China through rose-coloured spectacles A response to Christoph Neidhart’s China v Russia: ‘communist mask’ v ‘democratic hat’ It is important to distinguish between an analysis of the text, and the author’s ideological sympathies. These are probably more or less social democratic, reflecting an attitude that leans more towards protectionist measures than to the market, and which favours  state-owned enterprises whose output piles up in warehouses but at least provides people with jobs. Christoph Neidhart’s article, in our view, very clearly reflects the author’s left-wing sympathies.   Even before perestroika began in the Soviet Union, China’s policy of developing ‘socialist competition’ - free economic zones and so on -  had a political as well as an economic dimension. The pragmatists, who had lost power, were battling with the radicalism of Mao’s last years. China’s new leaders were far more conscious than most of their Soviet perestroika-era counterparts of the dangers of this internal struggle, having experienced so many ups and downs in the course of their political careers. This is why their efforts to ‘thaw’ society were very carefully calibrated and why they were quick to block any threat to their own power.  Neidhart’s notion that China kept its state-owned enterprises running in the interests of the economy and public peace seems less than convincing when we recall the state of Chinese industry after the Great Leap Forward and the Cultural Revolution. We should also bear in mind quite how small a percentage of the population these enterprises actually employed. The Soviet Union, on the other hand, had a completely different ratio of urban to rural population. Its industrialisation policy pursued completely different aims.    Neidhart implies that in Russia it would have been possible and even desirable to slow down the pace of reform. Let us look at some, at least, of the potential consequences that would have resulted from such a policy:

• The country would have faced hunger as practically no food was available at state-regulated prices.
• The market would have remained closed in order to protect domestic producers from foreign competition. But the ‘import cult’ was not created by perestroika.
• The defence industry, which accounted for a sizeable chunk of the economy, would have been left untouched. Aside from public procurement, there would have been no real demand for its products on the domestic market. Rather than bringing in currency, foreign arms sales usually only increased other countries’ debts to the Soviet Union. This situation would probably have led to the need to print more money, which would have driven up inflation.

  China’s rapidly developing economy is a fine image. But it represents only part of the truth. We should bear in mind how threatening this very dynamism  is to the Chinese leadership. They are trying to slow down this runaway growth in a bid to soften the effects of the very serious social problems that economic development has not only not managed to resolve, but in some respects has even exacerbated. The flow of Chinese immigrants arriving in Russia is the result not so much of demographic pressure as of the fact that in regions filled with decaying industrial giants, a large number of young people have little choice but to flee.    As for the future, even when its comes to Russia’s not particularly transparent and market-orientated organisations such as the state corporations, the Russian leadership is promising in  the not too distant  future to relax state  control. But there has been no serious talk at all of privatising the major state resource companies in China.   None of this is to underestimate the colossal economic progress that China has made over these last decades. But we should bear in mind three things. Firstly, neither country’s experience should be uncritically extrapolated beyond its specific historical context. Secondly, rather than looking at the situation in China through rose-coloured spectacles, our approach should be at least as critical as that of the more far-sighted of China’s leaders. Thirdly, we should ask ourselves how deeply these social and political reforms really have penetrated in China.  

Boris Dolgin is the Deputy Editor of Polit.ru

In his notes on the margins, Mr. Boris Dolgin implicitly confirms my view of Russia as fixated on ideology. He makes his argument with ideology, first by labeling myself as having “left-wing sympathies,” then by describing China’s power struggle in ideological terms. However, since the late 1970s, ideology played a rather marginal role in China.

Having covered the Soviet Union and later Russia for more than a decade, based in Moscow for seven years, this author arrived in China believing he could explain its transition with the analytical tools he had acquired studying Russia. I expected to be able to navigate China as a late totalitarian society just as I had learned to navigate Soviet society. Far from it, I had to relearn from scratch. Mr. Dolgin seems to repeat my own mistake.

To understand China’s economic development, it is important to study Meiji-Japan, Japan after World War II, as well as South Korea and Taiwan. After 1978, Beijing considered Japan’s path as a model to learn from, as has been acknowledged by subsequent Chinese leaders. Thus, terms like “socialist competition” are of little use when discussing China.

For four decades, on the macro level, Japan’s post WWII economy was centrally planned, though open, with a free market at its base. Other than the so-called socialist command economies, Tokyo used carrots, not sticks, to bring its private companies into line with the central plan.

It is true that after the Cultural Revolution, China’s industrial giants were in a very sorry state, but it has been convincingly shown that their decay had been exaggerated. A company such as Haier, today the world’s third largest white goods manufacturer, goes back to one of those collective industrial giants. Haier has never been privatized, but slowly modernized and redeveloped.

To speak of young Chinese fleeing from regions with decaying industrial giants to Russia is polemical at best. On any substantial scale, this cannot be supported by facts.

 Christoph Neidhart

Attempts to understand China’s economic development without also looking at its social development seem to me to be flawed from start. This is true of any society, but particularly so in the case of China. Ideology has played an important role at various stages of the country’s history, and not just over the last century.   

There are several justifications for my assertion. First, it would be wrong to reduce the historical process to its economic dimension (Marxists and neoliberals already made this mistake in the last century). Second, these processes in China, as also in Russia and Japan, were an important part of a political, ideological and cultural struggle. This is simply undeniable. My opponent’s position makes sense only in the context of separate and distinct processes taking place in various areas, or in which non-economic processes are deemed subordinate and of less importance. But this issue of the hierarchy of social development factors takes us back to the question of ideology – the author’s ideology.   

The experience of Japan in the Meiji and post-World War II eras, as well as that of South Korea and Taiwan, are undoubtedly very significant. The same is true of Russia’s experience, and China’s too. While it is certainly useful to look for patterns in the transformation processes that took place in these various countries, it would be a serious mistake to use the experience of any of these countries as a tool for analysing and explaining the situation in another. The extrapolation of any element in the explanation needs to be very solidly justified.  The Chinese leaders in 1978-1980 undoubtedly studied closely the experience of their Eastern Asian neighbours and other countries, though they could not, of course, study Russia’s experience of the 1990s. But this does not in any way mean that they directly transposed this experience, not the least because the initial situations, goals and limiting factors were fundamentally different in each case. In China, for example, the transformation process’ first offensive was directed at the villages, freeing them from the commune system. In post-war Japan, political, ideological and cultural aspects were critically important in the transformation process, which remains to this day one of the prime examples of successful transformation brought in from outside. Non-economic transformation played nearly just as important a part during the Meiji-era reforms too.

      A study of the term ‘socialist competition’ is illustrative in this respect. If we see the processes in China in 1978-1980 and in post-war Japan as being equivalent, the notion of ‘socialist competition’ seems to have no place at all. But if we place the Chinese reforms in their specific context we see that the introduction of the notion of ‘competition’ as something not incompatible with the socialist system, was the subject of speeches by party leaders and discussions in the party press.  The author mentioned Haier. The story of this business is also very illustrative. The factory producing refrigerators was built in Qingdao way back in the 1920s, long before the date when it is now said to have been founded. Later it was nationalised, became a state-owned enterprise, and as such, went into decline, building up debts of more than a million yuan and losing many of its employees.  Bankruptcy procedures began and the enterprise was shut down. At this point the city authorities turned to the young Zhang Ruiming as a sort of crisis manager who might be able to salvage at least something from the ruins. Work began again from scratch. This situation is very familiar to Russians, since this was often precisely what happened to Soviet-era enterprises, only in Russia’s case this usually had completely different results.   My assertion that young Chinese are fleeing regions of decaying industry might seem debatable in Japan, but not in Russia, where many of these Chinese eventually end up. These assertions are based partly on conversations with some of the Chinese who have settled in Moscow.