Assessing China's Reforms Author(s): Han Yuhai Reviewed work(s): Source: Economic and Political Weekly, Vol. 41, No.

22 (Jun. 3-9, 2006), pp. 2206-2212 Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4418293 . Accessed: 01/01/2013 12:40
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"social development" before "economic development".Yugoslavia . agricultural Hong Kongby secondresultwas thatJapanandTaiwan his simplistically rigid attitude toward machinery.Deng did notforget to emphasise -agriculturalproductivity should be attribto enter south-eastern coastal China via the importance of labourers' participation uted primarily to the state's long-term the end of the 1970s.seeds.FromChina's developing heavy industry and. nuclear technology. had already important US to withdrawfrom the Vietnamese the l8Os thina put "socialism" before undergone monetisation through the Assessing China's Reforms 2206 Economicand Political Weekly June 3.or.ItwasfromthattimethatChina began associated with dramatic urbanisation.which. But that theory has result therupture the"NewCrescent" of that "renegade" against the Soviet of of been increasingly called into question. defence and with these Chinese characteristics. and had established Whatthe reformshave targeted is China's democratictradition.ratherthan againsta broadinternational the external plundering of the world's which can be traced to at least to the second Asian-African Congress in Alge1970s. Nixon felt that it would be ontrary to prevalent thinking. Vietnamesevictory was instead. but and equality in Chinese society? the 74 per cent decline in infant mortality. of industrial reforms in 1975. foremost a result of struggles by the morality". There Chinaall the way from Baghdadin the science and technology) . impractical for the US to try to fight on in 1972. China's every step forward depended resources.to reject the Soviet model of unilaterally contrastwith China he hadknown 40 years namesepeople's struggle. in other words. An im. In for andChina's long-term support theViet. the was the 1973 Arab-Israeli war. production miracle that began in the latter and in put WhileIndiaandIndonesia were advocatWhen Deng Xiaoping. lationship years later). and basic ruralinfrastructure. Unlike today's the heroic statusof labourersandthe overall social equality.I Perspectives "modernisation". This is really what "Chinese characteristics" should mean.which had earlierbeen split up granting moreindependenceto enterprises. a basic system of modern industry and The criterionfor appraising China's reformsshould be: Is transportation. undertookthe firstround subjects (output-related contracting) still in a state of siege. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions .inthe form of mainly because it puts undue emphasis sphere". couldbuildup an important industrial re. when the world scenario ria. it seems that the first especially on the management experience of rural production. he drew within a "market"and the monetrisation Looking back.As Fei Zhengqingobserved George Bush. light indus. heavy industry and other economic The reforms of the latter 1970s .domesticpoliticalpressure theUS 1960s. and the people's "new profound transformation took place thus.diligence andfrugality. In reality. with the support 1970s as the establishment of household ing a "Bandung Spirit". An important characteristic of early began to undergoa majorshift. The so. China's called "opening of China's lock" was. 2006 This content downloaded on Tue. Vietnam. the"NewCrescent Containment" try.The in enterprise management (in contrast to investmentin fertilisers. coopbackground Asian people.were entirely in line Security Accord) which hadhemmedin 1975 (agriculture. What NixontoBeijing to China's transformation also be traced This not only allowed for a more balanced can from drove was not only the Soviet "threat" also back to the Sino-Soviet conflict and the development of the countryside but also but the Vietnamesepeople's impendingvic.Poland's Solidarity movement a few The rise in peasants' income was due with China.includthrough of AsianTreaty.the paradigm best captured in ing the "adjustments"made by the Deng (composed theSouth-East the BaghdadTreatyand the Japan-US Zhou Enlai's "Four Modernisations" of government in 1975 . sectors . it should is a theory that summarises the rural westto Japan SouthKoreain theeast.Thismeant At the same time. to emphasise coordination and cribed this transformation as a "miracle" extremelysignificant it meantbreaking exchange among agriculture. began earlier. tion of local. throughoutsociety. life sciences. a high level of solidarity China's"reform opening" and not begin in the 1980s. moreover. on Deng's "epoch-making" policies of by east Asia's cold warorder. As Zhou Enlai said at the eration.on the solidarityandmutualsupportamong China's industrialisation was its promosubtextfor Richard Nixon's 1972 the people of the third world. Its basis was solidarity.worldsocialistbloc's dissolutionin theearly prevented some of the serious problems in tory. was therevival the"Chinese of civilisation model. China's development was based did several fronts at the same time. be recalled. and in have not contributedto an improvement people's well-being.and "the greatest revolution in history". mainly to the state increasing grain prices. the estabHAN YUHAI quagmire and especially the heavy blow that the oil lishment of cooperative rural healthcare.new China was of Mao andZhou. small-scale industrial proportant From another angle. Another factorthatdrovethe Most important is that from 1949 until Labour power. "agriculture" thefirstplace. due to Mao's constant "de-Maoification". industry. the tripling of average life expectancy. the factors leading visitto ChinawastheUS planto withdraw duction in coordination with agriculture. Fei Zhengqing optimistically desthe perspective. the "reforms"in China Contrary advances in spaceflight. Although by 1972 China had achieved major to much conventional opinion.on equality. crisis dealt to the west. what really made the Chinese people proud was not the average economic developmentin the countrycontributingto democracy annual economic growth of 6 per cent. universalisation of education. the rise in thatoverseasChinesecapitalcouldbegin pestering.

this bond was brutally severed. Myanmar. (Most of the TVEs set up in the 1980s actually built their foundation on these earlier enterprises. which influenced this special historical period of China's reforms. however. however. This achievement is really inseparable from Mao's policy efforts. however. In 1958 the central committee and the state council advancedthe slogan. constructionandwarfarehadflowed from China into Vietnam. as early as 1979.China's urban reforms. Vietnam. The aftermath of this developmental strategy is not limited to the serious regional imbalance between eastern and western or coastal and interior China. an unjust war that destroyed the bond between these two nations (including its physical manifestations in the Sino-Vietnamese highway and the SinoVietnamese railroad). what this changed foremost was China's developmental path and its relationship with the world. as grain prices were unilaterally lowered over time. described continental Chinese civilisation as a backward "Yellow Civilisation" in contrast to an advanced "Blue Civilisation". for example. At the same time. transferring power to local levels and encouraging the establishment of medium and small-scale industrial enterprises in rural areas. Again.the 1980s TVE model that Fei Xiaotong called Economic and Political Weekly "leaving the soil without leaving the village. China proposed an opposite model called rural industrialisation -that is. In this sense. As an important cultural imagining. and east and south-east Asia. i e. China's closest relationships were with Russia. rural labour during the Mao era was not a simplistic "big pot of rice" egalitarianism. the commencementof ruralindustrialisation was the Great Leap Forward campaign of 1958. It was through this bond that a steady stream of resources forlife. along with the construction of rural infrastructure. the televised political documentarythat swept China in 1988. The reform of China's urbaneconomic system developed under extremely different international conditions. 2006 This content downloaded on Tue. (Contrary to prevalent representations. At the same time. A good example is the enclosure movement in coastal urban development. Anhui) and to ignore the longterm state policies of development and investment that treated "agricultureas the foundation". entering the factory without entering the city". This pattern was thoroughly transformed after 1986. As soon as Deng's "reformand opening"began. The Soviet Union had developed heavy industry by squeezing the rural population and carried out urban industrialisation entirely by extracting value from the countryside. one of whose main points was to develop the rural economy and decrease the urban-rural disparity by countering ('dui') the cities' "industrial superiority" with the countryside's "organisational superiority". China's relationship with Europe was mediated through the western lands. thousands of sons and daughters of China and Vietnam had given their lives andblood duringthe Vietnamwar. in 1970. gentle capitalism" associated with Keynesianism. Looking back.this was the second wave of China's rural industrialisation. western) civilisation". "overseas ('haiyang'. significantly narrowed the disparity between city and countryside. i e. even household-based farming could not raise peasants' income. and by the end of 1959 there were 700. Mao published On the Ten Relationships. North Korea and Kampuchea. and heralding the neoliberal age of economic. Deng's China went to war with Vietnam. a change whose internal manifestation was the increasingly serious economic imbalance between China's south-easterncoast andits westernregions. In order to establish this bond. so that by 1986 this disparity was the smallest it had been in China's history. for many centuries China had maintained a close relationship with India and Indo-China. the debt crisis began in Latin America. "Deathsong of the River" ("He Shang"). the US had frustrated OPEC' s challenge to the developed world . according to these appraisals. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions . And just as Japan's historical path proved to involve a brutal militarism.andeven US' modern weapons could not sever this "Sino-Vietnamese lifeline".000 commune enterprises throughout the country with a workforce of 18 million and an output value of over 10 billion Reminbi (RMB). that is. Beginning in the Han dynasty. as a continental Asian country. Its aim was to open a path of development different from that of the Soviet Union.mortgaging the landto state banks 2207 June 3. II What really marked the beginning of a new epoch. Similarly. These three waves.Taiwan.what in the 1980s became known as "the TVE [township and village enterprise] path". and then. This was what some scholars have called "the first wave of China's rural industrialisation". It was these two waves that laid the foundation for the third wave . due to the oil price increase. political and military competition. This has consisted of development enterprises acquiring use rights to land through official channels. the model village of Fengyang. This discourse of "turning towards the world" by parting with a "backward continental civilisation" and "embracing the advancedoverseas civilisation"remarkably resembled the "shedding Asia and enteringEurope"strategyproposedin 1898 Japan. For example. the nouveauriche stratum or plutocrats. the Reagan and Thatcher regimes came to power in the US and Europe. the state council's northernagriculture session proposed a "Ten-Year Plan" to mechanise agriculture .the challenge of using oil resources as a weapon.people's commune system of "work points". "People's Communes should also undertake industrial production". so has China's recent path of rushing toward the Blue Civilisation gone hand in hand with neo-authoritarianism. making a fictitious appraisal of the land's value. By convincing the Saudi ruling elite to peg the Saudi Arabian oil to the US dollar.) Since the monetary value of rural labour power depended on grain prices. Strictly speaking. which doubly welcomed the theories of Friedrich Hayek (who hadjust won the Nobel Prize)because they both opposed Keynesianism and regardedany type of economic organisation as the "road to serfdom". It has also rapidly produced the first batch of special interest groups.) Also in 1958. took place after 1985 . Anotherachievement of the early reform era was the fruit of the sustained rural industrialisation that Fei Zhengqing observed. it seems unconvincing to trumpet decollectivisation (as was done with Xiao Gang. including direct monetary aid that by 1976 amounted to over one billion RMB. Australia. This was the famous Silk Road. And throughout the 20th century. This seems to have been the first time that the word 'wenming' (civilisation) was inscribed within a discriminatory hierarchy. bringing to an end the era of "organised. The first step of China's urban reform strategy was to merge the south-eastern coastal cities into "the great international economic cycles" by setting up special economic zones that opened these cities to capital from Hong Kong. through the Arabian regions and south Asia. The Sino-Vietnamese war's extremelybitterprice was the dissolution of solidarity among developing nations and anotherserious blow to the socialist bloc's reputation.

for immense sums of capital. that the bank and its wealth belonged to the people. In this way a so-called big business stratum has been producedovernight. Indeed.the crises among various enterprises being inter-related. The former was psychological. without exception. Here it is not that the state has been tricked but that it has committed a ridiculous error:the state forgotthatit owned the landin the firstplace. Today some people are accustomed to explaining that these capitalist enterprises help to mitigate China's labour surplus. as it were. including the privatisation of healthcare.the developers. to say nothing of social development. which set quotas of taxes and fees for localities to hand over to the central government. China's economy thus stepped onto the export-oriented path led by processing industries. education and urban housing. whether out of foresight or putting all his eggs in one basket. What is most remarkable is that almost no one in China's intellectualcircles at the time pointed out what price reforms actually meant with respect to the interests of China's ordinary people. by defending their interests one could make the masses strive for the correct path of marketreform.This type of policy emphasises not economic development. in different editions. On the one hand. and forced the Chinese government immediately and "rationally" to discontinue this shock therapy.even if the problem is now being simplistically (and with ulterior motives) blamed on the poor management of state-owned enterprises (SoEs). met with the coercion and cajolery of vested interestgroupsandfailed to gain support from the broad masses. And it needs to be remembered that this is the origin of the debt problem now faced by China's state banks . The only qualified. andyet it transferredthis wealth to private individuals . something unheardsince New China's founding. The second characteristic of China's urbanreform is something that we should explore in more depth .to say nothingof TVEs . It is said that the only birth pangs here are that we must first let the economy go into shock and then wait for a spontaneous recovery. When the Chinese government could no longer ignore the SoE crisis. a majority of metaphysical reformists arguedthatonly a price-regulatedeconomy was a "true. only these ultra-rightists were able to perceive some of the basic factors thatlater led to the social crisis of 1989. a minority of dogmatic Marxists argued that to affirm price deregulation was flat-out capitalistic. whose response finally led to the serious social crisis of 1989. Of course.China's experience of price reform demonstrated that because the contemporary rural and agricultural economic foundationwas relatively secure.especially the costs of radical price marketisation . or in Chinese terms. of the "market first" policies pursued by other "reform states". however. or how. This elite path that ignored the masses had immediate repercussions. China'surbanSoEs have since been unable to recover from the setback.with respect to material prices and turnover. it took much longer for them to stabilise since the division of labour and cooperative relations in industrialproduction was much more complex thanin smallscale agriculture. what followed was the collapse of rural industrialisation. When Milton Friedman visited China in 1988. complete market economy". The costs of reform. once the prices of agricultural products and small commodities had been deregulated. The debates surrounding these marketoriented "pricereforms"beginning in 1986 especially illustratethe characterof China's reforms during that period. One. therefore . "a short pain is better than a long pain". In order to give play to its "cheap labour power".which led to thecrisis ofChina's urbanSoEs .published. and the sudden re-widening of the rural-urbangap. the latter a matter of economic structure. To be fair. These measures are what is meant by "cutting expenses" and "increasing earn ings" in fiscal policy. he advised China's leaders to continue with their price liberalisation programme on the ground that it was best to "cut off the snake's tail once and for all". Aroundthe world the plot has been the same . it was precisely this rapid price liberalisation of raw and processed materials. When the prices of industrial products were deregulated. they saw this from an ultrarightperspective aimed at protectingvested interests. prices actually rose for a shortperiod and then quickly stabilised. it invariably took one of two measures to acquire funds to support SoEs and state banks. These debates led to a serious split in Chinese intellectual circles. insightful scholars in this debate turned out to be the ultrarightists who pointed out that if the price reformswere not aimed atprotectingvested interests. however. first let society fall apart and then wait for it to "returnto its natural order" (Hayek). their first target being the TVEs.have been transferredto ordinary urban people and underdeveloped provinces and regions. by voting with their feet. After completing the liberalisation of prices. No sooner had the Chinese government's intention to rush through a price reform become known than panic-buying and hoarding for speculation ensued. but ratherthe simplistic superstition that liberalising exchange rates and prices will lead to a win-win situation as the rise of marketprices stimulates entrepreneursto increase production and the rise of supply leads back to a fall in prices. in 1992 Deng made his famous southern tour. that drove Deng to support his reforms with "the barrelof a gun" in 1989. however. 2006 This content downloaded on Tue. and instead switch to implementing the dual-trackprice system of gradual reform. and agricultural products and small commodities rapidly proliferated. then vested interests would not supportthe reforms and the reforms would fail. and to the predicament that urban liberalisation caused for statebanks. the decline of rural income. and the urban masses. especially among workers and peasants. a horde of foreign enterprises established a beachheadon China's south-easterncoast. From 1987. In fact. On the otherhand. This was not mere alarmism. was the large-scale cutting of public expenditures. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions . in order to realise his next political aspiration: to let China's coastal economy be completely subsumed within the world market dominated by the advanced capitalist states. made a mockery of Friedman's fantasy of public "rational prediction". as China's TVEs began to sink into a serious policy predicament (exacerbated by the post-1989 fiscal retrenchment policies). especially agricultural provinces and peasants. The ensuing large-scale flooding of cities with ruralsurplus labour exacerbated the effects of urban reform. which ultimately spread to central government policy-makers. under the encouragement of such a "policy of leaning to one side". and it was this loss of popular support. The RMB' s rateof exchange with the US dollar 2208 Economicand PoliticalWeekly June 3. its acceptance. Abstract price reform divorced from analysis of concrete social interests. the impact of price liberalisation on ordinary people's lives in 1989 was much less profound than its long-term effect on China's economy. The story after this point (1989) is well known. beginning in 1990. China's inflation reached 24 per cent that year. This also led to the dissolution of the consensus on reform that had taken shape during the latter 1970s.namely. although in fact China's earlier path of rural had industrialisation alreadyoffered a much better solution. The second was the new tax division system. Secondly.

made China's economy more and more dependent on the narrow world market. and this is widely regarded as the greatest accomplishmentof China'sexport-oriented economy. At an importantmeeting at West Cypress Ridge in 1949.the Chinese government was flabbergasted. in the face of this cruel tragedy. northernand western bases. "the five balanced aspects". Since 1990.nor even the urban SoEs or the public health infrastructure. "scientific development perspective". and. The Asian financial crisis of 1997 nightmarishly demonstrated how those export-oriented economies were exposed to attackfrom the front and the rearas soon as international capital could easily purchase large quantities of Asian currencies. we can not only avoid all sorts of collapse but also make the economy develop rapidly". the Chinese government immediately discontinued discussion of opening RMB accounts to foreigncapitalorany planto internationalise the RMB. so the government could not help "increasing the intensity of reform". In contrast with Deng's two southern tours. In such a multifaceted crisis. moreover. This may have been the first time that these words were mentioned in over 30 years. say things like "the masses' interests first". andthenan American spy plane essentially attacked a Chinese navy plane during its regular patrol and forced it into the SouthChinaSea.Many urbanSoEs had already gone bankrupt. The serious domestic insufficiency in consumption. This northernvillage in Pingshan county. their national currencies collapsed anyway. On the one hand. What collapsed. unemployment and collapse of the social welfare system. as representatives of China's new generation of leaders. It must be pointed out that. as the Chinese people witnessed their new generation of leaders. Like those greatestempiresof Chinese history. that vanguard of China's reform and opening. when Hu and Wen. China's economy fell into a period of seriously insufficient domestic demand. as opposed to the former USSR.Everything looked as if it were inexorable. Many finally understood: the Chinese people had again arrived at that "most perilous moment". was not only the rural water conservancy and administrative infrastructure. Hebei. On the other hand. the tide ofRMB "marketisation" rolled on with full force. undertaking brutal structural adjustment of those economic vestiges that were not "export-oriented".fell by a large margin. by 1992 the Chinese countryside had already fallen into the severe economic depression that would later be articulatedas "the agrarian question ('sannong wenti')".) This awakening came a little late. it points to an eminently realistic. the four Asian dragons which China had declared its role models of development. entering the . As China pulled out all the stops to realise this great Dengian ideal. It was widely regarded as an important turn when the new central leaders under Hu's directionchose to begin theirterms by visiting West Cypress Ridge (Xi Bai Po). IllI Of course there have been both successes and failures in the reform of China's urbaneconomy. and bank investments that had been spent through cutting social welfare had also basically become bad loans. For a time. moreover. but if we reflect theoretically on these failures.000 Daqing oil fieldworkers to lose their jobs.at a key moment announcing thatit would prevent the RMB from devaluating. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions . so that in the blink of an eye they had exhausted their foreign exchange reserves. 2006 2209 This content downloaded on Tue. Mao had admonished the party: "Be sure to maintain the fine traditionand style of bitter struggle". China took the initiative in its own structuraladjustment. In one day. In the face of a grave crisis. Economicand PoliticalWeekly June 3. the Asian export-oriented economic model that China had imitated for 20 years went up in a puff of smoke. central banks had no choice but to sell their reserves and buy back their own currencies. when the SARS epidemic broke out and rapidly spread throughout China. a typical example being the smuggling ring associated with Lai Changxing. andespecially when they talk about a "socialist harmonious society". was the Chinese CommunistParty's (CCP) last rural revolutionary headquarters.this is not at all an esoteric ideal. education and retirement into a consumptive dead end. so financial risk continued to exist in hidden forms. Due to the fall in wages.but. went through their unexpected financial collapse and gave China a grave lesson in economics.' This is also why today. to say nothing of fantasies that still prevail. At just this key moment. the Chinese masses were forced by the market reforms in housing. it seems thatif China had taken another step forward in its course of RMB marketisation and opened RMB accounts to foreign capital. for the first time this government began seriously to crack down on the south-eastern local powers. (The ring's large-scale smuggling of petroleum had directly caused over 10. or "rejuvenate the western regions". eastern Europe or the Latin American states which adopted the world capitalist elites' "structuraladjustment" programmes only after their monetary systems had collapsed. At that point China began to experiment with stock markets in Shanghai and Shenzhen. and it began serious macroeconomic regulations . however. RMB continued to leave China through channels such as black marketmoneylenders and this severely compromised all efforts to control capital accounts. there was the mantra of the "Chinese experience" that went. after exhausting their reserves. almost all Chinese people already understandthat China has arrivedat a point at which it must begin some serious reflection on the past 30 years of reform experience and lessons. China's monetary system might have also collapsed. Hu Jintao and Wen Jiabao. The heavy flooding disasters of 1998 revealed serious problems with China's public water conservancy infrastructure. one obvious lesson is the superstition of neoliberal economics. stand night and day on the front lines of the "struggle against SARS". the CCP was able to win China only through the strong support of its inland. Due to a long-term relaxation of agricultural investment. The most ironic thing was that the US government repeatedly announced dollar devaluations. The main reason here is that the so-called export-oriented economy actually helped China accumulate a large volume of US dollars. Due to long-term restrictions on domestic consumption and investment. "if only we take an active role in market reform. China's foreign exchange reserves has grown exponentially. healthcare.WTO may have been China's last fantasy and effort regarding the so-called world market. so the large volumes of US dollar reserves and bonds that China had accumulated the export-oriented economy's greatest accomplishment-alsobeganto sink toward the cold floor of the sea. In 2002. and all that remained was the RMB's so-called "internationalisation". which had touted the south-eastern coastal areas as national models for liberalisation. rational decision that China must face. It was from that moment that the death knell of neoliberalismbegan to toll in China. in Guangdong. at the same time. "Socialist harmonious society" . Looking back from today. the US bombed China's embassy in Yugoslavia with guided missiles. however.

the rise in unemployment leads to a fall in aggregate demand. Under these conditions. "Revolution". Li Zehou. His description of this "end of history thesis". Its heavy cost is that a synonym for "Chinese revolution". the May Fourth Movement. finally. or the people's revolution led by the CCP that sought to cast off feudal and colonial rule. China's capacity for social harmony and solidarity has plummeted. declared that the core of Marxist materialism was really just about economic development. the people's basic means of identifying with modern history. from the Chinese language. In today's China. Yu Yingshi. including Sun Yat-sen. not only negates a main aspect of Marxian modernity. what ensues is not only a sustained malignant inflation. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions .itself is also negated from history. state finances go into the red. and communities. etc). This was the source of the trope about "saying goodbye to revolution". Taiwan had already completed the transitionto modernityeven without granting its citizens any rights to political participation.however. as it were. who has been called a "leader of mainland Chinese thought". The negation of "revolutionary"modernity.such as Ding Wenjiang and Qian Duansheng who had sought to strengthen the Guomindang's dictatorial rule during the 1930s. says exactly the opposite. but also the sort of serious social unrest that occurred in 1989. Even if economic reform wants to present itself as a social movement. property rights theory overlooks the role of the state economy and non-profit sectors in maintaining social stability. fade out from thought" complemented the politico-economic call for the market to advance and the state to June 3. the 1898 Reform Movement. the May Fourth Movement. These movements all defined themselves in terms of revolution As soon as "Chinese revolution" becomes of unintelligible. Cultural neoliberalism especially takes the form of conservative liberalism and its concomitant discourse of "saying goodbye to revolution ('gaobie geming')".or socialist China. Shortly thereafter. and the Guomindang regime in Taiwan. education and housing at a time when their income is 2210 already compromised.China's reality. a balanced market.Neoclassical macroeconomic theory of rational calculation claims. and the currencyfalls even lower. and it means that economic development is the spread of neoliberal ideology with inequality as its "normal cost". therefore. is a speech that Princeton University's professor of East Asia Studies. moreover. As for the conservative fiscal policy of tight budget restriction. already disintegrated by the early 1990s. in modernChina refers to those political changes.the main social contradiction deriving from the grim plight of laid-off and unemployed personnel and the urbanfloating population. and the most basic lever giving shape to society. "revolutionaryChina". renounced the whole of modern Chinese history. The popular consensus regarding reform during the latter 1970s had. a subsequent rise in product supply.believes superstitiously in the equilibrium of economic cycles. During a depression in which a state faces serious unemployment to furthertighten government spending is to force the masses to shoulder heavy burdens for healthcare. but was also unlikely even to succeed. contemporary American politics. so conservatism had become a world trend. that the public often reacts to economic fluctuations by panicking. then. made a decisive impact on the neoliberal thought and neo-authoritarian politics that took shape in China throughout the 1990s. derived from the experience of US conservatism and Guomindang rule. and concluded that conservatism. claiming that inflation will spontaneously lead to a fall in consumer demand. which leads to a vicious circle as banks go into crisis. 2006 Economic and Political Weekly This content downloaded on Tue. So-called linear supply-demand theory. of articulatingthemselves historically. Equality even more has all along been a basic means of social mobilisation and organisation. which creates a domino effect and if the government does not respond immediately. thought . as anotherexample. has been modern China's basic means of self-definition all along. however. for instance. In 1992. in fact.in 1990. but also a profound cultural trend whose social impact is even greater than the former. and that a government should avoid all macroregulation unless it aims to deceive the masses. At that point. "Saying goodbye to revolution". The only affirmation was given to the "voices of reason". the "contribution" the Yu Yingshis only negates modern Chinese history. Most representative of this trend. moreover. and. and that the theories of social democracy and class struggle had already been disproved. gave at the Chinese University of Hong Kong in 1988. the 1990s expression "zoom in on academia. including the Taiping Rebellion.and. when it began to seem that reform had already turned into its opposite. the old Bush government was doing it. Not only did the speech. two. namely. in the US. Yu Yingshi compared the three perspectives of modern Chinese history. this even more betrays the historical experience that Keynesian economics gained through the Great Depression. It also renders equivocal or impossible the articulation of China's modern history. The reason that conservatism was the contemporary world's "proper way" was that. implies a negation of equality as a modern value. the state. or the politics of conservative liberalism. in one fell swoop. China's practical experience. and. the state retreats from discourse. system renovations and social practices aimed at social democracy and equality. worsens social unrest as it calls for total privatisation. that the public can accurately gauge macroeconomic tendencies. neoliberalism remains not only a trend of economic thought.however. civic morality has become seriously imbalanced. it must from the start appeal for legitimacy to this legacy and this aspiration ("universal wealth". at the same time. drawing from state banks to "salvage"the SoEs not only involved great social costs. modern culture and modern politics. "reform is a revolution". as "radicalist"mob politics. the basic motive force and aspiration for all of modern China's transformational movements and social activism. has been that as soon as enterprises close down due to a rise in material prices. Since entering the 1990s.the highest since the state's founding. titled 'Radical and Conservative in the History of Modern Chinese Thought'. social instability factors have reached their highest peak since the founding of New China . China's inflation had already reached 24 per cent . however. and.indeed. call for a "conservative liberalism". and land reform. Sun Yat-sen and the republican revolution. it also. ignores the impact of unequal distribution of wealth on economic development. what accompanies the conservative and authoritarianargument that negates democracy by equating it with mob politics or "radicalism"is an abstract negation of "the state" . cultural and ideologically. culture. and. Secondly. which spread throughout the mainland from China's south-east coast. Identification with a "revolutionary" modernity. moreover. was the ideal form of politics. In Chinese academia. for one.that is. like adding frost to snow. and moreover to undermine ordinary people's faith in the marketeconomy and the government's ability to govern.

Marx and Lenin as the "Mt Tai and North Star"of China's cultural circles. On the other hand. thatwe return to a concrete analysis of productive relations. In this regard. it was hard for China's economy to avoid stumbling onto a lopsided developmental path marked by the exclusion of domestic needs. "Are you economists of the Chinese people. Hayek's appraisal of modernity is also quite low. Similarly. like all academic disciplines.Bush andThatcher governments. not to mention the 20th century anti-colonial movements for national liberation around the world. This "overseas capitalist" worldview also influenced China's foreign relations by neglecting to maintain friendly relations with other continental civilisations. the world's great power is the "Blue Civilisation". This current gives impetus to the total negation of the modem tradition and path that China has followed for over a century at the same time also negating the accomplishments of over two centuries of European and American social democracymovements since the French Revolution. what these worshippers of EuroAmerican advanced culture forget is that American civilisation itself is to a large degree a product of the same French revolutionary tradition that they so despise. that "reform must benefit some people and sacrifice others". of the domestic economy. has passed many laws that benefit vested interests. not only with regard to the economic. what he calls "the natural order". as a description of the real relations of productive activity. andHayek's thought has played an important. economic and political concept. the developmental path markedby western capitalist trade. the Euro-American intellectual elites in their Economic and Political Weekly neoliberalism.i e. Chinese academia's voluntary colonialisation ("getting on track with the world") has provided discursive legitimacy for structural transformations. but he negates the framework of the state and democratic politics. This melodrama of "reforming the political system" has only begun to be corrected with the most recent People's Congress.Price reforms are not a simple question of distributing resources through the market.also symbolise the socalled "colour-coded revolutions"2 so praised by George Bush Jr. and the thorough transformation of the Chinese "thoughtliberation movement" that began in the latter 1970s into its own opposite. this ideology that opposes both the state and mass democracy has formed the main current of the cultural nihilism that has plagued China for over two decades. Pacific century or global era formed in this world view are not some hot new items invented by Deathsong of the River. some people are beginning to ask fashionable Chinese economists.political and cultural factors underlying these economic activities. if these constructions of east Asia were not by-products of American cold war discourse. acts as the market's "night watchman". One example is that as China's cultural right imitates Edmund Burke's distinction between British aristocratic liberalism and French mob democracy. emerged from class struggle and the productive activities of modern society. the social "economic activity" and "structural 2211 June 3. as a sort of naturalorder. or are you economists in the service of monopoly capital?"This sort of doubt demands. that particular economic activities require particular social relations and structural arrangements. defending monopoly capital in the name of economic development and efficiency firstandjustice second.China's cultural circles rarely consider. and legislation concerning social insurance and national security has been pitifully neglected. finally joining the world in their eyes . As the likes of Yu and Hayek take the place of Mao. Hayek's theory has had a profound impact on the reform of China's political system. in which he praised the former and censured the latter. In this reform and opening world view. reform in what direction . Similar to Yu Yingshi. 2006 This content downloaded on Tue.for in the complex social relations internal to economic activity we cannot postulate an abstract market determining social relations or creating a "just and rational structural arrangement".or. what Hayek represents is a method and tradition for observing the world. Economics. but rather a question of what sort of reform. "getting on track with the advanced culture of the UK.a question concerning social relations of production.retreat. that the east Asia. namely that real economic activities can only be a sort of structural arrangement. When we say. He claims that the formeris naturaland spontaneous. one reasonthatneoliberalthought still has a following in China is that. such as "Pacific century". for instance. Negation of the state is actually a long trend of thought in Chinese cultural circles since the 1980s. for instance. China's cultural and intellectual circles follow. The building upofa neoliberalist culturalhegemony. apelike. for many years failing even to mention the significance of the Bandung Spirit for the modem world. one of the results is that the Chinese National People's Congress. then they were the so-called modern perspective or east Asian perspective that early modern Japan constructed and which ultimately caused great suffering to the peoples of Asia.concentrated role in this discursive melange. nor are they some advanced culture In recent history. Lu Xun. This so-called "Blue Civilisation" is inseparable from the two world wars and the brutal politics of imperialism and colonial plunder. Thirdly. Because Hayek naively understands the state as a government's behaviour. but as opposed to Yu's cultural conservatism. on the one hand. crises and lessons they have brought with them are also profound. and by sacrificing people's lives and condoning regional disparities. As for modernity. Instead. None of this has contributed to a harmonious development of the world or even China's own international image. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions . this currentaffirms the "end of human history" preachedby the Reagan. at best. through legislation. This symbolises the formation of the cultural right's rule in China under the banner of liberalism. the "Blue Civilisation discourses" that have accompanied the reform and opening. however. a "natural process". On the contrary. Marx pointed out that economics. the US and Japan". which. arerepresentative figures who are mainly economists able to describe exploitation and oppression as necessary economic laws. Under the guidance of such a world view. Reflecting on the origins of these crises takes us back to Marx's teachings. They demonstrate that the new Chinese world view formed over the past three decades is not only a geographical concept but also a cultural. Today. there are also profound structural. this sacrifice and this benefit cannot be simplistically understood as a natural arrangementby the market's invisible hand. "East Asian Confucian capitalism" and "globalisation". At the same time as they lose their capacity for independent thought. he affirms the rationality of the capitalist system and the capitalist market framework. we between relations Justas we cannotdenythe accomplish. under the guidance of Hayekian economists.mustlook at the mutual ments of China's reforms. and that the latter is artificial. however. must include the two aspects of economic activity and structuralarrangement. i e. for this is actually the arrangementof a particularstructure.hascleared the path for some of these politico-economic policies.

225p. production and exchange. 2006. lost its chance to unite with the masses. lost its opportunityto bypass many of the reform's social costs. neo-authoritarian equation of people's democracy with mob politics and the neoliberal call for a "retreat of the state" are inseparable from the ideology of "getting on track"with the world capitalist market. 356p. leading in the end to a serious social crisis.a reference to the recent nationalist movements among the former Soviet and Yugoslavian republics. which they spare no effort to repudiate. and S. because independent economic forms divorced from social relations and conditions do not actually exist. so-called democracy is always relative to the modern state. 2006. charge impetuously into the enemy's cannon fire. Socialist approaches. 795 to forourcomplete pleasewrite us at: catalogue Notes [Han Yuhai is a professor of Chinese Literature at Beijing University. 1 Jan 2013 12:40:57 PM All use subject to JSTOR Terms and Conditions . 296p. 2006. we must distinguish between two approaches to reform ordevelopment." [Trans. Rs. that is. 227p. market and social monopoly. in its 1989 price reforms. 595 INTERROGATING HISTORY Essays for Hermann Kulke and MartinBrandtner ShishirKumarPanda(eds) 81-7304-679-4. Rs. 392p. 2006.limited or expanded in order to create the conditions for free competition and equal exchange. arise!'/ We. not at all equal or replace social democratisation. It was precisely by failing to recognise or apply this knowledge that the Chinese state. Rs. which American and Western European "NGOs" played a significant role in fomenting and supporting [Trans]..] 1 "The most perilous moment" . before the beforethey partyor the people can mature. Democratisation of social relations must include the democratisation of economic activity. So even if one strives for economic freedom. Indeed.The right wing. 2006 This content downloaded on Tue. Mao once said: A revolutionary party. It is a question. Rs. In the same way. at the very least. Caste and Sacrificial Organization in a Bengal Village MasahikoTogawa 81-7304-677-8.] 2 "Colour-coded revolutions (yanse geming)" . aim to defend the democratic aspirationsandbasic interestsof the masses by striving for balance and coordination between economy and society. but should be more deeply understood as opposition to the state's defence of monopoly. arise. must comparethe two. Narang(eds) 81-7304-678-6. a revolutionary people. Rs. 2006.Will China's economic development contributeto democracy and equality of Chinese society. Rs. is the very socialist state that has been forged through this tradition. Neoliberalapproachesaim to defend the minority's vested interests in the form of capital.Gopinathan K.C. the two interrelated aspects of economic activity and sociostructural marketisationdoes arrangement. precisely because social relations of production include. 875 SITUATING FEDERALISM Mechanisms of Intergovernmental Relations in Canada and India Rekha Saxena 81-7304-676-X. This is because economic activity is always embedded within social conditions.. 2006.What they target is precisely China's democratic revolutionary tradition and the state. Rs. and as a transference of the state's democratic functions through various social struggles.of how these structuresare transformed. 480p. and as forcing the state to defend true market competition and the majority's basic interests through such factors as price regulation. 995 MINORITIES AND POLICE IN INDIA AsgharAli Engineer andAmarjitS.this cannot be equated with simple opposition to state intervention. 750 RETURN EMIGRANTS IN KERALA Welfare. rather. 750 ASSERTIVE RELIGIOUS IDENTITIES India and Europe Satish Saberwal and MushirulHasan(eds) 81-7304-673-5. the Chinese revolution is sure to fail. lj1 [ MANOHAR AN ABODE OF THE GODDESS Kingship. Rehabilitation and Development Nair P. and it is only through a relentless struggle against neoliberalism that more and more of Mao's successors will understand that the fundamental choice we must face today is still the choice between socialism and barbarism.arrangement"in order to find the deeper social factors thatunderliemacroeconomic equilibrium and aggregate supply and demand. For all these reasons. ten thousand masses with one heart. 197p. Even if the aim is a free market. Translated by Matthew Allen Hale. development and social welfare. but rather expandingits democratic functioning. 600 NEGOTIATING FOR INDIA Resolving Problems through Diplomacy JagatS. 625 WATERAND SANITATION Institutional Challenges in India ChristineSijbesma and Meine Pietervan Dijk (eds) 81-7304-680-8. and instead gave the green light to neoauthoritarianand neoliberal elements.a reference to the PRC national anthem: "When the Chinese people have arrived/ At the most perilous moment/ Each oppressedperson belts out a final cry: / 'Arise. The market does not automatically bring democracy. just as naively appealing to the economy does not automaticallylead to beneficent structural or social relations of production. 298p. can be sure of victory. Perhaps what needs especially to be pointed out is that. Rs. If we learn only what is right but not what is wrong. Democracy. it is only through a critique of neoliberalism that China's socialist reforms and socialist market economy will develop healthily. must repeatedly undergo education in both what is right and what is wrong. does not require abolishing the state. - 0 _ - - *6-G 00 0 2212 Economic and Political Weekly June 3. structuralarrangement. this cannot be simplistically understood as the casting off of a political structureor other cultural constraints. in this sense. on the other hand. and state functions. Mehta 81-7304-672-7. Zachariah. or of the world? This should be the criterion for appraising China's reforms. 2006. 2006. The pressing task of China's reforms today is to undertake a relentless struggle against the former tendency by continuously expandingthe latter. IrudayaRajan 81-7304-675-1.R.