Date: Wed, 10 Nov 1993 22:35:54 PST Reply-To: ccf-editor@ifcss.org Sender: China-Net From: ccf-editor@ifcss.org Subject: CCF #9314, Nov 11, 1993: "Is Corruption Not Necessarily a Bad Thing" To: Multiple recipients of list CHINA-NT ==+==+==+== C h i n e s e C o m m u n i t y F o r u m ==+==+==+=== Thursday, November 11, 1993 (Issue No. 9314) +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= Chinese Community Forum (CCF) is a journal published on China-Net. CCF is dedicated to the discussion and debate on the issues related to the Chinese community. The opinions expressed here do not necessarily represent the views of the Editorial Board of CCF. Contributions to the discussions and suggestions of new topics are very much appreciated. +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= Table of Contents Author | # of Lines ============================================================================ 1. Theme of the Issue: Is Corruption Not Necessarily a Bad Thing a. Corruption Is Not Necessarily a Bad Thing. 22 b. Comments on 1a......................................Ignatius Y. Ding 24 c. Comments on 1a............................... 14 d. Reform, Official Profiteering, and Chinese Intellectuals..Xiaowen Li 41 2. Opinions and Observations a. "Leaping into the Sea," the Media, and False Consciousness...Bai Yan 46 b. Comment on China's Economy...............................New Thinker 50 3. China Watch a. Few Signs of a Free-Market Economy in China, Says Friedman............53 b. China--Can the Centre Hold...................The Economist, Nov-6-93 75 ===========***==========***==========**==========***==========***=========== 1. Theme of the Issue: Is Corruption Not Necessarily a Bad Thing ---------------------------------------------------------------------------- 1a. Corruption Is Not Necessarily a Bad Thing. 22 ---------------------------------------------------------------------------- In the conference Hong Kong and Greater China, distinguished professor Gregory Chow ( secretary of American Economic Association and economic advicer to former general secretary of CCP Zhao Ziyang ) argued that corruption is not necessarily a bad thing. His point is that corruption might improve economic efficiency and lead capital flow into most profitable industry. "In Mao's time, no corruption, no economic progress. In this market economy time, there is corruption, there is progress, more corruption, more progress." He further pointed out that the existence of corruption is because of economic incentive. He claimed that the party officials and party member are "able people" who deserve more economic gain, implying corruption might be justified. He believes that recent CCP anti-corruption movement will not provide any solution to corruption problem, as long as the economic incentive is so tempting. The delivery of this message is to hope that interested people can discuss this subject. Economics emphasizes efficiency, sociology does equity, politics does order, law does justice. I expect that different points of views can be seen. (From: 27-Oct-93) ---------------------------------------------------------------------------- 1b. Comments on 1a......................................Ignatius Y. Ding 24 ---------------------------------------------------------------------------- This is the most outrageous claim that I have ever heard. Murdering people could be part of population control, prostitution, drug trafficking, and extortion were all part of free market economy if one could accept this "distinguished" professor's justification for the rampant corruption of the ones in power at all levels of the Chinese government. His garbage talk only again proved that a communist is a communist. Regardless he calls himself a conservative or a reformist, he is always RIGHT even in the case that he commits a crime. He would tell you that it was done in the best interest of the "PEOPLE"!! One wonders who are the "PEOPLE" that he's talking about? Couldn't be the citizens on the street for sure. Must be the one who are ripping off the nation and the citizenry and stay in power by suppressing dissident voices. It is not market economy that he was talking about. It was the runaway flee-market trades that have taken over the rein of the command economy in China. Compare the economic situation in China between 1945 and 1949 and what is happening today, you would see many parallels; e.g. six to seven points between the inflation rate and GNP growth, the widening gulf between the residents in the urban areas and those in the rural areas. The explicit and hidden fees, taxes, and the "gifts" solicited by the corrupted officials take away the hard earned food and essentials from the hundreds of millions of poor people. How could anyone possibly say that "corruption is necessarily a bad thing"? (From: Ignatius Y. Ding 3-Nov-93) ---------------------------------------------------------------------------- 1c. Comments on 1a............................... 14 ---------------------------------------------------------------------------- I just would like to take a few moment to make a little comment on this issue, from a very ordinarily CSSA point of view. I was amazed to know that there should have this kind of argument as corruption is not necessarily a bad thing. Everybodies know that before communist China, Kuomingtang is a corrupted government, and for all its "efficient" corruption, the regime was brought down by communist party, or more precisely, by the general public who were unsatisfied and disapproved this kind of government. A more recent example maybe the Philippines, the country used to do very well economically in the 1960. But the corrupted government made this country a chaos, and soon the economic growth is stagnant. Philippines since became totally disorganized country, to the point that young people tried learn from China to have communist revolution. For a big country like China, it really can not afford to have this kind of situation. Therefore, harsh punishment is extremely necessary. (From: 2-NOV-93) ---------------------------------------------------------------------------- 1d. Reform, Official Profiteering, and Chinese Intellectuals..Xiaowen Li 41 ---------------------------------------------------------------------------- The question whether corruption is good for China's economy development is an ill-posed one. So no wonder it generated some outraged responses. However, the author did have some valid points. Let's have a look at our history. 100 years ago, there was the first move to learn from western economy/technology. We all know it failed. One of the reasons for its failure is that the movement did not gain support from intellectuals. Many righteous, clean-hands intellectuals were outraged by the official profiteering going along with the economy construction. Finally, these intellectuals pushed the economy-reformer aside and gained mainstream. They believed only their political reform could save China. They lasted about 100 days, then China fell into 50 years of chaos. Economy-reform failed, but at least it left some railroads, telegram lines, factories for China. How could it achieve this (no matter how little)? Because they push the economy ahead with those privileged hardliners gaining something from official profiteering. Political reformers failed so quickly since they made the old privileged group net loss without any gains, hence direct confrontation occurred. People may note similar reform/profiteering pattern before 1989, and now. No question official profiteering is bad. But assuming we agree that reform is what we need, then my question is: Can we reform the old structure without old privileged group gaining anything? If the answer is No, the next question will be: Should we tolerate some degree of official profiteering? If the question is Yes, the next question will be: How to make such inevitable privilege-to-money transition under control, so that those guys won't keep privilege forever while gaining big money? Some young friends think it is very simple, one said: "multi-party system", another said: "free news media." I don't think it is that easy. We tried both -- parliament and news media could be as corrupted as government. Reform is a kind of peaceful transition from old system to better new system. In such a transition period, some tolerance is absolutely needed from Chinese intellectuals. (From: Xiaowen Li Nov-5-93) ===========***==========***==========**==========***==========***=========== 2. Opinions and Observations ---------------------------------------------------------------------------- 2a. "Leaping into the Sea," the Media, and False Consciousness...Bai Yan 46 ---------------------------------------------------------------------------- If "to get rich is glorious," what about those who try but fail in the attempt? When China's media focused on the new rich and painted a rosy picture for many aspiring to be rich, it apparently neglected its duty of imbuing a public awareness of possible setbacks and misery after failure. The bottom line of free-market mechanism is economic polarization, anyway. Lured by dreams and ambitions, a great deal of people leaped into the sea. While some of them have become successful, some got drown or even sank to the bottom. Though the media didn't explicitly attribute their misfortune to their inabilities, its undue exhortation of personal qualities such as cleverness, decisiveness, vision, talent, and so on to the new millionaires all pointed to this old saying, "If you are clever, why are you not rich?" Certainly, one has to realize that in free-market economy free competition doesn't guarantee equal result. Reward only goes to those who not only take risk but work hard and know how to manage. But, once this is stressed to the extreme, the other side of story is kept out of view. It is evident that the unequal distribution of resources, such as capital, information, political connection, bestowed advantages or disadvantages on the individuals who jumped into the water. Those who lack such resources cannot obtain a fair chance to compete even when given equal opportunity. As known in China's case, political power (partisan, military, and bureaucratic) is used to beget economic power. A common folk may need to be clever to make money in business, but he first needs political networking to make sure he is able to keep afloat before he invests capital. This refers to those who want seriously to survive long enough in the ocean, rather than only to get wet a little bit. Actually this seems sufficiently clear to everybody, but the "losers" are still hard-pressed on themselves and blame themselves for lack of certain "traits" for success. To some extent it cannot be denied, the point, however, is that the causes of failures these people suffer lie more often than not outside themselves. There is not much they personally can do about them. One may ask why the media doesn't help the would-be entrepreneurs and free- lancers to be fully aware of this false consciousness of self-blame. Well, if that the media failed to issue proper warning against "leaping into the sea" is out of its negligence, then the media simple lacks political will to share insights with the rest of society. To the opposite, the media knows it very well that occasional exposure of official corruption can win heart of the masses, but any reporting about systematic uneven distribution of resources would set off long-repressed resentments from the poor. Considering this, the media would rather let the people live with the false consciousness of blaming for personal defects than enlightening them by revealing what is behind. (From: Bai Yan Oct-30-93) ---------------------------------------------------------------------------- 2b. Comment on China's Economy...............................New Thinker 50 ---------------------------------------------------------------------------- Under the paramount leader of Deng Xiao-Ping, the transform of china economy to market economy seems to be on the right track. However, without the increase of private economy and open recognization of private ownership, the market transform can never be complete. No state-running enterprises will work. You just look around the world, no matter socialist or capitalist country, the state-running business is always inefficient comparing to the private companies. Just taking the example of US post-office, the price is always increasing without improvement of service. I do not say selling off all the state running business right now and it will solve everything. However, the direction should be gradually increasing the private economy proportion and decreasing the proportion of the state-running business. This is the key to the success of china economy. Everybody should say this again and again until China leaders listen. At least some of them will if they want to be successful for their own reasons. Everybody wants the democracy. If the democracy came overnight like Russia, then what. The revival of the old style economy still needs a huge amount of painful work. If the china leaders are smart enough, they will do the market economy transformation and the privatization now and the democracy will gradually phase in, of course they may not want that. But this way they will at least stay in power for a few more years and will also save Chinese people a lot of pain later. Taiwan is a an example. The flourish of private economy gradually promotes the democracy of the whole society although until now they are in much better shape and still have a long way to go both for economy and democracy. Therefore, before the democracy comes, it needs much much more hard work of Chinese leaders, Chinese people both within and without, to encourage the development of the private economy of China. Oversea Chinese have parents and brothers and sisters in China, we will do our best to aid China and also help ourselves. It is our duty and our privilege. Then question rises that whether Chinese leaders will listen. Mr. Deng has successfully defeated the conservatives' attempts to pull China to back to old style of socialist economy, the death trap. Mr. Deng is a smart politician, he knows when to compromise and when to attack. But he will be gone soon. Then who will lead. Jiang Zhe-Ming has no reform ideas and that is why Deng chose Zhu Rong-Ji. Jiang should be gone soon, of course politically. Mr. Zhu may or may not be able to stay. But he seems lacking the strong political backing of other people in the power circle of China. Who will be next Deng xiao-ping. Nobody knows. Hopefully, somebody as powerful as he is and as committed to open door policy and market economy. If the next guy can successfully achieve the transform the China economy to private owned market economy, in the next twenty or thirty years, China will be a big force in world economy. Cheap labor is the major advantage China has. The key to success is promoting private market economy. Let everybody do his best to try to be successful. You will be surprised what ordinary people can do. If the next leader can do that, he will be at least as great as Deng Xiao-Ping, probably much greater. I think Deng Xiao-Ping is much greater than Mao Zhe-Dong, maybe less smart as a politician. Maybe next time I would like to share my thoughts about Deng Xiao-Ping, his success and failure. (From: "New Thinker" 29-Oct-93) ===========***==========***==========**==========***==========***=========== 3. China Watch ---------------------------------------------------------------------------- 3a. Few Signs of a Free-Market Economy in China, Says Friedman............53 ---------------------------------------------------------------------------- HONGKONG (AFP) -- Monetarist guru Milton Friedman, fresh from a visit to China, said he saw few signs that the communist regime was easing its iron grip on the economy, despite its claims of embracing bold reforms. Flying in the face of recent upbeat analyses of China's economy, the 1976 Nobel economics laureate said that real change could come about only if the communist regime exited the marketplace altogether. "They have the words, but do they know the tune? It's not clear they do," Dr Friedman said after his week-long trip that took him to Beijing, Shanghai, and Sichuan province. "If you're going to move to a free-market system, you have to move to a free-market system. And the answer to the question of how to go about getting a free-market system is very straightforward --- you get the government out of the way and privatise, privatise, privatise." Yet it remained "very hard to see" any moves towards free ownership of the mammoth state-run corporations which still dominated China's economy, said the economist, who last visited China in September 1988. His views contrasted sharply with those made a few weeks ago by Wall Street analysis Barton Biggs, whose "maximum bullish" rating of China unleashed a wave of American funds into the Hongkong stock market. Dr Friedman, whose ideas guided the economic policies of Britain, the United States and other Western economies in the 80s, said that he found the power of the Chinese bureaucrats as strong as ever, and cited business cards as evidence. "The Hongkong businessmen have in the left-hand corner the name of one company. Chinese name cards have at least six lines of this committee on this, that committee on that, that body here, vice-chairman of that," he said. "What that reflects is an extremely large administrative apparatus, and there certainly is no noticeable evidence that there are any fewer bureaucrats than five years ago." He also faulted China for routinely using the "blunt instrument" of austerity programmes to ease demand for credit and cool down recurring periods of economic overheating. He suggested as an alternative a strong central bank that would be responsible for money supply, leaving commercial banks to set interest rates freely. China's economy is expected to grow by 13 per cent this year, after Vice- Premier Zhu Rongji imposed a 16-point austerity mandate in July. Dr Friedman did not meet Mr Zhu on his trip, but he met President and Communist Party general secretary Jiang Zemin. Details of their talks were not carried in the official Chinese press. (Forwarded by CND; Source: The Straits Times (Singapore), Nov-1-93) ---------------------------------------------------------------------------- 3b. China--Can the Centre Hold...................The Economist, Nov-6-93 75 ---------------------------------------------------------------------------- MANY of China's provinces are rich. The central government is not, and wants the tax system to be changed in its favour. Should the government fail in its tug of war with the provinces, not only will it remain poor but it will also become increasingly irrelevant as the day approaches when the country's powerful patriarch, Deng Xiaoping, dies. A meeting of the Communist Party Central Committee has been called to find a way of bringing more tax revenues to Beijing. It may take place this month, but it has been delayed before and may be delayed again. Once finalised, the new tax system is supposed to take effect from January 1st. But in 1990, when the prime minister, Li Peng, tried something similar, the provinces screamed foul so loudly that the central government backed off. As a result, at this year's parliamentary session in March the finance minister, Liu Zhongli, said the government was so short of cash that some employees had gone unpaid. Infrastructure projects, among them the massive Three Gorges dam on the Yangtze river, are on hold until they can be paid for. But there is more at stake than cash. In September a report published by China's Academy of Social Sciences described the country's tax system as "severely flawed", and sounded the alarm. ''Until now," it said, "policy makers have not realised the danger of the central government's rapid decline of power, or they have and have come up with no effective way to halt the trend." The academy's report raised the spectre of a l920s-style descent into fiefs, predicting that if "a strongman" (for which read Mr. Deng) died, then China might "move from economic collapse to political break-up, ending with its disintegration." The London-based International Institute for Strategic Studies is soon to publish a report which also discusses the possibility that China may disintegrate as a result of the struggle between the centre and the provinces. Even the World Bank has bucked the popular view that decentralisation is always a good thing, and has pushed hard for Beijing to regain power in some key areas. According to the Bank, before Mr. Deng brought in reforms some 14 years ago, Beijing's revenue amounted to 34% of GDP. As economic power has been decentralised, that figure has shrunk to 19%. By implementing a range of measures, from a consumption tax to a unified corporate tax rate, the tax system now on the drawing board, and due to be discussed by the party, aims to double Beijing's share of revenue. At present, provinces haggle annually with Beijing and come up with a set amount of tax to be paid to the government. For the prosperous provinces, such as Guangdong and Zhejiang, this is a fine arrangement, for any extra money--and in Guangdong there is always extra money--can be kept. Meanwhile, poorer areas of the country are turning over 55% of the profits of large state-run industries and keeping only tax from the more meagre profits of the smaller enterprises that come under local control. In theory, any tax overhaul should not only increase Beijing's revenue, but also adjust the system so that poorer provinces do not fall further behind as prosperous provinces get ever richer. Quite how this adjustment will take place is not yet clear. It may be that the central government will allow the poorer provinces to keep taxes from natural resources--taxes that at present flow to Beijing. Or it may be that some of the extra taxes Beijing collects from rich provinces are reallocated to poor provinces. But the details are less important than the question of whether central government has sufficient courage to stand up to the provinces. Already there are some signs that the austerity measures imposed by the deputy prime minister and central bank chief, Zhu Rongji, just months ago are not being strictly obeyed. China's economy is expected to grow by nearly 13% this year, after 12.8% growth last year. That suggests that the boom provinces have not yet come under control. The centre may be wobbling. Last month, the party chief, Jiang Zemin, travelled south to try to placate provincial officials worried by the attempted squeeze. But the man whose resolve must not weaken, and indeed whose career rests on the success of China's fiscal renewal, is Mr. Zhu. He has already threatened that heads will roll if officials do not comply with measures he has drawn up to put China's economy in order. His may be among them. (Forwarded by: YANG Changqing ) (Source: The Economist, Nov-6-93) +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=++ + Executive Editor: Shusheng Luan Executive Moderator: Tong Shen + +--------------------------------------------------------------------------+ + For subscription: mail "SUB CHINA-NT Your-First-Name Your-Last-Name" + + to LISTSERV@UGA (bitnet) or listserv@uga.cc.uga.edu (internet) + + For back issues of CCF: + + anonymous ftp to cnd.org[132.249.229.100]:pub/community/CCF + + For contribution and inquiry: mail to ccf-editor@ifcss.org + +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=++