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China Expert Says SARS Outbreak Damaged China’s Standing But President Hu Can Gain if Epidemic Ends Soon

Interviewee: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
Interviewer: Bernard Gwertzman, Consulting Editor
May 19, 2003

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Elizabeth C. Economy, director of the Council on Foreign Relations’Asia Studies Department, says that China’s initial response to the severe acute respiratory syndrome (SARS) epidemic had “have undermined its growing stature within the international community.” But as a result of a factional split in the hierarchy of the Communist Party, the new president, Hu Jintao, could emerge more firmly in power. “If the epidemic can be contained within the next six weeks or so, Hu can claim victory in the way he responded to the crisis.”

Economy also says that U.S.-Chinese relations are at their best point since before the 1989 crackdown in Tiananmen Square.

She was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on May 19, 2003.

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What’s the impact of the SARS epidemic on China as a whole— in political and economic terms, besides the human dimension of the illness itself?

It’s significant in a number of respects. Until now, China had seemed to be unstoppable in its rise to global prominence. Not only had it become a global economic powerhouse, but it also had begun to assume a much more significant role as a major political player on the international stage. What SARS has done is to demonstrate that China may not be quite ready for prime time politically. Its initial cover-up and denial of reality, both to its own people and to the international community, suggest that the Chinese leadership still has a ways to go in terms of earning the trust of those it represents domestically and those it seeks to represent internationally as a regional power. China remains an authoritarian dictatorship, and the level of secrecy and control it believes necessary to maintain political stability and its authority has undermined its growing stature within the international community. Also, I think that the epidemic has demonstrated the significant weaknesses in China’s social welfare system. The problems that we are witnessing in the realm of public health are replicated in environmental protection, the pension system, etc.

By “denial of reality,” you mean the Chinese leaders’ attempts to downplay how bad the epidemic was?

It wasn’t that they merely downplayed the epidemic, they deliberately covered it up. In fact, I think there’s evidence to suggest that the leaders are still not being completely forthcoming about what’s going on, in Shanghai for example. It makes very little sense that, according to the most recent reports I have seen, Shanghai has reported fewer than 50 cases of SARS.

Whereas Beijing has 2,500.

Exactly. And Guangzhou has more than 1,000 at this point. It makes no sense that one of China’s three largest cities remains immune from SARS. There have been rumors that Beijing has wanted to maintain Shanghai as some type of uniquely SARS-free area because of its role as a center of international commerce.

One would think the Communist Party would like to have something like SARS as an excuse to mobilize action. What happened?

The general consensus seems to be that there was a factional split within the party as to how to deal with the SARS epidemic. China is in the middle of a regime transition, from Jiang Zemin [the former president and party chief] to Hu Jintao [the current president and party chief] and the newer thinkers within the party. According to this line of argument, while the newer thinkers advocated more openness, Jiang still retained control at the outset of the outbreak and was calling the shots. It wasn’t until there was pressure domestically— because e-mails and text messages were flying across the country talking about this outbreak in Guangzhou, and a doctor in Beijing publicly stated that the Beijing authorities were lying about the situation there— and the World Health Organization (WHO) began to knock down the door to get access to China’s hospitals, that you saw movement in the situation. If these reports of factionalism are accurate, then all of this pressure provided the necessary opening for Hu and his allies to be more proactive and more upfront about what was transpiring in the epidemic.

The reports today suggest that the epidemic is winding down, if the numbers are true, and that students are going back to school.

That’s in Beijing, but it’s far from clear to me that the epidemic has peaked in other parts of the country. Tens of thousands of people have left Beijing, have left Guangzhou, have left these major epicenters and fled back to their hometowns, and you see cases of entire towns in more remote parts of China having their own SARS outbreaks. It’s going to be at least six weeks to two months, if we’re lucky, before we see the peaks and the declines throughout the rest of the country.

Has economic growth just stopped because of this?

No, the growth rate hasn’t stopped. I think that most economists had predicted China’s economy to grow somewhere between seven and eight percent this year. Now expectations are closer to six percent.

That is still a very high growth rate.

Absolutely. Although six percent is below the seven-percent mark that the Chinese leadership has staked as the minimum necessary for maintaining domestic stability. If they’re right on that score, then they are facing some potential turmoil. I think the real issue is that different sectors of the economy have been hit very differently. The service sector has received the largest hit, but problems may also emerge in manufacturing over the next several months. Foreign direct investment may also begin to decline, if the epidemic doesn’t tail off, because [businesspeople are reluctant to travel to China and] it is hard to close deals over the phone or via video-conference.

The United States and Western countries import a great variety of products from China. Have the imports stopped?

No, although I think there are some delays, as countries have taken steps to disinfect or quarantine incoming goods.

Is President Hu, who’s also the general secretary, now on top for real, or is Jiang still there?

Jiang Zemin is still there. He still holds the position of chairman of the Central Military Commission and on foreign policy he undoubtedly will continue to exert a significant influence. Also, his supporters are still within the Politburo. Whether Hu has successfully captured not just the throne but the power of the throne depends on how the epidemic progresses. If the epidemic can be contained within the next six weeks or so, Hu can claim victory in the way he responded to the crisis. If it can’t be contained and there continue to be ripple effects, and if you continue to see protests or rioting of the kind that we’ve seen a little bit of thus far, then I think that’s going to weaken his position over the long term. And certainly, if we find out that there has been continued obfuscation of the virus’ impact in places like Shanghai, that will be very detrimental to Hu’s reputation and to his efforts to establish himself as a new kind of Chinese leader.

Will the Chinese allow Taiwan to participate at World Health Organization meetings?

They have blocked Taiwan’s membership in the WHO for years. With this outbreak, however, Beijing is in quite an awkward position. It is really indefensible to have equivocated over whether to permit WHO officials to visit Taiwan in the midst of the SARS crisis and to block Taiwan’s participation in the WHO as an observer. Taiwan participates in other international regimes, such as the World Trade Organization, without the status of a state. Something similar should be worked out in the case of WHO participation. There is also an opportunity for the United States to step forward. China and the United States have the best relationship that they’ve had since [democracy demonstrations in] Tiananmen Square [were put down] in 1989. This is one way that we could use our increased influence with China to very positive effect.

How cooperative has China been on the North Korea issue?

China has been as cooperative as its interests have dictated. Above all else, China seeks stability in North Korea. It doesn’t want to have North Korea isolated through a U.N. resolution or sanctions because it believes that such steps might well push North Korea over the edge or result in serious instability. It was more prone, therefore, to support North Korea’s demands for economic carrots and bilateral negotiations with the United States. However, I think that once China understood that the Bush administration took seriously the option to use force, based on the war in Iraq, China worked much more diligently to bring both sides to the negotiating table.

The fact that the United States and China and North Korea all met together— was that as a result of pressure on North Korea by China?

North Korea had stated quite explicitly that it wanted negotiations to proceed bilaterally with the United States. China was the only country that the North Koreans could see having at the table— China is North Korea’s largest provider of energy assistance and one of its largest providers of food aid. China is a logical broker between the United States and North Korea. And I think the North Koreans realized that China was becoming impatient with their belligerent approach. In February, China shut down its oil supply from the Daqing pipeline to North Korea for three days. China claimed that it was for technical reasons— but everybody, and in particular North Korea, knows that it was a signal to get back to the table. The Chinese want to see this matter resolved. They have a lot of leverage in North Korea, and I think that was the first indication that they were prepared to use it.

You said that U.S.-Chinese relations are the best now since 1989. How do you demonstrate that?

The entire agenda of Sino-American relations has been reordered along lines that not only make most sense for the United States— with its serious concerns over global security— but also fit well with China’s interests. Our overarching priorities are addressing problems in Iraq, North Korea, and with global terrorism. Generally, our interests and those of China, if not identical, mesh easily. Issues like Taiwan and human rights, which are frequent sources of conflict and which have underpinned much of the relationship for the past decade, have really dropped to the bottom of the agenda. For the first time since 1989, the United States did not pursue a resolution censuring China’s human rights practices this spring. Of course, Taiwan’s status in the WHO brings the contentious issue of Taiwan to the forefront. By and large, however, there is very little discussion of issues that both sides know will engender conflict. Everything is focused on the big-picture security priorities of the United States. Frankly, the Bush administration has turned its China policy 180 degrees from where it was two-and-a-half years ago.

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