China Boom CMS

<p>For the first 30 years of the New China, from &rsquo;49 to &rsquo;79, we essentially had a propertyless society. It wasn&rsquo;t just me who didn&rsquo;t have any property. Even department heads also were propertyless. They made more, about 200 RMB a month, but their houses were government owned. Even Mao Zedong&rsquo;s furniture was provided to him by the State Council. I have documents here that show Mao Zedong&rsquo;s furniture was rented. His bed, his cabinets, everything was rented. Every month he paid, I think, 80 RMB in rent for his furniture. At most, you owned a watch, or a bicycle, or a radio. Radio&rsquo;s were rare. All of these were very rare. If a single family had all of these, then they were a rich family. A family normally had, at most, a few hundred RMB worth of property, less than $100. After this 30 years, especially after housing reform -- before, the government would give out housing, now people were required to buy their own houses -- &nbsp;I feel like the great majority of urban Chinese bought a house, some even two or three houses, they also bought storefronts. Rural Chinese built their own houses. If you looked in the countryside around here 30 years ago, before the Reform and Opening, you would see all of the houses were made with straw. If people in the countryside had a roof made with tiles, they were certainly a very prosperous family. Now, there are almost no tile-roofed houses left, almost all of them are made with concrete. The peasants have their own houses, they built them themselves. Most people in the cities have bought their houses. A large proportion of city residents have bought cars. At this moment, in 2008, China has produced a segment of society, probably 300 to 500 million people, that has a certain amount of property. As soon as a person has property, he has roots. When he has roots, he starts to worry. He doesn&rsquo;t want revolution, chaos, or riots. He says, &quot;I have property already, don't indiscriminately take it away from me, don't rob me.&quot; Society is stable when a portion of society has property. He hopes that this portion of society, the middle class, gets larger and larger. And I think that we are really heading very quickly in that direction. The middle class is growing. The more people have property, the more stable society is, the more controlled people are. Because people have other things to worry about, this is the way i understand it. Take Chengdu as an example, a lot of the people in Chengdu, even normal workers, have bought cars. This would have been unimaginable just 10 years ago. I think this is a very significant change, because this property will be transfered to their children and then society has this continuity and stability, this attachment. Before, there was nothing to be passed down, there was no concept of heritage, a concept that we now have. It&rsquo;s a very significant change that will influence the way the entire structure of society changes, including political change.</p>

<p>I would divide the history into three periods. The first is the rural reform from 1978 to 1984. It marked the rise of TVEs, towns and villages became driving forces for China&rsquo;s development. At the time, the gap between the income of urban and rural areas was trimmed down to 1.8 times from 2.5 times. Chinese farmers benefited the most from that change. The second period is from 1984 to the end of the 1990s, about 15 or 16 years. That was urban reform and Deng Xiaoping&rsquo;s journey to the south accelerated that process. The gap between rural and urban China now had been increased and reached a very high gap. People in urban China all benefited from these changes. Foreign trade accelerated, rural immigration reached a high peak, particularly China participated global economy, which is very dynamic. Since the beginning of this century, the next level is really the coming of age of China. China&rsquo;s development became a reality starting in 2001 or 2002. It is really a geo-political economic shift. The rise of China is something similar to the rise of Europe in the 17th century, or the rise of America in late 19th and early 20th century, these major geo-political shifts. Now, China is entering the fourth period for economic development, returning to the rural areas.</p>

<p>The Cultural Revolution had forced all of the social elites to the bottom of society. So, when Deng Xiaoping gave these people the opportunity to re-enter the social elite, their passion and support absolutely gave the CCP a second legitimacy. It gave them them a second chance to rule China. The National Higher Education Entrance Examinations of 1977 and 1978 played a very important role in maintaining social mobility and bringing local elites to society. As long as you can reach the majority of the elite, to ensure them that you are still the heads of this country, they will put out incredible passion. Their philosophy is pragmatic, they don't have a strong ideology, no strong beliefs. If they feel hope, they will contribute all their enthusiasm. So, the most important factor is that the whole social elite considers the country to be their own country, since they have found opportunity.</p>

<p>I could read Marshall Chen Yi's emotions. &quot;You guys come to China, you may invade China. The Soviets from the north, India from the west and America and Chiang Kai-shek from the south. We are ready. My hair is going grey. I am waiting for that moment.&quot; That kind of statement was indicative of the state of mind of the Chinese leadership. In 1978, in China, we had such an important meeting, the Third Plenum. We decided to focus on the economy, on the modernization. That was a big change, a strategic turning point. In a way, Deng Xiaoping understood that the world had changed.</p>

<p>Deng's open door policy was launched after a series of Mao's poor decisions for this country left people without enough to eat, enduring a bitterly tough life, and with no freedom at all. No matter their position in society, whether a farmer, intellectual, bureaucrat, or worker, everyone wanted change. So, there were no obstacles to reform. There were debates over whether to choose a communist or capitalist government. After Deng's visit to the US, having seen America, his doubts about this debate vanished. He decided to forge ahead in a direction referred to as &quot;Socialism with Chinese Characteristics,&quot; which, as a matter of fact, is capitalism. I believe that Deng's visit to the US was the most salient reason for this decision. Deng visited the US in 1980 [in fact it was in January 1979]. Deng's biggest concern after having re-entered the government was to choose which route, whether communist or capitalist, to follow. Once he had visited the US, he made up his mind. I think that the main reason for the &quot;China Boom&quot; is western influence. From the First Opium War in the 1840s to today, China has made a lot of progress. I think the main reason behind this progress has been that China has learned a lot from the West. In all aspects, not only in technology, but also the economic system, we have learned from the west. If there were no communication with the west, China would have remained the old China for the last 100 years, there would have been no progress. China is not an innovative nation, but a very conservative nation. The Chinese have no particular distinction in natural sciences and modern civilization. In the fields of physics, chemistry, biology, astrology, the Chinese have not contributed a lot. The Chinese have learned a lot from the west. From their economic system, to their banking system, to their stock market system, it has all been learned from the west. The question of whether to learn from the west or not has been a point of debate since 1840. At that time, the Chinese opposed the idea of learning from the west. This debate continued until Mao's time and, even now, the debate goes on but, for the most part, the debate on this issue has been resolved. Everything we do here is from the West. Televisions, telephones, airplanes, these are all things that we have gotten from the west. Even the political system, the National People's Congress, is all western. The Empress Cixi would not be enthusiastic about the National People's Congress. The main reason that China has made so much progress is because they have learned from the west.</p>

<p>On the first trips with Kissinger and Nixon and Ford in the early and mid 70s, the economics situation was very bleak. China was still coming out of the Cultural Revolution, they had suffered under the excessive policies of Mao, including the Great Leap Forward and the Cultural Revolution, and therefore the economic component of the opening between the US and China was very meager. It was almost strictly a geopolitics exercise from the American standpoint to balance the USSR, but also try to improve relations with Moscow to get help ending the Vietnam war, to stabilize all Asia to give the American people a psychological uplift of a major diplomatic move even as we were extricating ourselves from Vietnam, to demonstrate to the world that we have diplomatic flexibility despite that war. From the Chinese standpoint, they wish to come out of isolation from the Cultural Revolution, they had broken off contact with every country, they had only one Ambassador abroad. They also wanted to balance the threat from the north, the Soviet Union. They figured if they made breakthroughs with the US diplomatically that Japan and Europe and others would follow and they would get into the UN. So these were the main impulses on both sides and I must say the objectives of both sides were pretty well served and it was a revolutionary event in geopolitical history. So, the economic component was really a long term vision, it was not a major part of our early discussions, where there were some minor talks on bilateral claims and assets and the principal of establishing trade over time, but we had no idea that China would grow and would turn into the economic giant that it is today. We figured that with 1/5 of the world's population that, over time, trade and economics and investment over time would be significant and we wanted to position ourselves for that, but it was a gleam in our eye at that point and, I must say, in Chinese eyes, and therefore was a very minor of the aspect of the opening in the 70s. Over the years, of course, this changed. And by the time I went back as Ambassador in the late 1980s the economic dimension was extremely important and our relations then were obviously changing dramatically. Even then in China they were beginning to welcome foreign trade and investment and our own trade and investment started to go up--not as big as today but by significant growth.</p>

<p>I think that changed the entire generation. It also changed the thinking mode. It changed the way you think, the way you look at life, the way you look at doing things, everything has changed. Also, because of their background, because these people had been blocked out for a long time, they desperately wanted to learn, they observe things very quickly and they apply it immediately and they work very hard because there had been a terrible lack of opportunity. If you look at the class of '77 until '80, these three years of students now occupy all the major positions in China. Anywhere, in government, private enterprise, they all occupied the key positions in China. I've discussed the effectiveness of the Cultural Revolution with my friend many times. I would say what happened with the Cultural Revolution is that it smashed down all the existing system or at least gave us an opportunity to question the whole existing system. Then, you are making your own judgment and since we observed so much information, different way of treating life, different way of looking, different way of doing, you try to figure out what&rsquo;s the best for yourself, for your country, or whatever. So, that somehow related to today's economic boom. I would say that the Chinese people have never been as free thinking in the entire history as today. Before, you followed the king, you followed the authority. You have never questioned authority because the system made you that way.</p>

<p>The fascinating thing is that the ten years before the 30 years was this cataclysmic period in which, if China exploded economically and socially and in terms of global reach in the last 30 years, and I think it has, it imploded in the previous ten years. And so, the question that I think future historians are going to ask is, &quot;How did you have this dramatic 180 degree about face?&quot; From the world&rsquo;s most autarkic country, a world in which impoverishment was quite visible in the China that I first saw in 1974, in which there was a sense that China was really disconnected not only from the rest of the world but seemingly from its own history, in which one of its goals during the Cultural Revolution was to wipe the slate clean in terms of its cultural heritage, people can debate how many people died, but certainly millions and probably tens of millions during the Cultural Revolution and then, suddenly, you seem to have this transformation into this China that is bent on 现代化- modernization, and not only bent on it, but proving to be a global success story, and perhaps the greatest global success story of the 21st Century. And if you look at it that way, I think a lot of documentation has occurred about the various periods of 1978, 1979, through the 1980&rsquo;s, the breakpoint that occurred, really, with Deng Xiaoping&rsquo;s dramatic take-over of the economy in the wake of Tiananmen, the huge take-off since then and probably, the third phase that we&rsquo;re in today, which is handing that on to successor generations, not just at the top, but in many ways through the cities and through the districts around all of China. That&rsquo;s impressive and you can see that sort of stage. But, I look backwards. I&rsquo;m a historian and a historian says, &quot;How come it happened in the first place?&quot; And the first part of the answer to the question is that it seems to me that the Cultural Revolution itself, for two reasons: One is that it crushed China, it removed it from having a sense of its identity, a sense of self, it hurt enormous numbers of people, and there is a kind of never again, a kind of resolve that one finds in a lot of people in China, not only in the generation who lived through it but the generations that have heard about it from their parents and grandparents. And that kind of resolute quality is a very important part of understanding where China is going today. The flipside of it is the Cultural Revolution also broke all patterns of restraint in China. And therefore, instead of being fixed in your locale, a large number of people were empowered as red guards to commandeer trains go around the country and many of them yearned to get to Beijing and in all of that a lot of Chinese society changed. And we know today that a lot of people met on those trains, or waving little red books, who China modernized, that they still friends and they still had allegiances. And they recognized that to get to part of a movement that had imploded, but they also recognized that they had a desire perhaps to join together as business partners, those who would stay in touch with each other and form organizations who were red guards that turned out to be successful entrepreneurs. So, ironically, the Cultural Revolution provides both a positive and negative valence, I think, for the period afterwards.</p>