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Boom and gloom: The struggle for a country's soul

From Saturday's Globe and Mail

Beijing — At the age of 41, Zhang Hongkang seems to have it all.

Rich beyond his childhood dreams, he owns six luxury cars, six apartments, two thriving factories, a real-estate business, a $100,000 gold Rolex, and one of China's most impressive private collections of imperial porcelain and paintings.

For someone who grew up so poor that he had to help his grandmother stitch notebooks together to earn a tiny income, his life today seems to fulfill every fantasy he could have had. Yet he has become restless and discontented, searching for something to fill the spiritual void of frantic capitalism.

”I have everything, but I don't know what to believe in,” the tycoon says in his Beijing office as he flips open his laptop to monitor the latest trades on the foreign currency markets.

”I look at this society and I don't know how to change it. Selfishness and self-centredness have become the only belief in China. Young people only know how to acquire things and entertain themselves. They only know how to spend money. In 15 years, I'm worried that China will become a very dangerous place.”

In an era of extraordinary social change, Mr. Zhang's confusion is that of China itself. Everything has suddenly become possible – yet no truths are certain, few causes are clear, and the beliefs of yesterday are rapidly eroding under the new business obsessions. The people of China are on a quest for an identity, a shared direction, while the reformers and reactionaries fight for its soul.

China's economic boom is one of the most astounding in world history. Its economy has grown by an average of almost 10 per cent every year for the past two decades, the fastest growth in the world, creating thousands of new millionaires. Within two generations it could overtake the United States as the world's most powerful economy. The idealistic spirit of the Tiananmen Square protesters has long vanished, buried in a landslide of money and greed. Yet anger and unrest are still here, just below the surface, in the morass of rural poverty and urban alienation and the widening gap between rich and poor in this country of 1.3 billion.

As the wrenching economic changes stir up new tensions and unrest, the legitimacy of the ruling elite is increasingly questioned. Widely seen as corrupt and antiquated, China's Communist Party is facing one of the most dangerous crises in its history. So far, it has succeeded in diverting and repressing the democratic impulse with a calibrated mix of police-state coercion and patriotic propaganda. But the pressures for reform are mounting.

In a peasant village on Beijing's outskirts, 75-year-old widow Xu Huizhen once thought she knew what China believed in. For eight years, she fought in Mao Zedong's guerrilla army, battling the landlords and capitalists who controlled the old China. In the 1950s, when the Communist revolution was over, she moved to her husband's village near Beijing, where countless generations of his family had farmed the land.

She thought the battles had been won. The land was in the people's hands. Everything seemed clear and truthful.

And then, in the 1990s, the land began to disappear.

It was nibbled away, first slowly and then ever quicker, by China's new capitalists, who were building palatial new $2-million villas in Beijing's expanding suburbs. Nobody quite understood how they got permission to grab the farmland. Nobody in the village had ever seen any papers or documents. But suddenly their land was gone. The peasants were being dispossessed again.

This summer, for the first time in her life, Mrs. Xu joined a street protest. With hundreds of other villagers, she marched to the nearest villas to block a road and demand justice.

Instead, the police descended. Eight of the villagers were arrested. The developers resumed their construction of luxury mansions.

“We fought against those capitalists when we established this country in 1949,” Mrs. Xu said, sitting beside a Mao portrait on her wall.

“We struggled to get the land for the peasants. We thought we would lead a happy life and our lives would become better and better. But now the fruits of the revolution are being taken away. Our land has been taken from us and sold.”

The gap between rich and poor, between Mr. Zhang and Mrs. Xu, is growing wider every day. After the forced equality of the Maoist years, China has suddenly become one of the world's most unequal societies. Yet the peasant and the tycoon are united by their discontent with China's corruption and materialism.

“The future stability of China doesn't depend on wealth or poverty,” Mr. Zhang says. “It depends on whether China becomes a lawful country. We are forced to pay taxes to the government, but we have no right to supervise the government. We need free elections, so that we can supervise the government. Yet I don't see any chance of them allowing it. If there were free elections, it would jeopardize the privileges of many people who are parasites on the state.”

The same feeling of despair and cynicism is pervasive across rural China, where peasants are daily witnesses to the rampant corruption of the Communist Party. In rural Sichuan province, in the small village of Xinhua, each peasant has only one-eighteenth of a hectare of land – but everyone knows that the fields of the local Communist officials are twice as big. Nobody can obtain a marriage certificate or a building permit or restaurant licence without bribing an official.

The peasants are forced to pay a bewildering array of fees and taxes to the local officials, often without any real explanation. One tax requires each Xinhua labourer to give 50 yuan annually to the local government, but nobody is sure why. Each labourer was required to pay a further 65 yuan so that the village road could be paved, yet it remains a muddy trail today.

Xinhua is a rustic village of rice paddies and bamboo, where the old men play mahjong and the women carry their babies in straw baskets on their backs. It was given its optimistic name (meaning New China) after the Communist revolution. But in its rising anger over corruption and extortionate taxes, it is typical of the crisis that the Communist Party faces.

“We sometimes ask the officials how they spend this money, but their answers are always unclear,” says Huang Yuanping, a local peasant who has been a member of the Communist Party for 32 years. “If we get angry, they say: ‘What right do you have to ask these questions?' So we can't ever know. But we know the officials spend a lot of money on their meals. The common people are losing trust in the party. People tell me: ‘Your party is a false one.' I can't even respond, because I know that some of the local officials are doing wrong.”

Mr. Huang recalls how he attended Communist Party meetings in the village every month in the 1980s. But now the party is increasingly disorganized and unpopular. In the village, it only meets once or twice a year, and Mr. Huang hears people making bitter jokes about it.

“There's less support for the party than there was in the past,” he says. “People attack us, and I can understand why. The local officials have done many bad things and the image of the party has been seriously damaged. In the future, their behaviour could totally destroy the image of the party. There's a big difference between the propaganda of the central government and what we actually see from the local officials.”

Across China, rural taxes jumped by 800 per cent in the mid-1990s. By one count, 360 different types of taxes and fees have been imposed on peasants in the past decade. Rural taxes are three times higher than urban taxes, even though rural incomes are much smaller.

At the same time, peasants are losing their last resource – their farmland. An estimated 66 million peasants have become landless since the early 1990s because their land was seized for urban development, and the number of landless peasants is expected to reach 110 million within the next 25 years. In thousands of cases, the seizures were illegal, yet the developers escaped any punishment.

The average urban income in China today is six times higher than the average rural income – a bigger gulf than when the Communists took power in 1949, and one of the biggest such gaps in the world. Since the 1980s, Chinese inequality has increased at the fastest rate in the world. The gap is compounded by an unofficial apartheid system that makes it difficult or impossible for peasants to move to the cities.

While China's nouveaux riches are living in luxury apartments and gated compounds, millions of migrant workers are subsisting in primitive conditions in crowded dormitories with few legal rights and no medical care. Despite China's dramatic growth, the poorest of the poor (those earning less than 50 cents a day) are actually becoming more numerous – and their incomes are declining. The number of workers who earned less than the equivalent of $100 a year rose by 800,000 last year.

Many analysts believe the Chinese Communist Party is facing one of its worst crises since its founding in 1921. Even its propaganda mouthpiece, the People's Daily, has warned that people are “losing confidence” in the party because of corruption and graft. In an internal report last month, the party's central committee urged “a stronger sense of crisis” because the “life and death of the party” could hang in the balance.

Mass protests are growing. There were 58,000 cases of “social unrest” or “mass incidents” in 2003, an increase of 14 per cent over the previous year, and 3 million people participated in those protests, according to official statistics. In the cities, hundreds of homeowner associations have been formed, and urban citizens are increasingly willing to launch lawsuits and collective actions to fight for their rights as consumers and property owners. Thousands of homeowners have engaged in bitter confrontations with urban officials and developers over the demolition of their homes without proper compensation.Beijing responds by talking of “intra-party democracy” and greater “accountability” and “supervision” of the authorities, but it never talks of the obvious solution: multi-party elections where the government would genuinely be accountable to the entire public. Party delegates are occasionally chosen by secret ballot in a few districts, but never at the provincial or national level. Elections at the lowest possible level, the village, have been allowed since 1987, yet they have never led to substantial democratic reforms. Only a few elections at the township level have been permitted.

Despite the rising discontent, there is less serious debate about political reform today than there was in the 1980s. The new Chinese leader, Hu Jintao, has shown little interest in real democracy, though he expresses vague support for the “rule of law.”

Even as it loses the revolutionary legitimacy that sustained it for a half century, the Communist government still knows how to crush and defuse dissent with a shrewd combination of iron-fisted repression (arrests, assaults, bans) and carefully controlled safety valves (the Internet, the courts, petitions).

Every democratic experiment is constrained by strict limits. Three independent candidates were elected in Beijing's local councils last winter, but one was swiftly arrested and silenced after he led homeowners in a battle with a property developer. Rural protest leaders are often jailed or beaten. In several villages, anti-corruption candidates who won local elections were imprisoned, assaulted or even killed by hired thugs.

“Nobody here has ever dared to protest,” said Mr. Huang, the veteran Communist member in Xinhua village. “People here are too obedient. Nobody ever dares to stand out from the crowd. Whoever stands out will be punished by those officials. If one person leads a protest, he is still an ordinary peasant and they are still powerful officials and it is the peasant who will suffer.”

China's economic boom has helped defuse the tensions. There is an implicit social contract that people can become affluent if they avoid political activism – “get rich and shut up,” as one writer noted. But the unrest could reach dangerous levels if the boom weakens. One of the biggest fears is a financial crisis, perhaps triggered by a collapse of one of the state-controlled banks that are already heavily burdened with bad loans. If the growth disappears at a time of rising expectations, the social tensions could escalate beyond the state's control.

As Communism declines, the regime is using Chinese nationalism as the new unifying force. Its media have given massive publicity to China's first astronaut, its surging gold-medal count at the Olympics, its reunification with Hong Kong and its constant demands for reunification with Taiwan. Disputes with Japan and the United States are quickly turned into rally-round-the-flag causes. Patriotism has become a powerful tool for mobilizing the masses and diverting the reformist urge. Political rights and multi-party elections are portrayed as “American” ideas, alien to China's needs.

One night, in an apartment in a Beijing suburb, five friends have gathered to talk about the future of China. They describe themselves as supporters of democracy, yet almost all of them accept Beijing's definition of democracy as a vague notion that the rulers should represent the people's needs. Four of the five do not expect China to hold national elections within the next generation, nor do they want such a thing.

Wei Jiang, a wealthy 42-year-old businessman, smokes a cigar and sips a glass of red wine as he denounces the idea of elections. “Western people are always telling China what to do,” he says, his voice rising angrily. “Democratic reform shouldn't follow the propaganda of the West. When the Americans massacred the Indians, were they thinking of democracy?”

Mr. Wei says he quit the Communist Party after the military crushed the Tiananmen protesters in 1989. But today, he praises the leaders and expresses faith in their policies. Indeed, for people like him, those policies have been successful. He proudly gives a tour of his $125,000 (Canadian) luxury condo - one of six he owns - with its hot tub, wine bar, stone floors, antique furniture and rooftop garden.

Among the group of five friends, the only one who wants free elections is Li Baiguang, a legal activist who represents landless peasants in court actions. In 1989, he spent several days with the protesters on Tiananmen Square, before he was forced to return to his provincial home. Since then, he has been arrested several times for his campus activism.

When he hears Mr. Wei praising the stability and “low costs” of China's autocratic government, Mr. Li disagrees. “Despotism has a lower political cost, but in China it has produced a small elite who enjoy greater privileges than anyone else,” he says. “The purpose of a government is not just to bring political stability and low costs. If you consider our lack of freedom, the cost is not so low. If we cannot elect our leaders, we're no different from savages in caves.”

But as the evening continues, Mr. Li is drowned out by the loud shouts of the government's supporters. Soon, he falls silent.

One of the dominant voices in the conversation is Wang Yiqun, a female lawyer who drives an expensive jeep and works as a wine marketing consultant. After the military crackdown in 1989, her husband was jailed for six months for “anti-revolutionary activities.” Yet today, she criticizes the student protesters and insists that the government had to “restore order” in Tiananmen Square.

For her, and for most of the emerging middle classes here, China's economic boom is proof of the correctness of its policies.

“In 1989, we were shouting for democracy while our stomachs were empty,” she says. “There's no big need for elections now. We need to develop our economy first. I'm confident that the 21st century will belong to China.”

In this affluent corner of Beijing, at least, the government's strategy seems to be working. For now, the urban elites are willing to postpone their political expectations.

But in the villages and the rural heartland, and even in the hushed rooms where a tycoon lingers over his porcelain collection, the restlessness grows.

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