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The Past: Part I

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The Past: Part I Back to the Past Part I China on the Eve of Capitalist Takeover? BY CHENG LI SHANGHAI, China August 1995 How time flies! I cannot believe that my two-year-long fellowship in China has passed so quickly. Now it is time for me to pack up my belongings and go back to the United States. My parents have started counting the days that I will stay with them in Shanghai. Two years here seem to me not long enough. It is only long enough to make me realize how much I do not know about this fascinating country and how deeply attached I am to the people living in this land. My "comrades-in-arms" in Shanghai Andrew Browne from Re- uters, Seth Faison from The New York Times, Joseph Kahn from The Wall Street Journal and other friends in the city are preparing a go- ing-away party for me. We did not know each other until we came to Shanghai as foreign correspondents at approximately the same time. During the past two years we have become close friends, as we have all struggled to understand this rapidly changing country and its people. We have openly exchanged our views and ideas, shared anecdotes and jokes, and debated various isSues concerning China and the world. Many times we have complained about the longevity of the paramount leader of China. My journalist friends now feel sorry for me because I am going to leave China at this crucial moment in Chinese history. "It's a pity that you will miss the International Women's Confer- ence in Beijing," Seth Faison said to me. "You will miss the opportunity to write on the spot when 'X day' finally comes," another friend of mine said. We use "X day" to refer to the day when Deng goes to see Marx. Indeed, I have a sense of unfulfilment. The remarkable changes that I have observed and written about during the past two years are only part of the unfolding human drama in the country. Greater changes are yet to come. The fact that I will not be able to observe "X day" in China, how- ever, does not really bother me. "X" day will certainly be important to China because the departure of Deng, like the death of Mao, will represent the end of an era and the beginning of another in contem- porary China. But Chinese history, like all human histories, is a continuing Cheng Li is an ICWA Fellow studying the political economy of the coast of China. One of the most memorable events during my fellowship in China was a "reunion" with Professor A. Doak Barnett, a Shanghai-boTh former ICWA Fellow, in our native city. Professor BaTnett is a legendary figure in American studies of China who has held a variety of governmental, scholaTly and journalistic positions in the US and in East Asia. PTofes- sot Barnett's fellowship took place on the eve of the Communist takeover of the country during the late 1940s. His writ- ings on China and Sino-US relations have significantly influenced several generations of students of China, including myself and my students at Hamilton College in Clinton, NY. process. The future of China, I believe, will not depend the Communist Party assumed power." The ICWA let- on an individual leader. Socio-political development, ters that he wrote at the time later became the basis of a in a sense, is a process of wave-formation---each suc- book entitled China on the Eve of Communist Takeover. It ceeding wave owes something to the strength of what has become a classic in Chinese studies.1 went before. Some socio-economic changes taking place in China that I have observed and written about During the two years that I have been in Shanghai, during the past two years-for example, structural Professor Barnett has visited me twice. Each time both changes in the Chinese economy, internal rural-urban of us were overwhelmed by historical ironies as we migration, and occupational mobilitynare far more discussed the events that happened a half century ago monumental than the life and death, or the rise and and the things taking place today. Witnessing the re- fall, of a charismatic leader. markable changes around us, we had no doubt that this is another watershed period in modern Chinese What really perplexes me, however, is a sense of his- history.2 When I told him that I planned to publish my torical irony. It seems ironic, particularly because my ICWA letters from the field as a book, Professor fellowship in China seems to have echoed, in a con- Barnett asked me, with a twinkle in his eyes, "Are you trasting way, the experience of a former ICWA Fellow going to write a book entitled China on the Eve of the in China in the late 1940s. That Fellow is, of course, A. Capitalist Takeover?" Doak Barnett, a dean and a legendary figure in Ameri- can studies of China. From 1947 through 1949, Doak We, of course, are not sure whether a capitalist take- Barnett, then a young American journalist, journeyed over is the most likely scenario for China's future, but to virtually every part of China and wrote about politi- the rapid rise of the capitalist and entrepreneurial class, cal and socio-economic changes in the country. His accompanied by large-scale privatization in urban two-year-long fellowship, as he described it, took place China and the prevalence of official corruption in Chi- during "a watershed in modern Chinese history a nese society, is undoubtedly one of the most important period in which the Nationalist regime collapsed and politico-economic development in today's China. 2 CL-28 History is full of ironies. After almost fifty years of Com- important differences, however, between the late 1940s munist revolution and socialist transformation, China and today. First, the ruling party of today's China is is going "back to the past'u to embrace capitalism. the self-proclaimed Communist Party. And secondly and even more ironically, this Communist ruling party Make no mistake, pre-Communist China was not a has been, in the past few years, enthusiastic about the completely capitalist society. It was a state with a mix- on-going transformation of the country from socialism ture of feudalism and capitalism. Chinese Communists to capitalism. usually characterized pre-1949 Chinese society in two complementary ways: 1) a semi-feudal and semi- "China is no longer a communist country in any colonial state, in which China's own national capitalists meaningful sense," New York Times Beijing Bureau were not fully developed; and 2) a bureaucratic capital- Chief Nicholas Kristof argued in his concluding article ist state, in which government officials controlled not on China in the fall of1993. He noted that no Commu- only political power, but economic, wealth as well. nist country "has ever so fully embraced stock markets in the 1990s the business of the party is business.'4 In his book Professor Barnett made the following re- marks on the eve of the 1949 revolution: People in the West have often seen a sharp contrast when comparing the former Soviet Union and China: The economy, subjected to excessive burdens, the collapse of Communism in the former and the pro- began to weaken. Inflation reached dangerous longed continuation of Communism in the latter. But it proportions, threatening the very foundations of can also be argued that the rejection of Communism oc- stability. China's intellectuals and students--its curred in China a decade earlier than the collapse of the modernized and educated elite became increas- former Soviet Union. The stock market, a notably capi- ingly disillusioned and bitter. Morale and disci- talist phenomenon, has played a remarkably important pline within the Nationalist bureaucracy itself-- role during the Chinese economy in the reform era. within the Party, government, and army--were steadily undermined. Cynicism, corruption, and The Re-establishment of the Stock Market mismanagement grew to serious proportions.3 in Shanghai The description that Professor Barnett gave to the During the early part of the 20th century, Shanghai gloomy situation in China about fifty years ago can was called the "paradise of speculators." During the also be used to refer to today's China. There are two 1940s, the volume of buying and selling stocks in A scene at a race track in Shanghai in the 1930s. Gambling was strictly banned after the Communist Revo- lution. The site of the race track was transformed into the People's Square and the Shanghai Library. Institute of Current World Affairs 3 A scene outside Shanghai Wanguo Securities Company. There is always a crowd both inside and outside any branch office of the stock exchange (brokerage house) in Shanghai every weekday. The number of registered stock holders in Shanghai increasedfrom 45,000 in 1990 to 4,600,000 in 1993. Shanghai was greater than that in Hong Kong, or about At present, China has three kinds of share listings: the same as in the Tokyo market.5 1) "A" share listings are for Chinese investors; 2) "B" shares are listed by joint-ventures and for purchase in Stock markets did not reappear in China until Au- foreign currencies (US dollars in Shanghai and Hong gust 1986 when Shanghai opened the first stock ex- Kong dollars in Shenzhen); and 3) "H" shares are change in the PRCEthe "first exchange in the world to Mainland company listings in Hong Kong and foreign be approved by a self-proclaimed Communist govern- markets. ment."6 Both the number of listed stocks and the vol- ume of trade grew dramatically during the decade.
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