Communist China’s Shift to the Left?

Ron Becker
Northeastern StateUniversity

    Only those who work inside the gates of Zhongnanhai can say for sure, but there are signs that an ideological battle is escalating within the government of the People’s Republic of China. (1)  In the “one-party two factions” system, resurgent neo-leftists appear to be challenging the liberal free-market capitalist forces of privatization. The neo-leftists, of course, are the ideological descendants of the old-guard Marxist-Maoists reclaiming their role as the champions of the underclass. The neo-leftists aim to slow down the privatization process which has produced a dangerous rich-poor gap after twenty-five years of capitalist development. From the perspective of the left, too many rural workers, urban workers, demobilized soldiers and underemployed college graduates have become casualties of the economic liberalization process. (2)  With unemployment, corruption, crime and environmental degradation all on the rise, a huge national protest movement is becoming a real possibility. One is tempted to think that the PRC might be headed toward a communist revolution.

    Over the past few years, confrontations between the underclass and government authorities have become larger, more numerous and more violent. In some cities protests have involved as many as 20,000 people at a time. In 2004, more than 200 "mass incidents of unrest" occurred each day. According to official Chinese police reports, in 2005 there were 87,000 “mass incidents” (protest demonstrations involving more than 100 people) within China, an average of 250 per day and more than quadruple the number a decade ago. (3)  In the deadliest reported incident, at least three villagers in Guangdong province were killed in December 2005 when police opened fire on demonstrators protesting inadequate compensation from land seized for a power plant. As the Guangdong incident illustrates, a primary cause of these mass incidents is the Chinese version of eminent domain. In the countryside the government is requisitioning farmland and selling it to private commercial developers. (4)  Reportedly, the takings are “typically schemes where local governments and business developers (act in concert)…so that they can take farmers’ land away as cheaply as possible.” (5)

    Likewise, in the cities the government is selling-off state-owned enterprises (SOE’s) to private investors resulting in labor abuse reminiscent of the nineteenth century industrialization in Great Britain and the United States. Of particular concern is the fact that record amounts of foreign direct investment (FDI) have resulted in close to half a million companies set up in China by foreign investors since 1980, but very few have provided decent work to their employees with regard to wages, working time, social security or occupational health and safety. In regard to the latter, China has experienced an annual average of about 1 million industrial accidents since 2001, according to the State Administration of Work Safety, with nearly 140,000 deaths each year, and millions of workers work 60 to 70 hours a week while living in dormitories of up to 20 people in each room. Inequity is growing and there are now almost as many recently unemployed people in China as in the rest of the world combined. Since private corporations are rarely the foremost advocates of labor reform, it is not hard at all to imagine what Engels would say about the current condition of the working class in China. (6) 

    In both cases, rural and urban, the losers of the privatization process have been the farmers or workers, and the winners have been the friends and family members of party officials who operate according to the principles of guanxi,which can be translated as “social connections,” "relation-based capitalism” or “crony capitalism.” More succinctly, the transformation to capitalism in China means that “capital, licenses, and contracts flow to those with connections to officials and to their friends and relatives, who, in turn, maintain close relations with, and remain beholden to, the regime. (7) 

    Growing inequality, unemployment, crime, corruption, pollution and the concomitant threat of mass unrest appears to have rejuvenated the left. In itself the rising ranks of the new rich are enough to cause considerable angst among the left. Clearly, the egalitarian public philosophy of the Communist dynasty’s founding fathers is being overtaken by an increasingly stratified class society in the transition to “market socialism.” While some of the often-reported economic statistics are impressive, some of the lesser-known statistics are troubling. Over the past twenty years China’s annual GDP growth has averaged nearly ten percent. China is currently fifth among the world’s nations in GDP, passing France in 2005, expected to overtake Great Britain in 2006 and Germany soon thereafter, which will place the PRC as the world’s third largest economy behind the U.S. and Japan. By 2001 over 40 percent of industrial output came from private companies, and more than 30 percent of nonagricultural employees worked for private or joint venture firms. (8)  (Joint ventures are the product of the law in the PRC that “requiresforeign investors in many industries to cooperate with Chinese partners, most of whom enjoy close ties to the government. These firms remain insulated mainly in three coastal enclaves and in ‘special economic zones’ set apart from the larger Chinese economy.” (9))  China's per capita GDP exceeded the $1,000 threshold in 2003, and is currently around $1,400, and roughly ten percent of the population of China now receives an income over $7,000 per year, which is expected to increase to twenty percent over the next ten years. The problem with all this is that China’s enormous tide of economic growth has certainly not lifted all boats evenly.

    Viewed from the left, the most significant result of the laissez-faire capitalist binge and madcap economic growth has been the creation of a giant income gap. “Privatization of housing has hurt the interests of the weakest group, left ordinary people unable to afford housing, unable to see a doctor, and unable to send their children to school." (10)  In the countryside “people live in what can only be described as pre-civilized conditions with almost half of China's population living on $2 a day.” While China’s emerging bourgeoisie consists in very large part of state officials, their families and friends who are getting rich on guanxi, the poor masses in China have a growing sense of exploitation. The GINI Index of inequality shows that China has reached the class-envy danger zone of political volatility. Estimates from both the World Bank and the Chinese government agree that income inequality has increased fifty percent in the PRC since economic reform began around 1980. At present the top one percent of all Chinese households control over sixty percent of China’s wealth (a level of inequality even worse than that of the U.S. where the top five percent control sixty percent of the wealth).(11)  A recent report indicates that “the poorest fifth of urban residents received only 2.75 per cent of total income in urban areas, whereas the richest fifth commanded 20 times as much.” (12)  By all accounts those with the right connections have become extremely wealthy, while the great majority of Chinese people remain desperately poor.

    The growing inequality and rising social unrest appear to have shifted Chinese politics to the left in the elections of 2002. In the one-party two factions politics of the PRC the current president of China , and more importantly the General Secretary of the CCP (Chinese Communist Party), Hu Jintao sits on the center-left. Mr. Hu assumed the presidency in March 2003 and has subsequently worked to establish his leftist credentials by promoting egalitarian values and distancing himself from the previous government. (13)  Hu’s predecessor, Jiāng Zémín was center-right. Mr. Jiāng was thought of as the "core of the third generation CCP leaders, serving as General Secretary of the Communist Party of China from 1989-2002, and as President of the PRC from 1993 to 2003. After the Tiananmen incident in 1989, Jiang was hand-picked by Deng Xiaoping to carry out Deng’s capitalist reforms. In the 1980s it was Deng's idea of “socialism with Chinese characteristics” that famously declared "to get rich is glorious" and "some must get rich before others," then it was Jiang who coined the term "Socialist Market Economy" in 1993 to represent the transformation of China's centrally-planned socialist economy into a government-regulated capitalist market economy. Jiang Zemin’s major policy initiatives were to open the door for the wealthy private business class to join the Communist Party, and then oversee a constitutional change to sanctify private property. Remarkably, Jiang’s contribution to Chinese political theory, the “Three Represents,” made it clear that in addition to the farmers, the workers and the intellectuals, the Party stood for the new bourgeoisie referred to as the “advanced productive forces.” (14)  In sum, Jiang Zemin “eschewed further political and institutional reform in favor of accelerating economic reform.” (15) Thus, the result of China ’s economic transformation has been extraordinary economic growth -- along with the closing of many SOE’s, an increasing unemployment rate, rising crime, rampant corruption, growing inequality, environmental degradation and mass unrest.

    The left in China viewed Jiang Zemin’s policies as a means to allow the new bourgeoisie and foreign capitalists to enrich themselves by purchasing public property at bargain basement prices, and at the of the expense of the working class. (16)  The left also became concerned about the fact that the PRC has become home to 16 of the world's 20 most polluted cities. (17)  Added to this was the rampant corruption of the 1990’s: “Various indicators, pieced together from official sources, suggest endemic graft within the state. The number of ‘large-sum cases’ (those involving monetary amounts greater than $6,000) nearly doubled between 1992 and 2002, indicating that more wealth is being looted by corrupt officials.” (18)  The result of these factors was China ’s shift to the left in 2002.

    Closely allied to President Hu, the current premier (or prime minister) in China also appears to be left-center. Wen Jiabao was on the losing (leftist) side of the inner-party struggle over the response to the students at Tiananmen (the tanks prove that the conservatives won that struggle). It is now known that in the one-party two factions CCP politics,two members of the five-man politburo standing committee voted for martial law on May 17th 1989, with two against, including Mr. Wen’s mentor Zhao Ziyang, and one abstaining. (19)  Mr. Wen “is remembered by many Chinese as having accompanied Zhao Ziyang, the former general secretary of the CCP deposed in 1989 for his opposition to the military crackdown on demonstrating students in Tiananmen Square, on his meetings with the students.” (20)  Since 2002, Hu and Wen have revealed themselves as leftists concerned with the downtrodden by touring hospital wards of SARS patients, meeting with HIV-AIDS victims and spending holidays with peasants. Hu and Wen portray themselves as the “president of the people” and the “premier of the people,” respectively. Hu speaks often of helping China 's poor, improving public health and enhancing public education.

    The ideological contrasts between Jiang Zemin the boss of the "Shanghai clique" in the Politburo Standing Committee and the leaders of the new fourth generation government are striking. One astute commentator gives the following account of Hu and Wen:

    Since taking over as Party General Secretary Hu has appeared to have a more egalitarian style than his predecessor. Hu and his premier, Wen Jiabao, proposed to set up a Harmonious Society which aims at lessening the inequality and changing the style of the "GDP first and Welfare Second" policies. They focused on sectors of the Chinese population that have been left behind by the economic reform, and have taken a number of high profile trips to the poorer areas of China with the stated goal of understanding these areas better. Hu and Wen Jiabao have also attempted to move China away from a policy of favoring economic growth at all costs and toward a more balanced view of growth that includes factors in social inequality and environmental damage, including the use of the green gross domestic product in personnel decisions. (21)

    Moreover, according to one of the most distinguished scholars of modern Chinese politics, Professor Cheng Li, “Hu has selected many like-minded provincial leaders to carry out his agenda.”Whereas many of Jiang Zemin’s protégés can be thought of as “princelings, notorious for their obsession with political networking and nepotism” with backgrounds in the fields of finance, trade and the oil industries,most of “Hu’s associates come from less privileged families.” And, not surprisingly, Jiang’s cadre “advanced their careers in coastal regions,” while Hu’s cadre came from China ’s neglected heartland and poorest regions. Thus, “under the leadership of the third generation, resources were disproportionately allocated to the coastal cities” especially Shanghai. “Hu and the fourth generation of leaders, however, are now effectively implementing their western development policies.” (22)

    Almost immediately after he assumed the position of General Secretary of the CCP, Hu characterized his administration as the one that “governs in the interest of the people.” This attitude also contrasts sharply with that of his predecessor, Jiang Zemin, who “had a reputation for representing the interests of the rich and powerful.” Unlike Jiang with his “elitist policy orientation,” Hu and Wen have “adopted more-favorable policies toward the agricultural sector, ordering all business firms to pay overdue wages to migrant workers.” During Hu’s first year in office employers reportedly made $2.7 billion in backpayments. (23)

    Then, during their second year in office, President Hu and Prime Minister Wen launched a major anti-corruption campaign, which translated means an assault on guanxi, i.e., public power for private gain. According to The Economist, “Mr. Hu’s rebranding of the party includes a clampdown on official corruption, the setting up of new hotlines for urban citizens to express their views and denounce wayward officials, and an attempt on the part of top CCP leaders to demonstrate a keen interest in the lives of the disadvantaged.” (24)  In February 2004, “after 13 years of preparation,” the Hu administration managed to implement “the first official anti-corruption measures taken by the CCP in its 55 year history of ruling the country.” (25)  In February 2006, the party's Central Discipline Inspection Commission announced that it had disciplined 115,000 party members for corruption in 2005. (26)  Cheng Li gives a remarkable account of the numerous high-ranking party and government officials who have been charged with corruption by the Hu government. A few have been sentenced to death, and thousands have escaped overseas. (27)

    This year, the CCP’s shift to the left has continued to generate major policy initiatives. In March 2006, the National People’s Congress approved the Central Committee and Politburo plan for a $42.5 billion rural “New Deal” of increased government spending to improve the welfare of farmers. Ostensibly, "Building a New Socialist Countryside," means that in addition to the infusion of government cash for peasants and rural areas, less farmland will be taken from farmers and turned-over to private developers. (28)  The shift to the New Deal faction has also resulted in tax relief for the poor as the threshold for the personal income tax has recently been increased from a monthly income of 800 yuan ($100) to 1,600 yuan, and a centuries-old farm tax has been scrapped. (29)  With regard to the rich, a leftist attitude toward big business is also becoming clear: “policies allowing Chinese private companies to take over large state-run corporations, selling more shares of Chinese banks to foreign financial giants, allowing international companies to acquire Chinese companies -- have been scaled-back, put on hold or are receiving greater scrutiny.” (30)  (In 1980 only 23 U.S. businesses were operating in China, with combined investment of $120 million. As of last year, there were 49,000, with combined investment of $51 billion.) For example, according to the Wall Street Journal, a $375 million bid by the Carlyle Group, a “prominent U.S.-based private-equity firm,” for an 85% stake in state-run Xugong Group Construction Machinery Co., a big player in China's construction-machinery sector, is now “drawing scrutiny.” (31)

    Even more stunning is the ideological struggle that erupted in the typically rubber-stamp National People’s Congress during March 2006. The result was a suspension of the “rightist’s counterrevolutionary” plan to sanctify private property. The born-again left appears to have won the debate by virtue of a plea for the protection of socialist property. (32)  The defeated draft law, eight years in preparation, was intended to codify the broad conception of private property rights that the Jiang government had successfully promoted in the form of an amendment to the Constitution. According to the New York Times, “Mr. Hu and Mr. Wen wittingly or unwittingly invited the debate when they made tackling growing inequality a center of their propaganda efforts.” Now, “the state-run news media are abuzz with calls to make ‘social equity’ the focus of economic policy, replacing the earlier leadership's emphasis on rapid growth and wealth creation.” (33)  Ultimately, proponents of the private property law had underestimated “the continued appeal of socialist ideas in a country where glaring disparities between rich and poor, rampant corruption, labor abuses and land seizures offer daily reminders of how far China has strayed from its official ideology.” (34)

    So, what does the capitalist-curbing, socialistic shift to the left mean for the prospects of “democracy” in China?  Is not democratic reform in China dependent upon continued economic liberalization? In Western political thought the capitalism-produces-democracy thesis has pretty much attained the status of holy dogma. According to the new orthodoxy, “capitalism isn't merely a necessary precondition for democracy in China. It's a sufficient one.”(35)  With regard to the PRC, President G.W. Bush has said, "I believe a whiff of freedom in the marketplace will cause there to be more demand for democracy," and trade with China will "help an entrepreneurial class and a freedom-loving class grow and burgeon and become viable." (36)  In political, economic and sociological theory, the idea that economic liberalization produces democracy in developing countries is usually traced back to Joseph Schumpeter (1942), S.M. Lipset (1959), Milton Friedman (1962) and Barrington Moore (1966). (37)  In Moore’s words, “No bourgeoisie, no democracy.” (38)  Thus, in theory, the rise of the bourgeoisie is expected to weaken the control of the CCP. Why? In Capitalism and Freedom,Friedman explains that “a society which is socialist cannot also be democratic,” while on the other hand “capitalism is a necessary condition for political freedom.” “Capitalism,” Friedman says, “promotes political freedom because capitalism separates economic power from political power and in this way enables the one to offset the other.” (39)

    Does capitalism separate economic power from political power? How can anyone believe such a proposition? Friedman’s doctrine has proven to be just as false for China as it is for the U.S.and Japan and every other capitalist country. Capitalism does not separate economic power from political power, and capitalism does not foster democracy. (40)  Certainly, not every capitalist economy has produced a democratic government. The truth is that “in places like Singapore and Malaysia, capitalist development has buttressed, rather than undermined, authoritarian regimes.” (41)  As for contemporary China, the renowned China expert Minxin Pei points out that:  

In large-and medium-sized state enterprises (ostensibly converted into shareholding companies, some of which are even traded on overseas stock markets), the Communist Party secretaries and the chairmen of the board were the same person about half the time. In 70 percent of the 6,275 large- and medium-sized state enterprises classified as "corporatized" as of 2001, the members of the party committee were members of the board of directors. All told, 5.3 million party officials--about 8 percent of its total membership and 16 percent of its urban members-held executive positions in state enterprises in 2003, the last year for which figures were available. (42)

    Capitalist wealth and political power have become wholly entwined in China. Over the past twenty years a partnership has formed between the political elites and their friends who have taken control of the private wealth through guanxi.Jiang Zemin actually made the connections between wealth and power official with the “reform” intended to allow the capitalists to join the “Communist” party, and with “The Three Represents,” Jiang made it clear that the Party intended to defend and protect the wealthy capitalists. In Marx’s terms, after Deng Xiaoping the Politburo of the PRC was on the way to becoming the committee for managing the common affairs of the whole bourgeoisie. (43)  Since the bourgeoisie in contemporary China consists largely of state officials and the families, friends and business partners of state officials, one cannot think that the growth of capitalism has separated economic power from political power. Rather, the fortunes of the bourgeoisie are derived from and dependent upon the Communist Party. (44)  As Minxin Pei puts it:

    The riches available to the ruling class tend to drown any movement for democratic reform from within the elite. Political power has become more valuable because it can be converted into wealth and privilege unimaginable in the past. At the moment, China's economic growth… makes the ruling elite even more reluctant to part with power.” (45)

    Contrary to the “capitalism and freedom” thesis, the bourgeoisie in China is not going to attempt an overthrow of the party. Instead the greatest supporters of the party are the bourgeoisie. The opposition to the alliance of wealth and power does not come from the bourgeoisie; it comes from the working class and underclass. In the 1980s and 1990s economic liberalization allowed the conversion of power into wealth. Under the present circumstances the ruling party elite is not going to give up political power and the rising Chinese bourgeoisie is not about to ask them to give up power. On the contrary, “the members of China's new bourgeoisie emerge more as agents of the state than as potential antagonists." (46)

    With the merger of power and wealth in China, capitalism has had a perverse effect on democratic reform. Yes, China has introduced direct elections for village chiefs in more than 660,000 villages, but according to The Economist “vote-buying and-selling, stuffing ballot boxes and violence have had a ‘considerable impact’ on rural elections. The Chinese media also speak of frequent, sometimes successful, attempts by wealthy businessmen to buy official positions or seats in local legislatures.” (47)  This is the “Chinese puzzle” confronting Hu Jintao-- what to do about Communist oligarchy and authoritarian capitalism. The indications are that Hu will try to find the answer to China ’s problems in a strengthened Leninist-Maoist Communist Party. Nevertheless, what China ’s shift to the left means for democratic reform is an open question. One can only wonder if the majority of Chinese people would vote for the party of Mao and Hu or the Party of Deng and Jiang.

Notes

(1) Zhongnanhai ("China's Kremlin”) is the historic center of operations and residence for Communist Party leaders in the Chinese capital, Beijing.

(2) David Webb, “China politics: Hello Mr. Democracy? Prospects for political reform,” Economist Intelligence Unit – Views Wire 2004-10-19; Chito Romana, “China Facing Economic, Social Unrest: China's Economic Direction in Conflict,” ABC News Internet Ventures, April 10, 2006: Romana writes of, “a growing divergence in the supposed consensus behind the model that has propelled China's economic boom since the 1990s,” and "unprecedented controversy and dissent among Chinese intellectuals.” According to Edward Cody, “Shrinking Opportunity on China's Campuses: Government Seeks to Limit Glut of Students Produced by a Booming Economy,” Washington Post Foreign Service, May 12, 2006: “Large numbers of well-educated but jobless youth, could become a political problem for the Communist Party. The official National Development and Reform Commission estimated last week that 60 percent of this summer's college graduates will have trouble finding jobs. Overpopulation at Chinese universities has emerged as the latest in a string of problems brought on by the country's swift economic growth -- the downside of progress. College graduates are now more likely to face unemployment than were their predecessors, whose diplomas nearly guaranteed them a job in business or government.”

(3)  Joseph Kahn, “A Sharp Debate Erupts in China over Ideologies,” New York Times, March 12, 2006; Melinda Liu, “After 25 years of sizzling growth, Beijing's shifting to a new economic model. Can Big Red go green?” Newsweek International, Jan. 30, 2006; Edward Cody, “In Chinese Uprisings, Peasants Find New Allies: Protesters Gain Help of Veteran Activists,” Washington Post Foreign Service, Saturday, November 26, 2005; Chris Buckley, “China reform agenda seen under ideological cloud,” Reuters News, 2006-03-06; “Special report: Politics in China,“ The Economist, June 30, 2001, pp. 21-23; George Gilboy, Eric Heginbotham, “China's Coming Transformation,” Foreign Affairs, July-August 2001 v80 i4 p26; China Statistical Yearbook 2005,China Statistics Press, 24th Edition.

(4) Edward Cody, “In Chinese Uprisings, Peasants Find New Allies: Protesters Gain Help of Veteran Activists,” Washington Post Foreign Service, November 26, 2005; Chris Buckley, “China reform agenda seen under ideological cloud,” Reuters News, 3/6/06.

(5) Jeff Riedinger, MSU International Studies and Programs, News Release, Sunday, May 07, 2006.

(6)  Doug Guthrie, “China, the Quiet Revolution -- The Emergence of Capitalism“, Harvard International Review, Summer 2003, pp. 48-53. Friedrich Engels, The Condition of the Working-Class in England in 1844 (1845); Xing Zhigang, “China's mining sector sounds the alarm,” (China Daily) 2004-12-03 “In some accidents, private firm owners even collaborated with local officials to cover up the death toll and injuries in order to prevent their mines from being shut down.” "Quite a large number of enterprises have distorted the relationship between work safety and economic gains," says a recent Xinhua commentary.

(7) Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006; Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001 p23.

(8) “Special report: Politics in China,” The Economist, June 30, 2001, pp. 21-23; George Gilboy, Eric Heginbotham, “China's Coming Transformation,” Foreign Affairs, July-August 2001 v80 i4 p26; Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006 i153.

(9) Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001.

(10) Chito Romana, “ China Facing Economic, Social Unrest: China's Economic Direction in Conflict,” ABC News Internet Ventures, April 10, 2006.

(11) Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006. AsiaPulse News, “ANALYSIS - CHINA PAYS ATTENTION TO THE WIDENING INCOME GAP,” March 6, 2006.

(12) Alexa Olesen, “Chinese Premier Vows to Protect Farmers,” Associated Press Update, 03.14.2006.

(13) Joseph Kahn, “A Sharp Debate Erupts in Chinaover Ideologies,” New York Times, March 12, 2006.

(14) Gary Hogan, “In China, democracy equals disaster,” The Baltimore Sun, 8/29/05;“Special report: Politics in China ,” The Economist, June 30, 2001, pp. 21-23.

(15) George Gilboy, Eric Heginbotham,“ China's Coming Transformation,” Foreign Affairs, July-August 2001 v80 i4.

(16) Joseph Kahn, “A Sharp Debate Erupts in China Over Ideologies,” New York Times, March 12, 2006. In an insightful report from the Asia Times (4/26/06) titled “Citigroup caught in Beijing tussle,” (http://www.atimes.com)  Sue Anne Tay writes, “Foreign investors in China's bank sector, especially US bank giant Citigroup, have been confused by the mixed signals Chinese banking regulators have sent regarding caps on foreign investment in domestic banks over the past few weeks.” According to Tay, current PRC rules limit foreign investments in domestic banks to 25%. However, Citigroup was attempting to close a deal which would have given it a majority stake in the Guangdong Development Bank (GDB) and allowed it unquestioned authority to drastically restructure the bank along US operational lines. “Combined with what had been a positive official atmosphere towards a rapid pace of bank reform, many believed that a successful Citigroup takeover of GDB would eventually lead to a country-wide lifting of foreign investment caps on banks.” However, “privatization, has become an increasingly sensitive issue,” since “views regarding China's economic modernization have experienced a discernible shift to the left in the past few years,” and “apparently, the political environment for financial reform and China's transition to a market economy has grown unfavorable for Citigroup and other foreign banks.” Tay< continues, “Critics of financial reform on the Chinese left argue that finance is a strategic sector which should not fall into the hands of foreigners…. A major trigger factor that heightened criticism against banking authorities was the recent sale of 9% of China Construction Bank (CCB) to Bank of America (BOA) for 1.15 yuan (US$0.14) per share. BOA paid what was perceived too little - 20% of the book value of assets - in comparison to what it reaped following the spike in valuations after CCB went public. Critics charged that regulators gave foreigners ‘too good a deal’.” In the end, the deal appears to be dead despite the fact that “former president George H W Bush wrote a letter to the Chinese Ministry of Foreign Affairs to seek official support for the bid, claiming the deal ‘would be conducive to the overall development of the Sino-US relationship’.”

(17) Melinda Liu, “After 25 years of sizzling growth, Beijing's shifting to a new economic model. Can Big Red go green?” Newsweek International, Jan. 30, 2006 issue.

(18) Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006.

(19) Andrew J Nathan and Perry Link (eds.), The Tiananmen Papers, Little Brown, 2001. John Derbyshire, “Beijing, Past and Future: What the Tiananmen Papers show,” National Review, Feb 5, 2001 v53 i2. Andrew J. Nathan, “The Tiananmen Papers. (secret documents on Chinese reaction to student demonstrations of 1989),” Foreign Affairs, Jan-Feb 2001 v80 i1.

(20) David Webb, “China politics: Hello Mr. Democracy? Prospects for political reform,” Economist Intelligence Unit – Views Wire, 2004-10-19.

 (21) From Wikipedia, the free encyclopedia, “Hu Jintao.” According to Wikipedia, “The Green Gross Domestic Product (Green GDP) is an index of economic growth with the environmental consequences of that growth factored in. In 2004, Wen Jiabao announced that the green GDP index would replace the GDP index itself in personnel decisions of the Communist Party of China. Both party and state seem to have moved away from a definition of development that focuses solely on GDP growth and toward a more balanced definition which includes social equality and environment effects.”

(22) Cheng Li, “Hu’s New Deal and the New Provincial Chiefs,” China Leadership Monitor, No. 10, SPRING 2004

(23) Ibid.

(24) David Webb, “China politics: Hello Mr. Democracy? Prospects for political reform,” Economist Intelligence Unit – Views Wire, 2004-10-19.

(25) Cheng Li, “Hu’s New Deal and the New Provincial Chiefs,” China Leadership Monitor, No. 10, SPRING 2004

(26) Alexa Olesen, “Chinese Premier Vows to Protect Farmers,” Associated Press Update, 03.14.2006.

(27) Cheng Li, “Hu’s New Deal and the New Provincial Chiefs,” China Leadership Monitor, No. 10, SPRING 2004

(28) Chris Buckley, “China reform agenda seen under ideological cloud,” Reuters News, 2006-03-06; Joseph Kahn, “A Sharp Debate Erupts in China over Ideologies,” New York Times, >March 12, 2006.

(29) Alexa Olesen, “Chinese Premier Vows to Protect Farmers,” Associated Press Update, 03.14.2006.

(30) Chito Romana, “ China Facing Economic, Social Unrest: China's Economic Direction in Conflict,” ABC News Internet Ventures, April 10, 2006.

(31) Kathy Chen, “Amid Tension with U.S., China Faces Protectionist Surge at Home,” The Wall Street Journal, 4/3/064/3/

(32) Jonathan Watts, “ China's leftwing scuppers property reform legislation,” Guardian, March 9, 2006.

(33) Joseph Kahn, “A Sharp Debate Erupts in China Over Ideologies,” New York Times, March 12, 2006.

(34) Ibid.

(35) Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001; MinxinPei,“The dark side of China's rise,” Foreign Policy,March-April 2006.

(36) Lawrence F. Kaplan, “Why trade won't bring democracy toChina: Trade Barrier,” The New Republic, July 9, 2001.

(37) Joseph Schumpeter, Capitalism, Socialism, and Democracy,New York: Harper and Brothers (1942); S.M. Lipset, “Some Social Requisites of Democracy: Economic Development and Political Legitimacy,” American Political Science Review, 53, 1, 69-105 (1959); Milton Friedman, Capitalism and Freedom, U. of Chicago Press(1962); Barrington Moore, Social Origins of Dictatorship and Democracy, Boston: Beacon Press (1966). Karl Marx also said a few things about the connection between capitalism and bourgeois representative government.

(38) Barrington Moore, Social Origins, p. 418.

(39) Milton Friedman, Capitalism, pp. 8-10.

(40) As James Madison correctly points out in The Federalist Papers, pure democracy has proven to be incompatible with the rights of property. Thus, democracy was explicitly rejected by the Founding Fathers who purposefully established a republic. Over time the meaning of democracy was transformed by Schumpeter (Capitalism p.269) and his like so that the term republic became synonymous with democracy. In any case, capitalism is the dictatorial antithesis of democracy. Obviously, capitalism is dictatorial because the capitalist has the legal right to fire workers, hire workers, and make other essential decisions concerning what to wear, acceptable hairstyles, how to behave, what time and days to work and not work, what tasks to perform, when to eat and pretty much anything else, all without the least bit of democratic input from the workers. Historically, socialism and the plea for “economic democracy” originated as the workers’ response to the heartless exploitation of capitalist oligarchies. (See Howard J. Sherman, Reinventing Marxism, Johns Hopkins University Press, 1995, pp 177-192.) Thus, capitalism in China entails the development of social classes and economic inequality, with the wealthy increasingly attaining inherently undemocratic power over the masses of workers.

(41) Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001.

(42) Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006.

(43) Karl Marx & Frederick Engels, Manifesto of the Communist Party, (1848) Section I.

(44) Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001.

(45) Minxin Pei,“The dark side of China's rise,” Foreign Policy, March-April 2006.

(46) Lawrence F. Kaplan, “Why trade won't bring democracy to China: Trade Barrier,” The New Republic, July 9, 2001.

(47)  “Special report: Politics in China,” The Economist, June 30, 2001.