Robert Kleinberg - Chinas Opening to the Outside World: The Experiment With Foreign Capitalism

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China's "Opening" to the Outside World

China's "Opening" to the Outside World

The Experiment with Foreign Capitalism

Robert Kleinberg

First published 1990 by Westview Press, Inc.

Published 2018 by Routledge
52 Vanderbilt Avenue, New York, NY 10017
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright 1990 Taylor & Francis

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:
Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Library of Congress Cataloging-in-Publication Data
Kleinberg, Robert.
China's "opening" to the outside world: the experiment with foreign capitalism.
p. cm.
Includes bibliographical references and index.
ISBN 0-8133-7904-0 (hardcover)ISBN 0-8133-8089-8 (pbk.)
1. ChinaEconomic policy1976- . 2. Shen-chen Special Economic Zone (Shen-chen shih, China). 3. Investments, ForeignChina. 4. ChinaCommercial policy. 5. ChinaForeign economic relations. I. Title.
HC427.92.K55 1990
338.951'27dc20

90-12477
CIP

ISBN 13: 978-0-367-01459-9 (hbk)

Contents

Guide

• FBIS U.S. Government, Foreign Broadcast Information Service, Daily Report, People's Republic of China
• FEER Far Eastern Economic Review
• JPRS U.S. Joint Publications Research Service, Translations on the People's Republic of China (Washington, D.C.: U.S. Government Printing Office)
• SCP U.S. Department of Commerce, Survey of People's Republic of China Press (Hong Kong: U.S. Consulate General)
• SWB British Broadcasting Corporation, Summary of World Broadcasts, Part 3, The Far East (Reading, England)

The purpose and scope of this book will, I hope, very shortly be clear to the reader. Perhaps a word or two would be appropriate first about what this study is not. It has not been my intention to theorize about the relationship between foreign economic policy in general and other aspects of domestic politics or foreign relations, because such an effort would require considering similar relationships in other countries and comparing them to those in China, which I was not prepared to attempt. Nor do I apologize for this, because any implications of some general theory of political behavior to China will depend on which of several conflicting interpretations of that country's immediate and unique circumstances one chooses to accept. My aim is to assess the meaning of concrete developments rather than to construct generalizations that a few counterexamples might easily prove fallible.

Although pressing issues are discussed here, this study does not include policy recommendations. To make policy requires an analysis of all the circumstances of the moment, which may include some of the factors I try to explain here, but also many others which fall outside my scope. My goal has been to develop an understanding of an important process at work in China and to try to share that understanding with the reader. Of course, I hope that can contribute to sound policy.

I would like to express my gratitude to a number of individuals without the assistance of whom this study could not have been completed and published. Professors Robert Scalapino, Chalmers Johnson, and Frederic Wakeman, Jr., were very generous with their comments and invaluable help of various kinds. Initial research was done at the library of the Center for Chinese Studies in Berkeley, and I want to thank Annie Chang of the library staff for advice and assistance.

During my one and a half years in China, my understanding of this book's topic and its broader context benefited from many conversations with friends and classmates at Beijing University and other institutions. I regret that it is not possible to thank these individuals by name here, but that does not diminish my appreciation for their help. I owe a special debt to the hosts who welcomed me to live with their families and to dispense with some of the special privileges that normally isolate foreign visitors from the daily realities of life as it is lived by most Chinese.

The University of Kansas kindly supported part of the necessary updating and revision with a summer New Faculty Grant (3752-20-0038).

An anonymous peer reviewer for Westview Press did an outstanding and thorough job of working through the manuscript and pointing out many flaws, large and small. The contribution made by that review is deeply appreciated.

Susan McEachern, Senior Acquisitions Editor at Westview, was supportive, patient, and sensitive to the problems faced by an author trying to produce his first book.

I am indebted for the assistance of Marjorie Kleinberg, Joanne Sedricks, and Virginia Postoak, who typed successive drafts of die manuscript. All three were extremely efficient in producing results of high quality despite having to work from my often messy notes and revisions. Pam Ritchey supervised the laserprinting process with care and professionalism.

Further, I would like to thank my old friend Mr. Nick Karpov, who encouraged me to continue with this endeavor through thick and thin.

Above all, I have been sustained in my work by the exemplary courage and understanding of my dear wife, Angela.

I alone am responsible for this book's contents.

Robert Kleinberg

1
Introduction

We never permit the use of foreign capital to develop our domestic resources as the Soviet revisionists do, never run undertakings in concert with other countries and also never accept foreign loans. China has neither domestic nor external debts.

People's Daily, Beijing, Jan. 2, 1977

Ours is an independent and sovereign socialist state. We have never allowed, nor will we ever allow, foreign capital to invest in our country. We have never joined capitalist countries in exploring our natural resources; nor will we explore other countries' resources. We never did, nor will we ever, embark on joint ventures with foreign capitalists.

Red Flag, Beijing, March, 1977

Two years after the death of Chairman Mao, the People's Republic of China began a policy of "opening up to the outside world." Instead of dividing the world into socialists and capitalists, or exploiters and exploited, China now engages in trade and investment relations with every kind of country to increase its national productive capacity. But the fact that its new economic relations are predominantly with capitalist nations does not mean that China now accepts the reasoning of liberal free trade or capitalist ownership. The opening up policy instead is a return, in economics, to the most potent factor in the creation of new China itself--nationalism.

For China, opening up means the adoption by the state of new methods to promote national economic strength, methods that replace class warfare and deny the likelihood of global class conflict. The state now encourages the involvement of foreign partners in China's economy, at a price and subject to government laws and polices. China offers special concessions to those who bring capital and technology, knowing that capitalist nations have the most to provide. Such measures have facilitated rapid growth and led to some local economic success stories. Some of these successes, however, have had destabilizing effects that challenged the government to devise new methods of control. To manage the balance between local initiative and central intervention during economic reform has proven an impossibly complicated task for the state.

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