Dr. Wang Bingzhang Chairman, Chinese Afliance for Democracy New York

Dr. Huan Guocang Princeton University Fugene Martin Depu Director, Office of Chinese Affairs T.S. Department of State

Martin Lasater Director, Asian Studies Center The Heritage Foundation

Democracy in China Part I Beijing Style Martin L Lasater, Director, Heritage Foundation-s Asian Studies Center I'd like to welcome you all today to The Heritage Foundation . This is the first in a two-part series on political reform in China, that will look at political liberalization on both the mainland and Taiwan. Today's discussion will center on political reform on the mainland. As you know, the term "democaTr " means m any things to many people. Democracy can range from mob rule to the New Englan town meeting to various multiparty systems such as our own. Even communist systems claim democracy. Ile type of democracy being sou$ht by some Chinese intellectuals on the main l and is, as the Chinese communists refer to it, "individual democracy": that is, a political system based upon the Western concept of individual freedom. Wfien combined with the principles of a free market and privateproperty, this is classical liberalism. And classical liberalism is the antithesis of the socialist democracy advocated by the People's Republic of China, whose principles include, according to the PRC Central Committee, private ownership of the means of production@ a planned economy, and polit i cal power of the working class born through revolution. The 1987 New Year's editorial in Peonle's Dailv made this distinction clear. It said: 'Ile democracy the Chinese -people need today can only be the socialist democracy known as people's democrac s y, rather than the individualist democracy of the bourgeoi ie." This is why in the recent political crackdown on the mainland, the target has not been democracy per se, but "total Westernization!' and "bourgeois liberalization." Significantly, and by way of c ontrast, the government of the Republic of China on Taiwan has not condemned "individual democracy" but rather seems to be moving in that direction. The demand for political liberalization in both parts of China is a century-old effort by patriotic Chines e intellectuals to modernize China through the importation of Western tech iques and concepts. Since at least the 1860s, China has wanted Western science, m technology, education, management skills, and military might. But the dilemma always has been how t o modernize without becoming Westernized. In general, Chinese governments have been eager to absorb Western technology but very reluctant to accept Western political culture with its emphasis on individual rights and freedom. Democracy based on individual f reedom is at last becoming a reality on Taiwan, but democracy on the mainland may have very little future since political reform there is aimed merely at keeping the Communist Party in power. This is quite apparent in the PRC press. In its New Year's edit o rial P e's Dailv aid: "We must carry out reform of both the _Uple's Daily economic and political structure under the leadership of the Party, because the reforms are designed to improve the socialist system rather than abandon or weaken the Party's leader s hip or change the socialist system." And then in a clear warning to those who might want to press the concept of democracy too far, the editorial said: "Class struggle will exist for a long period to come. We must never forget to wage a struggle against a handful of people who are hostile to China's socialist system and who try to sabotage it. Under no circumstances shall we lay down the weapons of the people's democratic dictatorship."

Contrary to speculation, these demonstrations wer e not instigated by any faction of the Chinese Communist Party; rather, they arose spontaneously. The trigger was a local electiQuipf-1ho-pegple's representatives at the China Institute of Science and Technology in rer@. Students at ifi-e-Ihstitute demanded free elections, and their demands were supported by the vice president, Professor Fang Lizhi, but r efused by the Chinese Communist arty (CPP) authorities. We think at least five factors contributed to the unrest that sparked the demonstrations. The factors included: 1) a crisis in the urban economic reforms; 2) nationwide inflation and work slowdowns; 3 ) delays in achieving political reform; 4) an awakening to the ideals of freedoni, democracy, and human rights spawned by the open door policy; an@ 5) reaction to the legalization of an opposition party in Taiwan. Although no one in the Chinese government intended to start a f6rest fire, once the fire started it was natural for everyone to want to use its flames to bum down their own political opponents. Hu Yaobang, the former General Secretary of the Chinese Communist Party, sensed danger and showed sympa t hy for the students and the liberal intellectuals. He realized that the student protests were really demands for speedups in the process of political reforms at the grass-roots level. Hu defended the liberal intellectuals, saying a severe attack on them. w ould hurt the image of the Communist Party. Unfortunately, while Hu was sympathetic to the students and the intellectuals, he did not know how to use the power of the Chinese people. Our organization, the Chinese Alliance for Democracy, believes that Hu s h ould have mobilized the power of the people to defeat the conservative bureaucracy. If the reformers had taken advantage of their high position to mobilize this power of the people, the outcome of the crisis could have been different. Limited by his own c o nservative leanings, Hu vacillated between liberalization and the Party line. Although he protected many intellectuals, at certain critical moments e%r% AM C nO I he also sacrificed certain others, such as former deputy chief editor of P vl--'- - R newspa er, Wang Ruoshui, and its publisher Hu Rwei. In doing these thifigs, Hu diminisKed his own power. As a result, old guard Maoist conservatives and the left-wing Militarv leaders gained the upper hand and dealt the first blow. They exerted pressure w6@fed t o the ouster of Hu Yaobang. But Hu's fall was not as sudden and u cted as it appeared. As early as September 1986, some military sources in Beijing alr=y were spreading word that Hu Yaobang and his protege, Hu Qili, were to be removed frompower within two m onths. This suggests that the demotion of Hu Yaobang was premeditated as much as five months earlier. From December 11 to 25 last year, while the student protests were spreading throughout China, left-wing military leaders spoke out at a meeting of the Mi l itary Commission of the Central Committee of the Party in Beijing. They denounced Hu Yaobang and asserted that he should be held responsible for the student unrest. These ilit leaders even threatened to quell the students by declaring martial law. Eventua l ly 7th"elseleaders colluded with such conservative senior members of the Party as Peng Zhen, Chen Yun, and Hu Qiaomu to pressure Deng Xiaoping into dropping Hu Yaobang. Hostilities between Hu Yaobang and the military go back a long time, with several mo . atmi factors. First, the economic reforms Hu supported conferred no benefits on the mil t . econd, Hu strongly yecommended reducing the armed forces by up to one mill ion members, a measure aimed at reducing the power of the military. Tliird,-Hu

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leaders, it is highly likely that the balance of the superpowers' big triangle may be shifted. The United States would be the loser. It is suicidal for China to go back to pre-reform days. T he conflict between the i Chinese people and the Party authorities will only be aggravated. Internal pressure will bu Id "a u like water in an overflowing dam. To prevent catastrophic flooding, the dam wall coulS be raised to contain the water or the wate r could be gradually released to save the dam. To raise the dam wall -would be a short-sighted -stopgap measure; As an illustration of this folly, let us look back to an earlier event in Chinese history, the 100 days of reforms in 1898 and the palace couT t hat te'rnu*nated it. In those days, the Emperor Wu Xu and his liberal intellectual ai es sensed the inability of the Qing Dynasty court to cope with the changing world. They initiated the Wu Xu reforms, but these reform were ended after just 100 (lays by t he emperoesmother, the Dowager Cixi. She put the emperor under house arrest and either executed or exiled the leading intellectuals involved in the reforms. Only three years later, the Empress Dowager herself was forced to take even more drastic reform me a sures than had been outlined bythe Wu Xu reformers, - mounting social pressures, but the measures came too late. The just to keep up with the Chinese people had lost all faith and the Qing court collapsed a short time later. Nearly a century later, as Den g Xiaoping strives to attain his goal of the four modernizations, Chinese leaders are faced with the same dilemma. They want modern technology and scientific advances, bu 't they cling to an antiquated political system, and they are getting the same result : failure. China is facing a crisis these days because the three factors that stabilize a society--ideology, rule of law, and credibility--are all threatened. This means the country is highly unstable, and after the death of Deng Xiaoping, turmoil could br e ak out. The Chinese Alliance for Democracy, or China Spring, is a small but well-organized political organization. Our ultimate goal is to establish a third force independent of the Chinese Communist 'Party and the Kuomintang. Our assumption is that, if p o litical reforms take place and suc ceed in China, it would prove necessary to have a functional opposition party. On the other hand, if the reforms fail, China will face great disruptions. This chaos will give the movement-for. democracy a chance to devel o p rapidly and help shape the future of China. Our organization also has a message for Americans, whose two goals in China seem to be to align China against the Soviet Union and to exploit a huge market for American products. But as long as China remains. a dictatorship, these goals can never be attained. While urging the Party to reform, the U.S. also should lend a hand to the democracy movement. Ideologically, this movement is inspired by the American system of government, which makes the U.S. a natural a l ly. Mr. Lasater: Thank you, Dr. Wang, for an excellent presentation. Our next speaker is Dr. Huan Guocang, who will discuss the likely effect of the conservative political backlash on China's reforms. Dr. Huan served at the Chinese Academy of Social Scien ces in Beijig and recently was senior visiting fellow at the Atlantic Council here in Washington. Dr. kluan is highly respected as a specialist in Chinese political and international affairs. Dr. Huan.

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Dr. Huan Guocang I would like to discuss three aspects of the recent political developments in China. First, what happened; second, why it happened; and third, what will happen in the future. I think the- media have already pointed.-out what happened, but I would like to - emphasize how to look at these events. First, it is a major setback politically. Second, it is a functional crisis, in which political changes occur suddenly and personnel changes are e cre i t unexpected. Third, Deng 3(iaoping s persona l dib ili _y both in China and abroad has been damaged, which will lead to more troubles in the future for a succession arrangement. Fourth, this is all very serious, particularly in the cultural and educational fields, for most of the intellectuals in Chi n a. Looking at these developments in the context of the relationship between society and state, I would say the student demonstrations in China were independent. I would also say those who were criticized by conservatives in China have received great sympa t hy from many other intellectuals. And I think it is important to note that the majority of the population does not like recent politicial developments in China. These -developments show the government's inability to mobilize the majority of the population in China to follow conservative policies, as they are against the will of the majority. Events in China during the last couple of months have. 'had very serious international consequences. There has been a stron impact on public 6p inion in Hong Kong and o n the - people in Taiwan. And also, it has haya very serious impac.t. on the international community at large, particularly industrial nations. The Soviets have taken advantage of it. I was told by-some American scholars who specialize in Soviet studies t h at the Soviet government was the only one in the world to publish some articles saying the student demonstrations in China were not good. They are in a gambling situation here, but I do not think that they will win. Why did this happen? Most of the Sinolo g ists in the United States have focused on the power alance inside the Chinese leadership, over the conflicts between such different institutions as the military, government, or economic factions. Others have focused on Deng himself: either Deng was forced to crack down, or he himself believed it was time to do so. But no clear evidence exists to prove those things. There are only rumors. I would like to look at something different. I think that what was important during the past few years were the fundamen t al changes in the society that caused the recent political events. First of all, politics. Since 1978, Chinese politics have changed dramatically. There no longer is a personal dictatorship as during. the Cultural Revolution. There is a kind of multicente r power structure. No one really is in the osition to order the society or the party to do anything he wants. Even Deng is not in t e same position as Mao was. There was a factional struggle, but the struggle was conducted differently than in the past. It did not allow executions, nor did it involve sending people to.prison. The struggle was not for life and death; it was for power.

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Second, bureaucratic institutions hav e not changed very much, and third, there is a balance of power between different levels. At all levels there are power struggles, and such political interruptions strongly affect the economic reform process. A final cause of the political crisis in China is that the reformers do not know how to reform. T"hat has become an increasingly important fact particularly during the last couple of years. Reformers were in a position to reform the system, but they really did not know how. They are jumping from one a r ea of-.economic -policy change to another.. -They started off with management reform and then found that changes in mana&ement make something else chapge. management reform affects the management in individual factories or companies, but it does not chang e market mechanisms. The reformers then jumped from nt reform to reform, but here they were without success. The latest manageme ifpncwe statement was: "Well, we ant to reform price structure, we have also to reform other things like financial markets, fin a ncial institutions, taxation, and so forth." Then they. started to establish a capital market and to reform financial institutions. People malung the decisions are open-minded, but lack sufficient knowledge of how to reform effectively. This inexperience c reated a number of problems. For example, high inflation, enlarged income gap, a government deficit, and a drop in foreign exchange reserves. It seems to me that these critical economic and social changes are the fundamental reason for the political insta b ility during the last two months. What will happen in the future? The government has several options. Number one, to develoN and expand an anti-rightist campaign in 1987. Number two, to moderate and then gradu ly cease the campaign and move back. to the r e forms. Number three, to separate its campaign from reform. That means to continue the campaign politically, but at a low level, without much economic reform. Finally, the government has the option of stopping the campaign immediately. My personal judgment is that the government will take the second approach, to moderate the campaign and then to gradually cease it. The campaign is against the will of the majority of the people. In the long term it will cause instability. If the government took the option of expanding the campaign, something might hap en as did in Poland where Solidarity rose against the government. The most rational cgoice is number two. The reason the government is not able to stop the campaign immediately is because it has to wage apower s t ruggle within its own ranks. Also the government has to maintain its credibility. Within the last couple of days, Premier Zhao, Ziyang has come out to say he would try to limit the campai ideological affairs and keep it within the Party. I think cisig to t hat is quite a rational de Of course, whether or not this decision can be effective, will only be seen later. Mr. Lasater: Thank you Dr. Huan. Our final panelist will be Eugene Martin, Depty. Director for Political Affairs on the China Desk in the Departm e nt of State. Mr. Martin is a career foreign service officer with wide experience throughout Asia. He will place the current political situation on the mainland in the international context. Mr. Martin. Mr. Eugene Martin I am speaking here on my own, and m y remarks do not represent the views of the State Department or the U.S. government. The events of the last several months have focused

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inflation, and a large trade deficit. These allowed some of those leaders who are more comfortable with central economic planning and fiscal monetary stability to press for a period of consolidation during 1986. This was done and it was quite successful. Recent preliminary data indicate that China's economic growth in 1986 was more stable and moderate and relatively well balanced. It was fairly close t o their annual targets. I)Fi@$ 1986 there was also greater leadership attention to new political reforms, Cu the endorsement. of-major themes in the September 28 communique of the Sixth Party Plenum, which called for public discussion of political reform i n preparation for the 13th Party Congress to be held this October. Ile official commentaries on the need for greater democracy and the calls for academic and intellectual freedoms, observation of constitutional rights, and innovative thinking raised e Pcta t ions and encouraged various politically aware groups to speak out more openly. I Ink that the increasingly active political dialogue during the fall provided some of the impetus for leading intellectuals and subsequently student groups to express their ow n views. It is, however, important to keep in mind that the entire spectrum of Chinese leaders is determined to maintain the primacy of the Communist Party. We are talking about political change and economic reforms, certainly, but political change, specif i cally, within the guidelines, the framework, and the limitations of a one-party system. The discussions for political reform must be within the framework of socialist democracy, which 'ves the Chinese Communist Party (CCP) the leading role in guiding and i mplementing the changes. As these economic reforms, and particularly the political reforms, have moved alon&, the role of the Party has become increasingly a question. If you have decentralization, if you have localization of decision making and resource p lanning, particularly on the economic sphere, what is the role of the Party, both in macroeconomic and in microeconomic terms? Can the Party continue to provide ideological and political direction dur@ng a period of major and rapid changes in the economic , cultural, and material environment in China? Can the CCP encourage innovative ideas and further economic development without losing control or obstructing the necessary reforms? Turning briefly to the international ramifications of this, I would say that at the moment we do not see a major impact of the recent developments on China's foreign relations. I think there are foreign policy issues that may have gone into the decision for Hu Yaobang's resignation; however, those are not evident at the moment. Ov e r the last four administrations, the U.S. has welcomed China's opening to the West and to the world and has welcomed its policies of modernization through economic reform, because these policies have had a dramatic' effect on its economy and on the standa r d of liviaof its people. We believe a stable and prospering China can be a force for peace and stabi ity in Asia and the world. The situation in Asia now is infinitely better than it was ten or fifteen years ago. China's modernization and the economic ref o rms its leaders have launched nave brought about a significant exchange of people, ideas, and knowledge between our two countries as well as with other foreign countries. Tens of thousands of students, officials, and private citizens travel abroad every y ear, and an even larger number of foreigners travel to China every year. Foreigners are participating in China's economic development and have had an impact on Chinese awareness of ideas and events abroad.

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Mr. Lasater. I would like now to open our discussion to the floor. Please state your name and affiliation. Alisa Joyce with the MacNeil-Lehrer Newshour: I wanted to ask Mr. Martin a bout the conservative backlash pushing China closer to the Soviet Union. Mr. Martin: There is obviously a potential that some of the leaders in China are more anxious to establish warmer ties with the Soviet Union than others. But I think China has its ow n national interests that will supersede warmer ties with the Soviet Union. They are certainly increasin their ties with Eastern Europe very rajpidly. There may be a shift, but I think the Chinese feadership, basically, is nationalistic rather than pro-Sov i et. Gus Constantine, Washingion 11mes : I'd like to ask the panelists how they assess the apparent contradiction between Hu Yaobang losing his General Secretaryship and yet maintaining his position on the Politburo Standing Committee? Dr. Huan : If you lo ok at the party constitution, major changes can be made only at the next Party Congress, which is going to take place in September. Ile removal of the General Secretary is an unusual action.

Dr. Wang: Ile World Economic Report is a newspaper in Shanghai. During the past few years this newspaper has introduced the market economic system of the West. It introduced ideas of free enterprise and some democratic ideas. For example, the World Economic Report published a summ@ry of Mr. Fang Lizhi's speeches about democratic ideas and concepts. This newspaper is very popular among the Chinese @@)ple, and many yoiTg people believe that this newspaper is an unportant instrument of Zhao Ziyang. There is a big debate among the Chinese leader s hip over the policy of sending students abroad. Some conservative senior leaders do not like to send students to the West. They argue that China should send more students to the Soviet Union and Eastern European countries. I think this debate is under way , but I don't know what the result will be. It depends on which faction gets more political power. Alan Rysldnd, Human Events : I wonder if any of you could tell us what kind of trai ing the Communist Party cadres get in China. Dr. Huan: I am not a Party m e mber, but I have learned at political education to ordinary Party members has not been that strong during le past fewyears. Ideological education was not strong because the Party itself had not :)een able to identify what its ideology should be. There als o have been many changes. The changes particularly have to do with economic reform and the open door policy. During the past few years, more and more liberal ideas have been introduced into the party education. Richard Sewell, Friends of Free China: What i m pact are political developments in the PRC having on Hong Kong and Taiwan? Mr. Martin: I think that the changes in China have made a big impression on both Hong Kong and Taipei. The Hong Kong stockmarket dropped considerably the day after Hu Yaobang resig n ed: but since that time, it has come baCK up and things are more stable now. Hong Kong is going through a great deal of uncertainty and concern about what is goin wor@ to happen between now and 1997. It is not yet clear as to how all of this is going to O b viously, stability, moderate Folicies, and future trends in China are going to make a good deal of difference to the peop e in Hong Kong, particularly as they continue drafting the Basic Law which will set out the governmental structure for the future of t he Hong Kong Special Administrative Region after 1997. Taiwan, as well, is very much concerned with what is going to happen on the mainland and the direction of economic and political modernization. Whether or not political events on the mainland will gen e rate greater pressure over the Taiwan issue is hard to say. We have taken a consistent policy over the last decade and a half, since 1972, and we intend to maintain that. Miles Costick, Institute on Strategic Trade: From the very beginning one has assigne d th t

follow the trends of Lenin's New Economic Policies. At that time there were political . O+'M liberalizations in the Soviet Union. In terms. of private enterprises, there were private- factories, an influx of foreign capital, joint ve ntures, development of mining, and all sorts of things that seemed like liberalization. All actually fell on their faces after 1924 with the coming of Stalin. Stalin was worried about the trend, not in terms of what it was going to do economically to the c ountry but what it was going to do politically to the dominant power of the Communist Party, the Bolsheviks. I tend to see Deng more from the perspective of a Leninist pragmatist than- anything else. A second thing: From my contacts with high PRC military officials, including military intelligence officers, I found out that conversation in Russian is much smoother. Also, proper knowledge of Marxism-Lemimism is a great help in leading discussions about anything, whether international or national security af f airs, internal policies, and so on. Now, in 1978, after the movement for the free labor unions and liberalization in Poland, Chinese authorities became greaqy concerned. There were attempts by labor in China, particularly in Shanghai, to organize on a sim i lar model as Solidarity. I his was d7*ving the Chinese authorities, at least those with whom I had contact, into a state of neurosis. They said developments in Poland were negative, and socialism had to be saved at any price. When I brought the strategic m oment into the conversation, namely that changes in Poland will tend to destabilize the Soviet Union, keep it reoccupied, and lessen the pressure the Soviet Union exerts on China, they said that, why-ce this would be true, the preservation of socialism in Poland was more important. As for the question of labor in the PRC, obviously one of the major concerns of the Chinese authorities on the mainland was the possibility of linkage between the students and labor. As a matter of fact, the crackdown in the fir s t place was directed against the laborers who tried to join hands with the students. The Chinese press clearly stated that the laborers had no business being out and joining student demonstrations. I think you gentlemen in your presentation ignored the ro le of labor and its linkage to the students in terms of creating opposition to the present government and demanding changes. Would you care to comment?

Dr. Huan: There are several differences between China and the Soviet Union in the 1970s. First, the hist orical cdntext of China is very different from that of the Soviet Union. After the Cultural Revolution, the government was under strong pressure by the majority of the population to raise living standards and to improve individual rights. Second, China ha s a leadership that survived the Cultural Revolution. They know what is wrong and what is right, even though many of them still want to go back to older ways. Third, the majority of the population is different from that of the Soviet Union in the 1920s. Il e Han Chinese are the majority of the population and its o nger generation is very different. They are 1 We( u totally open-minded. rourth, China is di rent in that it has broad overseas contacts. Hong Kong is an issue. Unless China is able to modernize it s elf politically, Hong Kong is going to be lost in 1997. The crucial issue for maintaining the stability and prosperity in Hong Kong is reform in China. Unless there is reform and an open door policy, Hong Kong is going to be lost. Yet another factor is Ta iwan. After thirty years of separation, the political structure, economic structure, and even the culture on the two sides of the Taiwan Strait are very

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one, to protect them when they are in trouble. Is there any discussion at all within the State Department or within the Administration as to how to deal with this problem? Mr . Martin: Well, we haven't seen the Problem yet, but it might be the case in the future. Of the some 19,000 or 20,000 students who have been in the United States, many are now coming to the end of their study period. Many of them are going back. Others ar e not going back for various reasons. It is certainly not only because of the political climate in China. Many of them are finding it much more remunerative to -stay here and work, rather than go back to their original work units. Mr. Fu: Have you detected a rise in the number of applications for political asylum since the demonstrations?

Mr. Martin: No. Dr. Costick : About 10 percent of the students asked for political asylum under one form or another. You have had a rather negative stance trying to discou rage them through deportations and so on. So your answer is not quite satisfactory. Mr. Martin: We do not have apolicy of discouraging or encouraging. We review each case individually. That is how the law reads. Terry Emerson, local attorney: I think it i s fair to say that one of the developments on which the success of economic reform on the mainland would depend is labor mobility. Last September, I believe, the State Council issued a set of new regulations that in theory, at least, would allow local mana g ers to enter into contracts with workers for a set period of time and would even provide managers with authority to fire workers. Has this law been implemented in practice to any significant degree? Dr. Huan: The law has been passed. -More and more people have been employed recently under contract. That means they are not permanent employees for the government, because most factories are owned by the $overnment. People also have grown tired of their jobs. They want to leave. Now they can leave if they find some other work place. You can even open your own small business. But the last option, it would seem to me, might be strongly affected by recent political changes. Jim Feinerman, Georgetown University Law Center: I would like to ask Dr. Huan to comment on the measured response of Chinese officials to the student demonstrations. Ile feeling one gets is that this was necessary to distance their response from actions taken during the Cultural Re'volution and the anti-rightist movements. Do people see the gove r nmentis reaction as being different from these responses of the past? Dr. Huan: What students did, it seems to me, is not against the constitution. And even thoufh the Beijing government passeId a regulation governing demonstrations, the regu ation was ne v er implemented. I just met some friends of mine from Beijing University. They said that, after the regulation was passed, a few students went to the Public Security Bureau in Beijing and said, "We want to have a demonstration on a certain day. We'd like t o have permission." The people at Public Security checked and found no one was responsible for issuing demonstration permits. After Beijing passed the regulation,

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