Prisoner of the State: The Secret Journal of Premier Zhao Ziyang (14 page)

C
omrade Chen Yun was deeply concerned about the open-door policy, and his differences with Deng Xiaoping were quite pronounced.

The Special Economic Zones (SEZs) were proposed by Deng Xiaoping. He gave approvals for Shenzhen and Zhuhai in Guangdong Province and Xiamen in Fujian Province, and would later add others. Chen Yun had always objected to the idea of SEZs. He never set foot in any of them. I’ve heard that he sent envoys to the SEZs who at first returned with negative reports, but later were more positive. But he always had doubts and objections.

At the December 1981 meeting of provincial and municipal secretaries of Party committees, and in his talk with leaders of the Planning Commission who visited with him during the Spring Festival, Chen Yun emphasized that the primary purpose of the SEZs was experimentation and learning. He added that SEZs could not be expanded any further and that we must make note of their negative aspects.

Originally, there were to be more SEZs along the coastal regions, including around Shanghai and in Zhejiang Province. But Chen Yun said that those areas were not to establish SEZs. This region, as Chen Yun put it, was famous for its concentration of opportunists who would, with their consummate skills, emerge from their cages if given the slightest chance. The Research Office of the Secretariat directed by Deng Liqun also collected material that attempted to prove that the SEZs would degenerate into “foreign concession zones.” At one point, these criticisms were widespread, a result of the influence of Chen Yun and Deng Liqun.

On the issue of foreign investments, Chen Yun was completely at odds with [Deng] Xiaoping. Xiaoping believed in bringing in large-scale foreign investments. He believed it was difficult for a developing economy like China’s to take off without foreign investment. Of course, he only dealt with major issues and didn’t intervene much as to how this might be brought about. But he supported all of it: preferential loans, nonpreferential loans, joint ventures. Chen Yun was very cautious about foreign investments. The case file for the Shanghai-Volkswagen joint venture remained in his office for a long time before he finally gave his consent.

Chen Yun believed that foreign direct investments [FDI] were not the solution for China’s development. He often said that foreign capitalists were not just looking for normal profits, but “surplus profits.” In other words, it would be impossible to gain any benefits from FDI. He often warned Gu Mu, who was in charge of foreign trade and economic affairs, to raise the level of vigilance. He said that preferential loans extended to China by foreign entities were for buying equipment. Though these appeared to be preferential, the purpose was [for foreign companies] to export products and the discount in loans was made up for in the profits made selling the products. When taking such loans, we had no freedom to choose, but were forced to buy designated products. FDI without spending limitations came with very high interest rates, which we could not afford.

He was also critical of joint ventures. I felt that Chen Yun’s thoughts were stuck in the theoretical expressions of “finance-capital” found in Lenin’s
On Imperialism
. After reforms had been launched, he read Lenin’s
On Imperialism
again. He once told me that Lenin’s characterization remained valid, and that we were still in the era of imperialism.

The “Strike Hard Campaign Against Economic Crimes” began in the coastal regions in January 1982. It started with an urgent notice sent in the name of the Central Committee, and it would have enormous repercussions. At the time I was in Zhejiang. I learned later that the campaign was begun in response to a report about smuggling activities in Guangdong that had been sent to the Central Discipline Inspection Commission.

On the document Chen Yun wrote a note, calling for “a hard and resolute strike, like a thunderbolt.” Afterward, [Party General Secretary Hu] Yaobang chaired a Secretariat meeting and issued the urgent notice. In March, after my return to Beijing, the Central Committee held a special symposium on Guangdong and Fujian provinces and disseminated a summary nationwide, directing other regions to act in line with the spirit of the document. In April, the Central Committee and the State Council again issued a “Resolution to Strike Hard Against Serious Economic Crimes.”

In 1981, the reforms were still new. This nationwide campaign, conducted in the coastal regions, brought enormous harm to them. The reforms had revitalized the economy but also led to activities such as smuggling, speculation, bribery, and the theft of state property. But they should have been dealt with on a case-by-case basis.

Instead, the extent of the problem was overestimated and an inappropriate determination was made. The unavoidable circumstances that accompanied efforts to relax rules in the name of stimulating the economy were characterized as “the important manifestations of class struggle in the new environment” and “the result of sabotage and erosion of our system by class enemies using decayed capitalist thought.”

It was also stated that “bourgeois lifestyles have been on the rise.” And it was proposed that “from now on, the struggle against the corruption from decayed bourgeois thoughts shall be strengthened. Emphasis is placed on preserving the purity of communism in the process of reform.”

This kind of labeling and the way in which the campaign was conducted inevitably affected issues that were emerging with reform. The overreaction toward smuggling in Guangdong and other coastal regions had much to do with Comrade Chen Yun’s objections and suspicions of reform and economic stimulation. He believed that these were dangerous policies.

When the strike against economic crimes was proposed, it was announced that the SEZs must also uphold “planned economy as primary, market adjustments as auxiliary.” This would have rendered the SEZs meaningless. He [Chen Yun] also announced the strengthening of central control over foreign trade: there was to be no trade or economic activities with foreigners except involving companies designated by the state and these had to follow official rules and procedures. As a result, some powers that had already been handed down to the SEZs were taken away. He also set guidelines for increased quotas for mandatory state procurement of agricultural and rural products and a reduction in high-priced procurements. He then proposed limiting workers’ bonuses in the coastal region to a level only slightly higher than those in the inner provinces.

The strike against economic crimes had turned into a campaign against economic liberalization. It took back some of the power that had been handed down. Permission for Guangdong and Fujian provinces to proceed with special and flexible policies had been stripped down to almost nothing.

Chen Yun played a major role in causing this situation. The trigger was the report of the Central Discipline Inspection Commission, but without Chen Yun’s directive in response, there would have been no such campaign. Hu Qiaomu [a conservative Politburo member who had once been Mao’s secretary] also played a very harmful role.

Deng Xiaoping perhaps did not realize the seriousness of the matter, because he had always tried to manage reform with one hand while curbing economic crimes with the other. He did not seem aware of how seriously this campaign could impact the overall implementation of reform. Both Yaobang and I were caught in a passive position. Even though the urgent notice was issued by a Secretariat meeting chaired by Yaobang, he was merely executing an order.

Even though the Guangdong and Fujian provinces symposium was held by the two of us and we both spoke at the meeting, we were in a bind. At the meeting, comrades from both provinces expressed deep concerns. They believed that such a campaign would make it difficult to deploy any special policies or flexible measures. On the one hand, both of us had to persuade them to accept the notice passed down by the Central Committee, but on the other hand, we needed to persuade Comrade Chen Yun to protect reform programs as much as possible, to minimize harm to the excellent situation that reforms had brought to the coastal region.

During the proceedings of the meeting, Comrade Chen Yun proposed removing Ren Zhongyi, the Guangdong Provincial Party Committee secretary. He believed that places such as Guangdong and Fujian should not have leaders like Ren Zhongyi, who were “so clever,” but should be led instead by people who were very principled, or in Chen Yun’s words, “as firm as an unmovable nail.”

Yaobang and I repeatedly appealed to him, until Chen Yun finally gave up. One reason was that he could not come up with a suitable replacement on short notice. The one person he proposed for the position was suffering from health problems, so he was forced to give up.

The campaign, which lasted over a year, caused a lot of problems. Some mistakes or shortcomings in people’s work were taken as crimes. There were many instances of convictions without a crime and severe punishments for minor infractions. Situations originally viewed as a benefit of reform were treated as profiteering and embezzlement.

For example, these activities were all treated as crimes: technicians working for collectives who had a private business or paid jobs in their spare time; organizations using the extra foreign currency that they had been allowed to keep after exporting goods or trading other currencies; public relations expenses between procurement people and their trading partners. Many people were wrongly convicted. Later, these cases had to be reevaluated and reputations restored.

This led people to start having doubts about the reform. They didn’t know what was allowed and what was not. They were confused. Some comrades working in the economic arena had to wait and watch before taking any action. Some procurement personnel and sales staff refused to go out for several months.

As a result of the notice from the Central Committee, people in the disciplinary and organizational agencies around the country who maintained their traditional views and were uncomfortable with reform took it upon themselves to go to factories and enterprises to conduct repeated inspections and investigations, causing tremendous headaches for the businesses. Many reform programs came to a standstill.

In the autumn of 1988, there was concern about a project in Yangpu on Hainan Island.

The Yangpu region was a stretch of barren land. It would have been difficult for us to develop it, but if we rented it to foreign businesses, they would be able to develop it quickly. [Hainan’s Party secretary] Xu Shijie and [Hainan’s governor] Liang Xiang got in touch with [the Hong Kong subsidiary of Japanese construction company] Kumagai Gumi with such a proposal, and the company agreed to invest several billions.

I reported the Yangpu project to Chen Yun, but he did not express his view. I then reported it to [Deng] Xiaoping, who was very supportive and said that it should be done quickly.

At the time, many people across the country had not yet had a chance to think this thing through. In the past, China had been colonized or half colonized, so people were very sensitive to the issue of sovereignty. Zhang Wei [vice president of Tsinghua University] had done some research and written a report saying that large areas of land rented out to foreigners were like independent territories within a country, implying a selling out of sovereignty. This became a major issue at the National People’s Congress in 1989 and caused quite a disturbance. Xu Shijie gave an explanation at the Congress, but many people did not want to listen to it; their opposition was fierce. I don’t know whether the opposition had ulterior motives, but they were determined to cancel the project and wanted to hold the Hainan officials responsible.

When [Party elder] Li Xiannian learned that the Yangpu project was being led by [Vice Premier] Tian Jiyun and had my approval, he wrote a document accusing the project of being “a loss of dignity, an insult to our nation, and a betrayal of our nation’s sovereignty.” It was another example of Li Xiannian’s resistance to reform, and his vigilance in finding opportunities to attack and incite others to oppose me. Prior to this, I had never had any conflicts with Comrade [Party elder] Wang Zhen, and I had always been able to discuss issues with him and win his support. However, the situation changed in 1988 when he began actively opposing me. After June Fourth, he accused me of being a “counterrevolutionary” and the “behind-the-scenes boss for a small gang of conspirators.” His change of heart was probably the work of Li Xiannian and Deng Liqun.

Li Xiannian also sent a letter to Comrade Deng Xiaoping condemning the project. Deng was not aware of the details, but after seeing that so many people opposed the matter, he said, “For the time being, this project should not proceed.” Just prior to this, Comrade Chen Yun had also forwarded a document to me and had asked me to be “cautious on this matter.”

The center of the controversy was the issue of sovereignty, so I had people prepare a detailed document explaining how the development of Yangpu had nothing to do with sovereignty. I sent a letter, along with some information, to Deng. I wrote, “Whether the lease is a good deal or not is something that can be studied. However, this has absolutely nothing to do with sovereignty.”