Liu Junning: Liberalism is enjoying a rebirth in China’s intellectual circles. As Newsweek recently reported, liberal economists are “hot” in China. In particular, there has been a lot of attention focused on the ideas of the late Friedrich Hayek. Even the prime minister of China has Hayek’s works on his bookshelf.

Interest in liberalism in China isn’t completely unprecedented. Before the communist triumph in 1949, there were some liberal intellectuals caught between the authoritarian Nationalist Party and the rising totalitarian Communist Party. Liberal ideas and intellectuals were completely rooted out in the anti‐​rightist movement in 1957, at the same time private property rights were outlawed, free enterprise was abolished, and a command economy was established.

A lot of subtle yet visible changes have led to the reemergence of liberalism in China. The country is shifting from a planned command economy to a heavily state‐​regulated market economy. The change from a Leninist political system to some form of one‐​party authoritarianism has been key. The middle class is growing, and China has a nascent civil society.

The old ideology has failed, and the attendant “right to rule” has lost almost all of its “true believers.” Some observers may wonder how liberalism will be able to sprout and grow in Red China. The answer lies in the market economy or, as Adam Smith called it, “the system of natural liberty.”

Market mechanisms in China promote not only greater economic freedom but other freedoms as well, such as freedom of speech. Ever since the Chinese government stopped giving subsidies to most newspapers, magazines, and TV stations after the introduction of market‐​oriented reforms, the media have been publishing things to keep the interest of their readers. Since more and more people in China are interested in liberal ideas, the editors have been very enthusiastic in meeting the demand, despite harassment and threats of censorship. Some of them started to stop censoring themselves—not just for economic survival but also because many of them are becoming genuinely attracted to liberalism. Now it is the editors who are pushing the intellectuals. In China the only effective way to stop the trend of liberalization is for the government to resume media subsidies, which it now lacks the means to do.

The political culture of China is shifting in a liberal direction. Gone are the days when you could be proud to be a leftist. Now intellectuals prefer to be identified with liberalism. In today’s China almost all of the opinion leaders and celebrities in leading fields are liberals.

One special factor that is contributing greatly to the spread of liberal ideas in China merits special emphasis: the Internet. China now is making a great leap into the “information age” and a “network society.” Internet use is rapidly growing in China, particularly at universities and academic institutions. In 1997 there were about 640,000 Internet users in China. There are now more than 4 million. The China Internet Information Center estimates that the number of Internet users will soon rise to 7 million. With the prices of personal computers falling and Internet access increasing, it is estimated that there will be more than 33 million Internet users by the year 2003.

Obstacles do remain. Liberalism in China has never been well developed or localized, and therefore has failed to dominate the political agenda for most of China’s torturous modern history.

But there is reason to be optimistic. The opening of China in the reform period, the experience of the 1989 movement, the collapse of the world communist camp, and the great expansion of the global market have all provided favorable conditions for democratization and liberalization in China.

Liberals are trying to shape the direction of political reform in China: increasing individual freedom and securing property rights, strengthening legislative bodies, placing the military and police more firmly under civilian control, relaxing the controls over nongovernmental organizations, strengthening the judiciary, and granting the populace more meaningful avenues of political participation.

This conference has raised a very important question: Whither China? Will it be a potential threat or a constructive partner? A liberal China can be a constructive partner for the United States; a nationalistic and authoritarian China, a potential rival. If it is true that liberal democracies won’t fight against one another, then the future role of China in the world and China’s relations with the West are very closely intertwined with liberalization and democratization. So it is in the greatest interests of the established democracies to encourage the emerging liberal enterprise in China as a driving force in making it a new democracy based on liberalism.

Martin Lee: This is the 50th birthday of the People’s Republic of China. In 1949 two boys were taken by their respective fathers to Hong Kong. One boy was 11 and the other was 12. I was the younger one. The slightly older guy, Tung Chee Hwa, is now the chief executive of Hong Kong. If you ask people in Hong Kong why they are living and working there instead of in China, they will probably tell you about the very important decision that their father, grandfather, or great‐​grandfather made decades ago—to take the entire family to Hong Kong.

Why? To be free. They couldn’t have gone for wealth, because Hong Kong then was very poor. People went there because they wanted to be free. And that is why so many left Hong Kong before the handover in 1997.

Freedom is what gives luster to this pearl of the Orient. It is a pity, but we must distinguish between political and economic freedoms in China. In fact, you either have freedom or you don’t. But in China they separate the two. They will allow people to enjoy economic freedoms but not political freedoms. How long can that last? How can you allow the economic half of the genie to come out of the bottle but keep the political half inside?

In Hong Kong, unfortunately, we are beginning to lose our freedoms, both political and economic. China has always wanted to control the goose that lays the golden eggs. China was already setting up institutions of control before the British left. Our constitution, the Basic Law, of which I was one of the drafters, was promulgated in April 1990. It is not a very good constitution, I’m afraid, because it is very restrictive. China was able to control the executive through her own appointed chief executive, Mr. Tung, the 12–year-old boy who with his father left China for Hong Kong in 1949.

In January 1999 the court of final approval laid down a landmark decision, dictating to courts in Hong Kong how they should construe our constitution. The Hong Kong court had construed certain articles of the Basic Law as giving the court the power to refuse to accept the government’s submissions. The government then went to Beijing and effectively had that interpretation overturned by the standing committee of the National People’s Congress. That sent the following message to the world: “If you should be unfortunate enough to be involved in litigation with the Hong Kong government, and if you should lose in the court of final appeal, then that is indeed final for you. But if you should win in the court of final appeal, don’t jump for joy yet because the decision is only semifinal and China could later overturn it.”

The decision of the court of final approval also sent the following message to the judges in Hong Kong: “You naughty boys. You knew what we wanted from you and you didn’t deliver. So we’ll have to correct you. You can rule as you like in the future, but we’ll correct you if we wish to do so.” The time, I’m afraid, will soon come when those judges will begin to ask themselves if they are doing the people of Hong Kong a disservice by conforming to what China wants.

They will ask, “How should we rule when we know the government is wrong? Do we uphold the law according to our judicial oath and defend the rights and freedoms of our people? If we do that, what happens? How long will our decisions last? Two months?” Once the judges start asking themselves those questions, Hong Kong will be no different from China or Singapore. In those countries, the government always wins.

As for economic freedoms, here is one of several recent cases. The director of public prosecutions agreed that a publishing tycoon and four of her senior executives caught conspiring should be prosecuted. But the secretary for justice, the equivalent of the U.S. attorney general, decided to prosecute everyone but the boss. The reason? If the boss had been prosecuted, 2,000 people might have lost their jobs. Which means that if any businessman in Hong Kong who employs only 20 or 200 people gets into trouble with the criminal law, he will be prosecuted. But if he has 2,000 or more employees, then he is innocent. That rich lady also happened to be a long‐​time family friend of the chief executive. Cronyism has already crept in. For years I’ve been saying that if we in Hong Kong cannot export our rule of law to China, it will export its corruption and cronyism to Hong Kong.

One country, two systems was the brainchild of Deng Xiaoping. He wanted to be the leader who won Hong Kong back from the British and Macao back from Portuguese rule. He wanted to be the one to wipe away the shame of the opium war. But he didn’t want to drag Hong Kong down while China was still developing. You keep your way of life, your rule of law, your level playing field, and your freedoms, he said. But that’s difficult to implement. They have 1.2 billion people; we have only 6.5 million. Do you remember your childhood days when you used to play on the seesaw? Imagine yourself now playing that game with a small child. How can you play in that situation? You must move toward the center until an equilibrium is struck. The Chinese government should do something similar by allowing everyone in Hong Kong, in particular the Hong Kong government servants, to maintain the highest degree of autonomy permitted under the joint declaration and the Basic Law. But that’s not happening. The Chinese leaders are not moving to strike an equilibrium.

What is the way forward for China? On the one hand China wants control, and on the other hand it wants to be prosperous. So you have the troops stationed in Beijing and the business people celebrating in Shanghai. You need a psychiatrist to get the right balance.

Chinese leaders should look at Taiwan. Just a decade ago Chinese people in Taiwan were just as oppressed by the Kuomintang as were their counterparts in China. In both places dissidents were either thrown into prison or driven overseas. (Most of them have landed in the United States.) But look at Taiwan today. There are democratic elections. There still isn’t the rule of law in Taiwan, but the people are free and prosperous. The Kuomintang is still in charge, although it must work very hard to win elections. Why can’t the leaders in China do the same? Why don’t they look at Hong Kong where we still have a pretty good system of law, although it is beginning to go downhill? It must be much easier to keep what you have than to develop what you don’t have. We would be able to provide a shining example for a capitalist China—what they call “socialism with Chinese characteristics.” You may as well call it capitalism with some degree of government control. We used to be a very corrupt city, but now corruption is well under control. The Chinese leaders have been talking about the rule of law. They know, however, that to implement it would mean that all the leaders, without exception, would have to comply with the law.

I was surprised to read today that Hong Kong’s chief secretary, Anson Chang, said that Hong Kong never had a laissez faire policy. For years the Hong Kong government’s interpretation of the French phrase laissez faire was “positive nonintervention.” It takes a while to work out what that means. I remember that when I was a boy my teacher asked if anybody knew what laissez faire meant. I didn’t realize it was a French phrase. I thought it meant the government was “lazy” and “fair.” And it certainly worked well for Hong Kong under British rule.

What do I feel as a Chinese person as my country turns 50? I wish I could be happy. But I have not been invited to Beijing to celebrate. They will not allow me in. Not only me. Practically all of the popularly elected legislators are not allowed in. I don’t think I’m missing too much. I just read that half a million people selected by the government to celebrate in Tiannamen Square have been provided with adult nappies to answer the call of nature. The officials don’t want to bring in those unsightly temporary toilets. Well, if that is true, then I’m happy not to have been invited.

Looking at my country, I see that it is strong, much stronger than before. But am I really proud of my country? I will be when I know that the rights of every citizen in China are respected and protected by law. That will come. The whole world is marching toward democracy, freedom, human rights, and the rule of law. The Chinese leaders cannot block that tide for long.

A few days ago I was having dinner with a good friend, and at the end he said, “Let’s have a toast. What shall it be, Martin?” I said, “Let’s drink to democracy and freedom in China.” To which he added, “In the next millennium.”

James R. Lilley: A fairly convincing case can be made that the partnership between China and Taiwan is moving in the right direction. Taiwan and China actually come very close to being partners economically, in reality if not in rhetoric. Since 1987, there has been a tremendous amount of trade and investment between the two nations. There are everyday examples of pragmatism beating out political differences. One incident that doesn’t attract much attention was Taiwan’s decision in August 1999 to adopt the Chinese romanization of the Mandarin Chinese dialect. Business is now often done on the Internet. Taiwanese companies want to dominate the Asian portion of the Internet; they can do so only by using the Chinese romanization. Such practical needs are a good way to improve relations in the long term.

Beijing’s recalcitrance in its dealings with Taiwan must be viewed against a backdrop of thousands of deals and exchanges at the highest level between China’s political leaders and Taiwanese businessmen. Douglas Chu of Taiwan’s Far Eastern Textiles best sums this up: “I’m an industrialist. I have enough problems building plants; I should not be worried about missiles back and forth. This is a cloud; if it stays there, China will pay a price.” He’s right. Taiwanese investment in China went down 30 percent in the first half of 1999, whereas it went up 10 percent elsewhere.

We must acknowledge, however, that Taiwan has been a flash point for much of this century. But we must see that, despite the dangers, Taiwan is not Kosovo, Kashmir, or Korea. Rhetoric has often crowded out reality. Mao Tse‐​Tung, for instance, is quoted as having said to an American leader, “100 years for Taiwan to unify.” Chinese leaders today say their policy has changed. Now they expect unification to take 87 years.

At a recent meeting in Washington, a well‐​known U.S. strategist on China talked about a preemptive strike that China might take against Taiwan. I asked a Chinese military officer there what he thought about that. He dismissed what the strategist said: “We are not suicidal.”

We can keep Taiwan a flash point—with bungling on our side, provocation on Taiwan’s side, and overreaction on China’s side. One thing the United States must realize is that China and Taiwan must enter the World Trade Organization almost simultaneously and deal with each other as equals in that organization. We need to handle Taiwan with skill and not with condescension because we know that when you mess up your Taiwan policy, your China policy is affected and when you get the Taiwan policy right and the China policy right, the situation moves ahead as it did in 1987. Yes, we can influence what people do, but it’s a sort of poker game. I have a sense of optimism because I’ve looked at the complexities and expansion of the Chinese‐​Taiwanese ties. It seems to me that we are moving away from the sterile arguments about theater missile defense versus missile deployments and getting to work on issues where the stakes are really very high: North Korea. We can get through this with the United States taking the lead in establishing a peaceful and prosperous environment in the 21st century.

This article originally appeared in the November/​December 1999 edition of Cato Policy Report.