NEW YORK — China is in economic and political free fall, a descent so precipitous that the accomplishments of the past decade have already been dangerously undermined. Even as the Soviet Union and Eastern Europe sprint away from the shadows of Stalinism, China's leaders are returning to the comfortable reassurances of political tyranny, ideological conformity and economic centralism. This course has factionalized the upper reaches of the Communist leadership and exacerbated regional antagonisms. It has also cast twin grave doubts: on China's ability to pursue any realistic modernization for the rest of this century and on the country's future role in Asia.
Thursday, Deng Xiaoping, the man whose vision of economic change generated the remarkable growth of the past decade--as well as the political turmoil that ended in the slaughter of June--left his last formal position, as chairman of the central military commission. He named the party's titular leader, Jiang Zemin, to fill his shoes.
Deng's retirement, intended to boost the stature of Jiang, his designated heir, and steady the leadership succession chaos, in fact does neither. Deng himself, as he has since formally leaving the party's Central Committee in 1987, will continue to exert pre-eminent influence over policy and personnel decisions as long as he breathes; he is now 85. Indeed, the disgraced former party chief, Zhao Ziyang, is accused of revealing the state secret--that Deng retained a firm grip on decision-making despite his official semi-retirement--to visiting Soviet leader Mikhail S. Gorbachev in May.
Jiang was a failure as mayor of Shanghai and has no national experience or individual power base. There is little reason to believe that he will, after Deng's death, assume his mantle of charismatic authority and web of loyalties. Around Jiang, jockeying for influence and control over their private agendas, are the geriatric leaders who returned to the pinnacle of power as the tanks churned into Beijing in June. They have expressed a tolerance for Jiang only at Deng's behest. Their own networks of patronage and interests, predating Jiang's ascension, are immune from Jiang's control. The death of Deng, who alone is able to dampen the aggressive instincts of competing factions within the leadership, will precipitate an intense internal power struggle.
The elders, such men as Chen Yun, Yang Shangkun, Li Xiannian, Wang Zhen, Hu Qiaomu, Peng Zhen--names generally unfamiliar outside China--are intent on controlling China's destiny. They are also intent on rolling back many achievements of the 1980s, of scuttling the economic reform so laboriously constructed by Zhao Ziyang and Hu Yaobang, Zhao's predecessor as party leader. The elders are determined to rein in the explosion of ideas--of artistic expression, innovative movie-making, obscure poetry, unrestrained political thinking--that bloomed under Zhao's and Hu's political tolerance. These old men began their efforts more than a year ago, when they wrested control of economic policy from Zhao and imposed severe economic retrenchment. The effects of their policies are increasingly apparent.
It is now evident that China is, and has been for some months, in a deep recession. The future is even dimmer. Intent on suppressing inflation--up to 40% annually in urban areas--the hard-liners instituted price controls, sharp restrictions on credit and, most recently, enforced savings by state workers. Industrial productivity is declining. Driven by an ideological antipathy toward private business, China's economic hard-liners have choked off credit to privately owned enterprises. In the past year, more than 1 million small private companies have expired in the credit drought. These firms, the most efficient and fastest-growing sector of the Chinese economy, represented the edge of China's transforming industrial economy.
Instead of encouraging these private businesses, now dubbed "exploitative" in the new era of ideological rectitude, the state has accelerated subsidies to lumbering, inefficient state industries, the legitimate children of socialism. More, the leadership has reversed Zhao's effort to extricate Communist Party hacks from the operation of factories, commercial outlets and mines and replace them with technically competent managerial personnel. The party elders, these men for whom the doctrines of Marxism-Leninism-Maoism are theological writ, remain convinced that only the party can provide the guidance necessary to propel China into the modern world and, most important, into socialism.
On the coast of Fujian Province, where private economic initiative was a driving force, businesses are virtually paralyzed by the credit crunch and uncertainty over Beijing's political direction. A young man from the province, now in the United States, said that in his home town, "No one is doing anything. Business has just halted."