William S. Turley and Brantly Womack
This chapter will explore the dimensions of regional reform leadership in China and Vietnam by comparing the national roles of Guangzhou and Ho Chi Minh City, the two most prominent municipal leaders in reform in their respective countries.
Our analysis of Guangzhou and Ho Chi Minh City tries to make three interrelated comparisons. First, we explore the divergence between national shares and direct material comparisons in order to concretize the disparity of scale between China and Vietnam. Indeed, the disparity of scale is so great that, although Guangzhou is a city of size comparable to Ho Chi Minh City and of considerably greater wealth, Ho Chi Minh City is a provincial-level unit, and so for many purposes relating to shares in the national political economy and to policy leadership our Chinese unit of comparison is Guangdong Province, of which Guangzhou is the capital. Secondly, we put forward a four-stage model of the transformation of political roles that fits the experience of both cities. The four stages are: incorporation, consolidation, exceptionalism, and reform leadership. Thirdly, we categorize the major differences between the two in order to account for their unique trajectories within broadly similar political roles and directions of development. The result, we hope, is a textured comparison that, by balancing the distortions implicit in each partial perspective, becomes better than their sum.
I. Comparative Dimensions
Problems of disparity in China and Vietnam comparisons
In general, China and Vietnam are "most similar" cases for comparison, because no country is more similar to China than Vietnam in terms of traditional society, revolutionary experience, and post-revolutionary government, and no country is more similar to Vietnam than China. This being said, the disparities between the two create tremendous difficulties for comparisons, and these difficulties are particularly acute for a concrete comparison of parts of each country.
While the similarities between China and Vietnam concern situation, culture, history and institutional forms, the differences lie primarily in scale. With seventeen times Vietnam's population and twenty-nine times its area, China has a Gross Domestic Product over thirty times as large as that of Vietnam, or about twice as large per capita. Of course, China started the move toward more open, competitive market economy earlier and from a stronger base, and it has experienced the most rapid economic growth in the world during the past fifteen years. Clearly China is not only much larger in population and territory, but it is considerably more advanced economically and its state structure has had more time to develop organizational complexity and managerial capability . All of these differences together create a contextual disparity in which similar policies can have different effects, intermediate units have different capacities, and national-local governmental relationships have different dynamics. We will try to turn the handicap into an advantage by using the problems of appropriate comparison to illustrate the concrete ramifications of disparity.
National significance and roles
It is implicit in the above discussion of China and Vietnam that Ho Chi Minh City is vastly more important for Vietnam than Guangzhou is for China. Guangzhou is one of China's largest and most progressive cities, but its contribution to the Chinese political economy is far less significant than that of Ho Chi Minh City within Vietnam. As Table 1 shows, Ho Chi Minh City's percentage of Vietnam's population is almost twelve times as large as Guangzhou's share in the population of China. Similarly, Ho Chi Minh City's share exceeds that of Guangzhou by a factor of
Table 1: Per centages in national totals, 1993
Guangzhou Guangdong Guangzhou as Ho Chi Minh % of City Guangdong Population 0.53 5.57 9.44 6.10 Employment total 0.64 5.78 11.06 5.10 industrial 1.52 6.83 22.24 8.40 GDP 2.36 10.28 22.97 17.4 GDP by sector 1 (agric) 0.54 7.00 7.66 1.60 2 (indust) 1.49 6.49 22.90 35.20 3 (other) 2.75 9.12 30.20 27.87 Retail sales 2.31 10.30 22.39 For'n econ relat's imports 2.39 19.10 12.52 31.88 exports 3.79 29.45 12.89 54.71 foreign invest. 3.76 25.26 14.87 42.90 Gov't revenue income 2.28 6.80 33.55 28.3 expenditures 1.62 6.20 26.07 15.6 Hospital beds 0.98 5.01 19.50 6.4
Sources: Guangzhou Tongji Nianjian (Guangzhou Statistical Yearbook) 1994; Guangdong Tongji Nianjian (Guangdong Statistical Yearbook) 1994; Nien giam Thong ke (Statistical Yearbook [of Vietnam]) 1994.
nearly seven in industrial employment, over seven in GDP, and over eleven in foreign investment. Ho Chi Minh City's relative importance to all of Vietnam is on a par with the national significance of the entire province of Guangdong. Indeed, in some respects Ho Chi Minh City is more important within Vietnam than Guangzhou is within its province of Guangdong.
Based on aggregatiing 1993 data from provinces contiguous to Guangdong. Source: Zhongguo Tongji Nianjian 1995 (China Statistical Yearbook 1995)
(top left: Population Share; top right: Direct Foreign Investment
bottom left: Gross Domestic Product; bottom right: Industrial GDP)
Figure 1 presents a graphic illustration of the relative national
salience of Ho Chi Minh City. In population, Ho Chi Minh City
is the equivalent of Guangdong and Hainan provinces. In GDP it
takes five provinces to equal Ho Chi Minh City's seventeen per
cent, and it takes all of southern China, eleven provinces, to
equal its industrial share. Ho Chi Minh City's national share
in foreign investment is even larger than its industrial share,
but the coastal provinces of southern China also have inordinate
shares of foreign investment, so the displacement is smaller.
The basic reason for the disparity in national share is that Ho Chi Minh City overshadows its nearest domestic rival by a wide margin. Compared with Hanoi, Ho Chi Minh City in the early 1990s accounted for six to seven times as much industrial output value, seven times as much foreign trade, and more foreign capital invested than in the entire northern region. On the national scene, Ho Chi Minh City dominates to an extent beyond any Chinese analog. Its relative importance surpasses not only that of Guangzhou but also of Shanghai, China's largest city, because economic power is divided among many more urban centers in China than in Vietnam.
Just as significant as scale for our comparison are the functions cities perform for their respective economies. Both Guangzhou and Ho Chi Minh City serve as gateways through which technology, capital, management skills, and ideas flow into the country. Both of them serve as entrepots, more in the sense of facilitating contact between national hinterlands and world markets than international trade forwarding. Both of them are financial and service centers for their respective domestic regions. And both are domestic centers of manufacturing and of representation of multinational firms. In these respects the two cities are quite similar, with Guangzhou performing these functions in greater volume than Ho Chi Minh City, although the Vietnamese city's contribution is again much larger in national context. The linkage between scale and function is alike for both cities, however, in that their significance in scale depends in large measure on freedom to perform the roles in which they historically have had a comparative advantage. When national policy has encouraged interaction with the world economy, these cities have gained relative to other urban centers; when it has restricted that interaction, they have experienced relative decline.
From the perspective of regional political leadership Ho Chi Minh City must be compared to the province of Guangdong rather than to Guangzhou. As we will detail below, it has been the province as a whole that has borne the weight of the four phases of center-region relations, with the municipal leadership of Guangzhou playing an important subordinate role, and as Table One indicates Guangdong's shares in the national economy are morecomparable than Guangzhou's to those of Ho Chi Minh City. Nevertheless, it should be emphasized that the national political and economic role of Ho Chi Minh City exceeds even that of Guangdong by a wide margin. Guangdong's national GDP share is only sixty per cent of Ho Chi Minh City's, and its share of national industrial production is only eighteen per cent of its Vietnamese analog. Even in the areas of foreign economic relations, in which Guangdong enjoys considerable prestige and envy within China, Ho Chi Minh City's national share is much greater. In short, even when we shift to comparing Ho Chi Minh City to a wealthy and progressive Chinese province of over sixty million people, it stands out as a significantly more important presence on the national scene.
Table 2: Ho Chi Minh City and Guangzhou, basic data, 1993
Ho Chi Ratio Minh City Guangzhou GZ:HCMC Population (mil) 4.58 6.24 1.36 non-agricultural 4.02 3.75 0.93 urban districts 3.25 3.73 1.15 Area (sq.k) 2056.5 7464.40 3.63 population density 2282 839 0.37 Urban district area 140.3 1443.60 10.29 district density 23752 2581 0.11 average district 271,000 466,000 1.72 population Work force (mil) 2.19 3.85 1.75 Per cap: Per cap: employed persons 1.47 2.11 1.43 HCMC GZ GDP (mil US$) 2229.7 12857.56 5.77 487 2061 I. agriculture 70.8 826.12 11.67 15 132 II. mfg. & 929.4 6104.06 6.57 203 978 construction III. services, 1229.6 5927.39 4.82 268 950 trans., etc. Fixed investment 684.1 6480.50 9.47 149 1039 housing 100.1 2282.41 22.80 22 366 Retail trade 1654.2 5438.14 3.29 361 871 Foreign trade & investment (mil $) imports 1088.5 2485 2.28 238 398 exports 1625.1 3482 2.14 355 558 contracted foreign 1096 7075 6.45 239 1134 investment Average annual wage 600* 1100.68 1.83 ($) Education no. of college-level 17 28 1.65 institutions college-level 32.9 79 2.40 students (thous.) middle school 281.6 414 1.47 students (thous.) no. of primary 534 1584 2.97 schools primary students 428.6 645 1.50 (thous.) Health hospital beds 12.3 27.30 2.22 (thous.) medical personnel 10.5 50.10 4.77 (thous.) doctors (thous.) 2.6 22.10 8.50
Sources: GZTJNJ 1994; NGTKTPHCM 1994.
Having discussed the political economies of Ho Chi Minh City, Guangzhou, and Guangdong in their national contexts, we will now turn to the task of presenting basic current data (Table 2).
The cities of Guangzhou and Ho Chi Minh City have different internal structures and rural-to-urban ratios that must be taken into account in comparisons. As is typical for large Chinese cities, Guangzhou City controls the surrounding rural areas. It includes eight urban districts and four counties, which vary enormously in population density. Ho Chi Minh City has twelve urban prefectures and six rural districts, therefore more major sub-divisions, covering a total area just over one quarter the size of Guangzhou. Moreover, Ho Chi Minh City's urban prefectures are confined to a central area just one-tenth as large as Guangzhou's urban districts. This gives them, despite smaller average population size, a much higher average density. The compactness of prefectures also leaves Ho Chi Minh City with a higher ratio of rural-to-urban area than Guangzhou, but the rural area under Guangzhou's administration is three times as large and supplies the city with a much larger proportion of its agricultural needs.
Comparisons not affected by differences of administrative structure show Guangzhou is much wealthier than Ho Chi Minh City. With a population 1.36 times as large as Ho Chi Minh City's, Guangzhou produces nearly six times the latter's GDP, possesses nearly ten times the fixed investment, conducts over three times as much retail trade, has over twice the foreign trade and six times the foreign investment, and its wages are over twenty times as high. Although calculation of values at the official exchange rate exaggerates the wealth gap in the Chinese city's favor, discounting for this still leaves Guangzhou ahead. In foreign trade and investment, which are conducted mostly at the official exchange rate, the ratio reflects the gap quite accurately. Where the units are non-monetary as in education and health, the ratios are higher in every category than the population ratio of 1.36.
II. Four stages in center-region relations
With much simplification and abstraction, it can be said that Guangzhou and Ho Chi Minh City have passed through similar phases of historical development. We identify four phases and label them incorporation, consolidation, exceptionalism, and reform leadership. Figure 2 shows the years of each stage for each city. Incorporation refers to the initial establishment of urban governance under the communist party, during which the new communist regimes adopted inclusive tactics to smooth the transition from the old regimes and restore normal functioning. The primary thrust of the second stage, consolidation, was to redirect policy toward an internally-
Figure 2: Stages of center-region relations
Stage Guangzhou Ho Chi Minh City 1. Incorporation 1949-1951 (3 years) 1975-1977 (3 years) 2. Consolidation 1952-1978 (27 years) 1978-1979 (2 years) 3. Exceptionalism 1979-1985 (7 years) 1980-1985 (6 years) 4. Reform leadership 1986- 1986-
oriented pattern of socialist development, in other words, to revalue existing urban resources in terms of new national goals and to transform them accordingly. In the third stage, exceptionalism, the cities deviated from national norms on an exceptional or experimental basis, either as a result of national policies granting privileges to certain localities (in China) or of localities' adapting to the situation at hand (in Vietnam). Finally, in the reform leadership stage, the localities took major roles, in alliance with reformists at the center, to push for a broadening and deepening of reform. For each phase we identify a characteristic composition of local elites and their role in national politics, and for each phase we identify a transitional logic or dynamic linking one phase to the next. Of course in reality, where muddle is more common than clear transitions, phases overlap and dating them is somewhat arbitrary, but the framework helps us to highlight the basic similarities and differences of the cities' development.
Guangzhou was an important city and port of China for centuries before the French transformed Saigon from a fishing village into the center of trade and commerce for Indochina in the late nineteenth century. From then until the Second World War, both cities prospered as the leading centers of modernization and international contact for their respective regions. Foreign influence was more direct in Saigon. While Guangzhou established municipal government and services under administrators trained in the West and Japan, Saigon did this under colonial civil servants. The Chinese diaspora played important but very different roles in each city. For Guangzhou and for China as a whole, remittances from overseas Chinese helped balance the purchase of imports, while in Vietnam the ethnic Chinese concentrated in Cholon next to Saigon (and now part of Ho Chi Minh City) became the second most important foreign economic presence after the French and later after the Americans.
Guangzhou experienced the vagaries of revolution and war long before the founding of the People's Republic. Its foreign trade rose rapidly until the strikes and boycott of 1925, and afterwards never completely regained its pre-boycott level. Guangzhou's external relationships and privileged position came to an end with the arrival of the People's Liberation Army in October 1949, but the city was not central to the final struggle between the Communists and the Guomindang. By contrast, Saigon became the capital of southern Vietnam for twenty-one years, and its economy was transformed by war and by the American presence.
The PLA entered Guangzhou peacefully, and the initial political leadership of both city and province was a combination of northern cadres, rural southern guerillas, members of the urban underground, and retained Guomindang officials. Ye Jianying was the first regional leader, combining the offices of Head of the Military Affairs Control Commission, first secretary of the Party's South China Sub-Bureau, governor of Guangdong, first secretary of the Guangzhou municipal party committee, and mayor of Guangdong. When the local leadership conducted a land reform campaign that the center considered too moderate, Ye and his subordinates were removed and a new team of leaders headed by Tao Zhu, with Zhao Ziyang as his assistant, arrived in early 1952. The new emissaries from the center launched a vigorous campaign of thought reform at the universities and a rectification campaign that criticized and removed local cadres from office.
In Vietnam, surrender spared Saigon from direct assault, and the initial leadership was a combination similar to that of Guangzhou. All of the top leaders had served in the Central Committee's Central Office for South Vietnam during the war. Indeed, Nguyen Van Linh had served three separate stints as the Saigon/Gia Dinh party committee secretary since 1945. After 1975 Linh served a year as chair of the municipal party committee and then was elected to the Political Bureau in December 1976, while Vo Van Kiet moved up from deputy head of the Saigon-Gia Dinh Military Management Committee to replace Linh as the party committee chair.
The pressure on Ho Chi Minh City to socialize increased after a Conference on National Reunification in November 1975 decided that the south should "transform" and "reconstruct" simultaneously. Campaigns against "traffickers and speculators" and comprador (mainly ethnic Chinese) bourgeoisie broadened into a comprehensive attempt to bring private enterprise, transportation, construction, and retail trade under state control. But progress was slow and uneven. Until spring 1978 about two-thirds of the retail market remained outside state control and the number of small private traders actually increased. Many private businessmen maintained direct links to Mekong delta peasants and struck deals with party cadres that left them effectively in control of their enterprises even after conversion to joint state-private or outright state ownership. Kiet's municipal government set up "joint state-private import-export companies that employed Chinese traders with overseas networks." Agricultural collectivization also stalled in the Mekong delta. As in China, the center demanded sterner measures, and Linh, who objected, had to cede his chair of the Committee for the Transformation of Private Industry and Trade in the South to Do Muoi by February 1978. A severe crackdown followed, ending the incorporation phase.
Contact between both cities and the outside world declined as trade shifted from private to state companies. In 1950, private companies still carried out 31.6 per cent of China's foreign trade. By 1954 the private share had fallen to 1.7 per cent. Meanwhile, the direction of China's trade shifted toward the socialist world, a trade that Guangzhou was ill-positioned to service. Hong Kong gradually assumed Guangzhou's gateway functions between China and Asia, and China and the West. In Vietnam, the state nationalized the south's export industries and foreign trade during 1976. The virtual termination of aid from the West and Japan sharply reduced the city's capacity to import and cut it off from traditional export markets, although it managed to continue some trade with Hong Kong, Singapore, and Japan. Embargo and socialism, however, obliged it to accept a partial redirection toward the non-convertible area.
The incorporation phase was more gentle than some urban residents had feared. The regimes in both countries were in firm control nationally and felt no need to demonstrate their power. They recognized the value of the metropolitan units now under their control, and the establishment of the party's authority took precedence over the transformation of economic and social structures. The tendency therefore was toward mild policies under cadres with longstanding and high-level connections to the center who also were locally-rooted. Neither Ye nor Linh and Kiet would have got their jobs without central credentials; however, they did not wish to lose standing in thelocalities now under their control by espousing the increasingly transformative policies of a distant center. Incorporation was successful in its objectives, but the accommodation of local realities became unacceptable at the level of national leadership when priority shifted to nationally uniform development. The modern resources of cities like Guangzhou and Ho Chi Minh City had to be redeployed for national aims even if the redeployment was unpopular, inappropriate, or wasteful at the local level. The transitional logic ending the incorporation phase thus was the centers' growing frustration with regionally specific and gradualist policies.
2. Consolidation to the national pattern
The drive to consolidate the state-controlled economy that intensified in 1952 in China, 1977-1978 in Vietnam, attempted to homogenize institutions and policies nation-wide, ending the cities' special status. China's "Southern Gate" closed, and an economy that had been built on a privileged commercial role with the outside world became a regional industrial center on China's periphery. Ho Chi Minh City's external links withered, and the plan directed it to emphasize light industrial manufacturing, leaving heavy industry to the north. A large portion of the city's mainly ethnic Chinese commercial class fled abroad, causing a sharp drop in domestic trade. This phase lasted longer in China than in Vietnam, where institutional weakness and economic crisis forced a grant of exceptions after about one year.
Under Tao Zhu's leadership Guangzhou and Guangdong were restructured as parts of a new China, and they remained tightly integrated into this national pattern until 1979. Tao was a successful enforcer of central consolidation policies. He removed well-known local leaders and disciplined local cadres. He transformed Guangzhou's economy into a regional administrative enter and emphasized the development of heavy industry. By the time of the Cultural Revolution in 1966, however, Tao's strong position in Guangdong had become an object of envy to Beijing radicals, and he was criticized and removed for building his own "kingdom." Zhao Ziyang, removed from power along with Tao during the Cultural Revolution, returned to the provincial leadership in 1972-1975 but was in no position to make major changes. He was replaced by General Wei Guoqing, a close colleague of Deng Xiaoping.
In Ho Chi Minh City, restructuring began under a long entrenched local leadership. Although Nguyen Van Linh lost his post in the south and membership of the Political Bureau and Central Committee secretariat for opposing rigorous socialization, his associate Vo Van Kiet remained secretary of the city's party committee. Do Muoi served briefly as the center's "enforcer" but learned that the policies he was sent to enforce were exacerbating the economic crisis and social turmoil. Leadership in Guangdong thus was an instrument of the center, dependent on it for authority both to enforce consolidation and to terminate it, while Ho Chi Minh City leaders had both a local power base and representation at the center, which gave them leverage their Guangdong counterparts lacked. In both cases, however, the power of regional leaders as well as the regions' developmental capacities assured them leading roles in modernization and openness when the consolidation phase ended.
Given the twenty-five years of consolidation in Guangdong compared with just a year or two in Vietnam's south, it is not surprising that the transformation of economic structure affected Guangzhou more profoundly than Ho Chi Minh City. Table 3 shows that a major restructuring of Guangzhou's economy took place in the 1950s, and the trends continued in later years though at a slower pace. The emphasis of the First Five Year Plan on industrial development, followed by the cooperatization of the service economy in the late 1950s, changed Guangzhou from an economy dominated by service industry to one dominated by manufacturing, and this pattern lasted through the 1970s. But the growth of manufacturing was relatively slow by national standards, and Guangzhou (as well as Guangdong) fell behind national growth rates. Comparable data on this phase in Ho Chi Minh City are unavailable, but the change had to be away from the extreme service-bias of the war-time economy. For not only did demand for services wither at war's end, but the first post-war Five Year Plan emphasized industrial development and neglected service.
Table 3: Guangzhou and Ho Chi Minh City GDP by sectors, 1952-1994 (current prices)
100 Guangzhou Sector Shares billion Ho Chi Minh City Sector million (per cent) dong Shares (per cent) yuan Year Total Agricult Industry Service Total Agricult Industry Service GDP . GDP . 1952 0.54 20.01 31.42 48.57 1957 1.12 13.37 45.74 40.89 1962 1.24 16.36 49.30 34.34 1965 1.80 13.88 56.25 29.87 1970 2.67 11.72 64.09 24.19 1975 3.66 12.10 62.06 25.84 1978 4.31 11.67 58.59 29.74 1980 5.75 10.85 54.52 34.63 1985 12.44 9.69 52.92 37.39 1990 31.96 8.05 42.65 49.30 1991 38.67 7.29 46.53 46.18 1992 51.07 6.98 47.25 45.77 18587 3.34 31.83 64.83 1993 74.08 6.42 47.48 46.10 23722 2.78 34.00 63.22 1994 29731 2.61 34.71 62.68
Sources: GZTJNJ 1994, p. 18; NGTK 1994, pp. 43, 45.
Industrial output in Ho Chi Minh City, however, failed to keep up with the national average and began to decline in 1978, subverting the state's attempt to command the heights of the south's economy. The causes included mismanagement and the inaccessibility of spare parts and supplies in the West and Japan, which mainly affected large state-owned enterprises (SOEs). The
decline of output by industrial SOEs was absolute in 1978-1980--calamitously so among SOEs managed by the central government--and only partly offset by rising output in the collective, cooperative, private, and household economies. Relative to other sectors, as Table 4 shows, the state sector's share of industrial output shrank steadily throughout the consolidation phase and more than for the nation as a whole. The figures for Guangdong, by contrast, show a much more extensive and durable attempt by the state and collective sectors to dominate industry. Private ownership and output wilted in the 1950s and 1960s, while the state and collective sectors grew until the mid-1970s, when growth began in other sectors. The traditional socialist model with its emphasis on industry and industry dominated by the state thus enjoyed a long run in Guangdong and, by extension, Guangzou; in Ho Chi Minh City it began to fail almost from the start, with a partial revival in the early 1980s followed by relative stability.
Table 4: Sector shares in industrial output, 1949-1993
Guangdong Ho Chi Minh City Vietnam year state collec local¹ other2 state collec coop1 other2 state 1949 59.6 -0- 40.4 -0- 1952 68.4 0.9 30.6 -0- 1957 68.0 20.1 10.9 -0- 1962 71.9 22.8 5.3 -0- 1965 76.7 18.2 5.0 -0- 1970 75.8 20.7 3.4 -0- 1975 71.8 25.0 3.2 -0- 1976 77.6 0.2 22.2 -0- 62.7 1977 76.0 0.2 23.8 -0- 68.0 1978 67.8 26.1 6.1 -0- 71.9 6.4 21.7 -0- 66.0 1979 59.0 7.4 33.6 -0- 61.8 1980 63.1 27.7 7.3 1.9 51.5 6.5 43.0 -0- 57.6 1981 68.2 31.8 46.6 6.2 47.2 -0- 55.0 1984 66.2 33.8 non-state 1985 52.5 30.5 12.4 4.6 67.7 32.3 1990 35.0 26.6 16.4 22.0 68.0 32.0 67.6 1991 36.8 23.0 15.6 24.6 69.5 30.5 68.5 1992 32.5 22.3 17.4 27.4 65.0 26.7 8.3 70.5 1993 24.2 20.5 20.4 34.9 64.1 27.8 8.1 71.7
1Includes township and vilage enterprises (TVEs), as well as local privately owned, household, and individual capitalist ownership
2Includes joint ventures and foreign ownership.
NOTE: Table allows only approximate comparisons between countries, or between the periods 1976-1981 and 1985-1993 in Vietnam, because of differences in the way data are categorized.
The 21 per cent jump in Ho Chi Minh City's state ownership between 1981 and 1985 is due in pat to a shift of data sources from internal to public, but it is not completely artificial. The 1976-81 and 1985-93 series are from compatible sources.
Blank boxes mean data are unavailable.
Sources: GDTJNJ 1994, p. 174; NGTKTPHCM 1976-1981, pp. 105, 107, 111; NGTKTPHCM 1991, p. 63; NGTKTPHCM 1994, p. 91; NGTK 1981, p. 146; NGTK 1994, pp. 182-190.
The shift in emphasis away from foreign trade and commerce and toward industry undercut both cities' economic preeminence. In China this allowed Shanghai, a national industrial power, to overtake both the Guangdong and national rates of growth until the effects of foreign trade, investment, and the unleashing of the service sector were felt in the 1980s. In Vietnam, a similar emphasis combined with the embargo delayed Ho Chi Minh City's recovery until relaxation of controls touched off a growth spurt in 1981. Retail trade suffered in both cities as well. The number of retail and service units in Guangzhou bottomed out at thirteen per ten thousand persons in 1978 before this sector reestablished its share during the boom of the 1980s. In Ho Chi Minh City this ratio held steady around sixteen per ten thousand as the total number rose, but the number of outlets selling food, general goods, pharmaceuticals, and books declined during 1977-1980. Of course, restructuring had more time to affect the quality of life in Guangzhou than Ho Chi Minh City. Life expectancy at birth in Guangzhou's urban districts went from sixty-seven years in 1953, to sixty-nine in 1964, to seventy-three in 1982, although this was not a great increase in comparison with rural China or even with other large cities. Life certainly grew more difficult in Ho Chi Minh City, which experienced restructuring in the midst of a national economic crisis and war.
The consolidation phase thus had important similarities in the two cities. The criterion of policy effectiveness for both of them was the execution of uniform national policies. For Guangdong, this meant transformation from a leading center of commerce, trade, and service to one more oriented toward industry, in which Guangzhou could not match Shanghai. Consolidation was far less successful in Ho Chi Minh City, as industry faltered under the combined effects of mismanagement and embargo, but like Guangdong it too experienced further constriction of commerce, trade, and service. In both cases, it eventually became clear that the natural advantages of each were being sacrificed to national uniformity and internally-oriented planning. Policy failure or suboptimization thus was the transitional logic. In Ho Chi Minh City it simply proved impossible for local leaders to spur growth or even to govern effectively while remaining faithful to national policy. Non-compliance was more in line with local conditions and could not be prevented, so local leaders had to choose between failure or disobedience. In Guangdong, disillusionment with agricultural collectivization and Soviet-style modernization set in well before 1979, and it was clear Guangdong could have done much better under policies tailored to its characteristics.
3. Policy exceptionalism
It might appear from the statistics that only Ho Chi Minh City faltered under national consolidation while Guangdong made progress, but in fact the cost of consolidation must be measured by the lost opportunities for more rapid growth under more appropriate policies. By 1979 the leaderships of both countries permitted a tentative readjustment.
This essentially transitional phase ran, in Guangzhou and Guangdong, from the center's interest in new policies in 1979 to the generalization of exceptionalist policies for coastal areas in 1985. In Vietnam, policy also became more flexible in 1979, initially as a crisis response that tolerated local experimentalism, until overtaken by national reform in 1985. However, this stage differed considerably in the two places, as Guangdong had been fully absorbed into the national economy and in any case had less weight in national context than Ho Chi Minh City. Exceptionalism could only occur in China as the result of a change of policy values at the national level; in Vietnam it occurred as the result of Ho Chi Minh City's unresponsiveness to national consolidation followed by recovery under emergency policies that did not officially or explicitly privilege it.
Exceptionalism was premeditated in China, adventitious in Vietnam. Guangdong province occupied a key position in Deng Xiaoping's project to reorient the Chinese economy. Its foreign trade and capital would greatly facilitate rapid development, overseas Chinese offered easy access to unthreatening foreign economic involvement, and the opening of Guangdong would ease Hong Kong's reintegration into China. While years of priority for rice production and industry had left the province relatively poor, its earlier prosperity made it seem likely that more permissive policies would yield rapid results. As the provincial party secretary, Xi Zhongxun, said at the time, Guangdong would have developed much faster if it had been an independent country. Reflection on thirty years' experience under the traditional model lay behind the Central Work Conference of April 1979, which led to Central Document 50 of July 1979, the first of a series of directives that permitted Guangdong to redevelop its external ties and service economy.
In Vietnam a similar appreciation of Ho Chi Minh City's unique requirements and potential had barely begun to develop before this stage began. The paramount concern in 1979 was the socialist model's failure amidst economic crisis. The disastrous effects of the crackdown on private trade and a backlash against agricultural cooperativization galvanized the south, while falling output in the state sector, the termination of Chinese and Western aid, and the conflicts with Cambodia and China affected the entire nation. The international situation ruled out a Deng-like opening, so policy had to stress domestic solutions, which meant legitimizing practices and productive forces that could immediately boost output. The city party committee in August 1979 seized this opportunity to propose a number of ideas that the Central Committee incorporated into Resolution Six, the key one from the city's perspective being permission for the private sector to produce goods in which it had the comparative advantage over state enterprises. A subsequent decree permitted enterprises to obtain supplies and sell output in the free market, sanctioning practices that were beginning to spread in the north but had never completely disappeared in the south. Other changes not exclusive to but chiefly benefitting enterprises in Ho Chi Minh City were piece-rate wages, profit-and-loss accounting, and supply priority for export industries. The plan for the city to concentrate on light industry quietly died.
The flexibility allowed retail trade and services to pick up, as these activities resumed major importance alongside industry in Guangzhou (see Table 3) and experienced a more restrained rennaissance in Ho Chi Minh City. Flexibility also allowed accelerated growth of industrial production in non-state sectors, so much so that the SOE share of industrial output in Guangdong went into steady decline while in Ho Chi Minh City it stabilized at a level below its peak (see Table 4). Growth spurts revealed the potential of both Guangdong and Ho Chi Minh City to advance much more rapidly under looser policies. Guangdong's share in national industrial output rose from 4.33 per cent to five per cent, Ho Chi Minh City's from 32.5 per cent to nearly thirty-seven per cent, in just one year from 1980 to 1981.
But the changes that produced these results in each country were different in three important respects. First, a five-year fiscal contract that allowed Guangdong to retain revenues over an annual quota of RMB 1.2 million, and other concessions granted a degree of autonomy to the province that Ho Chi Minh City did not enjoy. Second, Vietnam's policies remained uniform in principle if not in effect, whereas some of China's policies explicitly discriminated between regions. Under the slogan, "special policies, flexible measures," Guangdong received a broad range of privileges and was exempted (or exempted itself) from various national restrictions. And third, Vietnam's policy shift began with a domestic focus, whereas China's was outward-oriented from the start. China in 1979 authorized three Special Export Zones (later renamed Special Economic Zones) for Guangdong and another in Fujian province. These were by no means simply factory sites with special attractions for foreign investment and export production. Shenzhen, the largest SEZ located across from Hong Kong, had an area of 327 square kilometers, 23 per cent of Guangzhou's urban area and more than twice the urban area of Ho Chi Minh City. Massive investments, the wage differential between Hong Kong and China, and cross-border familial and ethnic ties supported a dizzy expansion of the SEZs. The SEZs quickly became Guangdong's Guangdong, a super-prosperous, externally oriented periphery unlike anything Vietnam could then contemplate. In fact the SEZs soon surpassed Guangzhou city in per capita income and replaced the provincial capital as the leading edge of provincial economic development.
The greater explicitness, stability, and depth of policy exceptionalism in China than Vietnam was partly an effect of differences in leadership. Deng needed to consolidate his power by cultivating regional support and encouraging regions to demonstrate the efficacy of reform. Leaders sent to Guangdong in the Deng era--Xi Zhongxun and Yang Shangkun in 1978, Ren Zhongyi and Liang Lingguang in 1981, and Lin Ruo and Ye Xuanping(son of Ye Jianying) in 1985--were expected to maximize Guangdong's economic growth even at the cost of central revenue and national policy uniformity. The right of SEZs to retain their foreign exchange earnings and the right to import, for example, gave the province an enormous advantage in the race to modernize over regions that needed central government approval. Deng could afford to grant such privileges because Guangdong was not a central part of the national economy, and the quick growth of the SEZs and of foreign investment in Guangdong provided proof of the wisdom of his policies. Of course exceptionalist policies for Guangdong excited the envy of provinces that weren't favored, but the main political effect was to induce other provinces to ask for similar policies.
No equivalent grant of autonomy and privilege for Ho Chi Minh City was conceivable. The center was still consolidating national unity, there was an atmosphere of national economic crisis, and Ho Chi Minh City was simply too important to the national economy to be bracketed off from general economic management. Formal recognition of Ho Chi Minh City's special character came with the rise of the city's own leaders to national power. This occurred after a conservative retrenchment in the early 1980s provoked southern leaders to develop a comprehensive program whose basic elements foreshadowed Doi Moi and to join forces with reform-minded leaders at the center headed by a former party general secretary and elder statesman, Truong Chinh. Reinstated in the Political Bureau in 1985, Nguyen Van Linh openly criticized past failure to exploit the city's "designed industrial capacity" and advocated making it the "industrial and service center for the south and the country as a whole."
The success of local experiments provided ammunition for reformists to defend policies that were inherently vulnerable and temporary. Echoing Linh's advocacy of a leading role for the city, Vo Van Kiet, a member of the Political Bureau, deputy premier, and chair of the State Planning Commission since 1982, in 1985 held up the city's Food Trading Corporation as a model worthy of emulation. Deng and Zhao Ziyang made trips to the south to promote coastal development as national policy. Reformists in both countries could cite increased flows of revenue. But the only sure way to stabilize and deepen the experiments was to widen them into national policies, and with that widening experimentation ceased to be exceptional. Nonetheless, the transition differed between the two cases. In Guangdong exceptionalist activities made the local leadership a natural ally of national reform leadership but also a target of more conservative national leaders, while in Ho Chi Minh City local leaders rose to national prominence because of their opposition to discredited conservative policies.
4. Reform leadership
The best defense of the reform trend was further success plus constant pressure for deeper and broader reforms. Guangzhou, Guangdong and Ho Chi Minh City developed especially strong stakes in this project because of the importance of recent changes to their continued development and because their advanced economies generated interests that pressed for further reform. Unconstrained by national responsibilities like those which confronted the center, they pushed for reforms that would further open and diversify the economy, though not so far as would weaken the national framework that was essential to their success.The point is not that the two cities pushed for similar policies, but that they pushed for a generalization of policies that favored their own growth, with success in this effort riding on politics at the center.
The effectiveness of local assertiveness in national reform politics continued to depend on connections to, and the balance between, factions at the center. For Guangdong, the patronage of central leaders was crucial. Zhao Ziyang's new policy of enhancing coastal development by extending Guangdong's privileges to other areas led the province to propose a reformulation of its special status that would have increased its autonomy. It was the leading province making such demands, but its requests were not granted. The combination of Zhao's national leadership and Ye Xuanping as provincial governor led to new attempts in 1987-1989 to confirm greater provincial autonomy, and the province received designation as a "comprehensive reform area," but Ye's bold proposals were never implemented due to the change in central leadership.
Ho Chi Minh City by contrast took liberties with existing policy and then saw boldness validated in December 1986 by the inauguration of Doi Moi and appointment of Nguyen Van Linh to the post of party general secretary. The removal of restrictions on private sector involvement in trade and transport, a new foreign investment law, the reduction of rationing, and devaluation of the dong during 1987 were highly consistent with the city's interest in market economy and openness. Reforms a year later formally recognizing the family and private economies, unifying official with market exchange rates, and separating commercial and state banking functions either had strong support from or followed proposals made by the Ho Chi Minh City government. Price reform, removal of import duties on industrial inputs, termination of export subsidies, legalization of private production of export commodities and trade with foreign partners, and fiscal reforms in 1989 were all favorable to the opening and expansion of the city's economy.
The city's collusion with reformist leaders at the center, however, was by no means solely responsible for constantly pushing Doi Moi forward. Further reform was the only way Vietnam could cope with challenges China did not have to face. These challenges included low state capacity to offer alternatives to local initiatives, severe inflation, the demonstration effect of reform elsewhere, and impending termination of economic cooperation with the USSR and Eastern European countries. International events in 1989 intensified Vietnam's need to redirect foreign economic relations and therefore to capitalize on Ho Chi Minh City's assets, particularly the access of its ethnic Chinese minority to regional markets and sources of capital. External shocks helped reformists get a single exchange rate, dong convertibility, liberalization of foreign trade including permission for private sector participation, and a general opening of the economy to foreign competition and investment.
Events abroad had less effect on China in 1989 than its own tragedy in Tiananmen Square on June 4, which was traumatic for external relations and hence especially so for Guangdong. Besides the abrupt change in international climate, the province also lost some of its reformist friends at the center and had to cope with attempts by Li Peng to reassert central control and to acquire a greater national revenue share. Ye Xuanping opposed these efforts with a fair amount of success. Although he and Lin Ruo retired in early 1991, their replacements, Xie Fei and Zhu Senlin, were natives of Guangdong (Zhu had been mayor of Guangzhou) and well-known reformers. In early 1992 Deng Xiaoping made a well-publicized southern tour in which he encouraged Guangdong and Shenzhen to catch up to Hong Kong, Taiwan, South Korea and Singapore in twenty years. This trip became a decisive watershed for central support of reform policies and shaped the agenda of the Fourteenth Party Congress later in 1992. As a result, some of Guangdong's wishes finally became a solid part of national policy. Even the Pudong project in Shanghai was a consolidation of Guangdong's achievements, because it was in part the result of Shanghai's lagging behind the growth rate of Guangdong.
Ho Chi Minh City by contrast never enjoyed privileges like those of Guangdong. The one concession that might be styled a privilege was the permission given in 1991 to establish Export Processing Zones at sites near the city, but permission was soon granted to Haiphong, Danang, and Can Tho as well. Guangdong-style privileges would have clashed with the goals of reducing north-south differences and spreading the wealth outward from Ho Chi Minh City. Preferential treatment was not essential to the city's success anyway. All it needed were national policies that permitted it to exploit its advantages. In return, it acquiesced to pressure for redistribution, mainly toward central and northern provinces, of state outlays for capital construction and the siting of foreign investments. A preoccupation with repairing the effects of war in Vietnam's case, with stabilizing the reform trend in China's, compelled reform leaders in both countries to frame their demands as national policies.
Generalization of policy, however, does not completely eliminate frictions over reform's pace and direction and in some ways exacerbates them. In summer 1995 China adopted its Ninth Five Year Plan, which laid a basis for eventual cancellation of remaining preferential policies for coastal areas and shifting investments toward inland ones. Argument also was made, infuriating Guangdong leaders, that with the opening of the entire nation the Shenzhen SEZ was no longer needed. In Vietnam, similar though less intense frictions were apparent in Can Tho's lack of enthusiasm for bridging the Mekong, in Hanoi officials' accusation that Ho Chi Minh City was indiscriminate about approving foreign investment projects, and in innuendoes about "shopping trips" taken by wives of high city officials to South Korea and Taiwan. Ho Chi Minh City interests for their part chafed under the center's tight credit policies and a highly centralized revenue system, inaugurated in 1991, that allocated the city substantially less than it collected.
The disproportionate prosperity of the reform leaders makes them targets of various national attempts to equalize opportunities among regions and the relative losers in national attempts to improve regulatory and fiscal control. Although tensions between national and regional interests have reemerged, they no longer call into question the basic policy direction, as the broadening and deepening of national commitments in this stage have made reform secure. But even if reform is secure it is not static. The reform leadership stage for example began with a dominant focus on the relaxation of central controls and then matured as localities became more concerned with state promotion and regulation of the national economy. Both Guangdong and Ho Chi Minh City appealed in the 1980s to the center to reduce competition among exporters, and in the 1990s they were driven by the increasing complexity of the economy to support demands by central government leaders for administrative reorganization and professionalization at all levels. Reform leadership thus evolves dialectically, in a direction that tends to strengthen integration rather than nourish latent separatism, despite the frictions it may sometimes produce.
III. Significant differences.
The stages of national-local relations discussed above demonstrate that there is much in common between Guangzhou and Ho Chi Minh City. Indeed, in this respect these two cities have more in common with each other than Guangzhou has with Xi'an or Ho Chi Minh City with Hanoi. Nevertheless, even a brief narration of these stages reveals that the experience of each city was unique. Rather than leave the differences as an unexplained residuum, we will now discuss what appear to be the main factors accounting for differences of development. The five factors are relative mass, state capacity, temporal pattern of stages, war versus leftism, and international situation.
The first factor is the difference in relative mass of Guangzhou and Ho Chi Minh City. The magnitude of the difference has already been discussed in the first section of the chapter, so the remaining task is to highlight how it has affected political economic development. Both cities were significant enough to merit careful treatment in the initial stage of incorporation, but relative mass became important at the stage of consolidation. Guangzhou was not so big as to prove indigestible to national policy. It was reshaped into a regional center of administration and state industry, and only a change in policy values among the post-Mao leaders caused a reconsideration of policy. The exceptionalist policies applied in Guangdong were a matter of localized experimentation, but the discretion enjoyed by its innovative leadership was granted by the center. It could be said, however, that the disproportionate success of Guangdong has increased its relative mass within China, and that it is now less tractable and more directly influential in the national political economy than it was in the early 1980s. Nevertheless, success has also undermined the rationale for privileged treatment of Guangdong, and it does not have the clout by itself to resist redistributive tendencies originating in inland provinces.
By contrast, Ho Chi Minh City was too big to be digested. Of course, it did not confront the center and oppose national consolidation, but consolidation policy produced policy failure rather than transformation. Because its resources were so important to the center, the failure of policy forced a national leadership that still preferred socialist consolidation to permit local leaders to act more pragmatically. But Ho Chi Minh City was also too big to be a haven for special policies. Its pragmatism, and especially the contrast of its pragmatic success with dogmatic failure, put a direct pressure on national policy and leadership. Having played a key role in turning the national leadership toward reform, the city's leaders earned national prestige. In a policy era that glorifies economic achievement, the massiveness and prospects of Ho Chi Minh City's economy guarantee it a major role in the shaping of national policy.
The second factor, difference in state capacity, is closely related to relative mass but not identical to it. Clearly if the Vietnamese leadership had the resources available to it that the Chinese leadership did then the consolidation of Ho Chi Minh City might have been more successful, but in order for Vietnam to have a comparable preponderance of central resources it would have to be proportionally seventeen times more wealthy than China. In reality, of course, the Vietnamese state was considerably weaker. Concessions to Ho Chi Minh City were only part of a pattern of emergency policies adopted in the 1980s to cope with mortal shortages of goods, a stagnant economy, galloping inflation, and international isolation. Moreover, even successful policies of marketization and decontrol have had serious consequences of undermining state services and creating economic polarization. In China, reform policies, including Guangdong's experiments, were adopted in order to maximize growth rather than to avert looming disaster, and national and local governments were better able to sustain infrastructure. China has a more powerful and effective governmental engine, and so its "takeoff" has been smoother and steeper.
The third factor is the temporal pattern of stages. The two cities have each experienced four stages, but Guangzhou has spent forty-six years in the process while Ho Chi Minh City has been at it for only twenty. There are two major effects of the difference in temporal patterns. First, Guangzhou was remade by a generation of socialism. Not only was it effectively transformed, but the transformation lasted a long time. By contrast, the two years of unsuccessful consolidation in Ho Chi Minh City were not enough either to succeed or to establish a new identity. Secondly, China has been the leader in policy innovation in the reform period, and even though Vietnam is loath to copy the Chinese experience publicly, clearly it has been an important referent for Vietnamese policy making. While it appears that both phases of reform leadership begin in 1985, it should be remembered that Deng Xiaoping began the general reorientation of China in 1979, and the experimentalist policies in Guangdong were only part of an extraordinarily bold and successful set of reforms already five years old by 1985.
The fourth and fifth differences are deeper contextual differences between China and Vietnam rather than factors specific to Guangzhou and Ho Chi Minh City. The fourth factor concerns domestic context, in which the most prominent difference is that Vietnam was at war from 1941 to 1975 and then in hostile isolation from 1979 to 1995, while China was able to accumulate resources and to build on the successes and failures of its own domestic politics. Of course, China's domestic politics were quite peculiar from 1957 to 1976, and its leftism led to serious economic chaos in the Great Leap Forward and to political chaos in the Cultural Revolution. Nevertheless, even the leftist period made major contributions to China's societal infrastructure and economic capacity, and China would not have had the superior state capacity referred to earlier if it had been wasted in war or destroyed by occupying armies. By the same token, any negative judgment of the performance of the Vietnamese leadership should be tempered by the acknowledgment that war and continuing hostilities put it in a situation of chronic emergency and privation. According to a recent World Bank study, fifty-one per cent of Vietnam's population is in poverty, compared to twenty-one per cent in Philippines, sixteen per cent in Thailand, fifteen per cent in Indonesia, and nine per cent in China. Clearly war, rather than socialism, is the cause of Vietnam's poverty. If Vietnam had enjoyed forty-one years of peaceful, unified development after the Geneva Accords it would probably have fared somewhat better than China since it would not have suffered the ideosyncracies of Mao Zedong's leftism.
Another important contextual effect of war was to create different societal experiences in north and south Vietnam. The difference was accentuated by the political domination of the north after victory and the imposition of policies aimed at forcing the south to catch up with the socialist north. By contrast, even the extremes of leftism were a national rather than a regional experience in China. Indeed, Guangdong had rather mild experiences with the Great Leap Forward and Cultural Revolution, while neighboring Guangxi suffered terribly from violence during the Cultural Revolution. Localism is a powerful tendency in Chinese politics, but if the Guomindang had managed to hold on to southern China until 1975 regionalism would be a more critical issue than it is today.
The last factor of difference is that of international context. Even if we bracket the problem of war, the international contexts of China and Vietnam are quite different, and these differences are clearly reflected in their most international cities. Here again relative weight is significant. China's population is twenty-one per cent of the world's total; Vietnam's is sixteen per cent of Southeast Asia's total. As a result, the mentality of international openness is different in the two countries, even though the policies are similar. To put it metaphorically, China opened its door and expected the world to walk in, which it has. Vietnam opened its door and expected to go out and find the world, adjusting to global tastes. Guangdong is not simply a province with ambitions of participating in the world market, it is a vestibule to the China market. The Vietnamese domestic market is not insignificant in its potential, but it is not comparable to that of China. Vietnam's economic path is more immediately dependent on regional and global markets, and Vietnam has been more agile and cosmopolitan than China in pursuing opportunities. It is not an accidental linguistic difference that China insists on things "...with Chinese characteristics," while Vietnam only requires that things be "...appropriate to Vietnamese conditions."
Moreover, China--and especially Guangzhou/Guangdong--is benefitted by a special relationship to Hong Kong. To some extent this relationship deprives Guangzhou of a special leadership role. A glance at the current economic geography of Guangdong shows that prosperity radiates from Hong Kong rather than from Guangzhou, and in the 1980s Guangzhou had a reputation of being rather stodgy compared to the new frontier towns of the Pearl River Delta. Whatever the loss of prestige, however, Hong Kong has been and continues to be an invaluable asset to China, not only in terms of its own considerable investment activity, but even more so as a world-savvy mediator of regional and international interests. To a great extent, China--and especially Guangdong--deals with the world through Hong Kong.
Vietnam and Ho Chi Minh City do not have a buffer between themselves and the regional and world economies. Although Hong Kong and Taiwan are also top investors in Vietnam, they do so as part of the regional economy, which is largely dominated by overseas Chinese, rather than as ethnically-committed mediators of world interests. Ho Chi Minh City faces the world economy more directly than does Guangzhou. Its industries and markets are less protected, but it is also likely to be more predictable and transparent to ethnic outsiders. In general, Vietnam's hope and expectation is to become another small dragon, while China remains one big dragon, with no external role model.
Two basic dimensions of disparity emerge from the comparison of Guangzhou and Ho Chi Minh City. Guangzhou is larger, more prosperous, and economically developed and was all of these things from the beginning of China's reform period. But it is Ho Chi Minh City that has had the greater economic role and significance in its respective national setting. Ho Chi Minh City also has the political clout of a province partly because in Vietnam's administrative structure it has the status of a province, whereas Guangzhou is only one among many large cities in China and must approach the center through the intervening layer of Guangdong province. Thus the appropiate comparison in analyzing roles and significance in the politics of reform is between Ho Chi Minh City and Guangdong inclusive of Guangzhou. This comparison reveals that leaders in both places entertained visions of reform-led growth in their localities but interacted differently with their respective centers to fulfill them. In both cases, however, the center-region dynamic contributed significantly to driving reform forward to irreversibility. That trend not only restored the two cities to their status as centers of commercial modernization within their respective countries, but also positioned them to remain in the forefront of reform, riding the crest of re-internationalization and commercialization sweeping East and Southest Asia.