Corruption is corroding Chinese Stalinism

Submitted by cathy n on 22 March, 2007 - 2:53

Chan Ying reports from Hong Kong on the eve of the sixth anniversary of the Tiananmen massacre (4 June 1989).

The Chinese authorities are once again harassing and arresting journalists, intellectuals and dissidents. Wang Dan, the student leader of the 1989 events, has been arrested again. He has gone into a hunger strike. Wang had already served his prison sentence, although he has been under constant surveillance ever since his release. This time he is one of 27 signatories to a letter petitioning the government to launch a full inquiry into the ’89 events. Another signatory, Ding Zilin, assistant professor of philosophy of Beijing’s Chinese People’s University and mother of a June 4th victim, has been kept under surveillance since March 1994, after publishing an article about her work in compiling June 4th victims. She has recently been threatened by the authorities even though she has not been involved in any form of illegal or underground activity. More than 40 activists have been detained in the last two weeks.

Although the regime has behaved similarly at each anniversary, the overall situation this year is quite different in many ways.
Firstly, the year started with rumours about Deng Xiaoping’s health. Although he holds no official posts, he is still the final decision-maker at the apex of the Chinese regime. He has turned ninety; his most stubborn veteran rival, Chen Yun, who patronises the conservative faction in the Chinese Party, has just died. The regime became very nervous and made special efforts to rein in Deng’s children from making any more public utterances and to curtail their overseas travelling. This spring it was wrongfooted by dissidents adopting a new tactic — bombarding the National People’s Congress meeting in March with very well publicised petitions on a whole range of issues. This perfectly legal petitioning is hard for the regime to label as “counter-revolutionary.”

Secondly, the country’s economy is once again overheating dangerously. After a brief period after Tiananmen when central control, was reasserted and western capital was hesitant to invest, free market reforms and the opening up of the country to foreign capital continued1. Economic growth and inflation were both in double figures, and Premier Li Peng’s target of 15% inflation for next year was greeted with open disbelief in the National People’s Congress meeting in March as the “deputies rattle their rubber stamps” (Far East Economic Review 25 March). The regime seems undecided about both the pace and control of economic changes, particularly about how to run the state-controlled industrial enterprises. [2]

Thirdly, a major faction fight appears to have started even before Deng has gone. Ever since the Tiananmen events, the market-reform faction led by ousted premier Zhao Ziyang has been edged out of power, and the regime has been in the control of an uneasy alliance between the Beijing faction favouring traditional Stalinist central planning, headed by Li Peng, and the Shanghai faction, headed by General Secretary Jiang Zemin, brought into power by Deng Xiaoping as a counter to his conservative critics. The Shanghai faction, holding the centre ground, appears not to have its own programme; objectively it represents the interests of technocrats and party careerists whose fortunes have been linked to the economic growth of the past few years and to the Communist Party’s repressive stranglehold over China.

Jiang has been furiously consolidating his hold over the army and the party apparatus while securing control over access to Deng and promoting the Deng personality cult. Last month he appeared to have successfully launched a preemptive strike against the Beijing faction. Beijing Party Secretary and Politburo member Chen Xitong “resigned” on 26 April. He is the highest ranked cadre to be removed since premier Zhao Ziyang was ousted directly after the Tiananmen massacre in 1989.

The charge against Chen is corruption. Since 4 April, when Beijing vice-major Wang Bao-sen committed suicide, allegedly over corruption, there had been a number of cadres from the Beijing party apparatus detained. Beijing Daily commented on “the seriousness of the threat posed to the party by rotten bourgeois ideologies.” Since Chen played a key hardline role in repressing the democracy movement in Beijing (he might even have exaggerated the influence and size of the 1989 democracy movement in order to persuade waverers in the central leadership) the communiqué was quick to point out Chen’s contribution in 1989, just in case anyone in the CCP or in the country thought that this was the beginning of a reversal of the party’s verdict. There is now a countrywide campaign against corruption, particularly in the coastal provinces and in the Special Economic Zones such as Shenzhen, where regulations for foreign investment are considerably relaxed.

To what extent is this anti-corruption campaign solely motivated by factional considerations? There has after all been a significant increase of officials losing office, even committing suicide, before this latest bombshell, according to Chinese language journals based in Hong Kong (The Trend and Cheng Ming, May 1995). According to the Far East Economic Review (23 March), for example, the 77 year old Zhou Guanwu resigned as chairman and party secretary of Shougang Corporation after his son was arrested on corruption charges.

Shougang, also known as Capital Iron and Steel, is a showcase state-run enterprise which has enjoyed the personal endorsement of Deng Xiaoping. It promoted a “contract responsibility” system to free state firms from the rigidities of state planning. The debacle here, with refineries standing idle and finances in a mess, is a serious blow to Deng’s prestige and further highlights the difficulties the regime is having over state-run firms.
Yet another prestige institution, China International Trust & Investment Corp (CITIC) was in the news because of losses of $40 million in futures trading. It could be that the new technocrats are trying to impose a more regulated business environment.
The anti-corruption campaign has continued to gather momentum after collecting the scalp of Chen Xitong, and the latest Reuter dispatch from Beijing reported on tough rules issued to ban state enterprise officials from setting up private businesses, helping relatives or using their firms’ assets for themselves. The dispatch commented that “the regulations are the latest salvo in the Communist Party’s struggle to curb the spread of the type of corruption it blamed for the collapse of Chiang Kai Shek’s Kuomintang government.”

Observers however point out that no one of any significance has been purged in Shanghai, Jiang’s powerbase, even though it has had its fair share of financial scandals.

The truth is probably somewhere in between. [3]

The opening up of the economy to the West in the past decade has increasingly meant that material privileges based on party rank are now less significant than the opportunities to get rich quick in the privatised sector. For cadres wanting to get a slice of the new action, there is an uneven distribution of such opportunities which depends on regional factors and factional connections. In turn, the party centre now has a harder job of keeping the regions under control, compared to former days when the country was more isolated from the outside world and the terror of violent purges during the Cultural Revolution was still fresh in many cadres’ minds.

The party hierarchy recoiled from the excesses of the Cultural Revolution, and thereafter did not readily pursue factional struggle to the point of physically exterminating opponents on a large scale. Defeated opponents who played the game and confessed usually suffered a fate no worse than retirement or detention in relatively comfortable conditions. Regional party bosses and army commanders built up their power bases somewhat like the medieval barons of Europe, and the party’s central control is no longer as absolute as it used to be. Party elders sponsored their own factions, exercising powers of patronage to promote and protect their protégés. The repeated exhortations from the centre on fighting inflation indicate, if anything, that cadres in the regions have been paying lip service to central directives to curb credit or to scrutinise the viability of large scale economic projects, but effectively continuing with whatever brings in the slush.

The free market reformer Zhao Ziyang, sacked as premier, has steadfastly refused to confess any wrongdoing during and after the Tiananmen events. He has not been tried, executive or imprisoned. The Jiang/Li centre repeatedly urge regional cadres to treat Zhao as “an ordinary party member.” Zhao has been reported to be travelling around, busily renewing networks.
The free market reformers as a faction are biding their time to regain control of the party once the ruling Jiang/Li coalition either run into economic difficulties or break out into a faction fight. Both seem to be happening now, although a temporary truce seems to be in place so that the regime can concentrate on eliminating the threat of any uprisings during the June 4th anniversary period.

Jiang is correctly sensing that corruption has gone too far and is corroding the party’s ability to survive, but he is opportunistically using the anti-corruption drive to eliminate some factional opponents and to assert new authority over the regions. He is however unlikely to reopen the “counter-revolutionary” verdict on the Tiananmen events. That, as Gorbachev discovered with glasnost, may open Pandora’s box irreversibly and cause the party to disintegrate. Yet any faction that aspires to long-term power and at least securing the passive acceptance of the population, knows that it needs to carry out precisely such an action, and perhaps Zhao’s faction is ready to offer itself as the party’s final saviour.

So much for the party’s troubles. What about the opposition? The dominant ideology among the overseas dissidents is for a multi-party democracy modelled on the West, and an implicit acceptance of capitalism. Leading individuals were either part of the Zhao faction or academics. There is a small working class-based opposition but its influence is weak. Inside China, there are many undercurrents opposing the regime. For example, recently the regime announced the smashing of a well-armed network pledged to terrorist action to overthrow it. The network was to have launched explosions in Beijing during the National People’s Congress in March. The central group consisted of cadres in the party and the armed forces, as well as entrepreneurs with considerable economic clout. Amongst the dissidents inside China, under arrest or surveillance, there is inevitably a spectrum of political views but these are not easily accessible.

The critical factor in any future scenario is what happens in the large scale state enterprises, which still dominate half of the economy. In the absence of a system of state benefits, these enterprises have served to offer workers not only jobs, but housing, schools, doctors and other welfare benefits. When such enterprises are declared bankrupt, the workers lose their jobs and everything else. The regime is however having to preside over them whilst the newly established private sector is recreating the classic sweatshops that used to be commonplace in Hong Kong. The relocation of factories from Hong Kong to the mainland is now creating rising unemployment in Hong Kong.

Whether the state enterprises are privatised, or remain under state control with injection of new investment, the continued changes to the economy along free-market lines will lead to an intensification of confrontation between industrial workers and their managements. Any political opposition against the regime must be based on these concentrated centres of industrial workers, or else can do no more than act as cheerleaders for the Zhao faction currently out of power.


1. In the period leading up the 1989 events, the Chinese Communist Party line was determined by Deng’s strategy of economic reforms combined with political control. Free market experimenters Hu Yao-beng and Zhao Ziyang who were Deng’s protégés, held the key positions of party general secretary and prime minister respectively. However, the infrastructural dislocations caused by the reforms, manifested mainly through inflation, caused the programme to falter. This allowed conservative critics headed by Chen Yun, who favoured a return to central planning along orthodox Stalinist lines, to gain the upper hand. The democracy movement of ’89 caught the regime at a vulnerable period of intense internal disagreement. The brutal suppression of the democracy movement was accompanied by the purge of free market reformists headed by Zhao. Deng decided to ditch his own programme, but instead of endorsing the conservative hardliners like Li Peng and the “Beijing faction” who carried out the repression, Deng promoted the Shanghai party leadership around Jiang Zemin, who was not involved in the party centre’s decision at Tiananmen, as the new party secretary. Jiang, coming from the country’s largest industrial city, represented the wider interests of the party machine in those regions which have benefited most from free market reforms. This compromise enabled Deng to keep a less ambitious programme of economic reform going, without caving in totally to the central planners.

2. No major decisions have been taken to grasp the nettle of ailing large-scale industrial enterprises, although the powers to declare them bankrupt and to privatise them already existed. The benefits to farmers of agricultural reform a decade ago have been eroded away by high prices for consumer goods and fertilisers, combined by on-off pricing controls over main produce such as cotton and grain. The iron discipline which controlled the drift of population from countryside into the cities has weakened probably irreversibly, and a growing population of ex-landless peasants are raw recruits to newly established industrial concerns often backed by overseas or joint venture capital. Industrial unrest among these as well as established workers in state industries has been increasing.

3. Corruption is almost a way of life within the CCP. Chinese Communist cadres have always enjoyed privileges — food, medical care, servants, housing and other perks depend strictly on a cadre’s rank within the party hierarchy. This was how the party was organised during its guerrilla resistance days, even before it took power in 1949. Few cadres could cope with their privileges and rank without succumbing to corruption and abuse of their power. The passing on of such privileges to children is systematically done through giving them the best education, then accelerated career promotion once in the party/government machine. A graphic account of how this operates is in the novel Wild Swans, where the author describes how her parents, both senior cadres, struggled hard at not bringing her up as a spoilt child in the ’50s and ’60s. A number of anti-corruption campaigns have been launched over the last five decades, but usually the top level cadres do not fall victim to such purges unless there is some factional struggle going on inside the party. The most extreme instance was during the Cultural Revolution in the late ’60s, when Mao Zedong resorted to desperate measures to regain power. Red Guards were used as storm troopers of anti-corruption and anti-rightist campaigns on a horrendous scale to purge hundreds of thousands of cadres, in Mao’s efforts to topple his factional opponents Liu Shao-qi and Deng Xiaoping.

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