[A-List] Sharp Debate over Ideologies Erupts in China

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A Sharp Debate Erupts in China Over Ideologies

By JOSEPH KAHN Published: March 12, 2006 BEIJING,

March 11 â?? For the first time in perhaps a decade, the National People's
Congress, the Communist Party-run legislature now convened in its annual
two-week session, is consumed with an ideological debate over socialism and
capitalism that many assumed had been buried by China's long streak of fast
economic growth.

Claro Cortes IV/Reuters President Hu Jintao, center, at a legislative
session on Saturday. The controversy has forced the government to shelve a
draft law to protect property rights that had been expected to win pro
forma passage and highlighted the resurgent influence of a small but vocal
group of socialist-leaning scholars and policy advisers. These old-style
leftist thinkers have used China's rising income gap and increasing social
unrest to raise doubts about what they see as the country's headlong
pursuit of private wealth and market-driven economic development.

The roots of the current debate can be traced to a biting critique of the
property rights law that circulated on the Internet last summer. The
critique's author, Gong Xiantian, a professor at Beijing University Law
School, accused the legal experts who wrote the draft of "copying
capitalist civil law like slaves," and offering equal protection to "a rich
man's car and a beggar man's stick." Most of all, he protested that the
proposed law did not state that "socialist property is inviolable," a once
sacred legal concept in China.

Those who dismissed his attack as a throwback to an earlier era
underestimated the continued appeal of socialist ideas in a country where
glaring disparities between rich and poor, rampant corruption, labor abuses
and land seizures offer daily reminders of how far China has strayed from
its official ideology.

"Our government only moves forward when it feels there is a strong
consensus," said Mao Shoulong, a public policy specialist at People's
University in Beijing. "Right now, the consensus is eroding and there is a
debate over ideology, which we haven't seen for some time."

The divide does not appear likely to derail China's market-led growth.
President Hu Jintao, in what Chinese political experts and party members
said was a clear reference to the debate, told legislative delegates last
week that China must "unshakably persist with economic reform."

China has generally stuck by its market-opening commitments to the World
Trade Organization. Wen Jiabao, the prime minister, has allowed billions of
dollars in foreign investment to flow into the once tightly protected
financial sector.

Legislative officials insist that the proposed law, which has taken eight
years to prepare and is intended to codify a more expansive notion of
property rights added to the Constitution in 2003, will sooner or later be
enacted, though possibly with some significant modifications.

But Mr. Hu and Mr. Wen wittingly or unwittingly invited the debate when
they made tackling growing inequality a center of their propaganda efforts,
political analysts say. The state-run news media are abuzz with calls to
make "social equity" the focus of economic policy, replacing the earlier
leadership's emphasis on rapid growth and wealth creation.

Since his rise to power in 2002, Mr. Hu has also tried to establish his
leftist credentials, extolling Marxism, praising Mao and bankrolling
research to make the country's official but often ignored socialist
ideology more relevant to the current era.

He told party leaders in 2004 to study how Cuba and North Korea maintained
political order, party officials say. And he has tried to distance himself
from his predecessor, Jiang Zemin, who invited private businessmen to join
the Communist Party and was viewed as permitting well-connected officials
to enrich themselves with public property at the expense of the poor.

"Hu is himself a centrist who is not really pursuing one agenda or the
other," observed a party official who said he could be punished for talking
about leadership politics if he were quoted by name. "But he did pull us to
the left to restore balance, and that gave the old guard an opportunity it
has not had in years."

As a result, analysts say, the leadership may find it harder to pursue
market-oriented solutions to some pressing problems, like providing health
care to rural residents, grappling with rampant corruption in the state
sector, expanding access to education and overhauling banks, insurance and
securities companies.

Beijing's new plan to address its rural woes, labeled "building a new
socialist countryside," promises an infusion of government cash for
peasants and rural areas. But it steers clear of tackling some restrictions
on economic activity, like a ban on private land sales in the countryside,
that many pro-market economists say have left peasants economically
disenfranchised.

"My impression is that allowing an expanded role for the market in
education and health care is off the table," said Mr. Mao, the People's
University policy expert. "Rural land ownership is also too sensitive to
consider now."

The tensions reflect rising concern that breakneck growth averaging nearly
10 percent annually over 20 years has left China richer but also dirtier
and, by the standards of the one-party state, politically volatile.

Corruption, pollution, land seizures and arbitrary fees and taxes are among
the leading causes of a surge in social unrest. Riots have become a fixture
of rural life in China â?? more than 200 "mass incidents of unrest"
occurred each day in 2004, police statistics show â?? undermining the
party's insistence on social stability.

Many Western and some Chinese experts have argued that these problems stem
from China's authoritarian political system, and that they will not easily
go away until people have a greater say in how they are governed. But the
Communist Party and many left-leaning scholars reject that view. They say
the ills are caused by capitalist excesses and rising inequality, which
they say requires that the government reassert itself in economic affairs.

One measurement of inequality, the gap between the average incomes of urban
and rural residents, has risen to about 3.3 to 1, according to the United
Nations Development Program, higher than similar measures in the United
States and one of the world's highest. A study by the party's Central
Research Office estimates that the ratio could rise to 4 to 1 by 2020 if
current trends continue, a level some Chinese economists say could incite
wider social turmoil.

Such political fears seemed to give an opening to critics who felt economic
policies had strayed too far toward capitalism. The strength of leftist
opposition had faded throughout the 1990's after Deng Xiaoping, who called
economic development "hard truth," and later Mr. Jiang tolerated little
ideological discussion of the direction of changes.

Liu Guoguang, a Marxist economist and a former vice director of the Chinese
Academy of Social Sciences, stimulated an outpouring of opinions about
inequality last summer when he gave a private talk that was transcribed and
posted on the Internet. His talk supported the emphasis on growth and
development but called for a much larger role for the government in
managing economic affairs.

In a subsequent interview with Business Watch, a state-run magazine, Mr.
Liu said, "If you establish a market economy in a place like China, where
the rule of law is imperfect, if you do not emphasize the socialist spirit
of fairness and social responsibility, then the market economy you
establish is going to be an elitist market economy."

He has been joined by other scholars, including Mr. Gong, whose incendiary
polemic on the property law prompted a succession of sympathetic essays and
study sessions.

Also contributing to the response is the Hong Kong-based economist Lang
Xianping, who has used a television show to pillory what he describes as
raids on state assets by managers and foreign investors.

One top official who has come under scrutiny is Zhou Xiaochuan, the central
bank governor and a promoter of market initiatives. Mr. Zhou attracted
foreign investment to the financial sector, partly delinked China's
currency from the United States dollar and steered the three biggest
state-owned banks toward stock market listings overseas.

Mr. Zhou was attacked directly in a widely circulated Hong Kong newspaper
article and indirectly by commentators in Beijing, who accuse financial
officials of selling China's most valuable assets too cheaply.

Ji Baocheng, president of People's University in Beijing, criticized Mr.
Zhou's banking changes in a public session of the legislature last week. He
cited the big Hong Kong stock market listing of China Construction Bank,
which was completed after the government injected billions of dollars to
clean up its balance sheet.

Mr. Ji said the government priced shares in the bank too low, given the
fresh infusion of capital, and he accused officials of "blindly sacrificing
the interests of China and its people."

The government defends the overseas listings as a necessary step to raise
capital, attract foreign experts to the boards and executive offices of the
troubled banks and put the financial system on sounder footing.

Some pro-market economists, who seemed ascendant in the 1990's and early in
this decade and now often sound defensive, have denounced the leftist
revival as dangerous. Many also criticize the Hu-Wen administration for
micromanaging investment and bank loans, tinkering with property and stock
markets and declining to extend market-oriented policies to the
countryside.

Zhou Ruijing, a retired newspaper editor associated with the pro-market
camp, captured the sentiment in a January magazine essay.

"A widening gap between rich and poor is not the fault of market reforms,"
he wrote. "It's the natural result of them, which is neither good nor bad,
but quite predictable."

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