Rights (Oxford: Clarendon Press, 1980). Back.
Note 53: Dong Yiyu and Shi Binhai, eds., Political China, pp. 124–131. Back.
Note 54: For detailed information about China’s corruption, see Julia Kwong, The Political Economy of Corruption in China (New York: M.E. Sharpe, 1997); Gong Ting, The Politics of Corruption in Contemporary China (Westport, CT: Praeger, 1994); Mayfair Mei-hui Yang, Gifts, Favors, and Banquets: The Art of Social Relationships in China (Ithaca, NY: Cornell University Press, 1994); Jean Louis Rocca, “Corruption and Its Shadow: An Anthropological View of Corruption in China,” China Quarterly (June 1992): 402–416; Gordon White, “Corruption and the Transition from Socialism in China,” Journal of Law and Society (March 1996): 149–169. Back.
Note 55: Jiang Zemin, Report, p. 26. Back.
Note 56: Zhao Hui, “Zhongguo dalu zhengfu jigou gaige de yinhuang” [“The Potential Crises of China’s Administrative Reform”], Jing Bao (The Mirror) 249 (May 1998): 40–41. Back.
Note 57: Hong Zhaohui, “Lun dalu guoyou qiye de zhaiwu weiji” [“The Debt Crisis of Mainland China’s State-Owned Enterprises”], Zhongguo dalu yanjiu (Mainland China Studies) (August 1996): 58–71. Back.
Note 58: Hu Angang, “Xunqiu xin de ruan zhaolu” [“In Search of the Second Soft Landing: Reducing Unemployment Rate Is the Top Priority of Macro Regulation”], Liaowang Xinwen Zhoukan (Liaowang Newsweek) (1998): 12. Back.
Note 59: Zhaohui Hong, “Jiang Zemin’s Stressing Politics and Reconstruction of Social Order in China,” pp. 95–96. Back.
Note 60: Xu Dianqing and Li Yanjin, eds., Zhongguo shuizhi gaige (China Tax System Reform) (Beijing: Zhongguo jingji chubanshe, 1997). Back.
Note 61: Xu Ming, ed., The Critical Moment, p. 70. Back.
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