By Liang Guosheng
In his excellent summary article, "Chinese workers challenge 'market Stalinism'" (GLW, August 10) Phil Clarke writes that the "general economic model promoted by Deng Xiaoping's regime is 'market Stalinism' — market reforms plus an increasingly authoritarian police regime with the Communist Party trying to stamp out all dissident activity". Clarke also notes, "More than two thirds of all Chinese still work in state-owned industries, giving the lie to claims by many ex-Maoists that capitalism has already been restored. Nonetheless, China's leaders aim to subordinate the state sector to the 'laws of the market' by making them compete against deregulated private firms ... The structure of employment will change dramatically as the 'iron rice bowl' [the cradle to grave state welfare system for workers] is gradually broken."
However, Clarke's "nonetheless" has major implications which need further explanation and discussion. What is the current situation and outlook for China's urban workers in the 1990s?
At the end of the late 1970s, state-owned enterprises were still the most privileged sector of the economy, their existence and functions assured in a totally state-run economy. A job in a state-owned enterprise was a guarantee of relatively higher wages, assured accommodation, free medical treatment for worker and family, relatively higher retirement benefits and, importantly, job security for life.
Currently, many managers complain that their state-owned enterprises are practically broke, unable to compete with the burgeoning non-state enterprises. It is important to view at least some of these claims with scepticism, since some managers whose enterprises are still in the black may exaggerate such claims with a view to ensuring continued state subsidies.
Others may exaggerate financial insolvency as an excuse to sell off the more productive components of enterprises to the "collective" or the private sector, in deals which favour their own personal or managerial grouping's interests.
But as Clarke notes, according to the State Statistical Bureau (SSB), 49.6% of all state firms made a "loss" last year, and with a state budget deficit running at $15 billion there is the potential for a huge number of bankruptcies as government further de-funds "less productive" state enterprises.
Double squeeze
Aside from reduced government subsidies, the state sector is feeling the squeeze from two sides. The bottom end of the market is now dominated by the "collectively" or privately owned firms.
The term "collective enterprise" is really a misnomer. "Collective" enterprises are often the result of state enterprise managers' cheaply hiving off the productive 91×ÔÅÄÂÛ̳ of their enterprises to their private sector friends in the name of short-term profits for the state enterprise. Thus, overnight, for example, former state car pools have been transformed into "collective" taxi companies.
Many of the state enterprise managers swing deals which leave them as major shareholders in such "collective" enterprises, while their own state enterprises are fleeced of important assets. "Collective" or purely privately owned firms, with their local farm labour and former communal funds, produce goods more cheaply and, of course, pay their workers far less — in China, there is no minimum wage.
Alternatively, the top end of the market is dominated by the foreign corporations, together with those state-owned enterprises that have been quick off the mark to form joint ventures. Workers in state-owned enterprises are under similar pressures.
Henry Cheung writes for a Hong Kong news weekly whose fundamental aim appears to be describing the realities of the situation in China for foreign investors, as well as for the many within the Chinese regime who like to read up on foreign ideas and initiatives on managing China's transitional economy and labour force. Cheung describes the general situation in terms any resident of China's cities would find familiar.
"There is a flood of unskilled but almost desperately hard working peasants in the urban job market. A visit to the railway station in any big city in China reveals just how many itinerant job-hunters there are, and that no state apparatus has enough power to stop these incoming 'human waves'. Rural workers demand little in welfare and many of them have no idea of job protection. They are quite content with the few bucks they can make in their off season and tend to drive down China's average price of labour.
"A short ride away from the 'lower order' at the railway station, you can spot the 'upper crust' dashing out of Beijing's World Trade Centre. These new Chinese professionals can afford pure wool business suits and some even own cars ...
"Between Beijing's railway station and the World Trade Centre lies part of the Eternal Peace Boulevard where thousands of others, who belong in neither place, pass them by every working day.
"They have been pedalling the same old black bicycles for the last 20 years. They could never have dreamed what it would be like working in those air-conditioned high-rise office buildings or how life would be if they had also bid farewell to their families and, carrying a blanket and a toothbrush, trekked up and down the Yangtze River looking for odd jobs.
"These are your typical state-sector workers. Despite all the problems currently plaguing China's system of state-owned enterprises, these workers have spent the best part of their working life building the country's industrial infrastructure. In China's most difficult time, it was they who contributed most of its state revenue ... Workers in Shanghai manufacturing firms are already singing songs about how they were the 'treasure' of the 1950s and the 'rags' of the 1990s." (Henry Cheung in Window, May 13, 1994).
Contract labour
According to last year's figures from the SSB and Labour Ministry, China's pool of labour totals about 610 million people, 340 million of whom work on farms. Among the nation's 270 million wage earners, there are 150 million urban residents (including 110 million state sector employees), three million self-employed individuals (either urban or rural) and 120 million workers in rural enterprises.
With the permanent employment system being replaced gradually by contract labour, the state sector had hired 35 million contract workers by the end of last year.
Shanghai has been classified by the government as the next boom area, though in this heartland of industrial workers, the leadership has approached the market reform process with more caution than in the coastal Special Economic Zones such as Shenzhen.
Noted the Hong Kong newspaper Wenhui Daily on February 4: "In Shanghai, 120,000 workers have been forced to leave their posts in enterprises as a consequence of the present restructuring and must now live on their basic salary. This is between 50 per cent and one third of their previous income. Even though only 6 per cent have actually been dismissed, all are said to feel that they 'have been sacrificed to the development of society' and that they are no longer as important as the Party claims. Women, the handicapped and the sick have been the first targets of this reduction in personnel. Given the rise in medical fees, with their low income the latter two categories have become the poorest in the municipality."
In apparent contradiction to this trend, the percentage of total capital investment flowing from the state to the state-owned enterprises has actually been increasing since 1989, while that flowing to the collective and private sector has fallen off. It is likely that, while pushing all state enterprises to become financially independent of future state subsidies, the regime is intent on cushioning to some degree many of the largest state enterprises as they undergo the transition from a permanent, welfare-assured labour force to contract labour.
While it is patently obvious to most Chinese that capitalism has not yet been restored in China (much to the chagrin of the Hong Kong and other foreign investors who continue to rail at the remaining "communist" obstacles to this), just about every current sign indicates that the market and especially labour "reforms" will bring about the incremental, stop-start, measured introduction of capitalism within the People's Republic.
Corruption
As money madness has swept China during the last few years, the bureaucracy has in many cases led the charge in chasing short-term profits, both institutionally and as private individuals.
Chinese government institutions have in the past been notorious for intense struggles over the control of scarce resources, and this experience has more recently been transferred to competition within the short-term markets. Wherever possible (and there exist increasing opportunities), individual highly placed officials tend to turn their institution's financial affairs to their own advantage as a matter of course.
Government corruption is rife. "Even poor and inaccessible provinces are setting up economic zones to mimic those of coastal provinces. Beggar-my-neighbour policies — tariffs and import controls at provincial borders, tax breaks for local businesses — are becoming a way of life. Provincial governments hungry for new revenues are neglecting investment in infrastructure while they speculate in property and invest in light industries and service businesses that they hope will bring quick returns. ... Corruption is widespread and flagrant at the township, county and even provincial level ... Official newspapers are sometimes directed to rail against the 'big monkeys'; but China's senior officials have neither the will nor perhaps the means to go about purging their own." (Economist, June 4, 1994)
Granted, the party's promoted "market reforms" have to date been fast in some areas, slower in others, and the leadership has developed a habit of "crisis control" when it believes that "stability" is threatened (a pseudonym for matters slipping economically and therefore socially and politically out of its control).
It is certainly true that urban workers' struggles against the "reforms" are ongoing and increasing in militancy. Writes Cheung, "There were some 12,000 labour disputes reported in China last year, a jump of more than ninety per cent from 1992. Before this, the State Statistical Bureau had never officially revealed figures ... Disputes and collective actions such as strikes are also increasing in joint-venture enterprises, especially in the small factories funded by capital from Hong Kong or Taiwan in the coastal provinces. In Guangdong province last year, almost one out of every seven disputes took place in non-state sector companies ... China is still drafting its 'labour law' and 'social insurance law' and currently has few labour regulations."
According to (notoriously rubbery) SSB figures, many of the disputes resulted from management's arbitrary cancellation of labour contracts or compensation for injuries or health risks caused by hazardous work environments.
Warlordism?
Clarke concludes, "Unless the Chinese workers are able to forge a political alternative to challenge the ruling bureaucracy's rush to destroy the collectivised economy with its associated gains for the workers, a unified Chinese state could collapse into civil war between regional bureaucratic warlords".
While devolution of power from the centre has meant that some provincial governments, such as Guangdong, are now tending to thumb their noses at certain of Beijing's economic directives, it is unlikely that the "collapse into warlordism" theory, of late being promoted by many China watchers, is a real possibility, at least in the shorter term.
There is an element of millenarianism in such prophecies, which hark back to traditional Chinese beliefs that imperial dynasties, having lost the mandate of heaven, end with social disorder and chaos. This belief finds support and its currency is encouraged mainly within the ranks of pro-capitalist China watchers/journalists who yearn for the death of the Chinese Communist Party.
Alternatively, it could be argued that there always has been an element of "bureaucratic warlordism", particularly at the provincial level within China's Stalinist-Maoist system, and that the current economic and political climate during Deng's last term is simply more publicly exposing the guts of China's political system.
Perhaps a more likely scenario is the current and post-Deng regime's continued "stop-start" approach to what essentially, despite the leadership's slogans and rhetoric, appears to be the conscious reintroduction of capitalism.
Bureaucratic caution
A "stop-start" approach has been very much a feature of the Deng regime's political approach since 1978. "Guo he mo mo zhe shitou", Deng's metaphorical slogan on how to approach the economic reforms, literally means, "When wading across a river, feel carefully for the stones".
Thus the government has recently been experimenting with economic indicators such as inflation and unemployment "alarm levels", a little like red traffic lights, which if crossed would require economic (and political) crackdowns so that "social stability" is not threatened.
The regime has learned much from the lead-up to the 1989 democratisation movement, when, aside from mass concerns over issues such as flagrant political corruption at the top, there was widespread anger at the rapid erosion of wages as (unofficially) inflation hit around 30% in Beijing. This time round the regime is trying hard to convince urban workers especially that the most skilled layers, at least, will be cushioned during the transition involving market reforms.
Secondly, the regime operates on its own, always encoded, internal logic. The very nature of the transition means that there exist very real possibilities of things getting out of control. Despite various differences within the main bureaucratic factions at the top levels of the party and state, there is now no open questioning of the "logic" behind Deng's drive to enormously expand the market economy — and make the state sector subservient to market laws.
Premier Zhao Ziyang, who was ousted from political power before the Tiananmen Square massacre, was the first top leader to promote the notion that China was in the "primary stage of socialism". This in itself was a huge shift from Mao's concept that socialism could be constructed puritanically — through the subjective political efforts of the Chinese people alone, and in one country, "leaping stages" of socialist construction.
In the "spring" before the Tiananmen massacre, many Chinese, and even dignitaries such as Su Shaozhi (then head of the national Marxism-Leninism-Mao Zedong Thought Party School), developed and discussed anti-Stalinist-Maoist ideas about fundamental issues of socialism. The importance of this tendency towards democratic socialism is underlined by the refusal of many pro-capitalist China watchers even to acknowledge its existence.
Against this background Zhao Ziyang's theory that China was in a "primary stage of socialism" meant that at least some forms of capitalist production must be reintroduced in order to drag the economy from the chaos of the preceding Cultural Revolution years, let alone achieve a more advanced national economic base.
After Zhao Ziyang's fall, Deng Xiaoping introduced his own reinterpretation: "Socialism with Chinese characteristics", which was as theoretically "flexible" as it was nationalist in sentiment.
While Deng's supporters presently promote the newer slogan, "Market socialism with Chinese characteristics", bureaucratic oppositionists tend to extol the "four cardinal principles": Marxism-Leninism Mao Zedong Thought, the Socialist Road, the Dictatorship of the Proletariat, and the Leadership of the Communist Party.
In his twilight, Deng's supporters champion him as China's "Great Theorist", thus implying his contribution has been greater than Mao's, while bureaucratic opponents appeal to the "four cardinal principles", implicitly supporting the older order and thus criticising the Deng faction.
Within the topmost layers, those who oppose Deng are often those within the institutions whose prestige, power, access to resources and authority are slipping during the market reforms. At the provincial level, for example, the Planning Authority has been historically responsible for designing and implementing (in typical, top-down, Stalinist fashion) just about all aspects of the five-year plans, a job which has become increasingly more difficult within the context of the growing market economy. These officials see their authority being eroded.
Even at such levels, there appears to be little opposition to Deng's market reforms per se. Instead opposition is centred on reduced institutional access to resources and funds, and thus, of course, all the special privileges and opportunity for corruption that such access allows. There is often intense jealousy of other government departments' increased control of resources.
Looking backwards
Many workers marching in support of the students during April-May '89 carried pictures of Mao (some, dripping with ironic symbolism, upside down) as a way of criticising Deng. For many such workers, Mao symbolised — certainly a period of economic harshness and massive political blunders — but also a period when basic social equity prevailed amongst the majority of people.
In the country as well as the cities, the poorer the household, the more likely one is to find posters of Mao, Zhou Enlai and the other "great leaders" on the walls of the dilapidated rooms.
And with the resurgence of religion and superstition during recent years, many taxi and bus drivers have pictures of Mao dangling from their rear vision mirrors — sometimes as a symbolic political statement, but just as often expressive of the belief that a picture of Mao will help them avoid road accidents and other personal disasters.
Can the workers find the beginnings of a political alternative to the Deng regime's "market Stalinism"? While, undoubtedly, this possibility does exist, in the present situation it appears quite remote. Perhaps there are too many forces, historical and current, opposed to Chinese workers' finding and establishing such an alternative.
In a very fundamental way, the various factional leaderships of the Chinese Communist Party have succeeded in one thing — turning the majority of thinking Chinese workers and peasants away from any support for socialism.
"Socialism" is inextricably bound up with deeply held memories of the disasters involved in the Great Leap Forward of the 1960s, the Cultural Revolution of the '60s and the rule of the Gang of Four until the mid-'70s. For them, any alternative must be better. And it is for this reason that the vast majority of Chinese have been willing to put up with the regime's political/economic zigzags since 1978.
For many Chinese, "pure" socialism, which they regard as their experiences under Mao, means that everyone starves at least a little. Deng, on the other hand, has offered a chance for increasing numbers of Chinese to become richer, together with the illusion that, eventually, everyone can become rich. The result is that even those who know quite well that this is improbable still support the market reforms in the hope that they, or their children, will one day be counted amongst the luckier ones.
China has 4 million rural villages. It is probably true that the "Great Leap Forward" was a main factor in the early destruction of the peasantry's support of "Stalinism-Maoism". The following Cultural Revolution became the rich icing on the cake of disillusionment.
Deng has offered, and produced, inequality, which, in many peasants' view, is better than outright "ultraleft silliness" and starvation. According to John Burns of the University of Hong Kong, who has studied village organisation in China, villages have returned to the kinship politics that prevailed before the 1949 revolution.
Meanwhile the World Bank has estimated that there are 100-150 million displaced rural workers on the move in China, a huge and potentially volatile population.
Guanxi
It is difficult to convey to socialists outside of China how deeply rooted has become the system of corruption in China. At top, you have a party which substitutes guanxi (the system of personal relationships through which everything is done) in place of fundamental democratic discussion. Guanxi rules. Nothing is said, let alone anything acted upon, without primary reference to the effects upon or directions from one's benefactors in the all-pervasive guanxi networks.
At every step of life, the guanxi system comes into play. It is the classic scenario of "not what you know, but who you know", reproduced in an extreme way. Everyone knows the system. And this same system operates even more tightly at the lower levels of the party-state, amongst the more educated up-and-comings.
Within the system, only the talented, clever and/or cunning opportunists succeed. Unable to establish guanxi connections, the vast majority are left out in the cold — not questioning the basis of the system, but instead their own personal shortcomings.
Whether it is the Women's Federation, the People's Liberation Army or any other party-state organisation, corruption swings fundamental decisions. It may not be corruption in terms of money bribes (although this is on a huge increase), but instead access to certain privileges and/or access to resources for which the state picks up the bill.
While, railing at the CCP with massive hypocrisy, as though corruption were a unique product of "communism" with absolutely no connection to capitalism (Who? Us?), the Economist does manage to describe the type of corruption at the top that was the cause of such anger in the mass democratisation movement of 1989.
"So completely has the culture of money saturated the party that anything done in the name of wealth-creation, save for the crudest bribe taking, seems permissible. How, for example, to judge the minister who, ordered to hive off a state-owned conglomerate, simply quits his government job after naming himself head of the company?
"Few of the party's most senior members need to stoop to enriching themselves; they have families to do it. Entrepreneurs and bankers in China and Hong Kong will flock to bring foolproof deals to the son or daughter of a leader, hoping for favours in return. These 'princelings' may be the children of provincial grandees, or central committee members, or even of Deng Xiaoping himself: the interests of one of Mr Deng's sons, Zhifang, include a private property company in Hong Kong that does business with mainland companies listed on the colony's stock exchange. Big money from China, some of it hot and some of it not, is conspicuous in Hong Kong's property and share markets. ... Often, the money is channelled back into China as the 'foreign investment' component of a joint-venture project; this wins the tax and foreign-exchange privileges granted to such projects. In theory, this money may still belong to such-and-such a Chinese organisation; but in practice much of it has passed into the control of individuals who cannot be held to account."
This is not to say that here are no decent, hard-working "socialists" within the bureaucracy/party/state. There certainly are. On the ground, one comes across many. However, given the overall system, they simply have no chance.
At the middle to higher level especially, all recognise that they would not have got to their present positions without their guanxi networks, for which all have guanxi debts to pay.
Fundamentally, all are driven by a "Stalinist-Maoist" system into a "market-Stalinist" system over which they have no control. Like many people living and working under such conditions, they will look to their families and their friends first, especially in times of political and economic troubles, because this is how they and their peers have managed to survive.
The intelligentsia is a very short story. During the 1980s, despite the various "anti-spiritual pollution" and "anti-bourgeois liberalisation" campaigns, the early economic reforms promoted by Deng also established a political space for the expression of alternative political ideas.
These ideas, (or the very concept of freely expressing alternative ideas) reached a height in the build-up to the Tiananmen Square movement of 1989, the underlying thread running through which was not the desire for capitalism but the desire for democratisation and accountability of the party and state cadres, especially at the highest levels.
Since '89 the intelligentsia too has learnt its lesson. With few exceptions, intellectuals appear to have buckled under to the prevailing orthodoxies and remain a quiescent, unremarkable grouping in society.
Over a period of decades, one can't keep witnessing the crushing of democratisation movements, and especially the imprisonment of anti-rightists (whom the party leaders have historically feared far more than pro-capitalist elements), and still expect that the vast majority of people will think the same political system is fundamentally reformable. China might well prove once again the notion that it is impossible for workers to build a socialist consciousness within a Stalinist society.
If future trouble does once more break out for the regime, the party leadership knows it has a staunch ally in the often ultraconservative leadership of the PLA. Even though the regime has increased the PLA's budget by one quarter this year, many PLA units continue to take advantage of the market reforms by establishing thousands of sideline businesses, within which opportunities for official corruption, again, are rife.
At their topmost levels, the party and the PLA remain inseparable, and the post-June '89 disciplining of probably thousands of middle and lower level officers by the PLA leadership was a stern warning to those in uniform who baulked at the massacre and its consequences.
Perhaps it may be possible for urban Chinese workers to rebuild a socialist consciousness within the developing system of "market Stalinism", or "market socialism with Chinese characteristics". However, perhaps the likely future in post-Deng China will be characterised by "capitalism with Chinese characteristics", with future political challenges coming not from the left, but from the right.
Ultimately the real test will lie with China's urban workers. But they have a very hard road. On the other hand, history shows that Chinese workers have always had a hard road. Certainly the regime continues to regard the potential power of urban workers with a mixture of nervousness, fear and loathing, for history shows that when China's workers do organise, they are capable of achieving gains of which the workers of many other countries can as yet still only dream.