20.12.2009
Assimilating Experience
№4 2009 October/December
Lai Hairong

Lai Hairong is an Executive Director of the China Center for Overseas Social and Philosophical Theories.

There is no doubt that the fall of the Berlin Wall in 1989 and
the collapse of the Soviet Union in 1991 were the two most crucial
global events in the second half of the 20th century. However, it
is not clear how far-reaching these events were for social,
economic and political changes that have occurred in places other
than Europe and Russia. This article will attempt to analyze the
impact of these events on domestic changes in China and in some
other East Asian countries.

A PLANNED ECONOMY VS. A MARKET ECONOMY: THE END OF THE DEBATE
FOR CHINA

The fall of the Berlin Wall and the breakup of the Soviet Union
were rooted in an unsustainable system. However, the process that
led to their collapse did not start until the problem of
sustainability began to be explosive in the mid-1980s.

China started its strategy of reform and openness in the late
1970s – many years before the sweeping events in Berlin and the
Soviet Union. Reform in China was basically driven by domestic
factors and without much international experience to go on. There
were heated debates over the reform strategy and target economic
patterns in the 1980s and these even grew into a political
struggle. Although it was obvious that the planned (command)
economy was not sustainable and that the market should be
introduced to coordinate some economic activities, the Chinese
ruling elite and society were divided regarding the question
whether the target economic system should be a planned economy with
the market playing a complementary role or whether it should be a
market economy with the complementary role of planning.

The fall of the Berlin Wall and the breakup of the Soviet Union
put an end to these debates in China. The question of viability,
changeability and sustainability of the planned economy that had
remained open in the 1980s disappeared because of its collapse, and
all arguments for maintaining a planned economy in China lost their
credibility overnight. So it is not accidental that in 1992-1993
the planned economy was abandoned by the Chinese Communist Party
and the market economy was introduced in the Party’s program and in
the Chinese Constitution. The fundamental shift from a planned
economy to a market economy was extraordinary because the ideology
of the early 1990s, as a consequence of the tragic events in
Beijing in 1989, was particularly hostile to the market economy,
which was viewed as a Western capitalist economic system.

It is not surprising that the fall of the Berlin Wall and the
collapse of the Soviet Union had such a far-reaching impact on
economic reform in China: the Soviet Union had been a model for
China in terms of systemic development, even though international
relations between China and the Soviet Union practically broke off
in the 1960s. The command economy that dominated in China between
1949 and 1978 was actually a copy of the Soviet command economy.
The uncertainty over Mikhail Gorbachev’s reforms in Russia also
affected Chinese reform in the 1980s. Thus, nothing could be more
sweeping in Chinese mentality than the demise of its tutor, the
Soviet Union.

Following the denunciation of the planned economy and the
introduction of a market economy, China quickly abandoned the
dual-track pricing system. In the mid 1990s, most commodity and
service prices were determined solely by the market. Privatization
started to spread, first from collectively-owned enterprises, then
to small and medium-sized state-owned enterprises subordinate to
counties and prefectures, and finally to large state-owned
enterprises subordinate to higher levels. The ownership structure
of the Chinese economy has changed fundamentally since the 1990s.
Measured by output, the share of private sector GDP increased from
0.9 percent in 1978, to 24.2 percent in 1996 and to 65 percent in
2006. China cautiously opened itself to the outside world in the
1980s. In the 1990s, China began to integrate itself into the world
economy and by the late 1990s it had completed negotiations with
major economic powers on joining the World Trade Organization
(WTO). After ascending to the WTO in 2002, China has integrated
into the world economy much faster than any other country and has
reaped many more benefits than most people could have imagined.

The introduction of a market economy in China was a milestone
not only for its economic, but also political development. China
had to look for its own path of development because the market
economy ran counter to the Stalinist ideology and Stalinism was no
longer a line to follow. Meanwhile, developed countries like the
U.S., Great Britain and other Western European states were
ideologically alien to China. It could not accept them as a model
to follow, although China closely studied their experience and has
assimilated certain merits of the Western economic system.

Today there is much discussion about the so-called Chinese
development model. Some believe there is such a model, while others
think it does not exist. One thing is clear: China’s path of
development has increasingly acquired many specific features, which
– to some extent – are a by-product of the collapse of the Berlin
Wall and the Soviet Union.

THE END OF RADICALISM IN CHINESE POLITICAL REFORM

Whereas the impact of the fall of the Berlin Wall and the
breakup of the Soviet Union on China’s economic development was
absolutely clear, the outcome for its political development was
quite obscure.

The debates about lessons from the Berlin and Moscow events for
political reform in China involved two opposing sides. One side
believed that the Soviet Union’s political system would not have
collapsed had it not been for Gorbachev’s reforms. The other side
thought that it collapsed just because Gorbachev’s reforms came too
late and were handled badly. The voice of the former group was loud
and dominating in the early 1990s, reinforced by the 1989 political
turmoil in Beijing. However, the arguments of the latter group were
also strong, although of a lower profile, particularly because
China had already started to explore different forms of political
reform in the late 1970s.

Political lessons common to the Soviet Union before 1992 and
China before 1978 seem to be that, first, the two countries had no
institutions for the succession of power and, second, power was
totally concentrated in the hands of a single leader. In the early
1980s, Deng Xiaoping, the architect of the reform and opening-up
policy in China, launched a program to institutionalize the
transfer of power. He initiated mandatory retirement for those
revolution veterans who had been in power for decades since the
establishment of the People’s Republic of China in 1949. Young
leaders began to emerge as candidates for high posts with the
prospect of holding power in limited terms and handing it over to
younger generations. The consequences of the Mao cult of
personality in China were as tragic and painful as that of Stalin
in the Soviet Union. One lesson from it was that Deng Xiaoping and
his colleagues put great effort into building an institution of
collective leadership. Power was to be shared by a team of leaders
so that the influence of any single leader, whether good or bad,
would be checked.

The hasty transfer of power from the dying Leonid Brezhnev to
the dying Yury Andropov, then to the dying Konstantin Chernenko,
then to a relatively young Mikhail Gorbachev who did not have much
experience, reinforced China’s own bad succession experience under
Mao. An institution that would ensure the succession of power thus
became a top priority issue in China’s political reform agenda.

Since the late 1990s the world has been witnessing the
achievements of the political reform effort in China. In 1997, a
few Politburo Standing Committee members aged 70 retired and in
2002 most of the Politburo members in their 70s retired. The high
posts were peacefully transferred to leaders of the younger
generation. In 2007, two Politburo members who were over 70
retired, and four new members who were in their 50s and 60s joined
the Committee. It is quite likely that by 2012 seven out of the
nine incumbent Politburo members will retire. Thus the previously
very uncertain issue of the succession of power in the Communist
political system has become quite predictable in China.

Another important lesson was drawn from the fact that
perestroika and glasnost were directed solely by Gorbachev, which
meant that the success and failure of the reform depended on a
single person. That was a frightening scenario for the Chinese. The
fact that the entire Communist Party was apathetic when Gorbachev
announced the dissolution of the Soviet Union and when Boris
Yeltsin dissolved the Communist Party was especially shocking for
the Chinese leaders who interpreted these events as that the
Communist Party played no role in the political processes. They
realized that there was an urgent need to dilute the concentration
of power by a single leader and increase the participation of
ordinary party members in decision-making. This became a primary
issue for China, and since the 1990s there has been much more talk
about intra-party democracy. Unfortunately, no concrete institution
has been established so far to ensure this. This shows that the
lessons of the collapse of the Soviet Union have not been fully
drawn yet.

Another obscure political issue is how open the ruling party
should be towards the state and society. In the 1980s, the main
perception among the leadership was that the party was too much
intertwined with the state; that it had become a substitute for the
state and had degenerated into bureaucracy. Thus there was a need
to separate the party from the state so that it politically led the
state while the latter focused on administration and
implementation. Radical efforts were taken to separate the party
structure from the state structure in the 1980s. But the 1989
events in Beijing, together with the fall of the Berlin Wall and
the dissolution of the Soviet Union, alarmed the Chinese
leadership. One frequently referred perception by the Chinese about
the collapse of the Soviet Union is that Gorbachev handed over too
much power too quickly from the party to the state, which
fundamentally and irreversibly weakened the party. With such a
lesson in the minds of the Chinese, the once heated public
discussion over separating the party from the state ended in the
1990s and the 2000s. The effort of separating the party from the
state stopped. Moreover, it seems that since the 1990s there has
been a tendency to strengthen the party’s supervising role over the
state.

However, not all political reform measures taken by Gorbachev
were perceived as mistakes in China. The Chinese leadership
realized that some extent of openness in the party structure was
needed. Bureaucratism in the Chinese Communist Party was as strong
as it was in the Soviet Union. Thus the need for reform was equally
urgent. Nevertheless, what exactly should be done is far from
clear.

DEMOCRATIZATION IN SOUTH KOREA AND TAIWAN

The impact of the fall of the Berlin Wall and the collapse of
the Soviet Union on domestic economic and political development was
felt not only in China, but in other East Asian states, as well,
such as South Korea and Taiwan. In these countries, the events in
the Soviet Union and Eastern Europe mainly affected their political
development. It was not accidental that democratization in South
Korea and Taiwan started in the late 1980s and was practically
completed in the 1990s. However, the way in which the events in the
Soviet Union and Eastern Europe influenced the political
development of South Korea and Taiwan differed from that of
mainland China. In China, it was the ruling elite that drew serious
lessons from the failure of its former comrades. In South Korea and
Taiwan, it was the United States which, no longer tied up by
pressure from the Soviet Union, encouraged or even imposed
democratization on South Korea, Taiwan and its allies in East
Asia.

During the Cold War, the United States would make alliances with
any country or region that was against the Soviet Union, no matter
how authoritarian a particular regime was. The U.S. would not
intervene in the domestic affairs of its allies if the intervention
would upset the rulers and thus drive its ally into the Soviet
bloc. That was also the case with the Soviet Union. The Soviets did
not mind becoming allies with those capitalist or feudalist states
that were against the U.S. bloc, although ideologically capitalism
and feudalism were condemned by the Soviet Union.

Once the pressure of the Cold War was alleviated, the U.S. had
the opportunity to promote democracy in allied countries. In 1988,
the military regime in South Korea held the first free presidential
election since General Park Chung-Hee took power in a coup d’etat
in 1961. In Taiwan, long-time dictator Chiang Ching-Kuo allowed an
opposition party – the Democratic Progressive Party – in 1998.
Restrictions over freedom of speech were lifted both in South Korea
and Taiwan in the late 1980s. There was a change in the ruling
party in South Korea in 1998 and Taiwan in 2000 as a result of free
elections which marked a new stage of democratization in these
countries. Naturally, there were other factors that promoted
democratization processes in East Asia, primarily the push from the
U.S. But this push would have been impossible without the fall of
the Berlin Wall and the collapse of the Soviet Union.

A NEW POSSIBILITY

The fact that the Berlin Wall fell and the Soviet Union
dissolved peacefully had and will continue to have a huge impact on
politics in East Asia. Before these two events, few people could
imagine that a regime change, dissolution of a state or
reunification of a nation could be accomplished peacefully. All of
prior history showed that regime change and the dissolution or
mergence of states inevitably involved mass violence, bloodshed and
killing. The peaceful collapse of the Berlin Wall and the Soviet
Union wrote a promising new page in world history, especially for
China and Korea, which face the pending problem of
reunification.

Several wars in the Middle East and Central Asia show that it is
much easier for violence to prevail than peace when different
states face disputes. Therefore, the peaceful fall of the Berlin
Wall and the Soviet Union set a genuinely precious example. It was
fortunate that the Czech Republic and Slovakia had a peaceful
divorce in the 1990s, following the peaceful reunification of
Germany and the peaceful dissolution of the Soviet Union. But it
was tragic that the former Yugoslavia did not follow this example.
The breakup of Yugoslavia involved hundreds of thousands of deaths,
as did the divorce between Pakistan and India in the 1940s when
millions of people died.

It is not yet clear if the great legacy of the peaceful
processes of the events in Berlin in 1989 and in the Soviet Union
in 1991 has been fully taken in by China and South Korea. The
Chinese Communist Party and its former enemy Kuo Ming Tang (the
Nationalist Party) in Taiwan reached a high level of reconciliation
in 2005 after decades of antagonism. This reconciliation greatly
eased the tension across the Taiwan Strait. Also, North and South
Korea began to engage with each other in the late 1990s. Although
the reconciliation between the two Koreas is not comparable with
that between mainland China and Taiwan, tensions on the Korean
Peninsula have decreased greatly because of this engagement. The
increasing possibility for peace in these two countries could
partly be a result of their people learning the lessons of the
peaceful fall of the Berlin Wall in 1989 and of the peaceful
breakup the Soviet Union in 1991.

EASE OF TENSIONS IN EAST ASIA

The end of the Cold War, together with the ensuing domestic
changes in East Asian countries, greatly improved international
security in the region.

The early 1990s witnessed a third – since 1949 – wave of China
establishing or restoring official ties with many countries,
particularly with its Asian neighbors – South Korea, Vietnam,
Singapore and Indonesia. China also established official relations
with Saudi Arabia, Israel, South Africa and Namibia during this
period. This new trend in foreign relations with various countries
helped China improve international security. Without profound
political changes in Berlin and Moscow in 1989-1991, establishing
or restoring ties could not have been possible. For example,
Vietnam had to end its aggression in Southeast Asia because of the
collapse of its ally, the Soviet Union, which paved the way for the
restoration of official ties between Vietnam and China. Similarly,
due to the fall of the Soviet Union, North Korea – a member state
in the Soviet bloc – lost its chance to invade South Korea, a
member state in the U.S. bloc. The tension on the Korean Peninsula
eased greatly, making it possible for China and South Korea to
develop foreign relations.

Even relations between China and India have improved since the
late 1980s when Gorbachev and the Chinese leadership began to seek
normalization of their relations. Backed up by the Soviet Union,
India had been antagonistic towards China for decades. After the
Soviet Union pulled back its support for this tension, India and
China began to engage with each other.

Yet a more far-reaching impact on international relations seems
to be that the approach of dividing the world along ideological
lines – communism, nationalism, liberalism, etc. – no longer
prevails. The most powerful driving force in shaping international
relations is now the promotion of economic interests through trade
with different nations. This new approach has helped many East
Asian states put aside their ideological differences and develop
economic cooperation. If there is still tension caused by
ideological reasons, its magnitude is not comparable with that
which existed before.

Thus from a Chinese point of view, the fall of the Berlin Wall
and the Soviet Union greatly improved international security.
Whether the world is safer is another question. Newly emerging
extremism might disrupt peace in the world. However, a world
without the frenzied Cold War is surely a much safer place than a
world with it.