Prisoner of the State: The Secret Journal of Premier Zhao Ziyang (13 page)

This letter was sent, but as before, there was no reply. Later, the General Office called my secretary to confirm that they had received the letter. They said that first of all, this was not house arrest (they were very afraid of calling it “house arrest”); and second, that I had brought it upon myself. Perhaps they were implying that I was to blame for the letter addressed to the 15th Party Congress [being leaked] overseas. That was the only reply I received to my two letters. The reality was that I continued to be detained at home.

Some time passed until it was just before Jiang Zemin’s visit to the United States, with still no indication of any intention to relax my conditions. Then oddly enough, one day the family doctor assigned to me from the Health Division of Zhongnanhai [site of the Party’s headquarters] came to my house and suddenly mentioned that it was not good for me to stay at home all day.

I laughed and replied, “What choice do I have?”

He said, “Why don’t we write a letter to the General Office to raise this issue, so you can go out and play golf?”

I said, “I am not permitted even to receive visitors now, let alone go out to play golf.”

He said, “We will file a report.”

This was unprecedented behavior for a member of the Health Division of Zhongnanhai and not at all in line with customs and rules. [Members of the Health Division] were never allowed to intervene in matters of this kind, nor had this doctor ever suggested this before.

It occurred to me that perhaps Jiang Zemin was hoping that during his visit to the United States, if someone were to ask him about Zhao, he could reply that Zhao was not under house arrest but had recently even gone out to play golf. With this in mind, I replied to him, “You should not get involved in this. Anyway, I have no interest in playing golf these days.”

I gave him the cold shoulder. Why would a doctor intervene in such matters? Only by orders of the General Office. Then the Party branch of the General Office called my secretary to say that playing golf was now allowed. Though I had previously been denied the right to attend the funeral of Yong Wentao, going to similar funerals in the future would now be permitted. No mention was made about receiving visitors.

It was therefore made clear that there had been a relaxation of the rules. No visitors or other outings were permitted. However, for the sake of some good publicity, I was allowed to go play golf and attend funerals. I didn’t know whether to laugh or cry at such tactics. I simply refused to play golf and absolutely refused to go out; nor did I attend any funerals.

As a result, in 1997, I did not go anywhere for the winter. I spent the entire winter in Beijing. Even though Beijing was dry and dusty, and worsened my respiratory problem and made me cough a great deal, I still refused to leave.

Speaking of these trivial matters is meaningless. However, this illustrates the kind of mentality they had. On the one hand, they disregarded the law and unreasonably limited my activities; on the other hand, they were fearful of exposure and the foreign media.

From October 1997 to December 1999, not only were the original six rules not relaxed, but stricter limits had been added, denying me visitors and the right to leave my home. These conditions lasted for more than two years.

With the passing of time, there was a little relaxation. Relatives were allowed to visit, as were some of the comrades holding lower-level positions, or retired elderly comrades. Yet many retired senior leaders, for example those who held minister or vice minister level positions, were still not allowed to visit me. Of course, they never spelled these terms out clearly.

In the latter half of last year [1999], I asked Comrade Zhao Jianmin [the governor of Shandong Province] to visit, but the General Office immediately told me that he was not allowed to come. Another time, I asked Comrade Xiao Hongda [director of the General Office of the Central Military Commission] to visit, but this was also turned down by the [Central Committee] General Office.

In December 1999, as my former secretary, Comrade Yang Wenchao, reached the age of retirement, a new secretary was assigned. In order to announce the assignment of the new secretary, two comrades from the Party committee of the General Office were sent to talk with me.

I used the opportunity to raise two issues: first was a request to leave Beijing during the winter season, hopefully to Guangdong or Hainan; second, I demanded an end to the ten years of house arrest, especially the full house arrest conditions imposed after the 15th Party Congress.

After a while, they relayed to me through the secretary that I was not to go to Fujian, Guangdong, or Hainan, but that other places were permitted, so their position had slightly relaxed. Visitors were generally permitted, as before. Some were allowed, some were not.

I immediately asked for Comrade Zhao Jianmin to come over. His visit was approved, and he came and visited for a while. Later, Comrades Xiao Hongda, Du Daozheng [director of the General Administration of Press and Publications], and Yao Xihua [chief editor of
Guangming Daily
] also came over for visits. In general, it appeared that the conditions had returned to those of the original six rules.

A
fter the Third Plenum of the 11th Central Committee [which in 1978 launched the reform era], there were two viewpoints held by those in the central leadership. Even before that, it’s fair to say there had been two: one represented by Deng Xiaoping and the other by Chen Yun.

Deng believed in expanding the economy with an emphasis on speed and opening up to the outside world, adopting reforms that moved toward a market economy. Chen Yun upheld the approach of the first Five-Year Plan in the 1950s; that group insisted on a planned economy and had reservations about the reform program.

After more than ten years of back-and-forth between the two, Deng’s idea triumphed and was accepted by more and more people. Reality has proven that it was correct.

[Hu] Yaobang and I were basically on the same side as Deng Xiaoping. [Influential elder] Li Xiannian was fully on Chen Yun’s side, and even more extreme and stubborn. The major distinction between him and Chen Yun is that Chen Yun genuinely believed in his viewpoint, whereas Li Xiannian was thinking more about which approach might benefit or hurt him personally. During the Cultural Revolution, he basically had been in charge of economics. Together with Yu Qiuli, who headed the State Planning Commission for a long time, the two were in charge of the economy.

This includes the two years immediately following the fall of the Gang of Four [in 1976], when they carried out an “all-out fast-paced campaign” that caused economic imbalances and set unattainable goals of importing major projects with the so-called “Import Great Leap Forward.” All this was done under his and Yu Qiuli’s leadership.

As reforms progressed, Li Xiannian, feeling that his work had been rejected, often expressed displeasure with notions such as “If whatever is being done now is all correct, then was the past work all wrong?” He always opposed reform and often complained about it.

Others who supported Chen Yun’s viewpoint included Yao Yilin, who later succeeded Yu Qiuli as the director of the State Planning Commission. He was the Vice Premier in charge of general economic policies in the State Council.

I had always fully supported Deng’s reform. Indeed, I was enormously enthusiastic about it and worked hard to bring it about. I did, however, have reservations over Deng’s emphasis on speed. Of course, if everything else is going well and the economy is running smoothly, faster is better; nobody could object to that. However, our past mistaken tendency to focus on pursuing output values taught us that an overemphasis on pace can result in a blind pursuit of high targets and speed, at the expense of efficiency.

My production targets were relatively modest and I emphasized economic efficiency. Deng understood my view on this matter. There was no conflict.

On the issue of reform, [Hu] Yaobang and I had the same basic view. We were both enthusiastic. However, we had differences on specific steps, approaches, and methods—especially on the question of speed, Yaobang was even more aggressive than Deng. Deng merely wished things could go faster. Yaobang actively promoted the concept everywhere and demanded that people do such things as “quadruple it, ahead of schedule.” Since I was in charge of overall economic work, the difference between our approaches was evident.

As for Comrade Chen Yun, I had enormous respect for him in the years when I first started working in the central leadership. I felt that of the elder generation of leaders, Comrade Chen Yun was the one with the most profound knowledge in economics; he had unique and penetrating insights.

His first Five-Year Plan had been very successful; of course, it was based on the Soviet economic model. After 1957, he insisted on thinking independently, and he disagreed with Chairman Mao’s Great Leap Forward.
*
At a time when the entire Party was delusional, it wasn’t easy holding to his own views. Furthermore, after the Three Transformations
†
during the 1950s, he [Chen] first proposed that within the predominantly planned economy, a small amount of freedom should be allowed. He believed in allowing for as lively a market as possible within the structure of a planned economy.

This was not easy, since at that time the Party was committed to expanding the role of planning until it accounted for the entire economy. Also, in 1962 when the economy was in crisis, he saved the situation. He carried out very effective measures, including raising the price of sugar, importing soybeans, and combating a water retention epidemic caused by starvation. He had turned things around quickly. Of course, efforts also were made by Comrade Liu Shaoqi [China’s President from 1959 to 1968] and Premier Zhou [Enlai, China’s Premier from 1949 to 1976], but Comrade Chen Yun proposed many of the measures.

After I moved to Beijing, I agreed with his opposition to the overemphasis on speed, so as to avoid major economic fluctuations. And he expressed support for my urban economic reform aimed at easing the reliance on the state for jobs and expanding autonomy for enterprises. In the initial few years, the two of us had a good relationship. I was even able to mediate and ease communication between Deng and Chen. Since I was in charge of the economy, I asked for both men’s opinions and then proposed ideas of my own. They were mainly based on Deng’s opinions, while also taking Chen Yun’s into consideration. The result was that the two of them could reach agreement.

Problems developed as reform deepened. New issues emerged as we pushed forward, but Chen Yun’s ideas remained unchanged. Within the Party, Comrade Chen Yun’s views on the economy would have been considered open-minded in the 1950s and 1960s. But as he persisted in his belief in “small amounts of freedom under a predominantly planned economy” or “planned economy as primary, market adjustments as auxiliary,” he became more and more out of tune with the overall goals of reform and the reality of the time. The distance between us grew greater.

I
n 1979 and 1980, a readjustment was made under the leadership of Comrade Chen Yun to correct imbalances in the economy. The Central Committee had established a Finance and Economic Commission, and Comrade Xiaoping had pushed for Chen Yun to head it. This occurred before I had come to Beijing. Later, under my leadership, the name of the group was changed to the Central Economic and Financial Leading Group.

The goal of the two-year economic readjustment was to correct problems that had emerged during the leadership of [Vice Premier in charge of economic affairs] Li Xiannian and [Vice Premier] Yu Qiuli. Yu Qiuli and [another Vice Premier] Kang Shien were critical of and basically opposed the readjustment. That helps explain why Yu Qiuli was later reshuffled out of the State Planning Commission and replaced by Yao Yilin.

After the two-year readjustment of 1979 and 1980, a further readjustment was proposed for 1981. This was the first major issue I encountered upon taking the leadership of the State Council.

When the sixth Five-Year Plan was being discussed in May and June of 1980, I had hoped to double the size of the economy within ten years. The goal was to shoot for 5 percent to 6 percent growth from 1980 to 1985, and then relatively faster growth in the next five years.

However, when the Planning Commission was drafting the plan for 1981, it discovered that the financial deficit had exceeded 10 billion yuan for 1979 and 1980, and it forecast that the 1981 deficit would also be high. At the same time, prices were going up, causing widespread complaints.

When Chen Yun learned of the situation, he suggested that we achieve both a financial balance and a credit balance in 1981. He believed that it would be better to sacrifice rapid growth in order to establish a financial balance. He was worried that year after year of deficits would result in worsening inflation. Li Xiannian went further, suggesting that not only should the budget be balanced, but there should be a surplus. Since the two had long-standing experience in making economic policy, further readjustment to the economy in 1981 became a certainty. This meant scaling back plans for construction projects, and slowing the pace of development.

The Planning Commission’s revised economic plan was submitted to a Politburo Standing Committee meeting for discussion on November 28. After Xiaoping, Chen Yun, and Li Xiannian approved it, it was communicated nationwide via a Central Committee Work Meeting on December 26 attended by provincial and municipal leaders.

With reforms producing consecutive years of good harvests and a vibrant market, living standards had risen. Under such good conditions, many comrades around the country saw the adjustment as unnecessary. The adjustment meant some contracts with foreign companies would have to be revised; equipment that had been delivered for certain projects would have to be put into storage.

As a result, there was some talk abroad about the Chinese economy being in trouble. Elsewhere there was praise. From the material that I read, only Japan believed that the readjustment was necessary to put the economy on the right track.

Chen Yun and Li Xiannian proposed the readjustment. Even though Deng Xiaoping agreed to it at the Politburo Standing Committee meeting and gave a speech to that effect at the Central Committee Work Meeting, it was not what he really wanted. He was not happy to have to pull the plug on major import projects and put equipment into storage. He agreed with Chen Yun and Li Xiannian’s views only to show his support for Chen Yun.

Until that moment, Deng Xiaoping still considered Chen Yun the primary decision maker on economic issues. In his mind, decades of experience had shown that Chen Yun had the deepest understanding of economic issues and was wiser than he. Even though the situation was not to his liking, he expressed support for Chen Yun.

[Communist Party General Secretary Hu] Yaobang did not say anything at the meeting. In my opinion, he did not entirely concur but found it difficult to express opposition, since two elders had proposed the measure and another had agreed to it. However, after a year had passed, in spring of 1982, when Yaobang visited the provinces for inspection, he said “the 1981 readjustment has caused the economy to take a dip.” Naturally, when this reached Chen Yun’s ears, he was not pleased.

Even though I was the leader of the Central Economic and Financial Leading Group, I had just joined the central leadership and was not yet familiar with the national economic situation. I genuinely trusted Chen Yun. Even though his opinion differed from my idea of “doubling in ten years,” I had agreed with Comrade Chen Yun’s idea. In hindsight, the further readjustment had been necessary, and the end results were good.

For a time after the Third Plenum of the 11th Central Committee [1978], our economy was still in a hole. For many years—before and during the Cultural Revolution—we had been lagging in many respects, including urban construction, agriculture, and people’s living standards. To shift to a healthier economic state, we had to go through a process of “re-learning.” In this situation, it was impossible to attain rapid economic development. Nor was it possible to engage in large-scale infrastructure construction.

For example, in order to revive the rural economy and enhance incentives for farmers, the prices of agricultural goods were raised. The aim was to reduce the urban-rural income gap. I was still in Sichuan when the policy was put forward, and I participated in the discussion. There were two key points. First, prices for agricultural and other rural products had to be raised, or else farmers would not have incentive to produce. Second, even though it was impossible at the time to remove the state monopoly on agricultural and other rural products, the quotas for mandatory procurement had to be reduced, especially in major grain-producing areas. For years, those quotas had been too high. Farmers had to work too hard to meet them.

After the Third Plenum of the 11th Central Committee, there were good harvests several years in a row: 1979, 1980, 1981, 1982, 1983, and 1984. The rural areas experienced a new prosperity, in large part because we resolved the issue of “those who farm will have land” by implementing a “rural land contract” policy. The old situation, where farmers were employees of a production team, had changed; farmers began to plant for themselves.

The rural energy that was unleashed in those years was magical, beyond what anyone could have imagined. A problem thought to be unsolvable had worked itself out in just a few years’ time. The food situation that was once so grave had turned into a situation where, by 1984, farmers actually had more grain than they could sell. The state grain storehouses were stacked full from the annual procurement program.

Two other factors contributed to the change. One was the elevated price of agricultural products. Farmers could make a profit from farming. The other was the reduction in the quotas for mandatory state procurement, which meant taking less food out of the mouths of farmers.

For more than two decades, farmers had not had enough to eat after handing over the grains they had produced to the state after every harvest. Of course, the reason that we were able to introduce this new policy was because the Third Plenum of the 11th Central Committee had decided that China could import grains. Comrade Chen Yun said the imports were allowed so that industrial crops could be preserved, but in fact, the imports fulfilled urban consumption demands, thereby reducing the rural mandatory procurement quota [purchased in part for urban markets]. The quantity of grain imports was huge in those years, between 10 million and 20 million tons. Major grain-producing regions could sell their surplus at a higher price and make a profit. Together, all of this gave rural areas instant prosperity.

These policy implementations came at a cost. While the prices of agricultural products had gone up, urban food prices could not be immediately raised, since urban workers had limited purchasing power. Therefore we had to finance additional subsidies for agricultural and other rural products. At the same time, foreign currency was needed to import grains, which affected the import of machinery. Plus, urban housing needed to be expanded. And since factories now had more autonomy, the wages and bonuses of the workers were raised. All of this involved additional expenditure. But these things all were part of the recovery process, which paved the way for the good situation of later years.

After the Third Plenum of the 11th Central Committee, our country’s financial revenue gradually declined in proportion to the gross national product, while expenditures steadily increased, thus resulting in a deficit. This was the price we had to pay; it was normal and solvable. In 1984, I began proposing a gradual raising of the revenue-to-GNP ratio. To reduce the deficit, we temporarily scaled back infrastructure construction and reduced the pace of economic development. There was no other choice.

If we had ignored the situation and launched an “all-out fast-paced campaign,” we would have faced seriously high inflation and put greater strains on farmers and workers. The readjustments in 1979 and 1980 and again in 1981 had been necessary. As a result of the 1981 readjustments, the agricultural sector continued to enjoy big harvests, the market continued to prosper, and the nation’s economy showed no negative growth. On the contrary, the economy grew by an annual rate of 4 percent. And as the readjustment deepened in 1981, growth increased. The growth rate in the first quarter was relatively low, the second quarter was better, the third quarter was higher, and the fourth quarter was significantly higher. This proves the readjustment was good and the economy had recovered.

Here’s how we kept the economy growing: by scaling back infrastructure projects and reducing heavy industry, iron and steel production, and machinery production; by expanding light industries such as consumer products and textiles while allowing and encouraging private businesses; by developing service industries. The cities continued to prosper and living standards continued to rise. Employment rates rose. In the end we achieved a balanced budget and the people were generally more satisfied.

That said, the policy had its shortcomings. We still hadn’t entirely corrected the traditional way in which the Planning Commission cut back on infrastructure projects, which was to “cut straight across the board.” With the old system still in place, it was hard not to do so, and so we set quotas for each region.

In order to save projects that really should not be cut, however, I asked the Planning Commission to be flexible with a part of the budget so that we could revive some of these projects. After the general spending reduction, we reviewed which cuts would incur too great a loss, or which projects were so beneficial they should continue. Of course, there could not be a large number of exceptions, but we were able to reduce the negative impact of “cutting straight across the board.”

Still, in retrospect, the readjustment was too severe. We should have made exceptions for all projects where equipment had already been received or was urgently needed and could be installed and put into production quickly. This would have been more cost effective, particularly if you consider the cost of storage. Even though some of these projects resumed a year later, time and money was wasted. Some of the projects took years to recover.

The reason we didn’t take more flexible measures was mainly because we lacked sufficient domestic funds to pay for these projects; the deficit needed to be reduced so that a financial balance could be achieved. It was all too mechanical.

For example, if the deficit had not been eliminated immediately and some of the budget had been spent on worthwhile projects, the investment could have been returned in a year or so. And under the open-door policy, we could have resolved the problem by taking out more foreign loans.

But Chen Yun was concerned and firmly insistent. He was afraid of excessive and overly large projects and insisted on the reductions. At the time, there were things we didn’t clearly understand, since we did not have enough experience.