Despite the economic reforms, though, China retains glaring social inequalities and the view espoused from certain quarters is that the failures of communism cannot be rectified by a full swing toward market economy. Standing to the left of President Hu Jintao’s liberalist position are a number of academics who have for some time been expressing their concerns at the current policy direction.
They gather loosely under the banner of the "New Left," a mixture of hard-liners and moderates united in their dislike for the move from public to private ownership, which they say is taking place at the cost of the many and the benefit of the few. Foremost among them is Wang Hui, a professor of literature at Tsinghua University who has used his position as editor of magazine Du Shu to publicly criticize the trend towards "crony capitalism" and call for a new direction. Contrast this with the front-page advertisement taken out by an entrepreneur in the Beijing News (Xinjingbao) on the eve of the National People’s Congress (NPC): "To have money is not a crime."
Now it appears the New Left movement has been buoyed by the backing of some of the country’s senior politicians. Figures from Jiang Zemin’s "Shanghai Clique" – led by Vice President Zeng Qinghong – are said to share doubts about Hu’s reformist measures. This has created rumblings of discontent within the party and the leaders have been forced to respond. Approached in the light of these political maneuverings, the NPC makes for interesting viewing. One could argue the event had the fingerprints of compromise all over it.
Need for harmony
In his opening speech, Premier Wen Jiabao spoke of the need to create a "harmonious society" that advocated social fairness. He referred to a number of measures all aimed at closing the gap between rich and poor: free education for children in rural areas, the abolition of agricultural tax, grain subsidies for farmers, improvements to rural hospitals and top-ups for health insurance plans. These could well be supplemented by new rules that ensure farmers who fall victim to land seizures receive compensation which better reflects the true price of the land.
Beijing is well to act. China’s urban dwellers enjoy incomes three times higher than those who live in rural areas while within the cities themselves, the wealthiest 20% collectively earn more than 20 times the total income of the poorest 20%. Even the China Academy of Social Sciences describes the gap as "unreasonable."
But Wen’s speech was also notable in its refusal to bow completely to these statistics. He made it clear that there was to be no economic slowdown and no backtracking on public sector reform. The US$42.3 billion boost to rural spending in 2006 represents a 14% rise on last year, a figure likely to be easily surpassed by tax revenue growth, which experienced a 20% rise in 2005 compared to the year before. Hu and Wen have a clear idea how their bread is buttered and will only go so far to appease the naysayers.
This division is also reflected in individual policy debates. The property law scheduled to be rubber-stamped during the NPC was returned for further review after being subjected to comments and criticism from 47 government departments and 11,500 members of the public. Domestic media claim the opposition is focused on complaints that the proposed law places too much emphasis on the protection of private property. Conservative fears that such legislation is a threat to the preeminence of the state were summed up by Peking University academic Gong Xiantian, who denounced the draft law as a tool that would "undermine the legal foundation of China’s socialist economy."
Make no mistake, China’s march toward increased liberalism is pretty much unstoppable, and in this are sowed the seeds of the New Left’s ultimate failure. But at the same time, the country’s current political environment is far too complex to be distilled into a battle of personalities. Zeng Qinghong isn’t going to have to stand in a bus parked by Tiananmen Square remonstrating with a contingent of diehard cadres who have set out their stall for change.
In all likelihood, this dispute will be resolved without a raised voice or a cross word. It does, however, cast China’s economic reform – stellar growth strategy in an interesting light. The House of Hu is not sailing along on a tide of unequivocal party support – there are those who, through whatever archaic back channels, are willing to speak out. And, in a strange way, this is a very healthy situation. Who would have guessed it 20 years ago – open and reasonable political debate with no fear of purges.
Politicians are supposed to hold each other to account. In other countries the political system is designed so that in many ways this is what they are elected to do. The vast majority of western observers keen to see China turn its back on any form of totalitarianism and its sickening byproducts only have to look at the progress of recent years to be reassured that a reversal of policy would be incredibly difficult to engineer.
With that thought nestling comfortably in the back of the mind, perhaps we can find room to look favorably on the New Left philosophy for its mere presence, if not its views. There is a force in place that is able to make the Hu-Wen road show stop and think before making its next step. And this can only be a positive thing.
Two sides of the IP coin
As China seeks to diversify its economy, it comes as no surprise that it sees technology standards as a way of securing a place at the top table of global trade.
An established manufacturer of standards-based products, Beijing has grown used to seeing license fees eat away at its profit margins in return for using intellectual property that belongs to other countries.
Now it hopes to become one of those select nations that set the standards for others to follow, aggressively pursuing homegrown technologies in everything from storage media to satellite positioning, and then exporting them to emerging markets.
However, these efforts have attracted criticism, concern and obstruction. Global fears were summed up in a 2004 Deloitte Touche Tohmatsu report which warned that China’s technological ambitions could eventually lock companies out of "a global marketplace increasingly defined by standards that originate in China."
As a sign of the challenge for Beijing, a homegrown wireless communications encryption standard was recently knocked back by the International Organization for Standardization (ISO) following heated lobbying.
China is not altogether blameless here. It put itself on the wrong side of the international community by suggesting the wireless standard should be adopted by all companies operating in China. Foreign companies were outraged, claiming it amounted to a barrier to their doing business in China, and the plan was shelved. When it came to the final vote, the ISO was unwilling to put faith in a technology still shrouded in secrecy and clouded by controversy, and opted for the established alternative.
A way forward must be found. As Beijing moves to strengthen the protection of intellectual property rights at home, its standards initiative becomes ever more important. If China is to be expected to take reform seriously, it also needs to have intellectual property to protect.
But should these efforts continue to be knocked back, the country could turn its back even further on global IP rules, insisting that those who want to do business in China play by its rules or not at all.
China’s homegrown 3G standard shows there is room for compromise. As one of three global 3G standards, major telecoms players like Nokia and Siemens secured some patent rights in exchange for technical know-how and capital during the technology’s development.
This has left all concerned in a reasonably comfortable position. Beijing is satisfied with its perceived political and business kudos while international players will still make money from the "Chinese" standard, even as they promote their preferred standards behind the scenes.
There is no doubt the success of Beijing’s standards initiative will come at some cost to its competitors. However, its clout as both a manufacturer and a market means these competitors could eventually find they have more to lose if they continue to stop China from joining the club.