By Gang Lin
Asia Program Associate

U.S. congressional approval of permanent normal trade relations with China has paved the way for China's entry into the World Trade Organization (WTO) and will undoubtedly help to maintain the momentum behind China's economic reforms. Yet, Beijing's economic reforms, while improving people's daily lives in many instances, have also brought painful social byproducts and carry substantial political implications for China. How to access social and political changes in China is a debatable issue, one with significant policy relevance for the United States.

At a September 22nd Capitol Hill breakfast seminar sponsored by the Woodrow Wilson Center's Asia Program, two leading China experts, Richard Baum of the University of California-Los Angeles and June Teufel Dreyer of the University of Miami, spoke to congressional staff on the political implications of China's economic reforms. The speakers explored the impact of economic reforms on China's social stability and political system and offered dramatically different diagnoses of the problems China faces today. Their remarks explored the following questions:

* How serious is urban unemployment in China?

According to June Dreyer, the Chinese official figure of 6.5% unemployment rate (with 11.7 million more workers laid off in 1999) underestimates the extent of the problem because it does not count those "waiting for employment." Most of the unemployed could not find jobs, and 10% are not covered by China's rudimentary social security network, contributing to a rising sense of social grievance in China.

* How widespread is corruption in China?

Beijing regards the rampant official corruption in China as a "life and death" matter to the Party. Yet, despite Beijing's continuous campaign again corruption, crooked officials continue to siphon off a growing amount of governmental revenues for their private use. Dreyer warned that once corruption gets established, it is very hard to root out. Baum pointed out that Beijing's corruption problems remind one of the ancient Roman conundrum: "Who guards the guardians?"

* Are social tensions and protests rising in Chinese society?

Both Baum and Dreyer remarked upon the drastic increase in labor disputes and protests in urban China in recent years. Meanwhile, hundreds of thousands of farmers have engaged in organized demonstrations and riots, because their incomes have on average declined steadily and corrupt village officials have increasingly exacted illegal taxes, fees and levies from the powerless farmers. Dreyer regarded these phenomena as the tip of the iceberg, indicating China is at the brink of social crisis, while Baum cautioned that social riots and protests in China are still fragmented and have not yet risen to regional or national scale as a coordinated resistance to the regime.

* To what degree have economic reforms changed state-society relations in China?

According to Baum, social mobility and individual choice have increased with the collapse of work units and the household registration system. Although the media is still under the Communist Party's control, people now have more access to foreign and Hong Kong TV programs and Internet service. However, Dreyer believes that state-society relations in China have remained largely unchanged from the system that prevailed prior to the introduction of economic reform in 1979. The local party secretary, concurrently serving as the chief magistrate, is essentially a law unto himself.

* How does the Party reconcile its ideological claim as the vanguard of the proletariat with the growing importance of the private sector in China?

Baum maintained China's market reform has created a new socio-economic group of private entrepreneurs and "cadre capitalists." To breathe new life into some of the Party's stale Marxist dogmas, Chinese leader Jiang Zemin has called upon the Party to "represent the advanced forces of production; to represent advanced popular culture; and to represent the advanced view of the masses." This suggests the Party has abandoned its ideological preference for state-owned enterprise, given the latter's problems with inefficiency and bankruptcy.

* Will continued economic reform inevitably erode the Party's influence and push China toward liberal democracy, or can the Party maintain control on the levers of political power even as it embraces economic reform?

Dreyer argued that China's economy cannot make further progress without initiating social and political reforms. Baum agreed that at the central level, China's dynamic economic reforms have been accompanied by political stasis and retrenchment. However, Baum pointed out that at the provincial and county levels, people's congresses now play a more active role in proposing laws and holding non-elected officials accountable for their actions. At the village level, he explained, elections have provided modest rudimentary checks on the arbitrary power of local officials. Further, Baum argued that Beijing's new emphasis on market transactions has called forth a variety of legal reforms designed to protect newly-defined property rights.

In brief, Dreyer highlighted China's social problems and the political retrenchment accompanying its economic reforms. By contrast, Baum argued that economic reforms have created the sprouts of "civil society" at the local level of China and that Chinese leaders are approaching, albeit gingerly, the issue of political reform. That two distinguished and experienced China scholars could come to such different conclusions regarding the impact of China's economic reform suggests how difficult it is to draw valid generalizations about this complicated and contradictory country, and serves as a useful warning against "definitive" statements purporting to explain China's present or future. To really understand China and grasp the political, economic or diplomatic opportunities for the United States, we must avoid facile generalizations and keep close watch of new developments in Chinese society.