Understanding China Part III

Readers of the biography of Jiang Zemin, The Man Who Changed China, will conclude the book is a must-read for the informed investor in China.
    While Deng “initiated” reform, it was Jiang (left) who systematically implemented cataclysmic changes. Again, without spending much time going over the inner political workings of China, it suffices to say that Jiang began to gather power at the behest of Deng as soon as he rose to power in 1989.
    Like Deng, Jiang Zemin was the product of the pre-WWII era. When Jiang was a student, China was occupied and terrorized by brutal Japanese soldiers. However, unlike Deng, Jiang is an engineer, not a military figure. This is a critical piece of academic background information on Jiang that helps mightily with the understanding of his remarkable leadership and the makeup of current rulers in China.
    The depth of Jiang’s talents, character, and magnetic personality are hard to overstate. Above all else, Jiang was a leader who loved the process of learning. If you think of the wisest, most well-read, most practical, and most people-skilled person you have ever met, you are describing a person very similar to Jiang Zemin.
    To summarize what happened in China under Jiang Zemin, is to understand how China has managed to position itself to dominate the 21st century world economy. No doubt part of the reason why the 21st century will be dominated economically by China is based on what the United States has failed to do. But history will also give great credit where it is due. And China is positioned as it is economically, due in great part to the vision and ability to execute of Jiang.
    Originally it was Jiang who caught Deng’s eye as an able administrator of Shanghai (right) after Jiang helped shape and administer the Special Economic Zones. By the end of 1992, Jiang had a firm grip on the reins of power in China. And it was in 1992, at the behest of Deng, that Jiang boldly, almost astonishingly introduced the idea of a socialist “market” economy. Prior to this event “market” was a dirty word in Chinese politics. Oddly, it is becoming a dirty word in America.
    In the end, Jiang has so many credits associated with his rule it is very difficult to list them all. Each item deserves more discussion than is given below.
• Jiang travelled all over the world (photo of Jiang and President Clinton left) and positioned China internationally as a trustworthy neighbor and broker for peace while simultaneously continuing to resist the temptation to engage in imperialism.
• He reformed the Chinese military and eliminated the conflicting practice of military officials corruptly engaging in private trade.
• Thanks to his scientific/engineering background, he understood the importance of and emphasized the rapid development of high technology industries.
• Jiang modernized the nation’s currency and made it convertible, thus freeing up the flow of foreign capital into China. Then, he courted international investors.
• He kept his solemn promise to allow both Hong Kong (right) and Macao to operate as Chinese provinces under their own free market economic systems.
• He closed down and/or allowed private ownership of countless State Owned Enterprises (S.O.E.). While risking temporary unemployment, he was able to shed the most inefficient drags on the Chinese economy.
• He sponsored and supported the push that ultimately landed the 2008 Olympic Games in Beijing (Olympic Stadium in Beijing left).
• He boldly called for the inclusion of entrepreneurs and other private business owners in the Communist Party. This was as revolutionary as calling for a socialist “market” economy.
• He supported more academic/scientific freedom and he supported the arts.
• He modernized the media and gradually loosened the party’s reins on the dissemination of information.
• He led by consensus in the party rather than dictating his own personal orders to the party.
• He facilitated a smooth transition of power to the next generation of Chinese leaders including his successor Hu Jintao.
    China now boasts over $1 trillion in currency reserves, a vibrant economy, and the strongest national balance sheet in the world. Jiang’s ideological legacy of governing is simplified in the concepts he called the “Three Represents”
1. advanced economic production
2. advanced cultural development
3. advance the fundamental interests of the vast majority of the people
    Thanks to the respect for Jiang’s leadership and enduring influence, these ideas were written into the Chinese Constitution in 2002.

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