China's Uncertain Course Assessments of Beijing's Future Clouded by Unease over How It Will Handle Taiwan, Hong Kong

Article excerpt

THROUGHOUT the length and breadth of Asia and the Pacific basin, one imponderable exercises the thinking of government leaders, politicians, businessmen, military experts, and other policymakers.

It is China and the unpredictability of its future course.

Sixty percent of the world's people live in Asia. While there are pockets of poverty, and repressive communist regimes continue to exist, much of it is exploding with economic vitality and a new sense of freedom.

If, as many predict, the 21st century is to be the century of Asia, China's direction will determine whether those years will be filled with continuing economic progress, whether they will be peaceful or defiled by conflict.

On the one hand, China is experiencing astonishing economic growth. Recent projections of the World Bank and the International Monetary Fund see China's economy looming as the world's third or fourth largest. Development is taking place mainly in the southeast coastal provinces of Guangdong, Fujian, and parts of Zhejiang. This development is fueled by investment from, and trade with, the thriving free-market economies of Hong Kong and Taiwan.

Guangdong's economy, for instance, has been exploding with an annual growth rate of 12 percent. Indeed, these free-wheeling coastal provinces of a theoretically communist state have become economically interlocked with the blatantly capitalist territories that lie across from them on China's borders.

Beijing can preach what political ideology it likes, but southeastern China is busy making very non-Marxist and non-socialist profits in a market encompassing Hong Kong and Taiwan, which is now being referred to by economists as "Greater China."

This is fine with China's effective leader, who has encouraged economic but not political reform. But Deng Xiaoping is in his late 80s and nobody knows what the succession will bring. The possibilities range from a continuation of his economic policies to chaos and civil war with enormous negative consequences for China's economy.

Much hinges on whether politics or economics will prevail in China's handling of two sensitive areas: Hong Kong and Taiwan.

Hong Kong, currently a British colony, is due to revert to China's ownership in 1997. Beijing has pledged to let Hong Kong's thriving laissez faire economy continue. But if new leaders in Beijing go back on that promise and cannot resist the temptation to crack down politically on Hong Kong, investors would flee both from Hong Kong and Guangdong.

Similarly, Taiwan is a test for Beijing. Officially, Beijing's position is that Taiwan is part of China. In fact, Taiwan is a separate entity that has thrived under the free-market system and guards its separate identity militantly. …