China fears its economic reforms are pushing citizens too far, too fast

September 04, 1994|By Ian Johnson | Ian Johnson,Beijing Bureau of The Sun

BEIJING -- Ask old Qiu Liuren at the market how it's going and you get an unexpected earful.

"We ordinary people can hardly keep up. Inflation's eating us up at both ends. The customers are cutting back, and we're not able to buy as much either. It's tough right now," said the 62-year-old peanut vendor.

Those are words to make a good mandarin cringe. A year since the government clamped economic controls on China's runaway economy, inflation is almost as strong as ever. Add to that gripes about corruption and rising unemployment, and you begin to understand why the government fears that citizens are being pushed too far, too fast by its program of economic reforms.

In response, Beijing's leaders have been backing off their ambitious plans to revamp China's economy. Gone are the heady days of 1992 and 1993, when even the most hardened socialist felt obliged to support speedy reforms. Now, hard-liners are freely spouting off against reform, peppering their speeches with words like "stability" and "caution."

"It's not the best of times to be a reformer or to support more opening up," said an independent Chinese economist who spoke on condition of anonymity. "The reformers aren't dead, but they're not setting the agenda right now."

Most observers believe that some reforms and an opening to the outside world will continue as long as the country's senior leader, 90-year-old Deng Xiaoping, lives. But with Mr. Deng effectively on his deathbed, China -- and its foreign investors from the United States and other Western countries -- may be getting a taste of the sort of retrenchment that could follow his death.

Recently, for example, top leaders have been holding conferences that blast capitalism.

"Blind worship of Western economics cannot solve China's problems," was how the official People's Daily newspaper summarized one conference.

Reforms had been high on the agenda since Mr. Deng toured southern China in 1992, helping to unleash a tremendous economic boom. China's economy, for example, grew 13 percent last year, helping to attract scores of Western investors -- most recently a group of 24 business leaders who toured China last week with Commerce Secretary Ronald H. Brown. But as in previous years, China's alluring economic growth has been accompanied by highly unpopular side effects, especially inflation. Last year, retail prices rose 24 percent for urban residents.

In a bid to prevent another in China's recent cycles of boom-and-bust economic growth, China's reformers vowed a year ago to "fine-tune" reforms. Inflation would be tamed and other reforms pushed forward, they promised, to give China more lasting stability.

The fine-tuning did dampen growth slightly, with the economy projected to grow by 11 percent this year, but inflation has remained stubbornly high. The result: Reformers have been at least temporarily discredited and old-guard Communists emboldened to speak out.

Late last month, for example, China's hard-line premier, Li Peng, said further price reforms -- which would help make China's economy more market-oriented -- would be put off for at least the rest of the year.

Then, Mr. Li gave a stern warning to his Cabinet colleagues that social unrest could get out of hand if inflation, corruption and unemploymentwere not brought under control.

"Prices have risen too fast and the inflationary pressure is still too big. The living standards of several hundred million peasants will have a direct bearing on . . . social stability," Mr. Li said in a speech carried in all of China's major newspapers last week.

The speech set off alarms among Chinese reformers, many of whom had thought that economic policy was being set by pragmatic technocrats, rather than the dour Mr. Li, best known for his prominent role in putting down the Tiananmen protests.

"When Li Peng starts talking about controlling social unrest and starts dabbling in economic matters, then you know the reformers are having trouble," said a Chinese newspaper editor.

But while many reformers feel threatened by the surge in anti-reformist sentiments -- which seems to have also been accompanied by a more repressive attitude toward political dissent -- many ordinary Chinese welcome a more activist, heavy-handed government.

That sentiment is easy to understand.

Beijing and dozens of other big cities across China have been plagued by problems that make many Chinese feel that the government is losing its grip. Peasants from the countryside, many of them traveling thousands of miles, flock into the cities every day.

They are part of about 130 million "surplus laborers" who are not needed on China's farms. Coupled with a decrease in hiring by state-run industries, China, as Premier Li put it, is facing a "social order that in some areas is not good."

But maybe the biggest worry comes from the country's high rate of inflation.

The State Statistical Bureau recently revealed that food prices in July were 31.9 percent higher than a year earlier. Most troubling for a government that has made affordable basic foodstuffs a top priority, grain prices jumped 57.8 percent, forcing many low-income Chinese to cut back on food they eat, according to a recent survey of low-income families.

For a migrant laborer like Liu Weihong, the effect is hurting him and his family in far away Sichuan province. Mr. Liu makes an average of $25 a month hauling beams at an office building construction site in Beijing but has found that price increases mean he's spending more of his pay on basic survival.

"Everything is up. It's hard to afford good food, but what's worse is that I have so little to send home to my family. That's what hurts," he said.

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