China’s Lost Decade

China Photos/Getty Images
A tourist posing with a sculpture of Deng Xiaoping at the West China Cultural Industries Fair in Xian, Shaanxi Province, October 2010

It’s hard to believe, but just twenty years ago China was on the verge of abandoning the market reforms that have since propelled it to its current position as a world power. Conservatives had used the 1989 Tiananmen massacre to reverse the country’s economic direction. Many felt that China needed to return to a more Soviet-style economic system, with stronger central planning and tighter regulation of people’s personal lives.

But China had a first-among-equals, Deng Xiaoping, who would have none of it. Although already an old man—he would die five years later aged ninety-two—he launched a brilliant guerrilla campaign. Almost surreptitiously, he left the capital in early 1992 for China’s freewheeling south, making speeches that extolled reforms. He declared that China’s biggest threat was from the left, not the right, and is credited with uttering the credo of China’s early reform era: to get rich is glorious. When conservatives blocked official media from carrying his remarks, he used his influence to publish his pro-reform message in regional newspapers. Eventually, the center’s resistance crumbled and Deng put economic reformers in key positions of power, unleashing a twenty-year boom. Political change remained off-limits, but almost anything else went; and it is defensible to say that China was freer and more dynamic than at any point in its modern history.

All of which brings us to today. Economic and political reformers are again on the defensive, with the economy increasingly dominated by pro-state forces that are squeezing private enterprise. The economy is slowing, with housing prices falling, foreign investment down, and consumer sales sluggish. Many economists advocating reforms of Chinese statism have been stifled—censors have banned the press and television from using the word “monopoly” in describing state enterprises. Socially, rising expectations mean people aren’t as easily satisfied with the Deng-era emphasis on achieving prosperity and enlarging personal opportunities; many also want to have more say over how their lives are shaped. But calls for political or social reform are blocked by a sophisticated “stability-maintenance” apparatus that keeps a lid on the tens of thousands of protests that beset the country each year and punishes outspoken critics of the regime.1

The new group of leaders, which takes over later this year, might have a raft of reforms in mind, but optimists are wary. Ten years ago most China experts proclaimed the incoming team of Party Secretary Hu Jintao and Premier Wen Jiabao to be laden with reformers; they turned out to be technocratic caretakers.

The difference between the stasis now and then is that China lacks a paramount leader like Deng who can challenge the logjam of competing interests, bureaucracies, and regions. Lacking the legitimacy that would be conferred by democracy or tradition,…

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