China Settling for A Stalemate

By John Greenwald

Scattered applause rippled through Peking's Great Hall of the People last week as the solemn figure in the gray business suit nervously took a seat at the podium. The surprise arrival was none other than the recently disgraced Hu Yaobang, 71, who was purged in January as Communist Party chief and heir apparent to Chinese Leader Deng Xiaoping. Hu's unexpected reappearance at the annual National People's Congress, China's largest policymaking body, marked the latest twist in the protracted power struggle that has shaken the country in recent months and threatened Deng's sweeping economic reforms. Said one of the nearly 3,000 congress delegates of Hu's return: "Perhaps it could be a good thing."

Perhaps, indeed. The 16-day congress could not have come at a more sensitive time. At issue amid the ongoing political turmoil is China's leadership into the 21st century. On one side are ambitious young reformers who want to press ahead with the radical innovations such as profits and private ownership that Deng, 82, has begun. On the other are mostly aging hard-liners determined to slow or roll back Deng's reforms and quiet the winds of Western-style democratic change, which they derisively label "bourgeois liberalization." Led by Peng Zhen, 85, chairman of the standing committee of the National People's Congress, the conservatives showed their power in the ouster of Hu, Deng's hand-picked successor, who was fired for failing to crack down on massive student demonstrations last December that called for democratic freedoms.

The warring factions have since settled into an uneasy standoff, as Deng has sought the middle ground. That was clearly evident last week when Premier Zhao Ziyang, a leading Deng disciple, delivered the Congress's opening address. While some reformers "are not sober-minded enough," Zhao declared in his 1-hour, 50-minute speech, their conservative opponents may not be "mentally emancipated enough." In any case, Zhao said, the government has already rooted out the worst excesses of reform: "After several months of work since the end of last year, we have curbed bourgeois liberalization, which was once quite widespread." Having said that, however, Zhao went on to reassure his listeners that Deng's reforms would continue and be "deepened" as China moves toward a "perfect socialist market system."

Zhao, 68, painted a grim picture of the Chinese economy. Echoing a conservative rallying cry, Zhao began his speech by demanding boosts in grain production. Lashing out at consumers who are "given to pleasure seeking," he called for more unglamorous projects, such as the construction of roads, bridges and energy facilities. Zhao railed against "blindly seeking an excessively high growth rate" lest China's inflation, which is now running at a roughly 6% annual clip, get completely out of hand. His remarks seemed aimed at the policies of the once influential Hu, who last week was re-elected / to the 157-member presidium that heads the People's Congress. Seated directly behind Zhao, Hu clutched a red pencil during the attack, underlining the prepared text of the Premier's speech and keeping his eyes riveted to the copy.

Other leaders decried China's woes. Charging that bribery, tax evasion, embezzlement and other crimes "have reached very serious proportions," Finance Minister Wang Bingqian demanded that the "malpractices" come to a halt. Dressed in a gray Mao suit, Wang chided officials for using public funds for "lavish dinner parties and gifts" and for "blindly pursuing the modernization of office facilities." Thanks in part to such extravagances, Wang said, the government ran a $1.9 billion budget deficit in 1986 and can expect $2.2 billion in red ink this year. Planning Commission Minister Song Ping took up the theme: "Financial and economic discipline has grown lax everywhere." Song's solution: "Simple living, hard struggle and industry and thrift."

Such nostrums aroused little enthusiasm outside the Great Hall of the People. Many Chinese, wearied by the violent eddies and reversals that continue to mark their country's political life, profess scant interest in matters of state. "These things don't concern me," said a taxi driver in Tiananmen Square, where red banners flew in honor of the People's Congress. Concurred a septuagenarian scholar: "I really don't listen to this sort of thing any more." And a Peking intellectual added his own apolitical perspective: "My friends and I just gather together to eat and drink and make up jokes."

Yet the impact of the latest power struggle is hard to ignore. Last year's toleration of dissent is clearly at an end. Deng Liqun, a leading member of the party secretariat and the conservatives' chief ideologue, has shut at least seven liberal newspapers and journals since January and is reasserting party control over virtually all Chinese publications. Said a Communist official in a recent speech: "As everyone knows, journalism is a component of the party's undertakings and is its mouthpiece." Deng Liqun has also reinstated political indoctrination in China's schools. Peking University students must now attend two political classes a week, and most college students are required to spend part of their vacations toiling in factories or on farms.

Despite the conservative backlash, though, recent intellectual purges have been relatively mild when compared with past excesses. Liu Binyan, a leading journalist who was stripped of Communist Party membership in January for questioning its authority, remains a vice-chairman of the Chinese Writers' Association. Liu has further confounded the hard-liners by retaining his post as a reporter for the People's Daily, the official Communist Party paper. Astrophysicist Fang Lizhi, dismissed as a university vice president in January, was promptly reassigned to a research job. Such moves have helped reassure China watchers that there is no second Cultural Revolution in the making.

China's bustling workplaces give further evidence that Deng Xiaoping's reforms are still on track -- and making headway. Western visitors to Jiangsu, Zhejiang and Guangdong provinces, where free enterprise thrives in factories and shops, have found no retreat from the reforms. To emphasize that the political furor in Peking has left them largely unaffected, local officials cite a Chinese maxim: "The mountains are high, and the emperor is far away." Even in the capital the pace of change seems unabated. The Bank of China last week agreed to link its Great Wall credit card with New York-based MasterCard International operations. The move came just two weeks after the Chinese bank said it would issue Visa International cards later this year.

Indeed, the power struggle in Peking is largely a dispute over how to strike a balance between foreign practices and Chinese ways. While the conservatives are willing to adopt Western ideas, they do not want the borrowing to go too far. Deng's rural reforms were quite acceptable to the aging revolutionaries who had supported the leader since he took power in 1977, but his latest moves have caused them to back away. Conservatives worried that the party's authority was threatened by Deng's 1984 drive to extend free enterprise to China's cities and by public discussion of political reforms. Last year's student unrest only heightened their fears. As a result, says a Western diplomat in Peking, "Deng's coalition has been coming apart."

Deng's task now is to put the Humpty-Dumpty coalition back together again. Unlike his predecessor, Mao Tse-tung, Deng has never striven for absolute dominance but instead has shown himself a master at finding the center of the shifting political debate. Foreign observers expect him to remain in power, but with somewhat diminished support. "It would be hard to conceive of Deng being toppled," says Kenneth Lieberthal, director of the - University of Michigan's Center for Chinese Studies. Experts also agree that while the pace of Deng's reforms may be slowed, they will not be rolled back. The fall of the reform-minded Hu Yaobang, however, muddies the outlook. His ouster could turn what had shaped up as a smooth transition of leadership into a bitter brawl for succession once Deng leaves power.

The next showdown between China's leaders will come this fall, when the 13th Communist Party Congress is to meet in Peking. The current political stalemate is likely to continue until that gathering, when top party and government posts will be filled. Among the appointments will be that of a permanent successor to Hu as party General Secretary, a job Premier Zhao now holds on an acting basis.

Virtually every aspect of China's modernization drive will be debated in the weeks and months ahead, and its opponents may even find some common ground. In a telling image, Politburo Member Chen Yun, a powerful conservative, has likened the Chinese economy to a bird and described government control as the cage. While the cage may be enlarged to let the bird fly more freely, Chen argues, it must never be thrown away. On that point, at least, Deng Xiaoping and his critics seem to agree completely.

With reporting by Jaime A. FlorCruz and Richard Hornik/Peking