Hoisting the Red Flag to counter the Red Flag

By Willy Wo-Lap Lam
CNN Senior China Analyst

HONG KONG, China -- Conservatives in China are taking advantage of the leadership's nervousness about instability and foreign intervention to stage a comeback.

The voices of anti-reformist factions are tipped to grow louder as Beijing's relationship with the administration of U.S. President George W. Bush continues to sour.

In the crucial area of the economy, so-called leftists -- or opponents of market forces and integration with Western norms -- are having a field day even as reformers, such as Premier Zhu Rongji, seem to be eclipsed.

The conservatives are training their firepower on Zhu-related reforms, such as the quasi-privatization of state-owned enterprises (SOEs); gufenhua, or turning SOEs into shareholding companies; and the globalization of the economy.

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Take, for example, the bold statement by Zhu and President Jiang Zemin last year that SOEs should withdraw from certain economic fields for the good of the country. A number of Zhu aides have called on state firms to beat a retreat, particularly from competitive industrial sectors.

In a now-famous paper published late last year, a team of researchers from the State Statistical Bureau, led by senior economist Qiu Xiaohua, urged SOEs to make a strategic retreat from 146 out of 196 industrial sectors.

Qiu's views were seconded by well-known liberal economists and commentators, such as Che Hongqing and Tong Jilu.

"Theory of retreat"

Since early this year, however, conservatives have blasted the "theory of retreat" as naked, capitalist-style privatization -- a betrayal of the principles of socialism that is the foundation of the People's Republic of China.

Writing in a recent issue of the journal Huaxia Forum, ideologue Ding Bing contended that instead of curtailing SOEs, Beijing should "consolidate and strengthen the state-held economy, which is the foundation and guiding force of socialism."

Wei Zhen, a factory worker turned theorist, is more explicit. He wrote in the just-published issue of Mainstream magazine that privatization would "lead to the death of the party and the nation."

"If China goes about privatization, the whole country will be plunged into chaos," Wei warned. "Once China is in chaos, the imperialists will intervene. The result will be disintegration just like the Soviet Union."

Opponents to globalization, including China's accession to the World Trade Organization (WTO), have cited President Bush's alleged "anti-China containment policy" to argue that "hostile foreign forces" might take advantage of the open-door policy to infiltrate and subvert the socialist system.

In a piece on the People's Daily web site, respected scholar Pang Zhongying warned of the perils of China losing its economic sovereignty.

"It is impossible for China to join the international [economic] system wholly according to Western demands," he argued. "Nor is it possible for Western countries to thrust China into the global structure according to their intentions."

Zhu (L), and Jiang -- on the defensive?

There are signs that Zhu and fellow reformers are on the defensive. For example, Beijing recently asked the official media and journals to avoid making any more reference to SOEs having to retreat from certain economic sectors.

And the Jiang leadership seems to have lost the zest for early WTO accession that it exhibited in the heady days of 1999.

Welfare protection

Part of the reason underlying the surge of conservatism is that leftists have skillfully linked their anti-reformist agenda to the protection of the welfare of workers.

Their favorite argument is that market-oriented experiments, including gufenhua, will lead to massive layoffs. And laborers are losing not only their traditional status as "masters of work units" but also their rice bowl.

In an article in Mainstream magazine, theorist Jiang Longhai claimed that the gufenhua policy would result in "the theft of public property" -- once owned by workers -- and the wholesale sell-out of workers' interests.

Equally important, leftists have used the pretext of upholding labor rights to cast subtle aspersions on Jiang's "theory of the three representations" -- that the Chinese Communist Party (CCP) must represent the most advanced production forces, the most advanced culture, and the comprehensive interests of the people.

As a Beijing based think-tank member pointed out, Jiang wanted the party to absorb more elements including intellectuals, professionals, hi-tech personnel, and even private entrepreneurs, who are seen as embodiments of "advanced production forces and culture" in the new century.

"Jiang has floated the 'three representations' theory as a trial balloon to see if Chinese are ready to jettison Lenin's -- and Mao's -- obsolete idea of the Communist party being the party of workers, the putative 'vanguard of the proletariat'," he said.

As Liu Ji, a veteran social scientist and Jiang adviser, puts it: the CCP must absorb more intellectuals and "become the representative of the intellectual class so as to fulfil its historical mission in the 21st century."

Liu said it was an inevitable trend that in economically developed countries, the size and importance of the blue-collar class would diminish even as intellectuals, managers and professionals became the mainstay of the economy.

Conservatives, however, are up in arms over what they regard as the degradation and marginalization of the proletariat.

According to Han Siya, a cadre at the All China Federation of Trade Unions, workers are the "most enlightened class" in society, the "masters of heaven and earth."

Exploiters and the exploited

Likewise, Beijing-based theorist Yang Xinjun was adamant that the CCP must remain exclusively the party of the vanguard of the proletariat.

"Workers represent the most advanced production forces," he pointed out, adding the working class must continue to be the foundation of the party.

Despite the fact that non-state enterprises already account for about one third of gross domestic product, leftists are resolutely opposed to the CCP recruiting "red capitalists."

Ideologue Lu Fashun said it was against the very nature of the CCP to admit private entrepreneurs as members because their relationship with workers was that "between exploiters and the exploited."

Referring to the fact that sizeable numbes of "red bosses" have already got into the CCP, Lu said they "must be thrown out to uphold the purity of the party."

Again, there are disturbing signs that the conservatives are making headway.

The May Day editorial of the People's Daily last week saluted workers as always being "at the forefront of the times."

"The Chinese working class is representative of advanced social production forces," the Daily said. "It is the basic force for pushing forward economic development … and socialist modernization."

Sources close to the Jiang camp said the president had shelved the idea of changing the charter of the CCP to allow owners of private firms to be inducted into the party.

The president's critics say it is true Jiang has continued to support economic reform; witness his speech at the Fortune Forum offering unprecedented opportunities to foreign businessmen particularly after China's WTO accession.

The Jiang detractors maintain, however, he is partly to blame for the resuscitation of leftist and other anti-reformist forces.

Since the spring, the president has revived quasi-Maoist themes in his speeches in an apparent attempt to rein in free-thinking intellectuals and to combat infiltration by "neo-imperialist forces."

For example, he said early last month that the party must strike a balance between reform policies on the one hand and the Four Cardinal Principles - a reference to the socialist road and one party dictatorship - on the other.

However, strict adherence to the "socialist road" would mean an end to experiments with market-oriented reforms, including boosting the economic and political status of private entrepreneurs.

Pursuing a tactic called "hoisting the Red Flag to counter the Red Flag," leftists such as ideologue Ding Bing are using Jiang's own conservative sayings to condemn the president's more liberal measures such as quasi-privatization.

When condemning the "theory of retreat," Ding has cited Jiang aphorisms such as "reform is nothing more than the self-perfection and development of the socialist system" and "we will lose the fruit of the endeavors of the party and people if we do not uphold the socialist direction in reform."

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