China's long winter

CHINA'S LONG WINTER

In the beginning there was surprise, for a short while elation, then shock, disgust, and finally grief. Intense emotions once again gripped Westerners as they watched the unfolding of events in China--above all, disbelief. The prevailing Western image, propagated by journalists, foreign diplomats, and the Chinese government alike, had been of a popular, dynamic, liberalized leadership that was successfully opening up China economically, politically, and socially. In ways that seemed gratifying, the Chinese were becoming more and more like us--Westernized and modern, dancing to rock-'n-'roll music, drinking Coca-Cola, and eating McDonald's hamburgers.

The troubled reality that underpinned the mass demonstrations of this past spring--the reality behind the Cokes--is that China's economic reforms have been encountering serious difficulties over the past several years: inflation, recurrent shortages, electricity blackouts, transport bottlenecks, waste, and inefficiencies, culminating in runs on banks and panic buying after the push for price reforms in 1988. GNP continued to climb, but the Chinese economy was lurching out of control, and this past year China's leading economists openly admitted they were baffled as to how to set it back on course.

Social discontent was mounting apace. China's own opinion polls (a post-Mao phenomenon) showed that the reform program was turning sour in people's minds by about 1985. It was then that the new economic policies had begun to take root in the cities and that the new patterns of social stratification took more visible shape.

Academics conducting interviews in China confirmed the opinion polls, and noted a profound sense of loss and frustration among people of all walks of life to an extent that the opinion polls did not dare express. Rampant corruption and profiteering, sharply widening disparities in income, erosion of the welfare system, threats of unemployment, all of these ills were deemed by Chinese interviewees to be part and parcel of the economic reforms, and they had been sapping people's trust in government policies. When I last conducted interviews in China in 1988, there was even talk of a collapse of China as a nation, of a bureaucracy more corrupt than the Kuomintang's of the 1940s, of degeneration into social anarchy. I even privately heard laments that only another "revolution" could save China.

This sense of disillusionment and frustration deepened as the economy veered further off course. To stanch a galloping inflation, the government sharply tightened up on bank loans. The pinch has been felt most painfully in the country-town enterprises that have mushroomed this past decade, thriving on cheap peasant labor. Cut off from bank credit, they very quickly experienced cash-flow problems and went under by the thousands, deliberately sacrificed by the government as a means to brake a runaway economy. The millions of former peasants who have been thrown out of work saw no point in returning to the land, where increases in labor input could no longer squeeze out higher yields. Roaming the country in search of a living, they joined the armies of unemployed laid off by the urban construction...