Within the People’s Republic, from the graybeards in the Politburo to the average Wang, it is an article of faith that only national unity can produce greatness and peace, while fragmentation entails chaos. Memories of China’s most recent collapse–barely 90 years ago–remain fresh, vivid and terrifying. History books used in Chinese middle schools recount, in excruciating detail, the national humiliation and mass sufferings endured by the Chinese people in the first half of the last century. The notion that China ought to remain one and whole has been hard-wired into the national psyche. To think otherwise would be un-Chinese.
Yet look around. Anyone who has seen more of the country lately than the Great Wall and the terra-cotta warriors would laugh at the idea that there is but one China. For the last two decades, divergent social and economic forces have silently but persistently pulled different parts of the country in different directions. In many ways Shanghai now has more in common with Seattle than with Xian. Life on the barren fields of Guangxi more closely resembles certain parts of Central America and sub-Saharan Africa than neighboring Guangdong province. If an unemployed steelworker were to riot in the streets of Shenyang, he would do so for very different reasons from those of a disgruntled Uighur in Kashgar’s ancient market.
The question isn’t whether the People’s Republic will or should fragment. The question, for all practical purposes, is what to do now that it has. No one–neither the party apparatchiks in Beijing, nor the CEOs of Western multinationals, nor the generals in the Pentagon–can afford to see only the China that makes headlines, the so-called factory to the world. The white-hot growth rates enjoyed by the People’s Republic over the last two decades have slowed. Unemployment is approaching double digits in many cities. Rural incomes have been declining in absolute terms in recent years. Beijing faces rising deficits and a mountain of bad bank loans (about 50 percent of GDP). The new leaders who will emerge from this autumn’s Party Congress will confront a country where multiple realities coexist and, increasingly, clash. How they resolve those contradictions will determine if China really can be one.
When most outsiders speak of “China,” they are talking about a relatively thin slice of the country–the booming coastal provinces, where glitzy skylines, neon-lit streets and fashionably dressed crowds cause many visitors to wonder whether they’ve landed in Hong Kong by accident. In some Shanghai boutiques, you can fork over $100 for a brand-name polo shirt (no fake) or set down an equal amount for a small vial of French perfume. Most people carry mobile phones, the latest model possible. Young professionals hand out business cards inscribed with their English names, like Cindy or George.
In a sense, this is China–or, at least, the country’s center of gravity. Coastal Chinese have a per capita income 75 percent above the national average and an effective purchasing power of almost $6,000 per year. Western businessmen may dream about what 1.3 billion extra pairs of Nikes could do for their bottom line. But most of them know perfectly well what they’re really after–the wallets of the tens of millions of middle-class Chinese here who can actually afford the goods they have to sell. The coast holds one other key attraction: a large pool of skilled labor and well-trained engineers. That has drawn a flood of foreign direct investment–about $30 billion in 2000 alone (or three quarters of total FDI in China that year)–and an influx of manufacturing so overwhelming that several countries, from Malaysia to Mexico, fear they will soon have nothing left to make. All that money talks: some 13 of the 23 members of the Politburo have ties to the coastal provinces.
Yet with each passing year this “China”–which accounts for only 30 percent of the population–looks less and less like the rest of the nation. An entirely different China sweeps across the country’s vast hinterland. Nearly 600 million downtrodden peasants populate this, the former cradle of Chinese civilization, and their circumstances are, if anything, declining. Half of China’s population, they contribute less than a third of its GDP. China’s accession to the World Trade Organization will ultimately open the doors to cheap Western grains and fruits, driving millions out of business. These Chinese already earn 25 percent less than the national average–some $700 per year–and yet are inundated with locally (and often illegally) imposed taxes and fees. Despite their mind-boggling numbers, they have no representatives on the Politburo.
Their woes are mirrored in China’s northeastern provinces. Once the country’s industrial heartland, this is now its rust belt. Shuttered state-owned factories pockmark a gloomy landscape. Unemployed workers, when they are not demonstrating for jobs and back pay, gather on street corners looking for work. And economic hardship is not the only source of misery for the 107 million people trapped in the ruins of state socialism. An even bigger scourge is corrupt government and organized crime. In the 1990s in Shenyang, the largest city in the region, the city’s mayor, executive vice mayor, chief judge and practically the entire municipal government were co-opted by a criminal racket. The group was led by a local mafia boss who, before he was arrested and later executed, acquired a taste for high-stakes gambling in Las Vegas.
The rest of the People’s Republic resembles nothing so much as a frontier, raw and unruly. These vast and sparsely populated margins are home to the country’s ethnic minorities–Tibetans, Uighurs, the myriad hill tribes of Yunnan. Illiteracy and poverty rates are high–per capita income in 2000 was 35 percent below the national average–and central control, often personified by Han settlers and military garrisons, is resented. Pro-independence sentiments simmer in the two largest provinces, Tibet and Xinjiang. Yet despite the area’s outward backwardness, it is hard to imagine China without this region, which encompasses more than half the country’s land mass. Its mineral deposits and energy resources keep the industrial engines on the eastern sea-board humming. Its rugged terrain insulates China from the turbulence in Central and South Asia.
Finally, there is the Chinese diaspora. If the Overseas Chinese community, including Hong Kong and Taiwan, were imagined into a separate China, it would have a population of about 55 million and a GDP of $1 trillion in 1999 (the same as the People’s Republic). Like two other great diasporas (Jewish and Indian), this “bamboo network” is really a web of knowledge and commerce. It has also become China’s most valuable link to the rest of the world: in the past two decades, this community has channeled more than $200 billion in direct investment to the mainland and helped build an export juggernaut in light manufacturing and consumer electronics. At the same time, many of these ethnic Chinese bring with them an experience of democratic rights and freedoms that Beijing would rather keep from its own citizens.
Taken together, these different Chinas have always maintained a superficial unity. Until the country embarked on its belated journey to modernity, the economic glue that held the empire together was agriculture. The center of power lay in the populous rural provinces: whoever controlled the central plains, or zhong yuan, dominated the entire country. By comparison, the coastal areas were considered strategically unimportant by rulers who were preoccupied with incursions from northern nomads. Ironically, this imperial neglect might have been a blessing in disguise, allowing the spirit of private enterprise to flourish among those far removed from the cutthroat court politics up north.
Meanwhile, like peripheries in other empires, China’s margins and its rust belt have long had tenuous ties to the imperial center. Most of these areas were brought into full Chinese control not by the Han Chinese but by the Mongols and the Manchus (who came from the northeast). History books say these groups conquered China and built massive empires. In effect, they merely delivered dowries, including their own homelands.
Maintaining some semblance of cohesion over this vast and diverse land overwhelmed all but the most competent Chinese imperial rulers. A centralized and supposedly meritocratic bureaucracy was their only means of spreading their authority. To reluctant subjects, however, the mandarins were little more than symbols of oppression and predation imposed from afar. Political cohesion rested, above all, on the vitality of the imperial center.
Perhaps China could not have been unified in any other way. Economic interests did not bind its citizens because the empire never developed an integrated national market. Nor did religious beliefs: Confucianism is not a religion and has no hierarchy similar to that of the Christian Church. It may have provided the core values that bound together the dominant Han ethnicity, but its appeal to those inhabiting the Chinese periphery has always been limited.
Without stronger foundations, empires are at the mercy of the political fortunes–and follies–of their rulers. For China the price has been steep. Since its unification in 221 B.C., the country has been divided into warring kingdoms for more than 700 years, or a third of its history as a nation. If you count periods in which the center lost effective control over large portions of its domains, China has logged almost a millennium of internal chaos–surely a world record.
Communism promised to change all that. The party offered an ideology open to all citizens. Its political organization spread from Harbin to Lhasa. The economy, if not a market per se, was forged into a single entity. Yet the regime’s own blunders have only deepened China’s underlying fissures. The fanaticism of the Cultural Revolution (1966-1976) alienated ethnic minorities. The government misallocated resources to capital-intensive heavy industries and neglected agriculture. (Worse, Mao Zedong, who had never tilled the land, issued detailed edicts on how crops should be grown–“plow deep and sow densely”–with predictable consequences.) State planning restricted the free flow of labor and capital, either across regions or from the countryside to cities. These policies kept people poor and doubled regional income disparities from 1952 to 1978.
At first the reforms introduced by Deng Xiaoping reversed this trend. With market forces, not the government, channeling people and money, income disparities fell by 20 percent between 1979 and 1991. But Deng himself undermined this process with his famous call to “let some get rich first.” In practice, this meant giving priority to the coast. Local governments were allowed to retain more tax revenues and to offer incentives to foreign investors. Private enterprise was encouraged. Foreign investors arrived en masse, pouring more than $300 billion into China in the 1990s. Within a decade, the entire eastern seaboard had been transformed.
At the same time, industrial decay spread throughout the northeast as Beijing dragged its heels on reforming moribund state-owned enterprises. Progress in large agrarian provinces stalled as farmers could squeeze no more out of their land. Beijing, starved for revenue, began to force citizens to pay for their own medical treatment and education–which in practice meant that many peasants received neither. Throughout this period, the margins were practically forgotten. The regime did not have the resources to develop the region, and foreign investors showed little interest. The result? By 1999, regional inequalities had returned to 1978 levels.
Those yawning gaps are only going to grow wider. The flow of money and people from the hinterland and rust belt to coastal provinces will continue as long as the rewards there are greater than anywhere else. Those left behind are doomed to face slow growth, tattered social fabrics and crumbling local governments.
Some have suggested that these regional disparities could push the People’s Republic toward disintegration. A more realistic danger is that the downtrodden Chinas will export their socioeconomic ills to rich China. An influx of millions of migrants could transform cities like Shanghai into Mumbai or Rio. Con artists and venal officials could cook up fraudulent financial schemes that destabilize the nation’s capital markets (it’s happened already, more than once). Far-flung provinces could become havens for organized criminal gangs colluding with local authorities. Drug smuggling along the borders of Burma and Central Asia is feeding a dangerous heroin problem–and the spread of HIV/AIDS–throughout the country. Many parts of rural China have found an unfortunate competitive niche producing counterfeit goods that pose serious hazards to public health and safety. According to one estimate, fake and low-quality medicines killed about 192,000 Chinese last year.
The coastal provinces–and the hundreds of thousands of overseas Chinese who do business there–are defenseless against these threats. China’s famed dynamism is not unstoppable. Regional inequality, economic stagnation and political decay at the local level could fracture the country’s internal markets (you can forget about the extra 1.3 billion pairs of Nikes). Beijing’s authority is likely to erode as provincial governments, disillusioned about the center’s ability to look after their needs, decide to take matters into their own hands.
Luckily, China still has some time to set things straight. Beijing needs to increase its spending on health and education in the long-neglected hinterland and border regions. Authorities need to abolish onerous and illegal taxes. In the rust belt, the top priorities are to uproot incipient local mafia states and speed up economic reforms.
All this requires money, of course. At present, China has no mechanisms to force coastal regions to increase their contributions to Beijing so the money can be spent on developing other areas. The regime must therefore give more political voice to the noncoastal provinces. For a start, the new Politburo that will be named this November should include some party bosses from these regions. Seats on the Standing Committee of the National People’s Congress, China’s Parliament, should be reapportioned to accommodate regional interests.
The long-term solution lies in constitutional reforms that would turn China into a federalist state. But this kind of political engineering carries its own risks. (The last authoritarian regime to try something similar was the Soviet Union.) Chinese leaders may want to consider an unorthodox “bottom-up, top-down and cut-out-the-middle” approach. Give citizens a sense of empowerment with true local elections. Use a national vote to cement the legitimacy of the top leadership. Only then worry about instituting provincial elections. This will prevent the rise of Yeltsin-like regional strongmen with their own popular legitimacy.
Of course, such a plan would likely doom the Communist Party, at least in its current form. But if its 2,200 years of history have taught China anything, it’s that emperors cannot knit this huge, disparate nation together. It’s time to give the Chinese people a chance.
