Guangdong Visions: A Talk with Wang Yang

Guangdong Party Secretary Wang Yang talks about the economic crisis, its impact on China, and the future role of the region he represents

By Robert Lawrence Kuhn

With the global financial crisis choking off exports and squeezing the economy, China's leaders have voiced different views on what best to do: Some have called for the government to support the cheap-labor export sector, others have said the state should focus on helping newer industries grow. At the same time, there's a debate among Chinese leaders about whether to concentrate on the wealthier coastal provinces or less developed interior regions. Recently, I spent a week in southern China's Guangdong province, the cradle of China's reform and engine of the country's historic transformation. (If the province were an independent country, its gross domestic product would be among the top 20 in the world.) I met with Wang Yang, Guangdong's Communist Party secretary and a rising star in Chinese politics. In this first of a two-part exclusive report, Wang, a member of the Politburo, speaks candidly about his views of the economic crisis and its impact on China.

Even though China's economy is suffering, Wang Yang (like other Chinese leaders) rightly believes that the country is now stronger in comparison with the U.S., Europe, and Japan. According to Wang, the West needs to know "the real, changing China" and realize how the Communist Party "has been advancing with the times." China, he said, is "on its way to modernization and therefore is gradually obtaining the capability of communicating with the West," but, he added, if "the West still doesn't understand China, it is neither good for the West itself nor conducive for establishing a 'harmonious world.' " Displaying a new aggressiveness in asserting China's rising relative position, he called for the West to interact with China on an equal basis. "The West must really understand China." And when it comes to understanding China, he stressed, "a good place to start is in Guangdong."

Indeed, Guangdong is the epicenter of three megatrends that, I told the Party secretary, are hitting China today. First is the need to move away from low-end manufacturing and toward knowledge, technology, and brand-based industries, much as Japan did in the 1970s and South Korea did in the 1990s. Second is the need to shrink widening gaps between classes and areas, especially income disparities between urban and rural residents. Third is the need to mitigate the devastating impact of the global economy's downturn, which has caused widespread company failures and massive layoffs and has threatened social stability.

Urban-Rural Imbalances

Agreeing with my analysis, Wang stressed that "economic transformation and industrial restructuring must be based on the 'Scientific Perspective on Development,' " President Hu Jintao's principle of focusing not just on maximizing economic growth but also on addressing urban-rural imbalances and environmental pollution. (To appreciate the power of Party slogans such as "Science Perspective on Development," designed to drive Party coherence under the senior leader, is to understand how Chinese officials think in formulating and implementing policy.) Thirty years after Deng Xiaoping launched the reforms that turned Guangdong into an economic powerhouse, Wang noted, "while its historical achievements cannot be denied," the financial crisis is now exposing some of the province's problems. "The drawbacks of the model are gradually emerging," he said. "Our growth model of 30 years, which enriched us rapidly, has come to the end of its cycle."

The Party secretary explained some of the issues. "First, rapid growth generally neglects the costs of resources, the environment, and worker health. Rapid growth has caused environmental damage. Air quality is almost intolerably poor; unprocessed water cannot be drunk.

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