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Mar. 19, 2007
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China Finished Building Socialism
// The People's Republic Prepares to Modernize
According to summaries of the recently-concluded session of the Chinese National People's Congress published this weekend by the Chinese Xinhua news agency, the country's national assembly has adopted legislation that will help smooth the way for China's transition from socialism to capitalism. In addition, the country's leadership has begun to move forward with a plan to gradually liberalize the regime.
One of the main achievements of the fifth session of the Tenth Chinese National People's Congress (NPC) was the adoption of a property law that finally guarantees Chinese citizens the right to own private property. Three years ago, the NPC introduced amendments to the Chinese constitution that recognized private property, but the government's position on the matter was not spelled out in detail. In total, the legislation has taken 13 years to prepare, and it was passed by the NPC last week after six previous attempts had failed. Many experts consider the 247-article document to be key to China's eventual economic transition from socialism to capitalism. This view was confirmed by Chinese Premier Wen Jiabao, who declared that the NPC's decision will help China "create an open and honest market system."

In practice, however, the law will defend the interests only of city residents and does not guarantee peasants ownership of their land. To placate rural residents and avert a possible eruption of growing tensions between the country's 400 million urbanites and 800 million peasants, many of whom live in grinding poverty, Beijing has decided to increase spending on the countryside to $51 billion in 2007, and residents of rural areas will presumably receive the lion's share of the $38 billion that the government has earmarked for education and social spending. A clear example of the kind of social upheaval that Beijing wishes to avoid took place last week in the town of Zhushan in the country's southern Hunan Province, where 20,000 people, mostly farmers, took to the streets to protest a doubling of bus fare over the Chinese New Year holiday, a popular time for travel. The authorities deployed riot police and the military to break up the demonstrations and to stop the crowd from storming the regional administration building, and in the clashes that followed dozens of people were wounded and at least one student was killed.

In addition to rural farmers, the authorities are also keen to show their generosity to the country's business sector. The NPC passed a law introducing a flat 25% income tax, which will mainly hit foreign companies: until now, Chinese firms paid 33%, while foreign companies paid between 15 and 24%. Beijing has also decided to create a state-owned company that will invest the country's currency reserves, which are estimated at around $1 trillion. According to Wen Jiabao, "the majority of the reserves are in US dollars and American securities, but Washington has nothing to fear." At a press conference after the conclusion of the NPC session, Mr. Wen also announced that China will soon move to restrict the flow of foreign investment in the Chinese economy. "We need to increase consumption within the country, in order to be less dependent on foreign capital," he said.

The Chinese premier had even more shocking things to say about politics. In a meeting with journalists, Wen Jiabao complained at length about the problem of corruption in China and unexpectedly offered his own recipe for dealing with the issue: "We need to decrease the excessive concentration of power and strengthen the control exercised by citizens over the actions of the government. We need large-scale political reform," he said, adding, "Democracy, the rule of law, the human rights are universal values. That means democratic elections as well."

Here one of the western journalists present attempted to catch out the premier by asking whether Mr. Wen's understanding of democracy coincides with the point of view of Zhao Ziyang, the moderate Chinese Communist Party general secretary who was unceremoniously removed from his post for opposing martial law and the use of force in the response to the Tiananmen Square protests in June 1989. Though Zhao remained under house arrest until his death in January 2005, his views on the necessity of encouraging the Chinese government to make steps towards adopting a western-style democracy were collected in a book that was published posthumously in Hong Kong. Wen Jiabao initially appeared taken aback by the question, but he recovered quickly and replied, "these are somewhat different things, and I have never read any books by Zhao Ziyang." The premier's reply is somewhat dubious, since he spent many years as Zhao Ziyang's head assistant and is still believed to be secretly sympathetic towards many of his fallen mentor's opinions. Whatever the case may be, the Chinese state-owned television station CCTV showed the entire conversation live and uncensored in a move that was both extraordinary and possibly indicative of things to come: the "Chinese model" may soon no longer boil down to "market economics for a single-party dictatorship." Perhaps a gradual liberalization of the regime along the lines of South Korea and Taiwan is in the works.

Alexander Gabuyev

All the Article in Russian as of Mar. 19, 2007

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