INTERDEPENDENCE AND THE PROBLEMS OF ADAPTATION: THE CASE OF CHINA IN THE 1980S XU HAN 3. 1993 Thesis submitted to the University of London in partial fulfilment of the requirement for the Degree of Doctor of Philosophy in International Relations, London School of Economics and Political Science, University of London. 1 UMI Number: U062821 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U062821 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 7h^s ££ r 7039 1 C7tf ABSTRACT This thesis is concerned with certain characteristics of the development of global interdependence as they apply to the case of China. In particular it examines the processes and problems involved in the policies-of “reform and opening-up" as they affected China's adaptation to the world economy during the 1980s. The thesis places this examination within a historical context and it considers the ways in which ideological and other legitimating institutions have been challenged as the reformers shifted from a Maoist self-reliant developmental strategy to a more interdependent and outward-looking one. This study is a systematic attempt to examine the problems involved in the pursuit of reformist policies that necessarily entail ever- deepening relations of interdependence with a largely capitalistic international economy on the one hand, and in the Chinese Communist leadership's attempt to maintain and develop a socialist political system on the other. Instead of focusing on the formation of policy, on the decision-making structures and processes at the higher levels of the system as numerous writings on China's reforms have done, this thesis draws heavily on the dynamic changes in the social base and focuses more on the lower levels, especially the enterprises level, and is based on my field research in China. This study shows that, after more than a decade of opening- up, China has markedly increased its interdependence with the world economy, which has not only helped China achieve its dramatic economic growth, but also played an important role in generating changes in cultural, political and perceptual areas. As a result, the possibility of China's further integration into the world community is greater than ever. However, the Communist Leadership's fundamentally flawed strategy of seeking to combine economic liberalism with political authoritarianism has caused a series of setbacks in China's development in the 1980s. Their continued refusal to consider fundamental changes in the political system means that China still faces an uncertain future. 2 CONTENTS T i t l e ............................................................. 1 A b s t r a c t .......................... 2 C o ntents.......................................................... 3 Acknowledgements .................................................4 Note on transliteration ......................................... 5 Abbreviations.......................................... 6 Chapter I Introduction ........... 7 Chapter II Interdependence and China ........................ 22 Chapter III Ideological Adaptation and Difficulties ......... 42 Chapter IV Practical Adaptation and Difficulties .......... 120 Chapter V Changes in Popular Modes of Thinking Under the Opening-up Policy ............................ 170 Chapter VI Conclusion........................................ 219 Bibliography................................................... 233 Appendix .......................................................250 3 ACKNOWLEDGEMENTS I wish to acknowledge first of all my deepest gratitude to my supervisor, Mr. Michael B * ... Yahuda .for his experienced supervision. I am indebted to the Sino-British Friendship Scholarship Scheme which gave me the opportunity to study in the U.K. I also gratefully acknowledge the financial assistance by the Central Research Fund of University of London, which made it possible for me to conduct my fieldwork for this thesis in China. The interviewees I visited for the purpose of writing this thesis have been indispensable, their suggestions and ideas have greatly enriched my thesis. Thanks are also due to many helpful lecturers in International Relations, London School of Economics and Political Science. In particular, I would like to thank Ms. Barbara Koscia for doing a very careful and thoughtful proof­ reading of the thesis. Last, but not the least, I would like to thank my wife, Yuemei, for her patience, encouragement and continuous help with the typing and editing of the manuscript. XU HAN LONDON, MARCH, 1993 4 A NOTE ON TRANSLITERATION Chinese names, terms, phrases and -titles used in this thesis are given in Pinyin (Chinese Phonetics), the official system of transliteration in the People's Republic of China. The exceptions are those applying to Hong Kong and Taiwan when Wade-Giles has been used. 5 ABBREVIATIONS / 1. CCP Chinese Communist Party 2. DPI Direct Foreign Investment 3. FRE Foreign-Related Economy 4. KMT Kuomintang (Nationalist Party) 5. MFN Most Favoured Nation 6. NIE Newly Industrialized Economies 7. NPC National People's Congress 8. PLA People's Liberation Army (Of China) 9. SEZ Special Economic Zone 10. TEDA Tianjin Economic-Technological Development Area 11. TUTRIC Tianjin United Tyre and Rubber International C o . Ltd. 11. WFO Wholly foreign-owned 6 CHAPTER I. INTRODUCTION Opening-up to the outside world has been regarded by the Chinese reformers as the key to revitalizing China's economy. But the shift from a Maoist self-reliant, inward-looking developmental strategy to an interdependent, outward-looking one is a very difficult endeavour. In order to participate in the world economy, China has to satisfy certain criteria, adjust to international practice and fit in with the international economic system. That is to say, it has to adapt. The process of adaptation will have to be carried out at two distinct though interrelated levels of the state's institutions: those concerned with external interactions and those involved with domestic arrangements. This is not merely an economic or technical matter; for with increasing integration into the world economy, the existing structures will be more frequently challenged and adaptation in areas of social, cultural and political activity will also become necessary. Moreover, the adaptation has to be continuous simply because the world economy itself constitutes a highly dynamic system. Obviously, for China, adaptation is a huge task of great significance because its capability to adapt will eventually determine whether China will realize its goals of modernization and become a rich and powerful country. Either result, success or failure, would have far-reaching implications both for China itself and for the rest of the world. This thesis examines the processes and problems involved in the policies of "reform and opening-up" as they affect China's adaptation to the world economy during the 1980s. If adaptation is never an easy process for any country, it was bound to be particularly difficult for China. For about three decades since 1949, China's economy had been organized and run in a very different way from the world economic system to which China now has to adapt. The legacy of the system of economic planning was bound to pose a special set' of problems as China sought to enter the international economic and trading system which is largely guided by free market principles. 7 Besides, as a member of the "third world" -few of which have managed to adapt successfully to the world economy and narrow the gap between themselves and the developed countries since the end of World War II1 - China faces even more formidable difficulties. These include: a vast and ever growing population; a poor transportation and distribution system; energy shortages; limited supply of arable land and hugely uneven rates of regional development, etc. Moreover, the attempt to integrate into the capitalist world economy is greatly impeded by the deep seated legacy of the traditional past especially when combined with the influence of the socialist system that has prevailed in the last several decades. By addressing the problems that have emerged in China's adaptation process in the 1980s, this thesis touches upon some of the key issues both in China's recent historical past of the last one and half centuries and in the development of its political economy in the last four decades. Historically, some deep-rooted and inescapable incongruity between China and the West in terms of value systems, political cultures and philosophies, etc. has made it a continuously frustrating process for the Chinese to find both their rightful position in the world and the right ways to deal with the advanced West and achieve China's modernization programme. In the last 150 years or so, the prevailing mentality and outlook among the ruling class in particular and in Chinese society in general, has been to try to uphold the basic values of the Chinese system while importing Western technology. This was