Zhao’s Market‐​Liberal Vision

January 26, 2005 • Commentary
This article appeared in Apple Daily, January 26, 2005.

The passing of Zhao Ziyang, one of China’s greatest liberals, after more than 15 years under house arrest—because he favored freedom rather than suppression—is a stark reminder of how far China has to go before it is a truly open society. The official (i.e., state‐​owned) media paid virtually no attention to the person most responsible for initiating economic liberalization—because he also wanted political reform.

As general secretary of the Chinese Communist Party, Zhao’s last public appearance was in Tiananmen Square in May 1989, to show his support for the thousands of students and others gathered there in the hope that paramount leader Deng Xiaoping would relax the CCP’s grip on power and increase freedom of the press and other personal freedoms. Those hopes were dashed in early June when troops forcefully crushed the democracy movement. Zhao was purged from the Party and became invisible in his own country.

Born in 1919, in Henan province, Zhao became premier in 1980, and was appointed general secretary in 1987. Like Deng, he was a victim of the Cultural Revolution (1966–76), but was “rehabilitated” and returned to party work in the early 1970s. He became party secretary in Sichuan and in 1976 introduced path‐​breaking agricultural reforms that later were to be implemented throughout China.

When Deng Xiaoping rose to power in 1978, he sanctioned the transformation of farming and started on the road to a market economy. Deng and Zhao had seen the evil and chaos of the Cultural Revolution and wanted prosperity and stability. As premier, Zhao pushed for the transition from plan to market, but he also recognized that economic liberalization would eventually require political reform. In October 1987, at the Thirteenth National Congress of the CCP, he called for “strengthening the socialist legal system” and advocated “new types of institutions … to promote the development of a market system.”

Zhao recognized that trying to graft a market economy onto state planning would lead to corruption. In 1988, he said, “Without reform there will be no way out for China.” An important first step, he believed, was to introduce new ownership forms, including converting state‐​owned enterprises into “shareholding” firms. When he met with Nobel laureate economist Milton Friedman in the fall of 1988, they discussed the contradictions inherent in “market socialism.”

Just prior to meeting with Zhao, Friedman spoke at what may have been the largest gathering of market liberals up to that point in China’s history, at a conference jointly sponsored by the Cato Institute and Fudan University in Shanghai. There was an air of optimism and widespread press coverage of Friedman’s talk, in which he emphasized that what China needs is not pseudo markets but “free private markets.” His message was that “peace and widely shared prosperity are the ultimate prizes of the worldwide use of voluntary cooperation as the major means of organizing economic activity.”

Privatization and freedom, however, are threats to the CCP’s monopoly on power. When individuals are owners and free to choose, they want representative government and, more important, limited government. Private property means respect for life and liberty under the rule of law. Justice prevails only when liberty and property are protected by law.

Zhao’s market‐​liberal vision was of a China in which markets play the dominant role and government a supporting role, and people are free to choose. It is unclear whether he would have supported American style democracy, but he clearly favored greater freedom of the press and a devolution of the party’s power, with more political competition.

It would be unrealistic to think that such reforms could occur overnight, but Zhao wanted to begin the process. He sought to go further in both economic and political restructuring then Deng, which is why hardliners perceived him to be a threat. That is the real reason Deng decided to oust him, just as he had ousted his predecessor Hu Yaobang.

In paying tribute to Zhao, Cato’s president Ed Crane, wrote, “China and the world lost a remarkable man with the passing of former Chinese premier Zhao Ziyang. Zhao was the man who pushed most strongly to liberalize his totalitarian country, the largest in the world. He favored private markets, abandoning the agricultural communes, press freedom, and the rule of law. He believed political freedom could accompany economic freedom. While the political freedom was not to come, the economic boom that China has experienced owes much to Zhao Ziyang.”

It is a tragedy that China and the world lost 15 years of Zhao’s energy and love of liberty. It would be an even greater tragedy if the Chinese people were to lose sight of Zhao’s market‐​liberal vision.

About the Author
James A. Dorn

Vice President for Monetary Studies, Senior Fellow, and Editor of Cato Journal