Assessing China: Hits And Misses

Congratulations on the excellent article "China: Is prosperity creating a freer society?" (Cover Story, June 6). President Clinton's renewal of China's most-favored-nation status is also to be applauded. Such a decision will certainly strengthen the growing tie between American businesses and China's booming middle class, who in turn will create pressure for more freedom, which could possibly lead to a change in the regime in China.

Mike W. Peng

Coordinator & Instructor,

Chinese Track

Center for International Business

Education & Research

University of Washington


As has become all too common in its coverage of China, BUSINESS WEEK has once again missed the point. The views that ought to control the debate over how best to induce the Chinese to respect fundamental human rights are those of the people whose rights are being violated. Yet nowhere in BUSINESS WEEK's pages is found the voice of any representative of those who have been victimized by the government's repressive and even genocidal conduct.

China continues to torture and murder those it has imprisoned for the "crime" of objecting to its policies; toys and other products the Chinese export to the U.S. are largely manufactured by the slave labor of those imprisoned for such "crimes," and China's occupation of Tibet is an international crime of the highest order.

Andrew G. Dulaney

San Francisco

Your article correctly notes that China has been making astonishing changes in recent years and therefore should now be more inviting to U.S. business than at any time in the past. But you missed what my experience tells me is the most important ingredient of China's economic growth: the rural-enterprise system, which consists of thousands of manufacturers of every kind of product. Few are located in metropolitan areas. These small- to midsize plants operate throughout China, with the coastal provinces having the greatest numbers. The style runs from straight capitalism to a collectivist community ownership. And regardless of organizational form, they are universally entrepreneurial. They are not part of the central plan nor under the control of the central government. In all of China, the rural-enterprise system represents about 30% of the nation's economy, or so I was told last summer on my sixth trip to China.

Where did this astonishing vitality come from? In the late 1970s, Deng Xiaoping determined that China must stop using up precious foreign exchange obtaining necessary food from abroad. "You must meet your crop quota," farmers were told, "but beyond that quota, whatever you grow you may sell on the open market for your own account." That did it.

Suddenly, for the first time, thousands of farmers obtained some wealth. Converting that wealth into startup funds for small manufacturing enterprises followed. These rural-enterprise companies should be better understood in America. Trade among them and small- to midsize U.S. companies should become an important commercial relationship.

Robert D. Orr


Alliance for Global Commerce


Editor's note: The writer is the former U.S. Ambassador to Singapore.

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