The Alternate History of China

Could Beijing Have Taken a Different Path?

On a visit to China in the summer of 1988, I encountered a widespread sense of drift and despair. The official inflation rate at 18.5 percent, and the actual rate was probably higher. State statistics said that 21 percent of urban workers had suffered a decline in living standards. In big cities, residents needed to routinely pay bribes if they wanted phone lines, electricity service, mail deliveries, or medical attention. Intellectuals were criticizing China’s political leaders, its political system, and even its national culture and national character. “Nineteen-eighty-eight ushered in a season of discontent that is perhaps unique in China’s post-revolutionary history,” I wrote in an article published later that year.

Such a dark mood was surprising at the end of a decade of what the official propaganda apparatus called “reform and opening”—Chinese leader Deng Xiaoping’s ambitious campaign to restructure China’s economic system and open the country to global markets after the stagnation and autarky of the Mao Zedong years. Not an expert in economics, Deng relied on China’s premier, Zhao Ziyang, to figure out how to reform the economy. Zhao contracted agricultural land to farming families to manage as they saw best; authorized villages and townships to set up small-scale, effectively private enterprises; and opened special economic zones such as Shenzhen and other production bases where investors from Hong Kong, Taiwan, and other market economies could set up factories to import raw materials and export products free of tariffs. These and other reforms achieved remarkable success. From 1978 to 1988, China’s GDP more than doubled.

Then, in 1988, Zhao persuaded Deng to authorize another step forward: reforming China’s price system. Under Zhao’s proposed new regime, enterprises would receive a quota of inputs and would be required to sell a quota of outputs at state-set prices. After fulfilling their quotas, they could buy inputs and sell products at market prices. This “dual-track price reform” was supposed to eliminate incentives for corruption, spur production enthusiasm, and promote even faster growth by giving managers and workers a financial reason to improve their products and productivity, since they could now sell their goods for higher profits. But before the plan was even put into effect, enterprises started bribing suppliers for more inputs at plan costs in anticipation of the shift, and consumers flooded stores to buy everything they could find before prices went up. Corruption worsened, inflation surged, and Zhao canceled the reform. China seemed stuck with a dysfunctional hybrid economy: half planned and half market, with the worst features of both.

The sense of paralysis helped drive popular dissatisfaction. In 1989, students in Beijing launched pro-democracy demonstrations in Tiananmen Square. Thousands of workers and low- and mid-level government and party officials joined them, and soon, the unrest spread to hundreds of cities around the country. By that time, Zhao had been promoted to acting general secretary of the Chinese Communist Party, officially the highest position in the Chinese party-state, although in reality, he remained overshadowed by Deng and a handful of other retired CCP elders.

Still, Zhao was responsible for managing the crisis. He insisted that the students could be persuaded to leave the square peacefully. But Deng wanted to use force. He cashiered Zhao and ordered the People’s Liberation Army to enter Beijing, where they put down the uprising, ending years of openness. Zhao spent the last 15 years of his life under house arrest. China, meanwhile, steadily evolved into the high-tech totalitarian system that it is today.

Did it have to be this way? In Never Turn Back, Julian Gewirtz says no. Gewirtz, a historian who now works on China policy in the White House, provides a vivid and readable account of the period from Mao’s death until shortly after Tiananmen, with a focus on the role of Zhao. In Gewirtz’s view, a more liberal development path was possible, and Beijing might have pursued it were it not for the quirks of history. “It is possible to imagine a China, even one ruled by the CCP, that rehabilitates Zhao Ziyang, praises the debate and contestation of ideas that characterized the 1980s, and even apologizes publicly for the violence of June 1989,” he writes. “It is possible to imagine China once again experimenting with meaningful political reforms, increasing the independence of the judiciary and the media, and giving ordinary people a greater say over the country’s direction.”

But historical contingency is not the reason China has become what it is today. Zhao’s conservative archrival Li Peng articulated a hard truth during the 1989 crisis. The pro-democracy demonstrators, Li said, “want to negate the leadership of the CCP and negate the entire socialist system.” Their aims were fundamentally at odds with the structure and philosophy of the one-party system. A regime that claims to possess an infallible ideology and is constructed on what Gewirtz describes as a system of “entrenched hierarchies” cannot survive if it opens up. Other CCP leaders knew this, even if Zhao did not.

DIFFERENT AND THE SAME
In devising measures to implement Deng Xiaoping’s goal of modernizing the Chinese economy, Zhao was intellectually adventurous. He welcomed the advice of young think tank scholars and advisers. And as Gewirtz describes in his previous book, Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China, Zhao invited prominent Western economists such as Milton Friedman and James Tobin and Eastern European experts including Janos Kornai and Ota Sik to discuss the pros and cons of market economics. He also became enamored of the ideas of the futurologists Alvin and Heidi Toffler, whom he entertained in Zhongnanhai. The Tofflers forecast a post-industrial society dominated by computers, the Internet, and digital media. Chinese translations of their books Future Shock and The Third Wave, along with John Naisbitt’s similarly themed Megatrends, were enthusiastically received.

These writings may have predicted radical change. But they still fit well with the belief inherent in Leninist systems that once class conflict is eliminated, government is essentially technical, and leaders equipped with the science of Marxism—updated with contemporary tools—can design and control society. Zhao was determined to use these insights to leapfrog Western states to the frontier of the “New Technological Revolution,” in which, as Naisbitt put it, “the strategic resource is information.” Zhao established the so-called 863 Program and other institutions to promote rapid development in seven key areas, including biotechnology, space technology, information technology, laser technology, automation, energy, and materials engineering. As Gewirtz acidly remarks, “At this point, the governments of the United States, Japan, and many other countries saw technology transfer to China as in their interests.”

Although they introduced some market incentives into the economy, the reforms were in no way designed to challenge the primacy of the party. The state owned all the land in the country, which it leased to peasants and urban factories for production. It ran all major utilities, allocated credit through state banks, controlled the exchange value of the currency, and eased or tightened the flow of imports and exports with regulations and licenses. The state indirectly set the price and allocation of labor through household registration and social welfare systems. And as the private sector grew, the state kept strategically important enterprises in its own hands. The propaganda system ransacked Marx’s writings to produce concepts such as “the initial stage of socialism,” “the socialist market economy,” and, most enduringly, “socialism with Chinese characteristics” to explain that what Zhao was doing was consistent with the ruling party’s ideology.

THE MORE THINGS CHANGE
Deng understood that to successfully modernize the economy, the government would also have to make certain changes to the country’s political system. Under the Maoist regime he inherited, the government made all its decisions based on ideology—including which crops to plant, where and how close to plant them, where to locate a factory, and how to run it. Local cadres would apply ideological principles even to decide whether to authorize a marriage, allow a couple to have a child, or permit a couple to get divorced.

As Mao kept revising the party’s ideology, officials struggled to figure out how it applied to clearly unrelated technical and managerial decisions. This ad hoc micromanagement resulted in repeated disasters. In 1959, unsound agricultural requirements created a two-year famine that killed an estimated 30 to 45 million people. Mao’s subsequent Cultural Revolution caused more mass death and paralyzed the government. Even when politics were relatively calm, Mao’s politicized economic system fostered inefficiency and stifled innovation.

Deng sought to fix these problems by freeing up economic actors to pursue prosperity without undue interference from party officials. He first raised the subject of political reform in a 1980 intraparty speech that called for ending life tenure in political office, diffusing top-level power among a group of leaders, and stopping party officials in state-owned enterprises and government agencies from interfering in managerial and technical decisions. This last policy was particularly important, and it came to be called “separation of party and government.”

Historical contingency is not the reason China has become what it is today.
Deng had no intention of relinquishing the CCP’s leadership over China. But his speech did have the effect of removing the long-standing ban on the independent discussion of politics. Senior officials and establishment intellectuals began to promote what were, in China, radical ideas. Vice Premier Wan Li said the party should let people “really exercise their constitutional right of free expression.” Senior party researcher Liao Gailong called for an independent press, for a more independent judiciary, and for the National People’s Congress—the rubber-stamp legislature—to function as an independent voice for diverse social interests. (Even the idea that socialist society could contain groups with diverse interests was radical.) Party scholars and journalists argued for establishing checks and balances among the three branches of government, and some even promoted multicandidate elections. The state-owned Central China Television broadcast a six-part documentary called River Elegy that attributed the country’s “backwardness” to Chinese culture and called for Westernization. Chinese civilization, the documentary concluded, “needs a good scrubbing by a great flood.”

In 1987, amid this intellectual turmoil, Deng again turned to Zhao, in his capacity as acting general secretary, to prepare a set of political reform proposals for an upcoming party congress. Zhao convened a team that privately heard uncensored testimony about different political systems, including from experts on Western systems. They considered a host of liberalizing measures, such as eliminating party cells from some institutions; allowing provincial people’s congresses to consider more than one candidate for governor and vice governor; giving more power to minor, noncommunist political parties; and strengthening the ability of the party-run trade unions to promote the interests of workers instead of trying to suppress worker unrest. “A yearlong process at the highest levels of the Chinese leadership to develop proposals for remaking China’s political system—building on nearly a decade of ferment, exploration, and new thinking—was on the verge of being approved by the 13th Party Congress,” Gewirtz writes. “A transformation was in the offing.”

But as Zhao prepared his proposals, Deng warned him not to consider ideas that “imitate[ed] the West.” In the end, Zhao submitted only modest proposals, including creating a civil service to staff the government and giving more power to nonparty managers and experts. As Gewirtz writes, “These changes sought to strengthen the functioning of the CCP and the government so that both entities could more effectively lead the economic reforms.” They did not soften the party’s hold on power.

GONE BUT NOT FORGOTTEN
A leading purpose of Gewirtz’s book is to correct exaggerations, by both Chinese and Western historians, of Deng Xiaoping’s role in reforming his country. This distortion was no accident: it was the product of a concerted effort by the regime to portray Deng as the “chief architect of reform and opening” in order to erase Zhao’s more liberal ideas from public memory. Given Zhao’s actual importance, it is easy to see why Gewirtz believes that had Zhao stayed in power, he would have fundamentally changed China.

There’s no doubt that Zhao had a reformist bent. In his early career, the premier pioneered change in Sichuan Province, contracting land to the peasants at great political risk before party leaders had endorsed the policy. He was remarkably open in consulting Western economists and in listening to wide-ranging political reform proposals from party and nonparty intellectuals. During the 1980s, he embraced an ambiguous idea called neo-authoritarianism, which argued that authoritarian rule was needed to push a recalcitrant system forward toward democracy. And in what might be the only source on Zhao that Gewirtz’s exceptionally well-researched book does not use—a series of interviews between Zhao and a loyal former subordinate named Zong Fengming conducted during Zhao’s house arrest—Zhao remarked that he had been interested in something called “parliamentary democracy.”

The Chinese Communist Party cannot tolerate independent political activity and survive.
Despite his use of this term, Zhao did not have a multiparty democracy in mind. Describing his thinking in the late 1980s, he told Zong: “At this time my guiding ideas were, first, that the leading position of the CCP could not change, but the party’s form of leadership must change; second, that a socialist state should be a rule of law state.” As Gewirtz writes, Zhao’s priorities were “to increase transparency, strengthen the ability of other political parties and social groups, from labor unions to women’s organizations, to represent their members, raise the number of appointments made through elections, protect citizens’ rights, and entrench the separation of party and state.”

If these were Zhao’s ideas, the possible future for China that was lost when Zhao was purged would not have been as democratic as Gewirtz seems to imagine. Had Zhao defeated Deng and realized his own political vision, China would still be a one-party state, facing the impossible task of reconciling popular political freedom with a monopoly on political power. This is not the kind of system that can square that circle. Zhao’s downfall was inevitable—the act of a regime so dedicated to concentrating power and so convinced of its own righteousness that it cannot allow independent political activity and survive.

Although Zhao and his open-mindedness are gone, the system under current Chinese President Xi Jinping has a great deal of continuity with the one Zhao envisioned. Zhao’s 863 technology project, which used top-down controls to promote rapid development in science and technology, has become Xi’s “Made in China 2025.” Xi’s idea of “civilian-military integration,” under which civil enterprises should develop advanced technology for the military, is an inversion of Zhao’s idea that military institutions should share economically promising technology with the state’s civilian enterprises. Today, as an official slogan puts it, “the state guides the market,” as it did under Zhao. Zhao’s vision of managing society like a machine has evolved into Xi’s surveillance state. Zhao wasn’t all that radical, but he was still too radical for the Chinese Communist Party.

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