Goodbye Grandpa

Legacy is a fickle mistress. Take the case of Alan Greenspan. A little over ten years ago, the former Fed chairman was being lauded by the respected journalist Bob Woodward as the “the symbol of American economic pre-eminence”. At the time Greenspan was getting fulsome praise for managing an American boom. There was even talk of a legacy as the greatest central banker in history. But as Edward Luce hinted in his Financial Times column this week, the global financial crisis put a stop to all of that. Greenspan’s tenure will more likely be remembered for his low interest rate policy and its malign outcome: a US housing bubble that nearly wrecked the international financial system.

Another man very focused on his legacy right now is Wen Jiabao, who is stepping down as China’s prime minister after a decade in office. When Wen delivered his speech to China’s annual parliament – the National People’s Congress – last week, he was at pains to defend his record. “What I have done may be appreciated and criticised by the people, yet ultimately, history will give me a fair assessment,” he suggested.

One policy that Wen was particularly keen to defend was his decision in 2008 to respond to the global financial crisis with a Rmb4 trillion ($643 billion) stimulus package. This spending splurge was later criticised for fuelling inflation, launching an unstoppable flow of infrastructure spending and encouraging local governments to run up massive bad debt via the shadow banking sector.

But in his speech last week Wen also cited a welter of data outlining a more successful outcome. He told his audience that Chinese GDP had nearly doubled since 2007 reaching Rmb51.9 trillion in 2012. Government revenues more than doubled too from Rmb5.1 trillion to Rmb11.7 trillion. Urban incomes rose by an annual average of 8.8%; rural income increased by 9.9% and 58.7 million jobs were created in cities; while 85 million rural residents also migrated to cities.

Wen kept on rolling out the numbers: 609,000km of new road, 19,700km of new rail track, and 31 new airports.

In that same period China also became the world’s second largest economy, overtaking its historical rival Japan. On the face of it, the stream of facts and figures suggested a peerless track record as an economic manager.

But were the delegates to the National People’s Congress impressed? Hong Kong media said the reaction to Wen’s speech highlighted that the outgoing premier is far less highly regarded than his predecessor Zhu Rongji.

“After he bowed and was seated, the delegates only gave polite applause, in stark contrast with the more than a minute of applause Zhu received 10 years ago,” the Hong Kong Economic Journal reported.

It added “Zhu is beloved and has fewer opponents than Wen. To put it bluntly, Wen’s decade has failed to win the people’s satisfaction.”

Another Hong Kong newspaper, Sing Tao, noted in an editorial that, as Wen spoke, the breaking news was the row over infant milk formula, and the recent cap on mainlanders bringing more than two tins out of Hong Kong (mainland parents had been bulk buying the imported powder in Hong Kong because they believe Chinese-made formula is adulterated and a danger to their children’s health, see WiC184).

Sing Tao said that this spoke volumes about the Wen decade. Despite the surging GDP growth, “the infant formula incident at the same time reflects the loss of morality behind China’s growth in financial power. In the mainland, food safety scandals come out one after another. From gutter oil to mutant chicken, they reflect that many individuals and organisations are not making money in the correct way. Regulatory mechanisms were not able to come into full play.”

There are other complaints about Wen’s tenure too. Unbalanced growth has saddled China with chronic pollution (see WiC178). House prices have risen beyond the reach of ordinary folk. Social tensions have been stoked by a rising wealth gap.

Related directly to almost all of these problems, even the central government acknowledges that corruption has become endemic (see WiC176) and that vested interests have done disproportionately well out of Wen’s boom.

In fact, one of the most damning reflections on Wen’s legacy is how people close to him have cashed in on the boom. A New York Times exposé late last year alleged that members of the premier’s family had amassed a multi-billion dollar fortune thanks to their connections. Wen has denied the report. But its impact – coupled with salacious details arising from Bo Xilai’s fall a year ago – has been to reinforce the impression that the families of the elite have run the economy for their own benefit.

This complicated mix begs the question: who is Wen, and how do we define his contribution?

Wen was born in 1942 in a northern suburb of Tianjin, growing up in an area called Laochengli, a place known for its traditional culture – which emphasised etiquette, respect for teachers and education, according to Southern Weekend. His father was a teacher (his grandfather even founded a school), and the young Wen is said to have studied diligently. Neighbours recall him poring over the four classics of Chinese literature and this literary background was evident when Wen later became premier. He was well-known among journalists for answering questions with a line of ancient poetry – such as “I wiped my tears and heaved long sighs. I lamented over the suffering of my people”, written in the third century BC by the poet Qu Yuan (for more on this see WiC174).

One of Wen’s boyhood friends also recalls that the premier was keen on chess. But as Song Minghe told Southern Weekend, Wen wasn’t obsessed by winning. Instead his concern was to keep to the rules of the game. “He never overstepped them,” Song recounted. “But when other people breached the rules he tended to take an attitude of forgiveness.”

In 1960 Wen finished high school (the same school attended by another former premier, Zhou Enlai) and tried to get a place at the renowned university Tsinghua. However, his family background was not considered proleterian enough and Wen went instead to the Beijing Institute of Geology. On graduating in the late sixties – and with the Cultural Revolution underway – Wen requested to be sent to the remote and poor province of Gansu, where he worked on a geological survey of the Qilian Mountains (the map is still in use today).

He was rescued from a career of relative obscurity in 1980 when new leader Deng Xiaoping made a bold speech to the Politburo. Deng called for an overhaul of the cadre system, and the recruiting of younger, better educated and more professional officials. In response the Ministry of Geology and Mineral Resources began shortlisting candidates for promotion. In 1982 Wen was transferred from Gansu and became a bureau- level director in the ministry’s research office in Beijing.

After that break, his career took off. In his subsequent promotions, Wen was marked down as an energetic official who supported Deng’s economic reform agenda. He also became a protégé of then Party Secretary General, Hu Yaobang.

By the 1990s, Wen had already been chosen by Deng to succeed Zhu as premier. In this period, Wen never led a city or a province, but stayed close to the heart of the power structure, running the body that oversaw the day-to-day tasks of the Party leadership as director of the general office of the Central Committee. In 1998 Wen was made a vice-premier and entrusted by Zhu with overseeing agricultural reforms that would help China join the WTO.

In early 2003 he began his premiership, the period of his career by which he’ll ultimately be judged. In his first term China-watchers also got a sense of Wen’s ideology – as well as the growing factional divides within the Party.

Mark Leonard’s What Does China Think characterises a split within the Party between the ‘new left’ and the ‘new right’. He refers to the ‘new’ left because this group – unlike earlier leftists – supports market reforms. But unlike the ‘new right’, the group is also concerned with remedying social and economic inequality.

Leonard quotes one of the intellectuals from the ‘new left’ as saying “China’s development must be more equal, more balanced. We must not give total priority to GDP growth to the exclusion of worker’s rights and the environment.”

Leonard thinks Wen’s administration was ideologically more ‘new left’ in its leaning, because it was committed to rebuilding China’s welfare state. Over the past decade there have been some fairly landmark changes in this regard: Wen pushed up education spending to 4% of GDP, instituted massive healthcare reforms (extending basic medical coverage to the fuller population), cut rural taxes, forced up minimum wages in cities and launched programmes to help rural Chinese buy cheaper electrical appliances. Wen’s egalitarian instinct has also been evident in some of his remarks, such as: “My deep feelings for the people are the foundation of my worldview to serve the people. If a leader does not understand the farmers or the rural areas, he will not understand the situation in China.”

In 2003 Wen met a migrant worker in Chongqing who complained that wages owed to him hadn’t been paid. The premier made a splash by urging that the interests of migrant workers be better protected, telling factory bosses to pay wages on time. In fact, for the first seven years of his premiership, Wen was generally viewed as a more caring leader, earning the affectionate nickname Grandpa Wen. Television cameras often caught him visiting disaster areas, perhaps most famously in 2008 when he arrived in Sichuan shortly after its devastating earthquake. One scene earned him public respect more than most: when he berated senior army brass for not doing more in the rescue efforts. But a photojournalist who accompanied him on the trip told Southern Weekend that he also saw tears in Wen’s eyes as he inspected the devastation. In one visit Wen picked up a pair of childrens’ shoes from the rubble. “I photographed the moment,” recalls Yao Dawei. “His mouth was trembling and he could not speak for a while.”

Wen also endeared himself to the public with a more personal style that eschewed the haughtiness normally associated with top officials. He won over journalists, for example, when he apologised for being four minutes late for a press conference. It may not seem like a major moment, but few could remember the last time that a leader apologised live on TV.

Foreign media were also kept interested by quirkier quotes from Wen, including references to The Meditations by Marcus Aurelius (Roman emperor and Stoic philosopher). Wen claimed he kept the book at his bedside, and that he had read it a hundred times.

Countering all these successes were some glaring failures. Wen’s background as an economic reformer seemed to diminish in his second term, as state capitalism gained ground at the expense of the private sector. This trend, in turn, fuelled wider corruption and enriched vested interests. It also contributed to fundamentally unbalanced GDP growth, creating industrial overcapacity and fuelling environmental degradation.

Wen also struggled to win a personal war against rising real estate prices. As WiC has chronicled over the past four years, he tried a host of administrative measures to rein in prices, and make housing more affordable. But none have achieved that objective. Many were flagrantly ignored at local level (such as the policy ordering state-owned firms to exit their property businesses), hinting at the limitations of Wen’s writ, even as premier. He made a last-ditch attempt to curb prices last week (see WiC184). The result was pandemonium in the property market, and a spike in divorces.

Perhaps too much was expected of the retiring premier, especially in political reform, where his critics say there has been talk but not enough action. In the past Wen has told CNN that freedom of speech is “indispensable”, for instance, and also warned that “without the safeguard of political reform, the fruits of economic reform will be lost.”

Last year he offered another view on the inevitability of change: “I believe China’s democratic system will, in accordance with China’s national conditions, develop in a step-by-step way. There is no way to stop this.”

But Wen has preferred to talk in generalities rather than detail, and it has been difficult to discern fuller meaning in much of what he has said. No doubt some of that was deliberate: even his own comments on political reform have been censored by the Party’s propaganda department in the past (see WiC82).

In the wake of the New York Times exposé last October, Wen has become increasingly emotional, professing in a speech in Thailand that he hoped the Chinese people would “forget” him. It was a strange comment, but later he struck a more defiant tone on his legacy, quoting his favourite poet Qu Yuan once again: “In the pursuit of truth, I would die nine times without regret. If I’m going to die, I want to die with honesty and integrity.”

Verdicts on Wen’s achievements will differ widely, if only because he oversaw a decade in which – on the surface – China seemed to get stronger, both economically and in terms of its global influence. But peel back the headline numbers and look beyond the flashy new trains, and Wen’s era has a darker legacy: a Chinese society that’s become more fragile and divided.

There’s also the sense that Wen leaves the stage with key problems postponed and deferred. China’s vested interests remain entrenched, a huge problem for his successor. Making the right decisions about further reforms will be difficult, says Wang Yang, Politburo member and former Party Secretary of Guangdong. “If the reforms implemented 30 years ago solved the problem of ideology, then, at present, reform is to solve the problem of interests,” Wang noted. “Reform at present is like cutting our own with a knife.”

In short, if change is going to happen, blood will need to be spilled within the Party’s own elites.

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