China's unparalleled experiment initiated by Deng Xiaoping

Late in the evening, I was still wide awake in the hotel where I regularly stay when I am in Beijing. So I opened the window and lit a cigarette. The availability of smoking rooms is greatly appreciated by people like me who have felt increasingly cornered in recent years. But even here, this situation will not last indefinitely.

Deng Xiaoping (1904-1997) Deng was a politician who rose three times following political purges and put reform and an open-door policy on track as China's paramount leader. He was born in Sichuan province, and went to France to study at the age of 16. After serving as vice premier and general secretary of the Communist Party of China, he lost power during the Cultural Revolution, but he made a comeback as vice chairman of the party in 1977. The photo shows his image displayed in a park in Shenzhen. (HIROKI FUKUDA)

The Baoshan Iron & Steel Complex in Shanghai is seen as a symbol of postwar cooperation between Japan and China. (HIROKI FUKUDA)

Hu Angang

Chen Jinhua

Yoshihiro Inayama

The nonstop tooting of car horns mixed with sounds that reminded me of classical Chinese opera made for an unsettled evening in Beijing that suddenly became warm with the advent of March. The city is caught up in final preparations for the Olympic Games in August. Hammering sounds from construction work added to the mix.

The dragon that is China has awakened and it is swinging its gigantic body. It achieved double-digit real economic growth for five consecutive years through 2007; its total trade value ranks third in the world after the United States and Germany. China also has surpassed Japan as the world's leader in foreign currency reserves.

Around the world, there is tremendous speculation about China's future. Some wonder how much longer the country can continue reaching dizzying economic heights, while others believe it will go bankrupt sooner or later.

The country has a population of 1.3 billion, perhaps 100 million more if counted carefully. That number alone indicates the precarious juggling that is required to manage this vast country. Furthermore, China faces the unparalleled trials of operating a market economy under a communist dictatorship. Thus, it's not surprising that the world is watching China's development with bated breath.

Hu Angang, a professor at Tsinghua University in Beijing and a leading specialist on China studies, has extensively analyzed the intertwining economic, political and social threads that make the country what it is today.

Citing several World Bank statistics on China's rise in recent years, the 54-year-old spoke with a passion that mirrors the country's economic growth.

"China has to be strong and bring wealth to the people at the same time," Hu said. "China is the only country that will be No. 1 in the world."

Hu also is mindful that China still faces various challenges in regard to its future development. He mentioned preservation of the environment along with political and social stability.

The one statement he made that I wholeheartedly agreed with was that "no one can accurately predict the future of this giant state."

Hu is involved in Beijing's decision-making process.

After a lapse of 15 years I visited Shenzhen, the city in Guangdong province that became China's first special economic zone in 1980. There, I saw a forest of high-rises that reminded me of Manhattan from a distance. People walking the streets looked no different from their counterparts in Tokyo's bustling shopping areas. During my previous visit, staff at a recently opened department store seemed unsure about what to do. But now, they look comfortable with their lot.

Le Zheng, 52, president of the Shenzhen Academy of Social Sciences, gave me another list of figures showing that the gross domestic product (GDP) in Shenzhen in 2007 came to $93 billion. The total value of trade reached $280 billion, and container volume in the port was the world's fourth largest. Given the fact that Shenzhen has a population of 8.6 million, or 12 million including the daytime population, it is on a par with Tokyo in that respect.

I took a quadruple-occupancy compartment in an overnight train from Wuchang Station in Wuhan to Shenzhen, and I was surprised at the striking appearance of Wuchang Station. The station had just been refurbished at a cost equivalent to 17 billion yen. It has a dignified, museum-like appearance, and the main passageway inside the building is 20 meters wide. In addition to the building, the "fundamental philosophy has dramatically changed," according to Yang Tao, the deputy stationmaster, who is 35. By that he meant that the station now puts priority on user friendliness, including ticket purchases and train connections from users' points of view, instead of simply being a station that "handles" passengers.

From that station my destination was Shenzhen, where there is a beautiful park called Lotus Hill Garden. There, atop a hill stands a grand bronze statue that looks out over a sea of tall buildings. The statue is of Deng Xiaoping, the leader responsible for reforms and the open-door policy that created modern China. People refer to Shenzhen as the "Deng Xiaoping city." There is a giant portrait painting in another park with the motto, "firmly maintaining the party's basic policy for a century."

That's another way of saying that the reforms and open-door policy are a 100-year plan. Deng initiated it 30 years ago in 1978.

One major project that symbolized the policy stands out.

Japan-China joint steel plant

Responding to the cheers of people lining the streets, a large group of runners made their way through a Shanghai street holding a torch. As giant paper dragons danced and weaved, the whole neighborhood got caught up in the festive spirit. The runners arrived at the ceremonial venue, went up to the flame holder, and solemnly transferred the flame.

This exercise was not for the Beijing Olympics. Rather, it was the blowing-in ceremony for the first blast furnace of the Baoshan Iron & Steel Complex in Shanghai in September 1985. I watched it on a video recording. The Baoshan steel project--which appears in "Daichi no Ko," a novel by Toyoko Yamasaki about a Japanese orphan left behind in China--began in 1978 as the biggest national program since the creation of the new China. Through joint operation over many years with Nippon Steel Corp., which China looked up to as an example to seek guidance from, construction of the Baoshan Iron & Steel Complex became a symbol of postwar cooperation between Japan and China.

Huang Jinfa, 81, was one of the directors from the Chinese side on the project, and he attended the blowing-in ceremony for the first blast furnace.

"I was very happy that day, and I got really drunk though I usually do not touch alcohol," he said in Shanghai. During the construction, Huang had several stormy exchanges with Nippon Steel over what machinery to install.

China insisted on building the same facility as the state-of-the-art Nippon Steel Kimitsu Works in Chiba Prefecture. Nippon Steel dispatched a technical team to China to provide advice.

Makoto Takahashi, 58, who now is a managing director at Nippon Steel Engineering Co., clearly recalled dealing with eager Chinese engineers who asked tenacious questions. Though young at the time, he was chosen as the company's design liaison representative and sent to Shanghai.

In China, Takahashi was flooded with questions such as why some screws were bent and others pointed. When he made a mistake, he was relentlessly criticized.

"The atmosphere was such that they could not easily accept my explanations," he said.

In those days, memories of the last war were more vivid than they are now, so the Chinese engineers gathered in Shanghai must have had mixed feelings as they braced themselves not to be looked down on by the Japanese while indulging in pure enthusiasm to learn new technologies.

China also sent people to Japan to study at Nippon Steel. Despite the struggles--indeed it is likely because of them--the joint operations toward the mutual goal of constructing the Baoshan Iron & Steel Complex developed into a relationship of trust.

While problems continued on the front lines, the project was on the verge of being canceled several times. Midway through construction, the project was rocked by a lack of Chinese funds as a power struggle erupted within the Communist Party. I visited 79-year-old Chen Jinhua, who headed the project for the Chinese side, in Beijing. He said there were times when he thought the project would falter, adding that Deng was his staunchest supporter during days when stress would give him stomach pains. He related one episode to me.

When construction was under way, a pile driver shipped from Japan was damaged, causing an uproar on the Chinese side. The engineers accused Japan of selling them a second-hand machine. Deng asked Chen for an explanation, so Chen told him that an investigation showed that abrasions were made during a Chinese inspection. When he heard that, Deng instructed Chen to explain what had happened to the rest of the staff.

"Deng's policy was consistent, and his instructions from the smallest to the largest thing were all specific. The Baoshan project would not have succeeded without him," Chen said.

Chen later became a minister in charge of the State Planning Commission and assisted in the practical application of the reforms that accompanied China's open-door policy. He is now honorary president of the China Enterprise Confederation.

Just like the front-line workers, Chen also learned about the Japanese way of doing things through the Baoshan project. Chen has nothing but praise for Yoshihiro Inayama, who was chairman of Nippon Steel at the time. It was through his contacts with Inayama and other Japanese involved that Chen said he learned and grew to value the work ethic of Japanese engineers.

"I often thought of the book 'Mr. Fujino' by Lu Xun," he said. Fujino was a Japanese teacher who helped Lu at a medical school in Japan.

The Baoshan Iron & Steel Complex that was built from scratch grew into the giant Shanghai Baosteel Group Corp. It was listed in Fortune 500 in 2004.

"China stands out because of its large population of engineers, technological levels of facilities and efficiency," said Yuki Iriyama, a 60-year-old managing director at Nippon Steel. "China has come this far, and depending on product market segment, it does not look any different from us," Iriyama said. "Its basic steelmaking technology is world class."

Driven by the Baoshan project, China's steel industry made a huge leap forward. China became the world's leader in crude steel production in 1996, up from fifth place in 1978. Domestic demand is unmatched by any other country. The Japanese steel industry revived in this century thanks to China.

But at the same time, Japan's steel industry faces a difficult time as it must fight over resources amid soaring costs for raw materials due to demand in China.

China is pushing the steel industry as a core state project.

In his book, Chen says China has been producing steel since the pre-Christian era and that it once led the world with its technology. He goes on to say that China got left behind and subsequently "was invaded several times by powerful countries with modern steelmaking technologies."

When considering the history of Japan from the perspective of the First Sino-Japanese War, the Baoshan project must have been a precious experiment that both countries worked hard to make successful even though not everything went smoothly.

Huang Jinfa said, "Think about the source when you drink water," referring to the Baoshan project.

Deng's southern tour

Shenzhen, Wuhan and Shanghai--all these places I have mentioned have connections with Deng Xiaoping. At the beginning of 1992, more than a decade after reforms and the open-door policy gained a foothold, Deng visited these cities to promote the policy. This became known as the southern tour, and Wuchang Station is where he gave a key speech. China genuinely began moving toward reforms and the open-door strategy in a big way after that, particularly with the promotion of the socialist market economy from 1992.

Deng, who was always forthright in his remarks, has often been quoted for his comment: "I don't care if it's a white cat or a black cat. It's a good cat so long as it catches mice." He demonstrated his unique leadership this way.

On one occasion, Deng said that once you set your eyes on something, try it for one or two years. If it is right, do it with all your energy, and if it is wrong, correct the course and quit. When quitting, you can quit immediately or quit gradually while monitoring developments. It is also OK to leave the tail behind.

He also said something that would make Japanese office workers nod with bitter smiles--there are too many meetings, too many long articles, and too many long speeches. The same topics are repeated and there are very few new words. Some parts have to be repeated, but they have to be concise.

There is no record of what he talked about in non-public settings, but these words are straightforward and easy to understand. Not surprisingly, his remarks resonated with the public, helping to propel the country toward greater affluence.

"The 1980s were a time when a jumbo jet called China was taxiing on a runway in preparation for takeoff, and the year 1992 was when the control stick was pulled back," says Zhu Jianrong, professor of international relations at Toyo Gakuen University. "China had seen how the planned economy of the Soviet Union and Eastern bloc got distorted, and the devastating experience of the Cultural Revolution prompted it to take the path of reforms and the open-door policy."

Zhu said Deng's techniques are particularly worth noting. While the Soviet Union and Eastern Europe were crumbling, he managed to keep complaints among the people from targeting the political system, while staying focused on economic reforms. As for the political system, he stood firm on a Communist Party dictatorship and he did not hesitate using an iron fist during the crackdown on pro-democracy activists in Beijing's Tiananmen Square in 1989, so he does not deserve unconditional respect.

However, if anyone asks how China would have managed without Deng, it would not be easy to come up with a solid answer.

Chinese have a natural talent for business, and once they become serious, they can quickly become successful, as many entrepreneurs have shown in recent years. Yet, serious issues also have ensued as a result. While major cities are thriving, hundreds of millions of people are on the edge of starvation in rural areas. Everywhere in China I visited in the last year, I heard that a turbulent atmosphere has been accumulating partly due to horrendous levels of corruption among bureaucrats. More than 110,000 public servants were convicted of crimes over the five years up to 2007 alone. It is often said that disparities between reforms with the open-door policy and the current political system will eventually explode.

China no longer has a model to follow. If it finds a tear, it somehow has to mend it, trying to find a way that follows neither the former Soviet Union nor the West, while changing little by little.

As the writer Lu Xun noted, "Earth had no roads to begin with." China is moving along a path that Lu Xun never dreamed of.

Fact File: China's reforms and open-door policy

Targeting the Four Modernizations of agriculture, industry, national defense, and science and technology, Deng Xiaoping led domestic reforms and a policy to open up to the world. The historical change of course from the Mao Tse-tung era at the third plenary session of the 11th Central Committee of the Communist Party of China held in December 1978 was a turning point. It was two years following Mao's death and the arrest of the Gang of Four, including Mao's wife Jiang Qing. China, exhausted from the Great Leap Forward and the Cultural Revolution, began breaking free from its planned economy and started boldly adopting market principles.

Deng dissolved the People's Communes and adopted a system to give individual farmers certain autonomy while contracting production to them. While protecting state-run enterprises, he allowed private businesses to operate and established special economic zones in Shenzhen, Guangdong province, and other areas to aggressively attract foreign investment. He advocated the idea that some areas better suited to getting rich should do so before others. The Tiananmen Square Incident in 1989 undermined China's political and economic vitality, and Deng pushed for a grand scheme of reform and an open-door policy in 1992 during his tour of southern China.

Since then, China has seen continuing phenomenal economic growth under the banner of a socialist market economy. Meanwhile, wealth disparities between coastal areas and inland sections, environmental destruction, and other issues have become increasingly serious.(IHT/Asahi: April 28,2008)