by Adi Ignatius
After reform was implemented, from 1981 to 1984, Guangdong started the development of “three inputs plus export subsidy.” They imported raw materials, samples, and designs, used existing equipment and labor to process it all, and then exported the finished product with subsidies applied. Even though it was a bit primitive back then, standards quickly improved. Guangdong, especially in the areas of Dongguan, Nanhai, and the Pearl River Delta, developed very quickly.
In the beginning, wherever Hong Kong businessmen went, the “three inputs plus export subsidy” policy was put in place, so they eventually moved their production equipment and production bases to the mainland. After Guangdong did this, Fujian, Shandong, Zhejiang, and Jiangsu followed suit. The results were good. All of this had again proven that the potential strengths of the coastal regions were just waiting to be realized.
Of course, this was already happening in the coastal regions during the years of reform. However, as an overall strategy, it was necessary to bring it to the level of strategic thinking and implementation. This was why the coastal development strategy was proposed. It was not without reason, nor was it from a temporary impulse; rather, it was a conclusion drawn from long-term observation, research, and understanding.
12
Coping with Corruption
All government policies, even the successful ones, have costs. One of the costs of China’s reform efforts, from the beginning, has been corruption. No reformer could afford to ignore the problem and its potential for provoking a backlash. Zhao argues that corruption is a result of the transition from the old economic system to the new, and that a hard-line response isn’t necessary. The answer is to move more quickly with reform of the economic, political, and legal systems.
Corruption was emerging as an important issue in 1988. The challenge was how to interpret and resolve this problem, and how to turn the concerns about corruption and creating a clean government into opportunities to deepen reform—while not giving opponents a chance to exploit this issue and restore the old system.
While spending the 1988 Spring Festival holidays in Guangdong, I read materials that revealed many examples of power-money exchanges. While it could not be assumed that they were the result of reform, we had to acknowledge that this was related to the changing economic environment. We could not ignore the issue. I proposed, “The economy must prosper, the government must remain clean.”
I realized more and more that “remaining clean” was a major issue. If neglected, it could provide an excuse to those who opposed reforms, while making the people disgruntled. The consequences could be dire. At the same time, we could use the anti-corruption issue as an opportunity to deepen reform. Because these problems emerged in the new environment, they could not be solved using old methods. First, the causes of these problems had to be understood. Only then could we find effective ways to resolve them.
For example, in Hong Kong, corruption was very serious in the 1960s. The law enforcement agencies had become seriously corrupted. Then, in the 1970s, the Independent Commission Against Corruption was established. There was even a film made, called The Storm Against Corruption. After this the situation evidently improved.
Corruption often occurs when the economic culture develops to a certain stage; but later, when the quality of civil servants and law enforcement personnel improves, and their wages and compensations rise, the situation changes. Today’s Hong Kong is very different from before. Similar situations have existed in other developing countries. The early stages of a market economy involve exchanges of power and money. As the economy develops, with the refinement of the legal system and establishment of a democratic system, the situation improves. Some ASEAN countries had similar experiences.
In January 1989, Ta Kung Pao [newspaper] in Hong Kong published an article with a title along the lines of “An Attempt to Analyze Corruption in the Mainland.” It was a systematic analysis of our corruption problem. I forwarded it to [Director of the Political Reform Research Institute] Bao Tong with a message: “This is an article studying corruption. We need to organize a group specifically dedicated to the research and analysis of the corruption problem, then propose our strategy and explain it in some persuasive articles.”
At that time, I believed the issue needed to be systematically studied. Only after investigating it clearly could we propose a solution. The reapplication of old tactics would not work. Returning to the highly centralized planned economy would be no good, even if it were for the sake of fighting corruption. That would be like never eating again for fear of choking. Using the methods of mass campaigns and class struggle, as we did in the early years of the People’s Republic, for example, by executing people, would not work.
This kind of corruption emerges during an economic and social transition process. The old system has weakened and is disintegrating, but the new system has not yet been established. That is why further economic and political reform is necessary in order to resolve this problem fundamentally.
Take power-money exchanges as an example. Now that the economy is freer, with commodities and markets, many enterprises and entities are subject to market competition. But power is still monopolized in the hands of government agencies. In other words, economic reform has not completed the shift to free markets. Many residual elements from the era of the planned economy still exist. If certain participants in the market competition get favors from agencies with power, they can gain huge profits under conditions that are not equal to those of their competitors.
For example, by converting supplies from inside the planned economy to outside of it—that is, buying commodities at a controlled low price from within the planned system from supply agencies and then selling it at market prices—huge profits can be obtained. Another example is the situation where whoever can obtain permits for exporting or importing certain goods can take advantage of the price discrepancy to make huge profits. Under these conditions, power and money are linked and exchanged so that some businesses profit from unequal competitive conditions. Part of the huge profits obtained in this way can then be used for bribes.
The only solution for resolving this issue is continued deepening of reform to separate government and enterprise, to hand down powers currently held by the government to administrators of the industries, and to resolve the issue of monopolies or the overconcentration of power. Doing this limits the environment for power-money exchanges. Such problems can only be solved through further reforms.
Another imperative is building institutions. A commodity economy requires appropriate institutions: a tax affairs office, police departments, bank branch offices, and various agencies to enforce and execute regulations. If procedures were all transparent, and if the results were made public, there would be fewer attempts to engage in corrupt activities.
I heard that there was a place in Heilongjiang where a bank’s agriculture loans were announced publicly every year: who got loans and what were the returns. This let the people participate and check on power. The less transparency, the easier it is to cheat. This is the issue of building institutions to fight corruption. Dongcheng District of Beijing Municipality has a good record in this aspect. This way of doing things easily gains public support.
To fight corruption, reform of the political system must be carried out. Emerging nations have periods of widespread corruption in the early stages of their development. The economy is growing at high speeds while political power is highly concentrated. The behavior of officials is not checked by public opinion. If a political party has no check on its power, its officials easily become corrupt. The situation will eventually improve with the building of democratic politics, a wider variety of political activities, a wider slice of the populace participating in the process, and checks on power by public opinion. Some of the ASEAN countries, as well as Taiwan, have gone through this. As the economic base changes, the political system also needs to be reformed.
Another important issue—in fact the most essential—is the indepen
dence of the judiciary and rule of law. If there is no independent enforcement of law, and the political party in power is able to intervene, then corruption can never be effectively resolved.
I pointed out all of these issues at the Central Committee Secretariat meeting. However, it appears that up to this day, the problems have not been resolved.
After June Fourth, when Li Peng and his associates were criticizing me, they accused me of saying that corruption was unavoidable in the reform process and therefore that I had a laissez-faire attitude toward corruption. They never seemed to run out of words to use against me in groundless accusations!
In fact, tackling corruption was very much on my mind. I talked about the issue of anti-corruption at both the Second Plenum of the 13th Central Committee in March 1988 and at the Politburo meeting in June. I also held several symposiums specifically for hearing about the experiences of people at lower administrative levels. I was actively studying anti-corruption in hopes of finding a solution that would truly resolve the problem. It was utterly unjust for Li Peng and his associates to take my quotes out of context in order to incriminate me.
It appears that this problem continues to this day.
PART 4
WAR IN THE POLITBURO
1
Hu Yaobang “Resigns”
Just how the opposing forces in Chinese politics have maneuvered against each other has long been a puzzle. Zhao lifts the veil on the Machiavellian scheming by the revolution’s Old Guard, who want to protect the Communist Party’s power and the legacy of Mao Zedong.
Zhao also sheds light on supreme leader Deng Xiaoping’s decision in 1987 to force out Hu Yaobang, the liberal leader of the Communist Party. Hu inexplicably failed to take seriously Deng’s warnings to deal with a growing liberal trend in society. But in the end, Hu’s fatal error appears to have been an interview he gave to a Hong Kong journalist, in which he almost seemed to be rushing Deng into retirement. Zhao takes over as Party chief and tries to manage the conservatives’ wrath. The elders launch an Anti-Liberalization Campaign* as Zhao struggles to protect reforms in the economy.
[Hu] Yaobang was forced to resign in January 1987. There has been a lot of talk about this issue. One version has it that Deng, under pressure from Party elders, was forced to abandon Hu in order to protect Zhao. I don’t think this was true. Certainly there were people fomenting trouble between Deng and Hu by making accusations against Hu in Deng’s presence. However, I don’t think it was the main reason.
The reason that Deng Xiaoping abandoned Hu Yaobang was not that he was misled or that he had to compromise under outside pressure. Rather, Deng’s attitude toward Hu gradually changed until he finally lost trust in Hu.
From 1980 to 1986, Deng grew to feel that Yaobang was increasingly at odds with him concerning the liberalizing trend among intellectuals. The differences between them grew wider over time. Starting from 1980, whenever Deng came out to condemn liberalization or propose campaigns against it, he was almost always responding to reports he had received from [influential leftist leaders] Hu Qiaomu and Deng Liqun. However, it was a fact that Deng and Yaobang held sincerely different views on this matter. Even without people brewing trouble between them, their conflict was bound to grow more serious. The end result was unavoidable.
Here are some of the things that happened over those years.
Deng gave a report at the Theoretical Discussion Meeting for upholding the Four Cardinal Principles* in 1979. Ever since, it was clear that Hu and Deng held differing views on the issue of liberalization.
As the years went by, their differences grew more obvious and their positions moved further apart. In July 1981, Deng Xiaoping accused the theoretical front† of being “lax and weak” and spoke on the matter. In October 1983, at the Second Plenum of the 12th Central Committee Deng said the theoretical front should not be involved in any “spiritual pollution.” He made these comments because he felt that the liberal trend among intellectuals had been gaining ground, and he believed Hu Yaobang should be held responsible for it, since this realm was under Hu Yaobang’s management.
Hu Yaobang himself never raised such questions, nor did he ever report to Deng on issues of this nature. Rather, Deng sensed it for himself or heard about it from Hu Qiaomu or Deng Liqun, so he felt compelled to intervene. This naturally implied a dissatisfaction with Hu.
I would like to specifically mention the matter of the Anti–Spiritual Pollution Campaign.‡ I feel that the way Hu Yaobang handled this matter aggravated the conflict between them a great deal. This ultimately played a key role in the final rift between the two.
After the Second Plenum of the 12th Central Committee, Deng’s Anti–Spiritual Pollution Campaign was disseminated nationwide. “Leftist” thinking made a comeback, not only in the cultural, metaphysical, and economic arenas, but also in people’s daily lives. Even the hairstyles and fashion of female comrades fell within the control of the Anti–Spiritual Pollution Campaign, and another Cultural Revolution almost seemed to be on the horizon. Strong reactions came from intellectuals across China and international commentators.
I was visiting the United States that winter, and everywhere I went I had to respond to people’s questions about it and ease their concerns. The momentum of the campaign was strong enough to threaten economic policies and reform.
[Vice Premier] Wan Li and I announced that the Anti–Spiritual Pollution Campaign would not be applied to economics or agricultural matters, so as to avoid a disruption to the economy. We also proposed that the campaign should not touch the realm of lifestyle habits. This had the effect of cooling the overall atmosphere. Since anti-liberalization was unpopular to begin with, if we indicated that the economic, agricultural, and science and technology arenas were “off limits,” the movement would lose momentum even in the metaphysical and cultural arenas. Even Deng became worried about the way things were going and revealed some of his feelings about this. So the Anti–Spiritual Pollution Campaign was not going to last long.
Yaobang always doubted the campaign. He apparently wished to ease the anger of intellectuals and reduce the negative impact on international opinion. While visiting Party chiefs in Shanghai in February 1984 and again when meeting Japanese visitors, he said that the phrase “Cleansing of Spiritual Pollution” was inappropriate. He said that the phrase led to overreaching in the campaign and that it would not be used again.
This was a very sensitive issue. As soon as word spread of what he had said, people, especially intellectuals, had the impression that the Cleansing of Spiritual Pollution Campaign had been wrong. Yaobang had specifically explained that “Xiaoping originally called for ‘Anti–Spiritual Pollution,’ but the media campaign had distorted it into a ‘Cleansing of Spiritual Pollution,’ therefore resulting in an overreaching.” In other words, it wasn’t that Deng had been wrong, but rather that it had been executed incorrectly. In fact, the campaign was based on Deng Xiaoping’s speech, so when it was printed in the newspapers, or mentioned by leaders in speeches, the word “cleansing” was used many times. Everyone knew that the campaign was waged according to Deng’s remarks. So Yaobang’s explanation could not reduce Deng’s responsibility in people’s minds.
Deng was not happy with this kind of talk from Yaobang. Even though Deng did not say anything at the time, he did not back down an inch from his previous stand, whether you call it “anti–spiritual pollution” or “anti-liberalism.”
On January 15, 1987, at the Party life meeting* that concluded the case of Hu Yaobang, [Politburo member] Hu Qili disclosed that on June 28, 1984, Deng had spoken alone with him. Deng had said, “The main reason I have asked you here today is to talk about Yaobang. Not only in the way that he dealt with Guo Luoji, Hu Jiwei, and Wang Ruoshui,† but with the upholding of the Four Cardinal Principles and in anti-liberalization efforts; as the party’s General Secretary, Yaobang has displayed a weakness that is a fundamental shortcoming.” Deng didn’t talk to Yaobang directly, but asked Hu Qili to relay h
is message, even harsh wording such as “weakness against liberalization is a fundamental shortcoming in a General Secretary.”
This evoked a question: If Yaobang could not change in a fundamental way, was he still suitable for the position of General Secretary? Hu Qili told Yaobang what Deng had said, word for word, but even after this, Yaobang did not pay attention or respond seriously to the matter. This was in 1984.
In July 1985, Deng Xiaoping asked Hu Qili and [Vice Premier] Qiao Shi for a talk. Again he pointed out that the real problem was the growing trend of liberalization. Deng said, “Some people (he meant people like Wang Ruoshui) encouraged Yaobang while using Yaobang’s name to oppose our domestic and foreign policies. You should ask Yaobang to raise the issue of anti-liberalization more often.” Qili and Qiao Shi did as Deng instructed and relayed the message to Yaobang and to me at Beidaihe [the beach resort where Party officials gather each summer].
I thought then that because Deng was repeatedly emphasizing this issue, the Secretariat needed to hold a meeting to discuss it seriously, as an appropriate response to Deng. I suggested this to Yaobang, but when [Hu] Qili asked Yaobang when the meeting would take place, Yaobang’s only reply was to say that he was about to leave for Xinjiang. Later, he did indeed go to Xinjiang, so the matter was postponed. Yet he should have dealt with the issue before leaving for Xinjiang; he did not view it as important.