Freeman Interview: Wan Runnan

Born October 29, 1946, in Jiangsu province, Wan Runnan was in college studying engineering when he had his first taste of repression. With the fanaticism of the Cultural Revolution sweeping the country, Mr. Wan was forced to interrupt his studies by the authorities and sent, without reason, to labor as a railway worker in the countryside. He eventually graduated from Qinghua University and went on to a position with the National Academy of Natural Sciences.

Mr. Wan grew increasingly frustrated with the Communist system and began to look for ways to promote a free market in China. In 1984 he started Stone Corporation, which produces computer software and English- Chinese word processors. Starting out with a loan of 20,000 yuan, Stone Corporation grew rapidly and reached sales of 8 million yuan in 1989. The company presently employs 2,000 workers and has branches in Hong Kong, Australia, France, and California’s Silicon Valley. Stone is credited as being the largest privately owned business in China, which earned Wan Run-nan the title of “China% leading businessman.”

When the pro-democracy protests began in the spring of 1989, Mr. Wan provided material support for the demonstrators in Tiananmen Square and helped organize negotiations between the students and government. He became convinced that the Communists would crack down if the square wasn’t evacuated, but his warnings to the students went unheeded and the massacre soon followed. Mr. Wan decided to flee after the June 4 crack down and is now wanted by the Chinese authorities.

A month after the massacre Wan Runnan, along with prominent exiles such as Wuer Kaixi and Yan Jiaqui, met in Paris to call for the creation of the Federation for a Democratic China. At the FDC’s inaugural conference last September, Mr. Wan was appointed Secretary-General of the organization. He was the main force behind the FDC’s adoption of a resolution calling for a free market in China and has become the most vocal advocate for private enterprise.

On January 17, 1990, having just returned from a six-week trip abroad and a meeting with New York Congressman Stephen Solarz, Wan Runnan spoke with Paris-based journalist Daniel Pruzin at FDC headquarters in Paris. The Chinese-English translation was provided by Lan Dong, Secretary of Information for the FDC.

Q: I’d first like to ask what inspired you to start up Stone Corporation? Did you face many obstacles?

A: I would say that the main reason for starting up Stone Corporation was not to make money but to explore the ways and means of reforming China through free market means. And needless to say, there were a lot of initial obstacles from the government to overcome!

Q: What were the problems that needed reforming?

A: The main problem that came to my mind had to do with ownership. In China, the means of production are mostly state-owned. For example, in the countryside you have something called the self-contract responsibility system, in which land is owned by the state but individual farmers are responsible for how the land is used. They fill state quotas, but the farmers can choose what to grow and can keep what profits are made from the surplus.

The problem, though, is that the land is still state-owned. As long as private ownership is not established in China, it will be very hard to stimulate the economy and expand upon this initial development.

Q: Your involvement with Stone Corporation indicates that you lost faith in the Communist system. When did you become a believer in the free market?

A: To be flank, a long time ago. Before the Cultural Revolution I began to disbelieve in the Communist economic system.

Q: How did you first become involved with the pro-democracy movement?

A: Well, like many other common citizens I was initially just an observer who was sympathetic with the students’ demands. I was inspired by their bravery. I then decided to get involved by supplying the demonstrators at Tiananmen Square with food and drink.

Q: But why did you get involved? After all, you had a successful company and served as a role model for Deng Xiaoping’s modernization program. Why did you risk all of this?

A: To understand this you have to understand my background. As I said, the reason I started Stone Corporation wasn’t to make money but to explore the ways and means of reforming China politically and economically. I also established a research institute to study political and economic issues. My partner at this institute, Mr. Ceo Siyuan, used to work with the economic reform commission of the state. He was the first to propose China’s bankruptcy laws, the monitoring system, and the auditing system at the People’s Congress [China's representative body]. Unfortunately, this very prestigious scholar was arrested after the June 4 crackdown.

Then you have to look at the demonstrations last spring. During the Tiananmen movement, private businesses were among the most active supporters of the students. The students had a genuine trust in us; when they had problems or difficulties they came to us for help.

So as you can see, my involvement in private enterprise hasn’t been for personal gain but has always had political and economic purposes behind it.

Q: At one crucial point in the pro-democracy movement last spring you played a major role in arranging a secret meeting between the student demonstrators and then-Communist Party General Secretary Zhao Ziyang. This was just before the arrival of Mikhail Gorbachev for a state visit, and the government wanted the students out of Tiananmen Square to avoid public embarrassment. Why did the government turn to you to arrange the meeting?

A: As a matter of fact, the government didn’t ask me to arrange the meeting. I, along with others, took the initiative to arrange the meeting out of humanitarian concerns—we were afraid things were getting out of control and that violence would erupt.

I actually helped to arrange three secret meetings between the students and the government. The first one took place at the International Hotel, the second at Beijing Hotel, and the third at Stone Hotel.

I told the student leaders at the meeting that the square would have to be evacuated, and eventually they came to agree with me. But there was such confusion at the time! At the peak of the demonstrations there were students from about 75 different universities, which made it difficult to establish order. So even though the student leaders agreed with me to evacuate the square, they couldn’t control the demonstrators and couldn’t get them out of the square.

Q: It’s sadly ironic then that everybody agreed to evacuate the square in order to calm things down but couldn’t.

A: Yes, indeed. We had a slogan at that moment called “The Four Senses.” The slogan was: “Students back to school! Troops back to their barracks! Repeal martial law! Restore order!” This was our position at the time and not the government’s.

Q: Did you have a feeling that everything would end in tragedy, or did you still believe the pro-democracy movement would triumph?

A: I did believe that a tragedy would happen. I even told this to Mr. Wang Dan, one of the student leaders. I asked him to listen to me, to follow my advice, because I knew the Communists and was much, much more experienced in dealing with them. Unfortunately, he didn’t believe me.

Q: At what point did you feel that everything was lost? The student leader Shen Tong said in a recent interview that he knew it was all over by May 14, the day the students failed to evacuate the square before Gorbachev’s arrival.

A: I thought that tragedy was inevitable the day martial law was declared, on May 19. Before martial law, there was still a balance between the two forces struggling against each other. At this stage it was still possible for either power to overcome the other. The declaration of martial law signaled the decline in influence of General Secretary Zhao, who was still an advocate of a peaceful resolution. After that, those who advocated force gained the upper hand and the balance tipped in favor of the government.

Q: You were in Beijing when the June 4 massacre took place. What was your initial reaction?

A: My first reaction was simply, “It’s too tragic for China.” I was at my office at the time, waiting by the telephone for information. Staff members of my company who were at the square ran back and reported everything to me instantly.

Q: Did you decide to flee China at that point?

A: No, not as early as that. After the massacre I first made some day-to-day arrangements at Stone Corporation, then decided to get out of Beijing and stay in southern China for a while. I had already planned a business trip to Hong Kong to visit my company branch, and it was during my stay there that I decided to escape.

Q: You are currently wanted by the Beijing authorities. What are the official charges against you?

A: (laughing) Well, I think the official charges are something like “planner, organizer, and agitator of the counterrevolutionary movement.” But all we did was to support the students’ demands and call for an emergency session of the People’s Congress. We wanted the students to withdraw from Tiananmen Square, but Deng Xiaoping wanted to settle the problem with tanks and machine guns. We advocated the settlement of the issue within a legal framework, that is, an emergency session of the People’s Congress. We did nothing wrong!

Q: Let me turn to your involvement with the Federation for a Democratic China. You are recognized as the organization’s leading advocate for a free market. How widely supported is the notion of a free market among Chinese people? There seemed to be few demonstrators in Tiananmen Square calling for such an idea.

A: I’d like to start off by saying that the advocacies of a political organization such as the FDC should be different from the advocacies of the masses. For example, at Tiananmen Square the people knew only what they were against, not what they were for. A political organization, however, has to go beyond that, to advocate what should be built, what should be established.

As far as whether a free market is supported by most Chinese people, I think you should take a look at the enthusiasm within China for the self-contract responsibility system. The level of support for this system is a sure indication that many Chinese want a free market.

Q: Is it difficult promoting economic reform in an organization primarily concerned with a political goal, i.e, democracy?

A: At the inaugural conference of the FDC last September, support for the free market was written into the organization’s charter. It was written into the charter because a majority of our members voted in favor of it. It’s as much a goal of the FDC as democracy or respect for human rights.

Q: Let me pose a critical question. Some have complained that the FDC has failed to make an impact within China. It has also become apparent that rifts have developed between members, with some criticizing the student leadership in the FDC as being too immature. The FDC vice-president Wuer Kaixi decided to take a five-month leave because of complaints over his personal behavior. Has the FDC failed to live up to its potential?

A: Well, this sort of criticism signifies that people have very high expectations for the FDC, otherwise they wouldn’t criticize us like that. I agree that the students are young and that they are still learning, but I’d like to point out that they are learning. The students were very brave in Tiananmen Square, and they enjoyed admiration from around the world. They are symbolic of the Tiananmen Square movement.

I’d also like to point out that Mr. Wuer Kaixi is outstanding among the student leaders who are now political exiles. He’s been very cooperative and has worked very hard learning new things with our people.

Q: You recently returned from a six-week visit to the U.S, Japan, Australia, and Taiwan. What was the purpose of this trip?

A: I had two purposes for my visit to these countries. First of all I wanted to develop the overseas organizations related in some way to the FDC. The second purpose was to establish contacts between the FDC and the governments and people of these four nations. And I can go as far as to say that on both points my trip was very successful.

While I was in the U.S., I met a number of Congressmen, among them the leaders of both parties and the chairmen of the human rights committees in the House and the Senate. I also had the opportunity to visit San Francisco and Los Angeles to have discussions with overseas Chinese in both cities. I’m happy to say that I was given an enthusiastic reception.

Q: The Bush administration has maintained that positive gestures from the Chinese authorities would result from the Scowcroft mission [U.S. National Security Advisor Brent Scowcroft visited Beijing on a secret mission in December 1989] and would prove that the decision to resume contacts was right. In light of such moves as the lifting of martial law, the release of some 500 pro-democracy demonstrators from prison, and the toning down of anti-U.S, rhetoric, has the Bush administration been proved right?

A: I think that all of what has happened recently in Beijing was actually designed by the Chinese authorities to prove that the Bush administration was right, to justify Scowcroft’s visit to Beijing.

We have issued a number of statements saying that the lifting of martial law is false. It% only in name, not in substance. We have ample evidence to indicate that the army simply changed their uniforms with the government police, and that the government police have become plain-clothes agents. Nothing has really changed.

The machinery of crackdown continues to exist. The persecution of pro-democracy demonstrators goes unabated. There are still secret trials, executions, and the continued claim by the government that the June 4 movement was nothing more than an “anti-revolutionary rebellion.” To the wise observer, it is clear that nothing has changed.

I believed that some of the pro-democracy demonstrators would be released. But what the Western democracies can’t understand is that in order to appear better in the public eye the Communist regime will do almost anything. They’ll build fake towns, they’ll dress up a prison. I’ll give you an example at how skillful they are at making false appearances. When President Nixon first visited Beijing he was invited to visit a store called the Dung Dang Grocery Market. The store was filled with happy customers, each carrying a chicken. A few reporters, however, noticed that the customers weren’t paying for their goods. They followed the customers out the front door and saw that they were sneaking around and reentering the store through a back door. There they quietly rejoined the crowd of customers, chicken in hand. The “customers” turned out to be store employees dressed up for the occasion.

There’s also the time when President Nixon was visiting the Great Wall. Upon arrival he “spontaneously” met a group of colorfully dressed young people playing cards, dancing, and so forth. They approached Mr. Nixon and treated him with great respect. But one of the reporters who came along was suspicious. After Nixon left, he stayed behind and watched as the group took off their colorful clothes, lined up, and marched away.

And now the Communist authorities are playing another game with the Bush administration. It’s tragic that the Bush administration is not aware of this.

The crux of the problem is not the partial release of those arrested. The problem is, will they release all the political prisoners, and will they re-evaluate the 1989 democratic movement? Will they try to put the butchers of Tiananmen Square on trial? That’s the problem.

Q: Are you frustrated with the Bush administration’s attitude toward the pro-democracy movement or do you feel your long-term interests are being looked after?

A: As an independent organization we must rely upon ourselves, on our own initiative, on our own strength. We cannot rely upon anyone else. The Bush administration has its own practical con-ceres. In a sense, we are prepared for this. Since we are prepared to rely upon ourselves, there’s no point in feeling frustrated. We don’t feel any sense of betrayal.

Q: I’d like to ask you about Chinese economic affairs. At this time China is undergoing its most serious economic crisis since the reforms of Deng Xiaoping were introduced in the early 1980s. Beijing authorities recently introduced an austerity plan which, among other things, prescribed controlled prices, strengthened state enterprises, and increased taxes on businesses. Is this austerity plan the answer to China’s ills?

A: Even before the June massacre, during March in fact, the Chinese authorities were drawing up plans for austerity. At that time I expressed the opinion that the austerity policy was wrong for the Chinese economy. Not that the Chinese economy wasn’t ill; i just thought that the medicine they wanted to use was wrong. It’s not going to solve China’s problems.

Q: It’s been reported that a government crackdown on private businesses coupled with austerity has already forced 2.2 million of China’s 14.5 million private enterprises to close. Is this true?

A: Yes.

Q: Has Stone Corporation been affected?

A: So far Stone Corporation has not been closed. That’s because Stone doesn’t need investment from the state. On the contrary, we can still provide income for the government, so for this reason we haven’t been closed.

Q: Are you still in charge of Stone Corporation?

A: Personally I’d like to believe that I’m the boss, but at the moment it’s hard to say. Because I’m wanted by the Chinese authorities, I can’t come back to manage the company. I believe though that someday I’ll come back to China.

Q: According to the government the reason for the crackdown against private businesses is that many of them have been evading taxes, smuggling, and profiteering.

A: It’s natural for such phenomena to occur in an economy that’s not well-developed legally. That’s understandable. For China especially it’s natural to have some cheating going on when for the last 10 years we’ve been switching from an old economy to an emerging one. In China, however, the fundamental reason for such phenomena emerging is because there% no rule of law but the rule of power. Therefore, we shouldn’t think only about invigorating the economy but also think about the demarcation of ownership, the development of rules for the market, and the rule of law instead of the rule of power.

Q: Could the austerity program provoke unrest?

A: Yes, without a doubt. About 40 million Chinese peasants are in the cities as migrant workers, and if the authorities succeed in implementing their program these peasants will be out of work. This would have a great impact on Chinese society.

Q: How far will the austerity program set back China’s modernization?

A: It’s hard to say. The problem is that the struggle is still going on between those who support austerity and those who support a continued opening of the market and reform. Although the central government wants to force the austerity measures on the rest of the country, there’s a great deal of resistance from the provinces. In fact, the provinces have already succeeded by a large degree in overcoming Beijing’s austerity plan.

One indication of how the struggle is going between the two camps is that the governor of the state planning commission, Yao Yilin, has left his post and been replaced by Zhu Jiahua. Although Zhu Jiahua is a supporter of the austerity policy, he is not as conservative as Yao Yilin.

Q: On one hand the Beijing authorities seem to be reverting to orthodox Communism, as political repression increases along with state planning of the economy. On the other hand, the authorities call for a continuation of economic reform and increased economic ties with the outside world. They have even said they want China’s special co-nomic zones in the south to keep such privileges as lower taxes and reduced restraints on businesses. What do you make of these mixed signals?

A: My impression is that they have disordered themselves badly while giving only lip service to reform.

Let me give you an example. An American banker recently asked Yao Yilin what exactly he wanted to reform since he came out in favor of continued economic reform. Yao Yilin didn’t know what to answer. An assistant of his whispered to him that the pricing system should be reformed. Suddenly Yao Yilin jumped up and shouted, “Yes, I will reform the pricing system!”

It’s this sort of lip service which makes people believe that the government is insincere.

Q: As a businessman, would you advise foreign companies to invest in China at this time?

A: No. My advice for businessmen is this: Under political and economic uncertainties the investment environment should be dubbed as unfavorable. Thus, no investment should be made.

Q: What about economic sanctions? President Bush has lifted some of the sanctions he imposed after the Tiananmen massacre, which Prime Minister Li Peng admitted had hurt the Chinese economy.

A: Of course I’m for continued economic sanctions because any difficulty that can be created for the current regime is a favor to China’s democratic movement.

Q: But isn’t it true that ultimately economic sanctions fail?

A: It’s true that the usefulness of economic sanctions is limited, and I agree that in the long term they will fail. But before they fail sanctions do some damage. Li Peng himself has felt the proof.

Q: Do you feel that free market reforms are still possible under the present regime, that they can return to the “good old days” of economic growth under Deng?

A: It will be very difficult. The reason is that the people have lost confidence in the present regime. Take me, for example. I used to believe that it would be possible to have economic reforms within the framework of the present political system. Needless to say, I don’t believe this anymore.

The events in Eastern Europe have also frightened these leaders, especially the old-timers. They’re going to be more cautious and more conservative.

Q: Chinese authorities have also switched to a hard line in respect to their relations with Hong Kong, which will be turned over to the Communists in 1997. Do you think the economic prosperity of Hong Kong as well as China could collapse under the present regime’s hard line?

A: Definitely Hong Kong’s future is very much in danger. You might even say that today’s Beijing will be tomorrow’s Hong Kong. The best chance for Hong Kong is that the democratic movement succeeds before 1997. This is the fundamental solution to Hong Kong’s problem.

Q: Let’s turn to a future China under democratic rule. In order to achieve this, what has to be done? What priorities have you and the FDC set?

A: First of all, the press ban and the party ban should be lifted. After this the establishment of a multi-party system is our major goal. Only after this is achieved can we work on developing a free market with private ownership.

Q: Do you favor the total privatization of state enterprises?

A: Yes. However, it must be done step-by-step, especially in such areas as transportation and telecommunications.

Q: But isn’t it true that ultimately economic sanctions fail?

A: It’s true that the usefulness of economic sanctions is limited, and I agree that in the long term they will fail. But before they fail sanctions

Q: So you don’t favor a rapid abandonment of Communism?

A: No, that’s not what I mean. What I mean is that we should take into consideration what existed before. Too rapid a transition might cause social instability. The best way to transform Chinese society, therefore, is through a gradual step-by-step approach in which the minimal social costs are incurred.

Q: I’d like to ask you about the attitude of the average Chinese person toward entrepreneurs and the free market. A New York Times correspondent in Beijing recently wrote that “most Chinese are reluctant to forsake their jobs and plunge into business, with its economic and political risks.” Thus many of China’s entrepreneurs are “social outcasts” who are unable to find work elsewhere.

A: Well, this describes one aspect of Chinese society. Taking society as a whole, however, this is obviously one-sided.

It’s true that some people don’t want to take the personal risks and that they feel more secure within the present system, a system where everyone is eating from the big bowl of the state. However, you have to realize that two sides of the Chinese personality exist. There’s a sense of security with the present system but there’s also an awareness that prosperity is missing. These two wants cannot be both satisfied; one cannot have the security the state provides with a better standard of living. So what you have on the one hand are people who want to keep the security of the big bowl provided by the state but on the other hand these same people are cursing the big bowl because there’s less rice in it!

I also don’t think it’s true that private businessmen are mostly social outcasts. Take me for example; I don’t consider myself a social outcast! And there are a lot of people similar to me—people from the National Academy of Natural Sciences, returning students from overseas, and many peasants—all who have become successful businessmen.

Q: Won’t you have some difficulties establishing a free market in the countryside, where egalitarianism has been backed up with generous policies from the Communist government?

A: I don’t think that is true. The rural areas of China are the most deprived areas in the country. It’s here that you will find the most dissatisfaction with Communist rule.

Q: What is China’s economic potential? Could a democratic, free market China rival the U.S. or Japan one day?

A: Yes, certainly. Some people are already saying that the 21st century will be China’s century. However, this will become a reality only if a democratic system is established in mainland China and good relations are developed between the two sides of Taiwan Strait. It’s also dependent on properly settling the Hong Kong issue.

Look at Taiwan, for example. Taiwan is only a very small island, yet look at their economic strength, look at what they are capable of doing! Why can’t a united China be even better?

Q: A final question. Recent events would seem to indicate that a democratic China is a distant goal. Beijing continues to hunt down and execute those involved with the pro-democracy movement while restrictions against the press and public demonstrations are strengthened. At the same time, recent events in Eastern Europe, especially Rumania—close ally of Beijing under Ceausescu—show that anything is possible. Is a democratic government a long-term objective, or are you optimistic that Communism’s days in China are numbered?

A: Personally, I think that democracy in China isn’t far away on the horizon. And I hope that it can be achieved by peaceful means.

There’s plenty to suggest that a democratic China is not a distant objective. For example, practical businessmen like me are involved in the democratic movement. As practical businessmen and entrepreneurs looking for a good investment, this in itself signifies that it’s possible!

1.   From an interview with Short Tong, The Face, December 1989.

2.   Wan Dan was arrested by the authorities after the crackdown.

3.   “Exiled Chinese Students Face Uncertainty and Guilt in the U.S.,” International Herald Tribune, December 27,1989.

4.   “China Shuts or Limits Millions of Enterprises,” International Herald Tribune, August 12,1989.

5.   Ibid.

6.   “Austerity Plan a Blow to China’s Booming Coast,” International Herald Tribune, December 26,1989.

7.   “China Defends Austerity Campaign,” International Herald Tribune, November 20,1989.

8.   “Entrepreneurs, the Wealthy Outcasts of Beijing,” International Herald Tribune, November 17,1989.