12 JUNE 2004, Page 26

Tiananmen was a victory for capitalism

Richard Spencer on the true meaning of the massacre that horrified the world 15 years ago


Tell me,' a Chinese friend asked me the other day. 'Why are you so interested in poor people?' Urban sophisticate that she is, she couldn't quite figure out the point of the story I was writing, about a poverty-stricken village in the middle of nowhere. I wasn't entirely sure myself, actually, but rather than go into the difference between Telegraph and Guardian readers I decided to try a bit of home-spun egalitarianism. 'Well, put it this way. You have a smart flat, a smart car, you go to smart restaurants, just like folk like you in Britain. But then there are your fellow Chinese who have nothing, not even running water. And you're a communist country too, right? That's interesting, isn't it?' The look on her face was halfway between bafflement and scorn. -My goodness,' she said politely, and left it at that.

China is, as most people are aware by now, a funny sort of communist country. Journalists are often invited to press conferences with top leaders like Wen Jiabao, the friendly Prime Minister who visited Britain last month, and lectured about the virtues of stability and modest living. Chinese newspapers are less reserved, blasting away at American hegemonism, and extolling the virtues of Mao Tse-tung Thought, Deng Xiaoping Theory, and Marxism with Chinese characteristics.

Capitalism it's got big, but the one thing you rarely see discussed is just how rightwing China is. Not just right-wing for a communist country, with an injection of American investment here and there, but full of gut-instinct right-wingery; rightwingery of the sort that regards China's newly enormous disparity of wealth as perhaps natural, at worst a necessary evil; right-wingery that regards authoritarian, paternalistic control, particularly of the poor, as a duty of government; rightwingery of the sort that elsewhere has student radicals marching in the street crying fascist.

China had its own student radicals crying fascist once, of course. That was 15 years ago to the day as I write this, but when the tanks rolled into Tiananmen Square we all supposed the nation was being saved for socialism, and when the tanks didn't roll a few months later in Eastern Europe the contrast appeared to prove the point. Looking back on that time, however, it's pretty fair to say that we all got things wrong. Most people thought the Tiananmen massacre just delayed the inevitable, that shortly the regime would fall, democracy would arrive, and everyone would agree what a big mistake sending in the troops had been. Peasants would discover the voting booth, as they did in South Africa; apparatchiks would mingle with oil barons, as in Russia; it would all be very exciting and end-of-historyish. But in fact the opposite turned out to be true: not only is the regime still there, but it sees the Tiananmen Square crackdown as a monumental success story for China. It's just that it wasn't making the country safe for socialism, it was making it safe for capitalism.

When I say success, that might seem callous. But look at it from the point of view of Deng Xiaoping, the paramount leader. He thought China was about to fall into a second Cultural Revolution, only worse. He painted a picture of civil war, of refugees flooding China's prosperous Asian neighbours. But then he added, to those old revolutionary friends of his who held the country in their hands, 'The momentum of reform cannot be stopped. We must insist on this point at all times.' Opening and reform, the buzz words of the Deng era, were the key to it all. And who can deny they have happened? In the years since, the proportion of the economy owned by the state or collectives has plunged and the economy has grown by 9 per cent a year. Deng met his target of quadrupling GDP in two decades. Underdeveloped countries which did throw off the shackles of dictatorship, like the Philippines and Indonesia, now look on with awe. Hong Kong is full of educated, free-thinking middle-class people from the Philippines; they work as maids, because there are no jobs at home.

Some will rightly point out that if China is capitalist it's not capitalist in the sense that Wall Street bankers understand. Half the economy — over half, some say, depending on how you define and count — is still in the hands of the government and its stateowned enterprises. When you see all these big Chinese firms listing on the Hong Kong and New York stock exchanges, they are usually pretty peculiar entities — artificially created subsidiaries of big state businesses which still have the controlling share. The listings are capital-raising exercises, rather than privatisation as we know it. Some go so far as to laud the 'Beijing consensus' as a Third Way alternative to Washington/IMF extremism.

Nevertheless, privatisation is happening, and even these listings couldn't happen if many state firms were not doing what privatised firms have to do to survive — merging, modernising, laying off workers.

Over the last half decade, anywhere between 20 and 40 million workers have been made redundant by the old state sector. You can see now more clearly where Tiananmen Square comes in. In Britain, 30,000 miners caused headaches. In Russia, the country China itself holds up for horrified comparison, all those new poor did outrageous things like, when they got the chance, voting for a return to the old communist ways. China couldn't have that.

And those numbers are small compared with the estimated 300 million rural peasants who, to make China's economy and agriculture efficient, will one day soon have to leave the land and come and find work in the cities. China is the World Trade Organisation now, too, and the thought of 300 million Chinese peasants discovering that their rice is more expensive than American rice and becoming anti-globalisation protesters is an alarming one. They might come to the city to riot, not work. Luckily, China still has a hukou, or residency permit system, akin to the old apartheid pass system, enabling unemployed peasants to be turfed back to where they came from before they cause trouble.

Probably the most visible success story in China in the last decade has been the cash flowing in from the multinationals and Taiwanese and Hong Kong businessmen. Foreign direct investment in China is now the highest in the world: a vote of confidence in its economic ordering if ever there was one. Opening and reform should be the Chinese translation of globalisation. Foreign money builds the factories where the world's shoes, underwear and wristwatches are made. It builds factories to make cars — not just runabouts but BMWs and Audis — for the country's middle classes. And we can all see why. Not only is labour cheap — which is true across much of the world, after all — but it is well-ordered and, above all, not organised. Free trade unions are banned. There is an official, party-run union, but it is not known for its activism. One of the most amusing spats this year was between the state media and Wal-Mart which, rightly seeing China as the new Midwest, has started opening stores here. Wal-Mart does not recognise trade unions, and this policy was applied to China. The media professed outrage that the workers' voice was being silenced, which goes to show that just as leftwing unions have ideological disputes, so do their opponents. The general assumption of a politician like Tony Blair, who wants to see more and more British investment, is that it is a win-win process — good for Western business, good for China. There is still a feeling that although Tiananmen Square put things back for a bit, all that economic liberalisation must be followed by political freedom somewhere down the line, and that constructive engagement, as it used to be known when South Africa was the issue, will help it along.

If so, there is not much sign of it at the moment: newspaper editors are arrested and dissidents who might say something controversial during the Tiananmen anniversary are put under house arrest. An interesting series of papers by a Harvard University academic had a different interpretation of foreign investment in China: for the most part, it was not just another aspect of a burgeoning local private economy, but a replacement for it. Private entrepreneurs, though theoretically protected in China, get very little access to financing, as bank loans are directed to state firms. The cash, instead, came from foreign firms.

The political advantage for the government is this: the economy is left in the hands of two sets of people with a vested interest in the status quo — state firms run by party appointees, and foreigners, who know they have to keep on the good side of party officials to extricate their cash as profits. The other thing the party has realised in the last 15 years, apart from the fact that ambitious young graduates can soon be bought off with company cars, is that people still have to feel they believe in something. Hence the fuss about the Diaoyutai islands. The what? Well, they are small, uninhabited and entirely unimportant. Nevertheless, the fact that they are owned by the Japanese when the Chinese think they belong to them is enough for regular protests at the Japanese embassy and symbolic raiding parties on the islands themselves, which are a couple of hundred miles away from the Chinese coast. Nationalism is the new ideology of state. Critics of government policy are no longer revisionists or counter-revolutionaries, words which have disappeared from the official lexicon. Instead, when a Hong Kong democrat is kicking up a fuss about elections, some official will turn purple, splutter and in full Colonel Blimp mode accuse him of being a traitor. A young punk rocker was asked by a (foreign) interviewer what made him really angry. 'Japanese occupation of the Diaoyutais,' he replied.

Sometimes this nationalism is turned against the Americans, but mostly the Chinese love the Americans and the American way. While Chinese leaders make up to Europe in the eventual hope of a 'multipolar world', there is no doubt that they prefer George Bush to Romano Prodi when it comes to diplomatic horse-trading. And if you ask people what developmental model China is following, few mention Europe, with its long tradition of monarchs and autarchs giving way to modern economies. China is a Wild West, bringing railways, industry (and prostitution) to its inner vastness as it seeks to subdue those rebellious and primitive natives: Tibetans and Muslims, for example.

One senior diplomat in Beijing expresses his support of his government's engagement with China, and regards the EU arms embargo imposed after Tiananmen as a slightly meaningless formality — as, apparently. does Mr Blair, who is said to want it lifted. In private, should you ask how open China will be in 20 years' time, the diplomat ventures the suggestion that it will be just like now, but richer and more powerful. That is a right-wing prospect, but not necessarily a pleasant one. It is hard to imagine businesses doing anything other than investing in China, but I do wonder how we will all feel when it happens.

Last Christmas was another significant anniversary, of Mao Tse-tung's 110th birthday. The Daily Telegraph interviewed a teenage boy queuing up outside the Great Helmsman's mausoleum on Tiananmen Square. He was a Young Pioneer, and about to be inducted into the Communist Youth League. What was Mao's relevance to him today? 'We learn from Mao that you can always achieve your goal if you struggle and work hard enough,' he said, in all seriousness. And what was his goal? 'To go to America,' he said.

He probably will, and if he comes back it will be to work for Ford or IBM. Fifteen years ago, the tanks were rolling where he stood, and he is a child of that day.

Richard Spencer is Beijing correspondent of the Daily Telegraph.