Economic Implications of Turmoil in Communist World

Article excerpt

What are the economic implications of the turmoil in the communist world?

President Bush said this week that China remains a country of strategic importance to America but that a ``normalized relationship'' is impossible as long as the harsh crackdown on dissent continues.

And Japan's decision to suspend aid to China dramatized the vulnerability of the Chinese economy to the shocks felt by both foreign government and business.

Capital from Hong Kong had been flowing so heavily into China that twice as many people are employed in Guangdong Province by Hong Kong manufacturers as in Hong Kong itself.

That inflow of capital and technology from Hong Kong and other capitalist democracies could now cease, collapsing Deng Xiaoping's efforts to modernize the economy.

His modernization drive was built on the theory that economic reform had to be combined with political discipline. Economic and political experts on China, from both capitalist and communist countries, had long warned that the Chinese government would not tolerate dissent.

Silviu Brucan, a professor of social science at the University of Bucharest in Romania, said two years ago, ``It is not a good sign that of Deng's four cardinal principles of modernization, the most frequently cited lately has been the people's `democratic dictatorship.'''

Brucan contended that ``while Gorbachev feels secure to advocate more democracy, having attracted most of the intelligentsia, scientists and engineers (numbering almost 15 million in the Soviet Union), Deng is fearful that the Chinese people, still beset by widespread illiteracy, are insufficiently prepared to withstand Western ideological influences.''

This refusal to countenance political dissent stemmed from fear of the unruliness of the Chinese people, as manifested in the Cultural Revolution; the wide disparity between living standards in rural and urban areas; anxiety about the speed with which the people could turn capitalist and reject their rulers, and the enormous development tasks Deng believed would require continued state capital and controls.

Yet, as one found on visiting China two years ago, the political ferment was as palpable, especially among young people, as the economic progress.

Chinese leaders insisted that their repressive political actions - they had just cracked down on students protesting the removal of Hu Yaobang, a liberal, as general secretary of the Communist Party - would mean no reversal of China's drive to reform the economic system.

Today Chinese leaders are holding to that line - and the Bush administration is trying to hold the door open to continued relations with China, apparently hoping that economic modernization will in the end bring political liberalization in its train. …