Is China a communist country?

...I think it would be fair to say that, if by "communist," you mean is there an assured ideology that workers of the world are going to displace capitalism --that's been dead for 10 or 15 or more years in any significant way. If, on the other hand, you mean communism as an authoritarian state with a Communist Party that's bent on keeping its monopoly of political power... China has a Communist Party with 60 million people -- it's bigger than many countries in the world. So it has an authoritarian Leninist party. The party is having trouble maintaining its coherence. ... It has that political structure, but the religious ideological character of the belief system is almost totally gone.

Let me just give you one example. I was just in Shanghai. The person that opened the meeting says, "I surely hope that you and the American economy does well in this global slowdown, because your economic interest and your economic development are critical to the welfare of people in Shanghai and China." What happened to the communist ideology that premised its success on the collapse of the capitalist world? Now they're hoping we do well because [with] us doing well, they do well.

It's remarkable, isn't it? How did it come about?

It is. Twenty-five years ago, you could have got all the China experts in the Western world together, and they wouldn't have predicted that, 25 years later, you'd be hearing that.

How have they done this remarkable transformation?

First of all, they've done what is the sensible thing to do, and that is unleash the basic entrepreneurial character of the Chinese people, taken the restrictions off the Chinese people to behave in economically rational ways that Chinese all over the world know how to behave. That's I think certainly the first thing.

The second thing that accounts for this success is that they have opened up their economy to the penetration of foreign knowledge in a way that the Soviet Union never did. Every year, in the United States, there are about 50-plus thousand Chinese students and scholars in research institutes in the United States. That 50,000 is many more people in one year than the Soviet Union sent scholars and students in the entire 70-plus-year history of the Soviet Union. So the second factor here is not only the Chinese people, but their willingness to open up intellectually in a way the Soviet Union never did.

... Are there more freedoms today than there have been?

Oh, it's night and day. The first time I went to China was in 1976. ... People would get on the other side of the street so they couldn't have a conversation with a Westerner, so they wouldn't be seen even conversing with a Westerner, because they knew the security police would be debriefing them shortly after that conversation.

Now you can engage in conversations with Chinese about a broad range of political topics. They are very critical of their leaders, very critical of economic and social policies. When I first went to China, people couldn't even live where they wanted. Families were split apart, children were sent to the countryside. Now people are travelling. Chinese are major tourists to Southeast Asia now. They go all over the world on leisure trips and so on, and so we're seeing a much freer China.

The area that there hasn't been progress is certainly treatment of dissidents, and certainly the ability to articulate the desire for a competitive political system. But the average life both materially, socially, and I would say politically of the Chinese is infinitely better than that China I saw in 1976.

But don't they face potential for an incredible instability? They seem to have so many problems.

If you look at all of the factors of instability in China, you can get very alarmed very soon. And, indeed, China's leaders are very alarmed. In fact, they justify some of their repressive political measures precisely because of what they call "the factors of instability." Those factors of instability include a financial and banking system that is basically bankrupt -- the bad loans out are greater than the real net reserves of the banking system.

They face literally perhaps between 80 million to 100-plus million people that are moving from the countryside on a kind of temporary contract labor into the Chinese cities. They are afraid of large numbers of urban unemployed that are getting put out of business and non-competitive state enterprises. So they've got urban unemployed, rural unemployed coming into the cities, unsound financial system, and general resentment against a regime that has, in the past, grotesquely mismanaged things.

So the sources of discontent in China are great, but Americans, it seems to me, make a mistake in one regard. There are also some things that tend to work towards the regime being able to exert some control over all this. The first thing is that the Chinese people have been through a lot in the years since 1949, including a famine where 20 million to 30 million people died in the early 1960s; a cultural revolution that went on into a decade, and the national suicide rate of China went up in that period. Nobody in China wants that kind of chaos again, so there is a kind of a constituency for law and order.

At the same time, many people are unhappy with the regime. And the other big thing the Chinese government has going for it is, while there are many poor people in China, and great inequalities -- maybe mounting inequalities in China -- never in the history of the world have so many people been lifted from poverty so rapidly. President Clinton, in one of his last speeches, said that 200 million people in China were lifted from absolute poverty from 1978 to about 1999. So the achievements are huge. The problems are huge. And that's why people like me are interested in studying China.

When you look at China today, what do you see in terms of freedom?

I think everything that you have ever heard about China is true. It's freer than it's ever been, economically. People in their daily social life, they do what they want, say what they want. On the other hand, in the political arena, in publications, it's perhaps not totalitarian, but it's an authoritarian state. It does censor the news, the media. Very thoroughly. Anyone who tries to start an organization or a publication that's not sanctified by the Communist Party is subject to arrest. The police can send anyone to a labor camp for three years without a trial. Virtually at their whim. People who want to practice religions that are not part of the government sanctioned religious scripts - are subject to arrest at any time, or harassment. So they are very severe human rights violations going on.

They affect a relatively small number of people, compared to the 1.3 billion Chinese. But they do involve principles that are so fundamental that they in a way affect everyone. I mean, if the press is controlled, this affects the information available to all 1.3 billion people. And ultimately it affects the ability to stop corruption. If there were a free press, one man couldn't bribe several hundred officials in the south- as one did recently and has now, fled to Canada. And make billions of dollars through smuggling. The many people knew about this but the local Communist Party did not allow the press to write about it.

Some people believe that with this enormous economic kick, with economic improvement, that there are inevitably going to be political changes. Do you see signs of this happening?

Well, there are some signs of change and other signs that nothing is changing. And I think that in the long run, certainly if they create a large middle class and a capitalist economy, it seems inevitable there will be new interest groups. And new ways of political expression and with the Internet and so on, more ways for people to get information and express it.

But that's the long run. In the next five, ten years, I don't think it's automatic at all that there's going to be progress toward democracy here. The leadership said very clearly the Communist Party must retain its monopoly on political power--that's the basis of our country's stability and its economic development, and that will not change. And they back that up with the police force.

For example, over the last three years--a time during which they have negotiated their entry into the World Trade Organization--which you would say is a liberalizing influence--during that very same period censorship here has actually grown worse. And scholars might have written something three years ago and had it published. Today, if they write that, either it will not get published, or if it is, they might get questioned by the police.

So the one woman [Editor's note: Dr. He Qinglian, author of The Pitfalls of China's Development] who wrote a book about the problems of corruption and the economic change occurring here, that [book] was a few years ago praised by some of the top leaders. And then this summer, she had to flee the country because the police were about to arrest her for the same writing.

So I think on the one hand the economic opening will bring more outside influences and in a way more chaos to the country which is not a bad thing in some ways. But the leadership is very worried about that. And so they are right now trying to sort of batten down the hatches and prepare for this onslaught of influences and try to keep in control. So that means there may actually be more human rights violations in the first five years after they join WTO, than there were before.

What kind of freedoms, opportunities do the ordinary people today?

Well, compared to twenty years ago, the average person now has the freedom to quit their job and find another job. If they have money, they can go rent or buy a house. People are even buying cars now. It's fantastic for the small minority that can afford that. But there is a legacy from the past that really is quite repressive toward the majority of the population. There is a system of residence controls. If you are lucky enough to be born in a city - and registered as a city dweller--it's easier for you to get into university. You are in the city, you can work at all the large companies and government agencies in the cities. If you are registered as a rural person, there are very severe restrictions on where you can live and work. And to my mind this is actually the biggest human rights problem in China today. You have a majority of this population of 1.3 billion, that are, by law, second class citizens.

What is applicable is to understand that, first of all, China has undergone a huge revolution in the last 30 years. Anyone who saw China as I did in 1971, and for that matter, even in 1979 -- because not much had changed between 1971 and 1979 -- and sees China today, knows one is in a different economic system.

When I first saw China, there were no automobiles. There were no supermarkets. There were no high-rise buildings. There were no consumer goods. There were no restaurants that were at least accessible that foreigners could see. It was a Stalinist society, and a very poor Stalinist society. So the economic system has totally changed, and the private sector in the economic system is now the dominant sector. It didn't exist at all as late as 1979.

Secondly, the political system has changed, though not as rapidly. The China of the 1970s was a communist dictatorship. The China of the twenty-first century is a one-party state without a firm ideological foundation, more similar to Mexico under the PRI than Russia under Stalin. But the measurement of the political and the economic evolution has not yet been completed, and is one of the weak points of the system.

So it's no longer a communist state?

I don't consider China a communist state, no. I know that sounds paradoxical, but it's my view.

It's not a party of the workers and the peasants?

Certainly not a party of the workers and the peasants. In fact, Jiang Zemin in recent weeks has officially said that capitalists and the entrepreneurs should be enrolled in the Communist Party.

China is incredibly unstable [with] such a disparity of incomes within the country, such unrest, troubles on the border, Muslim fundamentalist problems. Do you see the future of China actually being one of collapse rather than growth?

No. I see the future of China as growth. I think that historically China has often gone through periods of consolidation, and then periods of sort of weakening central authority. They undoubtedly face tremendous challenges.

Like any developing country, it has an inequality of wealth. In the Chinese case, it is particularly [pronounced] by the fact that they decided they couldn't make the whole country move forward simultaneously, so they've started region by region. So the interior regions are much less well off than the coastal regions. And this is certainly a huge challenge, because it produces a flow of populations from the poorer regions to the richer regions. ...

It is undoubtedly true that economic development in China has been enormous, rapid. But one of the things that has also occurred is a great disparity between rich and poor....Could that lead to social instability?

In the last 20 years, China has been able to lift about 230 million people out of poverty -- almost the total population of the United States -- and China is still a developing country. So this is something unprecedented in the world. And if you believe that people vote from their pocketbook, you have to believe that the overwhelming majority of the Chinese people say that this government of China is being very effective in leading the country forward.

On the other hand, this is a country of continental size, and the circumstances surrounding economic development varies from place to place. The country cannot really move further economically in goosestep, so we have to let some areas develop first. On the other hand, we will try to make sure that the gap will not be too wide, so as not to create social instability.

This is a tough issue, because China is going to join the WTO. We face both opportunities and challenges of how to make our industry, agriculture and other branches of our economy more capable of coping with these challenges. It's a big issue. But I think we are on the right track. And I believe that the government's policy of restructuring our economy in a strategic sense of revamping the state-owned sector, of launching this develop the western power of China's strategy, are all to the good.....

Can you see why there appears to the American viewer a contradiction between, on the one hand, engagement in WTO, and yet the continual clamping down and prevention of freedom of speech and freedom of the media in China?

This is a very interesting question. ... I believe that there is a misconception here in the West about what is going on in China in this information age. And that's why many Americans who have come away from China feeling that what they have seen in China is quite different from their pre-conceived ideas. So I'm really for more information exchange between the two sides. I would also hope that more Chinese programs will be shown on American TV, and so far we haven't seen much. In China, proportionally speaking, there are more programs from foreign countries.

One of the issues that Jiang Zemin addressed in his {August 2001] interview with the New York Times was his justification for the lack of political expression and the lack of freedom. He relates to the issue of social stability. Is that something that you see as a closely knitted relationship, that it is imperative for China to maintain social stability -- that that must be the paramount goal during economic development?

I don't think that the president makes a linkage between freedom of speech and the social stability in China. I believe that it has always been the Chinese government's position that freedom of speech is important, because through freedom of speech we can collect the wisdom of the people. On the other hand, social stability is important. When you look at China, China has been around for so many years, but it was only in the last 20 years or so that China opened up to the world. China accomplished a sustained economic development.

There was so much turbulence in the past. China was invaded by other countries. China was torn apart by the warlords in China in civil wars, and then foreign aggression again, and so on and so forth. So that's why the Chinese people treasure stability, because without stability there cannot be national cohesion; there cannot be fast economic development. There cannot be improvement of people's living standards and there cannot be peace of mind. And I think that recent developments in the world have shown people how important stability is.

Even by their own admissions, the corruption of Communist Party officers ...makes the corruption of the nationalists back in the late 1940s look like a Mary Poppins business.

The income gap in China today is the worst. ... The gap has widened in the last nine or ten years, and they will have to lay off something like 50 million to 100 million people in order to give those off the state-controlled industries. They have to do this in five or ten years

Right now, there are about more than 20 million people who [have] no social security net to take care of their basic needs. Right now, you have 80 million peasants wondering from one city to another city in search of jobs. Of the ten worst polluted cities in the whole world according to the environmental agency, eight are inside China. China has accounted for 23 percent of the global population and China's supplies of fresh water is less than 6 percent.

China used to be proud of its self-sufficiency of oil. Beginning 1994, they started to import oil. Now imports will increase according to several estimates. By the year 2030, China will have to import more than 70 percent of their oil from the Middle East, from the Gulf -- much in the same way as Taiwan's, South Korea's and Japan's dependence on Middle Eastern oil -- it's no different. And the same tanker will pass through the same Strait of Malacca, South China Sea, and beyond that, too, will sail through Taiwan Strait to reach the south port of China.

This is, in some ways, a frightening scenario. On the other hand, they are growing rich in some ways faster than Taiwan. At the moment, you have got America and Taiwan pouring millions of pounds, billions of pounds of investment into them. But why do they seem to be doing that? [China is] spending that money on new systems on the military.

Yes, and this is really one of the greatest ironies of our time. It is Taiwan's market connections which enable China to transform itself from a net importer with the United States to a net exporter.

Last year, China raked in $87 billion -- billion, not million -- for foreign exchange just from U.S. trade. They used some of the foreign exchange to purchase high tech aircraft and whatever, but they also used some of the hard currency earned from America to acquire conventional arms from Russia, beginning with the acquisitions of 27 in 1994. Over the years, they have purchased so many destroyers equipped with the SSN-32 designed to take on American aircraft carriers and other SU-30s and other sophisticated weapons, middle-range air-to-air missile, etc.

In Taiwan, this is one of the ironies of our time. We assisted them to import what they need, and in turn, they used a certain percentage of that foreign exchange to acquire arms to target us and intimidate us.

China is changing very rapidly in different directions, for example, in its economy. We saw that many of the coastal provinces, coastal cities, are developing so rapidly that some of the areas are seemingly more prosperous than Taipei. In terms of the military, it's also developing very rapidly. It's acquiring a modern aircraft and modern battleships. Its naval force and air force are developing so fast that Taiwan seems to be not having the competitive edge vis-à-vis China any more.

We also see that China is liberalizing itself in [other] areas. For example, in major urban areas, Western culture is allowed to go into mainland China. On a very grassroots level, China is also picking up democratization. They open up the village administrative positions to open election. So all kinds of things are changing and transforming China. ...

So with all these changes going on, how do you see the future?

Oh, I see the future in different ways. On the one hand, we see the force of globalization is kicking in. For example, Taiwan is making a tremendous amount of investment in mainland China. The figure is about $50 billion. Taiwan is also trading with China, and the amount is also growing and growing by the day.

The number of people [who travel] from Taiwan to mainland China is also increasing tremendously. One-third of the population has traveled to mainland China. In Shanghai area, about one percent of the population are actually Taiwanese taking up residence there. So we see very close interactions between the two societies. But on the other hand, we also see some things that are not the way that we wanted to see.

For example, mainland China has very intense competition among bureaucracies, and because of the bureaucratic politics, it is very hard for the Chinese top leaders to come up with a more moderate, more sensible, more reasonable policy to deal with Taiwan, to win over Taiwan's heart. The military has always been a very strong voice. In the 1980s and first part of the 1990s, the military was able to run their own enterprises, and the military was happy with that. But the military now is prohibited from running enterprises. So they need to get a bigger share of the national budget, and in order to do that, they need to have some tension here and some tension there.

Taiwan is very conveniently located right next to China, so they want some tension in order to get a bigger share of the national budget. That is what they've been trying to do. And because of the intense bureaucratic competition inside China, no political leader in China is able to appear to be soft on Taiwan, because that is dangerous to their own political career. This kind of development is going to lead to the opposite effect of what we need to see in a peaceful solution in between Taiwan and China.

Do you think this spy plane collision was used by the military for their own interests?

There are drastically different interpretations on how the military is playing in this incident. Indeed, the military is seen to be playing up with the incident and pressuring the civilian government to apply pressure on the United States. The civilian government has to honor the pilot that has been killed in the incident. So the whole thing shows that the military still has a very strong voice in China's decision making, in foreign policy area or in the military affairs. The incident shows that military has a very strong say in most of the policy in China. ...

China is now developing a democratic and legal system with socialist characteristics. We are also undertaking the reform of the political system, which is the most important part of the reform. Now the Chinese people enjoy more democracy than at any time in Chinese history. However, this democracy is not what the West regards as the Western style of democracy. China should develop its own democracy in the light of China's national conditions.

China is ready to collaborate with the U.S. in all sorts of areas -- including, as you have said, trade and business -- to develop our ties with the United States, to seek further development and increase the prosperity of both our countries. But if they try to use these links as a method of changing us, then they will fail to achieve their purpose.

Different social systems and different kinds of democracy can live side by side with each other. We can learn from each other's good qualities and make up for each other's shortcomings. Our purpose is to seek to develop together, to improve on both sides, but not to try to change the other side. If we were all identical to each other, then the world would not be a very colorful place.