South China's Economic Miracle - Will It Last?

AS China moves into the last decade of the 20th century, the future may well be determined not by what happens in Beijing, but by what happens in South China.

The four coastal provinces of South China - Zheiiang, Fujian, Guandong, and Guangxi - are today the sites of special economic zones that provide opportunities for entrepreneurship and joint ventures unknown in the rest of the People's Republic. As a result, this area is among the fastest growing regions in the world with annual economic growth rates of 9 percent or better.

The economic advantages are furthered by the financial and commercial facilities of neighboring Hong Kong. Export and import statistics dramatize the story. In 1990, nearly half - 42.9 percent - of all China's exports went out through Hong Kong. In the same year, 38.1 percent of China's imports came through Hong Kong.

Taiwan also enters the picture. Although precise statistics are not available, China experts point to the growing trade with Taiwan, both through Hong Kong and directly from Fujian province, as well as growing Taiwan investment in Fujian and neighboring regions of the South China coast.

Deng Xiaoping, China's venerable leader, reportedly sees in South China the model for the reforms he increasingly espouses for all of China. In January and February he made an extended visit to these provinces. Some China watchers believe that Mr. Deng may, for very different purposes, be following the pattern of Mao Zedung and the Cultural Revolution. In the latter case, Mao, frustrated by his inability to gain acceptance of his policies in Beijing, created a counter movement in provinces outside. Deng may be doing the same thing in anticipation of a party congress later this year in which, using the examples in the South, he hopes to pressure more conservative elements in Beijing ultimately to accept his economic philosophy.

Although South China provinces provide impressive models, and despite recent reports that suggest Deng is gathering support for his economic reforms, many obstacles still lie ahead.

An entrenched ideological cadre still possesses power in the government bureaucracy and the Communist Party. Opposition to forms of capitalism and to profit-making does not die easily in a communist environment - as the problems of the former Soviet Union demonstrate. Further, economic advances ultimately depend on a hospitable political climate, and such a climate is by no means certain in China's future. The Anglo-China accord under which Hong Kong will become part of China in 1997 contains unresolved issues relating not only to the ultimate boundaries of this new special zone but also to the form of administration - each one an issue that could affect future stability in the British colony. With the best will in the world on the part of reform-minded Chinese leadership, the positive image of Hong Kong, essential to its economic health, could be severely strained by negative actions of anti-reform elements in the bureaucracy after incorporation into China.

The issue of the future of Taiwan still has the potential to disrupt the growing economic relations with the People's Republic. Although the government in Taipei is increasingly relaxed about informal relations with the mainland, the basic relationship of the island to China is unresolved. A reversion to rule by hard-line anti-communists in Taipei, or a move by Taiwanese toward independence, could create a serious crisis with Beijing.

Beyond these identifiable issues is a more fundamental one: can economic growth continue indefinitely without democratic political reforms? Two questions arise here. The Chinese leadership has been successful in overcoming demands for trade restrictions in the United States and Western Europe that followed the incidents in Tiananmen Square. Despite this success, can China count on fully normal relations over time with the outside industrial world without greater democratization? The second question relat es to China's internal situation. In all of the so-called Asian Tigers - Singapore, Taiwan, and South Korea - authoritarian regimes that began the economic miracles have had to yield to pressures for greater political freedoms. Their examples may prove that economic growth cannot continue indefinitely without producing demands for political as well as economic freedoms. Will China be an exception?

South China, plus Hong Kong, could be a powerful world economic and industrial center. The next few years will tell whether that possibility is realized in the face of the political and economic stresses within China itself.