Frank Dikötter is the author of three books about China under Mao called the People’s Trilogy. He is currently the Chair Professor of Humanities at the University of Hong Kong. His latest book is China After Mao: The Rise of a Superpower.
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This is a party absolutely determined to maintain a monopoly of power and absolutely determined to crush any attempt by any group to suggest that there ought to be anything like separation of powers. No labor unions. No civil society. No freedom of press. No judicial independence. The mere suggestion of it seems to be so offensive that people end up in jail and that’s a constant theme that runs throughout this entire period.
Frank Dikötter
Key Highlights
- Introduction – 0:52
- Life in China After Mao – 3:06
- How much did China Reform After Mao – 13:20
- What do the Chinese People Want from Reform – 25:38
- Is Political Reform Necessary for Deeper Economic Reforms – 29:33
- Why are China’s Reform Overstated – 36:18
Podcast Transcript
On October 16th the 20th National Congress of the Chinese Communist Party officially begins. Many China watchers anticipate the Congress will confer a third consecutive term to Xi Jinping. It’s hard to know because Chinese politics are not transparent. It’s more insightful to look back into China’s history than to interpret its current politics. But even then the history of modern China is difficult to uncover. At times it is more myth than reality.
Frank Dikötter has spent his career dispelling the myths from China’s history. He is the author of three books about China under Mao called the People’s Trilogy. He is currently the Chair Professor of Humanities at the University of Hong Kong. His latest book is China After Mao: The Rise of a Superpower.
I wanted to talk to Frank, because China was widely considered a country in transition for most of my lifetime. It was undergoing a series of significant economic reforms and was even on the precipice of political reform before Xi Jinping came to power. But Frank argues this depiction of China wildly overstates China’s willingness to reform after Mao. So, this conversation tries to make sense of China’s present through a reexamination of its past.
If you like this conversation with Frank, please subscribe to receive future episodes and check out some of the past episodes on China or other topics. And please give the podcast a 5 star rating especially if you listen on Apple podcasts or Spotify. It only takes a little effort but really brightens my day every time I notice a new rating. Like always you can find a complete transcript at democracyparadox.com. This is my conversation with Frank Dikötter…
jmk
Frank Dikötter, welcome to the Democracy Paradox.
Frank Dikötter
Thank you for having me.
jmk
Well, Frank, your three books on China about Mao are often called The People’s Trilogy. It’s a fascinating series of books and it’s fascinating to read them, because they read as if there is almost no interest in the elites in China whatsoever. That’s very much how your new book reads, China After Mao. It talks about elites, but it doesn’t focus on them the way that other histories of China really do. So, why don’t you paint a picture for us about what life is like for Chinese citizens as we’re kind of transitioning away from the Mao era?
In the book, you have a fascinating passage where you write, “By 1970 a task as simple as making a button became a challenge as factories were forced to produce everything locally.” It paints a picture of economic isolation that life is incredibly difficult, incredibly hard for them to showcase their entrepreneurial spirit. So go ahead and paint the picture for us. What is life actually like beyond just that single sentence?
Frank Dikötter
So, in ‘49 the red flag goes up over the Forbidden city. Thirty years later, roughly, where are we? It’s a collective economy. That’s what Marxism-Socialism is like. All the means of production…. It sounds like jargon, but that’s what Marxism is. The means of production belong to the state. All the decisions are made by the state or representatives of the state. But to this you have to add something else and you point at it. Namely the Cultural Revolution, which unfolds from 1966 onwards where Mao insists that regions become self-reliant. So, even within a collectivized economy or one might even say in particular in a collectivized economy there might be decisions where a variety of regions are linked up. You know, somebody might decide Shanghai will make the buttons, Guangzhou will make the shirts and they will be put together in Chongqing.
Of course, it’s an enormous waste of time. But that’s roughly how it works. Of course, there is somebody who will decide how many buttons and what color shirts and what size shirt. So that’s a socialist economy. But under Mao from the cultural revolution onwards from ‘66, he insists on self-reliance. In other words, those cities, Guangzhou, Shanghai, Chongqing, Beijing, but also provinces must produce everything by themselves. Which, of course, is impossible simply because no one region will have all the raw resources, never mind knowledge, to carry out some of those quite complicated tasks.
So, it really becomes a fragmented economy which on top of that is collectivized. In a nutshell by the time the old man dies, 1976, living standards of ordinary people, North, South, East, West, anywhere you look at are lower than they were in 1949. This always comes as a shock to some of my students and some of my readers. They ask me, ‘Surely, it’s not possible that after 30 years living standards are lower.’ They point at the fact that there is actually some economic growth. Well, that may very well be true, but you’ve got to remember that the state comes in and takes the biggest share away. Whatever growth there is, the state will come in, take it away, and, of course, to a great extent waste it.
So, the point remains that living standards of ordinary people in 1976 are lower than they were in ‘49. A great many are literally, as we say in English, piss poor. They hardly get by except, as I pointed out earlier on, in the countryside where even before the death of Mao people have just about had enough. They’ve had enough of the collective economy. They’ve seen family members starve to death. Neighbors starve to death during the Great Leap Forward and they very quietly start doing what they want to do frequently with the support of local party secretaries who have also had enough of three decades of economic frenzy that leads nowhere. So, quietly that economy is being undermined and you can see living standards in parts of China begin to increase from roughly the mid-seventies onwards.
Black markets. That’s really it. Black markets, illegal economic activities. That is what saves a great many ordinary people in the countryside in particular.
jmk
So, when you’re talking about economic isolation, you’re not just talking about China’s isolation from the world. You’re talking literally the isolation of provinces or even cities from one another.
Frank Dikötter
Absolutely, and ironically, to some extent that is still the case today. I know this sounds surprising, but you’ve got to remember that China to this day is not so much a unified national economy as a sort of patchwork of independent fiefdoms. If you want to transport goods from Manchester to Lancaster, that was solved even when Karl Marx was alive in the first half of the 19th century. That’s not exactly a great feat to accomplish nowadays. But in China it’s very difficult. Not from Manchester to Lancaster, but from say Wenzhou to Guangzhou or from Suzhou to Shanghai which is why the WTO is so important.
Because there’s so many local barriers against the products from other regions that if one can get the product just across the border, it will go anywhere in the world thanks to the WTO even though you cannot sell it locally up the country or down.
jmk
That’s fascinating. That is Surprising.
Frank Dikötter
Yeah, it’s surprising. People don’t realize when they talk about the domestic economy in the People’s Republic of China, but after, I don’t know how many years… Where are we? 2022-1949. It’s been a while… There still is no unified domestic market to talk of.
jmk
So, when we think about some of these communist countries, it’s difficult not to compare China to the Soviet Union and in the Soviet Union after the death of Stalin, there’s a period of destalinization. In your recent book you write, “Destalinization had followed Nikita Khrushchev’s secret speech, but there would be no demaoification in China.” I’m curious about what a demaoification would have looked like if it had occurred.
Frank Dikötter
It’s a very interesting point. The Soviet Union, they’ve got two chaps. One is called Lenin, the one who establishes the Soviet Union. The other one is, of course, Stalin. The one who pretty much carries out all these Stalinist policies. So, if one dies, you still have got the other one. If you drag Stalin out of his mausoleum, you still have Lenin embalmed to display to members of the public, of course, to uphold as the founding figure of the Soviet Union. The problem with the People’s Republic of China is that you only have one which is Mao. He is both the Lenin and the Stalin. So, there’s not a lot you can do about him. So, that’s the key point and Deng Xiaoping says this very clearly as they’re trying to seek some sort of consensus about the Mao era after Mao’s death.
Deng Xiaoping is the first one to point out, ‘If we criticize Mao, we are criticizing ourselves and we all have a hand in what happened. We all are responsible for not just the Great Leap Forward, but also the Cultural Revolution. So, if we take down Mao Zedong, we damage the standing of our own party.’ So, that’s the decision that’s being made. We’ll keep him up there. So, there are so-called four Cardinal principles which Deng Xiaoping proclaims and are written into the Constitution and are there to this very day. One of these cardinal principles is holding up the banner of Marxism, Leninism, and Mao Zedong Thought.
So, you might say even if they had been more critical of Mao, even if they had denounced the Great Leap Forward, the enormous waste of lives during that period and the Cultural Revolution, even if they had and had taken down all the statues and portraits of Mao, nonetheless, they would still have been at heart real Leninist-Marxists. They are to this day. What is a Leninist? A Leninist is somebody who believes in one party, a revolutionary party, in charge with a monopoly over power. In other words, no separation of powers. What is a Marxist? A Marxist is somebody who believes that the means of production should belong to the state. What are the means of production? It’d be land, labor, energy, capital, means of transportation, all these are means of production.
So, to this day, of course, they do belong to the state, mostly directly, sometimes indirectly. So, this to me is at the very heart of the greatest misconception about the last 40 years, the so-called era of reform and opening up. We believed, or some have believed, I never believed, them for many years, that there was some sort of transition away – maybe not politically, but certainly in terms of the economy – from socialism towards capitalism. A move away from the plan, the collective economy, towards entrepreneurship and private enterprise. But at no point has any of these leaders wished to weaken the hand of the state. Now to this day, they are still, in Marxist terms, in control of the commanding heights of the economy. They’ve tried over the last 40 years to reinforce the grip of the state over the economy, not weaken it.
jmk
So, to what extent did Deng Xiaoping and even any of his successors actually open up China’s economy or promote any kind of liberalizing reforms?
Frank Dikötter
Well, they did, but it would’ve been difficult for them not to. First of all, because living standards were dismal. But most of all, because millions upon millions of ordinary people in the countryside were just getting on with it. So, the most interesting thing is that from roughly 78-79 all the way till 82-84 all the major decisions made about the economy in the countryside are nothing but an attempt to rubber stamp and give legitimacy to changes that have already happened. So, this goes back to your very first question. This is all driven by ordinary people in the countryside. They are the ones who take back, claim back very fundamental liberties.
But when Deng Xiaoping in 1978 decides that these giant collectives called people’s communes are allowed to retain any surplus above mandatory procurement quotas, this is often seen as the key moment where hundreds of billions of people are lifted from poverty. But that’s not the case. Deng Xiaoping and others insist that the people’s communes are the backbone of the economy. They issued them with contracts. But what happens is that the people’s communes give these contracts to the villages. The villages give them to households, ordinary individuals. So, the party rants and raves in 1978, ‘79, ‘80, ’81 telling them that the collective economy is the backbone of agriculture and China. The land will not be divided. Individual households do not have the right to make any decisions about the local economy.
Yet by ‘81 in some provinces more than half of the countryside is in the hands of individual families. The people’s communes collapse in 1982. It is, of course, a huge boom in the economy there. However, Deng Xiaoping should, I think, be given credit for coming up with an interesting policy in 1992 during his Southern tour. You got to remember in 1989, a hundred thousand soldiers, 200 tanks were used to crush the people of Beijing who like so many others in the country protest a very simple fact: Namely that in a one-party state without separation of powers, power can be traded for money. That’s what they’re protesting about and that’s what they’re still protesting about to this very day.
But you’ve got to remember after the massacre in Tiananmen Square in 1989, the country is again virtually closed for several years. So, in 1992 Deng Xiaoping makes a sudden tour and decides that there should be special development zones to attract money from foreigners. Foreigners are referred to as capitalists. So, what he does is, in effect, not all that different from what was done under Lenin and Stalin. We forget the extent to which foreigners were actually allowed to set up joint ventures under Stalin and were allowed to produce in the Soviet Union. They were allowed to invest. But nonetheless, what Deng Xiaoping says is very simple. He says, ‘Capitalist tools in socialist hands.’ What are these capitalist tools? He means capitalist investment.
So, he comes up with a very basic policy. We have these special development zones. Foreigners contributed capital in an exchange for a lease of the land and they use the capital to build up infrastructure. So, land for capital. Capital used to build up infrastructure. It seems to work quite well except, of course, there is a slight issue here. Who owns the land? This is a socialist state. It belongs to the state. Who can lease it? Well, just about everybody. Every conceivable government unit in this sprawling state bureaucracy is keen to establish a real estate arm. So, in 1991 before Deng Xiaoping comes up with this new policy there are about a hundred of these special development zones. By 1992, there are about 8,700 of them leasing enough land to pretty much build the equivalent of 500 cities.
In other words, it’s a real rush on land and who gets the money for all this. Party members. Who pays for it? Ordinary people. Because foreigners, when they invest in these special development zones are given tax rebates. Of course, tax rebates are paid for by ordinary people. But most of all, all the money that went to the countryside where village enterprises worked quite well in the 1980s now goes towards these special development zones along the coast. So, the real losers here are ordinary people. The winners are party members. But the point I’m trying to make is that the investment is such that there is over capacity at every level. Even before the Asian crisis kicks in in 1997…
You remember in 1997 several Asian countries run into difficulties. A lot of the dollars are taken out in Thailand. The Baht collapses. China from a distance looks very stable. But here’s the point. By the turn of the century, the economy is virtually bankrupt. The four state banks are awash in red. The central coffers are empty. The state enterprises as a whole are unable to generate a profit. China, according to the World Bank (if you trust them, I think the figures are inflated, but if you trust the figures) ranks China per capita GDP in 1976 at rank 123 in the world. Big country, lots of people. By the turn of century, the year 2000, that rank is down to 130.
In other words, after 20 years of so-called reform and opening up, after all sorts of efforts to pursue growth at all costs, that country still has an economy which is struggling to keep up per capita with the rest of the world. So, take Deng Xiaoping out of the picture. He’s dead. He’s gone. So, the real change, the real moment where China flourishes economically is really three letters. It is WTO which China is allowed to join in 2001 without reforming its state enterprises, without making its capital accounts convertible, and without floating its exchange rate. From that moment onwards, within a few years, the trade deficit with countries like the United States, Mexico, in fact, with the totality of countries that belong to the WTO, it increases by a factor of tenfold within a few years. It’s extraordinary.
From there onwards, the economy really does boom… and how could it not? You can do things in the People’s Republic of China that you simply cannot do even in Bangladesh. It goes back to what I said earlier on. This is a Marxist economy. This is a socialist state. The state can provide endless subsidies to the state enterprises which can be denied to foreigners producing goods in the People’s Republic of China. Land can be provided for next to nothing. Energy can be subsidized. Transportation can be for free. Tax rebates can be introduced. Labor in any event is very cheap. There are no labor unions. Nobody can compete. So, the real economic boom dates from the WTO onwards till roughly now.
jmk
So, let’s take a step back to Deng Xiaoping one more time. We talked about the economic implications of some of the reforms, but I don’t think that he should get a free pass for the political implications of some of the stuff that he did. I think that the most famous, other than Tiananmen, would be involving the Democracy Wall. Can you describe what that is and its importance for the history of China?
Frank Dikötter
So, from the very beginning, meaning the moment Mao dies, a lot of people are hungry for change. Democracy and more specifically separation of powers to make sure that power cannot be traded for money. That’s the key point. Separation of powers becomes a really important point not just for a couple of intellectuals and students, but for a great number of people. They demonstrate first in 1978 by putting up posters on a small bit of wall. In Beijing it’s called very rapidly the Democracy Wall. Can you believe it? There’s a little bit of space in this country which is huge. There’s a little bit, a tiny bit of wall where people can pull up a few posters and they want democracy. They want accountability. They want judicial independence. They want that separation of powers.
Deng Xiaoping goes to the United States, charms Americans (apparently not that difficult to do), goes to a rodeo, has a big cowboy hat and obtains from the Americans the Most Favored Nation Status meaning that China can export for next to nothing it’s products to the United States of America and also to Japan later on. When he’s asked about democracy, he says, ‘Look at the Democracy Wall.’ He goes back home in ‘79. This is early ‘79 and he crushes the Democracy Wall. Puts people in prison. A key leader, Wei Jingsheng, still in Washington to this day, claims that there should be democracy. He calls it the fifth modernization as opposed to the four modernizations that the party wants. But these people don’t disappear. They come back time and again, time and again. Throughout the 1980s, the people who protest and demonstrate at Tiananmen Square in 1989, always the same demands, sometimes the very same people.
In Tiananmen Square, 1989, one of the key figures there was a man called Liu Xiaobo. He too, like so many ordinary people, points at a system which is profoundly corrupt, because those inside the ranks of the party can trade their power for money and are not affected by issues like inflation or bankrupt bank accounts, et cetera. Liu Xiaobo protests and is thrown into prison. He reappears in 1995 and protests again. He petitions with a number of other people, again, pointing out that judicial independence is absolutely essential to prevent corruption from spreading throughout the entire system. He’s thrown into jail again. This happens time and again. Of course, he will die eventually in jail with a Nobel Prize.
So, there is a very constant theme that runs all the way from ‘76 till now. In fact, you might say from ‘49 till now, because ‘76 is not a major departure there. So, this is a party absolutely determined to maintain a monopoly of power and absolutely determined to crush any attempt by any group to suggest that there ought to be anything like separation of powers. No labor unions. No civil society. No freedom of press. No judicial independence. The mere suggestion of it seems to be so offensive that people end up in jail and that’s a constant theme that runs throughout this entire period. So, as I indicated political reform, definitely not. Economic reform, not really either. It’s more maybe tinkering with the economy to reinforce it and reinforce the hand of the state.
jmk
So, like I’ve said before when you’re writing about history, you’re really looking at regular people and you have a very just laser focus on them rather than just elites or rather than just the big names that we hear about whether it’s in the newspaper or in history books. When we’re thinking about democracy, when we’re thinking about political reform, what has that approach taught you about the spirit of the Chinese people or about Chinese culture in terms of what they want out of political systems?
Frank Dikötter
Yeah, well you can’t, of course, generalize. The whole point of looking at people from all walks of life is that they’re very different. They’re very, very different. But one point I already made, certainly in the countryside, and probably also in the cities, pretty much anyone who’s managed to survive massive starvation during Mao’s great famine from ‘58 to ‘62, and has managed to survive the Cultural Revolution is pretty much an entrepreneur. There’s no lack of entrepreneurial guile there. People have to be inventive in the countryside just to get by, feed themselves and their families. There is no doubt about that. But something else really struck me.
You know, I was in Beijing in the month running up to June the fourth, the massacre in 1989. I left one day before. I was on the last train. I didn’t know it was the last train. It was just a coincidence. But I always thought, ‘Well, these are students. These are intellectuals. These are really, you know, a fringe of society, say 5% of society.’ Very few people at the time went to university, even a high school. These are, if you wish, elites. I also thought possibly democracy could be a slightly abstract sort of concept for a lot of ordinary people.
But going through the archives, it turns out that was pretty much a wrong view. It is not about democracy. It’s about something that, again, people across the social landscape understand quite well whether this is a villager plowing the land or whether this is a factory worker. They understand all too well that they live in a system where, again, power is traded for money. They realize that however hard they work, whatever they do, it will always be a member of the Communist Party of China who’s the one who will get ahead and not them. They understand that there’s this divide and that they understand that there’s nothing you can do about it.
So, when you look at the evidence, you realize that in 1989, it wasn’t just people, students, intellectuals in Beijing, Shanghai, big cities who were upset. There were ordinary people across the country in a distant remote province like Gansu in the hinterland where a quarter of a million people demonstrated in 12 cities that most of us have not even heard of. Nothing to do with students. Not a single student in that at all. Just people from all walks of life who had enough, because they, by 1988, are suffering a rate of inflation which is apparently up to 48% if you trust some of these internal documents. While in the countryside, people are no longer being paid at all. They’re given IOUs by the Bank of Agriculture which is almost bankrupt.
So, across the spectrum by ’89 this is a country which is really on the verge of a civil war. This is not just students and a few intellectuals opposed to communism. This is a country on the verge of civil war with a great many people sick and tired of this system that enriches the few and impoverishes the majority.
jmk
So, China’s tried to separate out the idea of economic reform from political reform and as we’ve had this conversation, you’ve emphasized the fact that they haven’t done substantial economic reform. They’ve done more of what you describe as tinkering. Do you feel that China’s lack of political reform has ultimately limited the interest in substantive economic reforms within China?
Frank Dikötter
Well, let me put it very simply. There are a great many economists in the United States who seem to believe that politics doesn’t matter. They’ll talk about the free market here and the free market there. But I can tell you one thing. There’s no such thing as an open market, never mind a free one, without basic political freedom. It simply doesn’t exist. Politics comes before economics, not the other way around. If you do not have an independent judicial system, you cannot possibly have private property. There’s nothing there to protect it.
If you want to have a market… I assume a market is based on the exchange of goods which are either private or public property. You cannot ensure that the exchange is equitable if there is not at least some political reform including freedom of press and fundamental judicial independence and the rule of law. So, it’s simply incompatible. You cannot do anything called economic reform without changing your political system. Otherwise, what you’ll be doing is just tinkering with the system and this is what the book indicates. That we have thought, I haven’t, but a great many of my colleagues have assumed over the last 30 years that there is some attempt to move away from state enterprises towards private enterprises.
There’s no such thing. The hand of the state over enterprises has been reinforced time and again. Already by 2004, three years into the WTO, which many foreigners thought would compel China to abide by the rule to reform its economy, to get rid of the state enterprises because they wouldn’t be competitive enough. By 2004, some 96% of assets of the 500 largest companies are in the hands of the state. So more, not less. Today it is probably even more. Now what I’m trying to say is very simple. Politics comes always wherever you are before economics. Capital is supposed to be the key point when it comes to capitalism, but capital is a good. There must be rates of return. There must be interest margin.
But in a socialist economy, in a country where the state dominates, there is no political reform. There’s no such thing. There’s the party secretary, not the market who distributes the money. There’s the party secretary who allocates the funds, not the market. There’s the party secretary who makes all the major economic decisions on the basis of politics.
jmk
So, one of the ways in which the socialist economy is able to manipulate the markets, if you will, within China is through debt. And you write about that quite frequently and to be honest with you, it’s a topic that we see time and time again even in the current contemporary environment within China. We hear a lot about the state of Chinese debt. But let’s just focus on the historical perspective that you’re writing within this book. Can you explain how China’s using debt to finance its economic growth?
Frank Dikötter
Well, you could say growth not through enterprise, growth not through economic reform or opening, it’s just growth through lending. Of course, you do attract, as I pointed out earlier on in particular with Deng Xiaoping and his southern tour in 1992 and these special development zones and the tax rebates, foreign capital. It flows in. But then what happens with it is very, very interesting. Most of it is then redistributed to state enterprises. Regardless, again, of market requirements with oversupply in every sector rampant by already 1996-97. But the key point really is that there is always that and it gets heavier and heavier.
Now, normally if your growth is higher than your debt, you will outgrow the debt. But it has been increasing constantly over the last 40 years. It appeared to be very slow, but when you look at the consequences even by 1988… You remember in the countryside that farmers were given contracts. They must procure a certain amount of goods under contract and they can keep the surplus and sell it on the market. But by 1988, the Bank of Agriculture is bankrupt and has no money because it has lent so much to local party members who build houses, restaurants, sanatoriums, import televisions. Money is gone across the country, not in one province, not in a part of the country, but across the country.
For farmers who produce cotton grain pork they have to issue IOUs. Worthless little bits of paper. That’s 1988. Now this gets worse and worse. I don’t know what situation is today, but the amount of debt is just enormous. Of course, you can postpone it forever. This is a great trick you can do if you have a socialist economy in which you control the banks. All the banks are state banks. The capital belongs to the state. Land belongs to the state. The lending is done according to dictate from Beijing, so you can postpone the crisis for a very long time.
The amazing thing is that in the 2008 financial crisis. The leadership stands back and believes that it is witnessing the collapse of capitalism. Of course, this is classic Marxism: A philosophy that has been predicting the impending collapse of capitalism since Marx. We’ve been waiting for a century and a half. We’re still waiting. So, they believe that they’re witnessing the collapse of capitalism and they pull even more money into the economy to keep all their state enterprises afloat. I’m not one to study China today never mind tomorrow. Where China’s going, this is none of my business. I’m a historian. But seen from an historical perspective, the level of debt has accumulated so steadily and to such an extent that is very difficult to see how it could possibly go on for much longer.
jmk
So, one of the themes that we’ve had in this conversation is the fact that China’s degree of openness is largely overstated. It starts during this period after Mao. This idea that China’s opening up its economy when in reality it’s not making the degree of reforms that are sometimes portrayed in the larger media among China observers and among others. Why do so many observers overstate the degree of China’s reform and openness during this period of China’s history?
Frank Dikötter
That’s a very good question. All sorts of reasons. I think at the heart of it and it’s a problem that goes back to ‘49 is the belief in particular among Americans, but also Europeans that the moment you talk about China, and unlike say talking about Russia, you are talking about culture: poems and chopsticks and centuries of civilization. You’re not talking about politics. When you say Soviet Union in 1980, we think Bolshevik Revolution 1917. You don’t go back to the Romanov or Russian culture. You just think there’s a political system and it’s a nasty one. The moment you say China, it goes along with the term culture. In other words, this belief that Chinese communism is really communism, this is a problem that starts already in the Second World War. American advisors described Mao as agrarian reformers, not real communists. This goes on and on.
Now it’s one issue. Another issue is, of course, wishful thinking. The idea that somehow China is different. You know, it doesn’t have to abide by these rules. It doesn’t really have to open its capital account or float its exchange rate before it joins the WTO, because, ‘Oh, it’s different and somehow, it’s not like any other country.’ But finally, a great number of foreigners make good money. Two Henrys. Henry Kissinger with the Kissinger Foundation has made large amounts of money through China.
Henry Paulson, a man who doesn’t seem to understand very much at all about China. If you read his memoirs, you really wonder what kind of planet this man lives on. He was part of that team of foreigners who helped China in 1997-98 to come up with these giant conglomerates that were then listed on stock exchanges abroad. Hong Kong, but New York in particular. Frequently entities that existed only on paper. So, you needed foreign investment bankers, foreign corporate lawyers, foreign money makers to make sure that these companies that were listed complied with international corporate and finance law.
So, a great many foreigners have grown very rich and, in the moment, when you have the WTO, if you are a foreign entrepreneur, you have a very simple choice. You can go bankrupt or you can outsource your labor to China. If you do so, you do make money. There are a great number of people abroad who do like what is happening and do make money and money matters a great deal as we know. So, I think these are all the key reasons for this. Well, you might say that China has played its part by making all sorts of promises and pledges which have never been upheld, but then you start wondering how many times do you need to find out that the PRC doesn’t really follow up with any of the promises it makes? How many times have intellectual property laws been broken since 1976?
jmk
Well, thank you so much for joining me, Frank. This is a really wonderful book and it covers 46 years worth of Chinese history and we weren’t able to touch on everything that you cover, so I think that just means everybody’s going to have to go out and make sure to order a copy of your book. It’s China after Mao: The Rise of a Superpower and I definitely recommend it. Thank you so much for joining me today. Thank you so much for this conversation.
Frank Dikötter
Thank you. It was a pleasure.
Key Links
China After Mao: The Rise of a Superpower by Frank Dikötter
Learn more about Frank Dikötter at Wikipedia
The People’s Trilogy by Frank Dikötter
Democracy Paradox Podcast
Sarah Cook on China’s Expanding Global Media Influence
Steven Levitsky and Lucan Way on the Durable Authoritarianism of Revolutionary Regimes
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