These are the things that have to be handled just right in order to inhibit major fluctuations in prices. Even more necessary is relinquishing control at just the right time to allow the market’s own regulatory mechanism to take over.
This sort of large-scale regulatory feedback system implemented in China was a startling revelation to the initially skeptical foreign media. To put it bluntly, even a more authoritarian dictatorial government would be able to implement this “command economy for a new age” by employing twenty-first-century automated information and calculation systems. Price controls provided a kind of armed escort to smooth the path of China’s latest large-scale economic reform.
“In the world today,” said He Dongsheng, his voice beginning to break, “China is truly the only country that could accomplish all five of these policy changes at the same time.”
While the global economy was in great difficulty, and Western countries were in shambles, this was China’s opportunity of the century. An originally almost moribund top leadership had in a very short time transformed the social and political crisis caused by an economic meltdown into a golden opportunity. All of which made the rest of the world accept the idea of China’s ascendant prosperity. At the Party Congress the following year, the top- leadership transition proceeded smoothly. He Dongsheng admitted he didn’t do as well as he had hoped. His plan to be promoted to secretary in the Central Party Secretariat came to nothing, and he was merely promoted from an alternate to a full member of the Politburo; he was now an old veteran of three leadership changes. On the first anniversary of the “Action Plan for Achieving Prosperity amid Crisis,” He Dongsheng had wryly congratulated himself: “He Dongsheng, you did brilliantly.”
A century-old dream comes true
Fang Caodi and Little Xi were quite stupefied by this lecture, and they still had many questions they wanted to ask about that week of anarchy, but they were swept along by He Dongsheng’s monologue. He Dongsheng went to the bathroom, came back, drank another glass of water, and carried on speaking even more bombastically.
Fang Caodi and Little Xi didn’t deny that in the last two years China’s economic situation had been good, but they believed that the political situation had become much worse. China was moving further and further away from constitutional democracy. They complained that everyone seemed to be satisfied with the status quo.
“Everyone seems to be perennially happy,” said Little Xi.
Then Lao Chen spoke up. “I was one of those people,” he said. Before meeting Little Xi again, he’d thought that China’s present society was perfectly harmonious. Every day he was moved by his own sense of happiness. It was Lao Chen’s turn to hold forth now.
Not long ago he thought that Taiwan and Hong Kong were leading, and that mainland China was trailing behind, but now he felt quite the opposite was the case. Everyone used to criticize the mainland for being poor and backward, but then suddenly they started loudly proclaiming that China’s Golden Age of Ascendancy had arrived. For so many years intellectuals had said that the Western system was superior, and the whole world looked up to the United States, Japan, and Western Europe, but then in unison they suddenly changed their tune, and now the whole world was learning from or emulating China.
He Dongsheng interrupted and resumed his speech. He was still tied to his chair. His captors had no intention of unleashing him. “Of course there are some elements of misconception here that cannot withstand an empirical, item-by-item consideration,” he said. “For example, China’s per capita income is very far behind that of developed countries, environmental degradation is rampant, honest government is not to be found, human rights are not guaranteed, and freedom of speech is restricted. China has so many people, though, that its overall strength is always astonishing, and its rise is an incontestable fact. The Chinese media frequently report that in
In the past, foreign manufacturers had complained that China kept the value of its renminbi artificially low in order to subsidize Chinese exports, and that this created unfair competition. Western labor organizations also criticized China for exploiting its workers to maintain the preferential cost of its exports, thus lowering the living standards of workers all over the world. Now that China no longer relies on depressing export prices, the renminbi can appreciate in value, and Chinese people can buy more imported goods and go abroad as tourists, or even purchase foreign businesses. Incomes have risen across the board, companies are making good profits, and the state’s tax revenue has gone up accordingly. With this extra revenue, education, health insurance, and social security can all be improved, and China can redouble its efforts to combat environmental degradation.
“If we cannot protect our workers,” said He Dongsheng, “and cannot provide universal health insurance and social security, then what kind of a socialist country would we be?” For the first time, Little Xi and Fang Caodi nodded in agreement.
“Not relying excessively on exports doesn’t mean not trading with other countries. China is certainly not closed to foreign contact. It is still in the process of developing its heavy industry, and so it has been necessary to buy entire production lines from developed countries such as Germany, transport them to China, and reassemble them here. Furthermore, the United States also has products that China is still unable to manufacture, like Boeing aircraft and high-tech precision instruments. China will buy as many of these as possible. At present, Europe and America still have to rely on Chinese goods, but as China exports less to these countries, it serves to reduce their trade deficit with China. In general, though, China is already able to manufacture most of the goods it needs. Whether some of these are inferior copies or not, China’s domestic market is big enough and competition will produce articles of acceptable quality at appropriate prices. Then the number of industrial products that developed countries can sell to China will gradually decrease.
“China’s internal market is such a juicy plum that foreign capital, big-name brands, and retail companies have willingly accepted harsh joint-venture conditions for the right to enter or remain in China. China’s strict policies violate the spirit of WTO regulations, but since the protectionist and mercantilist activities of the developed nations themselves brought WTO negotiations to a standstill, the idea of global trade without barriers has turned into a pipe dream, and nobody can any longer occupy the moral high ground and lecture China.
“Our greatest needs are energy, minerals, other raw materials, and food, and most of these come from the countries of Asia, Africa, and Latin America. Now even Canada, Australia, New Zealand, and Russia are both buying Chinese goods and supplying China with these essentials. Basically, China can regard them as Third World countries. It has already reached mutually beneficial currency-exchange arrangements with the major trading nations, and the renminbi is now a globally circulating currency on a par with the dollar and the euro. China is already as important an economic entity as the United States, the European Union, and Japan. Its inflation remains at an acceptable rate of seven or eight percent, and economic growth has topped fifteen percent three years running. Such growth was seen before, during the thirty years of Reform and Openness: from 1982 to 1984 China’s GDP rose fifteen percent a year, but the total size of the GDP was small. To put it simply, China is now the only locomotive powering global economic growth. No wonder the nations of Asia, Africa, and Latin America want to be close to China, and no wonder people now say that the age of American imperialism is over, and the Chinese century has begun.” He Dongsheng paused to clear his throat.
Lao Chen, Little Xi, and Fang Caodi didn’t understand economics, but they were concerned about China, and knew therefore that they could not ignore the subject. They listened attentively and with narrowed eyes to He Dongsheng’s explanations. What rendered them truly speechless was when He Dongsheng turned from economics to a discussion of the international political situation.
“No matter how badly off the American economy is, the United States is still, militarily, the strongest nation in the world. Only the armed forces of the United States have the power to strike anywhere in the world.” He Dongsheng got back into his stride.
China cannot, therefore, follow the path taken by the Soviet Union during the Cold War: competing for world hegemony with the United States, conducting an arms race, implementing a balance-of-terror policy of mutually assured destruction. No, that is not the way to pacify the world, and not where China’s permanent security interests lie. A rational person like He Dongsheng, with his deeply concealed Chinese-style idealism, knew that this road was a dead end because China’s national power could not support it. To prevent the United States from starting a long-
