Has China really gone capitalist? America's academic business, and government elites insist that China is changing, but the evidence shows that China's communist leadership remains in total control.(CHINA TRADE)

"Despite the ruling party's name, China is no longer a communist country." So declares Scott Kennedy, assistant professor of East Asian languages and professor of political science at the Indiana University Bloomington campus. Prof. Kennedy's pronouncement appears on an IU web page announcing a major conference on "Capitalism with Chinese Characteristics," which took place May 19-20, 2006 at the university's Kelley School of Business. Professor Kennedy was one of the main organizers of the conference.

Statements like Prof. Kennedy's are common these days. Those who make these assertions back up their claims by pointing to the fact that the People's Republic allows millions of small entrepreneurs to own shops and sell goods and services; has permitted thousands of foreign firms to invest and set up business in China; and lets millions of tourists travel in areas previously closed to foreigners. Additionally, they point to China's gleaming factories and skyscrapers, and the rapidly rising standard of living of a hundred million or more Chinese in China's booming coastal cities.

False Front

So-called experts made similar statements in the 1920s about Soviet dictator Lenin's New Economic Policy (NEP). Armand Hammer, Averell Harriman, Henry Ford, and other capitalists rushed in to invest. Journalists and professors hymned praises to the "former" communist country's remarkable economic and technological progress and its new freedom. Then came the brutal reign of Stalin. But Stalin only carried out what Lenin himself would have done, had he lived a bit longer.

This is how Lenin described the strategy behind the NEP to his fellow communists:

 
   The Capitalists of the world and their 
   governments, in pursuit of conquest 
   of the Soviet market, will close their 
   eyes to the indicated higher reality 
   and thus will turn into deaf mute blind 
   men. They will extend credits, which 
   will strengthen for us the Communist 
   Party in their countries, and giving 
   us the materials and technology we 
   lack, they will restore our military 
   industry, indispensable for our future 
   victorious attacks on our suppliers. In 
   other words, they will labor for the 
   preparation for their own suicide. 

The "reforms" that were visible to Western visitors during the NEP quickly vanished once the Communist Party decided to clamp down. The Party had loosened its grip for a time, but it had never given up the power it would later need to re-assert totalitarian control.