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Winners and losers in China’s boom

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China is playing an increasingly important role on the world stage. John Gittings gives his view on the country’s economic growth and its impact on Chinese society
Issue 1934
John Gittings
John Gittings

QUESTIONS ABOUT China’s future have begun to multiply after a long period when—bizarrely for a country of such size and importance—it had drifted off the map of global concern. On the one hand China’s role in the dominant international economic structures has become more visible especially following its entry into the World Trade Organisation (WTO).

China now consumes steel, coal, oil and other primary products on a scale which dictates prices on those markets while, after years of obtaining a mammoth share of global foreign investment, it is beginning to export its own capital on a significant scale.

The economic boom promoted by the late Chinese leader Deng Xiaoping to divert his people from the trauma of the Tiananmen Square massacre has entered its second decade and, however unevenly its material benefits have been distributed, it shows no sign of slackening.

As Mao Zedong forecast 60 years ago, the comparative advantage offered by cheap Chinese labour has become irresistible to Western capitalism and because of its greater scale can easily outbid alternative sources of such labour elsewhere in Asia.

On the other hand even those who champion the Chinese “economic miracle” most loudly have to acknowledge that it has been achieved at a heavy price for social equity. The gap between rich and poor, town and country, entrepreneur and workers is widening with alarming speed.

The previous Chinese premier, Zhu Rongji, made regular references to the “Gini Coefficient” which measures that gap—and is higher in China than in any other major developing economy—in his last three years (2000-02) in office. His successor, Wen Jiabao, has identified tackling rural poverty as a top priority.

Two recent health scandals—the spread of HIV/AIDS through contaminated blood collection in Henan province, and the SARS crisis which only by good fortune did not become a national epidemic—have focused attention on the collapse of rural medical health since the collective era.

The Chinese media has more latitude now in covering widespread abuses such as punitive rural taxation, under-payment of wages to peasant migrants, mine disasters and other industrial accidents. The most sensitive issues such as protests by laid-off urban workers are still out of bounds.

An affluent elite has emerged whose wealth derives mainly from asset-stripping of state industry and property in urban China, or, in the rural areas, from speculative dealing in what is still in theory collectively-owned land.

Whether it is the rural township cadre who use hoodlums in police uniform to enforce the collection of illegal taxes, or the urban entrepreneur who builds luxury housing on land from which municipal tenants have been cleared with inadequate compensation, corruption plays an essential part in ensuring the conversion of public to private wealth.

These stark contrasts in contemporary Chinese society have led some to the conclusion that before too long a classic Maoist contradiction is going to be resolved in a classic Maoist way. Once again “the countryside will surround the town” and the peasant masses, in alliance with an army of alienated workers, will overthrow the “new power-holders” who have usurped the people’s mandate.

It is a tempting but, in my view, mistaken analogy with a past where for the vast majority there was “no way out” other than revolution.

In spite of today’s extremes of wealth and poverty, the picture today is much more blurred and is constantly changing. Vastly improved transport communications and increased social mobility mean that, except in the most remote areas, there are no “independent kingdoms” of the kind which provided sanctuary both for warlords and for revolutionaries in the last century.

Nor can the gap between rich and poor be equated so easily as before with the divide between the eastern coastal provinces and those of the interior. Wealth differences have spread in ink-blot fashion throughout the country, with inland cities beginning to replicate on a smaller scale the lifestyle of Shanghai and other coastal cities.

The climate of entrepreneurship (which, it is taken for granted, must depend on having the right “connections” with the Communist Party to prosper) is now widely diffused and those who benefit from it, even in the smallest town, are relatively numerous.

This is not to minimise the extent of rural poverty, but the question is whether these alienated forces are likely to reach a critical mass capable of organising themselves effectively. To a large extent this depends on the skill of the ruling Communist Party in defusing protest by a combination of appeasement and repression. Protest is now so frequent—partly because it can often gain results—that many Chinese barely give it a glance when they encounter it in the street.

Regrettably the most intractable cases are often located among marginalised communities too remote or weak to make their voice heard effectively.

If there is a prospect of more radical protest against the government, then it is most likely to come from the armies of laid-off workers whose despair is so well documented by the China Labour Bulletin.

Unrest is particularly pronounced in the rust-belt of the north-east and in the industries which were relocated inland in the 1960s and 1970s.

But here too the central government may take sufficient remedial measures to head off action by groups which are already demoralised and ageing. There has been some success with job creation schemes in more prosperous parts of the country.

Chinese society is evolving at a rapid pace and new issues are constantly emerging. Though China officially claims that there are still 900 million “peasants”, a third of this number have become urbanised and at least another 100 million are semi-permanent migrant workers. To some extent migrant labour is performing the role once played by military service when ex-army conscripts returned to the villages with new skills and ambitions. Working conditions vary widely from the worst kind of sweatshop to factory complexes with clinics, schools and entertainment.

In the poorer rural areas, a recent survey by the Chinese Academy of Social Sciences shows that the focus of peasant activism has shifted from tax disputes to property rights, as local governments, who can no longer levy such high taxes, seek to compensate by lucrative land sales. Thus, over 20 years after the People’s Communes were dissolved, the key neglected issue of who owns the land, which remains nominally in collective ownership, is at last being confronted.

Progress towards democracy and towards freedom of press are the standard Western yardsticks to judge how China is developing politically. It is certainly true that there is a huge imbalance between (to use terms no longer used in China) the rapid development of the economic base and that of the political superstructure.

We owe it to the students and Beijing citizens who were suppressed in 1989, and to a succession of jailed and persecuted advocates of democracy since then—notably those who attempted to set up the China Democracy Party in 1998—not to belittle its importance. Many ordinary Chinese lament the absence of a multi-party system although many also accept the government’s argument that “social stability” comes first.

However, while the repressive apparatus of the state continues to jail dissidents, ban publications and block websites, the parameters of argument also continue to widen. There has been a wide-ranging debate at the academic level since the mid-1990s on China’s future (summarised for English readers by Chaohua Wang in One China Many Paths, Verso, 2004).

The advance is often two steps forward and one step back—currently the Communist Party’s propaganda machine is inveighing against the concept of “public intellectuals” (those who believe they are entitled to criticise government and speak up for the masses) but a simple crackdown on intellectual autonomy is no longer feasible.

The more outspoken sections of the Chinese media continue to muck-rake and expose in spite of periodic purges, airing such sensitive issues as discrimination against migrant workers, mishandling of toxic waste, culpable negligence in industrial disasters, and even questioning the use of the death penalty.

As a China specialist who—like nearly all my colleagues—failed to anticipate either the Cultural Revolution, or the abolition of the People’s Communes, or the 1989 democracy movement (although I did forecast, incorrectly, that the Communist Party would collapse after Tiananmen Square) I must be wary of prediction.

However, I believe that capitalism in China is raw and often ugly but, like capitalism elsewhere, has enormous staying power, and that it will continue to evolve. The main threats which China now faces are those shared with the world to which it now belongs. A collapse of the global market would throw out of work the bulk of the migrant labour force and increase levels of urban unemployment which are already critically high.

Global warming will exacerbate shortages of water and the effects of deforestation on the Chinese environment which is already under heavy strain. And those problems are quite serious enough.

China since the second world war

A peasant army led by Mao Zedong’s Communist Party of China drives out the dictator Chiang Kai-shek and the Western powers that had dominated China for a century.

Mao and his allies launch the Great Leap Forward—a massively accelerated programme of industrialisation. Peasants are forced into huge collective farms known as “People’s Communes”. By 1960 the programme falters and famine kills millions.

In another attempt to overcome Chinese economic backwardness and to shore up his position in the Communist Party leadership, Mao launches the Cultural Revolution. The movement threatens to go beyond the limits set for it by Mao and is brought to an end with massive repression.

Mao dies and Deng Xiaoping eventually emerges as the real leader of China. He initiates economic policies aimed at opening China up to the world economy. As part of this process the People’s Communes are dissolved in the 1980s and a huge programme of privatisation begins.

Driven by the growing gap between rich and poor, and opposition to state repression, pro-democracy students assemble in Tiananmen Square, Beijing. They win support from workers around the country. The government responds with massive repression murdering thousands.

John Gittings was The Guardian’s China correspondent for many years. His book The Changing Face of China will be published this year by Oxford University Press


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