The issue that brought protesters to the streets in cities from Paris to San Francisco was the Chinese suppression of Tibetan demonstrators. The immediate target of the protesters' anger, therefore, was Chinese nationalism, not Chinese socialism. Quite fitting for a government that shed its socialist claim a long time ago and replaced it with a nationalist discourse that presents it as the sole guarantor of the nation's integrity. It is also deeply ironic that the Chinese Communist Party, which came to power in 1949 after a civil war against the nationalist Kuomintang, has metamorphosed into a nationalist party not unlike the one whose members fled to Taiwan after Mao's victory.
That is not the only notable metamorphosis suffered by the Chinese communists. The other one took place in December 1978, when the party's Central Committee announced the beginning of an economic liberalization that, except for a brief period after the Tiananmen Square massacre, has continued uninterrupted through today. Under Deng Xiaoping, the Chinese communists became ideological cross-dressers, adopting the robes of the Asian right--the combination of political dictatorship and private enterprise that South Korea, Singapore and Taiwan had experienced under Park Chung-hee, Lee Kuan Yew and Chiang Kai-shek, respectively.
There is no denying the economic boom that the market-dictatorship formula has brought to China. In 1978, the private sector accounted for less than one-third of China's industrial output, while today it produces two-thirds. Over that period, considering the relative prices between the United States and China, China's per capita income measured in dollars has multiplied by a factor of 10.
Many areas of the economy remain under suffocating control, particularly capital markets and the banking system--the reason why 70 percent of the loans awarded by state-run banks go to state-owned enterprises even though they only represent one-third of the economy. And there are big differences in terms of economic freedom--and economic performance--between provinces such as Guandong and Zhejiang in the south and, say, Xinjiang in the northwest. But, all in all, it is estimated that the reforms inaugurated in 1978 have pulled hundreds of millions of Chinese out of extreme poverty.
China's economic awakening has produced mixed feelings around the world. On the one hand, it has served to push the issue of political reform and human rights to the back of people's minds. On the other, it has generated a fear of competition, both economic and military–particularly in the United States, with the incessant calls for the adoption of measures against Chinese imports and the emphasis on "strategic modernization" in the Pentagon's latest budget, a third of which will be devoted to countering China's defense expenditure.
Both attitudes--moral neglect on the part of those who think economic liberalization is enough and paranoia on the part of those who don't understand the salutary powers of competition--are wrong. The first school of thought is right to think that China's growing prosperity is a boon for everyone; however, under present conditions, their attitude helps reinforce the pernicious idea that freedom can be sliced up conveniently to the satisfaction of those who aim to preserve power. The second is right to take a critical look at Beijing's bureaucracy, but wrong to think that China is essentially an economic or military threat against the rest of the world: As every act of repression indicates, the rulers in Beijing are a far greater threat to the Chinese people themselves.
Many people assume that economic liberalization and the rise of the middle class will lead to political reform in China sooner or later. But the lesson of the 20th century was not that political change automatically comes about because of economic change. It is that freedom only happens when people struggle for it, and that political and economic freedom are two sides of the same coin. Reminding the Communist Party of China that respect for human rights and civil liberties in that country is long overdue, as demonstrators recently did, is a healthy development.
Alvaro Vargas Llosa, author of "Liberty for Latin America," is the director of the Center on Global Prosperity at the Independent Institute.
By Alvaro Vargas Llosa