FREE ESSAY ON THREE GREAT RELIGION

THREE GREAT RELIGION

Two years after the death of Mao Zedong in 1976, it became apparent to many of China's
leaders that economic reform was necessary. During his tenure as China's premier, Mao had
encouraged social movements such as the Great Leap Forward and the Cultural Revolution,
which had as their bases ideologies such as serving the people and maintaining the class
struggle. By 1978 Chinese leaders were searching for a solution to serious economic
problems produced by Hua Guofeng, the man who had succeeded Mao Zedong as CCP leader
after Mao's death (Shirk 35). Hua had demonstrated a desire to continue the ideologically
based movements of Mao. Unfortunately, these movements had left China in a state where
agriculture was stagnant, industrial production was low, and the people's living
standards had not increased in twenty years (Nathan 200). This last area was particularly
troubling. While the gross output value of industry and agriculture increased by 810
percent and national income grew by 420 percent [between 1952 and 1980] ... average
individual income increased by only 100 percent (Ma Hong quoted in Shirk 28). However,
attempts at economic reform in China were introduced not only due to some kind of
generosity on the part of the Chinese Communist Party to increase the populace's living
standards. It had become clear to members of the CCP that economic reform would fulfill a
political purpose as well since the party felt, properly it would seem, that it had
suffered a loss of support. 
As Susan L. Shirk describes the situation in The Political Logic of Economic Reform in
China, restoring the CCP's prestige required improving economic performance and raising
living standards. The traumatic experience of the Cultural Revolution had eroded popular
trust in the moral and political virtue of the CCP. The party's leaders decided to shift
the base of party legitimacy from virtue to competence, and to do that they had to
demonstrate that they could deliver the goods. (23) This movement from virtue to
competence seemed to mark a serious departure from orthodox Chinese political theory.
Confucius himself had posited in the fifth century BCE that those individuals who best
demonstrated what he referred to as moral force should lead the nation. 
Using this principle as a guide, China had for centuries attempted to choose at least its
bureaucratic leaders by administering a test to determine their moral force. After the
Communist takeover of the country, Mao continued this emphasis on moral force by
demanding that Chinese citizens demonstrate what he referred to as correct consciousness.
This correct consciousness could be exhibited, Mao believed, by the way people lived.
Needless to say, that which constituted correct consciousness was often determined and
assessed by Mao. Nevertheless, the ideal of moral force was still a potent one in China
even after the Communist takeover. 
It is noteworthy that Shirk feels that the Chinese Communist Party leaders saw economic
reform as a way to regain their and their party's moral virtue even after Mao's death.
Thus, paradoxically, by demonstrating their expertise in a more practical area of
competence, the leaders of the CCP felt they could demonstrate how they were serving the
people. To be sure, the move toward economic reform came about as a result of a changed
domestic and international environment, which altered the leadership's perception of the
factors that affect China's national security and social stability (Xu 247). But Shirk
feels that, in those pre-Tienenmen days, such a move came about also as a result of an
attempt by CCP leaders to demonstrate, in a more practical and thus less obviously
ideological manner than Mao had done, their moral force. This is not to say that the idea
of economic reform was embraced enthusiastically by all members of the leadership of the
Chinese Communist Party in 1978. To a great extent, the issue of economic reform became
politicized as the issue was used as a means by Deng Xiaoping to attain the leadership of
the Chinese Communist Party. 
Mao's successor, Hua Guofeng, had tried to prove himself a worthy successor to Mao by
draping himself in the mantle of Maoist tradition. His approach to economic development
was orthodox Maoism with an up-to-date, international twist (Shirk 35). This approach was
tied heavily to the development of China's oil reserves. When in 1978 estimates of the
oil reserves were revised downward commitments to import plants and expand heavy industry
could not be sustained (Shirk 35). Deng took advantage of this economic crisis to
discredit Hua and aim for leadership of the party. Reform policies became Deng's platform
against Hua for post-Mao leadership (Shirk 36). Given this history of economic reform, it
is evident that under the present system economic questions are necessarily political
questions (Dorn 43). Once Deng and his faction had prevailed, it was necessary for some
sort of economic reform to evolve. 
The initial form the new economy took was not a radical one. China was still a state in
which the central government retained the dominant power in economic resource allocation
and responsible local officials worked for the interest of the units under their control
(Solinger 103). However, as time passed, some basic aspects of the old system were
altered either by design or via the process of what might be called benign neglect. 
As Shirk points out, in rural areas, decollectivization was occurring: decision making
power was being transferred from collective production units (communes, brigades, and
teams) to the family (38); purchase prices for major farm products were increased (39).
In 1985, further reforms were introduced. For example, long-term sales contracts between
farmers and the government were established. In addition, in an effort to allow the
market to determine prices, city prices of fruit and vegetables, fish, meat, and eggs,
were freed from government controls so they could respond to market demand (Shirk 39).
Most importantly, a surge of private and collective industry and commerce in the
countryside (Shirk 39) occurred. This allowed a great percentage of the populace to
become involved in private enterprise and investment in family or group ventures. The
conditions also allowed rural Chinese to leave the villages and become involved in
industry in urban centers (Shirk 40). The economy grew so quickly that inflation occurred
and the government had to reinstitute price controls. China's economy retains these
characteristics of potential for growth-and inflation-to this day. 
Another important aspect of Chinese economic reform was the decision of China to join the
world economy. Deng Xiaoping and his allies hoped to effect this 1979 resolution in two
ways: by expanding foreign trade, and by encouraging foreign companies to invest in
Chinese enterprises. This policy-denoted the Open Policy (Shirk 47)--was a drastic
removal from the policies of Mao Zedong and, in fact, from centuries of Chinese political
culture. The Open
Policy, which designated limited areas in China as places with preferential conditions
for foreign investment and bases for the development of exports (Nathan 99), was
extremely successful in the areas where it was implemented (Shirk 47). However, it was
looked upon by many Chinese as nothing less than an avenue to economic dependency (Nathan
50). 
Indeed, when the policy was first implemented, many Chinese seemed to fear that Deng's
policies were drawing China back toward its former semi-colonial status as a market where
the imperialist countries dump their goods, a raw material base, a repair and assembly
workshop, and an investment center. (Nathan 51) It is interesting to note the symptoms of
a national character that would subscribe to the above sentiment. 
In an article written in 1981, just two years after the Open Policy was first proposed,
Andrew J. Nathan noted the almost pathological resistance to foreign intervention in the
Chinese economy: Some Chinese fear that reliance on imported technology will encourage a
dependent psychology ... Many Chinese perceive joint ventures as a costly form of
acquisition. 'Some people worry: Won't we be suffering losses by letting foreigners make
profits in our country?' (52). The Chinese were as vociferous about issues of
sovereignty. Nathan maintained that the Mao-led revolution, which culminated in victory
in 1949, had been fueled by an intense patriotism: ... once China had 'stood up,' no
infringement on its sovereignty, no matter how small, should be permitted (53). These
feelings were manifested in denying foreign businessmen long-term, multiple entry visas,
resisting increased foreign economic contacts and alteration of current ways of doing
things, and disinclination to become involved in government-to-government loans and joint
ventures lest Chinese become exploited in some way (Nathan 53-55).
Given these hesitancies on the part of the Chinese society vis-a-vis foreign relations,
it is impressive that Deng and his allies were able initially to create and implement the
Open
Policy since many members of the society at large were resistant to becoming involved in
a policy so antithetical to the Chinese national character. However, once the successes
of the Open Policy were apparent, resistance to the plan by the populace waned. Moreover,
given the confluence of politics and economics in China, it seems apparent that some
members of the CCP would also not be in favor of the plan. Nevertheless, the Open Policy
was implemented and has become instrumental in the success of the burgeoning Chinese
economy. The implementation of the Open Policy was so successful that by 1988 the leaders
of the CCP were encouraged to create a new program called the coastal development
strategy. In this program, even more of the
country was opened up to foreign investment-an area which, at the time, included nearly
200 million people. Moreover, by involving more overseas investors, importing both
capital and raw materials, and exporting China's cheap excess labor power, the new policy
was one of
'export-led growth' or 'export-oriented industrialization.' It was explicitly modeled on
the experiences of Taiwan and the other Asian 'small dragons' (Nathan 99). 
One analyst has maintained that China now stands at the threshold of the greatest
opportunity in human history: a new economic era promising greater wealth and achievement
than any previous epoch (Gilder 369). Illustrative of this optimistic feeling is
Shanghai, an area that was designated for preferential conditions for foreign investment
and as a base for the development of exports in 1988. This city and environs in the
Yangtze Delta area have a population of approximately 400 million people and the city has
become the nation's financial hub for international and national investors. For political
reasons, this area was excluded from the original Open Policy designation in 1978, but is
currently in the process of catching up with other areas so designated. 
Indeed, the increase in foreign investments in the last two years is striking. The area
received 3.3 billion dollars in foreign investments during the 1980s. The area received
the same amount from foreign investments in 1992 alone. In only the first ten months of
1993, the area had received over six billion dollars worth of foreign investments (Tyler
A8). 
Western analysts have asserted that the Open Policy and the coastal development strategy
have allowed Deng to entrench his political power (Shirk 47) and will allow his power to
be sustained even after death. If this is true, Deng should be very popular in Shanghai.
With its new designation, and with the billions of foreign dollars coming into the area,
it has become necessary to improve the city's facilities. To that end forty billion
dollars worth of public works projects have been allocated by the central government for
Shanghai within the last year (Tyler A1). These public works projects include new sewers,
a new water system, new gas lines, a new bridge, and extensive roadwork. Future plans
include the construction of a second international airport, a container port, a new
subway system, and more roads and bridges (Tyler A8). 
The financial district, which will feature a new stock exchange, is also being rebuilt by
China and foreign investors in a joint venture. By being designated for preferential
conditions, Shanghai received from the central government tax exemptions for enterprises
doing business with foreign companies, tax holidays for new factories set up with foreign
investments, and a bonded zone-the largest in China-for duty free imports of raw
materials. Shanghai now has all the trappings of a modern city: discos, construction
projects, and conspicuous consumption. In short, where revered monuments and golden
arches exist side by side (Riboud 12), the appearance of the new Shanghai does nothing
less than signal the end of the ideological debate over China's free market experiments
(Tyler A8). Shanghai has joined the ranks of the modern metropolis. However, this is not
necessarily a beneficial development. 
Inflation is rampant: prices have doubled in the industrial zones in the last five years.
Nevertheless, the fact that Shanghai currently possesses the fifth most expensive office
space in the world demonstrates that demand is high and that the prospects for future
growth are promising (Tyler A8). Indeed, Pudong, a free export manufacturing zone
described as the future sight of Shanghai's Manhattan (Tyler A8), boasts more than twenty
factories built or being
built with names like Siemens and Hitachi prominent. This area has become particularly
attractive to foreign investors and companies because of its tax concessions, duty free
imports of raw materials, and cheap labor. Shanghai stands to benefit, too, as it
receives ancillary technology and discretionary spending from the workers and executives
of the companies represented (Tyler A8). It is conditions like these that have caused at
least one analyst to predict that China will be the richest economy in the world within
the next 25 years (Gilder 372). 
Shanghai is by no means unique to this growth. Additional foreign investments have
continued to pour into other areas of China. For example, the Boeing Company recently
announced its intention to invest $100 million in a plant in Xian China to make tail
sections for 737 jetliners (Boeing D4). In addition, E.I. du Pont recently predicted that
its investments and
business in China could increase as much as ten times by the end of the century (Du Pont
D2). Tellingly, du Pont's chairman attributed the company's negotiations of as many as 28
new projects in China to the fact that the country's financial changes, improved
infrastructure and
rising disposable income has sic encouraged the company to expand its business activities
(Du Pont D2). The Chinese government has made conscientious attempts to promote the
strength of the country's economy while protecting its citizens. Just a few weeks ago,
the government instituted tight-money policies, intended to control inflation and slow
what has been the world's fastest growing major economy (Shenon China Halts D1). However,
after doing so, China's Securities Regulatory Commission was forced to stop the issuing
of new issues on the Shanghai and Shenzhen Stock Exchanges because the value of the
markets had decreased so greatly. This latter move was meant to calm millions of
first-time Chinese investors who evidently went into the market believing that stock
prices could only go up (Shenon China Halts D1). 
Might this policy show a union of economic and moral concern? If so, it demonstrates the
desire on the part of the government to show some kind of responsibility, some moral
force, to its citizenry. At the very least, the strategy appears to show a practical
desire on the part of the government to take control over what could have been a bad
economic situation. Indeed, after these measures were instituted, China's trade deficit
decreased (Hansell D2) and the stock markets' volume attained record highs (Stocks Surge
D2). To be sure, Chinese investors remain somewhat wary about the stock market and,
ironically enough, more control of the stock markets appears to be necessary (Shenon A
Nail-Biting D1). But, in discussing Chinese attempts to control inflation, Philip J.
Suttle, head of emerging markets research at the investment firm of J.P. Morgan, has
predicted that [i]t looks as though the Chinese are going to have the soft landing they
are aiming for (quoted in Hansell D2). China's interest in stock markets is no longer
restricted to within its own boundaries. This month, Shandong Huaneng Power Development
Company, the first mainland Chinese company to have its primary listing on the New York
Stock Exchange (China Stock D5), began trading shares. The stock should be an attractive
one to investors: Chinese electrical demand ... is expected to grow by a whopping 17
million kilowatts a year until the turn of the century (Zuckerman D6). Moreover, China
stands to gain from the issue's sales. The company plans to use the $311 million dollars
it received from the offering to retire $83 million in loans from ... Chinese state
entities. It also plans to expand its overall generating capacity (Zuckerman D6). Nor
does this signify the only Chinese attempt of raising capital from foreign sources on
foreign soil. Three more power companies are expected to be listed in New York and Hong
Kong in the coming months (Zuckerman D6). Given the apparent strength of the Chinese
economy as shown by huge public works projects, extensive foreign investments,
participation in the world economy, and a generally higher standard of living by the
populace, it would appear that China is now ready to join the world as a modern
capitalistic and democratic society. However, this is not quite the case. The CCP retains
vestiges of those characteristics of insularity and intransigence as discussed by Nathan.
Because of its human rights record, the country's economic growth is being impeded. That
is, the politics of China, which have always been allied with its economics, are now
restricting international growth. The United States, especially, has been concerned with
China's treatment of political dissidents. 
In May, President Clinton decided to end linking China's trade status with the United
States with its record on human rights. The president has been criticized for this
because of situations like the following: trials for 'counterrevolutionary activities'
[including] ... plans to use a remote-controlled airplane to drop pro-democracy leaflets
over ... Tienenmen Square (China cracks A13) have recently begun for fifteen dissidents
and labor organizers who were involved in the Tienenmen Square protests. These trials
have been delayed twice, first to avoid negative international reaction just before the
decision last September on China's failed bid to host the 2000 Olympics and then this
spring to avoid influencing Clinton's trade decision (China cracks A13). In addition,
China has instituted new laws effective in June [which] give sweeping powers to China's
State Security Bureau to clamp down on dissidents (China cracks A13). China is fully
aware of United States' concerns about its human rights record. 
Given the fact that the United States has made it clear to China that that record will be
allied with trade status, China's timing of such restrictive activities has caused United
States legislators and administrators to question China's sincerity in its desire to have
a favored trade status with the United States. Indeed, just in the past few days, it took
a last-minute lobbying campaign by President Clinton and his Cabinet [to head off a]
potentially embarrassing vote by the House of Representatives to restrict trade with
China as a way to punish Beijing for reported human rights violations. (Bradsher A7) But
China's problems in joining the community of the world market have more to do than with
its political ethos and practices. China appears not
to understand or to be able to follow through on fundamental modern economic practices.
For example, the United States has recently complained that China has not complied with
international rules on access to its markets and protection of copyrights and patents
(Gargan
14). Such non-compliance could make it difficult for China to become a founding member of
the World Trade Organization, the successor to the General Agreement on Tariffs and Trade
and the body that is intended to promote global free trade by lowering tariffs and other
barriers, [which]
will be formally constituted on January 1, 1994. (Gargan 14) 
The specific nature of the United States' complaint has to do with China's pirating of
musical compact disks, video laser disks and computer software. In fact, it is estimated
that such pirating costs American companies a billion dollars a year. This phenomenon
seems to have to do with the Chinese psychology as described by Nathan. In his 1981 essay
he noted that China did not wish to become a technological client of the west. The
preferred solution is to buy one item and copy it (Nathan 52). Clearly, this is not the
way trade works today. It is the United States' position that China must adhere to the
rules of trade before it can be included in a trade organization. Needless to say,
exclusion from WTO would be disastrous for any country, but particularly for an emerging
market such as China. Even on a day to day basis, China's economic leaders seem unable to
understand how some aspects of a market economy work. In discussing the status of the
Shanghai Stock Market, for example, one stock dealer referred to it as crazy (Stocks
Surge D2). Moreover, American analysts have been amazed to discover in the Shanghai
market the lack of regulation and the poor disclosure requirements. Some companies have
been listed for two or three years and have not issued an annual report (Hansell D2). It
is no wonder that Chinese investors become anxious about their investments. The issuance
of shares in the Shandong Huaneng Power Development Company also demonstrates the lack of
expertise on the part of the Chinese in the modern world market. In fact, according to
one Hong Kong investment analyst, 'the company wasn't really a company. It was just a
bunch of discrete plants that they tied a bow around and wrote a prospectus on'
(Zuckerman D6). The prospectus guaranteed a fifteen percent annual return on investments.
In fact, the return will no doubt be less than that because of prevailing currency
exchange rates and debt that the company will have to assume. To be sure, the problems of
the Shandong Huaneng Power Development Company and the Shanghai Stock Exchange may
demonstrate only the problems of an immature economy. Nevertheless, if China wishes to
become a viable member of the world economic community, such shortcomings will have to be
eliminated quickly. 
These apparent problems may also be the result of an economic system that is run by the
state. Certainly, one thing that the CCP has attempted to do is create a market economy
while retaining a state controlled system. This structure may be possible but it does
have its critics. Steven N.S. Cheung, in anessay written in 1989, argued for the creation
of private property by mandate (31), feeling that privatization in China would lead to
necessary additional investment in the society's infrastructure and the establishment of
a judicial system that is based firmly on the principle of equality before the law
(Cheung 32). Echoing Cheung's sentiments, James Dorn saw problems in the areas of Chinese
banking and finance. In this arrangement, Dorn argued, the state controls the bulk of
investment resources. The lack of a private capital market has
handicapped economic development in China and hampered rational investment 
decisionmaking (43). In order to become a modern economic state Dorn argued for the
necessity of circumventing China's ruling elite who oppose the dismantling of state
monopolies and who benefit from price fixing and nonprice rationing (51). 
Xu Zhiming also saw the necessity for a revamping of the Chinese system: We must throw
off the traditional system completely (249) in order for economic reform to thrive.
Communist Party members, of course, articulate a different position. In a recent
interview that appeared in the Beijing Review, Feng Bing, Deputy Secretary General of the
State Commission for Restructuring the Economic System, spoke to the issue of economic
reform in China. It is striking that Feng spoke of the benefits that the populace has
received as a result of the economic reform now occurring in China. That is, his comments
appeared to demonstrate the beneficence, or the moral force, of the Chinese Communist
Party vis-a-vis economic reform. He noted that such reform involves the essence of
socialism: to liberate and develop productive forces; to eradicate exploitation; to
remove polarization; and ... to attain the goal of common prosperity (Official 12). Thus,
CCP leaders still appear to see their roles as representatives of a moral force. CCP
members and leaders wish economic reform not to be judged on just its practical merits,
but also as an effect of the moral force of the leadership. Economic reform, then,
becomes nothing less than a moral crusade and it is thus easy to see why, for example,
China has staked its national prestige on becoming a founding member of the World Trade
Organization (Gargan 14). Will China succeed in taking its place among the nations of the
world market? Will the CCP succeed in retaining its political power given the drastic
changes in the societal makeup of China that are occurring due to the changing economic
realities? I would suggest that the chances are better for the former than for the
latter. 
Once the Chinese attain more sophistication relative to international and national
markets, institute a more manageable banking system, and make a good faith effort to
insure acceptable human rights, the country may well become the richest economy in the
world within the next 25 years (Gilder 372). However, whether or not these conditions can
occur without a weakening of the state controlled system is problematic. The most
impressive and far-reaching display of moral force by the CCP may well have to be a
voluntary reduction of its power over the people. Paradoxically, by weakening itself
politically, the party may demonstrate its true moral force by liberating, politically
and economically