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U.S. Department of State

Great Seal Jeffrey A. Bader
Deputy Assistant Secretary for East Asian and Pacific Affairs
Statement submitted for the record to the Senate Foreign Relations Committee, Subcommittee on East Asian and Pacific Affairs
Washington, DC, March 18, 1997

Blue Bar

China After Deng Xiaoping

Mr. Chairman, I welcome this opportunity to appear before you today to discuss what China looks like, and will look like, after the death of its paramount leader. Deng Xiaoping. This hearing, as I understand its purpose, is more designed to provide an analysis of China's future than to lay out a series of prescriptions for U.S. policy. I note that you have assembled a superb group of expert private witnesses who will appear in the next panel. I commend you, Mr. Chairman, for holding this kind of broad, policy-focused hearing. We need a thoughtful and constructive approach in our analysis of developments in this important country.
Even though the focus of this hearing will be on analysis, not policy, for those of us involved in making policy this is an especially welcome hearing. Good analysis doesn't always lead to good policy, but bad analysis is virtually certain to lead to bad policy. We welcome the opportunity to supplement our own analytical effort with the views of experts outside the Administration. The coming year or two in U. S. -China relations will be filled with important policy decisions. These decisions will cover fundamental aspects of our interaction with China in areas including regional security, nonproliferation, military cooperation, peaceful nuclear cooperation, human rights, trade, the environment, law enforcement, and Hong Kong among other issues in our increasingly multifaceted relationship. They will occur against the backdrop of a series of high-level visits, including state visits by President Clinton and Jiang Zemin and next week's visit by Vice President Gore to China. Secretary Albright, as you know, was the first high official of the new Administration to visit China, and was the first U.S. official to meet with the Chinese leadership in the wake of Deng's death.
The timing of this hearing also is significant in that we recently marked the 25th anniversary of the Shanghai Communique, a cornerstone in U. S.-China relations, issued at the conclusion of former President Nixon's historic trip to China and his meeting with Mao Zedong and Zhou Enlai. Deng Xiaoping did not live to see the 25th anniversary, but he did more than any other Chinese leader to foster closer ties with the United States.
Today, I intend to discuss Deng's legacy and the prospects for continuity or change in four areas: economic reform, political reform, China's place in the world, and relations with the United States. I should say up front that I am not going to speculate on leadership changes or to predict specifically what course China will take. Having devoted a good part of my career to China, I can say with some assurance that better minds than mine have tried -- and failed -- to forecast accurately the tremendous swings in China's modern political history. If one looks at the last 50 years of Chinese politics, one sees a history filled with dramatic and often unpredicted events roughly once or twice a decade: the catastrophe of the Great Leap Forward and the accompanying famine that killed millions in the 1950's; the Cultural Revolution that purged the top leadership and traumatized a nation in the 1960's and early 1970s; the demise of Mao Zedong and his left-wing followers and the rise of market-oriented reform under Deng Xiaoping in the 1970's; and the mass demonstrations of 1986 and 1989 leading to the Tiananmen tragedy. I should note here that, as paramount leader in 1989, Deng bears responsibility, which he readily acknowledged afterward, for ending the Tiananmen demonstrations by force, a decision which left deep scars in Chinese society. With this history as backdrop, we can see that it would be extremely risky to venture specific predictions on what will happen next, but I think these events serve as a cautionary warning against "straight-line" positions in a society as dynamic and complex as China's.
The transition to the next generation of leadership -- the succession to Deng -- has been underway for several years. Deng left public office in 1989, when he resigned from the chairmanship of the Communist Party's Central Military Commission, and he had been incapacitated and inactive the last years of his life. In his stead, he promoted Jiang Zemin as the "core" of the next leadership generation. Jiang, who holds two critical Party positions (General Secretary and Central Military Commission Chairman) as well as the Presidency, has grown in stature as the "first among equals." Deng's long survival also allowed Jiang to consolidate and strengthen his position. In public statements by the Party on the occasion of Deng's passing, Jiang's position as the "core" of the leadership was once again underscored. The other key figures in China's leadership are the members of the 7-man Politburo Standing Committee, notably Premier Li Peng, National People's Congress Chairman Qiao Shi, economic czar and Vice Premier Zhu Rongji, and the top figures in the PLA, represented in the Politburo Standing Committee by General Liu Huaqing.
As I noted, Deng did not play an active role in the leadership after his health began to deteriorate in 1993. The leadership team I just enumerated -- in place essentially since 1989 -- has thus had several years to operate without Deng's direct guidance. Deng's longevity probably served to mute leadership differences and to enforce cautious, consensus-oriented policies. That said, who China's "paramount leader" is may be less important now than it has been in the past. China has begun to diminish, if not yet thoroughly dismantle, the "rule of man" system and gradually to replace it with a rule of law and institution-building that hold the promise of making future policy swings less violent than those of the 1949-1992 period. We will be watching with great interest the progress of this development.
Economic Reform
Deng Xiaoping was eulogized by his successors as the "chief architect" of China's reform program and its opening to the outside world. His commitment to economic reform led him through the 1980's to open China to foreign investment and business in order to acquire the resources, technology, and expertise necessary to carry out his plans for modernizing the country. He instigated highly successful economic reforms in agriculture, dismantling the commune system in favor of household contracts and private farming. He then moved to restructure the urban economy, introducing market incentives in industry, reforming price and wage systems, and granting public and private enterprises more autonomy.
His reforms were controversial and were opposed by orthodox Party officials who feared they would reduce the Party's control over the economy and expose China to foreign influences. Deng's last response to this opposition was to make a much-publicized trip to south China in January, 1992, during which he renewed his emphasis on economic reform, enunciated a new slogan -- "market economy with socialist characteristics" -- and urged that the pace of economic reform be accelerated. These remarks gave a powerful boost to reform-minded leaders and set China more firmly on the reform course. His famous expression of a pragmatic approach to economic growth -"It doesn't matter if the cat is black or white, as long as it catches mice" -- first uttered in the 1960s, continues to describe a policy that downplays ideology and relies increasingly on letting the economy respond to market forces rather than government dictates.
China's current leaders, in place since the early 1990's, have continued these policies. They remain committed to reform, indeed they recognize that reform is necessary for long-term growth and prosperity. They, like Deng, have learned that a command economy is inefficient and unresponsive and that an inward-looking China, cut off from the outside world, cannot progress.
And the progress China has achieved has been extraordinary. China's GDP rose 11.7 percent annually in real terms from 1991 to 1995. Its foreign exchange reserves top $100 billion, second only to Japan's. Eight in 10 urban households have acquired a color TV. An urban middle class is emerging, and a population along China's eastern coast of 250-300 million people lives a lifestyle comparable to that of an advanced developing country.
But Deng also left behind a legacy of unsolved economic problems, and partial reform has brought new ones. His successors will have to grapple with the drain on the country's resources and the government's revenues posed by massive, inefficient state-owned enterprises. The state-owned sector and the trade regime that protects them are obstacles not only to China's full realization of its economic potential but also to accession to the World Trade Organization. There is a vast disparity between the remarkable expansion of the coastal area and the relatively slow growth of the internal provinces. With a population of 1.2 billion and growing, the economy must create more than ten million new jobs per year. A floating population of 80 to 100 million people have migrated to Chinese cities and towns in search of work or higher incomes Far-reaching reforms in the financial and communications sectors and massive expenditures on essential infrastructure projects must be undertaken if China is to continue its economic success. With its high growth rate, China is stretching the capacity of existing resources and energy. By 1993, China had become a net oil importer for the first time since the 1960's. By the year 2005 China could be importing 40 percent of its oil.
Implementing the necessary reforms will mean breaking the "iron rice bowl" of security to which urban Chinese workers and managers traditionally have been accustomed, a weaning process sure to cause even more discomfort, distress, and disruptions. Hence, while the overall direction of China's economic future remains clearly set, debate will continue over the pace and sequence of reforms, and over the distribution among competing groups of the benefits and proceeds of economic development. Some of the reforms to come are likely to be even more difficult than those already implemented.
Political Reform
Deng broke with tradition, imperial and communist, and relaxed the political grip of the central state apparatus. He decentralized economic decision making, empowering regional governments to set their own targets and pace. He reorganized the Communist Party, the PLA, and the central government bureaucracies, ending the period of "mass struggle," class warfare, and "proletarian revolution," and adding an emphasis on professionalism and training. The legal and bureaucratic reforms he began continue to be implemented by his successors, who are beginning to institutionalize the rule of law, lay the foundation for more stable, rational, and transparent decision-making, and make the judicial system more fair and predictable.
But Deng's refusal to recognize that an open political system is a necessary complement and component of a strong, prosperous economy continues to haunt his successors. Like him, they have yet to recognize that a modern society calls for broader participation in decisions about who governs China and how it is governed, greater respect for political rights, and separation of party and government. There was a brief period of experimentation in the late 1980's, but since June of 1989, maintaining stability by silencing public dissent and opposition before they can threaten the dominance of the Communist Party has been a central preoccupation of the leadership.
Despite government repression of political dissent, personal freedom for ordinary Chinese has burgeoned with new opportunities that include freedom of movement; greater choice in employment, housing, education, and consumption; and expanded access to information with creation of thousands of new media outlets. Quasi-independent organizations and the indirect influence on politics of public opinion have continued to grow. Village elections have given millions of Chinese the opportunity to exercise choice in determining who their local leaders will be.
So where is this combination of economic dynamism, greater social mobility, expanding options in daily life, and continuing political repression likely to lead China's political system? The collapse of the Soviet Union does not provide a useful model for understanding China's future. While they had in common leadership by an authoritarian single party intolerant of public dissent and determined to monopolize power, the differences between the two are more striking. The USSR was an internal empire of numerous nationalities that nearly outnumbered the dominant Russians clinging to an external empire through emphasis on a heavy industrial/military sector, an unwelcome alliance structure, and military occupation. Its economy was a shambles, offering consumers little. It was closed to foreign investment and different forms of property ownership and resisted interaction with the West. China has had none of these characteristics for the last two decades.
Nonetheless, Chinese and foreign observers alike understand that China's vast social and economic problems and its rigid political structure present real risks of social disruption and disorder. Disillusionment with the political system has led to popular cynicism. Crime and corruption are on the rise. Ethnic tensions have surfaced in Tibet, and recently in Xinjiang, in the form of riots and a number of terrorist bombings.
Political opening is unwelcome not only because it threatens the dominant position of the leadership but because it raises for those who lived through the chaos between 1910 and 1950, or the mass movements of the 1950's, 1960's, and 1970's -- most especially the Cultural Revolution -- the specter of instability or renewed chaos. We should not dismiss this as frivolous or mere pretext. That said, political reform will be necessary if China is to sustain its modernization program, and indeed in the long term is inevitable. At some point, perhaps after this year's 15th Party Congress, China's leaders will have to move beyond the negative conclusions they drew from Tiananmen and their reliance on repression to maintain stability. That is unlikely to mean significant movement toward Western-style democracy in the short term, but it could mean a resumption of the gradual liberalizing trends of the 1980's, perhaps buttressed ideologically by invocation of a so-called "Chinese path to development."
China's Place in the World
Deng's decision to move China out of its isolation changed not only the manner in which it conducted its relations with other counties but also its vision of its role and place in the world. In pursuit of China's reunification, Deng devised the principle of "one China, two systems" for Hong Kong's reversion to Chinese sovereignty, a framework which the PRC has also proposed for Taiwan. Deng pushed China to join major international organizations and subscribe to multilateral treaties, moderated or ended its disputes with other nations; and halted its support for Communist insurgencies elsewhere. His decision to promote better relations with China's neighbors and major economic powers was rooted in his drive to ensure a peaceful international environment that would permit China to concentrate on its domestic economic and social modernization. His decision to send thousands of Chinese students to America has been a significant factor in expanding China's international outlook, as well as China's scientific knowledge. Deng also knew that opening the PRC to the outside world was the only way to acquire the resources, technology and expertise necessary to modernize his country.
China's foreign policy since the late 1970's has been a function of this domestic priority. Under its current leadership, China has continued to reduce tensions with its neighbors, agreeing on drawdowns in troop deployment along borders a and other confidence-building measures with Russia and its central Asian neighbors. China has adopted a less confrontational and even conciliatory stand in resolving its territorial disputes with India, and Japan. Its relations in the South China Sea area, however, while peaceful, are uneasy.
China today is also driven by a desire to be treated as a major power commensurate with its growing economic and military clout. Yet in many ways China remains a reluctant participant in the international system, unwilling or slow to accept the responsibilities that go with being a regional or global power. Steeped in a political environment of isolation and distrust of the outside world, China's current leaders are only slowly recognizing that China has an interest in conforming to international standards. If China wants to influence international norms, it must participate actively and responsibly in their formulation -- and in their observance.
As China develops its interactions with its East Asian and Pacific neighbors, much attention will be focused on the People's Liberation Army. Modernization of the military ranked fourth among the "Four Modernizations" that Deng announced in 1978. The PLA chafed under a tight budget and has looked to extra-budgetary activities to supplement on-line funding. Since 1989 the PLA has benefited from more generous funding but, when adjusted for inflation, the actual increase has been unimpressive. Last year's nominal increase was 12.7 percent -- six percent after inflation -- with much of it devoted to a salary increase. Estimates of actual defense expenditures vary widely, but a credible figure is about three percent of GNP or, in absolute terms, less than Japan. China's recent acquisitions of new weapons systems have relied increasingly on Russia, the source of SU-27 fighter aircraft, Kilo-class submarines, SA-100 surface-to-air missiles, Sovremenny-class destroyers, and heavy transport aircraft.
The relaxation of tensions with Russia having progressed impressively, PLA planning seems more oriented toward other-potential areas of conflict off its eastern coast, as its aggressive exercises in the Taiwan Strait last year demonstrated. We do not see signs that the PLA is assuming or demanding the driving role in defining broad strategic policy objectives, or that it seeks to reverse China's essentially conservative approach to its relations with its neighbors. A U.S. policy that stresses and balances forward deployment, mutual transparency, regional cooperation, maintenance of our alliances, and development of bilateral military ties helps ensure that there is clarity and predictability in China's defense policy, and provides our best response to the PLA's evolution.
U.S.-China Relations
Let me turn last to our bilateral relationship with China. Deng played the central role in normalizing our bilateral relations in 1979 and in moving those relations toward cooperation. He was committed to a positive relationship with the United States as a necessary condition for China's modernization. Although Deng was not uncritical of the United States, at difficult junctures in the relationship he worked to prevent damage, often against advocates of a rigid approach.
China's current leadership appears to want to continue to develop a productive and cooperative relationship with the United States. President Jiang Zemin and Premier Li Peng went out of their way to emphasize to Secretary Albright their commitment to continuity and stability in the relationship. China's leaders want and need access to our markets, our technology; our know-how. They have somewhat mixed feelings about our military presence in the Asia-Pacific region but understand that it is a stabilizing influence that allows them to devote their attention and resources to domestic problems. Chinese students by the tens of thousands come to the United States for advanced study and training. Cultural, educational, and professional exchanges have brought Chinese from all walks of life to d e United States and the majority of them carry back a positive message not only of America's good will but of how much China has to learn from the United States. Surveys in China continue to indicate that the United States is the most admired country but also that, after Japan, the United States is the most frequently criticized. These surveys also indicate that many Chinese disagree with U.S. policies toward China.
Chinese are troubled by the threat that modernization and "Westernization" pose to their political system and traditional values. China's leaders and elite are uncertain of our attitude and intentions toward an emergent China. They are critical of discrete U.S. policies: imposition of sanctions for nonproliferation or human rights abuses, support for democracy in Hong Kong and cultural preservation and human rights in Tibet, arms sales to Taiwan, support for the rights of dissidents, reaffirmation of the U.S.-Japan alliance, and Congressional opposition to MFN and to holding the Year 2000 Olympics in Beijing. They see such policies as part and parcel of a carefully coordinated policy designed to weaken if not dismember China, and to prevent it from taking its rightful place of global and regional leadership. Confronted with the worldwide collapse of communism and the thorough discrediting of Marxist ideology and economics at home, China's leaders are turning to nationalism to rally their country and legitimate their hold on power. Rising nationalist sentiment is not purely, or even predominately, the product of leadership manipulation, however. It reflects the pride of the Chinese people in the accomplishments of the last two decades, after a century and a half of humiliation and 30 years of Maoist turmoil and totalitarianism. It also reflects the defensiveness of a society undergoing rapid change inspired by outside forces whose intentions they do not always perceive as benign.
Implications for U.S. Policy
What these developments I have been describing mean for U.S. policy is and will be the subject of continuing discussions in the Administration, in the Congress, in the media, and in the public. This Administration's approach, like that of the previous five, is one of "comprehensive engagement." This means seeking areas of cooperation and dealing directly and frankly with areas of difference. It is premised on the assumption that there is no natural or inevitable hostility between the United States and China. Working together, we can advance key global and regional security and commercial interests. Over time, our interaction will continue to help transform China in the liberalizing direction that has generally prevailed over the last two decades. China's history has shown us we should be prepared for surprises. Deng's passing, however, has not altered the validity of these premises.

[end of document]

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