In Search of Liberalism, Chinese-Style

May 1, 1995
Julian Ku
There is perhaps no greater symbol of communist China than the massive portrait of Mao Zedong facing south toward Tiananmen Square, the spiritual home of Mao’s New (read: Socialist) China. At the center of the square sits the Monument to the People’s Heroes, an obelisk to those revolutionaries who fought off the evil imperialists and capitalist running dogs. Of course, Mao himself lies in state in a massive mausoleum located at the south end of the square with architecture that could only be described as Stalinist.
Indeed, I could not help being impressed with Tiananmen Square, especially last October when I witnessed the 45th anniversary celebration of China’s ‘Liberation.’ Members of the People’s Liberation Army lined the square keeping everyone in the proper place. Atop Tiananmen Gate, China’s leaders viewed the thousands of specially selected guests enjoying the dancing and music in the square. A spectacular fireworks display filled the night sky. As I listened to China’s president address the expectant masses, I almost felt as if I really was in the New China governed by Marxist-Leninist-Mao Zedong Thought. But then something caught my eye and brought me back to reality. 
As I looked south from the foot of Tiananmen Gate, past the Workers’ Monument, past the red flags bearing the hammer and sickle, even past Mao’s final resting place, I could see that universal symbol of capitalism, McDonalds’ golden arches, brightly shining, undisturbed amid the communist clamor. I sighed happily and dreamed of Big Macs.
Poverty isn’t socialism. 
‘Deng Xiaoping
The million (or perhaps billion) dollar question for China-watchers comes down to this: Can the world’s biggest Communist Party continue to liberalize China’s economy while refusing to allow corresponding political liberalization?
The usual response of classical liberals is no, and that therefore China will eventually become a democratic nation since the economic rights and political rights are linked. These arguments are often used to defend continuing China’s Most Favored Nation trading status against human-rights critics. This, however, places classical liberals in the awkward position of defending political repression for the sake of big business.
Contrary to popular Western opinion, China is not only politically anti-liberal, but economically anti-liberal as well. But classical liberals are a little too sanguine in their predictions of a natural evolution toward liberalism. The relationship between political and economic liberalism is more complex than classical liberals care to admit. For classical liberals, a deeper understanding of the changes occurring in developing countries like China is needed. Freedom, we need to remember, is never won easily.
To get rich is glorious. 
‘Deng Xiaoping
Before 1978, China had largely followed the Stalinist model of centralized economic planning and large-scale industrialization. The Great Cultural Revolution (1966-76) terrorized China’s intellectuals and caused great upheavals throughout society, but it largely left China’s economic structure intact.
Deng changed all that when he launched the ‘reforms and opening’ in 1978. beginning with the privatization of agriculture, Deng’s reforms also led to the establishment of Special Economic Zones (SEZs), the creation of individual entrepreneurs, and the attraction of foreign investment (currently, China receives more foreign investment than any other nation in the world). In 1992 the government launched a new wave of reforms, opening up stock markets and expanding the sale of land-use rights. The average income of a Chinese national jumped and the economy continued to grow at a breakneck pace (13% in 1993).
Despite the improvements in living standards, which The Economist has called the greatest single improvement in the condition of the greatest number of humans in history, China’s future is far from rosy. Inflation continues to spin out of control (16% in the first half of 1993). For the first time since 1949, a significant number of Chinese are being laid off. Poor working conditions and static (and sometimes nonexistent) wages have sparked wildcat labor strikes across the country. Nearly 100 million former peasants, released from the strict residence registration system, are now part of a massive ‘floating’ migrant population.
The environment, which had been devastated during years of central planning, only became more uninhabitable as development speeded up. For instance, China emitted over 16 million metric tons of coal ash in 1991 and 15 million tons of sulphur dioxide, causing acid rain as far away as Russia and Korea. Arable land continues to be gobbled up for development, reducing the country’s grain harvest each year. Crime is up as drug trafficking, prostitution, and other serious crimes become more widespread and commonplace. In 1993, the incidence of serious crimes rose 23 percent.
Thus, China’s economic miracle is not without its dark side. While many of the problems could certainly be attributed to the inevitable difficulties of an economic transformation of such magnitude, an assessment of this kind is insufficient. Other analyses, such as those proffered by Communist leaders themselves, attribute growing crime problems to the influx of Western ideas of liberty. Pointing to the continuing political and economic problems in the former Soviet Union, Chinese leaders proudly defend their tight grip on political power, warning that liberalism would inevitably lead to chaos.
While not fully agreeing, some Western observers have sounded similar notes. ”the forces that propel China’s shift from a Soviet-style planned economy to a market-driven one are at the same time causing social and political decay.’ China’s political dissident movements, while united in opposition to the Party’s grip on power, have little else in common, especially in terms of economic views. Hence, during the protest movement of 1989, many marchers in Tiananmen carried portraits of Mao as a show of defiance against what they perceived as a corrupt regime in league with foreign capitalists.
If liberalism and the free market continue to be associated with the growing crime rates and greedy foreign corporations, then it could easily become a target in a political backlash. The recent political revival of ex-Communists in Eastern Europe under the banner of social liberalism is a sign of how the perceived economic failure of classical liberal-leaning parties can lead to quick political losses. The growing power of right-wing nationalists in Russia is an example of free-market liberals under attack from the right. Hence, as speculation continues about who will lead China after Deng’s death, almost no one is betting on a party of free-market liberal democrats coming to power. Instead, forecasters envision either a slow evolution toward social liberalism under Communist Party reformers or a nationalist takeover from the hard-line wing of the Party.
Government is not the solution. Government is the problem. 
‘Ronald Reagan
What can classical liberals say to Chinese frustrated by the increasing problems besetting their country in the age of economic reform? Plenty. The problems in China are not, as Deng might say, the result of too much liberalism. The problem in China is that there is still far too little liberalism, of both the political and economic variety. Many of China’s social ills can be directly traced to the continuing overwhelming state penetration of society.
Most of China’s economic problems can be blamed on the millions of inefficient, money-losing state-owned enterprises’a legacy of the country’s socialist reforms in the 1950s. A state-controlled banking system propos up these enterprises by lending money indiscriminately to the state-owned enterprises (who promptly spend it), driving up inflation and gobbling up needed investment funds. When one bank official at the People’s Construction Bank was asked how much money his bank lent to private entrepreneurs, he laughed out loud. ‘We only lend to each other,’ he said, referring to other state-controlled banks and enterprises.
Though some privatization has begun, China’s virtual state monopoly on the education system keeps teachers’ salaries lower than all but the poorest city laborers. This monopoly is causing a serious shortage of Chinese teachers, forcing one university in Shanghai, for instance, to double the teaching load of their remaining teachers. China’s entire education system is headed toward a crisis. In the cities, China’s intellectuals are going abroad in huge numbers or switching to lucrative private-industry jobs. City schools are then forced to recruit teachers from the countryside, worsening the shortage fo qualified teachers outside the city. ‘No one in their right mind would want to be a teacher,’ one recent graduate of Beijing Normal University, China’s premier teacher’s school, told me. ‘There’s no future.’
The housing shortage in the cities can be partially blamed on the lack of a free market. Since housing is assigned by state work units, it is nearly impossible for an average citizen to purchase or rent an apartment (and loans from state-owned banks are a pipe dream). While certain cities have begun opening up the market, allowing limited 50-year leases, major cities like Beijing and Shanghai continue to suffer severe housing crunches.
State bans on independent organizations such as labor unions have stifled efforts to improve working conditions. Reports in Chinese newspapers describe workers forced to work seven-day weeks, 12 hours a day and 0.75 RMB (less than one U.S. cent) an hour, yet attempts to organize labor unions have been quickly quelled. One labor activist, Han Dongfang, was imprisoned for two years and then (after U.S. pressure) was finally released and expelled.
Since the state in China has traditionally controlled almost every aspect of the average citizen’s life’work, food rations, health care, education, family planning’the sense of personal responsibility or duty to the community has been flattened. The growth in crime can probably be attributed as much to a generation raised by a nanny-state as to the relaxation of government controls.
In one widely-reported incident in February, a man trying to help a woman being mugged was stabbed in the chest and lay bleeding while dozens of witnesses watched but made no move to help. Even the woman he was trying to save left him bleeding to death. Later, when China Central Broadcasting opened a hotline to discuss the incident, the majority of callers did not criticize the onlookers but instead wondered why the state could not protect them from such criminals.
A thousand points of light 
‘George Bush
Socialist liberals analyzing China often sound apologetic for the effects of liberalism and offer remedies such as a Western-style social security system and welfare state. Nationalist corporatists, agreeing with the social liberals that liberalism is the problem, can push for a more authoritarian state with stricter social controls.
It is here that classical liberals should respond that China needs more freedom, not less. We should promote the full liberalization of Chinese society rather than a partial liberalization for the rich and the powerful. Foreign corporations and the new Chinese businessmen are often less interested in freedom than in forming monopolies with the cooperation of the state. Classical liberals should argue for a free market in education and housing as well as a free market for cellular telephones. Freedom can work, we should argue, as long as you give freedom to everyone rather than just a select few.
What classical liberals need to offer is a vision of their ideal society to citizens of developing countries frustrated by the problems of economic and political transition. But too often, a classical liberal society sounds like a painfully atomistic and colorless society devoid of beauty and spirit. I believe classical liberalism offers a much more attractive vision.
A classical liberal society consists of a self-regulating world of autonomous groups and individuals working within a clearly defined set of laws. These laws, while strictly drawing the limits of state power, also are integral for facilitating the interaction of these groups and individuals. These autonomous groups are not simply economic entities like businesses. They also include labor unions, trade associations, the press, artists, religious organizations, interest groups like conservationists, and a myriad of other non-state-controlled organizations. 
This non-state sector of society has been dubbed the ‘civil society’ by development analysts. Elements of this free and independent civil society could act as a check on irresponsible state or business activity. Hence, labor unions could negotiate directly with businesses to improve working conditions without having to rely on the state. In a similar manner, environmental groups could act as a check on dangerous development policies. A free press could play a major role in revealing and then reducing corruption within government. A thriving civil society helps to flesh out a classical liberal vision of a pluralistic society encompassing a wide variety of different interests and with a watchman government equally protecting liberties for all.
Black cat, white cat, what does it matter as long as it catches mice? 
‘Deng Xiaoping
This famous saying, first popularized by Deng in the pre-Cultural Revolution days, seems to hold true in today’s China as well. Millions of Chinese, exhausted after years of ideological warfare, have little interest in the political-scientific systematizing that I have been doing. But such analysis is necessary to truly understand the complex changes occurring in a developing country like China. We need to see how ideas fit together and how ideas transform themselves into policies. In the end, ideas will matter in China, especially if its economic boom collapses. The current contradictions of the Chinese system of national corporatism not only continue to prevent open political debate, but they also are responsible for many of China’s economic and social problems. The solution to China’s problems is not socialist liberalism, which only offers a more efficient socialism.
Classical liberalism promises more than watered-down socialism but also more than just a way to make a quick buck. Classical liberals can proudly offer a vision of both flourishing economic and civil sectors’all of which requires little if any control by the state. While this image of society is admittedly idealistic, it certainly is not impossible to realize. What it requires is for classical liberals to turn their attention outward to the developing world. As the ‘rest’ of the world continues its often painful process of development, classical liberals cannot be left out of the dialogue. It is our responsibility to show the millions of people struggling for a better life in the developing world not only that socialism really is poverty, but that the color of the cat does indeed matter.
‘Julian Ku, a former Editor-in-Chief of the YFP, is currently an English instructor at Beijing Normal University
Julian Ku