Epic rivals whose battle shaped China

PUBLISHED : Monday, 01 December, 2008, 12:00am
UPDATED : Monday, 01 December, 2008, 12:00am

Chen Yun feared that Deng Xiaoping was taking the nation too far, too fast

There was once a joke among sinologists that the key to China's future was whether gung-ho economic reformist leader Deng Xiaoping would outlive his conservative rival Chen Yun . In April 1995, Chen died at the age of 90, and Deng two years later, at 92, winning the apparent battle.

Today, China is still at the mercy of the economic forces that 30 years of Deng-ist reforms unleashed. But Chen's imprint is as discernable as Deng's, though it receives much less fanfare.

'The country today is the product of a long period of haggling between these two different schools of thought on growth. The contest has been a running theme in the central leadership for the past 30 years,' said Hu Xingdou , an economics professor at the Beijing Institute of Technology.

The story often told is of factional rivalry, with Deng cast in the role of open-market visionary and his revolutionary colleague, Chen, the conservative heavy, favouring a more measured pace of economic liberalisation and growth.

However, the idea of Deng and Chen as fierce opponents is a simplification. They often disagreed about the direction China should go in but those differences sprang from their ideological leanings, not their personal feelings towards each other. It was Chen, after all, who helped bring Deng back to power after Mao Zedong's death in 1976.

Both agreed that the party's priority at the time was to immediately correct the huge distortions inflicted on the economy by the complete systematic imbalances and poor management that followed the Cultural Revolution.

The talk was not about leaning on market levers to normalise the entire economy - and especially not about such extraordinary measures as 'shock therapy' economics or mass privatisation. Mainland society was not ready for this, nor was the leadership team of Deng and Chen.

At the third plenary session of the 11th Communist Party Central Committee in December 1978, reforms were drawn up only as part of an economic policy characterised by the formula: 'regulation, reform, cleaning up and moving up'.

First place was given to 'regulation', which was Chen's catchphrase. But, five or six years into the reform, their views began to polarise. Chen, the economist and central planner, grew increasingly wary about the speed, scope and direction of economic change; he believed reform should be like building a slightly bigger birdcage, but not letting the bird out.

Chen's 'birdcage' theory was seen as a rebuke to Deng's reforms. The bird of the free market should be allowed to fly, Chen said, but only within the cage of the planned economy. While Deng never thought the state sector should lose its dominance, his approach was nonetheless much more pragmatic and flexible. Take for instance the so-called cat theory: 'black or white, it's a good cat if it catches mice.' His logic was that the party's only claim to legitimacy rested in delivering the economic goods, so it should do whatever it could to ensure quick growth.

In a bid to open the mainland to overseas capital, Deng set up four special economic zones in 1980 and opened 14 coastal cities in 1984. That was where Deng and Chen's views differed the most.

Zhu Jiamu , Chen's secretary from 1981 to 1985, said Chen 'took a sceptical stance towards the introduction of non-socialist special zones and, in general, what he perceived as 'reform exuberance''.

At a Politburo meeting in 1985, Chen is reported to have made an implicit attack on Deng's policy by declaring: 'The planned economy's primacy and the subordinate role of market regulation are still very necessary.'

After that, Chen was viewed as Deng's most powerful rival and patron of the conservative faction of the party, one that opposed rapid liberalisation of the economy.

The conservatives ascended following the 1989 Tiananmen crackdown and the reforms were pushed back.

But Deng's reaction to the backlash and the collapse of the Soviet Union in 1991 was to speed up reform. Following the domino-style collapse of communism in Eastern Europe, the patriarch undertook wider reforms in 1991-92 to ensure the survival of party rule. Deng argued it could keep power only by continuing to reform the economy and delivering ever-higher living standards to the bulk of the people.

Professor Hu said Jiang Zemin then party chief, 'inherited and enriched' Deng's pragmatism. Expounding on Deng's thesis that a socialist state could have a market economy without the risk of becoming capitalist, Mr Jiang made building 'the socialist market economy' the core of his economic policy. He even urged that 'we should widen differences in personal income to a reasonable degree'.

Under President Hu Jintao , a conservative authoritarian who is influenced by Chen-style central control and regulation, economic reform has slowed and more attention has been directed to wealth redistribution and social equity.

'Mr Hu tried to pour cold water on the idea of laissez-faire economics, which is blamed for a growing gap between rich and poor, and urban and rural,' Professor Hu said.

'He is worried that a small government and free markets could, if given too-free a rein, cause an economic meltdown in China. Those are essentially the same kinds of worries that Chen had before.'

Mr Hu's pet theory is 'scientific development', which means a balanced, gradual approach to economic development rather than breakneck growth at the expense of all else.

But growth will remain his priority. He will not veer from the belief that has been at the core of the Communist Party since Deng's famous southern tour in the early 1990s: growth is essential to social stability and thus the party's survival.