Fresh Air Fiend

  Any illusion that Deng was a high-minded Jeffersonian at odds with the forces of Marxist-Leninist darkness was shattered in 1980 when, for political convenience, he proposed deleting the "Four Bigs" from the 1978 constitution. These four freedoms were speaking out freely, airing views fully, holding debates, and writing big-character posters. This proposal of Deng's was endorsed in the Fifth Plenum of the Party Congress. And so Tiananmen Square in 1989 was Deng at his most characteristic. Sun Tzu's The Art of War recommends hacking a disobedient soldier to pieces in front of his regiment to make a memorable point about discipline. The feebler the pretext, the sterner the lesson.

  In other respects, 1980 was a banner year for Deng. Besides the trial of his old enemies, the Gang of Four, which went without a hitch, there were two Dengist ideas, both successes, that had far-reaching economic implications: the Statute of Joint Venture and the new Commission for Foreign Investment. Although business with the outside world had been going on since President Nixon's visit in 1972, these two policy changes marked the beginning of recent Chinese prosperity. They meant that foreign companies could build factories in China with Chinese partners—making almost anything—that capital and technology could be easily transferred, and, perhaps most important, that foreign loans, both government and private, could be negotiated. Just as crucial, the new policies meant that business affairs were decentralized. Now foreign businessmen could negotiate directly with factories, bypassing the bureaucracy (and bribery) that had demanded that every deal be routed through the ministries in Beijing.

  Along with this start of China's open door policy was the ousting of Hua, the adoption of an official and greatly modified view of Mao, a break with the radicalism of the past, and some practical steps to develop China. One of these was the concept of Special Economic Zones. China is a world of compartments. A special currency was created, not renminbi —people's money—but FEC, foreign exchange certificates. The idea of the Special Economic Zone was another compartment, and it was nothing new. Strictly speaking, that is what the city of Canton was in the fifties and sixties (and what Shamian Island in Canton was in the nineteenth century): a sealed zone where foreigners could transact business without stinking up the rest of the country with their decadent or subversive notions. So, just over the Hong Kong border station of Lo Wu, in a village on the railway line fringed by bamboo groves, at a place then known in its Cantonese form as Shumchun, a new city was planned.

  This was hardly an overnight success. In 1983, a RAND Corporation Sinologist and U.S. national security adviser, Richard H. Solomon, published an article titled "China's Uncertain Future." Granted, any article on China in any given year could justify that title, but Solomon's was a well-argued thesis that almost anything could happen next. Not much did happen. Stung by the ferocity of the Cultural Revolution, and receiving mixed signals from the right and the left of the Party, the Chinese people were hesitant in carrying out Deng's exhortations. His cry "To get rich is glorious!" remained little more than a yearning. What I saw in China in 1986 and 1987 was mainly confusion and tentative steps toward a free market, and an official crackdown resulting from the usual Chinese horror of crime and chaos (ten thousand people were executed for various crimes between 1983 and 1986). I believe that the comparatively mild government response to the student demonstrations of late 1986 inspired a greater boldness, which resulted in the demo and hunger strike during Gorbachev's visit (with many junketing journalists) to Beijing in 1989 and the subsequent massacre. After that, it appeared that China was in the economic doldrums. This was an illusion, of course. As we know now, no businessman is likely to be deterred by a little thing like a massacre. The Japanese government did not even condemn the killings.

  Deng was unrepentent about the Tiananmen Square killings. "Pragmatic" is the word most often applied to him. He is no fount of ideology, but plainspoken and full of down-to-earth saws and maxims ("It doesn't matter what sort of cat you have, so long as it catches mice," etc.). He strikes me as soulless, unspiritual, a skeptic, unsentimental—the embodiment of the tough, risk-taking side of the Chinese character. He is a card player, rather mocking of art, literature, and artistic expression. A survivor to his nicotine-stained fingertips, he is all business.

  Mao had a sort of monstrous style, in contrast to Deng's absence of style. By idealizing peasants and the virtues of toil and learning by doing, Mao tried to be a man of the people. But his ego was on a much grander scale, and he was a romantic, a poet, almost Byronic, and yet someone who seemed to enjoy his reputation as a demon manipulator. He was happy to hand power to the Red Guards and turn the country upside down for ten years just to see what would happen. While both Zhou and Deng had been affected by their years in France, Mao enjoyed belittling European countries as imperialists or running dogs of the Americans. Asked what his view was of the effect on France of the French Revolution, Mao said loftily, "It is too early to say."

  Mao welcomed (and trained) African and Latin American guerrilla fighters and discussed with them his theories of protracted war. It is hard to imagine Deng writing a poem or caring very deeply about exploited African workers and peasants. While Mao was happiest debating the hypothetical African siege of Johannesburg, Deng might exult in selling the South Africans steel or Christmas ornaments. His outlook is quite different from the internationalism of the previous Chinese leadership. He is without charisma—doesn't have it, doesn't want it. No cult of personality has grown up around him, nor will it. His briskness and frankness is a reaction to the time-wasting and secrecy of the past. Mao was an emperor whose image was iconographic, Deng is a sort of CEO and is almost faceless. Deng's main dictum of reform is "Tighten on the inside, loosen on the outside."

  It is hard to imagine, but in these years of Chinese miracles, Deng's initiatives were not an instant success. In the first half of 1990, China experienced almost zero growth, and finished the year about 3 percent ahead. Compare this to its more recent annual growth of around 10 percent and the incredible heating of its economy. How to explain this swift infusion of cash? I think there are many reasons. The collapse of Eastern Europe and the fragmentation of the Soviet Union created new markets and diverted investment to China. The worldwide recession of the mid-1980s inspired manufacturers to look for cheaper labor and more consumers—China, these businessmen discovered, not only can make electronics, Ninja Turtles, and costume jewelry at a fraction of the cost elsewhere, but also can supply hundreds of millions of potential customers. Traditional cheap-labor centers such as Taiwan, Korea, and Hong Kong were being undercut by the even smaller wages in China.

  Confidence in China (and Deng) is the key thing, and it seems to be limitless at the moment. China is a good credit risk. China is a serious market as well as manufacturer. The handing over of Hong Kong is an important factor, too. Suddenly China is no longer a seedy, sprawling, monolithic gerontocracy of enigmatic ideologues, but rather an enormous, orderly, businesslike place that inspires confidence and comes up with the goods very cheaply. It now seems almost laughable that a company would contemplate setting up a plant in Britain, Ireland, Poland, or Italy when for a fraction of the cost and the prospect of no labor unions, the same company could be set up in China. That is precisely what is happening. As a result, China, with whom the United States has an $18 billion trade deficit, is our largest trading partner after Japan, and south China has become "the Gold Coast": high-tech aircraft parts are being made in Fujian Province, a place known for six thousand years only for cork paintings and oolong tea. In its dealings with Britain over Hong Kong, China seems to have realized that it is negotiating from a position of much greater strength. This is evident in the way China intentionally humiliates the British diplomats (creating delays, refusing to greet them or else not meeting their planes, making them wait, and occasionally issuing contemptuous statements). Chinese machismo these days is unmistakable, and businessmen are lining up to arrange joint ventures for anything from jet planes to Barbie dolls. China has moved quickly from
being the twentieth-, to the eleventh-, to the third-largest economy in the world. We are greatly in their debt.

  Mao's legacy are all those communes and collective farms that have been reconstituted as go-ahead villages, or else plowed under, their people dispersed to struggle to find their niche in the labor market. Deng's creation is Shenzhen. I visited there several times—took a train from Hong Kong (less than an hour from downtown Kowloon) and went by road from the nether parts of Guangdong Province.

  A billboard in Shenzhen showed the eighty-nine-year-old Deng looking ghostly and cadaverous—a lifelong chain-smoker, he has carried an oxygen bottle for the past eight years, his emphysema apparent in his sucked-in cheeks and popping eyes—and making an admonishing gesture with his fingers, offering these words:

  If you don't adhere to the socialist road,

  If you don't follow the reforms,

  If you don't develop the economy,

  If you don't improve your livelihood,

  Then the only way for you is death.

  It was part of a speech he had made on his southern tour when he had visited Shenzhen in 1993.

  The growth of Shenzhen has been prodigious. Formerly it was no more than a railway platform. In 1971, the Harvard Sinologist Ross Terrill stopped here when it was still a township spelled "Shumchun," and he wrote, "The traveler enters a building which is combined railroad station, customs house, and hotel." Nine years later, I stopped and described it in my diary as a wilderness of barricades and barbed wire; it had just been designated a Special Economic Zone. Now Shenzhen is vast, with a railroad station as large as Grand Central and scores of hotels. It is a city nearly the size of Hong Kong in population, and sprawling in all directions. It is as famous for its prosperity and its buoyant stock market as it is notorious for its massage parlors and prostitutes. It has organized (and approved) gambling and its own racetrack, its bustling streets and busy factories brilliantly lit by blinking signs. Deng had said famously, "I like this."

  But he also made statements about corruption, and the local Party official, Mo Huashu, specified "red tape, embezzlement, dereliction of duties, abusing power for personal gains, and Party members and officials visiting prostitutes." Mr. Mo quoted Deng as saying, "If the society decays, what is the point in achieving economic success?"

  The Fortune Cookie

  There are no fortune cookies in China—the things are unknown, people laugh when you explain them, and even the name they find absurd and meaningless. Yet, inspired by the effusion of Chinese enterprise, two Chinese men are attempting to register their patent of a fortune cookie, though they don't call it that. Qian yu bing is their phrase, "words-written-on-paper cake."

  In December 1990, the People's Republic's Patent Gazette contained a description of design #92303321.1, their "cake"—the novelty is in the unique folds in the dough, but the finished article looks little different from other fortune cookies (or other tortellini, for that matter). Having been gazetted, the design could well be approved, and owning the patent, Mr. Bei Xian and Mr. Zhiang Renli, of Qingdao, Shandong Province, would become China's next millionaires. All they have to do is find a way of collecting revenue from such fortune cookie users as the China Moon restaurant in Stoneham, Massachusetts, Woodland's Potstickers restaurant in Honolulu, and numerous other infringers of their patent.

  The Chinese are themselves masters of the art of copyright infringement and have found it an effective way to generate business, make enormous profits, and earn hard currency. Their factories are closely monitored in Hong Kong by people acting for the brands and labels that are assiduously pirated. Even so, the infringers get away with murder.

  "Take running shoes," a Hong Kong lawyer told me. "It is a billiondollar business. I am not exaggerating when I say a billion. Chinese factories make the shoes and label them 'Nike' or 'Puma,' they put them in boxes printed 'Made in Korea,' and they ship them all over the world."

  The Chinese purloin trademarks and labels and logos willy-nilly. You don't have to be in China very long to see the ripoffs. On every conceivable consumer item, Mickey Mouse is gallivanting all over China without a license—and sometimes Mickey has a curiously almond-eyed expression. The Playboy bunny appears on any number of products without the approval of Hugh Hefner. Knockoff Swiss Army Knives are fairly common. Lux soap has been popular in China for so long there are a dozen pirate versions with the same color wrapper, often the same name or a similar one—"Lid," "Lix," "Lud," "Lus." The soap bars are exported to Africa and Southeast Asia, where they may be found stacked near "Goldgate" and "Rodigate" toothpaste (the same Colgate colors, no relation), "Pepsi-Cola" biscuits, and fake and almost unchewable "Chiclets."

  False labeling, especially concerning the country of origin, extends to clothing exported worldwide, but especially to the United States, where China is limited to certain quotas. It is known that China's production far exceeds its quotas, so many Chinese products are given labels such as "Made in Haiti" or "Made in Mongolia" and transhipped through those places, where a fax machine in a dusty office serves as a third-country connection. "Made in Mongolia" has been popular on Chinese labels, because little is manufactured in that country of grasslands, yaks, and nomads. One Hong Kong trading company was raided recently and found to have sold $2 million worth of falsely labeled Chinese goods. The value of Chinese textiles passing through Hong Kong with false labels rose 150 percent in 1992, to $24 million.

  The United States is the world's largest purchaser of Chinese clothes, $4.5 billion worth in 1992. I wanted to visit some textile factories, especially ones that produced designer goods—Ralph Lauren, for example. This would be a problem, I was told.

  "Ralph Lauren and the others are very uptight about giving the locations of the plants they source from," I was told by a China expert in Hong Kong. "It is bad PR for customers to know that their suit costing hundreds of dollars is made for peanuts in China. And cheap competitors want to source from the same factories, so that they can pass their producers off as 'just as good as Polo'—or buy the surplus production."

  Long before my driver Mr. Li and I were humming Mao hymns and dodging carnage on the Shantou Road, I visited a wholly owned American enterprise outside a major Chinese city—I promised my informant I would be circumspect. I was met by a fresh-faced American manager, who asked me why I happened to be interested in his company's product.

  "I'm planning to write an article," I said, "about change in south China. And your part in it."

  "Wait a minute," he said, becoming officious. "I don't want to be in your article. I don't want to be quoted. I don't want my name on it. Everything I say has to be off the record. If you want information, you can talk to our PR people in Hong Kong."

  "It won't be much of an article if I use public relations brochures," I said, and thought that this was precisely the sort of unhelpful attitude I had met among old Commies and hacks in the older, Marxist-Leninist China.

  "I'm sorry, I can't help you."

  "I was just curious about your experience in China. I promise to respect your wish to be anonymous."

  The Nameless American Factory Manager in the Nameless American Factory considered this and finally said, "We're doing very well. We're on schedule. Everything's going ahead. We have a great team."

  He set his face at me as though defying me to find anything wrong with what he had just said. I found a great deal wrong. He was unhelpful and probably untruthful. It was the sort of thing you would hear from the cadre of the Revolutionary Red Star Work Unit during the height of the Cultural Revolution.

  "How many people do you employ?"

  "Eighty-five."

  "So it's not very labor intensive?"

  I had been told by another factory manager that if an industry was not labor intensive, there was almost no point in setting it up in China, since low wages and high productivity were the keys to Chinese success. On the other hand, if you wanted to sell something to the Chinese, the best position was to be wholly owned and to satur
ate the market, as this company obviously wanted to do.

  "We have a lot of machines," the Nameless American said.

  "What do you pay people?"

  "See?" he fumed. "That's the wrong question! Why don't you ask whether they get transportation? What about cafeteria privileges, holidays, overtime, all the rest of the benefits?"

  "I was coming to that," I said (and he might have added haircuts and showers, two other joint-venture perks for Chinese workers). But seeing that I had stung him, I persisted with my wage question.

  "About five hundred a month—maybe less."

  Call it 450 yuan, $80 a month at the official rate of exchange. It was slightly above the going rate. The clothing factories, run mainly by Taiwanese and Hong Kong businessmen, paid 200 yuan or less a month. If you are wearing a garment marked "Made in China," chances are good that the person who cut and stitched it earned a little more than $5 a week. Your Chinese-made umbrella? Your children's toys? The angels on your Christmas tree? This easily made stuff was probably produced by Chinese earning less than $5 a week.

  "That's a very good salary here," the man said, and it was likely he was earning 250 times that amount.

  "What if your workers didn't think it was adequate and decided to go on strike?"

  "They'd have a problem. We're a non-union operation in the States. We don't deal with unions—we deal with individuals. My door is always open to anyone who's got a complaint."

  I doubted that anyone would risk it. Even in our brief conversation this Nameless American seemed to me to be a rather forbidding person.

  He told me that he had been living in a hotel in the nearby city for almost seven months. Formerly a manager of a U.S. plant in one of the western states, he had never lived in China before.