For China, the Most Difficult Reforms Lie Ahead (Editorial)

CHONGQING, China -- For years, Americans have debated whether economic reform in China will inevitably lead to political reform and democratization. A visit here suggests a different question: whether further economic reform can succeed without political reform and democratization.

That question arises because, while everyone here agrees that 20 years of economic reform have brought remarkable growth and increased freedom, almost everyone also agrees on something else: that the most difficult reforms still lie ahead.

"The reason we've been more successful than the Russians is that we've left the hard ones for the end," a senior pro-reform official in Beijing said. "That was the right choice. But still . . . there are a lot of pitfalls ahead."

In this provincial industrial center 1,000 miles southwest of Beijing, you can see one of those pitfalls represented in the rope-muscled men who wait on street corners with bamboo poles in hand. They are emissaries from the impoverished countryside hoping to earn a few yuan by balancing those poles on their shoulders and serving as porters for better-off city folk.

More than half of China's 1.3 billion people remain rural -- 900 million of them, the country's trade minister said in an interview. Their incomes rose sharply when Deng Xiaoping began China's reforms 20 years ago, in part because they had been beaten so low by the communizing lunacy of Mao Zedong.

But rural incomes have stagnated in recent years, and improvement is unlikely without major reform. China still does not allow peasants to own land, so few are willing to invest, and no one can assemble tiny plots into more efficient farms. The result is too many farmers producing too little, surviving on government-subsidized grain prices, with deteriorating health care and schools.

You can see another pitfall in the inferno of Factory Number Five of the Chongqing Iron and Steel Co. The clanking, hissing machinery of the plant was moved here from nearer the border with Russia in the 1960s, when Mao expected war with the Soviet Union. And the outdated technology is operated by far too many people. Overall, the company manager said he employed 63,000 at the beginning of last year, while he needs only 30,000, itself no doubt an exaggeration; the enterprise also must support 34,000 retirees.

The situation is typical of China's state-owned enterprises, which have incurred huge debts to each other, to the state and to state-owned banks, yet in many cases continue to lose money.

And you can see a pitfall in the corruption that Executive Vice Mayor Wang Hong Ju says is "inevitable" during this period of reform. "I won't give you specific numbers on how many Party cadres have been punished, but in the past four years two senior colleagues of mine have been arrested for corruption," Wang says. Not just in Chongqing, corruption is pervasive, from the lowest-ranking bureaucrat to very senior officials.

Any one of these three problems -- rural poverty, potential industrial labor unrest, resentment at corruption -- could destabilize the country. But the linkages among them make solutions difficult. Market reform in the countryside would send tens or hundreds of millions of people into the cities, which would aggravate unemployment. State interference in the economy at every level renders corruption inevitable, but the government is reluctant to cede more control when social unrest threatens.

Reform's progress has given China tools to attack these problems. Many officials understand what needs doing.Private savings accounts have mushroomed, providing at least the potential to create an unemployment and pension insurance system that would relieve the state-owned enterprises of that burden. The non-state sector now produces 70 percent of the gross national product, according to think tank chief Cao Siyuan, athough it controls only 30 percent of assets.

The explosion of bourgeois ambition and entrepreneurial energy is evident not just in coastal cities such as Shanghai but here in the hinterland too. The clock tower at Chongqing's center still chimes "The East Is Red," but the commercial bustle all around is impervious to ideology. Bus conductors hawk their destinations, newspaper vendors hawk a range of publications; hundreds of stylish teenage girls line up to have their CDs signed by a rock star in front of a local department store; in the marketplace nearby, ducks stand apprehensively in rows, masses of eels squirm in their buckets, street chefs offer noodles and dumplings at outdoor stands.

Seemingly in inverse proportion to the commercial fervor, the government seeks to block political or spiritual diversity. It censors the Internet, bulldozes Christian churches, tortures Falun Gong practitioners, jails labor activists and Democracy Party leaders. Some analysts say that the repression makes sense -- that the economic pressures are such that the government can't run the risk of protests.

Others argue, though, that only democratic reform can relieve those pressures. An independent judiciary to deal with corruption; a chance for workers to express grievances through independent unions; letting peasants own land to unleash their productive energies -- these may be what reform needs.

Bao Tong is one who believes so. A senior architect of China's reforms until 1989, when he opposed the crackdown in Tiananmen Square, Bao remains under virtual house arrest, surrounded always by six security agents, and I was unable to meet with him. But he answered questions by phone.

There are many links between economic reform and political freedom, Bao said, but the key point is to free people to help solve their own problems. China's economy and society have grown too complex to be directed even by a modernizing party.

"Honestly speaking, I can't tell you how to solve the economic problems of China's villages," Bao said. "But I can tell you this: You can't just use one head to solve these problems, you have to use lots of heads."

© 2001 The Washington Post Company