Home » Leadership & Strategy » Strategy » Understanding China IV: Stability

Understanding China IV: Stability

To understand China, if Pride, Responsibility and Vision are the first three guiding principles (see previous issues), Stability must surely …

To understand China, if Pride, Responsibility and Vision are the first three guiding principles (see previous issues), Stability must surely be the fourth. If one appreciates just these four overarching ideas and can recognize their countless expressions, one already knows a good deal about what drives this nation and informs its leaders.

Stability is the watchword, and a good part of the bred-in-the-bone reason can be traced directly to the Cultural Revolution, that devastating decade (1966–1976) when political madness manufactured social turmoil and delivered personal torment, when self-inflicted national mutilation turned the entire country inward against itself, pitting students against teachers, children against parents and friend against friend. To understand China, one must understand the Cultural Revolution.

Initiated by Mao Zedong in the twilight of his mercurial career, the Cultural Revolution was his sad and vainglorious attempt to re-revolutionize China and reaffirm his own potency and preeminence. Begun as an effort to expunge alleged capitalists from the Communist Party, it nearly destroyed the country. Energized by fundamentalist fervor, adherents concocted a Mao-centered personality cult. Universities were closed; intellectuals and professionals were exiled to farms; children were urged to denounce their parents; and young Red Guards, waving their little red books of Mao’s quotations, stood in judgment over anyone they deemed counterrevolutionary, who was virtually everyone in authority.

An entire generation was lost. It is impossible to overstate the hovering presence of the Cultural Revolution- the accusations, denunciations, castigations, humiliations. I have not met a single educated person over 50 years old who was not emotionally scarred by the experience.

China’s leaders will never allow such colossal chaos to happen again. They describe the kind of political reform that, while not advocating Western-style democracy, does provide for increasing transparency in government, collective decision making that makes dictatorship impossible, increasing powers of the National People’s Congress and the like. These trends of political reform, they say, will continue until “China develops its own kind of democracy consistent with the historical, cultural, economic and social needs of 1.3 billion Chinese people.”

Most Westerners assume that if one rejects communist-style central planning, then one must espouse Westernstyle democracy. Such reasoning seems naïve to many Chinese, even to those who seek fundamental change in the political system. Many Chinese intellectuals believe, quite in accord with government policy, that collective rights are more important than individual rights, and that improving the standard of living for all citizens is a superior good to allowing greater freedom of speech for some citizens.

Thus, the fourth and final theme needed to understand China is the desire for stability. Actually it is more than desire; it is obsession-a deep-seated need for social order and an almost paranoid fear of turmoil and chaos. This is the legacy of the Cultural Revolution: The nightmare memories are seared in the collective national soul, and a recurrence must be prevented.

Nothing good can happen without stability. No economic growth. No social progress. Stability is essential. This is what one continually hears in China.

“Class struggle,” the classic epitome of Marxist ideology and frenzied goal of Mao Zedong’s politics, has returned as a core concern of China’s leaders, but neither Karl nor Mao would recognize its current incarnations. In recent talks with China’s leaders, I find them now using the emotionally burdened term in two novel ways, both reflecting concern for stability.

Thirty years ago, when Mao’s death mercifully ended the Cultural Revolution, there were no classes in China- everyone was equal, equally poor. Even a decade ago, classes in China, which are the natural and inevitable result of free-market economies, was so sensitive a subject that senior leaders, even among themselves, felt uncomfortable discussing this taboo.

Not so today. Although China is perhaps the most remarkable story of sustained economic growth in world history, and standards of living have risen dramatically, the rise has been a sharply uneven one. Some areas and sectors, largely coastal and urban, are highly developed; others, largely inland and rural, much less so.

Even though China’s rural population, about two-thirds of the entire population, is substantially better off in absolute terms, in relative terms, compared to the urban population, it is not. And human beings are wont to judge their circumstances not in comparison to what they had in the past but in comparison to what others have in the present. That’s just human nature.

In terms of wealth, China has gone from one of the most equal countries in the world-everyone with the same low standard of living-to one of the least equal. Deng Xiaoping recognized that some people would have to get rich first, though he couldn’t have imagined the extent of the disparities. Even as China’s economy continues to grow, its economic imbalances continue to escalate-and increasing incidents of social unrest by rural residents are a direct result.

Thus the first new “class struggle” is a subtle campaign to recognize the persistence of classes as an inextinguishable reality (at least for the foreseeable future). Happily, this “struggle” has been won by the pragmatists, for whom the preservation of stability is a priority.

A second use of “class struggle” deals with how to handle the severe inequalities in China, which is China’s most vexing problem. If instability would ever again befall China it would come by the hands of those who desire better standards of living, not by those who seek Western-style democracy.

China’s leaders recognize that economic growth is dependent on the wealth-creating vision and energy of risk-taking entrepreneurs, and that confrontational “class struggle,” Communism’s traditional tenet, is archaic and counterproductive.

Building a “moderately well-off society” is President Hu Jintao’s overarching goal, which is expressed by his slogan of building a “Harmonious Society.” Harmony is needed because there are now classes, which naturally generate disharmony-after all, if China’s social classes were already living in harmony, there would be no reason to set building harmony as a national goal.

China is also concerned about world stability. China is now tied tightly to the global economy, and international instability would cause domestic disruptions. A senior Chinese leader told me that President Bush’s absolute belief in imposing American-style democracy on other nations is analogous to Mao Zedong’s absolute belief in fomenting Marxist-style revolutions in other nations. Now it is China, this leader said, which has the more flexible, rational, realistic vision of the world. This is why President Hu calls for a “Harmonious World,” which recognizes that differences in local conditions and governance not only exist but cannot be eliminated.

American leaders need to appreciate the motivation of China’s leaders, just as Chinese leaders need to understand American interests and values. China’s leaders recognize that inequality in the world, both within national borders and across them, is the single most important problem to be solved. The stability of the world, and hence its peace and prosperity, depends on it.

Speaking after the devastating Sichuan earthquake in May 2008, President Hu Jintao pledged to maintain development and safeguard social stability: “Focus on the current earthquake relief, on one hand, and economic and social development, on the other,” he said, while inspecting two companies that made prefabricated housing. Calling on his own background as a grass-roots engineer, Hu encouraged increased production. For stability to be maintained, the homeless needed homes.

When China increased restrictions on media and dissidents in 2008, it was not, as some claimed, using the Olympics as an excuse to crack down but rather sensing concern that increasing economic volatility, which was causing serious unemployment (especially among migrant workers), could spur political turmoil. If stability was at stake, it wouldn’t matter what the world thought.

I recently asked the first female president of the Chinese Writer’s Association, Tie Ning, about censorship in China. An elegant writer with ministerial rank, she responded with two Chinese sayings, which she, uniquely, coupled together:

“Bystanders see a more complete picture and can be more objective.”

“But only the foot knows if the shoe really fits.”

For President Hu, as for all of China’s leaders since the Cultural Revolution, stability is a recurrent theme. Whether calling political stability a key factor for driving China’s economic growth or price stability as essential for world energy markets, Hu is consistently on message.

“The past 30 years of reform and opening-up have told us that China cannot develop itself in isolation from the world,” Hu said in mid-2008. “And it is equally true that the world cannot enjoy prosperity or stability without China…. China’s future is more closely linked with the future of the world than ever before.”

It may seem simplistic to reduce one’s analysis of an entire nation to four basic themes. Nonetheless, characterizing contemporary China by the interacting themes of Pride, Responsibility, Vision and Stability can explain a great deal. Walking into the darkening unknown of the worldwide financial crisis, we had better get China right.

Robert Lawrence Kuhn, an international investment banker and corporate strategist, is the author of How China’s Leaders Think: The Inside Story of 30 Years of Reform and What This Means for the Future, forthcoming from John Wiley & Sons. This is the final of a fourpart series on “Understanding China.”

About robert lawrence kuhn

Dr. Robert Lawrence Kuhn is an international corporate strategist, investment banker and expert on China. Since 1989, he has worked with China’s senior leaders and advised the Chinese government on matters of economic policy, industrial policy, mergers and acquisitions, science and technology, media and culture, Sino-U.S. relations, and a variety of international business matters. Dr. Kuhn advises leading multinational companies, CEOs and C-Suite executives, regarding formulating and implementing China strategies in a variety of sectors, including science and technology, energy and resources, industrial, media and entertainment, healthcare / medical / pharmaceuticals, consumer products, and financial services. He works with major Chinese companies on structuring their capital markets financing and M&A activities.