Economic Success May Soon Force Beijing to Deal With Internal Woes

The prevailing consensus in international affairs is that China will soon aggressively seek its place as a world power, a status it enjoyed for 2,000 years but lost in the last century. Accordingly, the regime that 92-year-old Deng Xiaoping will leave behind--a communist state bent on capitalist development--is seen as a threat and may have to be contained. But ideology notwithstanding, China is far from an emerging world power like Kaiser Wilhelm’s Germany or Meiji Japan in the 1890s.

The reason can be found in two interrelated trends and their implications for China’s political and economic life. One is the widening economic gap between the country’s coastal and interior regions. The other is the emergence of rival regional power centers that routinely challenge central authority in Beijing. Both trends have received little attention in the West, but they are bound to affect China’s relations with the outside world.

There is no disputing that China’s economic accomplishments are remarkable. While its neighbors have suffered through recession, China has been growing at a double-digit rate. However, this dazzling record has also weakened its social institutions to the point that Beijing may soon be forced to concentrate on internal affairs. Its economic policies, especially those creating special economic zones and rewarding coastal cities with preferential tax breaks to attract foreign investment, have bred deep divisions and inequality in Chinese society. Economic prosperity has hardly touched people living in “geographically incorrect” inland rural areas. The gap between the haves and have-nots is astounding. For example, while residents in a small, affluent town in Shandong, a coastal province in the East, boast about owning a 213-room hotel, the Cockatoo Inn, in Los Angeles, peasants in Guizhou, a mountainous province in the Southwest, scrap by on less than $9 a month.

The consequences of such an enormous economic chasm should not be underestimated. Throughout modern Chinese history, rural poverty, especially in the interior regions, has been an underlying cause of political unrest, sometimes leading to mass rebellions. If the current economic polarization persists and widens, it will bring far more people into the streets than any call for democracy by elitist dissidents.

Furthermore, the uneven economic development has encouraged the emergence of the rival regional power centers. Guangdong and Shanghai are two prime examples.

In the 1980s, Guangdong, especially the region around the Pearl River delta, enjoyed privileges denied to the rest of the country, partly due to its connection with the late Marshal Ye Jianying and then-Premier Zhao Ziyang. A policy called “one step forward” enabled it to leap ahead economically and serve as a shining example for other provinces. After Zhao’s disgrace in 1989, Guangdong is no longer the epicenter and model of China’s reforms. But it continues to exert strong influence in Beijing’s political circles principally because of its location on China’s southern coast, which gives the region easier access to overseas markets and resources, and thus bargaining power in China’s capital. The return of Hong Kong, near Guangzhou, next year will further strengthen the region’s status in China’s power structure.

Shanghai’s emergence as a regional power center since the early 1990s takes another route. Known throughout China as a spawning ground for technocrats and businessmen, and benefiting from the resources of the surrounding Yangtze River delta, it has grown into a super-economic zone, the “dragon’s head,” and has begun to set the pace of the nation’s overall economic development. Both Jiang Zemin, Deng’s appointed heir, and Zhu Rongji, China’s economic czar, have personal and political ties to Shanghai, a fact that boosts the metropolis’ ability to compete with Beijing and Guangdong for influence in national life.

To some extent, the rise of regionalism in China is inevitable, given the country’s enormous population and the vast linguistic differences among various regions. However, as more power flows to regional centers, and as the gap between the prosperous coast and impoverished interior expands, the situation becomes ominously reminiscent of the events leading to the collapse of the Manchu Dynasty in 1911.

Of course, not everyone agrees that China is facing a reckoning day. But even the most optimistic of Chinese scholars concede that China has less than a 50-50 chance of succeeding at becoming a world power in our lifetime. Instead, China may have to struggle to maintain its national unity in the near future.

There is growing speculation that Beijing will soon take strong action to tame the runaway regionalism and discipline disobedient local officials. But it’s doubtful such a drive can succeed, because regional bosses accustomed to exercising power will surely be reluctant to let it go. More important, no Chinese leader today enjoys the same kind of broad-based national support that Deng once had. To hold onto power, they must not only accommodate the desires of regional bosses, but also share their decision-making authority with them.

This new reality in China requires Washington to adjust its policy. This is not to say that a “regional approach” may be preferable to the current posture. The circumstances in each region in China are so different and complicated that Washington could not put together a coherent policy. Furthermore, a “regional approach” might encourage ambitious local Chinese officials to ignore Beijing altogether, thus fostering disunity in China. Consider how this could greatly magnify the problem of piracy of U.S. intellectual property in China. If China falls into chaos and the state disintegrates into regional fiefdoms, there would not be several dozens but hundreds of counterfeiting factories to contend with.

A strong central authority in China may thus be in the U.S. interest. As such, Beijing’s efforts to curb regionalism are worthy of support. In fact, this was one of the reasons why Secretary of State John Hay proposed the “Open Door” policy at the end of the 19th century, which, among other things, endorsed the existence of an effective central government in Beijing during the crisis of the Boxer Rebellion.

On the other hand, Washington needs to better understand what is really happening in China, especially in its interior and at the regional level. Unlike in the past, U.S. interests in China now embrace such a wide slice of American society that the White House cannot afford to misjudge the situation there.

In any event, Washington need not be overly preoccupied with Beijing’s seeming aggressiveness; rather, it should recognize that China is just a developing country facing an uncertain future. Only by doing so, can the United States benefit from the changes in China and move the relationship beyond Cold War theories.