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Looking back -- in order to prepare for what's ahead

2009 looms, but first we look at major trends from 2008 and note important anniversaries to be marked next year

December 29, 2008

The brutal economic downturn is the most important issue in both the United States and China today. It has been an incredible year in other realms as well. Here we highlight key events and trends from 2008 and remember key anniversaries we’ll mark in 2009. This article is adapted from the December 17 and 24 issues of Talking Points, our weekly newsletter. 

This display at Shanghai's Yu Garden's for the 2008 lunar new year was optimistic. The bull knocks out the bear. Alas, the bear won in 2008. In late December 2008, the Shanghai Stock Exchange composite index was down 65% from where it was the year before. Photo by Christopher Augapel (Creative Commons).

In spring 2008 pollsters found that virtually all Chinese considered inflation a huge problem. Food and housing prices, especially, were rising rapidly. China’s central bank was tightening credit and economic planners were looking for ways to cool the economy. The shrinking of export markets and the end of Olympics-related spending has led to factory closings and massive lay-offs. The country’s central bank joined others last month in cutting interest rates and more cuts are coming. On December 16, bank chief Zhou Xiaochuan said, prices are “going down, and sometimes even faster than we think.” Like the incoming Obama administration in the U.S., China’s government will fund “shovel-ready” infrastructure projects as part of its two-year US$586 billion economic stimulus plan. Some criticize the plan as doing little to bolster Chinese consumer spending, but others argue construction will put people to work right away and produce long-term results by addressing transportation and energy needs.

News coverage has focused on the flow of laid off workers back to sometimes distant villages. The snowstorms which stranded tens of millions of migrant workers at the start of the lunar new year reminded us of the fragility of China’s infrastructure and the vulnerability of these people. Remittances from relatives working in cities did much to improve rural household incomes. While 30 years of economic reforms have improved most people’s living standards, many still live in desperate poverty. In the spring, nine out of ten Chinese identified the gap between rich and poor as a pressing problem. That gap is likely to grow, but the recently released annual report of the Chinese Academy of Social Sciences says the income of China’s richest 20% is already 17 times the income of the poorest 20%.

China’s leaders are acutely aware of the tensions these economic problems generate. Building a “harmonious society” was one of the themes at last year’s Communist Party national congress. Nonetheless discontent over rising prices, job losses, and other issues has driven demonstrations in many parts of China. College students have not been participating in most of these, but unemployment among college graduates is 12% and perhaps twice that for recent graduates.

College students and grads (as well as Chinese students abroad) were eager participants in the spring demonstrations to protest foreign criticism of Chinese government policies and in the mobilization of resources to aid those harmed by the May 12 earthquake in southwest China. They effectively used cell phones and the internet to organize parades, blood drives, and donation campaigns.



Yingxiu - one of the hardest hit towns in Sichuan, elementary school flag flying. Photo by Julia Kao, Creative Commons license.

Civil unrest in Tibet yielded a stern government response and that produced considerable criticism abroad. Some critics sought the spotlight afforded by the Olympic Torch Relay to demonstrate their opposition to the policies and practices of the Chinese government. Beijing authorities and many in China took great offense at this, accusing critics of trying to “keep China down” and denying the country the chance to celebrate its hosting of the Olympics. Just a month later, though, the horror of the Sichuan earthquake caused Chinese netizens and others to rally to the aid of those affected.

The quake killed almost 90,000 people and left ten million homeless. Chinese did not wait for their government to act, though it soon did. Relief supplies were trucked in, money raised, and workers dispatched. An unprecedented national mourning period was declared. Much has been done by the government and by non-governmental organizations, but the recovery process has only begun. It will require years and sustained investment.





Six weeks after the quake, these boys play in the space between temporary housing blocks. Photo by 23hours, Creative Commons license.

Some officials and citizens won acclaim for their speed and skill in responding to the crisis. But the quake also focused

 Photo by Marc van der Chijs, Creative Commons license.

attention on the corruption and incompetence of others. The already mentioned survey (conducted before the quake) showed that eight out of ten Chinese considered official corruption to be a major problem. Here, though, the slow and inept responses of some officials may have cost lives and the corruption of others may have permitted contractors to get away with building shoddy schools whose walls collapsed and crushed thousands of children. Hundreds of millions of television viewers were reminded of those children and the millions more whose lives were disrupted by the quake when Lin Hao, a child who helped save his schoolmates, walked with basketball star Yao Ming in the Olympic Games opening ceremony.

No sporting contest was as rigorously prepared for or as highly anticipated as this year’s Summer Games. Some $43 billion was invested in beautiful venues, new transportation facilities, and more. Imaginative roadside landscaping was undertaken and unregistered residents herded out. Water and electricity was diverted from neighboring areas to ensure the capital had a secure supply. Factories were shuttered and car travel restricted in an effort to reduce air pollution. Soldiers and others trained for months to deliver music and dance performances of astonishing scale and precision. They and technicians designing the world’s largest LED screens labored under the direction of a creative team headed by film director Zhang Yimou. The ceremonies were stunning and the impression they conveyed was of a country on the move. Editors at Time Magazine were so taken that Zhang was a finalist for its annual “person of the year” designation. The athletic performances were no less amazing. Though there were eligibility and judging controversies, it’s the skill and determination of the competitors that most will remember.

By most measures, the Games were a great success. Visitors and viewers came away with an image of China as technologically sophisticated, disciplined, and united. Many, though, also noted that the Chinese government was vigilant in squelching dissenting voices. Protest zones were designated, but protests were forbidden. Restrictions did not end with the Games. Last week more than 300 Chinese signed an open letter posted on the internet calling for the government to protect human rights and implement far-reaching political reforms. At least one of the signatories, Liu Xiaobo, has been detained. International human rights organizations and others have called on the Chinese government to provide information on Liu and to observe its own laws regarding free speech.

The “08 Charter” drive was timed to coincide with the 60th anniversary of the Universal Declaration of Human Rights. China’s leaders also marked the anniversary, linking it to the 30th anniversary of the economic reforms Deng Xiaoping launched in 1978 (reforms that caused Time to name Deng the 1978 “person of the year”). China’s government prioritizes the right to subsistence over other rights. President Hu Jintao marked the anniversaries by stressing the government will continue to focus on improving living standards.

Those two December anniversaries and a third, the 30th anniversary of U.S.-China diplomatic relations, highlight the complex year it has been. China’s economic reforms and opening to the outside world have produced better living conditions for most of its people and have help tie its economic fortunes to our own. Leaders in both countries meet regularly to strengthen economic relations and coordinate our responses to economic and other challenges. And differences on human rights persist.





On Jan. 26, we'll enter the year of the ox. Above are stamps issued by China and the United States to mark the last year of the ox in 1997. The U.S. has already released pictures of the 2009 stamp. China's postal authorities will release pictures of their stamp on Jan. 5.

In addition to the 12 year cycle of the Chinese zodiac, we can also look to some of important anniversaries and events that await us in 2009. We've already noted the 30th anniversary of China's economic reforms and the 30th anniversary of United States-People's Republic of China diplomatic ties. Below we note several key moments in recent Chinese history: the May 4th demonstrations, the founding of the PRC, the adoption of the one child family policy, and the popular demonstrations of 1989.

1919 –China sided with the Allies in World War I. Thousands of Chinese went to Europe to support this effort. Perhaps 2,500 died there or en route. China’s delegates to the Versailles Peace Conference expected to be treated as part of the winning coalition. However, another member of the Allied side, Japan, insisted that secret agreements guaranteed it would receive Germany’s holdings in China. American, British, and French leaders accepted this and transferred German rights in China to Japan. This outraged many Chinese, especially students, who launched protests in Beijing on May 4th. Chinese in France kept the government’s delegation from leaving its hotel and the Beijing government never agreed to the terms of Versailles Treaty. This example of Chinese mobilizing to pressure their government to stand firm against foreign slights remains prominent in the minds of today’s leaders of China. The date of the Beijing protests now serves as the label for the nationalist awakening and cultural questioning of that era.

1949 – After more than two decades of war, the Chinese Communist Party’s forces defeated Chiang Kai-shek’s forces. On Oct. 1 Mao Zedong stood atop Tiananmen, the Gate of Heavenly Peace, and formally announced the establishment of the People’s Republic of China. A few days earlier, Mao spoke to the provisional parliament, celebrating the defeat of “the reactionary Kuomintang backed by U.S. imperialism” and arguing the Communists had finally ended a century of “oppression and exploitation” by foreigners and domestic reactionaries. As he put it, “Ours will no longer be a nation subject to insult and humiliation. We have stood up.”

That “century of humiliation” began with the 1839 start of the Opium War with Britain. That invasion and those that followed took lives, carved out territorial concessions, opened the country to traders and missionaries, and exempted them and other foreigners within China from Chinese law. Since 1949, China’s government has taken the restoration of China’s national dignity as one of its most important tasks. Bringing Hong Kong and Macau back under Chinese sovereignty were significant milestones in this effort. In the eyes of China’s leaders and most of its people, the natural culmination of this campaign will be the restoration of control over Taiwan.

As a result, the Bush administration’s announcement in October that it would sell $6.5 billion in arms to Taiwan’s Kuomintang-led government was described by Beijing officials as harming its interests. Beijing canceled planned senior meetings with American defense officials to protest the sale. American officials argue they are obliged under the 1979 Taiwan Relations Act to provide Taiwan with defensive weapon systems.

Most analysts doubt the sale will have a negative impact on U.S.-China relations over the long term. This is partially because of the increasing economic ties between China and Taiwan. Since the March election of the Kuomintang’s Ma Ying-jeou as Taiwan’s president, several high-level meetings have been held between the two sides. Regularly scheduled direct flights across the strait are a prominent outcome of these warming ties. China-Taiwan trade has already reached $100 billion a year and more than a million people from Taiwan live and work on the mainland. This past weekend officials hammered out a plan to allow Taiwan banks to enter the Chinese market. Chinese officials also expressed concern about the impact of the economic downturn on cross-strait investors. To aid them in weathering the storm, the Chinese government will loan up to $19 billion to Taiwan businesses operating in China.

This latest announcement is another signal of the Chinese government’s worry that the global financial crisis will lead to further factory closures and lay-offs. Since Deng Xiaoping’s declaration thirty years ago that a cat’s color is irrelevant as long as it catches mice, China’s Communist Party has staked its reputation largely on its ability to foster economic growth and improved living standards. In the past two months, it has pledged to speed up planned construction projects and otherwise stimulate the economy so as to keep people working and head off potential discontent.

As it prepares to mark the 60th anniversary of the founding of the People’s Republic, China’s leaders and people are increasingly confident of their place in world. The country plays significant roles in many international and regional bodies from the United Nations Security Council to the G-20 economic forum. China’s economy is now the world’s fourth largest. Most of China’s 1.32 billion people live longer and enjoy higher living standards than the country’s 542 million did in 1949.

1979 – Through great improvements in prenatal and neonatal care, China dramatically reduced infant mortality. This

 "Carry out family planning, implement this fundamental national policy." 1986 poster from Stefan R. Landsberger's collection.

reduction after 1949, combined with peace and more equitable distribution of food caused China’s already large population to grow rapidly (2-3.4%/year) in the 1950s. Mao and other leaders ignored warnings from scholars such Beijing University president Ma Yinchu that such rapid population growth strained the country’s resources. Growth slowed from the mid-1960s and in the 1970s the government urged families to have fewer children. By 1979, China’s leaders had long been struggling to educate and create jobs for those born years before. They saw cutting population growth as critical to their development aims and ordered implementation of the “one-child policy.”

This required drastic measures. The marriage age was raised and millions of officials were mobilized to provide information about birth control and to monitor the women’s menstrual cycles. This effort, combined with economic development, increasing urbanization, and more education for girls yield a dramatic drop in birth rates. In recent years, China’s population has been growing at 0.6-0.8%/year. Chinese officials estimate the drop means that the country avoided having more than 200 million additional people to provide for. They concede that occasionally the program was brutally implemented, resulting in forced abortions and other abuses. And the policy has combined with the traditional bias in favor of having sons to drive some female infanticide and, much more widespread, sex-selective abortion. For several years Chinese families have been having 15-17% more sons than daughters. This birth gap will exacerbate the difficulties men in poorer areas have in finding wives. Even more serious than this problem, however, is the demographic squeeze that lies ahead. In two decades, China will have more than 300 million people over age 60. How can a single child support two parents and four grandparents?

1989 -- The Communist Party largely justifies its right to rule on its defense of China’s territorial integrity and the economic advance it has overseen in recent decades. In 1989, however, it saw its authority challenged first by unrest in Tibet and then by student-initiated pro-democracy demonstrations in Beijing and elsewhere. To the extent these events are officially acknowledged, Chinese leaders assert the lesson to be learned is the need for resolute government action to maintain order and preserve social stability, and to step up patriotic education.

Twenty years ago, the Tibetan unrest began, as it did last March, with protests to mark the 1959 failed armed uprising against Chinese rule. That 1959 uprising probably had covert U.S. support, but was crushed, with many killed. The Dalai Lama, then 23, fled with many of his supporters to India. Thirty years later, Hu Jintao, the Communist Party secretary for Tibet and future president, responded to unrest by declaring martial law. That fall, Secretary Hu asserted “we must take a clear-cut stand in waging the struggle against splittism so as to strive for a long-term stable political situation.” Shortly thereafter, the Dalai Lama received the Nobel Peace Prize, with the selection committee emphasizing his commitment to nonviolence. In his acceptance speech the Dalai Lama argued the Chinese authorities were implementing a “calculated and systematic strategy aimed at the destruction of [Tibetan] national and cultural identities.” Neither side has moved very much in the twenty years since 1989.

In contrast to its quick decision to use military force in Tibet, in 1989 the Chinese leadership was divided over how to respond to the pro-democracy demonstrations that broke out all over China later that spring. The protests coincided with an economic slump that included rising prices, lay-offs, and some state enterprises giving employees IOUs in lieu of their full paychecks. An April People’s Daily editorial blamed “an extremely small number of people with ulterior purposes” of poisoning minds and fomenting opposition to the Communist Party. The editorial argued that the demonstrations could lead to chaos and threaten all the reforms of the last decade. But the demonstrations continued, disrupting ceremonies associated with the first China-Soviet Union summit meeting in three decades. Because he advocated greater tolerance for the demonstrators, China’s Communist Party Secretary Zhao Ziyang was removed from office and placed under house arrest. On June 4, the army took control of the city. Some soldiers and many more civilians were killed in the process. On June 5, a lone man blocked for a few minutes a line of tanks rolling into the city, an act of defiance that was captured by news cameras and remains a defining image of the age.

A few days after the shooting, Deng Xiaoping congratulated the army on extinguishing the “rebellion.” He rejected American criticism of the use of force against unarmed students, saying “didn't America mobilize police and troops, arrest people, and shed blood” to stop internal unrest. But Deng also took pains to assert that the economic reforms and the open door policy he had initiated must continue.

The 1919 and 1949 anniversaries are already marked each year (students get May 4 off, Oct. 1 is a national holiday). The government has already articulated an approved way to think about those and these other anniversaries. Many Chinese do not view these milestones (and others, e.g.,the 1999 American bombing of the Chinese embassy in Belgrade or the 1999 banning of the Falungong religious group) in the approved way. For example, earlier this month more than 300 Chinese intellectuals petitioned the government to “embrace universal human values, join the mainstream of civilized nations, and build a democratic system.” Their Charter 08 begins by pointing to anniversaries, including the 1989 Tiananmen protests.

Reflecting on the milestones above reminds us how far China has come in the last century and how much the American relationship with China has changed. They also remind us of the many challenges that remain.