2008年2月28日

Turning back China's reforms

By LIU JUNNING, BEIJING, China

February 28, 2008

Two incidents have attracted much attention in China of late. One was a pronouncement by the authorities that their medical reforms are a failure. The other was a trial in late January at which Gu Chu-jun, former president of the Kelon Group, was sentenced to a 10-year prison term for embezzling the company's property. Kelon is a former state-owned enterprise that was sold to Gu, a private entrepreneur.

These two events lend themselves to a judgment concerning two long-term disputes over the marketization of education and healthcare, and the privatization of state-owned enterprises.

There are two sharply divided camps over the issue of China's reforms. One is lead by conventional economists who advocate market reforms and reformists who are within the system -- this group can be considered official and mainstream. The other camp, lead by Hong Kong financier Larry Hsien Ping Lang, includes unconventional economists, victims of state-owned enterprise reforms, angry youth and cyber activists -- this group can be considered outside the mainstream.

Although the mainstream camp has not admitted its loss, the outsider group has claimed a complete moral victory through these recent events. The officials have lost the battle of public opinion due to the distorted, unfair and ineffective reforms they have advocated, and their practice of adjusting the yardstick to fit their reforms.

The mainstream economists who defended Gu appear to be collectively speechless. The admitted failure of the medical reforms and Gu's imprisonment have tipped the balance of public opinion away from the official, mainstream line.

Those in the mainstream camp have viewed themselves as realists whose positions were based on the actual situation in China. Their judgment was that reforming China was impossible to accomplish all at once by introducing a complete and just system. Thus, in order to continue the reforms, the corresponding distortions, injustice and negative effects should be endured, they reasoned.

These people have tended to allow big compromises with the old systems, interests and ideologies. They believed that even distorted reforms were better than no reforms.

The outsiders, on the other hand, have consisted of various groups that were sometimes in conflict with each other. Those in this camp have been good at criticism, but could not come up with solutions; or their solutions have been odd and contradictory.

It was the distorted reforms promoted by the mainstream camp that brought the opposite camp together. Those in the opposition blamed the officials for introducing all kinds of corruption in the name of reforms, causing huge losses of state property and damaging the interests of many common people.

This group preferred to completely terminate the reforms rather than suffer from their distortions and unfairness. Larry Hsien Ping Lang kept urging that the reform of state-owned enterprises be stopped; he even claimed it would be better to retain them under state ownership and under the old system.

Many people thought that the choice facing China lay in whether or not to undertake reforms, not in the choice between fair or unfair reforms. In this context, the outsider camp preferred no reforms.

Now, the objective of this camp has basically been achieved -- the large-scale reforms of state-owned enterprises have been called off. Besides, it has been a long time since the authorities released any new substantial reform measures.

As for the moral judgments made by this camp -- that the reforms were distorted, unjust and even caused the disintegration of state properties -- the mainstream camp seems not to disagree. They merely believe there was no other choice.

Based on these observations, the two camps are not as different as they appeared. They belong to the same camp, in fact -- which is rooted in nationalism.

The mainstream represents today's bigwigs, while the other group longs for the abandoned old ways. The approach of the former is to pursue strong state power politically and promote the economy of the powerful -- to their own benefit and at the sacrifice of the ordinary citizens.

The solution of the latter camp is to try to pull China back to its old path, which was actually a path of death, as proved by the high cost in loss of life among the Chinese people. The latter camp wants to go back to the previous politics of strong state power.

China's path of reform should aim to get rid of the strong concentration of power, whether it is new or old.

It can be concluded that China's reforms now face a dead end. The reforms themselves were a slapdash job that cannot be easily corrected. Now the choice seems to be between continuing these ill-devised reforms and calling them off altogether.

Ironically, social pressure for reforms is rising while the pace of reforms has slowed, almost grinding to a halt.

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(Liu Junning is a researcher on social issues at the Institute of Chinese Culture under China's Ministry of Culture. He was formerly a political researcher at the Chinese Academy of Social Sciences, and a visiting scholar at the Fairbank Center for East Asian Research at Harvard University. This article is edited and translated from the Chinese by UPI Asia Online. The original can be found at www.ncn.org . ©Copyright Liu Junning.)

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