In an age of rampant Chinese consumerism and skyrocketing levels of manufacturing and trade, is China really communist?
By Loretta Solon Greene, Contributing Editor
In the 1950s China’s communist leader, Chairman Mao Tse-tung, launched massive economic and social reconstruction programs that seemed abhorrent to the West. The rigidity of the communist system was evident in almost every aspect of Chinese life. And while conditions for ordinary Chinese have improved since those times, the imprint of one-party rule is still quite obvious. Even today the Chinese government faces unrelenting foreign criticism for its authoritarianism, treatment of Tibet, severe population control measures, reluctance to allow religious freedom, and abuse of human rights.
These criticisms notwithstanding, China’s communist inflexibility seems to have relaxed in proportion to its economic growth and emergence on the world stage.
In the early 1970s most world powers began recognizing China diplomatically and, in 1971, the United Nations gave China a permanent seat on the Security Council, replacing Taiwan. Advances in diplomacy were followed by dramatic economic transformations after the Cultural Revolution ended in 1976. The decade-long revolution was Chairman Mao’s paranoid attempt to prevent the reestablishment of capitalism and represents a chapter of Chinese history rejected even by its communist government. In 1978, under Deng Xiaoping, the Chinese government embarked on a gradual, but inexorable move toward economic reform and liberalization. “The nature of political reform in China is poorly understood and often misrepresented,” says Stapleton Roy, Director of the Kissinger Institute on China and the United States. “The reality is that China has revised its earlier Marxist-Leninist-Maoist ideology almost beyond recognition.”
China’s brand of communism has clearly been diluted from its birth in 1949. Even its harsh repression of the Tiananmen Square protesters in 1989 belies efforts the regime later undertook to place Shanghai and the “special administrative regions” of Hong Kong and Macau at the very leading edge of capital investment. Yearly economic growth rates in some regions of China were at times more than 10 percent.
Today China boast memberships in more than 65 multilateral—mostly trade—organizations, including the World Trade Organization (WTO), the G20, the Asia-Pacific Economic Cooperation, the East Asia Summit, and the Shanghai Cooperation Organization.
According to the International Monetary Fund and the World Bank, China’s gross domestic product is ranked third in the world and is considered in most economic circles to be the world’s fastest growing economy—at least until the 2008 worldwide economic downturn. China and the United States rank as each other’s second largest trading partners, leading to greater exposure to Western ideas.
Evidence of the depth of economic ties can be seen in the growth of Chinese diplomatic representation in the United States with the Embassy in Washington, DC along with five Chinese Consulates General in Chicago, Houston, Los Angeles, New York, and San Francisco. On the reverse side in China, the United States has an Embassy in Beijing with five U.S. Consulates in Chengdu, Guangzhou, Shanghai, Shenyang, and Wuhan. While many of these cities are not household names in the U.S., exports from them have been expanding for years.
With the increase in trade and investment between the U.S. and China, Chinese society is no longer under such strict public information control. As former Secretary of Commerce Carlos Gutierrez observes, “The challenges in our trade and economic relations will only be solved through continued joint engagement. The China story—both the country’s remarkable rise, and the growth of our dynamic relations with it—is testament to the benefits of openness and engagement.”
More evidence of the economic ties are visible online. All you have to do is go to the U.S. Department of Commerce’s Web site and run a search on “China.” Trade, commercial standards, tariffs, market access, compliance, and a host of other topics illustrate the abundance of business Americans are doing with China. Of special note is the creation of the Chinese Business Center, often referred to as China BIC—a U.S. government resource for exporting to China—and the China Pulse newsletter. The China Pulse helps grow U.S. businesses in China by offering partnership opportunities through the U.S. Commercial Service, the U.S. Embassy and the Consulates’ contacts and expertise. The market reforms of the 1980s have unleashed individual initiatives and entrepreneurship, especially in China’s urban areas. This has led to large reductions in poverty and, at the same time, rapid increases in income. Considering China’s massive, billion-plus population, these economic improvements are quite remarkable.
Seán Dennison, CEO of international private equity firm SmithDennison Capital, LLC notes, “China’s greatest resource is clearly its enormous population. That population is, despite the relative youth of China’s political system, deeply rooted in, and keenly aware and respectful of, their most ancient of cultures. It is also conspicuously hopeful for its future and for China’s place in the world. Therefore, rather than tear down and destroy, only to have to rebuild from the ground-up, the people have, in a sense, become willing participants in the continuous adjustments being made by the Chinese political apparatus, which in some ways is proving somewhat remarkably adaptable to change.” The drift from strict party dogma of the past can be seen with the recognition of private property in the Chinese constitution in 2004. The official recognition of property rights by the Chinese Communist Party is also recognition of the growing clout of China’s urban nouveau riche and growing middle class. What would Chairman Mao think?
Other signs of openness and change include China’s hosting of the 2008 Olympic Games in Beijing and the upcoming 2010 World Expo to be held in Shanghai. While China’s production of the games’ opening ceremonies was exposed for utopian artificiality they were viewed by millions across the globe. Yet another example of free enterprise exposure occurred in July of 2009 when the largest consumer technology trade show, the China International Consumer Electronics Show (SINOCES), was held in Qingdao. SINOCES is the only State Council-approved professional and international exposition for the electronics industry in China. SINOCES’s 390 exhibitors and 62,000 global industry professionals attended to see the very latest advancements in consumer electronics. Michael Petricone, vice president of government affairs for the Consumer Electronics Association a SINOCES co-sponsor says, “As a nation becomes invested in trade, it also becomes invested in maintaining a stable and peaceful world. And as a nation imports goods, it also brings in new thoughts, values, and ideas.”
Despite the worldwide recession that started in late 2008, economic ties and trade between China and the U.S. remain profitable. An August 12 WTO ruling could potentially open China up to American filmmakers, publishers, and entertainers currently frozen by the restrictive China Film Group Corporation. According to the Washington Post, the WTO ruled that Chinese restrictions on the distribution of foreign audio-visual material were found to be inconsistent with pledges China made to enter the WTO in 2001.
Ron Kirk, the U.S. trade representative, hailed the ruling as a significant victory. The case was originally filed in April 2007 during the Bush Administration and is one of several trade disputes between the two countries. China’s failure to comply with this latest WTO ruling could lead to trade retaliation. China announced on August 17 they would appeal the ruling.
Other disputes include China’s importation of steel products and, in a relatively new case, tires. President Obama faced a September 17 deadline on whether or not to impose stiff tariffs (as much as 55 percent) on the importation of Chinese tires and on September 11 decided to impose a 35 percent tariff. In April, the United Steelworkers filed a case with the International Trade Commission seeking relief under American trade law. The safeguard, known as Section 421 of the Trade Act, is specific to trade with China and grants the Steelworkers a much lower litigation hurdle compared to the arduous WTO process. Decisions about relief are solely under the discretion of the U.S. president.
The Commission backed the Steelworkers complaints about severe job losses in the last few years as a result of the Chinese imports, recommending the stiff tariffs which would last three years.
The decision will be the first big policy test of President Obama’s attitude on the engagement of China through trade. In addition to ongoing trade disputes during a worldwide recession, China’s ownership of American debt is another bone of contention. China is the top purchaser of America’s public debt, owning a quarter of foreign-owned U.S. treasury securities. China is viewed as holding these securities in an effort to stabilize its currency and keep their export prices artificially low.
Even with this massive economic activity China is still communist. But to supporters of free markets and expanded trade, the picture is not so cut and dry. Stapleton Roy of the Kissinger Institute contends, “China still has a one-party system, but the party’s relationship to the people has changed radically over the last 30 years. It allows people much more freedom in their daily lives while ruthlessly preventing the organization of any groups that could challenge the party’s supremacy. To put it bluntly, to call the Chinese Communist Party a communist party is about as accurate as to call North Korea a ‘democracy’ because it styles itself the Democratic People’s Republic of Korea.”
The view from China is more complex. Patrick Chovanec, an American professor at Tsinghua University’s School of Economics and Management living in Beijing offers this candid assessment. “If you had asked me if China was still communist a year ago, I would have given you an unambiguous ‘no, it’s not anymore.’ Chovanec explains, “It remains true that China long ago transitioned from being a totalitarian state driven by Marxist ideology back to the more historic pattern of being an authoritarian state focused on more prosaic concerns such as social stability and national security, alongside a thriving commercial economy. Many of the traits we often associate with ‘communism’ in China are actually rooted far deeper in Chinese history and were only reinforced by the Leninist emphasis on an all-powerful state.”
“But,” warns Chovanec, “the global financial crisis—particularly the rising role of government in the U.S. economy—has brought a lot of Chinese leaders ‘back to their roots,’ reviving tendencies that long lay dormant. It’s not a return to a totalitarian society, but you do hear a lot more about state planning and a dominant state role in the Chinese economy and a lot less about entrepreneurship. So in that sense, the past year has brought a re-embrace, perhaps not of ‘communism’ in the Cold War sense, but definitely of ‘socialism.’”
Despite the grip of one-party communist rule, China is a global citizen that is moving quickly to become an economic giant. Changes will occur as the Chinese learn more about democracy through exposure to the Western world through trade and the Internet. The Chinese people are clearly demonstrating their appetite for entrepreneurship; the only question that remains is how much longer will they seek entrepreneurship under the management of a one-party party system.
