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Monday, November 1, 1999

China in the New Millennium: Market Reforms and Social Development

Cato Has Sounded a Libertarian Call to Arms in China

In June 1997 the Cato Institute sponsored an academic conference in Shanghai, along with Fudan University’s Center for American Studies. The government signed off on the event and, for the most part, the Chinese participants carefully avoided sensitive political topics. Not so the irrepressible Cato crowd.

James Dorn, Cato’s vice president for academic affairs, reminded his listeners that “The continued success of China’s journey to prosperity . . . will depend on whether [they] are willing to allow a true market system to develop, in which individuals can hold secure title to their property and are held accountable for their mistakes, or whether China remains a ‘socialist market economy.’”

Edward Crane, Cato’s president, made the connection with politics explicit. “There are two fundamental ways to order society: Voluntarily, through the private interaction of individuals, associations, religious organizations, businesses, and so on . . . or coercively, through state mandates . . . because it is in the nature of man to be free . . . society is better off—not just economically but spiritually—when politics plays as small a role as possible in societal affairs.”

The Chinese participants (who did not have the advantage of holding either American citizenship or outbound plane tickets) were mostly silent. Professor Zhou Dun Ren stood alone among those who pointed out the connection between economic and political freedom, suggesting that China needed more of both. “The pointer on the roadmap of the 21st century is for China to go down the road of a true market economy. The more developed China is economically, following the free-market model, the more freedom and democracy will advance.” Perhaps it is not surprising that Professor Zhou is the former deputy director of the Center for American Studies. In China, libertarian sentiments do not go unpunished.

The conference proceedings, published here, offer abundant evidence that China’s steps away from rigid central planning and toward the free market have generated spectacular economic growth over the past 20 years. Per capita income has increased fourfold; exports have skyrocketed. Hundreds of millions of Chinese have been lifted out of dire poverty.

At the same time, China’s increased material prosperity has had no discernible effect on the political system, which remains a self-perpetuating one-party dictatorship. Despite participant Mao Yushi’s claim that “China’s economic reforms and opening to the outside world have advanced both material progress and civil society,” evidence of the latter remains scanty.

Kate Xiao Zhou argues that women in rural China have experienced a revolutionary change in their lives as their participation in the market has increased their personal autonomy and freedom. In “Market Development and the Rural Women’s Revolution in Contemporary China,” she writes that rural women by the millions “have participated in the development of markets, the rise of rural industry, and migration.”

China’s economic changes have weakened social controls for women, but it has gained them nothing in terms of political rights from the state. And the weakening of the mediating institutions of family and village, as the one-child policy demonstrates, may in some ways render women even more vulnerable to state exploitation. Zhou regrets that this “contemporary rural women’s revolution,” as she calls it, “has no organization, no leader, and no ideology,” but it could hardly be otherwise. If it did, the Party would see it as a threat. It would be either co-opted or crushed, as the China Democracy Party was recently crushed.

Minxin Pei, assistant professor of politics at Princeton University, draws a connection between the economic liberalization and the thousands of semi-official associations that have sprung up over the past 15 years. Pei sees these associations, which include groups of private entrepreneurs, consumers, and village and township enterprises, as a nascent civil society. This may be too optimistic a reading. Many of these organizations represent pre-existing Party and government organizations (the village and township organizations, for instance), and all are required to register their membership and goals with the government. Moreover, a recent government edict forbids the formation of new groups.

What is one to make of this increasing gap between China’s material prosperity and the retro behavior of the Chinese Communist Party? Crane suggests that China is “at a crossroads, and that it must choose between political society and civil society—that is, between coercion and freedom as society’s organizing principle.” I believe that China’s leaders have chosen—long ago—to organize on the principle of coercion. And there is no evidence I can see that they are wavering in this choice. Indeed, they seem convinced that a continuation of the present “socialist market economy” is their road to national power and personal wealth.

For all the talk about China’s “nascent civil society,” the People’s Republic is at present governed by a single class. This kleptocracy uses its power—combined with the strength of Chinese family ties—to engage in a massive accumulation of wealth. Non-relatives—the vast majority of the Chinese people—can expect to be cheated.

Cato is to be congratulated for going to China and sounding a libertarian call to arms. The conference volume that resulted is worth reading. But there is no force in China today capable of taking the field against the vast Communist kleptocracy.

Steven Mosher is the president of the Population Research Institute and the author of the forthcoming Hegemon: China’s Plan to Dominate Asia and the World.