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By Guy Sorman

Economics Does Not Lie: A Defense of the Free Market in a Time of Crisis

By Guy Sorman

The Empire of Lies: The Truth about China in the Twenty-First Century

City Journal

Guy Sorman
The Empire of Lies
The twenty-first century will not belong to China.
Spring 2007

Selected Responses:

Sent by Colin Thomas on 05-07-2007:

Thanks for a very interesting report on China. The reporting from the countryside was eye-opening and depressing.

However, there appears to be a disconnect in your premise. Your view seems to be that "China's economic 'miracle' is rotting from within" because political oppression and environmental destruction exist along side extraordinary economic gains. I say extraordinary because even if the growth is only 8 percent, or "no more than Japan and South Korea achieved during their take-off phases," that is as high as any country has ever managed without unbearable inflation. And Japan and Korea are worthy peer groups when measuring economic results. China's economic dynamism which in turn funds an assertive internationalist government is the reason the world sees China as an impending superpower.

Since my first visit to China in 1985 when I took a train from Beijing to Tianjin to judge a software contest at a university, the entrepreneurial instincts of the Chinese impressed upon me the sense that I had met natural capitalists. I marvel to this day that they were ever communist. Every Chinese I meet in business who is an A player will inevitably tell me about his plan to own a business someday. These are not Party parasites, but men with dreams of being little kings. One of the biggest changes I noticed last time I was in Hong Kong was that Wan Chai was no longer a red light district but rather a string of design shops for everything from fancy fixtures to custom electronics to sell to the visiting Chinese business owners shopping for their new villas.

The communist party today is a power structure, not an economic philosophy. The old Chinese government factories are relics from an unnatural act. The government carries them to keep the peace but they don't grow them. As a result they will be an ever smaller percentage of the rapidly growing capitalist economy.

None of what I say excuses China's brutal oppression of its own people or the total disregard for its land or the air and water of the entire region. Those issues just don't have a lot to do with whether or not China is an emerging superpower. China's economy is run by natural capitalists with an appetite to compete on both cost and engineering a better mousetrap. Countries that have a lot of competitive innovative companies tend to become quite rich. China has the confidence, ambition and population to apply that wealth to securing a position as one of the world's few superpowers.

Sent by Stephen W. Browne on 04-30-2007:

"I merely want to record the words and impressions of some exceptional Chinese men and women, who mostly suffer in silence, raising when they can the demand for a free nation—a 'normal' nation."

When I went to live and work in post-communist Eastern Europe in 1991 I heard again and again the almost heart-breaking refrain, "All we want is a normal life!" This is not "relative" or "just their culture"; people in despotisms everywhere know that what they are subject to is not a normal, humane way to live.

Sent by Warren on 04-30-2007:

Thanks for the interesting article about China. I have been led to think that China would, eventually, lean towards democratic principles because of the overwhelming western influences of cars, TV's, and the like but it seems the party will forever keep its foot on the neck of freedom, while making it look like there are a lot of happy people in China.

I work in a high-tech field and have met many Chinese nationals, who are great people with a work ethic I much admire, but few of whom want ever to go back home for obvious reasons.

The Western press is full of stories these days on China’s arrival as a superpower, some even heralding, or warning, that the future may belong to her. Western political and business delegations stream into Beijing, confident of China’s economy, which continues to grow rapidly. Investment pours in. Crowning China’s new status, Beijing will host the 2008 Summer Olympics.

But China’s success is, at least in part, a mirage. True, 200 million of her subjects, fortunate to be working for an expanding global market, increasingly enjoy a middle-class standard of living. The remaining 1 billion, however, remain among the poorest and most exploited people in the world, lacking even minimal rights and public services. Popular discontent simmers, especially in the countryside, where it often flares into violent confrontation with Communist Party authorities. China’s economic “miracle” is rotting from within.

The Party’s primary concern is not improving the lives of the downtrodden; it seeks power more than it seeks social development. It expends extraordinary energy in suppressing Chinese freedoms—the media operate under suffocating censorship, and political opposition can result in expulsion or prison—even as it tries to seduce the West, which has conferred greater legitimacy on it than do the Chinese themselves.

The West’s tendency to misread China dates back to the seventeenth century, when French and Italian Jesuit travelers formed stereotypes that clutter our minds even today. We learned then—or thought we learned—that the Chinese were not like us. They had no religion, and the notion of freedom was alien to them. They naturally gravitated toward enlightened despotism, as embodied by the philosopher-emperor. Such misconceptions link up across time: Voltaire sang the praises of the Mandarins, wishing a similar elite class could rule Europe; leftist intellectuals in the sixties and seventies celebrated the heroism of Mao Zedong; and today’s business elites happily go along with the Communist propaganda that democracy and free speech are contrary to the Chinese ethos.

Yet with enough patience and will, one can plunge into the real China. Since 1967, I have visited the country regularly, and I spent all of 2005 and part of 2006 traveling through her teeming cities as well as her innermost recesses, where few Westerners go. I make no claim to know China fully, an impossibly ambitious task. I merely want to record the words and impressions of some exceptional Chinese men and women, who mostly suffer in silence, raising when they can the demand for a free nation—a “normal” nation.

Before the totalitarian reign of Mao Zedong and his immediate successors, never in human history had an entire nation been under such intense surveillance. The Chinese not only had to speak alike; they had to think alike. The Communist Party regulated every aspect of private life. In the sixties, it even sought to anesthetize all feeling, commanding hundreds of millions of Chinese to repeat mindlessly the slogan of the day; one of Mao’s sayings would have to preface any “personal conversation.” A few second-rate books were the only permissible reading material, and eight revolutionary operas provided the sole entertainment. Placed everywhere—city squares, railway stations, factories, and offices—Party loudspeakers blared martial music from dawn to dusk, making it physically impossible for people to speak or think. The state imprisoned and killed untold numbers of its subjects.

Things have obviously changed, much for the better. China is no longer totalitarian. Yet the 60-million-member Communist Party, if subtler, remains cruel and omnipresent. When I met Madam Ding Zilin at the Golden Carp Café, I had to lean in close to listen. In Beijing, true privacy is only possible in such a public place. Ding Zilin felt that the security agents who shadow her every movement wouldn’t be able to record her confidences above the noisy laughter and the clamor of the waitresses moving to and fro.

It had taken me several months and many intermediaries before I could finally meet with this self-effacing, frail 75-year-old, branded an enemy of China by the Party—a label it gives to anyone with the temerity to oppose the regime. Until June 3, 1989, she was just another conformist professor at the University of Beijing. But on that fateful night, the police came to her apartment and dumped the bullet-riddled body of her 17-year-old son, Jiang Jielian. The boy had gone, out of curiosity, to Tiananmen Square to watch pro-democracy student demonstrators seek a dialogue with the authorities. The world knows how Deng Xiaoping reacted: he ordered a massacre that cost 3,000 their lives, many of them barely adults. Ding Zilin was one of the few parents to recover the body of a child lost at Tiananmen. Most disappeared without a trace, their families never learning for sure whether they were dead or alive.

In the massacre’s aftermath, Ding Zilin and her husband, also an academic, drew up a list of victims, to remember the dead and missing and to help parents come to terms with their loss. Both professors swiftly lost their jobs. Every time Ding Zilin tried to contact a victim’s relations, security agents harassed her and the families, telling them never to speak of June 3. Some families found themselves stripped of everything simply for acknowledging publicly that their children had vanished at Tiananmen Square. For them, Ding Zilin tried to raise money from overseas Chinese. The Party accused her of smuggling and threw her behind bars.

Now she’s on probation. If a foreigner tries to meet with her, government thugs will often stop her from leaving the house, at times for days on end. She nevertheless persists in her struggle, heading an association of families of Tiananmen victims that has managed to collect 600 names of those gone or known to be dead, publishing them in a Hong Kong brochure, with photos when available—an incomplete memorial that illumines the Chinese regime’s brutality and deceit.

Eighteen years later, the massacre is still a taboo subject in China, as Mao Yushi also discovered. In 2004, the internationally esteemed economist sent a polite petition, signed by 100 fellow intellectuals, to the Chinese government, asking it to apologize for Tiananmen and thereby help bury the tragic past. He, too, lost his university position and wound up under house arrest. I met him at his home on a rainy day; plastic bowls collected the water leaking through his crumbling roof—his refusal to play along with the Party has had material consequences. “I had forgotten the present leadership is the same as in 1989 or its immediate successors: they can’t confess,” he tells me.

The Communist Party is no less mendacious when it comes to China’s AIDS epidemic. The problem is gravest in the province of Henan, where vast numbers of poor peasants contracted AIDS during the nineties from selling their blood plasma (a trade generally controlled by Party members) and then having the blood, sans plasma but pooled with that of other donors, reinfused, absent HIV tests—a recipe for massive contamination. The AIDS sufferers of Henan are now dying in the hundreds of thousands, trapped in their impoverished villages with no one to care for them.

The government’s initial reaction was to deny any problem, isolate AIDS-affected areas, and let the sick die (a pattern that initially repeated itself when SARS broke out in the country).

Police barred entry to the contaminated villages, and new maps of Henan appeared without the villages, as if they had vanished into thin air. But after the international press became aware of the growing crisis, the Party banned the blood trade (though it enforced the prohibition fitfully) and in 2000 at last officially acknowledged the existence of AIDS on Chinese soil.

Despite all its pious declarations in the subsequent years, though, the government continues more to obfuscate than to help. When Bill Clinton visited Henan in 2005 to distribute AIDS medicine provided by his foundation, for example, the Party prevented him from visiting the worst-off villages. Instead, in the Henan capital city of Zengzhou, he posed with several Party-selected AIDS orphans as the cameras clicked away. It was an elaborate public-relations charade: “China, with the West’s help, was tackling AIDS!” The world saw a smiling Clinton, but not the real tragedy of Henan.

Had Hu Jia been the guide, a far grimmer picture would have emerged. Only 30, he is already in poor health, carrying on his bony shoulders the weight of multiple forms of subversion. He is a democrat and a practicing Buddhist, a follower of the Dalai Lama who favors Tibetan independence. In 2004, he gave up his medical studies to look after Henan’s sick. He has brought them clothes collected in Beijing, a little money, and some food.

Months after Clinton’s photo op, Hu Jia and I traveled to one of the Henan villages that the former president had to miss: Nandawu, home to 3,500 residents. A police checkpoint guarded the entryway, but foreigners could get past it easily by hiding under a tarpaulin on a tractor-trailer. Once inside, there was no danger: the police feared AIDS too much to go in. I shall never forget what I then saw. The disease had struck at least 80 percent of Nandawu’s families; in every house, in every hovel we entered, an invalid lay dying. Most of the sufferers had no medicine. One woman was putting a drip on her sick husband, bedridden for two years and covered with sores. She was clumsy and hurt him. What did the bottle contain? She didn’t know. The label said glucose. Why was she doing this? “I saw in the hospital and on television that sick people had to be put on the drip.”

Soon, only orphans would be left in Nandawu. No school will take them in—teachers refuse to accept these children. A charity run by a young Beijing democrat, Li Dan, tried to open a school for AIDS orphans, but the authorities shut it down. The orphans are a painful reminder of a story that the Party wants to erase from public memory, Li Dan said.

For as long as my guide Hu Jia worked alone to help the sick, the Party let him be. But then he began to distribute pamphlets, put up posters, and question the Henan government. Worse still, he urged the victims to form an organization. The Party will sometimes put up with isolated dissent, but the moment an “unauthorized” association forms, the boot comes down. Several months ago, the government placed Hu Jia under house arrest in Beijing. It is only thanks to his wife that he can communicate with the outside world. When he tries to post a message on the Internet, the Propaganda Department’s screening software immediately deletes it.

So far, the young Beijing writer Yu Jie, a leading liberal voice in China, has avoided Hu Jia’s fate, experiencing nothing worse than interrogation in a police station. This despite writing in a Hong Kong magazine of the truth about Mao Zedong, whose murderous reign is another taboo subject in China: “It is inconceivable that the Olympic Games, one of the high points of civilization, be held in Beijing as long as the body of the assassin lies in the heart of the city.” (Mao’s mausoleum still occupies Beijing’s central square.) Yu Jie’s words spread like wildfire on the Internet, where his romantic but typically apolitical writings have attracted a large readership.

With his writer’s pince-nez and baby face, Yu Jie may not seem much of a threat to the authorities; he is a lone intellectual with no organization. But the Party’s lenience probably has more to do with his relations with American Christian churches. Yu Jie and his beautiful wife are among China’s newly converted evangelicals, some 40 million of whom now congregate in “house churches”—private prayer and Bible study groups, discreetly supported by American churches and unfettered by any government control. The Chinese authorities don’t want any U.S. Christian protest movements to tarnish the 2008 Olympics, so for now, it serves their interests to keep their hands off Yu Jie. He acknowledges the point: “Until the games, I am safe. After the games, who knows?”

In general, however, and especially outside Beijing, the Party ruthlessly polices non-sanctioned religious movements, haunted by the memory of past Chinese dynasties overthrown by mystical upsurges. The authorities have decimated Falun Gong, a Buddhist sect whose master lives in exile in the U.S. The group’s members languish in prison or in reeducation centers.

Today’s dissidents and their compatriots don’t seem very threatening. None promotes the overthrow of the government. They aren’t comparable to Chinese dissidents in exile, such as Wuer Kaixi, leader of the 1989 Tiananmen revolt, or Wei Jinsheng, hero of the 1979 Democracy Wall, political men with no following left in China. So why does the Party expend so much time and energy trying to keep them in check? Because it recognizes that their activity, however limited in scope and seemingly harmless, is a sign of the desire for freedom and truth among the people—a desire that ultimately threatens the leadership’s future.

By looking at conventional forms of political protest alone, one might miss a deeper current of dissidence. Mass culture highlights the growing tension between Communist Party ideology and popular sentiment. The reach of popular Western, Japanese, and South Korean culture extends throughout Chinese society and may well rock it to the core. China is now home to 123 million Internet users, well over 30 million of them bloggers, for instance. Internet-savvy students play a cat-and-mouse game with the censors to access foreign information sites, though it’s personal success, not political causes, that tends to drive this young jet set.

And like everybody else, the Chinese love to watch TV, despite pervasive censorship and the propaganda broadcast on it in China. One of their favorite shows is a local version of the U.S. hit American Idol called Super Girl, broadcast by a Hunan satellite channel and produced by a private firm. In 2005, the winner of this amateur singing contest was Miss Li, a lanky 20-year-old with a punk hairdo, sporting jeans and a black T-shirt—a fashion inspired by South Korean pop bands. Miss Li won democratically with nearly 4 million votes, text-messaged by viewers using their cell phones from home. Over 400 million Chinese viewers—more than the combined populations of the United States and England—watched the finale.

An unexceptional story—except that it happened in China, and the Communist Party, taken by surprise, condemned Miss Li for not singing in Chinese but in English and Spanish and for wearing clothes that didn’t conform to the anodyne official dress code laid down by the national television station. A columnist in China Daily, the Party’s mouthpiece, interpreted her victory as a popular uprising against the established order, concluding that “Miss Li has been elected but the people have made a bad choice. This is what happens when people are unprepared for democracy.”

In China’s Shadow

Hong Kong, the colony that the United Kingdom handed back to China ten years ago, remains starkly different from the People’s Republic. True, the border between the two lands is no longer the iron curtain through which a million refugees, fleeing Mao’s Cultural Revolution, burst in the 1970s. Indeed, hundreds of thousands of Hong Kong’s 7 million residents now cross the border daily just to shop. But Hong Kong is nevertheless an island of liberty in the shadow of an authoritarian colossus, living with a political arrangement that provides no long-term guarantee of democracy or freedom.

The contrasts between China and its new “special administrative region” are profound. Hong Kong’s citizens enjoy real property rights. Their press is free and delightfully rich, ranging from the New York Post-ish Apple Daily to the historic English-language South China Morning Post, one of the best sources of information about Chinese politics. In the Hong Kong subway, you can buy international newspapers that Beijing doesn’t even allow to circulate, such as the Wall Street Journal Asia and the International Herald Tribune.

Nor is religion of the state-sponsored China variety. The ranking Catholic prelate in Hong Kong, Bishop Joseph Zen, regularly denounces human rights abuses on the mainland, and Falun Gong, the quasi-religious dissident group that China ferociously suppresses, demonstrates openly. Hong Kong’s government, too, is capable and uncorrupt. Despite great damage to its economy, it warned the world in 2003 about the outbreak of the deadly new respiratory illness SARS. China, where the disease originated, did the world no such favor.

However, Hong Kong has never been truly democratic. The United Kingdom didn’t allow direct election of its colony’s chief executive; instead, the British prime minister simply appointed him. The U.K. also kept Hong Kong’s Legislative Council both weak and unrepresentative of the colony’s population. To this day, LegCo, as it’s called, can’t even initiate legislation, and such interest groups as doctors, lawyers, and teachers elect half of its 60 members.

Before leaving, Britain did get China to agree to the Basic Law, a mini-constitution in force until 2047. The Basic Law left in place Hong Kong’s very limited democracy but did little more than allude to the possibility of eventual change for the better—and even that change, it specified, could take place only with Beijing’s permission. For example, the Basic Law theoretically permits popular election of the chief executive, but China has allowed no step in that direction. Today, just 800 electors choose the chief executive, and they themselves are chosen by Beijing.

Although this “one country, two systems” agreement is supposed to protect Hong Kong, simple administrative dealings with China have already eroded liberties. Consider border crossing: Hong Kong sharply restricts immigration, fearful of an inundation of mainlanders eager not only for freedom but for the benefits of a welfare state that’s far more developed, thanks to British influence, than ostensibly communist China’s. But it does so by allowing China to distribute the emigration permits. Dissidents, it goes without saying, need not apply. Similarly, Hong Kong residents need Chinese permission to cross the border. Though crossings like Lo Wu—said to be the world’s busiest, with more than 300,000 people crossing daily—may appear unrestricted, in fact Falun Gong members, investigative journalists, human rights activists, and probably even certain pro-democracy Hong Kong legislators aren’t allowed through.

Hong Kong’s citizens crave more democracy and also worry that their existing freedoms are at risk. Recent years have seen regular demonstrations on July 1—the date of the 1997 British handover—calling for direct election of the chief executive. In some years, crowds estimated at half a million have gathered, despite intense heat and subtropical humidity. Last year, the crowd was smaller—about 40,000—but its mood was militant. Led by the revered Anson Chan, the last head of the colonial civil service, it sang, in Chinese, lyrics from Les Misérables: “Do you hear the people sing, singing the song of angry men . . . who will not be slaves again?”

This year, Hong Kong democrats have gone further. One section of the Basic Law allows any candidate to run for chief executive who gains pledges of support from 100 of the 800 electors. An opposition candidate, legislator Alan Leong, managed to secure enough pledges to run against the current chief executive, China-supported Donald Tsang. The result has been a contested election—although one, as before, in which only 800 people could vote, and one that Tsang is certain to win.

Might such developments point toward gradual liberalization? Might Hong Kong, like Taiwan, even serve as a light unto Beijing? Some in Hong Kong fear the opposite possibility. At a recent dinner, a group of Americans, myself included, raised ideas about how to fast-forward democratization in Hong Kong. The locals, many of whom served in the government, shook their heads at our naivety and reminded us that the Basic Law was set to expire in 2047. “You don’t understand,” they said. “We only have 40 more years.”

—Howard Husock

Another sign of the desire for freedom, particularly worrisome to the authorities, is the explosion of peasant revolts in the Chinese countryside. The countryside is an immense universe, immutable and mysterious even for Chinese city dwellers, who go there only to honor the tombs of ancestors. Traveling to a village is like taking a journey in time; old China emerges, and modernity seemingly slips away. It also is to encounter China’s communication problem: peasants, unfamiliar with the national language, speak only in regional dialects—though television, the great linguistic and cultural leveler, is making the country more homogeneous by the day.

I’ve been to many Chinese villages, and everywhere I have encountered the peasantry’s feelings of helplessness and anger when dealing with the Communist authorities. When in late 2006, I reached one village in the heart of the Shaanxi Province, after a 40-hour journey from Beijing by train, car, and tractor, I saw no trace of the uprising that had taken place a month earlier. Alerted by a text message sent from the village, the Hong Kong press had reported a violent clash between the peasants and the police, leaving people injured and missing—or even dead, with the authorities spiriting away the bodies. I stayed in the house of a taciturn widow, who kept feeding me fresh walnut kernels—ideal, she said, for those doing intellectual work. The kernel looks like the brain; traditional Chinese medicine bases itself on such morphological approximations.

I pieced together the very ordinary reasons that had provoked the uprising from bits of information divulged by the children rather than the adults. The village had a dilapidated school, without heating, chalk, or teacher. In principle, schooling is compulsory and free, but the Party secretary, the village kingpin, made parents pay for the heating and chalk. Then a teacher came from the city. He held that his government wages weren’t commensurate with his status and demanded extra money from the parents. Half of the parents, members of the most prosperous clan, agreed to pay; the other half, belonging to the poorer clan, refused. A skirmish erupted between the two clans, and the teacher fled. The Party secretary tried to intervene and was lynched, the Party office plundered. Then the police roared in with batons and guns. The school has reopened, the teacher replaced with a villager who knows how to read and write but “nothing more than that,” he admits.

The government puts the number of what it calls these “illegal” or “mass” incidents—and they’re occurring in the industrial suburbs, too—at 60,000 a year, doubtless underreporting them. Some experts think that the true figure is upward of 150,000 a year, and increasing.

The uprisings are really mutinies, sporadic and unpremeditated. They express peasant families’ despair over the bleak future that awaits them and their children. Emigration from the countryside might be a way out, but it’s not easy to find a permanent job in the city. All kinds of permits are necessary, and the only way to get them is to bribe bureaucrats. The lot of the peasant migrant—and China now has 200 million of them—is to move from work site to work site, earning a pittance when payment is forthcoming at all. The migrants usually don’t receive permission to bring their families with them, and even if they could, obtaining accommodation and schooling for their children would be virtually impossible. The fate of Chinese citizens often depends on where they come from. Someone born in Shanghai is an aristocrat, with the right to housing and schooling in Shanghai. Someone born in a village, however, can only go to the village school, at least until a university admits him—a rare feat for a peasant. An American scholar, Feiling Wang, had come to China to study this system of discrimination, which few in the West know about, but the government expelled him.

The widow who was my hostess finally decided to open up a little. Her husband had left years ago to look for work in the east, never to return. She’d like to know what happened to him, but whom could she ask? The villagers had no one to turn to—certainly not the Party secretary. “He doesn’t speak to us,” she says. “He comes from the city. He doesn’t understand our dialect and looks down on us.”

The lack of medical facilities is another common cause of peasant complaint. The district hospital is five hours away by bus, and admission requires a payment of 600 yuans, a small fortune for a farmer—and that’s before the doctor’s fees and medicine costs. “When we are sick, we don’t bother about treatment,” my hostess says. “Yet we would like to relieve the suffering of our elders.”

Villagers often told me that it wasn’t the local Party secretary whom they most hated but rather the family-planning agents. To ensure the proper implementation of China’s single-child policy (in some provinces, the limit is two children, if the first is a girl), the agents keep close watch on childbearing women, often subjecting them to horrific violence. In 2005, a family-planning squad targeted the city of Linyi and its surrounding rural area, in the Shandong Province, because the population had far exceeded the Party’s child quota. The agents kidnapped 17,000 women, forcing abortions on those who were pregnant—in some cases, immersing seven- to eight-month-old fetuses in boiling water—and sterilizing those who weren’t. The agents tortured the Linyi men until they revealed the hiding places of their daughters and wives.

This nightmarish episode, admitted to by the Beijing government, would have gone unnoticed if not for yet another text message sent to a Hong Kong journalist, which ultimately led to the American press’s picking up the story. The man responsible for the Linyi revelations— an act of true courage and heroism—is a young peasant, blind since childhood: Chen Guangcheng, a self-taught “barefoot lawyer.” I met him at his farm near Linyi, where the Party had recently confined him. Chen told me that the law on family planning technically prohibits coercion (though, of course, it is widespread); what happened to the Linyi women was thus illegal. In complaining about the abuses, Chen used only legal means. Nevertheless, early this year, he received a 51-month prison sentence for inciting a mob to disrupt traffic in Linyi. The trial, like the charges themselves, mocked the rule of law.

China’s draconian single-child policy may have slashed China’s population growth (though not by as much as the official statistics say), but the preference for boys has led to widespread female feticide and gender imbalance on an unprecedented scale—120 boys are born for every 100 girls. The disparity will be an inevitable source of teenage violence, as the boys compete for a limited number of available girls. Forcible birth control will also give rise to an increasingly elderly population. What will old parents do with no children to look after them? A poor country like China is totally unprepared to deal with the looming crisis.

Will China’s surging economic growth, described by some in the West as a “miracle,” put an end to the discontent rumbling throughout the country? “Economic development in China is not a miracle but an unmitigated disaster,” says the house-confined economist Mao Yushi, a supporter of free markets. Isn’t he happy with the country’s spectacular 10 percent annual growth rate? Maybe—if he were certain that the figure was accurate. But with the Communist Party providing the statistics, truthfulness is anything but assured.

Doing his own calculations, adjusting for what he believes are fudged numbers, Mao Yushi arrives at a growth rate of about 8 percent per year. That’s a healthy rate, due principally to the shift of the idle or unproductive peasant population to industry, but as I point out to him, it’s no more than Japan and South Korea achieved during their take-off phases. “Correct,” Mao replies. “So it can hardly be called a miracle.” Moreover, the 8 percent doesn’t take into account the vast environmental destruction caused by China’s rapid development.

Mao Yushi acknowledges that no development could take place without a large-scale shift to urban life and damage to the natural environment. But he questions the government’s unchecked savagery. The current growth rate isn’t sustainable, he believes: natural bottlenecks—scarcity of energy, raw materials, water—will get in the way. China can import energy and raw materials, true, but water, which isn’t readily importable, could soon become a massive problem. The Chinese government doesn’t view purification plants as useful investments; already, hundreds of millions of Chinese lack access to drinking water, with many dying as a result.

Many goods that China produces are worthless, Mao Yushi reminds me—especially those made by public companies. About 100,000 such Chinese enterprises continue to run in the old Maoist style, churning out substandard products because they’ve got to hit the targets that the Party sets and provide employment to those the Party cannot dismiss, not because they’re responding to any market demand. Most public-sector firms don’t even have real accounting procedures, so there’s no way of ascertaining profitability. “China is not a market economy,” Mao says bluntly.

The Party gives the banks lists of people to whom loans should go, and the rationale is frequently political or personal, not economic. Indeed, in many cases, banks are not to ask for repayment. That investment decisions obey political considerations and not the law of the market is the Chinese economy’s central flaw, responsible at least in part, Mao Yushi believes, for the large number of empty office buildings and infrequently used new airports and an unemployment rate likely closer to 20 percent than to the officially acknowledged 3.5 percent.

Unemployment doesn’t just affect the impoverished migrants, excluded from the government statistics (which is one reason why the official unemployment rate is so low). Two-thirds of China’s degree-holding engineers can’t find work commensurate with their qualifications even three years after they finish university. Their unemployment reflects the primitive nature of China’s development, based on the massive deployment of unskilled labor, not on encouraging the enrichment of human capital, as in Japan, South Korea, and the other Asian “tigers” during their rise to prosperity. Is it any wonder, then, that so many of China’s engineers leave for the United States and Canada?

Still, hasn’t growth created an independent middle class that will push for, and eventually obtain, greater political freedom? Many in the West think so, looking to the South Korean example, but Mao Yushi isn’t convinced. What exists in China, he argues, is a class of “parvenus,” newcomers whose purchasing power depends on their proximity to the Party rather than their education or entrepreneurial achievements. Except for a handful of genuine businessmen, the parvenus work in the military, public administration, or state enterprises, or for firms ostensibly private but, in fact, owned by the Party. The Party picks up the tab for almost all their imported luxury cars, two-thirds of their mobile phones, and three-quarters of their restaurant bills, as well as their call girls, their “study” trips abroad, and their lavish spending at Las Vegas casinos. And it can withdraw these advantages at any time.

In March, the Chinese government announced, to much fanfare in the Western press, that it would begin to introduce individual property rights. We should understand that this “reform” will benefit only the parvenus, not the peasants, whose tilled land will still belong to the state. But the parvenus will now be able to transmit to their children what they have acquired thanks to their Party connections—one more reason that they will be unlikely to push for the democratization of the regime that secures their status.

Madam Mao Yushi interrupts us to serve the ritual tea, an ordeal because I’ve never quite learned how to sip the boiling beverage without swallowing the green leaves floating on the surface. Through the window, I glimpse the plainclothes policemen pacing outside the run-down apartment building where the nearly 80-year-old Mao and his wife live. The agents let me in without asking questions. I must have had my photograph taken. I run no real risk, though, since I’m French—China and France currently enjoy warm relations. It’s the Chinese who must fear the government, not the foreign visitor. Whenever I meet free spirits like Mao Yushi, I wonder if I’m making life difficult for them. He tells me not to worry: a little international recognition can spare the dissenter more violent reprisals.

Beijing is not impervious to criticism abroad. China desperately needs international legitimacy. Were Western consumers and investors to turn away, the Chinese economy would collapse, leading in all probability to the fall of the Party. Thus, the Propaganda Department, helped by a plethora of public-relations consultants and politically articulate emissaries, does all it can to woo foreign critics. The ham-handed methods of Maoist China are a thing of the past.

“Do you dare deny China’s success story, her social stability, economic growth, cultural renaissance, and international restraint?” Yan Yfan (a pseudonym) asks me, back in Paris. A scholar on the payroll of a Beijing foundation, an extension of the Party, he has the assignment to handle my case. I respond that political and religious oppression, censorship, entrenched rural poverty, family-planning excesses, and rampant corruption are just as real as economic growth in today’s China. “What you are saying is true, but affects only a minority yet to benefit from reforms,” he asserts.

Yet nothing guarantees that this so-called minority—1 billion people!—will integrate with modern China. It is just as possible that the “minority” will remain poor, since it has no say in determining its fate, even as Party members get richer. Yan Yfan underscores my fundamental error: “You don’t have any confidence in the Party’s ability to resolve the pertinent issues you have raised.” He’s right; I don’t.

One must tread cautiously when trying to predict China’s future. Over the last century, China has never ceased to surprise with her dramatic U-turns. China scholar Andrew Nathan suggests various scenarios: a revolution (but not necessarily a democratic one); economic bankruptcy (with a military dictatorship taking over); gradual liberalization (unlikely); or the maintenance of the status quo. I think the status quo will prevail, at least for now, for the Chinese people fear new political violence.

Of course, a fifth scenario is possible, the one that can’t be predicted. But those in the West who think that the future belongs to China should think again.

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