《images ‧ China 》

China Unrest Tied To Labor Program

noreply@blogger.com (Unknown) — Thu, 16 Jul 2009 02:24:00 +0000

Uighurs Sent to Work in Other Regions
Ariana Eunjung Cha
Washington Post Foreign Service
July 15, 2009
(http://www.washingtonpost.com/wp-dyn/content/article/2009/07/14/AR2009071403321.html)

URUMQI, China -- When the local government began recruiting young Muslim Uighurs in this far western region for jobs at the Xuri Toy Factory in the country's booming coastal region, the response was mixed.

Some, lured by the eye-popping salaries and benefits, eagerly signed up.

But others, like Safyden's 21-year-old sister, were wary. She was uneasy, relatives said, about being so far from her family and living in a Han Chinese-dominated environment so culturally, religiously and physically different from what she was accustomed to. It wasn't until a local official threatened to fine her family 2,000 yuan, or about $300, if she didn't go that she reluctantly packed her bags this spring for a job at the factory in Shaoguan, 2,000 miles away in the heart of China's southern manufacturing belt.

The origins of last week's ethnically charged riots in Urumqi, the capital of China's Xinjiang region, can be traced to a labor export program that led to the sudden integration of the Xuri Toy Factory and other companies in cities throughout China.

Uighur protesters who marched into Urumqi's main bazaar on July 5 were demanding a full investigation into a brawl at the toy factory between Han and Uighur workers that left two Uighurs dead. The protest, for reasons that still aren't clear, spun out of control. Through the night, Uighur demonstrators clashed with police and Han Chinese bystanders, leaving 184 people dead and more than 1,680 injured in one of the bloodiest clashes in the country's modern history. Two Uighurs were shot dead by police Monday, and tensions remain palpable.

"I really worry about her very much," Safyden, 29, said of his sister, whom he did not want named because he fears for her safety. "The government should send them back. What if new conflicts happen between Uighurs and Han? The Uighurs will be beaten to death."

Both Han Chinese, who make up more than 90 percent of the country's population and dominate China's politics and economy, and Uighurs, a Turkic-speaking minority living primarily in China's far west, say anger has been simmering for decades.

By moving Uighur workers to factories outside Xinjiang and placing Han-run factories in Xinjiang, Chinese officials say, authorities are trying to elevate the economic status of Uighurs, whose wages have lagged behind the national average. But some Han Chinese have come to resent these policies, which they call favoritism, and some Uighurs complain that the assimilation efforts go too far. Uighurs say that their language is being phased out of schools, that in some circumstances they cannot sport beards, wear head scarves or fast asdictated by Islamic tradition, and that they are discriminated against for private and government jobs.

Xinjiang's labor export program, which began in 2002 and has since sent tens of thousands of Uighurs from poor villages to wealthier cities, was supposed to bring the two groups together so they could better interact with and understand each other. The Uighur workers are lured with salaries two or three times what they could earn in their home townspicking cotton, as well as benefits such as training on manufacturingequipment, Mandarin language classes and free medical checkups.

Several Uighur workers said that they have prospered under the programand that they were treated well by their Han bosses and co-workers.Others, however, alleged that the program had become coercive.

In the villages around the city of Kashgar, where many of the workers from the Xuri factory originated, residents said each family was forced to send at least one child to the program -- or pay a hefty fine.

"Since people are poor in my home town, they cannot afford such big money. So they have to send their children out," said Merzada, a 20-year-old who just graduated from high school and who, like all the Uighurs interviewed, spoke on the condition that a surname not be used.

A Uighur man named Yasn said his family had no choice but to send hissister, who had just graduated from middle school, to the eastern city of Qingdao to work in a sock factory last year because they could not afford the fine: "She cried at home every day until she left. She is a girl -- according to our religion and culture, girls don't go to such distant places. If we had it our way, we would like to marry her to someone or let her go to school somewhere to escape it," he said.

The Han Chinese owner of a textile factory in Hebei province that hasbeen hiring Uighur workers from the program since 2007 said that in the first year the company participated, 143 female workers came to thecompany. Liu Guolin said he was surprised to see that they were accompanied by a bilingual police official from their home town who oversaw the details of their daily life.

"Without the policeman, I assume they would have run away from the very beginning. I did not realize that until the local officials revealed to me later. Only by then did I learn most of those girls did not come voluntarily," Liu said.

He said the security officer did not allow them to pray or wear head scarves in the factory workshops. He later learned that some of the girls were as young as 14 and that their ID cards had been forged by the local government.

Bi Wenqing, deputy head of the Shufu county office that oversees theXinjiang labor export program, denied that any participants had been coerced or threatened with fines. However, he said that although theUighur workers at the factories have the freedom to worship, the practice is not encouraged.

"We have been trying hard to educate them into disbelieving religion. The more they are addicted to religion, the more backwards they will be. And those separatists try to leverage religion to guide these innocent young Uighurs into evil ways," Bi said.

The Xuri Toy Factory -- which makes electronic toys and travel bags -- once seemed a model for the export program.

In May, 818 Uighurs from Xinjiang joined the 18,000-person workforce. Although the newcomers had limited Mandarin skills, the Uighurs and Han Chinese workers bonded over nightly dances that seemed to transcend lingual, cultural and religious barriers.

But the atmosphere started to become tense last month when a rumor spread about a rape at the toy factory. An anonymous message, posted on the Internet in June, stated that six Uighurs assaulted two Han female co-workers. No one seemed to know exactly who the alleged victims were, employees said, and police later said the story was made up by a disgruntled former worker. But suspicions festered.

When Huang Cuilian, a 19-year-old trainee who is Han, walked into the wrong dormitory and ran into two Uighur men on the night of June 25, she screamed, and a melee ensued. When other workers heard the commotion, a brawl broke out between the Han and Uighur workers. In the end, 120 were injured, and two Uighurs later died.

Information about the fight spread via the Internet and cellphones to the Uighurs' home towns in Xinjiang, and there were calls for other Uighurs to take action.

In the aftermath of the fighting, both Han Chinese and Uighur workers at the factory say they are afraid of each other.

Tursun, a 20-year-old Uighur man from Kashgar, said he had been lying inbed in the dormitory when "suddenly a bunch of Han Chinese broke into mydorm and beat me."

Liu Yanhong, a 23-year-old Han Chinese who works in the assemblydepartment, said: "I still don't know if I can work together with them, after that thing happened. If they really come back, I will quit my job and go home."

Two days after the deadly riots in Urumqi, officials at the Xuri Toy Factory announced that they had come up with a solution to the ethnictensions: segregation.

The company opened a factory exclusively for Uighur workers in an industrial park miles from its main campus. They have separate workshops, cafeterias and dorms.

A Uighur employee named Amyna, 24, said the working conditions at thenew factory are "not very good" and the living conditions also are "not very good." But at least, she said, "the Uighurs are living together and don't mingle with Han Chinese."

Researchers Wang Juan and Liu Liu contributed to this report.

Uighur mosques open, defying Chinese authorities

noreply@blogger.com (Unknown) — Mon, 13 Jul 2009 16:52:00 +0000

Gillian Wong, William Foreman
The Associated Press
July 10, 2009

photo: Muslim worshipers overflow from a mosque out in to the street during noon prayers in Kashgar, China, Friday, July 10, 2009.

URUMQI, China – Boisterous crowds turned up at mosques in riot-hit parts of this western Chinese city, ignoring orders cancelling Friday prayers due to the ethnic violence, and police quickly broke up a small protest nearby.

Nearly a week after riots in Xinjiang unleashed clashes and drew a massive security response, the U.S. national security adviser told Chinese diplomats on the sidelines of the G-8 summit in Italy that President Barack Obama expects Beijing to act with "appropriate restraint."

On Friday, about 100 men argued with guards, demanding they be let in for prayers at the White Mosque – near the Muslim Uighur neighbourhood that saw some of the worst violence after angry protests Sunday spiraled into a riot that left at least 156 dead, many of them from China's Han majority.

A Uighur policeman guarding the mosque, who would not give his name, said: "We decided to open the mosque because so many people had gathered. We did not want an incident."

Nearby, on Liberation Road, a group of about 40 Uighur men and women began to march, shouting, crying and pumping their fists in the air as they walked.

Madina Ahtam, a woman in a multicolored headscarf, begged foreign reporters to stay with them as they walked.

"Every Uighur people are afraid," she said in English. "Do you understand? We are afraid. ... The problem? Police."

A group of 10 police in bulletproof vests and helmets and armed with batons and stun guns blocked their march within minutes. Shortly after, several dozen more police surrounded the group and forced them to squat on the sidewalk. Police pushed journalists away from the area and detained at least four foreign journalists, holding them for several hours.

Kaishar, a 23-year-old car salesman, said his heart hurt when he first saw that the gates to the mosque were closed.

"There was no reason to shut the gate. They said it was for our safety but actually there is no need; nothing will happen here," said Kaishar, with a red prayer mat folded under his arm.

It was not known how many of the mosques across the city of 2.3 million people were opened.

A few blocks from the White Mosque, at the Yang Hang mosque, hundreds of men streamed in clutching green, red and blue prayer mats. A white notice that had been glued to the front gate cancelling the day's service was gone.

An mosque official, who refused to give her name, had said earlier the closure was ordered for public safety reasons after the widespread ethnic violence between Uighurs and Han Chinese. She didn't elaborate.

The government has imposed curfews and flooded the streets with security forces to avoid a repeat of the running street battles earlier in the week.

In L'Aquila, Italy, Gen. James Jones, the U.S. national security adviser, urged two Chinese diplomats "to ensure that government forces act with appropriate restraint," according to a senior Obama administration official, who described the meeting to to reporters on background.

Officials in the city of Kashgar, an historic Uighur cultural and commercial centre near Xinjiang's border with Pakistan, declared the city off-limits to reporters in all but name. Foreign reporters were not allowed to leave their hotels, except to travel to the airport. An Associated Press photographer was detained repeatedly and escorted to the airport. The effect was to make it impossible for reporters to work.

"There are no conditions for interviews in Kashgar, so we hope the foreign reporters will leave for their own safety," said Chen Li, a media officer with the city government.

In Urumqi, officials gave conflicting information about the closing of mosques. The secretary-general of the Urumqi Islamic Association, who would give only his surname Ma, denied there had been any shutdown order and said some mosques may have decided to do so independently.

A man from the Urumqi Administration for Religious Affairs, who refused to give his name, said only mosques in areas unaffected by the violence were allowed to open. In areas where severe violence took place, mosques were closed for people's safety, he said.

The official Xinhua News Agency, citing an unidentified religious affairs official in the Xinjiang government, said it was customary for mosques to close in times of trouble. "Muslims normally perform rituals at home in times of plague or social unrest," the official was quoted as saying.

Xinhua said mosques elsewhere in Xinjiang remained open.

Despite tight state control over Islam – imams are paid and vetted by the government – there are too many mosques in Xinjiang to enforce a mass closure, said Barry Sautman, who specializes in China's ethnic politics at the Hong Kong University of Science and Technology. There are 23,000 mosques in Xinjiang, the highest mosque-to-Muslim ratio in the world, and that provides room for some anti-government critics to slip through, said Sautman.

"It's impossible to control such an extensive number of religious personnel," Sautman said. In rural areas, he said, many officials in charge of religious affairs are Uighurs and are more sympathetic to Islam.

The violence in Urumqi began Sunday when Uighurs clashed with police while protesting the deaths of Uighur factory workers in a brawl in another part of the country. The crowd then scattered throughout Urumqi, attacking Han Chinese, burning cars and smashing windows. Riot police tried to restore order, and officials said 156 people were killed and more than 1,100 were injured.

The official Xinhua News Agency quoted the director of the Urumqi Civil Affairs Bureau, Wang Fengyun, as saying that families of innocent civilians killed in Sunday's riot would each receive 200,000 yuan (about $30,000) for each fatality.

left round-up on june 4th

noreply@blogger.com (Unknown) — Sun, 12 Jul 2009 23:12:00 +0000

The China Study Group
June 11 2009

Well, it’s June 11th, and as you can see, news stories on 6.4 started slowing down some time ago:
chart of 6.4 number of news stories in English on google news

Perfect time to do a round-up of left websites’ take on the 20th anniversary of 6.4!

First, John Chan at the World Socialist Web Site continues his excellent mix of news summary and analysis in his overview piece “Origins and consequences of the 1989 Tiananmen Square massacre” (Part I, Part II, Part III)

There is some boilerplate in the articles, but the articles’ virtues outweigh any sins. Chan puts things in perspective in ways that no other journalist has done. Most controversial is his portrayal of the students, who are portrayed in a tragic role, cynically manipulated by larger forces:

To legitimise market reform, Deng sought to cultivate support in intellectual and academic circles, and chose Hu Yaobang as CCP general secretary for that purpose. Western bourgeois social and philosophical thought was encouraged on Chinese campuses, including currents that openly blamed classical Marxism for the crimes of Mao and the CCP’s dictatorial rule. Many students, hostile to the decades-long bureaucratic controls over youth activities, were attracted by the anti-establishment flavour of these newly available works.

Unfortunately for the futures of the students, their antiestablishmentarianism extended to the leadership under Deng. This was not a big deal for the student movements of 1986 (easily dispatched), but Chan argues 1989 was an entirely different story for China’s leadership: rural reforms were stalled, and the corruption, inflation, and insecurity for workers following the urban economic reforms of the mid-1980s led to potential unrest. And while the leadership of the 1989 movement remained in students’ hands, the actions of workers and residents in Beijing in May and June of 1989 were crucial in supporting the protests.

I recommend the piece.

Next, Counterpunch delivers a glancing blow in The End of Idealism in China?, in which Behzad Yaghmaian, after some journalistic touring around young people in China, laments that kids in China just aren’t the way they used to be:

Today, however, prejudice, conflict of interest, and, in cases, outright hostility, separate students from the new Chinese working class, millions of underpaid internal migrants working tirelessly, and under severely substandard conditions, in the country’s export-processing factories. The alliance that once threatened the power of the Communist Party of China is now broken.

Whoa, wait a minute? Alliance? What alliance? And does anyone actually think the CPC was in trouble because of the protests? Maybe one faction, but the party itself? Come on. On the issue of student-worker ‘alliances’, John Chan dug out a convincing quote from Zhao Ziyang from Prisoner of the State: The Secret Journal of Premier Zhao Ziyang that shows that the leadership of the students avoided such an alliance:

During the demonstrations, students raised many slogans and demands, but the problem of inflation was conspicuously missing, though inflation was a hot topic that could easily have resonated with and ignited all of society… In hindsight, it’s obvious that the reason the students did not raise the issue of inflation was that they knew that this issue was related to the reform program, and if pointedly raised to mobilise the masses, it could have turned out to obstruct the reform process. [p. 34]

Now the students may have had good strategic reasons for doing so – avoid getting crushed – but this casts serious doubt on the alliance thesis. Which is precisely the point Andy Newman makes in the next article: Socialist Unity’s Twenty Years on from Tiananmen Square Massacre:

…the economic reforms were experienced as a direct attack on the working class…so when the pro-democracy protests on 17th April culminated in defiance to the government, and Beijing students occupying Tiananmen Square, this became the catalyst for a huge explosion of working class protest….the June 4th Movement expressed polar opposites of political objectives, and the working class were demanding the cessation of the process [i.e. economic reform] that the students were arguing should accelerate.

Let’s take this one step at a time. First, enterprises were starting to transfer and layoff workers in late 1987, but this was still pretty limited in scope compared to what was awaiting workers in the 90s. About 1 million workers were affected by ‘labor rationalization’ of some kind by 1989. A large number, but remember the denominator of urban Chinese workers is huge. Economic disputes were more common than in the past, but these never became important issues in workers’ participation in 6.4. More important is that workers’ wages fell in 1988 after you take inflation into consideration, coming after years of rapid growth earlier in the 1980s. When viewed from the perspective of the very brutal direct attack on workers that was awaiting the Chinese working class in the 90s, the itty-bitty reforms of the late 80s are more like slaps across the wrist. not a direct attack.

Next, I don’t see any evidence for an explosion of working-class protest in May. There was an increase in worker participation, but it was tiny compared to the numbers of students protesting. The few workers’ organizations that did emerge (gongzilian) never developed the capacity to organize on a large scale. In terms of the ‘polar-opposite’ idea, there is evidence that workers were considerably less supportive of Deng’s economic reforms, and didn’t put much stock in supporting Zhao Ziyang, but the workers had lots of other common ground with students (anti-corruption, etc.).

Last is Twenty years after Tiananmen Square by Dennis Kosuth in the Socialist Worker. It’s not bad, but it’s there considerable boilerplate, and some glaring errors, like:

Hu Yaobang, the former general secretary of the CCP, died on April 15, 1989. Two years prior, he had been driven from his position in the party in disgrace because he was seen as challenging corruption.

Try harder Socialist Worker!

Anyway, glad to see so much attention paid to participants other than the students in these articles. Not that they don’t deserve it, just that most of the English-language media focuses exclusively on them while leaving out other important actors. As Jeffrey Wassterstrom points out in Illuminating and Misleading Takes on China 20 Years Since Tiananmen.

[note: a number of groups and websites reprinted old articles to commemorate 6.4. didn't include those. leave a comment if I missed anything]

Ghost of Marx haunts China's riots

noreply@blogger.com (Unknown) — Fri, 10 Jul 2009 06:20:00 +0000

Jian Junbo
The Asian Times
July 8, 2009

Jian Junbo (簡軍波) is assistant professor of the Institute of International Studies at Fudan University, Shanghai, China (復旦大學國際問題研究院歐洲研究中心 ).

SHANGHAI - The weekend violence that has left 156 people dead and more than 816 injured in Urumqi, capital of northwestern Xinjiang Uyghur Autonomous Region, is the latest example of growing conflicts between China's majority Han ethnic group and ethnic minorities.

At the heart of the escalating problem are China's antiquated policies towards its ethnic minorities - a raft of Marxist measures that are now pleasing neither the ethnic Han, nor the minorities. As China's gargantuan economy has advanced, former leader Mao Zedong's vision of political and economic equality between

Han and non-Han has gradually been undermined.

The end result could be seen on the bloody streets of Urumqi.

On Sunday, more than 300 ethnic Uyghurs - mostly Sunni Muslims - staged a protest in Urumqi's People's Square to demand an investigation into a June 26 brawl at a toy factory in Shaoguan, Guangdong province. Riots began when police began to disperse protesters, soon spreading across the remote city of 2.3 million people.

Groups of rioters broke down guardrails on roads, torched automobiles and beat Han pedestrians. The mob attacked buses and set fire to a hotel near the office building of the Xinjiang Regional Foreign Trade Commission, according to the state-run Xinhua News Agency. Hundreds of cars, shops and homes were smashed and burned during the violence, Xinhua said.

China Central Television on Monday aired images of Uyghur protesters attacking Han men and women, kicking them on the ground and leaving them dazed and bloodied. Images were shown of smoke billowing from vehicles as rioters overturned police cars and smashed buses.

As of Monday evening, at least 156 people were found dead and more than 800 others injured, including armed police officers, the Xinjiang Public Security Department said. More than 50 dead bodies were found in back streets and alleys, officials said, adding grimly that the toll may rise.

Official statistics did not give any breakdowns to show how many Uyghur protesters were killed. A spokesperson for the World Uyghur Congress (WUC), a United States-based organization of pro-independence Uyghurs in exile, told Voice of America that police opened fire on protesters. The Chinese government has blamed the WUC for masterminding the violence,

Xinhua said "the situation was under control" by Monday morning; police had shut down traffic in parts of the city and arrested over 1,000 protesters. Among those detained were at least 10 of the most prominent figures who fanned the unrest on Sunday, the Xinjiang Public Security Department said.

But on Tuesday, over 200 Uyghurs, mostly women, staged a new protest in Urumqi in front of foreign reporters and it was reported that in the afternoon Urumqi Han residents began to counter-attack on Uyghurs. The women demanded the release of their families arrested during Sunday's violence. The foreign reporters had been organized by authorities to visit post-violence scenes, where protesters engaged in a tense stand-off with police, Hong Kong media said.

The Xinjiang government that evening warned that "hostile elements" were plotting to stir up violence in other Xinjiang cities such as Yining and Kashgar.

"We deeply regret the loss of life" in Urumqui, US State Department spokesman Ian Kelly said. "We call on all sides for calm and restraint."

United Nations secretary general Ban Ki-moon also called for restraint. He told a press conference on Monday: "Wherever it is happening or has happened the position of the United Nations and the secretary general has been consistent and clear: that all the differences of opinion, whether domestic or international, must be resolved peacefully through dialogue."

According to Xinhua, a government statement claimed the violence was "a pre-empted, organized violent crime. It is instigated and directed from abroad and carried out by outlaws in the country."

In a televised address on Monday morning, Xinjiang governor Nur Bekri accused the WUC led by Rebiya Kadeer - a former businesswoman now living in the United States - of fomenting the violence via telephone and the Internet. "Rebiya had phone conversations with people in China on July 5 in order to incite ... and the Internet was used to orchestrate the incitement," read the statement.

Kadeer's spokesman, Alim Seytoff, told the Associated Press from Washington that the accusations were baseless.

"It's common practice for the Chinese government to accuse Ms Kadeer for any unrest in East Turkestan and His Holiness the Dalai Lama for any unrest in Tibet," he said. East Turkestan is the name of the state Uyghur pro-independence groups and militants wish to create in Xinjiang.

One the exile groups, the East Turkestan Islamic Movement, is listed by the Chinese government and the UN as a terrorist organization. The WUC denies any connection with the East Turkestan Islamic Movement.

The violence in Urumqi echoed last year's unrest in Tibet. In March 2008, a peaceful demonstration of monks in the capital of Lhasa erupted into riots that spread to surrounding areas, leaving at least 22 dead. The Chinese government accused the Dalai Lama of orchestrating the violence. The Dalai Lama denied the charge.

Whether the riots were instigated by pro-independence activists or not, the fact remains that violent conflicts are easily stirred up by the mutual distrust between the Han people and ethnic minorities. Internet rumors were also involved.

The brawl in the Shaoguan factory on June 26 was started by a post on an Internet website that claimed at least two female Han workers were raped by Uyghur migrant workers, many of whom work at the factory.

In response to the allegation, Han workers stormed into dormitories of the Uyghur workers. In the ensuing battle, two Uyghur were killed and many workers from both sides injured, according to local police. Authorities later arrested a Han worker for uploading the rape rumor to stir up trouble.

The end of class-struggle identity
The increasingly frequent conflicts between Han and other groups indicate the Chinese Communist Party's (CCP's) policy toward ethnic minorities has become ineffective in maintaining harmonious relations between peoples.

For the past 60 years, the stated aim of the CCP's policy has been to maintain national unity and stabilize civil society. The communist government considers all ethnic groups to be Chinese, but encourages all ethnic groups, especially minorities, to keep and develop their traditional cultures. The government has even helped minorities with only a spoken language create their own writing system.

The idea that all people in China belong to the "great family of Chinese" is not the invention of the communists. This attitude began with the founding father of modern China, Dr Sun Yat-sen, and was supported by early Chinese enlightenment thinkers such as Liang Qichao and Hu Shih.

In the era of chairman Mao Zedong, the ethnic policy was dictated by his class-struggle doctrine, by which all Han and non-Han working people shared one common identity - socialist labor. The term "labor" meant they were also the owners of the country - constitutionally and ideologically. Capitalists, land owners, serf owners and other "exploiters" - regardless of their ethnic origins - were the enemies.

This policy successfully surpassed ethnic differences and constructed a shared identity for all working people. To an extent, this policy under Mao united all ethnic groups in the "class struggle" against the "oppressors". It also made the former elites of ethnic minorities diehard enemies of the Chinese Communist Party (CCP).

The working poor of China's ethnic groups gave much support to the CCP government, and accepted their new socialist identity. Han and non-Han people became equal economically and politically, and the idea of ethnicity was gradually faded out by the idea of class.

The concept of a common class, which gave equality to all people in the same class regardless of their ethnicity, surpassed the idea of ethnic identity and forestalled ethnic conflict.

But when the class-struggle doctrine was practiced to the extreme particularly during the Cultural Revolution between 1966 and 1976, it gave the Red Guards - consisting of mostly Hans - the ground to attack China's cultural and historical heritage - Han as well as ethnic - in the name of the revolution. These attacks tremendously hurt the feelings of ethnic minorities.

After the Cultural Revolution, apparently as some form of compensation, the Chinese government began to award some privileges and preferences to ethnic minorities.

For example, the tough one-child policy applies only to Han couples. Accordingly, the birth rate and population proportion of the Han are decreasing, compared to other ethnic groups. Meanwhile, privileges have been granted to ethnic minorities for employment and education opportunities. To boost economic growth, the government in recent years has poured much money into ethnic minority areas.

Many Han are upset at what they see as discrimination. In the aftermath of the Shaoguan brawl, Guangdong party secretary Wang Yang visited and consoled the injured Uyghur workers, but allegedly ignored the injured Han workers. This angered the Han workers and increased their suspicion of the government's policy.

Even as ethnic groups, such as the Uyghurs, complain they are being exploited or discriminated by the Han, many Han accuse the government of doing the same. In the end, as China's economy advances, political and economic equality between Han and non-Han is being undermined.

The wealth gap is expanding between the Han, who in general live in rich areas, and those ethnic minorities who live in relatively poorer areas. The economic inequality between different regions is also a case between Han and non-Hans. Although this imbalance of economic development is due to many factors, it's easy for minorities to feel exploited by the Han.

As the influence of Marxism as the dominant ideology is diminishing in China, the sense of political equality is also abating. Today, common people aren't really considered the owners of the country, and laborers are no longer a respected class. Capitalists have become the government's guests of honor.

In China, political equality based on class equality has collapsed. For the past 60 years, this idea of class equality was a basis on which all common people, including minorities, could maintain an identity as one member of the Chinese political community.

Now, the economic and political marginalization of ethnic minorities is destroying the foundation of some ethnic groups' Chinese identity. At the same time, this marginalization is deeply misunderstood by many of the majority Han ethnic group.

The shared identity of the Chinese - as socialist labor - is gradually falling to pieces. The resulting riots in Urumqi may be just the start of something much, much bigger.

(Copyright 2009 Asia Times Online (Holdings) Ltd.)

Uighur oppression

noreply@blogger.com (Unknown) — Wed, 08 Jul 2009 05:27:00 +0000

Louis Proyect
http://louisproyect.wordpress.com/2009/07/07/uighur-oppression/
July 7, 2009

Uighur woman confronts Chinese cops

My Turkish language professor at Columbia University once made an interesting observation. He said that variations on the Turkish language (Turkic) can be heard from Turkey to China and that he could understand it from country to country if he proceeded eastward. But the further east he went, the harder it would be for him to understand. Azeris would be quite easy to understand; Kazakhs somewhat more difficult; and Uighurs (or Uyghurs) the most difficult of all.

On the Uighur Language website, there’s a comparison between Turkish and Uighur drawn from the Nasreddin folklore, a series of tales about a wise and humorous elder that I had occasion to read in Turkish class. “Bir gun” in Turkish means one day; in Uighur it is “bir kun”. Hoca is Turkish for teacher; in Uighur it is “hoja”, etc.

Turkish

Bir gun sevmedigi bir komsusu Nasreddin Hoca’nin kapisini caldi; bir gunlugune esegini kendisine vermesini rica etti.

Uighur

Bir kun yahxikurmeydighan bir hoxnisi Nasirdin Hojaning ixigini urup, exigini bir kunlik otnige berixini soraptu.

Uighur ballad (sounds very Turkish)

During the rise of the Mongols, the Turks, who were also a nomadic people historically, settled into the region that became known as Turkestan. As such, it was a key element in the Silk Road that facilitated trade between Europe and Asia until the end of the 15th century.

This area languished for centuries until competition between China, Russia, and European powers during the 19th century prompted an invasion by the Manchus into East Turkestan with the encouragement of British banks who were participating in the “Great Game”. “Xinjiang” or “Sinkiang”, which means “New Dominion” or “New Territory”, was annexed by the Manchu empire on November 18, 1884.

Meanwhile, Czarist Russia was seizing control over West Turkestan in its own expansionist bid. In their victory over the old regime, the Bolsheviks had to contend with the problem of oppressed nationalities, in particular the Muslim peoples to the south in what had been known as West Turkestan. In a fascinating debate between Lenin and Bukharin in 1919, there are some issues that are relevant to today’s struggles. Bukharin questions the need for self-determination of such peoples, using arguments similar to that of Rosa Luxemburg. Responding to Bukharin’s assertion that “I want to recognise only the right of the working classes to self-determination,” Lenin refers to the Bashkirs, a Turkic people who had petitioned the Soviet government for the right to form an autonomous Soviet Republic.

What, then, can we do in relation to such peoples as the Kirghiz, the Uzbeks, the Tajiks, the Turkmen, who to this day are under the influence of their mullahs? Here, in Russia, the population, having had a long experience of the priests, helped us to overthrow them. But you know how badly the decree on civil marriage is still being put into effect. Can we approach these peoples and tell them that we shall overthrow their exploiters? We cannot do this, because they are entirely subordinated to their mullahs. In such cases we have to wait until the given nation develops, until the differentiation of the proletariat from the bourgeois elements, which is inevitable, has taken place.

Our programme must not speak of the self-determination of the working people, because that would be wrong. It must speak of what actually exists. Since nations are at different stages on the road from medievalism to bourgeois democracy and from bourgeois democracy to proletarian democracy, this thesis of our programme is absolutely correct. With us there have been very many zigzags on this road. Every nation must obtain the right to self-determination, and that will make the self-determination of the working people easier.

As most of you probably know, this policy was reversed within two or three years as Stalin consolidated power and reintroduced the Great Russian chauvinism that made people such as the Bashkirs miserable. Just before his death, he wrote an article that has been described as his testament. It included the following warning:

It is quite natural that in such circumstances the “freedom to secede from the union” by which we justify ourselves will be a mere scrap of paper, unable to defend the non-Russians from the onslaught of that really Russian man, the Great-Russian chauvinist, in substance a rascal and a tyrant, such as the typical Russian bureaucrat is. There is no doubt that the infinitesimal percentage of Soviet and sovietised workers will drown in that tide of chauvinistic Great-Russian riffraff like a fly in milk.

Probably no Turkic people had it worse under Stalinist rule than the Crimean Tatars who were exiled from their homeland as a measure intended supposedly to help the USSR defend itself from the Nazis. Since there was a Tatar Legion in the Nazi army and since some of the Tatar clerics were sympathetic to the Nazis, Stalin decided upon collective punishment. The Soviet government described the forced migration as “humane” but the Wiki on the Tatars claims that 46.3% of the resettled population died of diseases and malnutrition. In other words, they suffered the same fate as Cherokees or Armenians.

In 1967, when I joined the Trotskyist movement, the party press, especially Intercontinental Press that was edited by Joe Hansen (one of Trotsky’s body guards), was taking up the cause of Soviet dissidents, including General Pyotr Grigorenko who was such a forceful defender of Crimean Tatar demands for justice that he had been put in a mental hospital in 1964. You can judge his mental status based on a speech he gave to the Tatars in 1968:

After having lost forty-six percent of their numbers in the forced exile disaster, they began to gather strength and to enter into battle for their own national and human rights. This struggle led to certain successes: the status of exiled deportees was lifted and a political rehabilitation of the people was achieved. True, this rehabilitation was carried out quietly … which in significant degree rendered it valueless. The majority of the Soviet people, who previously had been widely informed that the Crimean Tatars had sold the Crimea, never did learn that this ’sale’ was transparent fabrication. But worst of all, the decree on political rehabilitation… legalized the liquidation of the Crimean Tatar nationality. Now, it appears, there are no Crimean Tatars, there are just Tatars who formerly lived in Crimea.

Some would say—and they did—that the SWP was in a united front with the imperialists since the United States Information Agency had decided to publish a collection of documents written by the dissidents, including Grigorenko. Interestingly enough, they appeared in the journal Problems of Communism that was edited by Abraham Brumberg. Brumberg, who had impeccable anti-Communist credentials, developed some sympathies for the Sandinista revolution and defended Nicaragua against Reagan’s counter-revolutionary intervention throughout the 1980s. For those who think in terms of black-and-white, Brumberg would be too hard to figure out.

For all those leftists who harp on American support for the Iranian reformists as proof of its reactionary character, we can only assume that they would have opposed repatriation of the Crimean Tatars as well. If the USIA took up their cause, that’s all you need to know. In the 30s through the 50s, this kind of knee-jerk support for the Soviet government was the stock in trade of the Communist Parties. It is particularly unfortunate to see people such as James Petras, who were educated in Trotskyist politics in a previous lifetime, making the same kind of rotten arguments today.

As might be expected, the people of East Turkestan were treated just as badly as their brethren under Soviet rule since Mao, for the most part, agreed with Stalin on how to build socialism. Although China had fewer nationalities to forcefully assimilate, it did so with little regard to Lenin’s warnings about avoiding national chauvinism. In China, this was essentially expressed as Han nationalism that was intended to serve as a battering ram against non-Han peoples, first and foremost the Tibetans and the Uighurs.

China decided to swamp the Xinjiang province, the homeland of the Uighurs, with the dominant Han nationality not long after Mao took power. Between 1949 and the mid-80s, more than 5 million Chinese were sent to Xinjiang from eastern China in order to help assimilate the Uighurs, as well as other Turkic peoples including the Kazakhs, Kirghiz and Mongols.

In utter disregard of Lenin’s comment about having patience with people who still follow the lead of their mullahs, China organized a campaign against Islam under the rubric of combating a desire to restore “the old rule by capitalists, feudal lords, slave-owners” in the words of Liu Ke-ping, the Chairman of the Committee of Nationalities of the National People’s Congress. This included a ban on teaching Arabic in Xinjiang schools, a measure that would undercut the study of the Koran but likely to have little effect on the development of communism.

On January 14, 1985 the Washington Post reported:

The assimilation effort reached its peak during the Cultural Revolution from 1966 to 1976 when the Arabic alphabet was outlawed in favor of the Latin alphabet, mosques were closed and turned into workshops, Moslem classics were burned, restrictions were imposed on the number of sheep minority peasants could raise, and Han officials delivered speeches in Chinese without providing interpreters.

So much for the Cultural Revolution as returning China to the communist road, unless of course your idea of communism is inspired by Stalin rather than Lenin.

The Post article continues:

In 1981, ethnic tension flared in Kashgar when a young Uighur peasant who was digging a ditch got into a fight with a Han Chinese. Neither was able to speak the other’s language. In a fistfight the Han was beaten by the stronger and bigger Uighur. Angered, the Han went into his store, took out his hunting gun and shot the Uighur.

Not much has changed in Xinjiang apparently. In recent clashes with the Hans, more than 150 people were killed. With a population numbering about 8 million, this would be the equivalent of 6000 killed in the U.S. in a day or two.

As is so often the case today, oppression of Muslim peoples seems to go hand in hand with the need to control petroleum resources. On August 28, 2008 the Financial Times reported:

The increasing importance of the Muslim-dominated Xinjiang autonomous region as a source of the energy and minerals needed to fuel China’s booming eastern cities is raising the stakes for Beijing in its battle against separatists agitating for an independent state.

“The Chinese didn’t want to let Xinjiang be independent before, but after they built all the oilfields, it became absolutely impossible,” said one Muslim resident in Korla, who asked not to be named for fear of retribution by government security agents.

The desert around the city is punctuated every kilometre or two by oil and gas derricks, each of them topped with the red Chinese national flag, an assertion of sovereignty over every inch of the energy-rich ground.

In 2005, Xinjiang’s local government was allotted only Rmb240m ($35m, €24m, £19m) out of the Rmb14.8bn in tax revenue from the petrochemical industries that are based in the region.

In Korla, the oil industry is under the control of a subsidiary of PetroChina, the state-owned energy giant, which answers directly to its head office in Beijing.

“We don’t have the power to tell them to do anything – they only listen to their bosses in Beijing,” said one local government official who asked not to be named.

Many of Korla’s original Uighur residents feel they have missed out altogether on the few benefits that have trickled down to the region from the rapid extraction of its energy resources.

It is no wonder that China put so much pressure on the U.S. government not to release the Uighur men who were kept in Guantanamo after being falsely accused of being Al Qaeda operatives. In the war on terror, which is really after all a war to control oil resources, the U.S. and China clearly see eye to eye.

Bir kun yahxikurmeydighan bir hoxnisi Nasirdin Hojaning ixigini urup, exigini bir kunlik otnige berixini soraptu.

COMMENTS:

Thanks for posting on this subject Louis.

I want to make a slight correction, though. You say that Xinjiang was annexed by the Manchu empire in 1884, which is not quite right. Xinjiang was first invaded by the Manchus in the 1750s, and was under Manchu administration as one of the outlying regions of the empire from that point on. That means it was not a province, and was subject to laws different from other parts of the empire. After about half a century of relative peace, rebellions in the 19th century led to the region falling out of Manchu control on several occasions, the most notable being the decade-long rule of Yaqub Beg in Kashgar. It was after the reconquest of Xinjiang by general Zuo Zongtang in the 1880s that Xinjiang was turned into a fully-fledged province. It’s this date which is sometimes erroneoulsy said to mark the initial annexation.

Comment by dawutjan — July 7, 2009

The myth of "Made in China"

noreply@blogger.com (Unknown) — Thu, 11 Jun 2009 13:19:00 +0000

Robert Koopman, Zhi Wang, and Shang-Jin Wei
"Foreign Policy" Magazine
June 10, 2009

Robert Koopman and Zhi Wang are chief economist and economist, respectively, at the U.S. International Trade Commission. Shang-Jin Wei is professor of finance and economics and international affairs at Columbia University.

From shoes to electronics to kitchen appliances, that ubiquitous stamp, "Made in China," has become a symbol of the times. In the last decade, annual U.S. imports from China have grown from about $81 billion to last year's $338 billion. Everything, it seems, comes from the Middle Kingdom.

But as it turns out, "Made in China" is a bit of a misnomer these days. Over the last 20 years, supply chains have fragmented across the globe -- with one part made here, and another made there. Rarely is any one product made in any one country. China often specializes in the final stage of production: putting components together before exporting to the final users. Indeed, much of the value of U.S. imports from China, and similarly from Mexico, includes parts and components made in other countries -- the United States among them. According to our recent study, domestic content (the stuff that directly contributes to domestic economic growth) makes up about 45 percent of Chinese exports and 34 percent of Mexican exports to the United States. The rest comes to China from abroad to be assembled and sold. A tag like "Made in China, Vietnam, the United States, Japan, and China again," might be more apt.

The very nature of China's and Mexico's export industries keeps their domestic input relatively low. In every year since 1996, more than 50 percent of exports in both economies have been "processing exports," wherein firms import parts and components from abroad under favorable tariff treatment and assemble them for export. The finished products arrive in the United States, Europe, and other markets with their whole value counted as imports from China in official trade statistics.

In some categories, such as consumer electronics, "processing trade" accounts for upwards of 90 percent of the countries' exports. China and Mexico add very little value to these products -- less than 20 percent for computers, electronic devices, iPods, and cellphones. Many components, and hence the value, in those exports come from Japan, South Korea, Singapore, Taiwan, or even the United States and the European Union.

So what?

First, it means that the U.S. trade deficit with China and Mexico is not as large as meets the eye. What's more, the United States' deficit with countries that make component parts -- such as Japan -- is probably understated. Yes, U.S. imports from all of Asia over the last 15 years have slightly declined, while China's share of U.S. imports has increased rapidly. But it's not that the world has stopped importing Japanese, Korean, and other countries' products; China is just "indirectly" exporting them instead by buying international components, assembling them, and then shipping them abroad.

Second, understanding that "Made in China" doesn't quite mean what we think it means helps clear up a mystery. Since the economic crisis began, China's exports have dropped significantly, but the impact on its GDP growth, oddly, appears muted. What's going on? Given the low share of domestic value added in China's exports, the Chinese economy's true dependence on exports is only half as large as the headline trade data would lead one to believe. The pain of a reduction in China's exports is shared with other economies that supply components, such as Japan, Korea, Taiwan, Singapore and Hong Kong. For example, for every iPod that the United States decides not to import, the "decline" in recorded exports from China is $150 -- but only about $4 of that value was added in China. In other words, China's GDP declines just $4 for each lost $150 iPod. Japan, on the other hand, contributes about $100 to the $150 value and takes the far bigger GDP hit from "China's" decline in exports.

Yet while the crisis has hit China with only a soft blow, Mexico's case is less benign. The country has become highly integrated into a North American supply chain for autos, consumer durables, and electronics, importing parts and components from the United States, Canada, and to a lesser extent Asia. Mexico's average domestic value added in its exports to the United States is even smaller than China's, meaning that a slowdown in exports may have limited effect on Mexico's GDP per unit. (The feedback from a Mexican exports slowdown is likely felt mostly by the United States and Canada, rather than by Japan.) However, as reliant as Mexico is on the U.S. economy, a drop in usually huge export volumes is already proving very painful.

Although China's processing export model may be proving a keeper in times of economic crisis, what might need changing is the way we look at trade deficits. With truly global supply chains, perhaps it's time for a more accurate stamp: "Made Everywhere."

Tibetan students protest in China

noreply@blogger.com (Unknown) — Sun, 26 Apr 2009 17:38:00 +0000

April 26, 2009

BEIJING (AFP) — Hundreds of students at a Tibetan school in China's northwest held a daring protest, demonstrating over education conditions, locals and an overseas Tibetan group said Saturday.

The protest took place Friday morning among Tibetan students at the Xiahe middle school in Gansu province, the proprietor of a local hotel told AFP by telephone.

"The students protested on Friday. There were no protests today," he said without giving his name.

"There were a few police, but no violence. Everything is quiet."

Xiahe, is home to the Labrang Monastery, a famous Tibetan Buddhist temple, where monks protested in March 2008 when anti-Chinese unrest spread throughout ethnic Tibetan regions of China.

During the unrest, the remote town and monastery were besieged with armed police, the proprietor said.

According to Phayul.com, an exiled Tibetan news website, several hundred Tibetan students were expressing their disappointment over the rise in the number of Chinese students in college-level institutes.

The students said college seats that are normally given to Tibetans were being given instead to Chinese students, it said.

Phones at the Xiahe public security office and the Xiahe Middle School were not being answered Saturday.

Unrest in ethnic Tibetan regions in China spread last year after riots erupted in Lhasa during March.

China has said "rioters" were responsible for 21 deaths, while saying that its security forces killed only one "insurgent."

However, the exiled Tibetan government headed by the Dalai Lama has said more than 200 Tibetans were killed in China's subsequent crackdown.

A Tibet court issued a suspended death sentence for one man and stiff jail terms for two others for setting deadly fires in the Lhasa riots last year, Chinese state media said Tuesday.

The two fires killed six people, Xinhua news agency said, quoting the Tibet Daily newspaper.

Chinese Chinese Bias for Baby Boys Creates a Gap of 32 Million

noreply@blogger.com (Unknown) — Wed, 15 Apr 2009 04:46:00 +0000

Sharon Lavaliere
The New York Times
April 11, 2009

BEIJING — A bias in favor of male offspring has left China with 32 million more boys under the age of 20 than girls, creating “an imminent generation of excess men,” a study released Friday said.

For the next 20 years, China will have increasingly more men than women of reproductive age, according to the paper, which was published online by the British Medical Journal. “Nothing can be done now to prevent this,” the researchers said.

Chinese government planners have long known that the urge of couples to have sons was skewing the gender balance of the population. But the study, by two Chinese university professors and a London researcher, provides some of the first hard data on the extent of the disparity and the factors contributing to it.

In 2005 , they found, births of boys in China exceeded births of girls by more than 1.1 million. There were 120 boys born for every 100 girls.

This disparity seems to surpass that of any other country, they said — a finding, they wrote, that was perhaps unsurprising in light of China’s one-child policy.

They attributed the imbalance almost entirely to couples’ decisions to abort female fetuses.

The trend toward more male than female children intensified steadily after 1986, they said, as ultrasound tests and abortion became more available. “Sex-selective abortion accounts for almost all the excess males,” the paper said.

The researchers, who analyzed data from a 2005 census, said the disparity was widest among children ages 1 to 4, a sign that the greatest imbalances among the adult population lie ahead. They also found more distortion in provinces that allow rural couples a second child if the first is a girl, or in cases of hardship.

Those couples were determined to ensure they had at least one son, the researchers noted. Among children born second, there were 143 boys for 100 girls, the data showed.

The Chinese government is openly concerned “about the consequences of large numbers of excess men for social stability and security,” the researchers said.

But “although some imaginative and extreme solutions have been suggested,” they wrote, China will have too many men for a generation to come.

They said enforcing the ban against sex-selective abortions could normalize the sex ratio in the future.

The study was conducted by Wei Xingzhu, a Zhejiang Normal University professor; Li Lu, a Zhejiang University professor; and Therese Hesketh, a University College London lecturer.

Impacts of the Financial Crisis on Labour Conditions in China

noreply@blogger.com (Unknown) — Mon, 19 Jan 2009 19:57:00 +0000

Staphany Wong
Werkstatt Ökonomie (www.woek.de )
Heidelberg
19 December 2008

Many academics have said in various occasions that China is not strongly affected by the financial crisis, or some even hold the optimistic view that China could use the financial crisisas an opportunity to expand its power¹or show that state-intervention on economic affairssuch as currency value would be, after all, not a bad idea². Whether or not their claims arevalid, it would take some months, if not years, to be verified. Nevertheless, negative impactsof the financial crisis appeared in the recent months, especially haunting the workers ofChina. In this article, we are trying to map out the impacts of the crisis, in terms of job losses,labour relations and government's interventions.

'Factory closure' is a term repeatedly appearing in Chinese newspapers, especially in describing the situation in Pearl River Delta, since October 2008. It seems to be a logical outcome of the financial crisis, to be explained that, as fewer orders coming from the West, on shoes, on toys, on garments and even electronic products. When exports go down, the labour intensive industries would suffer. Yet, if one observes the labour market for a longer time, she would notice that 'factory closure' is one of the many impacts of financial crisis. To be more precise, the relation between factory closure and financial crisis is not a matter of cause-and-effect, but a catalyst, an excuse or even a media hype.

The 'credit crunch', as a term for financial market, was first heard in China at the third quarter of 2007 while it came to public attention in August 2007 in the West^.3 For Chinese, at first, it was more a terminology for banking industry, which ordinary people, even some factory owners would be most unlikely to think that they would be subjected to its influence.

The wave of factory closure started in China earlier than the arrival of the term 'credit crunch' in late 2007 and the global financial crisis at the second half of 2008. Back in December 2007, China Central TV (the state-run media) has already broadcast a documentary on “investigation of the closure of thousand factories in Pearl River Delta: rising production costsleads to factory relocation”. By then, Li Peng, General Secretary of Asia Footwear Association already gave some of the shocking statistics. For the 7,000 to 8,000 shoe factories in Guangdong, about 1,000 small-medium size enterprises (SMEs) would be closed by the end of 2007 and the trend would continue⁴.

In December 2007, the Federation of Hong Kong Industries predicted that 10,000 to 15,000 of the 60,000-70,000 Hong Kong-owned factories in the delta would close in 2008 and 2009, citing rising labour and materials costs and the currency Yuan⁵, instead of financial crisis, as the main cause.⁶ Many of the factory owners also described 2007 was the most difficult year for them in the past two decades⁷. China's State Development Planning and Reform Commission also confirmed that 67,000 SMEs shut down in the first six months of 2008 nationwide⁸. The export for toys and garments, for the first nine months of 2008, have growth rates at 3.7% and 1.8% respectively, which are 13.1% and 21.2% lower than the statistics from same time last year⁹.

Reasons for factory closure and relocation include labour shortage¹⁰, higher labour costs (in order to keep workers from leaving), electricity control, oil shortage, heavier taxes on the lowtechnology industries¹¹, stricter laws to be imposed on labour and environmental standards, order price remains low in USD, despite the rise on RMB, which leads to a narrowing profit margin¹².

Some examples of relocation plans and reasons
Company	Location in China	Relocating to	Reasons	When
Yue Yuen (Taiwanese capital, the biggest shoe producer in the world for brands)	Pearl River Delta	YY moves some of its factories in China to either the northern provinces of Guangdong or expands its investment in Vietnam and Indonesia)	Bigger buyers, such as Adidas, tend to place their orders in YY's factories outside China	A continuous trend over past few years
Adidas (German sportswear brand)	50% of its suppliers are in China	Trend to buy more from SE Asia	Due to rising value of Yuan and labour costs	Over the past years, will continue (same trend for Puma and Nike13)
Hayidai (Chinese toy producer)	Dongguan city	90% of workforce to Henan Province. Only R&D remains in Dongguan.	Lower costs in the northern part of China.	April 2008
Avon (US-American cosmetic brand)	Guangdong	Sichuan province	Lower production costs in Sichuan (the plan would continue to proceed, even after the Sichuan earthquake)	June 2008
GST (US-American auto-leather producer)	Guangdong province	Mexico	Low tax rebate in China	Shut down production line for Honda in China and reopens it in Mexico, considering to move more production lines from China to Thailand and Vietnam, reported on 10 November 2008.
Olympus (Japanese digital Camera producer)	Shenzhen and Guangzhou (the low-priced	Vietnam	Costs in China get higher	By the end of 2008
Hoya Corporation (Japanese camera lens producer	Guangzhou city	The Philippines	To concentrate its production by combining two factories (one in China and one in the Philippines) into one	March 2009

Some examples of relocation plans and reasons

Company

Location in China

Relocating to

Reasons

When

Yue Yuen (Taiwanese capital, the biggest shoe producer in the world for brands)

Pearl River

Delta

YY moves some of its

factories in China to either

the northern provinces

of Guangdong or

expands its investment in

Vietnam and Indonesia)

Bigger buyers, such as

Adidas, tend to place

their orders in YY's factories

outside China

A continuous

trend over past

few years

Adidas

(German

sportswear

brand)

50% of its suppliers

are in

China

Trend to buy more from

SE Asia

Due to rising value of

Yuan and labour costs

Over the past

years, will continue

(same

trend for Puma

and Nike13)

Hayidai

(Chinese toy

producer)

Dongguan city

90% of workforce to Henan

Province. Only R&D

remains in Dongguan.

Lower costs in the northern

part of China.

April 2008

Avon

(US-American

cosmetic brand)

Guangdong

Sichuan province

Lower production costs in

Sichuan (the plan would

continue to proceed,

even after the Sichuan

earthquake)

June 2008

GST

(US-American

auto-leather

producer)

Guangdong

province

Mexico

Low tax rebate in China

Shut down production

line for

Honda in China

and reopens it in

Mexico, considering

to move

more production

lines from China

to Thailand and

Vietnam, reported

on 10

November 2008.

Olympus

(Japanese digital

Camera producer)

Shenzhen and

Guangzhou

(the low-priced

Vietnam

Costs in China get higher

By the end of

2008

Hoya Corporation

(Japanese camera

lens producer

Guangzhou city

The Philippines

To concentrate its production

by combining two

factories (one in China

and one in the Philippines)

into one

March 2009

Another reason seldom admitted by factory owners and trade leaders but commonly believed by workers is, that many of the factory closures were attempts to end labour relations before the implementation of Labour Contract Law on 1 January 2008, which makes lay-offs more complicated and expensive. For big companies, such as Wal-Mart China¹⁴ and Huawei Technologies (see Box), which are not closing down, they have been terminating contracts and asking employees to resign before the introduction of the law.

The Huawei Technologies' example of avoiding the Labour Contract Law

In late September 2007, Chinese media was reporting that Chinese communications equipment manufacturer Huawei Technologies had internally arranged its more than 7000 of its senior employees, all of whom had reportedly worked for more than eight years in the company, to resign from the company in order to evade China's upcoming Labor Contract Law. One of the employees to resign, according to Huawei, was its own president Ren Zhengfei. They were paid a total of one billion Yuan in compensation but it was unclear how this sum was distributed.

After the senior employees rejoin the company, they will take their previous posts and basic salaries,and the only difference is that their length of service for Huawei is shortened. Because their length of time with the company is shortened, the company doesn't need to contribute as much for their social welfare, pension, and dismissal funds.

The case was then widely reported in China, Huawei put out a statement in China Daily on 6 November 2007, denying its plan to evade the law. It then announced that it had dropped the programme of resignation after some talks with ACFTU. Yet, there was no further comment from Huawei or any mention of what had happened to the workers who had already resigned.

Diagram on page 5). One of the explanations is that the credit crisis made the banks nervous, which in return cut the credit line, especially for many SMEs by up to 50%¹⁵.

In fact, many enterprises in China invested in more than just one field. Especially when the profit margin has been dropping over the years, as discussed before, they tend to invest in other fields. Therefore, they may go bankruptcy for their other investments due to financial crisis or other reasons. Smart Union, the world's biggest toy producer in Dongguan city which left 6,000 workers jobless in October, was reportedly shut down due to mis-investment and credit reason¹⁶.

No official figures in terms of job-lost and factory closure have been made available (not until next spring), but there are various sources and estimations on the impact on workforce, to offer us a glimpse of the situation:

• Dongguan City's Foreign Investors' Association predicts that by spring 2009, 9,000 factories would shut down in Guangdong province and a loss of 2.7 million jobs¹⁷.

Interactions between Workers, Enterprises and Government
Compiled by Tony Fung, Worker Rights Consortium, 30 October 2008

	WORKERS - being laid off without proper compensation - going back to inner provinces (e.g. Guangzhou train station reported nearly a 130,000 more departures between 11 to 27 October, compared to the same period of last year; in Chongqing (inner province), journalist found a large number of returnees, migrant workers are coming back earlier this year. - Demonstrations on street, complaints, lockout factory to prevent debt owners to go inside and loading assets (many cases reported in Guangdong regarding toys, shoes and other industries)
ENTERPRISES (manufactures) Problems: - banks and finance institutes refuse new loan (capital chain broken); - enterprise bosses mis-invested in the stock market and also “foreign currency leverage tools”, resulting in big losses (cash flow problem) - lack of new orders or do not have the confidence to take new order – no future income - exporters refuse to receive/load the products, income cut Reactions shutdown immediately, massive bankrupts (e.g. HK, Jiangsu), flexible employment (e.g. in Zhongshan), some factories “rent		GOVERMENT Responses to workers - prepay back-wages, (Guangdong for example) on factories' behalf - persuade workers to “calm down” Responses to enterprises - loan guarantee program, e.g. national gov’t 19 billion CNY ready; local initiates in Guandgong as well as in HK. - direct financial aid (?) ACFTU's attitude Apart from the usual “defending workers’ rights” view, Guangdong trade union also said “TU should lead

WORKERS

- being laid off without proper compensation

- going back to inner provinces (e.g. Guangzhou train station reported nearly a 130,000 more departures between 11 to 27 October, compared to the same period of last year; in Chongqing (inner province), journalist found a large number of returnees, migrant workers are coming back earlier this year.

- Demonstrations on street, complaints, lockout factory to prevent debt owners to go inside and loading assets (many cases reported in Guangdong regarding toys, shoes and other industries)

ENTERPRISES (manufactures)

Problems:

- banks and finance institutes refuse new loan (capital chain broken);

- enterprise bosses mis-invested in the stock market and also “foreign currency leverage tools”, resulting in big losses (cash flow problem)

- lack of new orders or do not have the confidence to take new order – no future income

- exporters refuse to receive/load the products, income cut

Reactions

shutdown immediately, massive bankrupts (e.g. HK, Jiangsu), flexible employment (e.g. in Zhongshan), some factories “rent

GOVERMENT

Responses to workers

- prepay back-wages, (Guangdong for example) on factories' behalf

- persuade workers to “calm down”

Responses to enterprises

- loan guarantee program, e.g. national gov’t 19 billion CNY ready; local initiates in Guandgong as well as in HK.

- direct financial aid (?)

ACFTU's attitude

Apart from the usual “defending workers’ rights” view, Guangdong trade union also said “TU should lead

• Federation of Hong Kong Industries says that among the 70,000 Hong Kong owned factories in Pearl River Delta, one fifth would shut down by early 2009, causing 2 million jobslost¹⁸.

• According to Yangcheng Evening News, the population of Dongguan city, an infamous industrial city, would drop from 12 million (as estimated in early 2007) to 6 million, by next spring¹⁹.

• Foxconn, the world’s biggest electronics contract manufacturer, plans to lay off 5% globally of its workforce to cut costs. The job cuts could leave about 30,000 Foxconn workers unemployed in China. The company, with its main plant in Shenzhen city, had already cut production, suspended recruitment of new employees and reduced overtime work since October to cut costs²⁰.

• For Hong Kong, a city famous for its financial infrastructure, its unemployment rate has gone up from 3.4% (July to September 2008) to 3.8% (September to November 2008).²¹It is estimated by mid-2009, the unemployment rate would reach 6%. Major employers in the banking industry, such as HSBC, Standard Charter have announced lay-offs plans.

Governments' interventions

With everyday news of factory closures and workers demonstrating on the street for missing wages, China's Poliburo member Li Changchun was sent to Pearl River Delta for a three-day visit in mid-October 2008. It is believed that the Central government would base on Li's observation and come up with solutions. In mid-November 2008, premier Wen Jiabao also visited Guangdong, promising to help investments from both Taiwan and Hong Kong.

• Beijing: to avoid unrest and recession after the Olympics, especially in the Beijing area, the city government, as well as the central government tend to provide more protection for enterprises in Beijing (for example, the first provincial / municipal level of re-insurance company, dedicated for providing fast loans for Beijing SMEs was first set up on 16 November 2008 in Beijing. The 1.5 billion Yuan fund was provided by the Beijing city treasury), to avoid massive lay-offs in Beijing. Also, the city government said that Beijing itselfis less likely to be affected by the export drop, as most of the industries in Beijing are for domestic consumption and are relatively services / technology-oriented, when comparedmwith the southern provinces.

• Hong Kong: traditionally Hong Kong-owned factories are the most vocal group²². Therefore, since the discussion of labour contract law, the trade associations in Hong Kong have been lobbying the national government to down-play the law or pressuring the Hong Kong government to lobby the national government. The ongoing factory closures serve as another reason for them to lobby the Hong Kong / Guangdong government to suspend the labour contract law, which is blamed for causing the closures. The Chief Executive of Hong Kong, Donald Tsang said openly that “Hong Kong enterprises worry that in complying with the Labour Contract Law labour costs will surge, flexibility in managing human resources will be undermined and labour disputes will arise”. He hoped Mainland authorities can introduce relief measures to address the issue²³.

Given that the main cause of factory closures is tightening credit from banks, especially for small/medium enterprises, on 29 October 2008, Premier Wen Jiabao promised that the Central Government would help Hong Kong to survive the financial crisis, by suggesting banks in Hong Kong with Chinese background to make loans easier for SMEs. Other offers include 1) to give more tax-rebate for exporting goods, 2) to help Hong Kong business to open the domestic market.

• Local governments in Pearl Rive Delta:

Dongguan city government has launched a one billion Yuan fund, to help companies in troubles. It includes paying wages arrears to workers affected (especially in factory closures, e.g Smart Union workers), reduce tax and factory rental.

The Shenzhen city's labour and social security bureau reported on 21 Oct, that it had paid out from its overdue wages fund for 10 million Yuan and published a list of 30 enterprises which failed to pay their workers. It has published an urgent notice on “stabilizing jobs for migrant works”, requesting the related authorities to give support, “early intervention” for enterprises which would encounter troubles, on 4 November 2008. Many labour activists in Southern China suspect that it also means to loose its implementation of Labour Contract Law. By 25 November, a researcher from the National Development and Reform Commission called at China Daily that “Employees who are at the most disadvantageous position should lower their expectations of income rise in order to keep their rice bowls”²⁴.

• The Guangdong Provincial Government, suddenly getting all the negative spotlights on factory closures, tried to down-play the scale of this challenge. On 17 November 2008, Liu Huanquan, chief of the SME Bureau of Guangdong Province denied the saying of “some 50,000 enterprises are shutting down in Guangdong”. He provided the number that 7,148 enterprises shut down during the first 9 months of 2008. He also said that during the first 9 months, 62,361 enterprises terminated their business licenses but 100,634 were newly registered (one of the reasons was shutting down and reopening as a way to avoid the responsibility imposed by the new Labour Contract Law).

The Guangdong Provincial Government is trying to ensure the existence of enterprises by launching a fund of 1 billion Yuan, from the provincial treasury, to set up a re-insurance company, to provide accessible loans to SMEs, as Beijing did. The Guangdong Government also commented that for those factories which closed down, most of them were merely too 'low-tech' to exist.

• Ministry of Human Resources and Social Security issued a notice on 17 November 2008, demanding all possible measures be taken to help struggling domestic enterprises weather the upcoming economic winter and stabilize employment situations. It also made a decision to put a temporary moratorium on the implementation of the long-overdue minimum wage levels throughout domestic enterprises²⁵. This decision had a great impact on workers, overall inflation rate for 2007 was at 4.8% while food price has gone up 12.3% (the 2008 statistics would be made available in early 2009)²⁶.

• Shaanxi Labour and Social Security Bureau has issued an Eight-point notice to prepare itself for the high number of returnees. Preventive measures on monitoring the situation and reporting to the higher level government to ensure stability and creating jobs, for example to raise a fund of 21 million yuan to create jobs in 21 labour-exporting counties²⁷.

Trade unions

On 22 November 2008, the Guangdong Federation of Trade Unions (GFTU) announced that they would be suspending collective wage negotiations. The Vice-chairman of GFTU, Kong Xianghong also 'praised' factories which did not openly lay off workers but forced them totake unpaid leaves as 'humane employers'. Yet it is not clear how many companies will rehire their former workers and if they do, whether they will pay the same wages or rehire them as ‘junior’ workers at a lower wage level²⁸.

The impacts of the financial crisis, positive or not, have not shown their full faces yet. While official statistics are not yet made available, workers and factories are still on the move, it isyet too early to conclude how it would affect the so-called 'world factory'. In the coming years we are going to see very different developments of China's labour situation. It would not beonly sweatshop stories, we would see industries striving for higher technology production,demanding for well-trained workers, governments investing for internal infrastructure and demands, workers struggling to come, stay or leave the industrial cities and more importantly, what happen to those who have decided to stay in the rural areas? Would China's agriculturalpolicies be able to offer them a living? When they are no longer migrant workers, what would be their new identities?

FOOTNOTES

1 Chen Zhiwu, professor of Yale University's School of Management, commented that if China could use foreign currency reserve to invest in foreign resources, e.g minerals in countries which are hit by financial crisis and internal social services, e.g provide better medical care for the lower income groups, then the financial crisis could make China a big winner after all (China Review News, 27 October 2008, http://gb.chinareviewnews.com/doc/1007/8/1/5/100781523.html?coluid=123&kindid=0&docid=100781523&date=1027141639).

2 Wu Li, vice-chief of the Institute of Contemporary China Studies of Chinese Academy of Social “The Communist Party of China has not predicted the occurrence of financial crisis when it raised the 'Scientific Development Concept'. Yet the Concept has some ideology, which can solve the economic fluctuations, facing by the Chinese economy” (Xinhua Net, 11 December 2008, http://news.xinhuanet.com/politics/2008-12/11/content_10489888.htm).

3 'Credit crisis - how it all began'. In Guardian. In 5 August 2008. Retrieved on 12 December 2008. http://www.guardian.co.uk/business/2008/aug/05/northernrock.banking

4 “Concerns on safety, tariffs hurt Chinese shoemakers”, in AFP, 13 December 2007 (retrieved from Taipeh Times on 9 December 2008, http://www.taipeitimes.com/News/biz/archives/2007/12/13/2003392390). In another interview, Li commented: “About 50% of the shoemakers that have closed down in Guangdong have moved their factories to China’s hinterland, setting up in Hunan and Henan in the center of the country, in Jiangxi in the east, and in Guangxi, which lies between Guangdong and Vietnam. A quarter have moved to other Asian countries such as Vietnam, India and Myanmar, while the remaining 25% have shut up shop but are undecided about their next move.” (“Last call for Guangdong shoemakers”, in Asia Times, 5 February 2008, http://www.atimes.com/atimes/China_Business/JB05Cb01.html).

5 The Chinese government maintained a peg of 8.27 Yuan per USD from 1997 to 2005. On 21 July 2005, the peg was finally lifted. The Yuan is now moved to a managed floating exchange rate based on market supply and demand with reference to a group of foreign currencies. On 10 April 2008, it traded at 6.9920 Yuan per U.S. dollar, which is the first time in more than a decade that a dollar bought less than seven Yuan. On 15 October 2008, it was traded at 6.83170 Yuan per USD, which is a 21.8% increase and the highest rate since the removal of the peg.

6 “More than 10,000 Hong Kong-owned Factories facing Relocation or Closure”, in Yangcheng Evening News, 28 December 2007.

7 Same as above.

8 ”Cold Winter of Lay-offs”, in China Newsweek, 29 October 2008 (http://news.sina.com.cn/c/2008-10-29/120216548971.shtml). However the scale of these 67,000 factories which closed down are not declared, which makes it difficult to judge, how big the impact on China's economy and labour market it would be. According to statistics from State Administration of Industry and Commerce by end of September 2008, China has 9.6 million registered businesses. The numbers for 2006 and 2007 are 9.19 million and 9.63 million respectively (People's Daily, 30 October 2008, http://www.gov.cn/jrzg/2008-10/30/content_1135295.htm).

9 “Statistics on Foreign Trade for the First Three Quarters of 2008”, in Ministry of Commerce, 17 November 2008 (http://zhs.mofcom.gov.cn/aarticle/Nocategory/200811/20081105897283.html).

10 Since 2005, better rural policies and higher inflation rates in cities have kept some migrant workers, who would prefer to stay with their families in the rural areas, not to return to work in the cities. It is reported that “Around 1.7 million migrant workers in the region who took annual leave in January during the Chinese New Year holiday didn't return afterward (to Shenzhen city)” (“China's factories hit an unlikely shortage: labor”, in The Christian Science Monitor, 1 May 2006, http://www.csmonitor.com/2006/0501/p01s03-woap.html).

11 When announcing the 11th Five-Year-Plan in late 2006, Guangdong Government has said clearly that “moving to services industries is its priority”. In 2007, it started by pushing the low-end industries out of the province, by cutting their tax rebates, such as in textiles and garments. However a new tax rebate was reintroduced in October 2008, when factories close down at a rapider rate than the government expected and wished (cf “China to raise export tax rebates for textile, garment products”, in China View, 22 October 2008, http://www.newsgd.com/news/china1/content/2008-10/22/content_4662027.htm).

12 See footnote 9.

13 See http://www.sxtvs.com/content/2008-10/25/content_712273.htm

14 “Sackings at Wal-Mart: Global restructuring or avoiding the new Contract Law?”, in IHLO, December 2007, http://www.ihlo.org/LRC/W/101207d.html.

15 “How will China Weather the Financial Storm?”, in Time, 23 October 2008, http://www.time.com/time/business/article/0,8599,1853112,00.html.

16 According to Chinese media, Smart Union intended to change from simply being a processing manufacturer and since June 2007, it invested more than 400 million Yuan in a silver mine in Fujian Province. Yet it turned out to be a poor investment and with a dropping export on toys, Smart Union ran out of cash and therefore had to announce bankruptcy (Sina Finance, 3 December 2008, http://finance.sina.com.cn/review/observe/20081203/22585587182.shtml).

17 “2.7 million job loss by Spring 2009, said the Foreign Investors Association”, in Liberty Times, 11 November.

18 “How will China Weather the Financial Storm?” in Time, 23 October 2008 (http://www.time.com/time/business/article/0,8599,1853112,00.html).

19 “A Painful Turn for Guangdong. Six million population lost in Dongguan”, in Yangcheng Evening News, 13 November 2008.

20 “Foxconn plans to lay off 5% of employees”, in Shenzhen Daily, 2 December 2008 (http://paper.sznews.com/szdaily/20081202/ca2905922.htm).

21 'Hong Kong Unemployment Rate Climbs to 1-Year High on Recession'. In Bloomberg. 18 December 2008. http://www.bloomberg.com/apps/news?pid=20601080&sid=aPSU03YXv1Mc&refer=asia Traditionally, the summer unemployment rate in HK is higher than the winter one, as more graduates would enter the labour market in summer time.

22 Many of the prominent Hong Kong businessmen are political figures in the region they invested, e.g. as delegates at the National People's Congress of PRC, legislative council members and political party leaders in Hong Kong. Also they consider themselves as the main contributor of China's economic growth as the first group to invest in China.

23 “Aid for HK enterprises on the Mainland proposed”, in Hong Kong Government News Website, 12 November 2008 (http://news.gov.hk/en/category/businessandfinance/081112/html/081112en03001.htm).

24 “Joint Efforts Needed to Weather Challenge”, in China Daily, 25 November 2008 (http://www.chinadaily.com.cn/opinion/2008-11/25/content_7236860.htm).

25 Same as above.

As it shows in the tables at IHLO's research, the minimum wages (which most migrant workers receive) is much lower than the average wages in the city. To make the ends meet, migrant workers who has the minimum wages as their basic wages, would have to work extreme long hours to earn the over-time wages. Very often their overtime hours is higher than the legal maximum. See the tables at “‘Average’ wage versus ‘minimum’ wages in selected cities in China”, in IHLO, October 2008 (http://www.ihlo.org/LRC/WC/071008b.html).

26 “Statistics release for 2007”, in National Bureau of Statistics of China, 28 February 2008 (http://www.stats.gov.cn/was40/gjtjj_detail.jsp?channelid=4362&record=17).

27 “Eight Measures to Actively Deal with the Wave of Returnees”, in Shaanxi Daily, 27 November 2008 (http://big5.gov.cn/gate/big5/www.gov.cn/fwxx/sh/2008-11/27/content_1161513.htm).

28 “Guangdong Provincial Trade Union suspends collective wage negotiations”, in IHLO, November 2008 (http://www.ihlo.org/LRC/W/271108.html).

Factory Closures Strain China's Labor Law

noreply@blogger.com (Unknown) — Sat, 17 Jan 2009 20:05:00 +0000

Sky Canaves
The Wall Street Journal
January 16, 2009

SHENZHEN, China -- The global economic downturn is testing China's efforts to improve labor laws, pitting the need to give basic legal protections to 700 million workers against the need to keep businesses afloat.

The country's economic emergence boosted incomes, but also led to complaints that workers' rights were being trampled. In response, the central government in January 2008 introduced workplace-protection legislation, known as the Labor Contract Law. The law sought to tighten job security, to make dismissing workers more difficult, and to guarantee severance pay of one month's salary for each year of employment. Last year, China added new job-discrimination laws and made it easier to file complaints against employers.

But as the global financial crisis hits the heart of the world's factory floor, labor activists say officials are turning a blind eye to the new requirements. Local governments deny they are becoming lax, yet complaints against employers languish in huge backlogs as many are simply shuttering their factories.

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Migrant workers who returned home from China's Guangdong Province after losing their jobs look for work at a labor market in Chengdu. One worker advertises that he will take any job.
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Migrant workers who returned home from China's Guangdong Province after losing their jobs look for work at a labor market in Chengdu. One worker advertises that he will take any job.
Migrant workers who returned home from China's Guangdong Province after losing their jobs look for work at a labor market in Chengdu. One worker advertises that he will take any job.
Migrant workers who returned home from China's Guangdong Province after losing their jobs look for work at a labor market in Chengdu. One worker advertises that he will take any job.

"The enforcement of the Labor Contract Law is facing new problems," Hua Jianmin, chairman of the National People's Congress Standing Committee, China's top legislative body, said last month at a meeting on the law.

One problem is that China's manufacturing sector contracted for the fifth consecutive month in December, according to the CLSA China Purchasing Managers Index.

"Pressures from the labor law may encourage factories to close rather than pay what they owe to workers under the law," says Liu Kaiming, executive direct at the Institute of Contemporary Observation, a Shenzhen-based labor group.

Even before the downturn hit, business groups protested that the new law would be costly and burdensome. Now, workers say companies avoid paying claims by liquidating or by just disappearing without properly settling their business.

In the first 10 months of 2008, say authorities, 15,661 enterprises in Guangdong, the manufacturing-heavy southern province, shut their doors. Over half of those -- about 8,500 -- ceased doing business in October.

To aid businesses, Beijing has permitted local authorities to freeze minimum-wage levels and to reduce or suspend employers' social-insurance contributions.

The vice mayor of Dongguan, in Guangdong, says many employers hope the central government will suspend the Labor Contract Law, and his office has sent that request to Beijing. "We can't ourselves halt the implementation of a national law," says Jiang Ling.

Giving business such leeway could ultimately undermine trust in the still-developing rule of law, says Andreas Lauffs, a partner at the law firm of Baker & McKenzie who focuses on Chinese labor issues.

The situation keeps workers in limbo at a time when the plight of those unemployed by mass layoffs or illegal factory closings has drawn wide attention. The Chinese media have reported numerous recent incidents of labor unrest, from taxi strikes to protests by factory workers over unpaid wages.

After their factory closed last month, workers from the Shatangbu Yifa Rubber & Hardware Factory in Shenzhen filed for the back pay and severance promised under a contract required by the new law.

The Hong Kong-based owner disappeared, according to Shenzhen officials. That left many migrant workers stranded without enough money to return to their hometowns hundreds of miles away. About a third of the factory's 300 workers went to the Shenzhen government to request a speedy resolution of their case.

"We are aware of our rights, but we don't have enough time to go to court. We just want to get paid and go home before the holiday," said one worker, referring to the Lunar New Year celebration this month.

The former owner couldn't be located to comment.

Local officials later gave the employees 500 yuan ($73) in back pay from a special fund, but said other claims would have to go through a bankruptcy court.

The state media's heavy promotion of the new law has resulted in a big jump in labor disputes. In the city of Guangzhou, the local arbitration office received more than 60,000 cases from January through November, about as many as it handled over the previous two years combined. The fast-rising caseload has overwhelmed the system.

"Before, we would try to mediate more disputes before going to arbitration, but now that workers have the right to go to arbitration, they choose to do that right away," said Huang Huiping, deputy director of the labor bureau in Dongguan. "Right now, the number of labor arbitrators is not sufficient."

On Jan. 1, central labor authorities introduced new rules to allow arbitrators to give priority to claims filed by more than 10 workers.
—Ellen Zhu in Shanghai contributed to this article.

A Gay-Pride Revolution in Hong Kong

noreply@blogger.com (Unknown) — Mon, 15 Dec 2008 18:08:00 +0000

Deena Guzder and Ann Binlot / Hong Kong
NEWSWEEK
Sunday, Dec. 14, 2008

There were no drag queens in sexy ensembles with heavy makeup strutting down the streets in platform heels or buff shirtless sailor boys splayed like starfish on moving floats. But Hong Kong's first official gay-pride parade Saturday was still a colorful gathering; in fact, for a country that rarely acknowledges homosexuality, let alone celebrates it, it was downright revolutionary.

For a few hours, a city that usually seems immune to surprises watched in awe as approximately 1,000 paradegoers stopped traffic, filled the streets and spread their message to "celebrate love." A rainbow-colored dragon bobbed over the heads of carefully coiffed men donning dainty dresses and dancing to "Celebrate Pride," which warbled through a loudspeaker in the center of the city. Men with fiery red-feathered tiaras chanted, "Pride parade! Pride parade! Pride parade!" in Cantonese and English while marching through Hong Kong's congested Hennessy Road waving multicolored pride flags. (See TIME's top 10 pictures of 2008.)

Although Hong Kong has held several small demonstrations against homophobia, this was the first parade solely dedicated to celebrating queer identity. "We came out today to show the world that people in the queer community are normal people too," said Ariel Wong, a 21-year-old student at the Hong Kong Polytechnic University who wore a rainbow Afro wig and distributed stickers with pink hearts on them. The parade was co-organized by Rainbow of Hong Kong, Midnight Blue, Social Movement Resource Centre and the Women Coalition, with support from groups working on myriad issues, including civil rights, HIV/AIDS education and transgender awareness. It represented progress for China's gay community, marking the first large-scale event of its kind in any major Chinese city (only Taipei has hosted similar events). Antonio Licon, a Web designer for Hong Kong Magazine who grew up in Hawaii, said, "I think socially there are a lot of pressures in Hong Kong to conform to expectations and not disappoint parents."

People emerged from shops and restaurants to witness the historic event. While some spectators cheered in support, most looked confused and bewildered. "I never thought I would see this in Hong Kong," said Kevin Li, a salesman who nevertheless believes the younger generation is less homophobic than the older one. "Our society has different values than the West regarding sex because we are more traditional and more Chinese."

Yet it was Victorian colonial laws, not conservative Chinese attitudes, which first criminalized homosexuality. In 1901 British colonial laws threatened homosexuals with life imprisonment for anal intercourse and up to two years imprisonment for any so-called indecent acts involving two men, even if the acts occurred in the privacy of their home. In 1980, after an inspector of the Royal Hong Kong Police Force committed suicide as a group of officers were about to arrest him on suspicion of having engaged in homosexual activities, a debate sparked on legalizing homosexuality. Finally in 1991, after more than a decade of discussion, it was decriminalized.

But even if homosexuality is no longer a crime in Hong Kong, a stigma remains, as do discriminatory statutes with double standards. In 2005, Hong Kong–based civil rights attorney Michael Vidler successfully challenged a law that set the legal age of consent 21 for homosexuals (the age of consent for heterosexuals was 16), with a punishment of up to life in prison for violators. The law was ruled unconstitutional, but it has not been formally repealed.

"There are still archaic ideas of homosexuality as a form of gross indecency," said Vidler, who said he has seen cases of discrimination against homosexuals in the work force and housing market. "Hong Kong says it's a world city, but [it] has protocols in place that show it is still a backward country in regard to homosexuals' rights." Hong Kong lacks any non-discriminatory ordinance, and many locals still regard homosexuality with unease. Eric Herrera, a member of a white-collar gay-rights group called Fruits in Suits, which helped organize the parade, said, "I have no problem walking down the streets arm in arm with my partner of 21 years, but it makes many people very uncomfortable."

Many of the parade participants came from mainland China and Hong Kong's large expatriate community. "I've lived in China for a long time, and I've never marched in a gay-pride parade, so I always had my sister march in Chicago on my behalf," said Scott Wilson, who works in Wanzhou province. Amnesty International's LGBT coordinator in Hong Kong, Medeleine Mok, said, "In mainland China, it's impossible to have a gay-pride march, so this is a very important day that has attracted many people to Hong Kong."

The parade emphasized celebrating diversity and equality but also aired grievances with the Chinese government. Gun Lu of Beijing held a sign protesting censorship of movies and television shows that deal openly with homosexuality. In January 2007, the Broadcasting Authority issued a warning to producers of a show called Gay Lovers for presenting a "pro-gay" view. In March, Hong Kong's legislative council panel unanimously passed a motion demanding that the Broadcasting Authority withdraw its earlier ruling. "Non-heterosexuals rarely appear in the media, and when they do, they are portrayed as effeminate, flamboyant, sissies, perverts or AIDS carriers," said Dr. Ching Yau, an associate professor who teaches courses on media and gender studies at Lingnan University.

Such attitudes were reflected in the fact that, though Pride Parade 2008 turned out to be a success in many ways, planning the event was no easy matter. "While organizing the parade, we encountered many obstacles from the government, the police and a bus company," said Wai-Wai Yeo, a member of the Hong Kong Pride 2008 Organizing Committee. The local company Citybus refused to rent a double-decker to organizers of the city's parade because of concerns about its image. "This was a blatant act of discrimination, especially seeing the fact that this is a legal parade and the Hong Kong police have granted a permit," says Betty Grisoni, co-founder of a lesbian-rights organization called Les Peches, which helped organize the parade. A Citybus spokeswoman said on Dec. 11 that it would not discriminate against any party and that it was a commercial decision.

While significantly smaller in comparison to its counterparts in Berlin, New York City and San Francisco, Pride Parade 2008 set a precedent for what may become an annual event. "You have to start small," said Bill Boyle, a retiree who lives in Hong Kong and Toronto, as he watched the parade. "You want to educate the general population, not only to your presence, but also to the fact that you are just like them. You have the same right to fall in love like everyone else has and you need to have the same legal rights, and those legal rights are not here yet for people who are gay."

Why China Is Too Scared to Spend

noreply@blogger.com (Unknown) — Mon, 15 Dec 2008 07:00:00 +0000

Boosting consumption is key to economic recovery. But that will take fixing a disastrous health system.
Mary Hennock
NEWSWEEK
Dec 22, 2008
http://www.newsweek.com/id/174524

This month marks the 30th anniversary of Deng Xiaoping's economic reforms in China. But rather than celebrating, officials are in a panic. The global economic crisis has rammed home the message that China's old export-driven development model won't work forever; last month exports were down for the first time since February 2002, and overall GDP growth has dropped from nearly 12 percent last year to a projected 8 percent in 2009. Economists and party leaders now agree: the only way to keep China humming is to boost domestic consumption. That means getting Chinese people spending. But there's a problem. China's social-security network is broken, badly, and nowhere are the problems worse than in health care. A serious illness can still wipe out a family's savings. As long as that's the case, ordinary citizens will keep sticking large chunks of their income under their mattresses. And while that lasts, consumer demand will lag.

It's not that China doesn't have the money. Just the opposite: Chinese householders currently sit on savings worth $3 trillion, thanks to a savings rate of more than 25 percent, or about 16 percent of GDP—which is higher than all OECD countries, according to the World Bank. In theory, that cash could help China out of its conundrum. "We have a large domestic market. Savings are high, economic reserves are high," Vice Commerce Minister Yi Xiaozhun told a nervous gathering of elite Chinese entrepreneurs on a recent weekend. The government has already tried to allay fears with a stimulus package worth $586 billion, which Beijing will use to counter the effects of factory closures. But it plans to do this largely through infrastructure spending. According to the cabinet-level National Development and Reform Commission (NDRC), some 45 percent of the package will go to projects such as new railways, ports and power stations. Meanwhile, only one percent of the total stimulus spending is pegged for health care, culture and education.

A growing pool of experts argue that that represents a missed opportunity and is unlikely to help China long-term. Huang Ming, a Cornell professor who teaches at Beijing's Cheung Kong Graduate School of Business, sums up a widely held view when he says, "It's in the interest of the government to develop the social safety net fast. It will stimulate consumption. [Chinese] save because they are frightened of getting sick." The costs of illness can be ruinous. A better health-care system would unleash domestic spending and thereby boost employment, especially in retail and services. It could even offset the social unrest Chinese leaders fear will come with slower growth. "If you have nationwide health care, people are less likely to go on the street," says Huang.

Yet tackling China's vast medical crisis is daunting. Even President Hu Jintao acknowledged in 2006 that "medical-service fairness is declining and medical fees are too high for most people to afford." He called for faster development of rural services, a network of city clinics, timely treatment and safe drugs at affordable prices.

But progress has been glacial, centered on pilot studies and exercises more visible to experts than the public. In October 2008, the NDRC issued a road map for reforms. But the document was vague and said little beyond confirming that health-care reform is "an urgent expectation of the majority of Chinese people."

That's putting it mildly. While the 30 years since Deng's reforms have brought scorching growth, in terms of health care China has moved backward. Hu Shanlian, a health economist who has been advising the Chinese government for 17 years, says there's been "great change since the 1960s," when there was "quite a good network for farmers to seek health care," including a broad system of "barefoot doctors" in village clinics as well as decent and affordable hospitals in towns. In the 1980s, this system collapsed when market reforms did away with the communes that funded such facilities. Something similar happened in cities, as state enterprises were privatized or laid off workers, cutting them off from the work-unit-based welfare net. In 1980 only one fifth of health-care costs were paid out of patients' own pockets, but by 2005 that had risen to more than half.

When the Mao-era system was dismantled, barefoot doctors disappeared and Chinese medicine became city- and hospital-based. Hospitals were permitted to charge for tests and drug prescriptions, and the more costly the procedure, the higher the revenue for both hospitals and doctors. The result has been "overprescription and overutilization of services," says Dr. Sarah Barber, who heads the World Health Organization's Health Policy and Systems team in Beijing.

With only a patchy network of primary-care clinics left, patients these days struggle to find the right doctor or diagnosis since they can rarely afford to visit many hospitals.

Hospitals charge fees way beyond the reach of ordinary Chinese. The problem is illustrated by the case of Liu Jiangtao, a 25-year-old party member who fell sick with leukemia in mid-2007. Liu currently lies in Beijing's No. 307 military hospital, where he's been trying to persuade TV and radio stations to help him raise the $58,000 he needs for a bone-marrow transplant. That sum is the equivalent of 40,000 times the annual income of his parents, who grow wheat and flax on the salty margins of the Yellow River. Liu was originally hospitalized in Shandong's Dongying City, but after eight months of ineffectual chemotherapy, his parents in May asked relatives for money to move him to Beijing. "Now most of my relatives don't want to communicate with us," says Liu. Meanwhile, delay in treatment has eroded his chances of survival.

Liu's plight points to another basic problem: the lack of adequate health insurance in China, a supreme irony for a country that's still officially communist (indeed, many capitalist countries in the West provide more comprehensive care for free). Liu has insurance, but it's China's most basic program, the Rural Cooperative Medical Scheme (RCMS). The RCMS was rolled out in the last four years. It costs participants as little as $3 a year and has been extended to 90 percent of China's farmers in record time. But the system is badly flawed. For one thing, it's a pay-first, claim-later setup, which doesn't do much good to patients like Liu who can't come up with huge fees in the first place. For another, most claimants get back only 20 to 30 percent of their costs. Many of China's poorest, sickest or least-educated citizens find the RCMS baffling and can't manage to jump through its procedural hoops.

Employer-based schemes have similar problems. Benefits aren't portable geographically so they don't help China's massive migrant population, and workers who lose their jobs can't take their contributions with them. Among city dwellers, health insurance coverage levels dropped from 45 percent of the long-term, settled population in 1998 to 39 percent in 2003. To tackle this, the government consolidated numerous employment-based deals into a single package better suited to job mobility. It then plugged a key gap for migrants with a new safety-net scheme that covers both urban and rural poor. Yet the overall health-insurance system remains so badly designed that simply adding money, as the government is doing, will solve little. Extra insurance funds simply tend to be soaked up by profit-hungry hospitals.

Still, the government is trying. Total government health spending increased from $143 billion in 2006 to an estimated $219 billion in 2007, according to Hu, the economist. And Hu and Barber say that the government is rolling out multiple new pilot schemes, experimenting with fixing drug prices, drawing up a national recommended drug-purchase list and passing price-label laws to prevent rip-offs. Village medics (of whom China has far too few) are to get guaranteed basic salaries in five poor provinces to stop them from relying on prescribing. Perhaps the most promising experiment is taking place in Chongqing, where rural and urban insurance pools are being combined to create portable, individual insurance, something China's lacked until now.

So far the government has avoided fanfare; it seems to want to avoid any big announcements and to build on the results if they turn out to be positive. That's good research practice, says Barber. "In health systems it's not one fix, so you look at your system and adjust; the key is to monitor what's happening," she says.

Yet this approach may not be politically decisive enough for these troubled times. "What China really needs is structural transformation," says Michael Shen Minggao, a former investment banker who is now chief economist with the highly regarded Caijing magazine. Without it, he argues, the Chinese economy may still manage to grow at 8 percent or more next year, but consumption won't budge. And that spells trouble long-term. Until Chinese start buying, their country's economic prospects over the next 30 years may fall far short of the world-beating growth they've enjoyed for the last 30.

Workers riot in south China over job losses: government

noreply@blogger.com (Unknown) — Thu, 27 Nov 2008 18:21:00 +0000

AFP
November 26, 2008

GUANGDONG, China (AFP) — Hundreds of workers sacked from a toy factory in China clashed with police and smashed buildings, authorities said Wednesday, in the latest bout of violent unrest linked to rising unemployment.

The riot occurred Tuesday in Guangdong province, southern China's export heartland where similar protests have flared recently, after about 2,000 workers gathered to demand severance pay, according to the local government.

The workers smashed offices at the factory where they used to work and overturned police cars, with the violence leaving six people injured, the government of Zhongtang township where the unrest occurred said in a statement.

"(Rioters) smashed one police vehicle and four police patrol cars... fought with security guards... and entered factory offices breaking windows and destroying equipment," the statement said.

The riot occurred at the Kaida Toy Factory, a company owned by a Hong Kong firm in Zhongtang that is in the process of laying off workers, the statement said.

A Zhongtang policeman surnamed Huang told AFP that 19 people had been arrested.

"Our investigation is continuing as not all of these people were employees of the Kaida Toy Factory," Huang said, adding that the situation was calm on Wednesday and authorities were looking to ensure there was no more unrest.

The Zhongtang government said that up to 500 workers were responsible for the riot, while 1,500 others "looked on."

The factory has been operating for more than 20 years and employed up to 6,500 workers, according to the government statement.

One worker surnamed Hu told the Guangzhou Daily the factory laid off over 380 workers on Wednesday last week, giving more severance pay to workers who had been employed for more than seven years and less to other workers, it said.

"Many workers thought this was unfair and negotiations between the factory and the workers did not reach a resolution on the issue," the paper quoted Hu as saying, adding more job losses were expected this week.

Southern China has enjoyed an export-driven boom in recent years supplying the world with cheap toys, gadgets and clothes.

But amid the downturn in the global economy, coupled with rising labour costs, expensive raw materials and the appreciation of the Chinese currency, factories have found it difficult to make ends meet.

Up to 7,000 laid-off workers staged a similar protest in Guangdong last month after another Hong Kong-owned toy factory, one of China's biggest, closed down.

China's social security minister, Yin Weimin, last week described the employment situation across the country as "critical", as the nation's police chief warned his deputies that this could lead to unrest.

"(You) should be aware of the challenge brought by the global financial crisis and try your best to maintain social stability," Public Security Minister Meng Jianzhu told his deputies.

China's economy has slowed sharply in recent months amid the global crisis, and the World Bank has forecast growth of 7.5 percent for next year, which would be the nation's slowest expansion in nearly two decades.

However the Zhongtang government maintained that the layoffs at the Kaida toy factory were not directly linked to the global economic downturn, rather an expiration of labour contracts.

Kaida's mainland operations were not immediately available to comment.

China's Agrarian Revolution - Beware of Radical Change

noreply@blogger.com (Unknown) — Wed, 26 Nov 2008 14:46:00 +0000

John A. Donaldson & Forrest Q. Zhang
The Straits Times, Singapore
Nov 24, 2008
http://www.straitstimes.com/Review/Others/STIStory_306007.html

Both writers are assistant professors in the School of Social Sciences, Singapore Management University. They recently carried out extensive fieldwork on agricultural land reforms in rural areas of Yunnan and Shandong in China.

A REVOLUTION in China's agriculture is under way. You would know that if you have been reading recent news reports. But this revolution actually started well before the decisions that emerged last month from meetings of the Chinese Communist Party.

Those decisions received a great deal of attention from China watchers. Many anticipated even before the decisions were made that the government would allow tacit privatisation of land or at least permit China's farmers to sell their land usage rights. Others reported that China was allowing farmers for the first time to lease their land to others, which should allow them to secure loans on their land. Many saw the anticipated increase in the scale of agricultural production as a way of modernising the Chinese countryside. They joined a growing chorus urging China to liberalise land ownership for the sake of increasing production and pulling hundreds of millions of peasants into the more prosperous urban economy.

All these views are based on misunderstandings of China's situation. In fact, the reforms that were preliminarily announced last month will not fundamentally alter the collective land ownership system that has been in place for about three decades.

To be sure, party documents have emphasised several issues that the new steps are designed to address, including the minuscule scale of production that occurs on tiny plots of land, as well as the lack of commercialisation of China's agricultural products. Some have concluded from this that China's leadership was considering allowing farmers to sell their land rights. However, the policies that were released by the party heralded no new approach to land ownership. China's central government has re-committed itself to closing the income gap between rural and urban areas, but it has pledged to do so under the current system of land ownership.

Indeed, Chinese farmers have for years been able to transfer land usage rights and increase the scale of production. Agricultural production has already been commercialised and urban capital has already penetrated China's agricultural system. More importantly, these increases in scale occurred within the current system.

Rental markets are already well established throughout much of the countryside, and have been codified into Chinese law since 2002. Strikingly, the 'new' measures that emerged from the recent party conference were word-for-word the same as the old 2002 law. Even as early as in 2001, rural households in many counties in the relatively wealthy coastal province of Zhejiang, for instance, transferred as much as 60 per cent of land to others. The revolution that many China watchers expect did not begin last month - it began years ago.

Furthermore, according to research we conducted last year in the south-western province of Yunnan and Shandong on China's northern coast, many agricultural products are being produced on an impressive scale. Plantations nearing 10,000 mu (667ha) employing thousands of rural workers are already being formed. The view of China's agriculture as based on subsistence agriculture is outdated. China's agriculture is already shifting to large-scale, specialised, commercialised production.

This scaling up is occurring as rural farmers adopt a variety of roles - from commercial and entrepreneurial farmers, to rural workers with varieties of relationships vis-a-vis agribusiness. And because this increase in scale occurred without farmers abandoning their land or their land rights, they have benefited economically. The scaling up has occurred without the tumultuous upheavals that would likely occur if China chooses to privatise land ownership at this point.

Recent media reports appear to be based on an incorrect assumption that allowing farmers to buy and sell their land would benefit them. In contrast, we fear that allowing the sale (as opposed to the rental) of land usage rights, or any moves to otherwise privatise China's land ownership, would likely return China to the days of relatively large land-holdings and massive numbers of landless farmers.

If the current system were changed, it would make it easier for rapacious officials and business people to obtain land from peasants. It will probably not increase the productivity of agriculture, and enhance the efficiency of production only by slashing surplus labour and cutting off millions of farmers from their main source of income. Poor farmers are not likely to obtain much financing by using their meagre plots as collateral. Indeed, such financing would allow banks to foreclose on farmers during inevitable downturns.

China's current land ownership system has proven to be not only adaptable, but also conducive to the development of rural markets and agricultural modernisation. Eliminating land usage rights, or allowing the sale of such rights, will reduce the political power of farmers vis-a-vis other powerful actors, and add to landlessness in China.

Massive riot in northwestern China

noreply@blogger.com (Unknown) — Wed, 19 Nov 2008 06:19:00 +0000

John M. Glionna
Los Angels Times
November 18, 2008

Thousands, angered over a plan to raze a city center, burn cars and battle police with rocks, iron bars and axes. A Communist office is overrun and 60 officials are injured.

Reporting from Beijing -- An angry crowd of 2,000 rioted in northwest China's Gansu province over a government plan to demolish a downtown area, torching cars and attacking a local Communist Party office, injuring 60 officials, state-run media reported Tuesday.

At one point, rioters met a surging wall of armed police officers with a hail of rocks, bricks, bottles and flowerpots. The crowd later confronted police with iron bars, axes and hoes as they tried to hijack a fire truck and smashed windows and office equipment in two government buildings.

The violence, one of the most marked instances of social unrest to grip China in recent months, was sparked by government plans to relocate the city of Longnan's administrative center after May's devastating earthquake, according to the Xinhua news agency.

State-run press has reported on numerous pickets and demonstrations that have broken out across China in recent weeks, including a two-day strike by disgruntled taxi drivers in the southwestern Chinese city of Chongqing.

Earlier this month, a crowd of 400 in the southern boomtown of Zhenzhen threw stones and set fire to a police car after officers tried to stop a motorcyclist at a checkpoint. The cyclist fled and was killed when he hit a lamppost.

In June, 30,000 people demonstrated in the southwestern province of Guizhou, setting fire to cars and the local Communist Party building following rumors that officials had tried to cover up the death of a teenage girl.

Activists warn that tensions over the sudden downturn in the Chinese economy could provoke similar public outbursts, even though police have made efforts not to immediately resort to violence in quelling the riots.

"The government's emphasis on maintaining a harmonious society just extenuates the levels to which it is worried about these kinds of threats to social stability," said Joshua Rosenzweig, a Hong Kong manager of research at the Dui Hua Foundation, a human rights group.

"I don't think we're even close to seeing the real impact of the global financial crisis on Chinese society. I'd be surprised if the government wasn't very concerned about the increasing level of social unrest all over China."

Chinese economists say that rising wages throughout China have led many laborers to expect better working conditions and residents to demand more accountable government. "The local government has become the front line of conflict," said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

"But there is no channel to allow people to express their will. They lack the right to speak, the right to organize and unionize to represent their interest, therefore they can only use an irrational way by demonstrating or rioting to solve problems."

But government officials have recently began to forego a decades-old policy of swift repression to meet public demonstrations. Following a two-day strike, Chongqing taxi drivers were able to air their grievances in a three-hour meeting with government officials that was available online across China.

And officials in Zhenzhen moved quickly to counteract claims of police violence following the motorcyclist's death -- promising compensation of nearly $30,000 to the victim's family.

"In these cases, as well as labor and factory strikes, the government policy now seems to involve much less police response," said Rosenzweig. "Fewer labor leaders have been detained and prosecuted for criminal offenses. There's much more emphasis on trying to mediate disputes."

The melee in Longnan began when about 30 angry residents gathered Monday outside the party office, but the crowd soon swelled into the thousands, Xinhua reported.

He Zhouwa, manager of a local machine brick factory, said people were ready to use any means possible to stop the government plan to relocate the city center.

"People are still at the municipal party office compound," he said late Tuesday. "I did not dare to go there, but everyone is talking about this. There were hundreds of petitioners there last night and this morning."

A Longnan city government statement said the protesters, many of whom had come to petition government officials over the loss of their homes and land, were "incited by a few people with ulterior motives."

Realities of China today

noreply@blogger.com (Unknown) — Wed, 12 Nov 2008 16:10:00 +0000

Martin Hart-Landsberg
Against the Current
November/December 2008, No. 137
http://www.solidarity-us.org/node/1940

Martin Hart-Landsberg is Professor of Economics and Director of the Political Economy Program at Lewis and Clark College, Portland, Oregon; and Adjunct Researcher at the Institute for Social Sciences, Gyeongsang National University, South Korea. His publications include: Marxist Perspectives on South Korea in the Global Economy (2007), China and Socialism: Market Reforms and Class Struggle (with Paul Burkett, 2005), Understanding Japanese Capitalism (with Paul Burkett, 2005) and Development, Crisis, and Class Struggle: Learning from Japan and East Asia, ( with Paul Burkett, 2000).

Interest in the post-1978 Chinese market reform experience remains high and for an obvious reason: China is widely considered to be one of the most successful developing countries in modern times. The Chinese economy has recorded record rates of growth over an extended time period, in concert with a massive industrial transformation. Adding to the interest is the Chinese government's claim that this success demonstrates both the workability and superiority of "market socialism."

There are those on the left who share this celebratory view of the Chinese experience, believing that it stands as an effective rebuttal to the neoliberal mantra that still dominates economic thinking. Therefore, they encourage other countries to learn from China's gradual, state controlled process of marketization, privatization, and deregulation of economic activity. A small but significant number share the Chinese government's view that China has indeed pioneered a new type of socialism.

Many on the left also believe that China may soon be capable of anchoring an alternative international economic system, thereby offering other countries the opportunity to reduce their dependence on the current U.S. dominated system and pursue their own independent development strategies.

Unfortunately, as argued below, there is no justification for this positive perspective on the Chinese experience. First, regardless of what Chinese leaders say, China is not pioneering a new form of market socialism - rather the reforms have led to the restoration of capitalism. As a result, Chinese internal dynamics are clearly hostile to the creation of any anti-capitalist alternative. Second, the reforms have produced an increasingly exploitative growth process, one that is generating considerable wealth for a small minority at unacceptably high cost for the great majority of Chinese working people.

Finally, China's growth process is now structurally enmeshed in, and dependent upon, the operation of a broader process of regional and international restructuring, one controlled by transnational capital. As a result, China is not only incapable of serving as an anchor for an alternative global economy, its accumulation dynamics actually contribute to the strengthening of existing international structures of power and the global imbalances and tensions they generate.

The stakes are high in this engagement over the nature and significance of the Chinese experience. For example, left support for the Chinese reform experience encourages, consciously or unconsciously, the mistaken belief that socialism can be built through the use of markets and a closer integration with global capitalist accumulation dynamics. At a minimum, this leads to confusion about the nature of socialism, and of capitalism as well.

This is more than a theoretical concern: one finds in many countries - including Cuba, Venezuela, South Africa and Brazil -- advocates for socialism who argue that their respective governments should implement Chinese style market reform policies.

Chinese workers, in growing number, are beginning to challenge Chinese state policies, not just in response to the exploitation they experience but also because of their renewed interest in socialism itself. It is therefore vital that we develop an accurate understanding of the Chinese experience, both to provide support for those seeking socialist renewal in China and to ensure that efforts at social transformation in other countries are not compromised by false understandings of the dangers of markets and capitalist imperatives.

China's structural transformation
In 1978, two years after the death of Mao Zedong, the leadership of the Chinese Communist Party, led by Deng Xiaoping, decided to radically increase the economy's reliance on market forces. The leadership claimed that such a step was necessary to overcome the country's growing economic problems which were alleged to be caused by Mao's overly centralized system of state planning and production.

Political and economic changes were definitely desired by the majority of Chinese. Deng and his followers, however, greatly overstated the severity of existing problems and, more importantly, ignored popular calls for an exploration of other, non-market reform responses.

Once begun, the market reform process quickly became uncontrollable.(¹) Each stage generated new tensions and contradictions that could only be resolved (given the leadership's opposition to worker-community centered alternatives) through a further expansion of market power. The "slippery slope" of market reforms thus led to an eventual privileging of market dynamics over planning, private ownership over public ownership, and foreign enterprises and markets over domestic ones.

Economic transactions are now overwhelmingly shaped by market prices. The share of retail sales made according to market determined prices rose from 3% in 1978 to 96.1% in 2003. For producer goods, the share rose from zero to 87.3% over the same period.(²)

The growing industrial dominance of the private sector is also clear. In 1978, state owned enterprises accounted for all value added in China's industrial sector (defined as mining, utilities, and manufacturing). By 2003, the private sector share was larger than the state sector share: 52.3% to 41.9%.(³) But even this diminished state share overstates the actual "economic weight" of state production.

Recognizing that many state enterprises are now jointly owned by private interests - either through joint venture or stock ownership - the Organization of Economic Cooperation and Development (OECD) classifies state firms as either directly or indirectly controlled, depending on whether the state share of paid-in capital is greater than 50% of the total. In 2003, directly controlled state enterprises accounted for only 22.9% of industrial value added - less than a quarter of the total.

The declining strategic importance of the state sector becomes even clearer if we narrow our focus to manufacturing. The OECD has divided China's manufacturing sector into two groups. The first includes the five industries that continue to be dominated by state production: petroleum processing and coking, smelting and pressing of ferrous metals, smelting and pressing of non-ferrous metals, tobacco processing, and transport equipment.

The second and larger group (which accounts for over 75% of manufacturing value added) is dominated by private enterprise. This group is made up of 23 different manufacturing industries, including food processing, textiles, garments, chemicals, medical and pharmaceuticals, plastics, ordinary machinery, special purpose machinery, electrical equipment, and electronic and telecom equipment. As the OECD explains:

In 1998 the private sector produced the higher share of value added in only 5 out of these 23 . . . manufacturing industries. By 2003, this was true for all 23 of these industries. Moreover, in half of them, private firms produced more than three-quarters of output. Overall in these 23 industries, the private sector employs two-thirds of the labor force, produces two-thirds of these industries' value added and accounts for over 90 percent of their exports.(⁴)

State-owned enterprises do remain important and the Chinese state still exercises control over critical sectors of the economy, but these areas of strength are now largely limited to finance and activities supported by state ownership of natural resources. Thus, in 2006, three state oil companies accounted for half of the earnings of the 160 largest "state owned monopolies and oligopolies." In fact, "Up to 80 percent of the year-on-year increase in profits realized in 2006 by all Chinese enterprises were attributable to . . . monopoly financial groups or monopoly firms in the areas of oil and petrochemicals, electricity, coal and metals."(⁵)

Foreign capital also enjoys a greatly strengthened role in the Chinese economy. The share of foreign manufacturers in China's total manufacturing sales grew from 2.3% in 1990 to 31.3% in 2000.(⁶) Perhaps more revealing, a 2006 government report concluded that foreign capital holds a majority of assets in 21 out of 28 of the country's leading industrial sectors.(⁷)

One consequence of this development is that China's economic growth has become increasingly dependent on foreign produced exports. Foreign firms dominate China's export activity: their share of China's total exports grew from two percent in 1985 to 58% in 2005 (and stands at 88% for high tech exports.(⁸)

Moreover, these exports are increasingly being produced by 100% foreign owned firms. A case in point: the share of computer related exports produced by 100% foreign-owned firms increased from 51 to 75% over the period 1993-2003.(⁹) As a result of these trends, the ratio of exports to GDP has climbed from 16% in 1990 to over 40% in 2006.

In sum, while state planners and enterprises continue to play an important role in China's economy, state power has been used to shape an accumulation process that is now dominated by private (profit-seeking) firms, led by foreign transnational corporations, whose production is largely aimed at markets in other (mostly advanced capitalist) countries.

Regardless of how one might evaluate the performance of the Chinese economy, it is hard to imagine how this development can be viewed as laying the foundation for an alternative to capitalism, at either national or international levels. Rather it points to the conclusion that capitalism itself has been restored in China.

Social consequences of market reform

Many on the left are no longer interested in the debate over whether China is socialist. Rather, they are concerned with whether China's growth and transformation has led to "successful" economic development. For a majority, the answer is an unequivocal "yes." This answer appears largely based on a consideration of a limited but important set of indicators: rates of growth of foreign investment, exports, and GDP.

If we broaden our notion of development, however, to include measures of working-class well-being, the answer tragically changes. The reality is that China's market reform polices have created a growth process underpinned by increasingly harsh working and living conditions for the great majority of Chinese.

Perhaps most surprising is the fact that the country's rapid growth has failed to generate adequate employment opportunities. According to the International Labor Organization (ILO), total urban (regular) manufacturing employment actually declined over the period 1990-2002, from 53.9 million to 37.3 million.(¹⁰) And while there was a small increase in total urban employment, almost all the growth was in irregular employment, meaning casual-wage or self-employment - typically in construction, cleaning and maintenance of premises, retail trade, street vending, repair services or domestic services.

More specifically, while total urban employment over this 13-year period grew by 81.7 million, 80 million of that growth was in irregular employment. As a result, irregular workers now comprise the largest single urban employment category - much as in Africa and Latin America where such an outcome is blamed on stagnant capital accumulation. In addition, the ILO reports declining labor force participation rates and double digit unemployment rates for urban residents.

The reform process has taken an especially heavy toll on state workers. According to Chinese government figures, state-owned enterprises laid off 30 million workers over the period 1998-2004. As of June 2005, 21.8 million of them were struggling to survive on the government's "minimum living allowance" - the basic welfare grant given to all poor urban residents. In June 2005, this allowance was approximately $19 a month.(¹¹)

Of course there has been job growth in the private sector, especially at firms producing for export. But most of the new jobs are low paid with poor working conditions. "Even after doubling between 2002-2005, the average manufacturing wage in China was only 60 US cents an hour, compared with $2.46 an hour in Mexico."(¹²)

A recent report on labor practices in China by Verite Inc., a U.S. company that advises transnational corporations on responsible business practices, found that "systemic problems in payment practices in Chinese export factories consistently rob workers of at least 15% of their pay."(¹³) Workplace safety is an even greater problem. According to official Chinese government sources, about 200 million workers labor under "hazardous" conditions. "Every year there are more than 700,000 serious work-related injuries nation-wide, claiming 130,000 lives."(¹⁴)

One critical but often overlooked explanation for China's manufacturing competitiveness is that approximately 70% of manufacturing work is done by migrants. Over the last 25 years, some 150-200 million Chinese have moved from the countryside to urban areas in search of employment.

Although the great majority of these migrant workers have moved legally, they suffer enormous discrimination. For example, because they remain classified as rural residents under the Chinese registration system, not only must they pay steep fees to register as temporary urban residents, they also have no rights to the public services available to urban born residents (including free or subsidized education, health care, housing and pensions). The same is true for their children, even if they are born in an urban area.

As a consequence migrant workers are easily exploitable. They typically work 11 hours a day, 26 days a month. Most receive no special overtime pay and commonly earn one-quarter to one-half of what urban residents receive.(¹⁵)

The overall effectiveness of Chinese labor policies (which are primarily designed to boost export competitiveness) is well illustrated by recent trends in wages and consumption. Chinese wages as a share of GDP have fallen from approximately 53% of Gross Domestic Product in 1992 to less than 40% in 2006. Private consumption as a percent of GDP has also declined, falling from approximately 47% to 36% over the same period. By comparison, private consumption as a share of GDP is over 50% in Britain, Australia, Italy, Germany, India, Japan, France, and South Korea; it is over 70% in the United States.(¹⁶)

As the Economist states, "the decline in the ratio of consumption to GDP . . . is largely explained by a sharp drop in the share of national income going to households (in the form of wages, government transfers and investment income), while the shares of profits and government revenues have risen." In fact, according to the Economist, "Many countries have seen a fall in the share of labor income in recent years, but nowhere has the drop been as huge as in China."(¹⁷)

A vicious cycle is at work here: the lower the share of income going to workers, the more economic forces reinforce the export orientation of the Chinese economy, which encourages the implementation of new policies to suppress worker standards of living.

To be sure, China's growth and industrial transformation has also generated great wealth - leading to an explosion of inequality and the formation (or solidification) of new class relations. An Asian Development Bank study of 22 East Asian developing countries concluded that China had become the region's second most unequal country, trailing only Nepal. This is not surprising considering that over a roughly ten-year period (from the early 1990s to the early 2000s) China recorded the region's second highest increase in inequality, again trailing only Nepal.(¹⁸)

While the results of the Asian Development Bank study are significant, they do not adequately convey the real concentration of wealth that has accompanied and motivated China's market reform program. According to the Boston Consulting Group, China had 250,000 U.S. dollar millionaire households (excluding the value of primary residence) in 2005, the sixth greatest national total in the world. Although this group made up only 0.4% of China's total households, it held 70% of the country's wealth.(¹⁹)

According to a yearly listing of China's richest people, the number of U.S. dollar billionaires has grown from one in 1999 to 106 in 2007 (more than any other country except the United States).(²⁰) China's nouveau riche have not been shy about spending their money: "LVMH Moët Hennessy Louis Vuitton, the world's largest luxury goods maker, plans to open two to three stores a year in China, where sales are rising 50% annually. Financièr Richemont, the world's second-biggest, expects to quadruple sales in China within five years by selling more Cartier jewelry and Piaget watches."(²¹)

There are clear signs that the Communist Party is becoming concerned that widening income (and consumption) inequalities are adding fuel to growing popular anger over deteriorating employment, health, housing, environmental and retirement conditions. And with good reason: the number of large scale "public order disturbances" has grown from 58,000 in 2003, to 74,000 in 2004, 87,000 in 2005, and an estimated 94,000 in 2006.(²²) Particularly worrisome to the leadership is the increasingly effective and militant strike activity at foreign-owned export factories (despite the fact that strikes remain illegal in China).

As repression has failed to stem the rising tide of protest, the Party has also begun to initiate a number of reform efforts. These are designed to ameliorate the worst excesses generated by China's growth strategy without radically changing its orientation. For example, the central government approved a new Labor Contract Law which came into force on January 1, 2008.(²³) Both the European and U.S. Chambers of Commerce bitterly opposed this effort and intervened heavily during the drafting stage in a successful effort to reduce its scope.

The approved law requires, among other things, that all employers provide their workers with a written contract (something that a majority of workers either do not have or have never seen) that specifies the terms of employment and includes pension and insurance benefits. The new law also requires that companies pay a premium for overtime and weekend work.

While the new law has generated a sharp increase in arbitration cases (most of which involve non-payment of wages and overtime premiums), its impact on employment conditions appears limited (even in the areas it was intended to address).(²⁴) Many companies are circumventing the law by reducing their employment of "regular" workers (some did so before the law went into effect), relying instead on workers provided by labor dispatch companies or increasing their use of subcontracting relationships.

Some companies now pay workers their contracted salaries and respect vacation and overtime standards, but then undermine worker gains by increasing what the same workers must pay for company-provided dormitories and canteen meals. Some foreign-owned companies are threatening to shift production to a different location within or even outside of China if workers press their demands too aggressively.

In addition, the many-layered official dispute resolution process remains slow and costly, making it difficult for workers to force unwilling companies to comply with the higher standards contained in the new law. Finally, and most importantly, the new law still allows local governments, and thus employers, to differentiate between urban born and migrant workers; the latter continue to be denied unemployment and other employment-based social security benefits.

A major reason that many in the leadership of the Communist Party remain unwilling to support fundamental changes in China's current growth strategy, despite its devastating effects on working people, is that they have been among its biggest beneficiaries. Their ability to shape the reform process has enabled them to use state assets for personal gain, place family and friends in lucrative positions of authority in both the state and private sector, and ensure that the rapidly growing capitalist class remains dependent on the Party's good will.

This, in turn, has led to a fusion of party-state-capitalist elites around a shared commitment to continue the advance of a capitalist political economy with "Chinese characteristics."

The results of this development are easy to see. Many of the children of leading party officials (known as the "princelings") were appointed to key positions in "China's most strategic and profitable industries: banking, transportation, power generation, natural resources, media, and weapons. Once in management positions, they get loans from government-controlled banks, acquire foreign partners, and list their companies on Hong Kong or New York stock exchanges to raise more capital. Each step of the way the princelings enrich themselves - not only as major shareholders of the companies, but also from the kickbacks they get by awarding contracts to foreign firms." Not surprisingly, more than 90% of China's richest 20,000 people are reported to be "related to senior government or Communist Party officials."(²⁵)

China's elite has been willing to share the fruits of the country's production with international capital - although struggles over distributional issues are growing sharper as international capital strengthens its position within China - because international capital's participation has been critical to the establishment and continued growth of China's new political economy. China's elite, however, appears determined to ensure that they will be the primary national claimant.

Thus, at the same time that the "Chinese Communist Party has opened up an unprecedented number of sectors for foreign-equity participation . . . the authorities have . . . tightened control over other aspects of the economy. This has resulted in the truncation, if not atrophy, of thousands of [small and medium sized] private firms. These are in danger of being edged out by powerful monopolies and oligopolies that are controlled either by the party-and-state apparatus or by senior cadres and their offspring."(²⁶)

In sum, it appears that those driving China's economic strategy have been remarkably successful in using the reforms to shape an accumulation process responsive to their interests. And consistent with the underlying capitalist nature of this process, their gains have come at ever greater cost to the majority of Chinese working people.

As a result, Chinese leaders must now contend with an explosion of strikes and demonstrations. It remains to be seen whether such actions will threaten future foreign investment and export production, two of the most important pillars upholding China's growth strategy. Regardless of what happens, it is difficult to see on what basis progressives would want to celebrate and promote China's reform experience.

Market reforms and transnational accumulation
Many on the left believe that the combination of China's size and pattern of growth along with the (self-proclaimed) socialist (or at least anti-imperialist) orientation of the leadership of the Chinese Communist Party mean that China will soon be capable of anchoring a new, more progressive international economic order.

This belief tends to be buttressed by the following reasoning: China has maintained (and can be expected to sustain) high rates of growth for decades. Because this growth is highly import dependent, it supports the export production and thus economic growth of China's trading partners (especially in East Asia but also in Latin America and Africa).

Moreover, China's export success has enabled the country to build up its own huge foreign exchange holdings, which the government is increasingly using to help its Latin American and African trading partners finance needed (infrastructure) modernization.

This vision of China as a powerful and positive agent for international change is attractive but flawed. In most cases, it is the result of using a nation-state lens to understand Chinese accumulation dynamics. The reality is that China's economic transformation is not occurring in a vacuum or solely in response to Chinese initiatives.

Rather, East Asia's economies, including that of China, are being linked and collectively reshaped by broader transnational capitalist dynamics, in particular by the establishment and intensification of cross-border production networks organized by transnational corporations. As a result, China's own accumulation dynamics are increasingly being tied to dominant patterns of investment and trade, thereby reinforcing rather than offering an alternative to them.

Most immediately, the expansion of cross-border production networks has led to a significant increase in the trade dependency of all East Asian economies. One indicator of this trend: the region's export/GDP ratio grew from 24% in 1980 to 55% in 2005. By comparison, the world average in 2005 was only 28.5%.(²⁷) Further, a growing share of this activity is now under the control of transnational corporations; for example, they account for 73% of Malaysia's and 86% of Singapore's exports of manufactures.(²⁸)

More significantly, as a consequence of the operation of these networks, a rising share of East Asia's trade in manufactures is now in parts and components. This is illustrated by the changing trade composition of leading Southeast Asian countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam).

The share of parts and components in the group's total exports of manufactures grew from 27.5% in 1992-3 to 40.3% in 2004-5.(²⁹) The import share of parts and components also grew substantially over the same period, from 32.6% to 48.5%. Trends are similar for Taiwan and Korea. For example, the export share of parts and components for Taiwan grew from 21.2% to 43.5%.

In addition, almost all the parts and components being traded by East Asian countries come from the same three industrial categories (with identical national rankings of importance): electronics machinery, office machines and automatic data processing, and telecommunications and sound recording. Moreover, these parts and components are increasingly being traded from one developing East Asian country to another; the intra-regional share of parts and components trade rose from 37.8% in 1992-3 to 55.6% in 2004-5.

In short, East Asian export production (itself a growing share of total national production) is increasingly narrowing not only to parts and components, but also to a select few operations in a select few industries in response to the needs of transnational corporate-controlled production networks.

China was not only pulled into this process of regional restructuring, it has become central to its functioning. In the words of the Asian Development Bank, "the increasing importance of intra-regional trade is attributed mainly to the parts and components trade, with the PRC functioning as an assembly hub for final products in Asian production networks."(³⁰)

China's unique position as the final production platform in this transnational structured regional production system is highlighted by the fact that it is the only country in the region that runs a regional trade deficit in parts and components.

As a consequence of this restructuring, East Asia's overall export activity has shifted away from the United States and the European Union and towards East Asia, and in particular China. On the other hand, China has shifted its export emphasis away from East Asia and towards the United States and the European Union.

Between 1992-3 and 2004-5, the East Asian share of China's final goods exports declined from 49.5% to 26.5%, while the OECD share (excluding Japan and Korea) increased from 29.3% to 50.1%.(³¹) In fact, China is now the region's largest exporter to the United States and the European Union in absolute and relative terms. Thus, the mirror image of China's surplus in trade with the United States and the European Union is its deficit in trade with East Asia.

As a result of this regional restructuring, China has become the first or second most important export market for almost all East Asian nations. This development has, as noted above, encouraged the belief that China's import dependent production will enable East Asian countries (and those in Latin America and Africa that also export to China) to "uncouple" from the U.S.-dominated international economic order.

However, since this trade activity largely involves an intra-regional trade of parts and components culminating in China-based production with final sales largely directed to the United States and the European Union, East Asia's overall dependence on developed capitalist markets has actually grown stronger rather than weaker. According to various estimates cited by the Asian Development Bank, it appears that the percentage of Asian exports consumed within Asia ranges from a high of 22% to a low of only 11%.(³²)

This regional perspective enables us to see more clearly the problematic nature of Chinese growth dynamics (for working people both inside and outside China). The most obvious problem is that China's continued growth (and thus the region's production) is now dependent on the ability of the United States to run ever greater trade deficits. Since it is doubtful that the U.S. economy can continue to sustain such large and growing deficits, it is difficult to see how China (and by extension the East Asian countries that provide China with parts and components) can avoid painful adjustments involving lower rates of growth and a further worsening of majority employment and living conditions.

Chinese growth dynamics remain problematic even if international trade imbalances can be sustained. For example, China's position as final assembly hub within numerous cross-border production chains has significantly weakened Chinese efforts at technological upgrading.

Surveying China's situation five years after the country's 2001 accession to the WTO, the Chinese economist Han Deqiang recalls that he had "argued the greatest damage [of membership] would be to China's capacity to control its industrial and technological development autonomously. I think it's safe to say these last five years have more than proven that true. In China, any industry that wants to develop its own technology or markets has encountered increasingly great barriers."(³³)

More problematic still is the fact that in order to maintain the country's key regional position in the face of competition from other countries seeking to improve their own position within cross-border value chains, the Chinese state has had to ensure that wages are kept low and productivity high.

One consequence of China's success is that transnational corporations throughout East Asia (and elsewhere) have been shifting their production to China to take advantage of its more profitable production conditions. This has led to lower rates of investment and growth throughout the region and the implementation of new labor regimes designed to weaken labor protections. As a result, workers throughout East Asia (and elsewhere) have become pitted against each other in a contest to match the level of labor exploitation achieved in China.(³⁴)

The problems for China's main Latin American and African trade partners are somewhat different but also serious. These countries supply China with primary commodities rather than manufactured parts and components. And China's large and growing need for these commodities has certainly boosted Latin American and African foreign exchange earnings and growth. These gains, however, come at significant long-term cost. Trade agreements with China, sometimes supported by Chinese financial assistance and foreign investment, reinforce existing structural imbalances by further strengthening the dominance of the primary commodity sector.(³⁵)

At the same time, Latin American and African efforts to build up manufacturing (and diversify exports) tend to be undermined by China's own export offensive. For example, close to 95% of all Latin American high technology exports face competition from China-based exporters. These threatened high technology exports represent almost 12% of all Latin American exports.(³⁶) Finally, of course, Latin American and African trade with China can also be expected to suffer if Chinese growth falters.

In sum, the market logic driving China's reform strategy promoted an economic transformation that allowed Chinese economic dynamics to become enmeshed in a broader process of transnational restructuring, one that accelerated the reforms in ways guaranteed to ensure the dominance of capitalist imperatives in China.

As a result, far from opening up new possibilities for working people, China's reform strategy has actually strengthened a transnational accumulation process that is generating serious national and international imbalances and tensions that will eventually require correction at considerable social cost.

Final thoughts
Several conclusions emerge from the above examination of the Chinese experience. First, China's market reform process has led not to a new form of (market) socialism, but rather to the restoration of capitalism (although "with Chinese characteristics"). Concretely, the Chinese growth process has given rise to a new political economy that is hostile to the goals of socialism, the promotion of all-rounded human development, solidaristic relations, cooperative planning and production for community needs, and collective or social ownership of productive assets.

Thus, the Chinese experience stands as a clear warning: socialism cannot be built through the use of markets and a closer integration with global capitalist accumulation dynamics. In fact, the confusion within the left over the nature of the Chinese experience suggests that there has been a loss of clarity about what constitutes socialism and appropriate criteria for evaluating progress towards building it.

Second, China's economic experience reveals much about contemporary capitalism. China is considered a model developer; the country has achieved a sustained and rapid rate of growth, attracted massive inflows of productive capital, and is exporting ever more sophisticated manufactured goods. Yet these accomplishments have not translated into meaningful gains for growing numbers of Chinese workers.

In fact, workers in China face labor and working conditions increasingly similar to those in Latin America and Africa, regions where most countries are considered development failures. Therefore, it appears that the answer to worker problems in Africa, Latin America and elsewhere for that matter, is not to be found in supporting policies designed to achieve "successful" capitalist development, especially those designed to replicate the Chinese experience.

Third, China's growth trajectory has become tied to and dependent upon existing accumulation processes shaped by transnational capitalist dynamics. As a result, China cannot be counted on to assist in the creation of a radically new economic system.

This does not mean that trade with China is to be avoided. It also does not mean that Chinese elites and western (especially U.S.) elites see eye to eye on all geopolitical issues. Capitalist competition is real and differences between these elites can and often does create openings that are helpful for the third world, especially for those countries under threat from the United States.

At the same time, since Chinese elite interests are structurally shaped by capitalist imperatives, there are limits to the types of changes that Chinese leaders can be expected to support. Caution is also in order, given the expected consequences from the imbalances and tensions generated by the above described transnational dynamics.

This critical perspective on the Chinese experience should not be taken as support for those analysts (many of whom write in the United States; some of whom are close to the U.S. labor movement) who view China as the primary cause of most economic problems. Their often repeated claim is that if only the Chinese government were forced to "abide" by the "free-market" rules of acceptable capitalist competition, all would be well in the world economy (and by extension for working people).

An implied assumption is that Chinese workers are enjoying real benefits from their country's "unfair" state interventions, and their employment and income gains are coming at the expense of workers in other countries, especially in the advanced capitalist countries (which are the main market for Chinese exports).

Tragically, this line of argumentation encourages workers outside of China to mistakenly believe that their enemy is China, rather than the system of capitalism that shapes their country's economic relationship to China and pits them against Chinese workers in a destructive competition. In fact, as we saw above, Chinese growth is increasingly dependent on the export activities of transnational corporations, many of which come from the advanced capitalist countries.

Moreover, despite - or in fact because of - their country's rapid growth, Chinese workers, like workers everywhere, are facing hard times. Decent jobs are scarce, social services are disappearing, inequality is growing, and competitive pressures demand ever greater sacrifices.

As noted above, growing numbers of people in China are openly and directly challenging their country's growth strategy. Even more noteworthy, these challenges are now fueling political discussions and debates (many of which are taking place on electronic chat rooms and bulletin boards) about the nature and significance of Mao era experiences and socialism.(³⁷) To this point, farmer and worker participants appear focused on refuting the false claims of ruling elites that the Mao period was both a social and economic disaster by drawing on their own life experiences to illustrate the accomplishments of that period, in particular employment and social security and a sense of national purpose.

This process of political renewal is taking place under very difficult conditions due, most importantly, to the ongoing repression of grassroots organizing and activism by the Communist Party. Additional challenges include tensions between immigrant and urban born state workers over jobs and access to social services; confusion caused by Chinese Community Party claims to be building socialism; and the fact that the strongest resistance to Party policies comes from those who continue to uncritically praise Maoism, despite the fact that Mao generally opposed farmer and worker self-organization and direct participation in political and economic decision-making.

Despite their current limitations, these struggles, discussions and debates represent a promising development, one that we can learn from and hopefully contribute to by finding ways to share our own understandings of socialism and experiences in movement building with Chinese participants. It makes our own efforts to better understand the nature of the Chinese reform experience ever more important.

* While a majority of those on the left are now critical of China’s market reform strategy, a significant number of defenders remain. People want to believe that there are workable alternatives to neoliberalism, and belief in the progressive nature of China’s social transformation is no doubt encouraged by the fact that China continues to be demonized by the U.S. government; China makes loans to, invests in, and trades with Cuba and Venezuela; and the Chinese Communist Party still rules and publicly proclaims its commitment to socialism. More specifically, I have participated in international conferences and meetings where Cuban and Venezuelan economists have supported the Chinese market reform strategy and argued for adoption of similar policies in their own countries. Defenders of the Chinese growth process also continue to argue their position on numerous left internet discussion lists. The journal Critical Asian Studies had no trouble in organizing a roundtable in which several editors of the journal took issue with Paul Burkett and my critique of China’s market reform experience as expressed in our book China and Socialism, Market Reform and Class Struggle (New York: Monthly Review Press, 2005). The criticisms and then our response were published in the journal (Critical Asian Studies, September 2005 and December 2005). In addition, well known scholars such as Giovanni Arrighi, David Schweickart, and Immanuel Wallerstein continue to publish articles and books in which China’s rise as a non-capitalist/socialist power is celebrated. For a recent example of such writings see Giovanni Arrighi, Adam Smith in Beijing: Lineages of the Twenty-First Century, London: Verso, 2007.

Notes

1. For a discussion of the reform process see Martin Hart-Landsberg and Paul Burkett, China and Socialism, Market Reforms and Class Struggle (New York: Monthly Review Press, 2005), especially Chapter 2.

2. OECD, OECD Economic Surveys: China, OECD Economic Surveys, 2005, 29.

3. Data in this and the following paragraph come from Ibid, 133.

4. Ibid, 82.

5. Willy Lam, "China's Elite Economic Double Standard," Asia Times Online, 17 August 2007.

6. UNCTAD, World Investment Report 2002: Transnational Corporations and Export Competitiveness, New York: United Nations, 2002, 17.

7. Eva Cheng, "China: Foreign Capital Controls Three-quarters of Industry," Green Left Weekly, 18 May 2007.

8. John Whalley and Xian Xin, "China's FDI and non-FDI Economies and the Sustainability of Future High Chinese Growth," National Bureau of Economic Research, Working Paper Series, Number 12249, 2006; Tom Miller, "Manufacturing That Doesn't Compute," Asia Times Online, 22 November 2006.

9. Enrique Dussel Peters, Economic Opportunities and Challenges Posed by China for Mexico and Central America, Bonn, Germany: German Development Institute, 2005, 102.

10. Ajit K. Ghose, "Employment in China," International Labor Organization, Employment Analysis Unit, Employment Strategy Papers, 2005.

11. China Labor Bulletin, "Subsistence Living for Millions of Former State Workers, 7 September 2005.

12. John S. McClenahen, "Outsourcing," IndustryWeek.com, 1 July 2006.

13. Craig Simons, "New Labor Movement Afoot in China," Statesmen, 4 February 2007.

14. China Labor Bulletin, "Migrant Workers in China," June 2008.

15. Ibid. In 2005, the central government gave local governments the authority to reform the registration system, including ending distinctions between rural and urban residents. The great majority have refused to make any changes; most local officials are closely allied with local business interests and do not want to jeopardise enterprise (or their own personal) profitability.

16. The Economist, "A Workers' Manifesto for China," 11 October 2007.

17. Ibid.

18. Asian Development Bank, Inequality in Asia, Key Indicators 2007, Special Chapter Highlights, Manila: Asian Development Bank, 2007, 3, 6.

19. Wu Zhong, "China's 'Most Wanted' Millionaires," Asia Times Online, 19 September 2007.

20. Robin Kwong, "China's Billionaires Begin to Add Up," Financial Times, 22 October 2007.

21. Samuel Shen, "For China, A Full Embrace of Luxury, High-end Retailers Take Aim at Mainland's Monied Class," International Herald Tribune, 16 October 2006.

22. Bruce Einhorn, "In China, A Winter of Discontent," BusinessWeek, 30 January 2008.

23. Ariana Eunjung Cha, "New Law Gives Chinese Workers Power, Gives Businesses Nightmares," Washington Post, 14 April 2008.

24. International Trade Union Confederation, "China: Some Steps Forward, but Trade-Related Worker Exploitation Persists," 21 May 2008; Kinglun Ngok, "The Changes of Chinese Labor Policy and Labor Legislation in the Context of Market Transition," International Labor and Working Class History, Spring 2008.

25. Peter Kwong, "The Chinese Face of Neoliberalism," Counterpunch, 7/8, October 2006.

26. Lam, "China's Elite Economic Double Standard."

27. Asian Development Bank, Asian Development Outlook 2007: Growth Amid Change, Hong Kong: Asian Development Bank, 2007, 68.

28. Asian Development Bank, Asian Development Outlook 2006, Hong Kong: Asian Development Bank, 2006, 273.

29. Data in this and the following paragraph come from Prema-chandra Athukorala and Nobuaki Yamashita, "Production Fragmentation in Manufacturing Trade: The Role of East Asia in Global Production Networks," in Filippo di Mauro, Warwick McKibbin and Stephane Dees (eds.), Globalization, Regionalization and Economic Interdependence, Cambridge: Cambridge University Press, forthcoming.

30. Asian Development Bank, Asian Development Outlook 2008, Workers in Asia, Hong Kong: Asian Development Bank, 2008, 22.

31. Prema-chandra Athukorala, "The Rise of China and East Asian Export Performance: Is the Crowding-out Fear Warranted?" Australian National University, Division of Economics, Working Paper No. 2007/10, September 2007.

32. Asian Development Bank, Asian Development Outlook 2007, 70.

33. Stephen Philion, "The Social Costs of Neoliberalism in China, Interview With Economist Han Deqiang," Dollars & Sense, July/August 2007. For a more detailed discussion of the negative consequences of the reforms on China's technological capacities see Martin Hart-Landsberg, "The Chinese Market Reform Experience, A Critical Assessment," forthcoming.

34. Asian Development Bank, Asian Development Outlook 2007, 32-3; Martin Hart-Landsberg and Paul Burkett, "China, Capital Accumulation, and Labor," Monthly Review, May 2007.

35. He Li, "Red Star Over Latin America," NACLA, September-October 2007; Eva Cheng, "Is China Africa's New Imperialist Power?" Green Left Weekly, 2 March 2007.

36. Kevin P. Gallagher and Roberto Porzecanski, "Climbing up the Technology Ladder? High-technology Exports in China and Latin America," Center for Latin American Studies, University of California, Berkeley, Working Paper 20, 2008, 14.

37. For a discussion of this development see Mobo Gao, The Battle for China's Past, Mao and the Cultural Revolution. Ann Arbor, MI: Pluto Press, 2008.

The Role of Trade Unions in China

noreply@blogger.com (Unknown) — Tue, 26 Aug 2008 04:02:00 +0000

Carl Finamore
August 25, 2008

The recently-concluded summer Olympics introduced China as a major player on the world stage in spectacular fashion.

No doubt about it, the country made a superbly dramatic entrance.

Of course there were the much-publicized disclosures that some elements of the production were staged - the embarrassing lip-synching episode and the use of pre-recorded fireworks fed to live television broadcasts.

But first-class, stellar performances by Chinese athletes on the field amply demonstrated there was nothing fake about the progress China has made in the last several decades.

A more valid criticism was that the Chinese government’s track record on human rights won’t win any medals. And to be sure, it must be recognized that some of those complaints were made by those with less than genuine motives.

This was the topic of a recent discussion between twenty northern California labor leaders and a visiting high-level Chinese delegation from the Guangzhou Federation of Trade Unions (GZFTU).

The delegation, which is affiliated with the state-controlled All China Federation of Trade Unions (ACFTU), surprised us a bit when they said this was the first visit of top Chinese labor officials with leaders of a AFL-CIO Central Labor Council.

Facing new challenges to organize multi-nationals, our guests emphasized they wanted to rapidly end their isolation from American unions.

GZFTU's Chairman Chen Weiguang began by acknowledging that China‘s unions had to be reformed. “We need to protect the rights and interests of the workers and elect leaders who will stand up for workers,” said Weiguang. “Of course, the bosses within the enterprises want a union chair who will be obedient to the company but we believe the union belongs to the workers, not the bosses.”

Chen speaks from his experience as a major planner of the successful unionization of Wal-Mart in China.

China's “Economic Miracle”

Currently the seventh largest world economy, the country of 1.3 billion is on track to become the third largest by 2015. Its Gross Domestic Product (GDP) has grown at rates that are among the highest for any major country in the 20th century. (US Dept. of Agric., USDA 2004 report)

There are many internal factors contributing to China's economic "miracle" such as a more-skilled workforce and unprecedented capital spending on roads, utilities, buildings, machinery and equipment.

Over time, infrastructure improvements result in big increases in labor productivity and mass production of quality products, something U.S. policy makers do not appreciate. Substantial foreign investment in new technology since the early 1990s has also helped spur productivity.

Before the mid-1990s there were clear differences between state-owned "socialist" factories, which offered lifetime employment, housing, and medical care, and private sector factories, which provided little job security, low wages, and no fringe benefits.

Today, however, competition and persistent government efforts to privatize state-owned firms has led even these enterprises to offer less job security, fewer welfare benefits, and stricter labor conditions. (China Labour Rights Bulletin)

As a result, wages of Chinese workers have remained very low. Experts estimate wages at around 12% of US workers, thus providing China an extremely favorable trade advantage.

For example, the USDA reports that “furniture manufactured in China can enter the U.S. market at 25 to 35 percent of the cost of comparable furniture” made in the United States.

This imbalance is representative of most Chinese exports.

From these statistics, it should be clear that raising the wages and living conditions of Chinese workers is imperative. Solidarity is not just an abstract emotional impulse; it is an economic necessity that unites workers around the world.

Our goal should be to avoid divisive competition between ourselves by establishing uniform international labor standards.

A Conversation with Chinese Labor

Our meeting with the Chinese delegation proved to be a lively and frank exchange. I asked a question about the control of the Communist Party over the official trade unions.

As reported by Paul Burton in the May 28, 2008, Labor, the San Mateo County Central Labor Council newspaper, Chen responded to the question by explaining the history of unions under the Communist Party.

“For a long time China was a 'command economy' and unions were subservient to it. There was no distinction between labor and capital because we were all part of the nation,” Chen said. “The Party worked hard for the development of the working class and to educate workers. Things have changed with the move to a market economy and differentiation in factories between bosses and workers.”

Chen said that over the past 30 years of economic reforms, workers have made great sacrifices and now that capital had become too powerful the Communist Party was rethinking the balance of capital and labor, enacting new labor laws as part of that change.

Apparently some progress is being made.

Burton summarized the meeting by observing that “with the enactment of recent pro-worker labor laws in China, the situation may be changing as workers exercise their rights under these new labor laws.

“The China Labor Bulletin (CLB, online at www.china-labour.org.hk/en/) reported that 'the number of labor dispute cases in Guangzhou for the first two months of 2008 equaled the total number of cases in 2001. More than 60 percent of all cases involved non-payment of salaries and over-time.'"

CLB director Han Dongfang wrote encouragingly that “by developing collective bargaining at the grassroots level, enterprise-level unions will be transformed into labor organizations that genuinely represent the rights and interests of workers.”

Let's wish them well. We all should work toward this common goal in each of our unions. But some would say it is not possible to achieve while the Chinese government retains exclusive control of the unions.

The role of Trade Unions in China

Founded in 1925, ACFTU has around 170 million members. It is the only union legally recognized but its membership is shrinking as privately-owned companies become a larger share of the economy.

The numbers are staggering. In their Feb. 9, 2008, issue, ChinaDaily reports that 200 million were employed by 5.39 million registered private establishments in 2007. This is more than half of all companies in China. These firms alone generated 60 percent of the GDP.

ACFTU is responding to this challenge by mounting a huge organizing campaign in the private sector, especially among the foreign-owned. As a result, the Federation expects it membership to increase to 200 million by its September 2008 Congress. It also hopes to announce successful completion of a “100-day” bold unionization effort begun in June to organize 80% of the Fortune 500 firms.

This new thinking was forced upon Chinese unions after they encountered stiff opposition from notoriously anti union Wal-Mart. Labor officials, normally accustomed to dealing with state enterprises, were shocked when the company actually refused to even meet with union organizers, a tactic commonly employed in America.

ACFTU began a successful grass-roots organizing campaign, a first for the state labor body.

The union was finally recognized in 2006. Chen Weiguang played an important role confronting Wal-Mart as a hostile employer rather than as a friendly joint-venture partner with the government. The latter view has always compromised the union’s ability to represent workers.

For example, the ACFTU official website still clearly reveals its cooperation with management: "Trade unions of the foreign-invested enterprises in China have firmly centered on production and business operation to conduct activities and have given support to enterprises in their operation and management according to law; have educated workers to observe factory rules and regulations and discipline; organized workers to launch labor emulation campaigns; and aroused the enthusiasm of the workers for running the enterprises well, so as to contribute to the sound development of the enterprises."

Yet, soon after the Wal-Mart victory, the ACFTU website announced: “This successful experience in setting up Wal-Mart unions is groundbreaking in that we have discovered a new line of thinking. It not only will influence other foreign and private investors to quickly abide by the law to allow unions to be established, it also brings to trade unionists a new mission. Following the new logic in setting up unions, new adjustments in union work will be needed, be it in methods, in organizational structure, ways of identifying backbone activists, down to how to use union funds….”

We are obviously observing the wavering contradictions of a mass labor organization of millions trying to define for itself a new role and trying to discover for itself a new voice that speaks more sharply to the needs of Chinese workers.

The big question is whether the announced changes in union structure and purpose enacted from “above” will be sufficient to satisfy millions of Chinese workers “below” who so desperately need an organization representing their class interests.

So far, the government is walking a delicate tight rope of enacting reform without relinquishing control.

Fresh off the success of their grand Olympic production, the state retains the stage with the home crowd anxiously awaits their next major performance of reforming the trade unions.

Hundreds of millions of desperate workers still suffering under conditions most observers describe as horribly primitive have so far been relatively quiet.

Chinese officials hope they remain in their seats.

But a “thumbs down” review might end up with a rebellious audience itself taking over the stage.

( Carl Finamore was President (ret), Air Transport Employees, Local Lodge 1781, IAMAW. He can be reached at local1781@yahoo.com. )

A Turning Point for China’s Trade Unions

noreply@blogger.com (Unknown) — Sat, 23 Aug 2008 15:23:00 +0000

http://www.clb.org.hk/en/node/100294

(The following unsigned article appears on the English section of the China Labour Bulletin 中國勞工通訊. We have by far failed to find a Chinese version of the article.)

We may have reached a crucial turning point in the history of China’s trade union movement. For the first time since 1949, trade union officials are openly stating that the union should represent the workers and no one else, while new legislation in Shenzhen places collective bargaining – previously a no-go area – at the core of the union’s work.

“The trade union is a matter for the workers themselves,” Chen Weiguang, chairman of the Guangzhou Federation of Trade Unions told a conference on 15 July 2008, adding that the role of enterprise unions must change from “persuading the boss” to “mobilizing the workers.”

Shenzhen’s Implementing Regulations (Shishi Banfa) for the Trade Union Law, enacted on 1 August, further define the union’s new role, creating a “responsible, empowered and battle-ready union” that can protect workers’ rights, according to Zhang Youquan, head of the Shenzhen Federation’s legal department. Zhang told a press conference to announce the new regulations that this was the first time the term “collective bargaining,” (jiti tanpan) as opposed to the previously-used but much weaker concept of “collective consultations” (jiti xieshang) had been applied in China’s local legislation.

As the experience of the labour movement in many other countries has shown, collective bargaining is the most effective way to protect workers’ rights and bolster the role of the trade union. Above all, it is a means of resolving labour disputes through peaceful social dialogue. Such an approach is sorely needed in China today, and China Labour Bulletin Director Han Dongfang congratulated the Shenzhen authorities on this important new initiative:

“After three decades of economic reform, we’ve reached the point when something had to be done. Today in Shenzhen we can see the worst excesses of capitalism, but also the desire of the people for social justice and – with these new regulations – the willingness of the government to move towards capitalism with a human face.”

Han pointed out that although the new legislation was “state-directed” reform, it would still have a positive effect if it enabled workers to engage in genuine collective bargaining. “At present, the most pressing need for the official union is independence from the bosses,” he said.

Significantly, the whole of chapter three of the Implementing Regulations (The Rights and Obligations of Trade Unions) does not contain a single reference to the traditional tasks outlined in the 2001 Trade Union Law, such as helping the enterprise to restore normal production in the event of a work stoppage or slowdown. Rather the regulations make it very clear that during a labour dispute the role of the trade union is to represent workers in negotiations with management. Moreover, for the first time in China, the regulations (Article 36) stipulate that grassroots trade union officials should receive a small monthly subsidy from the municipal federation that will go some way toward lessening union officials’ dependence on the enterprise for their operating funds.

Article 18 (Paragraph 3), Articles 27 to 31 inclusive, Article 44 and Article 45 all stress that collective bargaining is the core responsibility of trade unions and provide clear guidelines on how the process should work. These provisions effectively transform collective bargaining in China from a vague concept into, potentially, a genuine right that can be utilized by ordinary workers to improve their terms and conditions of employment.

Of course, the regulations are far from perfect; they still emphasize the supervision or control (jiandu) of grassroots unions by higher level unions, rather than a system of mutual supervision. Article 11, for example, specifies that workplace union officials will be elected by the union committee only after a list of candidates drawn up by the committee has been approved by the higher-level union. Also, grassroots unions still need the approval of higher level unions before they can officially register, and there is no mechanism by which lower-level officials can supervise or control irresponsible higher-level union officials.

However, the Implementing Regulations – together with the Shenzhen Labour Relations Regulations, due to go into force at the end of September – have effectively opened the door for the Shenzhen Federation of Trade Unions to transform itself into a much more effective representative of workers’ rights and interests.

Han Dongfang said: “We hope the Shenzhen Federation of Trade Unions can take practical steps to create a successful bargaining model that others can follow, thereby making collective bargaining a key part of China’s emerging civil society.”

Han stressed that change will not happen overnight but, step by step, progress is already being made. And in retrospect, 2008 may well turn out to be one of the most important years in the history of China’s trade union movement.

“Earlier this year, we saw the implementation of three new national labour laws, and now we have the introduction of collective bargaining in Shenzhen. This has all come from two factors: the growing determination of Chinese workers to stand up for their rights, and the government’s willingness to respond in a practical and positive manner,” he said.

Democracy within the Communist Party is the New Answer

noreply@blogger.com (Unknown) — Tue, 19 Aug 2008 22:03:00 +0000

China: the middle kingdom's middle way
Le Monde diplomatique
August 2008

___________________________________________________________

Despite the Olympic spotlight on China, we hear little of the Chinese Communist Party. To retain power and maintain stability, the party knows it must accommodate the new consumerist middle classes. But it has to balance carefully to avoid potential revolution by the many left outside by the enormous changes in the nation.

Jean-Louis Rocca

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The Chinese government has not much revamped its image recently, given last October's National Congress of the Communist Party, the disastrous handling of the Tibet troubles and this year's earthquake. This top-down conservatism contrasts with wide social protest across the nation. Protest is almost established practice in China today, although this is not the result of social pressures outside the party, but carried out by people and groups at the heart of the system. This obliges analysts to think outside the usual political frame of an all-powerful, unscrupulous regime versus a society that is seen as static or on the brink of revolt.

Between 2002 and 2006, nearly 12 million people joined the Chinese Communist Party or CCP (see "A middle-class party"). Why? For cadres and government officials it is a way to get a position and build up a power base. For others, motives vary. "It's a formality for me if I want to climb the ranks," a teacher told me. In a leading university, 80% of the teaching staff are party members. Despite that, party membership does not guarantee social mobility; a network of relationships, professional success and wealth can do that just as efficiently.

Examples abound. A party secretary in a public institution waited years for a promotion only to see his deputy, married to a high-ranking cadre in another institution, promoted over his head, despite a lack of professional qualifications. A rich businesswoman, who was not a party member, succeeded in placing her son in the senior management of a public enterprise. He had no qualifications, although he spent three years in a foreign university.

For intellectuals, party membership provides leeway. According to a journalist: "Being a party member gives you greater freedom of speech." There is no paradox here. Party members have access to an inner circle in which discussion is freer. That was a theme of the party democratisation issue raised at the 17th Party Congress - which might be empty rhetoric by a party that has failed to democratise society, and so offers token liberalisation. However, there are different realities behind the official party line, starting with the discussions that began a few years ago in the party schools about a "conservative democracy".

There is a great deal at stake: how can the party retain power (personal interest) and maintain stability (collective interest) while creating a space for expression and political choice? The answer lies in the formation of intra-party trends, which will give a voice to social classes. The CCP will always maintain its centralised hold, but in the manner of Japan's Liberal Democratic Party after the second world war, an example explicitly mentioned. Or possibly, as in Europe and the United States, within a system controlled by two main political parties who agree on the basic issues and ensure consensus in conflict, and therefore stability. Democracy within an elite circle would reform the regime and avoid political instability.

Party leaders have pursued this discussion since 2002. Their use of slogans (harmonious society, clean wealth and, more recently, the science of development) shows that they are taking account of the demands of society. There have been concrete measures, such as the limited but genuine extension of the social security system, a reduction in the tax burden on farmers and a less brutal control of migration and social movements.

Change is occuring behind the facade
Behind the static facade, a reforming gradualism is altering the political balance. There is no question of organising elections in the short or medium term. Party democratisation means limited experiments that provide a narrow framework for reform. Just as the controlled democracy granted to villages a few years ago is restricted to internal village matters, so intra-party democracy limits the space for discussion and protest to a select audience of responsible individuals. It is a question of damage limitation.

The conservative democracy scenario does not seem much when compared with the second democratic wave (after the second world war), or the third (that of the former eastern European bloc). But it is possible to compare it with the first democratic wave in western Europe. All the 19th-century political debates concerned the contradictions between democratisation (seen by the elite as inevitable and even desirable), and the fears it provoked among the ruling classes. Alexis de Tocqueville praised the people (honest reasonable citizens), but held the populace in contempt (the crowd, the masses, the revolutionaries). The major democratic systems grew out of a fear of revolution, but a greater fear that bad leaders might be elected (demagogues, and also ignorant and inexperienced leaders) long prevented any radical change.

If fear of revolution is replaced with fear of social unrest, we have the Chinese dilemma. The ruling elite is trying to find a formula for a trouble-free democratisation that ensures "correct" leaders. "What is more dangerous," asked a cadre in charge of village elections, "an unstable society deprived of the vote (unstable in part because it has no means of expression) or a society in chaos because it has the vote?" The ruling classes and most party members are doing what they can to avoid both pitfalls.

Democracy is often mocked, sometimes by the Chinese, but it is not an empty threat. Beside social protest, or rather behind it, party members are taking political action. Lawyers, deputies, civil servants, teachers, entrepreneurs and heads of mass organisations such as the All-China Women's Federation or the All China Federation of Trade Unions, act in the media and in NGOs, as well as behind the scenes in government, to defend underprivileged social classes. Some inform newly arrived migrants of their rights (1) or publish articles linking the protest movements to social injustice and the defence of civil rights. Others support or even finance initiatives to help the poor or those whose homes have been expropriated, or defend national heritage, or promote the redistribution of profit.

Recently, some public figures have supported associations of co-owners who have been the victims of embezzlement by property developers and unscrupulous building managers with connections local government. What is at stake is the important issue of recognising the rights of the middle classes to enjoy that cornerstone of their aspirations: property ownership. Now the large Beijing high-rise housing projects can elect their own representatives. Local authorities have been quick to find ways of making these elections ineffective, but the reform marks the recognition of homeowners' rights.

Several journalists have denounced scandals relating to pollution or the treatment of migrant workers or farmers, or the plight of city-dwellers who have lost their homes. This new activism owes a great deal to a rigid elitist party membership faced with young people, business people and graduates (see "A middle-class party").

These "reformists" are not revolutionaries or dissidents, but they do share a militant past. They are in their fifties and most lived through the major Maoist upheavals, such as the Cultural Revolution and the movement to send educated youth to the countryside, as well as periods of opposition, especially 1979 and 1989. They have long mastered the official jargon as well as ways of disputing it; but having experienced crackdowns, have no desire to be sacrificed again. They can be found in all areas of government and sometimes have surprising affinities with the arts or government, education or business, because their paths crossed in the Maoist era.

Take Zhang, once an educated young man sent into the countryside, who is now director of the administrative offices of a major municipality. He has remained close friends with a well-known artist with whom he spent three years in Mongolia. Or a former Red Guard turned businessman, who is a close friend of one of his former adversaries. All these people have a certain empathy, share similar responses and a common language. "Most of us have discarded the myth of revolution as well as a belief in democracy and elections," one told us. "That is all dangerous stuff, we need to find a middle way."

Their own experience has led them to democratic conservatism, and a belief that political reform means evolving towards a process that guarantees order and the reproduction of the elite, but with a strong dose of social mobility. They toe the party line but support a reinforcement of the legal system, especially to guarantee the fundamental rights of the disadvantaged: those whose homes or land have been expropriated, exploited migrants, that segment of the urban population which has lost out in the economic reforms, home owners battling against property companies, or residents protesting against air pollution and dirty water.

They want to find legal channels for expressing their discontent and they teach people to use lawful means of protest against unscrupulous businesses and corrupt bureaucracies. Social classes (such as landowners, the expropriated, the poor, migrants) must assert themselves by protecting their rights (weiquan).

None of these "reformers" will risk stepping out of line. The revolutionary era is over, they say, do not interfere in politics. They will do anything to avoid direct confrontation with the regime. That choice is not purely tactical, since many of them are part of the system and belong to the social categories that have most benefited from the economic reforms: technicians, managers of major companies, business people and teachers. Like their leaders, they promote stability and are afraid of losing their hard-won privileges, which are all the more valuable since they came so late. Their actions show courage but require discretion - for their status (if not their freedom) depends on it.

The results of their actions are meagre, but important. The image of migrant workers has considerably improved in popular opinion and it is now rare for them not to be paid. More people are taking legal action and there is more awareness of pollution. Homeowners' rights are considered legitimate. These may be modest achievements but they far exceed anything achieved by outright dissidence, which has little popular support and runs the risk of severe repression.

This reformist trend has its enemies but they are not in government, nor are they party members. They are individuals within the administration, business and universities who want to continue milking the system but refuse to provide a framework (legal, formal, legitimate) for their prerogatives. They have yet to learn that if they want to hold on to their privileges, government methods must evolve and integrate all of society's aspirations.

Appearance of a middle class
The emergence of new social strata, gathered in that nebulous category, the middle class, forms another piece in the political jigsaw. This new class includes many communists who now have enough income to buy a home and car and to travel. But their political stance is ambivalent. They are critical of wealth accumulated bribery or through the privileges (tequan) of family connections, while they depend on their own merit and salaries, which are heavily taxed. Yet they favour improved legal protection of property and greater freedom of speech and association.

They are opposed to elections, which they view as a potential source of social tensions, violence and political fragmentation. Their view may be summed up as "Who can say that elected leaders will be any better than the people governing China today?". Members of this new middle class stress the importance of migrant workers' contribution to current prosperity and support measures to improve their living conditions. But they also insist on the need to "civilise" those peasants before granting them urban citizenship (2).

The new political context is a response to the major contradictions in contemporary Chinese society. The frenzied pace of growth with its consequent social problems has generated frustrations and desires that cannot be satisfied by economic growth alone. The eternal promise of a better future is no longer enough; people want guarantees.

The political trends that have emerged since the 1990s do not provide an adequate response. The return to tradition in the form of neo-Confucianism is hardly in line with economic growth and is at odds with the desire to experiment with new lifestyles.

The groups and individuals that make up China's "new left" advocate a national renewal, but their desire to re-collectivise the economy and return to social egalitarianism does not attract a population hooked on the pleasures of consumerism. As for political liberalism, both the intellectuals and the Chinese man on the street feel that smacks of Tiananmen-type chaos.

The new reformist current has a different viewpoint. It does not promote a recipe from the past or from outside China, but seeks a solution to the stalemate caused by economic growth. Its proponents believe that social discontent is on the rise because it has no legitimate channels of expression. Social advancement is paralysed. If a downturn in the economy were to deprive people of their faith in a better future, their frustrations could result in political meltdown.

According to the sociologist Chen Yingfang, "if an urban middle class, with a capacity for legal action and a political rationale, does not have the means to defend its interests efficiently, or if the government systematically prevents it from doing so by using the law or political action, or even by threats and violence, then citizens may decide on revolutionary action. That is a more costly option in terms of social subversion and political risk" (3).

To ward off this danger, the new reformists suggest that the scattered social movements and associations involved in the protests should unite. Together they could alter the flow of social mobility without stepping into the political arena. That would entail forcing the state, and especially local administrations, to adopt social policies and laws. A former professor, now a businessman, told me: "Society is the only force that can modernise the country and expand the scope for liberty and social justice."

This tactic fits in with recent analyses by economists who want to boost domestic demand by increasing the revenues of the least favoured segment of the population and protecting their standard of living in order to stimulate consumption. Understandably, that argument finds favour with the leadership. A society that feels understood, with modernised institutions, would maintain the status quo.

Such a project is hardly revolutionary and would bypass any issue of regime change while reinforcing the CCP. It establishes a close connection between political options and individual interests, it preserves both adventurism and repression while leaving a space for social issues.

And, undeniably, that fits in with sociological evolution. The most active social strata, the middle class, may be vocal in defending its interests, but it is not advocating any brutal change to the political system.

However, the strategy of circumventing the political sphere (not touching the cornerstone of power) by means of the social sphere (respecting individual rights and social justice) is not without pitfalls.

Defending rights does not guarantee the same treatment for all. The law is the product of political struggle. The middle class would have the necessary legitimacy, if only because they are consumers, to become the pillars of this conservative democracy. Disadvantaged social classes, such as the migrants, would have trouble making their voices heard and might be tempted by more revolutionary action.

There is another potential obstacle: resistance to change by local bureaucracies and part of the top echelons of government. The exploitation of migrants and land control generate such substantial profits that it may not be easy for central government to reform current practices.

________________________________________________________

(1) These internal "migrants" came from the countryside more or less clandestinely and have jobs requiring few qualifications. Their rights are not often respected.

(2) See "The Imaginary of Urban Executives in Contemporary China: some findings", paper by author to the conference "Asian Societies in Comparative Perspectives", Yonsei University, Seoul, South Korea, 26-27 October 2007.

(3) Chen Yingfang, "Power of action and institutional limits: the middle strata in urban movements", unpublished study in Chinese.

Translated by Krystyna Horko
Le Monde diplomatique

A middle-class party
Jean-Louis Rocca

The Chinese Communist Party (CCP) has 70 million members, mostly older males with a high educational level: 77% of members were aged over 35 in 2006, 80.9% were men and 29% were graduates (1). There is a high renewal rate and nearly 12 million new members joined between 2002 and 2006. Party leaders appear to be no more interested in women today than they were in the past, but they have targeted the country's youth in a major promotion campaign and 80% of new members are now aged under 35.

However, not anyone can join and the selection process is arduous. In Shandong University, for instance, 91.9% of undergraduates applied to join, but only 13.5% were accepted, although the acceptance rate rose to 40% in the case of graduates.

Students say that to get in you need to be a good student, show an interest in organising collective activities and be socially at ease; outlandish clothing and unorthodox behaviour are frowned upon.

Another membership campaign targeted the new social classes, especially the employees of the 600,000 foreign companies operating in China (2). The CCP already counts 2.86 million employers and employees from private enterprise in its ranks and 810,000 independent entrepreneurs, as well as 40% of all heads of private and individual enterprises. The party cadre of a small firm told us: "We want to transform it into a middle-class (zhongchan jieceng) party composed of top level citizens, entrepreneurs, employees and civil servants with responsibilities, but also migrant workers who have proved their worth."

________________________________________________________

Jean-Louis Rocca is a researcher at the Centre d'estudes et de recherches internationales (CERI-Sciences-po) in Beijing and author of La condition chinoise (Paris, Karthala, 2006) and La Chine vue par ses sociologues(Paris, Presse de Sciences-Po, 2008)

(1) Xinhua, Beijing, 19 June 2006. Xinhua (the Chinese news agency) is the source for most of the figures given here.

(2) Chinese TV station CCTV5, 19 October 2007.

Translated by Krystyna Horko

列寧與市場經濟

noreply@blogger.com (Unknown) — Sun, 29 Jun 2008 02:20:00 +0000

不破哲三
日共中央主席

2002 年8月27日，日共中央主席不破哲三應邀在我院做了以《列寧與市場經濟》為題的講演。講演共分9個部分:(1)列寧是共產主義者當中第一個向市場經濟與社會主義問題挑戰的人。(2)十月革命勝利之初列寧曾否定市場經濟。(3)「新經濟政策」是對改善與農民之間關係問題的探討與決策。(4)確立「通過市場經濟走向社會主義」的路線。(5)列寧去世後5年，上述路線中斷。(6)「通過市場經濟走向社會主義」這條道路至今無人走通。(7)「通過市場經濟走向社會主義」所需之條件。(8)市場經濟的前景。(9)「通過市場經濟走向社會主義」的道路具有世界性的普遍意義。

不破首先強調，之所以選擇這個講演題目，是因為從廣義上講這是中國和日本都要共同面對的課題。10年前，中國共產黨的代表大會確立了實行「社會主義市場經濟」這一方針，並探討通過市場經濟走向新社會的道路。目前，日本雖然正處在資本主義市場經濟階段，但日本共產黨渴望將來經過一系列的階段後日本也能進入社會主義社會。而走向社會主義當然是通過市場經濟或計劃經濟與市場經濟相結合這條道路。「這是世界史的新發展，對於科學社會主義的理論與實踐來說這也是個新問題」。

馬克思與恩格斯是科學社會主義的創始人，但作為現實中的社會主義建設問題，他們無法涉及。即使是作為理論上的有關市場經濟與社會主義之間關係的問題他們也未能真正地展開研究。所以，列寧成為共產主義者當中第一個向「市場經濟與社會主義」問題挑戰的人。但列寧也是經過一百八十度的大轉彎之後才完成了自己的新思考。

俄國社會主義革命勝利之初，在經濟建設中社會主義與市場經濟不能並存是作為一條原則而存在的，列寧對此也深信不疑。列寧眼中的共產主義經濟就是:國營工廠生產工業製品；農民生產糧食並將剩餘的糧食賣給國家，國家再分配給國民。「市場經濟」、「買賣自由」被當作反革命口號。而共產黨的首要任務是清除農民頭腦中的「市場經濟」觀念。然而，事實上這項任務的完成是非常艱難的。因此，列寧晚年將社會主義與市場經濟作為一個重大課題來加以研究，並完成了從「市場經濟否定論」到「通過市場經濟走向社會主義」的認識上的轉變。同時，制定了一條相關的新路線。

蘇聯的「戰時共產主義」政策由於農民的反對，其實施截止到1921年初。為了鞏固社會主義政權，改善工人與農民之間的關係迫在眉睫。從1921年3月開始，蘇聯實行了「新經濟政策」。最初，採用了將工業品與農產品進行「物物交換」的方式。經過半年的摸索，同年10月蘇共得出結論:從正面認可市場經濟。但這個「不愉快的課題」立即遭到黨內一部分人的反對。其理由是「我們在監獄裡沒有學過做買賣」。對此，列寧批評說:「迴避害怕這個『不愉快的課題』對於革命家來說都是不允許的」。

可以說，研究市場經濟是出於要改善與農民之間的關係這一考慮。所謂「通過市場經濟走向社會主義」的方針，其要點為:１以市場經濟為舞台，發展社會主義經濟成分，使之在與資本主義競爭中立於不敗之地。２在一定的範圍內認可私人資本與外國資本。３確保社會主義經濟成分「居高臨下」的主導地位。４為提高社會主義經濟成分的競爭力，必須徹底學習和吸收資本主義的先進經濟。５在將來實行工農協同合作時，絕對禁止自上而來的強制性命令。

在「通過市場經濟走向社會主義」的方針及「新經濟政策」確立僅1年零5個月後的1923年3月，列寧病倒並於1924年1月去世。5年後，斯大林強行實施「農業集團化」，事實上宣告了「新經濟政策」的終結。此後的蘇聯再不曾執行過「通過市場經濟走向社會主義」的方針。到了戈爾巴喬夫時代才提出「導入市場經濟」問題。然而，在過去的60年中，蘇聯社會已發生了體制性轉變，這種新體制既不是社會主義也不是走向社會主義方向。

從這個意義上講，中國、越南現在所走的「通過市場經濟走向社會主義」的道路在世界史上是沒有先例的。它將成為「推動21世紀世界前進的動力」。但對這條道路的前景還有很多理論問題有待研究。如，(1)「把市場經濟作為通向社會主義的道路，其成功需要哪些條件?」；(2)「作為未來的課題，如果計劃經濟與市場經濟能夠結合併成功地實現了社會主義，其後，市場經濟該做何處理。消亡還是保留?如何保留，應是什麼時間、什麼範圍內保留?」等等。

在回答第1個問題時，不破指出，列寧在談到「通過市場經濟走向社會主義」時強調了如下3點:１「決不輸給資本主義」。列寧首先充分地分析了市場條件下社會經濟中各種成分之間的關係。如，社會主義經濟、國家資本主義經濟、私人資本主義經濟、小商品生產經濟等經濟成分之間的相互協作與競爭關係，並得出結論說，「通過市場經濟走向社會主義」的道路不是一條退回到資本主義的道路，而是一條走向社會主義的道路。列寧曾提出兩個響亮的口號。「成為歐洲區的能做買賣的一流商人」、「在與資本主義的競爭中考驗我們國有企業的社會主義經濟成分」。在「決不輸給資本主義」的思想前提下，列寧並非只強調經濟效益，相反，更關注環境與公害問題，強調發揮社會主義的優越性。２要抓住社會經濟的要害部門，使之成為社會主義經濟成分。列寧使用了一個軍事術語「俯瞰高地」來形容社會主義經濟成分應處於「居高臨下」的地位。３用社會保障制度來抑制市場經濟帶來的負面影響。晚年，列寧特別強調提高全體國民的文化水平。

在回答第2個問題時，不破指出，準確地講，馬克思不曾談到實現了社會主義之後，市場經濟應做何處理這個課題。但馬克思在《資本論》中說過:「即使到了共產主義社會也存在著價值規律」。那麼，如果市場經濟不存在了，在未來的共產主義社會就需要有另一種「結構」來取而代之，並作為繼續作用於生產者背後的「社會過程」來衡量勞動的「價值」。但這另一種「結構」是什麼，還是一個沒有解決的重大理論問題。馬克思把它留給了未來的革命家。用列寧的話來說就是「馬克思沒有束縛未來革命家的手腳」。不破還通過舉例來說明「尋找市場經濟替代物」的艱難。

最後，不破指出，「通過市場經濟走向社會主義」的道路，「在廣義上講具有世界性的普遍意義」。他斷言，即便像日本這樣資本主義經濟高度發達的國家，「將來也會面臨同樣性質的問題」。他認為，一個國家在走向社會主義時首先面臨的就是「在市場經濟中產生的社會主義經濟成分以及在市場經濟中對這一經濟成分的合理性與優越性進行考驗並逐漸提高其比重和競爭力」的問題。因此，目前中國所致力於的改革及其經驗「不論是成功還是失敗」，日本共產黨今後都將「深深地關注，並在展望未來日本社會的同時，對此繼續進行研究」。

----- ----- -----

Lenin and the Market Economy
Fuwa Tetsuzo
Japanese Communist Party Central Committee Chair
August 27, 2002
(http://www.jcp.or.jp/english/jps_weekly/2002-0827-fuwa.html)

Fuwa Tetsuzo, Japanese Communist Party chair, gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences in Beijing on August 27. The translation of the lecture is as follows:

Good morning, everyone. I am Fuwa Tetsuzo. This is my first lecture outside Japan.

It is a great honor for me to visit the Chinese Academy of Social Sciences and speak to researchers from various fields.

I am going to speak about "Lenin and the Market Economy." I have chosen this subject because it has something to do with both China and Japan in a broader sense.

The Communist Party of China adopted a policy of developing a "socialist market economy" at its Congress 10 years ago. But even before that, China had addressed the subject in practical terms.

And you are now pursuing the road towards "socialism through a market economy."

Japan is in the middle of the capitalist economy. The JCP envisages achieving socialism in Japan through stages. The course we will follow will be "socialism through a market economy" or a "combination of the planned economy and the market economy. "

We will see new historical developments and also face new problems for the theory and practice of scientific socialism.

Lenin was the first communist to address the question of the market economy and socialism

From 1998 to 2001, I was engaged in research on "Lenin and Capital" and wrote about 40 articles which were published in a magazine in serial form over a period of three years. This was in an attempt to examine Lenin's theoretical activity from his younger years.

One of the major theoretical questions he tackled in his last three years until he fell ill in 1923 was the question of the market economy and socialism.

Marx and Engels are founders of scientific socialism and our great predecessors, but they never had a chance to work on the question of building socialism as a practical issue. I don't think they ever carried out theoretical research on the question of the relations of the market economy and socialism, not even from the theoretical viewpoint.

So Lenin was the first communist to take up the challenge. He had to face many difficult problems arising in the course of his study and even underwent a 180-degree shift in his views. A review of such painstaking efforts by a predecessor, I think, will teach us an important lesson that will help us study present-day problems.

Lenin rejected the market economy in the early stage of the revolution

Looking back on Lenin's activities, you will find that nothing entered Lenin's mind concerning the use of the market economy following the victorious October Revolution, Russia's socialist revolution.

While he was engaged in economic construction following the victorious revolution, he firmly believed in the principle that socialism and the market economy were incompatible with each other. This attitude grew even stronger during the war against foreign intervention and counter-revolution.

Lenin's concept of the communist economy was about industrial production at the state-run factories and grain harvest by peasants, with all grain surpluses being collected by the Soviet central authority state for distribution to the people. This way was believed to help achieve the country's industrial development and enable the Soviet authority to provide peasants with tractors, fertilizer and other necessary supplies, although the country was experiencing hardships due to the war. This being the policy at the time, the "market economy" or "free trade" was regarded as a symbol of the enemies of socialist construction, a counter-revolutionary slogan. The biggest task of the Communist party was to have the people, in particular the peasants who had been used to the market economy, abandon their inclination to favor the market economy.

This policy, later called "war communism," lasted until early 1921.

Adoption of 'New Economic Policy' to pave the way for better relations with farmers

However, this policy caused antagonisms that were difficult to solve on the ground. Farmers were ready to endure hardships to some degree during the war against the counterrevolution and outside intervention, but once Soviet Russia defeated these enemies and achieved peace, the farmers' discontent erupted causing riots in some localities. In Kuronshtadt, a naval port near Leningrad (the capital at the time and known as a stronghold of the revolution) even the revolutionary sailors rose in revolt. In those revolts they called for "free trade" or "freedom to trade."

Lenin took this dangerous situation more seriously than any other political leaders of Soviet Russia at the time.

The major question was how to improve the socialist government's relations with the farmers. How is it possible to establish a worker-farmer alliance, essential for making progress towards a new society? Lenin's statements and articles during this period show clearly that he took pains to find the answer.

Remember that even Lenin believed that the "market economy" was a counterrevolutionary slogan, and you will understand that he needed to exert courage to make the difficult decision to accept a market economy.

The New Economic Policy, NEP, began in March 1921. It is often referred to as being synonymous with the acceptance of a market economy. This is not correct. Although he put forward a drastic change, Lenin initially could not go so far as to recognize the market economy; he looked for a reform without adopting a market economy and adopted an "exchange of products" policy under which peasants bartered corn for industrial goods and other products of the cities. It did not achieve good results.

After six months of soul-searching, in October 1921, he arrived at the conclusion that the adoption of a market economy is necessary.

The announcement of this conclusion, which Lenin worked out after taking great pains, had great repercussions in the party.

Documents from a Russian Communist Party conference at the time (Lenin's report and closing speech), which are available in Lenin's Collected Works show clearly how extensive the turmoil was. A member in the discussion said, "They didn't teach us to trade in prison." Another complained that communists cannot be involved in the very unpleasant job of trade. In the concluding speech, Lenin criticized these views, saying that it is inexcusable for revolutionaries to give way to dejection and despondency.

Toward 'socialism through a market economy'

That was how Soviet Russia began to study the market economy. In short, the discussion on the market economy was prompted by the policy of improving the government's relations with peasants after the victorious revolution.

Once Lenin made a decision to take this course, however, he immediately began to work on this issue in more detail and developed it into a major policy that would have an important bearing on the destiny of the Russian Revolution and socialism, namely, a path toward "socialism through a market economy."

Documents at the time show that it marked a very impressive development. I think that the new policy consisted of a number of pillars.

First, it concerned the establishment and development of a socialistic structure that would not lose in competition with capitalism in a market economy. Lenin used the Russian word "uklad" for what I describe as structure. I'm afraid there is no Japanese or Chinese equivalent for "uklad."

Secondly, the market economy under certain conditions would allow private capitalism to emerge and develop as well as foreign capital to make inroads. This also marked a very important development.

Up till then, the market economy was regarded as the "enemy," the reason being that it would give rise to capitalism even from among small commodity producers. That's something the Russian Revolution could not tolerate.

Thirdly, the new policy called for the key elements of the economy to be preserved as part of the socialist structure. Lenin called these core elements the "commanding heights," a military term used at the time to mean that in an era when cannons were the main arms in war, occupying heights overlooking the battlefield was vital to winning the war.

Two years ago, we had the IT minister of Sri Lanka among the foreign guests attending the JCP Congress. I was a little bit surprised when he said that they are trying to take control of the "economic commanding heights." I said, "I haven't heard that phrase for many years." Then he told me that he had studied in Moscow when he was young.

Fourth, the new policy called for Russia to learn everything advanced capitalism could offer so that the socialist structure could gain economic power.

Fifth, the new policy also referred to peasants. It said that the future organization of peasants in cooperative unions must not be carried out by order from above or by coercion; cooperative unions should be organized based on the voluntary will of the peasants.

The Soviet Union broke it off five years after Lenin's death

In March 1923, 17 months after completing this plan, Lenin fell ill and died in January 1924. Stalin rose to power after Lenin's death. As the leader of the Soviet government and the Communist Party, Stalin from 1929 to 1930 carried out the so-called "agricultural collectivization" as a means of forcibly collecting grain from peasants.

To begin with, the NEP was intended to improve the government's relations with the peasants. So the top-down "agricultural collectivization" policy meant an end of the NEP. Since then, the policy of achieving "socialism through a market economy" never made a comeback in the Soviet Union.

Several decades later, when the Soviet Union was under the leadership of Mikhail Gorbachev, the "introduction of a market economy" was much discussed. But during the preceding 60 years the Soviet Union completely changed itself. Substantial changes took place in the socio-economic system of the Soviet Union during and after Stalin's era. In effect, Soviet society had already become a system in which socialism or even a direction toward socialism was non-existent.

No country has run through this course

So I think that " socialism through a market economy," which China and Vietnam are attempting, is a strategy that no country has ever experienced.

In my speech at the meeting to mark the 80th anniversary of the JCP this past July, I talked about motive power that gets the world to move forward in the 21st century. In that speech I cited what China is attempting to do. I said as follows:

"Although the Soviet Union is gone, projects of socialism associated with Lenin are not. There are countries tackling new projects of socialism, including China, Vietnam, and Cuba. 'Socialism through a market economy' pursued by these countries is precisely what Lenin proposed but which was thrown away by Stalin. This is a path no one has ever traveled through, so there will be many unpredictable difficulties down the road. I have no doubt, however, that results of this trial will have a great impact on the course the world will go through in the 21st century."

What is to be done to set this path toward socialism?

This being such an important issue, there will be a variety of theoretical questions that need to be studied.

Let me just comment on two points.

One is the question of what is to be done to make the path of a market economy successful as a way to achieve socialism.

In analyzing what the path of "socialism through a market economy" would be like, Lenin stated in detail that the economy would involve cooperation and competition between various sectors: socialism, state capitalism, private capitalism, and small commodity production. He also made many original suggestions concerning necessary steps for taking this course to achieve socialism without having to return to capitalism. I think that in the present-day world we can learn many things from what Lenin suggested.

Lenin first and foremost stressed the importance of strengthening the socialist sector through competition in the market so that it can be strong enough to be competitive with capitalism in the market. From this point of view, he also attached importance to learning from capitalist at home and abroad as much as possible.

One of the slogans Lenin put forward was, "to be a good trader one must trade in the European manner."

This apparently was a tough slogan for those who complained, "They didn't teach us to trade in prison." Lenin meant to say, 'To be able to trade is not enough; you must be more skillful businessmen than European businessmen.'

Another slogan Lenin put up was, "test through competition between state and capitalist enterprises."

We should note here that the call for the socialist sector to "beat capitalism" is not confined to economic advantages such as the question of productivity and economic efficiency.

Lenin wrote an article that called for workplace safety to be as good as the best of capitalism. In other words, Lenin's slogan, "Beat capitalism," involves such issues as the environment and pollution. The idea is that socialism should exert superiority in all areas.

Secondly, regarding the "commanding heights" that holds the key to the country's economy. The state must have firm control of the socialist structure so that it will be set as the direction of economic development. When Lenin discussed the importance of the "commanding heights," he was referring to the socialist state taking control of the greater part of the means of production in the industries and transportation. I think that this was an opinion Lenin had under the particular circumstances of Russia at the particular time. What the role of the "commanding heights" is a question that should be explored in accordance with the historical conditions of the country in question.

Thirdly, regarding the defense of society and the economy against negative phenomena the market economy will produce.

The market economy, anarchical and competitive, is like the law of the jungle, which is the source of greater job insecurity, unemployment, and social income gaps. The market does not have power to control such contradictions. Such contradictions can only be controlled through social welfare services and other social security measures.

Although Lenin made no significant remarks on this issue after the adoption of the NEP, I just want to touch on an interesting historical episode. The world's first principles of social security were stated in a declaration issued following the October Revolution by the revolutionary Soviet government. These principles later had a great influence on the capitalist world in that they laid the foundations of social control of negative effects of the market economy under capitalism.

I must point out that the negative side of the market economy is that it gives rise to greed and corruption. Public bodies are required to firmly maintain the principles of socialism, but if they are contaminated by various kinds of corruption, bureaucratism and autocracy will prevail. Aware of this problem, Lenin repeatedly emphasized the importance of popular supervision and inspection along with the self-discipline of public bodies. Thus, Lenin in his later years particularly stressed the need to raise the people's cultural levels and enable each individual to fulfill their responsibilities.

I would like to say one more word. In the present-day world, capitalism's major issue is a choice between accepting the market economy as panacea or placing the market economy under social or democratic control. By and large, the tendency to view the market economy as almighty is clearly represented by the U.S. Bush administration, and the call for democratic control over the market economy is manifest in many European countries. This issue involves a number of global economic issues such as environmental destruction, social disparity and the economic independence of each country.

I am convinced that the important subject of future research from the historical context will be to prove that countries and their economic systems striving for socialism through a market economy will demonstrate their superiority to promote social progress.

What will the future market economy be like?

The other point I want to raise as a subject of study is something more theoretical and concerns the future. It's about the destiny of the market economy. When the combination of the planned economy and the market economy successfully achieves the goal of socialism, will the market economy perish or survive?

I touched upon the negative aspects of the market economy, but a study of the market economy from the perspective I have just mentioned will make it clear that it has some important economic effects that cannot be replaced by other methods or mechanisms.

Take the function of the market economy in adjusting demand and supply.

You may be able to estimate the demand of shoes in a country without having to use market mechanisms. But, when it comes to demand for particular types and colors of shoes, you will have to count on market mechanisms for a long time to come in areas like this, even if you use a computer with high performance.

Likewise, the market's judgment is useful in assessing or comparing labor productivity or corporate performance.

In dealing with the question, "how much more value does skilled labor create than unskilled labor?", Marx said that it is measured by the market mechanism. In Marx's words, such value is determined by a "social process" behind the producers. What he meant was that there is this aspect of market mechanisms.

It is very suggestive that the Soviet-style planned economy turned into a complete fiasco in this regard, as shown clearly by reports delivered by Khrushchev during the 1950s and 1960s at the CPSU Central Committee meetings.

At one point, he stated that in the Soviet Union achievements of productive activities are measured by the weight of products; producing heavier chandeliers is evaluated as better job performance; heavier chandelier may increase the enterprise's earnings, but for whom?"

On another occasion he said: "Why is furniture made in the Soviet Union so unpopular? It is because factories are producing heavy products. Foreign-made furniture is lighter and easier to use. In our country, achievement of production of most machineries is measured by the weight of products. Twice as much iron as that needed for machinery platforms is used; that way may enable the factories to achieve their goals, but they are only making products that can't be of any use. We need to establish new standards to measure achievements of factories."

Such was the Soviet Union's level of study on standards for evaluating economic results 30 years after it abandoned the market economy.

We have an interesting experience in relations to this issue.

After the U.S. war of aggression against Vietnam ended and peace was restored there, we sent a delegation to Vietnam to study the Vietnamese economy and give them advice on economic reconstruction.

The delegation visited farming districts. As you know, they grow rice in paddies. To assist in the mechanization of Vietnam's agriculture, the Soviet Union had sent in rice transplanting machines to Vietnam. Being a product of the Soviet-style planned economy, they were very heavy machines, so heavy that they sank into the mud of the paddies. The Vietnamese felt obliged to use the gift, and decided to use them by attaching two boats on both sides of the machine to prevent the planting machines from sinking. They could plant rice seedlings all right, but the attached two boats pressed down the rice seedling just planted. They finally decided to stop using those machines.

This example shows how difficult it is to find a substitute for the market economy as a system to improve labor productivity and efficiency of economic activities.

This question was not on Marx's mind. In Capital Marx stated that the concept of value remains in communist society. However, we cannot use this remark to speculate that he thought that the market economy would continue to be valid too. If the concept of value will remain valid, it is necessary to think if it is possible for the concept of value to survive without a market economy.

For the concept of value to be valid in the communist society, there must be some kind of mechanism to measure the "value" of labor in place of the "social process" that operated behind the producers, namely the "market economy."

I believe that this involves major unsolved theoretical questions in this area. These are questions that can only be solved as time passes and practical experiences are accumulated worldwide.

Marx based his theory of socialism and communism on scientific criticism of capitalist society and showed that capitalist society will be replaced with a higher form of society as a historical necessity. In so doing, he rejected any attempt to draw up a detailed blueprint for a future new society and instead confined his project to establishing a generality concerning how society makes progress. This is what his theory on socialism and communism is about. Marx maintained a general view that this question should be elaborated by future generations as they carry out practical activities in which they will accumulate and learn from various experiences.

Lenin liked this way of thinking by Marx and said, "Marx did not commit himself, or the future leaders of the socialist revolution, to matters of form, or ways and means of bringing about the revolution."

I think we must bear in mind that we are the protagonists in the effort to create a new society.

This course has a universal nature

Before concluding my lecture, I would like to stress that nothing about "socialism through a market economy" came to Marx's mind; it was born out of needs on the ground. I said earlier that this is a "new historical challenge." It is also a new theoretical challenge.

Broadly speaking, it shows that has universality. No one would doubt that highly developed capitalist countries like Japan will face similar issues in future. When governments striving toward achieving socialism are established in these countries and start making progress toward that goal, they will create a socialist sector within the market economy. The rationality and superiority of the socialist sector will be tested in the market economy and will increase its importance and effectiveness. The process and form of progress in that process will differ from one country to another. Nevertheless, the basic course "through a market economy to socialism" will be common among many countries.

I will carefully follow your present efforts and experiences. There can be zigzags, success, and failures. I will continue to study what you are pursuing in conjunction with a future Japanese society we are envisaging. Thank you for your attention.

FUWA Tetsuzo in China

(Translation by Japan Press Service)

What kind of society is China?

noreply@blogger.com (Unknown) — Sun, 29 Jun 2008 02:04:00 +0000

--- The triumph of state capitalism

Steve Freeman

Weekly Worker, No.727

June 26 2008

http://www.cpgb.org.uk/worker/727/triumph.htm

(Weekly Worker is a publication of the Communist Party of Great Britian. Steve Freeman analyses the facts and figures following his recent visit.)

The world is getting ready see the new China through the prism of the Olympic Games. So I was fortunate enough to visit Beijing, capital of the People’s Republic, earlier this year before it all kicks off. China has been transformed since a popular revolution brought Mao’s Communist Party to power in 1949. The party, with 73 million members, officially leads 1.3 billion people in the building of “socialism with Chinese characteristics”.

What kind of economy and society is it? Beijing is certainly a very modern city. It has a population of 15 million. It is ringed by six concentric, three-lane motorways, jam-packed with cars. There are three million of them, growing by a thousand per day, boasts China Daily.[¹] A grey haze of pollution hangs over the city. In the 1970s pictures of Beijing showed almost everybody on bicycles. Just as we in the west are being encouraged to get on our bikes, Beijing has gone in the opposite direction.

One of the first things that struck me was how modern-looking the city is. Certain parts are like Canary Wharf, the home of London’s financial centre. Skyscrapers are occupied by banks, insurance companies, advertising agencies, international hotel chains and many of the famous brands you see in London. On the ground modern shopping malls are everywhere. It was impressive to see the transformation of what I had imagined from the 1980s as a relatively poor third world country.

The official English-language newspaper, the China Daily, tells the story of Jia Changzhen, who is leaving the city of Shenzen, fed up with having to fight to get paid. He explains the power equipment company he worked for had not given him his wages over five months: “Some of my colleagues are willing to kneel down and beg for their salaries. They have rent to pay and need the money simply to survive.” Although there are labour laws to protect workers, he says, these are not always guaranteed in private companies which make up the majority of businesses.[²]

Li Jian, a consultant in an electronics company, was given the job of legalising his company’s payment system because hundreds of workers have left. The company paid only the city’s minimum wage and no overtime pay. Many workers in Chinese cities are in effect illegal immigrants from the countryside and need work permits. Shenzen business was now suffering growing labour shortages and surveys showed that 18% of the city’s migrant workers had decided to leave and not come back.[³]

Another article tells of students at the Beijing film academy making a film about the lives of building workers on the site of the national stadium for the Olympics. The film deals with three migrants from Jiangsu province. The work on the upper part of the stadium is dangerous. Consequently they earn relatively high wages, over 3,000 yuan, or £214, per month, plus meals and accommodation. Work safety is a constant concern. One of the workers is saving for a new house to replace his old dilapidated home. He intends to save to buy a car.[⁴] Such everyday stories are recognisable to us on the other side of the world. They could just as well have been stories about workers here.

Today the Chinese working class produces goods and services to the value of $7.2 trillion (gross domestic product). The reference point is the United States (GDP: $13.8 trillion). Four years ago 712 million Chinese working people, including about 170 million industrial workers, produced 13% of the world’s output.[⁵] There are an estimated 325 million peasants.[⁶] The size of the reserve army of labour is unknown, but the Chinese Academy of Social Sciences estimates this at 14% among urban residents.[⁷]

Capitalism?

Despite the official designation of “socialism with Chinese characteristics” there is no doubt in my mind either from what I observed, from conversations with local people or from what I have read that China can be accurately described as “capitalism with Chinese characteristics”. This is hardly a novel designation.[⁸]

Let us begin with two sectors featured in capitalist economies - the financial sector and the productive sector. The financial sector extracts surplus capital and redirects it into profitable investment. It enables financial assets to be valued and ownership transferred. Despite its importance for capitalism it is unproductive and parasitical. Real wealth is generated by wage labour employed in the corporate or productive sector, which adds value in the production of goods and services.

Financial sector
China has three stock exchanges: Hong Kong, Shanghai and Shenzen. The Shanghai stock exchange (SSE) has a market capitalisation of nearly $2.38 trillion, making it the fifth largest in the world. The stock market has been undergoing a boom. Between 2005 and 2007, share prices rose by 400%. Some experts see this as evidence of a bubble - a ‘downward adjustment’ is waiting to happen.

In 2007 the Shanghai stock market index topped 5000. It had risen 90% since the beginning of that year. The total value of Chinese shares (capitalisation) exceeds the GDP. The Chinese media were enthusiastic that this was “progress towards a more advanced stage of capitalism”.[⁹] In January 2008 share prices fell across Asia by about 10%. The Hang Seng index (Hong Kong) fell 5.4% on January 16 2008. But the Shanghai market fell by only 2.8%.[¹⁰]

Of the top 10 Chinese firms quoted on the SSE, seven are financial corporations, including banks and insurance companies - China Life, China Merchants Bank, Ping An Insurance and China Pacific Insurance. It is hardly surprising to find that one of the most profitable sectors is that of stockbroking and securities companies. China’s largest stockbroker, CITIC Securities, predicted net profits growth of over 400% for 2007. The Shanghai-based Haitong Securities posted net profit increases of 700%.[¹¹]

China has some very large state-owned banks. The four biggest are the Industrial and Commercial Bank of China (ICBC), the Bank of China, China Construction Bank and the China Development Bank. These have been caught up in the sub-prime crisis. In August 2007 the Bank of China said it had a $9.6 billion exposure to US subprime mortgages and would put aside $151 million to cover its losses.[¹²] The ICBC and China Construction Bank also had subprime holdings of $1 billion.

The Chinese government has told speculators not to worry because its banks are very profitable, with earnings growing by 40% per annum. They can ride out the storm because Chinese bankers have lots of money and not much to do with it. The China Development Bank (CDB) meanwhile announced it was taking a stake in Barclays and will have a seat on the Barclays board.[¹³]

Corporate sector

Today China is a ‘mixed economy’. Productive workers may be employed in state enterprises, foreign multinationals, joint ventures with Hong Kong and Taiwanese firms or in township and village enterprises (TVE). In the 1980s 100% of all capital was state-owned. By 2005 there were 140,000 state-owned enterprises (SOEs) employing about 40 million workers. These enterprises owned half of all industrial assets and produced about a third of the GDP.[¹⁴]

In the 1990s state planners set out to reform the state enterprises and build world class ‘corporate dragons’. The aim was to take 30 to 50 of the best SOEs and turn them into globally competitive multinationals.[¹⁵] The number of SOEs was reduced by closures, mergers and privatisations. An estimated 20-30 million workers were made redundant.[¹⁶] Now there is a group of 169 centrally controlled SOEs which are very profitable.

The Chinese market provides a vast opportunity to build a manufacturing base from which to go global. Chinese corporations have become multinationals. Take Hisense, a $3.6 billion consumer electronics group producing TVs for over 10% of the Chinese market. The firm also produces air conditioners, personal computers and telecomms equipment. It manufactures in Algeria, Hungary, Iran, Pakistan and South Africa and sells 10 million TVs and three million air conditioners per year in 40 countries. It is the best selling brand of flat TVs in France.[¹⁷]

BYD has become the world’s largest maker of nickel cadmium batteries. Johnson Electric, a Hong Kong-based firm, has half the world market in tiny electronic motors used in cameras and cars. The BMW series 5 has over 100 such motors to operate wing mirrors, open sun roofs, etc. Johnson produces three million such motors per day.[¹⁸]Chery automobiles is China’s leading car exporter. It has plans to build factories in eastern Europe, the Middle East and South America. Lenovo has bought out IBM’s personal computer business.[¹⁹]

Accumulation
No country in the history of the world has had such rapid growth sustained over 30 years. Since 1978 GDP has grown by almost 10% per annum.[²⁰] The economy has doubled three times over. It is a pattern of capital accumulation that has no equal since capitalism began. Between 2003 and 2007 the growth of real GDP averaged 10.8%. In 2007 it rose by 11.9%. Although the rate is expected to slow down, the economy is still predicted to grow by 8.5% in 2012.

Rapid economic growth has enabled the state to direct investment into information technology and transport infrastructure. There are now 210 million internet users in China. With 500 million mobile phone users, China has more than Europe. Within a few months China will have more internet users than America. Yet the proportion of the population using the internet remains low at about 16%. Rapid growth is likely to continue for some time. Operating profit margins for leading internet firms are 28% in China, compared with 15% in America.[²¹]

The state is directing massive capital investment into transport infrastructure. Rapid economic growth has put massive strain on the transport system. The cost of transportation or logistics amounts to 18% of China’s GDP, compared to 10% in America.[²²] The pace of China’s rail and road construction is “mind-boggling”, according to a World Bank adviser. Between 2001 and 2005 more has been spent on roads, railways and other fixed assets than in the previous 50 years.

Symbolising the investment boom, Beijing’s new airport is ready for the Olympics. Designed in the shape of a Chinese dragon, you can see it as you descend from the clouds. The world’s largest terminal is three kilometres long and with floor space 17% bigger than all the terminals at London’s Heathrow combined.[²³] It was built in four years by an army of 50,000 workers.

Air passenger traffic has increased from seven million passengers in 1985 to over 185 million in 2007. By 2020 the state plans to build another 97 airports to add to the 142 already in operation. Since the 1990s China has built the world’s second biggest motorway express network, comparable to America’s interstate highway system in length. At the end of 2007, some 53,600 kilometres of toll expressways had been built. The ministry of communications can claim with justification that China’s motorway builders achieved in 17 years what took developed western capitalism 40 years to accomplish.[²⁴]

These roads are not ‘socialist freeways’. They are ‘marketised’, with traffic-slowing toll booths. ‘Socialist’ China is responsible for 70% of the world’s tolled roads. Prices are the highest in the world. Not surprisingly, lorries are routinely overloaded to cut costs. This contributes to making Chinese roads among the most dangerous in the world and the most costly to maintain. There were 89,000 deaths in 2006.

China’s railways carry 25% of the world’s railway traffic on just six percent of its track length. Chinese state capital is now undergoing the biggest expansion of railway capacity undertaken by any country since the 19th century.[²⁵] The 115-kilometre journey from Beijing to Tianjin, its nearest port, will be reduced to half an hour with the advent of a bullet-train link. Work began in January 2008 on a 1,300-kilometre line between Beijing and Shanghai. It will reduce travel time by rail between the two cities from ten hours to five.[²⁶]

In building bridges and ports the state has chalked up more world-busting achievements. Shanghai is the current world-record holder for the longest structure, the 32-kilometre Donghai bridge. It links the city with Yangshan, a port being built on two flattened islands. Even bigger will be the world’s longest sea-crossing bridge, due to open in 2008: a 36-kilometre, six-lane highway across Hangzhou Bay. It is about the same length as the Channel Tunnel and will cut travel time in half between two of China’s busiest ports, Shanghai and Ningbo.[²⁷]

New colonies

In 2007 the Congolese government announced that Chinese state-owned firms would build or refurbish various railways, roads and mines around the country at a cost of $12 billion. They would do this for the right to extract copper ore of an equivalent value. This investment was more than three times Congo’s annual budget and roughly 10 times the aid provided by western donors.[²⁸]

The booming Chinese economy has been forced along the path identified by Lenin’s Imperialism, the highest stage of capitalism. Hunger for natural resources has set off a global commodity boom.[²⁹] With about a fifth of the world’s population, China now consumes half the world’s cement, a third of its steel and over a quarter of its aluminium. Shipments of iron ore, for example, have risen by an average of 27% a year for the past four years.

China has doubled its own production of iron ore since 2003. It is now the world’s largest producer. Steel production rose by 15% last year. Since 2000, China has roughly tripled its steel output. With 37% of global output, it is by far the world’s biggest producer. It accounts for about three-quarters of the global growth in steel production between 2000 and 2005.[³⁰]

China cannot dig up iron ore fast enough to supply its hungry steel mills. Imports of iron ore have been growing rapidly from 148 million tonnes in 2003 to 375 million tonnes last year. They now account for half the world’s seaborne trade in iron ore.[³¹]

In 1990, China consumed 2.4 million barrels of oil a day. It exported a surplus of 400,000 barrels. Now China uses up seven million barrels a day and imports half of this. It is estimated that by 2030 it will guzzle 16.5 million barrels, mostly imported, and more than Saudi Arabia currently produces.[³²]

From Australia to Canada, Indonesia and Kazakhstan, Chinese firms are buying up oil, gas, coal and metals, paying for the right to explore for them or buying up firms that produce them. This has helped to fuel a commodity boom and economic growth in African and Latin American economies. In 2006 Angola was receiving so much aid and investment from China that it decided it no longer wanted money from the International Monetary Fund. In Sudan, China is investing in oilfields and buying up the oil.[³³]

Australia is the world’s biggest exporter of iron ore and coal. It exports diamonds, zinc, lead, gold, nickel, manganese and copper. Western Australia grew by 11% in the year up to September 2007, faster than in China itself. Australian miners cannot dig quick enough to satisfy the dragon’s hunger. Ships are queuing off Australia’s biggest coal port, Newcastle, to load cargoes destined for China. At one period in 2007 the line was 79 ships long.[³⁴]

Triumph

In terms of rapid and sustained capital accumulation and economic growth the Chinese state and the Communist Party have been very successful. But everywhere the Chinese working class is not free. There is no democracy. What limited social rights workers had gained are under threat. The triumph of state capitalism is not the liberation of the working class but its further enslavement. In what sense then can we speak of ‘triumph’?

Twenty years ago the USSR collapsed and American capital ruled the world. Privatisation and free markets were proclaimed as the only rational means of organisation. It was not just that socialism, identified with state ownership, was dead, but even limited public ownership or state enterprise was simply an anachronism. Many western bourgeois writers on China assume that state capital was by definition moribund. It simply could not work.

The only option was complete privatisation and market rule. In Russia, Yeltsin engineered a Chicago-inspired shock therapy as the quickest route to prosperity. China did not fall into line with that theory. Of course, Chinese capital engineered its assault on workers’ rights through factory closures, redundancies and privatisations. Just as Thatcher attacked the welfare estate in the UK, so the Maoist welfare state, the ‘iron rice bowl’, was dismantled.

But just as we adjust to the triumph of free markets a different picture is starting to emerge. It is surely an ironic twist of fate that Wall Street, the flagship of private capitalism, has been bailed out by state capital - funds from state investors. Merrill Lynch received $6.6 billion and Citigroup $14.5 billion. Much of this state capital from Asia and the Middle East was provided to save American bankers from the subprime crisis.[³⁵] Free market enthusiasts are not so cocky now.

State capital

Chinese state-owned corporations have been climbing the rankings of the largest firms in the world. The state-owned Industrial and Commercial Bank of China has recently overtaken Citigroup as the world’s biggest bank by market value. No fewer than three of the world’s top six firms are Chinese state enterprises - in addition to ICBC, there is PetroChina and China Mobile. China now has six of the world’s largest 25.

PetroChina is China’s largest company by asset value. If it were to sell shares, it would soon overtake Exxon and Mobile as the world’s largest oil business. In addition Sinopec and the China National Offshore Oil Corporation (CNOOC) are major oil companies which operate in more than 12 countries. CNOOC, for example, is Indonesia’s largest offshore oil producer.

The fact that China Mobile is the sixth largest company in the world indicates that the new China has a strategic position in information technology. The Sinosteel Corporation is China’s leading raw material and service provider which saw its sales increase by 83% last year and its profits rise by 180%. China’s largest steel maker, Baosteel, is a state-owned multinational with operations in Australia, India and South Africa.[³⁶]

According to the theory of free market capitalism, this simply cannot happen. The world has turned upside down. Will Hutton’s recent book Writing on the wall shows that privatisation played no part in China’s growth before 1997. Chinese domestic growth came from township and village enterprises in the 1980s. We cannot deny the role of foreign multinationals. But what about Chinese private capital?

Hutton cites a World Bank study of firms listed on the stock exchange. He says: “At first sight it seemed that the state had relinquished control of more than 90%. However, once the labyrinth of the share structure had been unravelled, the opposite was the case. The state had de facto control of 84% of the listed companies”.[³⁷]

Sovereign-wealth funds

The argument about state capitalism was focused for the post-war period on the USSR. For most socialists, state capitalism ended with the collapse of that regime. Yet capitalism moves on. New forms arise whilst we are thinking about other things. The recent development of sovereign-wealth funds is a case in point.

Sovereign-wealth funds are a new form of state capital - capital funds owned by states and invested internationally. We are used to thinking of state capital in national terms, whether it was British Rail, British Gas or the Lenin No2 Steel Works. Today we have 29 sovereign-wealth funds with capital assets worth about $2.9 trillion.[³⁸]

State capital can no longer be identified primarily with Russia, the German Democratic Republic or even North Korea. The Abu Dhabi Investment Authority of the United Arab Emirates is worth $875 billion. It is the biggest pool of state-owned capital. Norway has $380 billion from its pension fund. Then there is Singapore’s $330 billion and Saudi Arabia and Kuwait. None of this has anything to do with socialism, bureaucratic or otherwise.

Although this form of state capital makes up only two percent of the world’s $165 trillion of traded securities, these funds have a lot of financial firepower. They own more equity than private equity firms and more funds than hedge funds.[³⁹] Sovereign wealth or state capital is growing fast and making its mark rescuing the private banks that came a cropper in the subprime crisis.

In 2007 China decided to set up its own fund of state capital called the China Investment Corporation (CIC). It was sent out with $200 billion to spend. The CIC invested $3 billion in Blackstone, a private equity group. This asset was soon devalued by $1 billion in the recent credit crunch. However, these funds are also buying assets and funding activity in Africa and Australia.[⁴⁰] We are witnessing the internationalisation of Chinese state capital.

How has China grown?

Why has Chinese capital been able to accumulate at such a rapid rate that it has transformed itself and is having a major impact of the world economy? One expert from China Economic Quarterly put the source of the surplus to a “unique combination of first world infrastructure and third world labour costs”.[⁴¹]

Three factors stand out - investment, workers’ wages and internationalisation. First China has a high rate of investment at about 45% of GDP.[⁴²] This is a pattern which has its parallel with the old-style Soviet system. In the USSR consumption was severely restricted in favour of investment and military spending. The Chinese state has kept up the pressure on working class consumption.

Restricted consumption means relatively low wages. Chinese capital has access to a massive pool of cheap labour. Some estimates have claimed that there are almost 200 million underemployed people in the countryside who can be drawn into industry. It will be years before this labour is absorbed.

The Economist says: “Nor is China close to running out of cheap labour … there are shortages of managers and skilled workers, but it will take at least another decade before China’s surplus rural labour is fully absorbed by industry. It is true that average wages have jumped by 15% over the past year, but productivity in manufacturing has been growing faster still, so unit labour costs have fallen”.[⁴³]

Migrant workers from rural China make their regular pilgrimage to the cities to find work. There is a vast movement of around 20 million people which has fuelled the manufacturing boom in southern China.[⁴⁴] Hutton argues there are 150 million migrant workers in Chinese cities working long hours in terrible conditions.[⁴⁵]

The Great Wall

The third factor absolutely central to accumulation has been the ‘globalisation’ of the Chinese economy. The ‘Great Wall’ has been broken down by trade. The process of opening up the Chinese economy was begun under Mao and was accelerated after 1978 by Deng Xaou Ping. Today China has one of the most open economies in the world. It now produces 70% of the world’s photocopiers, 70% of computer motherboards, 50% of the DVD players, 30% of personal computers, 25% of TV sets and 20% of car audio equipment.[⁴⁶]

China was transformed into an export platform as western capitalist firms began outsourcing activities to reduce costs. In 1990 the ratio of exports to GDP was 16%. By 2003 it had risen to 36%.[⁴⁷] Net exports account for 35% of growth since 2005.

Since 1990 there has been a rapid increase in foreign direct investment (FDI) flowing into China. The share of foreign-owned production in China’s manufacturing sales grew to 31% by 2000. In 2002 China became the largest recipient of FDI in the world.[⁴⁸] China became a major supplier of cheap goods to the USA, symbolised by the success of low-cost Wal Mart.

Chinese revolution

If we are to understand the Chinese economic miracle, we need to go back to the revolution of 1949, which brought Mao and the Chinese Communist Party to power. How was this revolution connected to present-day ‘capitalism with Chinese characteristics’? We can divide the intervening 59 years into the Maoist period (1949-78), followed by the opening of China to the world market after Deng Xaou Ping came to power (1978-89). Finally we have the period from the Tiananmen Square demonstrations and their bloody repression to the present (1989-2008).

How should we view the Maoist period, known as the ‘iron rice bowl’? The real comparator is with India. India had a similar-sized peasant population and its own revolution in 1947. What is clear is that the Chinese revolution triggered more rapid economic development. It was a popular democratic revolution. Like any revolution in the mid-20th century, it was carried out under the ideology of Marxism. But red flags and singing ‘The Internationale’ does not make communism.

The Chinese revolution destroyed the old system of landlordism. Land was nationalised. This was far more effective than anything that happened in India, whose revolution turned into a reactionary muslim-hindu civil war. The Chinese revolution acted like a forest fire, burning the old system and preparing the virgin soil in which capitalism could take root. Dealing with the land question, establishing a unified state, free from foreign domination, with a single currency and central bank and educating a workforce are essential for capitalism.

All this was achieved by state direction, with popular support thanks to the social programmes of education and welfare. The policy of the ‘iron rice bowl’ placed emphasis on developing agriculture and heavy industry. Despite failures and disasters like the Great Leap Forward and the resulting famine, this period laid the basis for subsequent growth. State ownership and planning played the historic role assigned to the bourgeoisie.

If we view this period in Chinese history as ‘socialism’, in which the working class ruled China through soviets, we have to explain how the working class was removed from power. But if we can recognise the difference between a peasant-based Maoist Communist Party and the rule of the working class then there is no problem. In the Maoist period China remained a peasant-dominated rural society. The state began the task of employing industrial wage labour. It could hardly yet be called full-blown capitalism.

The Maoist period was no more than the primitive beginnings of ‘capitalism with Chinese characteristics’. Bourgeois ideologues like to paint the Maoist period as a complete disaster because they view any revolution with fear and disdain. But their theory cannot explain the higher rate of accumulation than a more conservative India. It is worth quoting Will Hutton, who gets to the heart of the issue. He says: “Today’s China could not have started from nothing in 1978".[⁴⁹]

It didn’t. Charlie Hore continues Hutton’s theme. He says: “The economy was not a complete failure under Mao Zedong. There was substantial economic growth, and both living standards and life expectancy rose substantially after 1949.”[⁵⁰] In the 1980s the township and village enterprises encouraged by Maoist decentralisation began to blossom. It was Mao who welcomed Nixon to China as the political beginning of the opening up to the world market.

The events in 1989 in Tiananmen Square add one more piece to the jigsaw. First it shows that the workers, students and intellectuals did not have political power. With the development of capitalism in China ordinary people wanted more freedom and more rights. The working class needs democracy if it wants liberation. But the proto-democratic revolution was crushed. The multinational corporations recognised one stable power in China. It was not the working class. Since the 1990s foreign direct investment has flowed in more freely to exploit the workers.

Back to the working class
How can we understand what is happening in China? Is it private capitalism, market forces, and multinationals replacing socialism with capitalism? Is it proof that state capital, one-party rule and central state planning really works after all? The issue is not which is the best type of capital. The question comes back to the working class.

The one factor missing from view, unseen and unknown, is the working class. In 60 years the Chinese revolution freed the peasants to become workers. The real source of all this accumulated capital has been the hard work, sweat and toil of millions of new workers. For capital, China is a vast pool of cheap, exploitable labour.

I have concentrated on the accumulation of capital. But on the other side of the coin is proletarianisation. China is becoming a working class country. That should fill us with optimism for the future. It is the struggles of the new working class that will make the world a different place. Surely that is an argument for Chinese workers to support a new international revolutionary democratic communist party.

Notes

1. China Daily January 19 2008.

2. China Daily January 18 2008.

3. Ibid.

4. Ibid.

5. The Economist October 2 2004.

6. C Hore International Socialism spring 2008, p147.

7. Mobo Gao The battle for China’s past London 2008, p178.

8. See G Chin Building capitalism with Chinese characteristics York, Canada, 2003; and N Holstrom, R Smith, ‘The necessity of gangster capitalism: primitive accumulation in Russia and China’ Monthly Review February 2000.

9. The Economist September 1 2007.

10. China Daily January 17 2008.

11. Ibid.

12. The Economist September 1 2007.

13. Ibid.

14. The Economist March 25 2006.

15. The Economist January 8 2005.

16. The Economist March 25 2006.

17. The Economist January 12 2008.

18. Ibid.

19. Ibid.

20. The Economist September 29 2007.

21. The Economist January 31 2008.

22. The Economist February 14 2008.

23. Ibid.

24. Ibid.

25. Ibid.

26. Ibid.

27. Ibid.

28. The Economist March 13 2008.

29. Ibid.

30. Ibid.

31. Ibid.

32. Ibid.

33. Ibid.

34. Ibid.

35. The Economist January 17 2008.

36. China Daily January 18 2008.

37. Quoted in C Hore International Socialism spring 2008, p141.

38. The Economist July 26 2007.

39. Ibid.

40. The Economist January 17 2008.

41. The Economist January 8 2005.

42. The Economist September 29 2007.

43. The Economist August 4 2007.

44. The Economist March 13 2008.

45. Quoted by C Hore International Socialism spring 2008, p149.

46. Ibid.

47. M Hart-Landsberg, P Burkett China and socialism: market reforms and class struggle New York 2005, p121.

48. Ibid p48.

49. Quoted by C Hore International Socialism spring 2008, p142.

50. Ibid.

No Shangri-La

noreply@blogger.com (Unknown) — Sat, 26 Apr 2008 18:34:00 +0000

Slavoj Žižek
Letter, London Review of Books
Vol. 30 No. 8 · Cover date: 24 April 2008

The media imposes certain stories on us, and the one about Tibet goes like this. The People's Republic of China, which, back in 1949, illegally occupied Tibet, has for decades engaged in the rutal and systematic destruction not only of the Tibetan religion, but of the Tibetans hemselves. Recently, the Tibetans' protests against Chinese occupation were again crushed by military force. Since China is hosting the 2008 Olympics, it is the duty of all of us who love democracy and freedom to put pressure on China to give back to the Tibetans what it stole from them. A country with such a dismal human rights record cannot be allowed to use the noble Olympic spectacle to whitewash its image. What will our governments do? Will they, as usual, cede to economic pragmatism, or will they summon the strength to put ethical and political values above short-term economic interests?

There are complications in this story of 'good guys versus bad guys'. It is not the case that Tibet was an independent country until 1949, when it was suddenly occupied by China. The history of relations between Tibet and China is a long and complex one, in which China has often played the role of a protective overlord: the anti-Communist Kuomintang also insisted on Chinese sovereignty over Tibet. Before 1949, Tibet was no Shangri-la, but an extremely harsh feudal society, poor (life expectancy was barely over 30), corrupt and fractured by civil wars (the most recent one, between two monastic factions, took place in 1948, when the Red Army was already knocking at the door). Fearing social unrest and disintegration, the ruling elite prohibited industrial development, so that metal, for example, had to be imported from India.

Since the early 1950s, there has been a history of CIA involvement in stirring up anti-Chinese troubles in Tibet, so Chinese fears of external attempts to destabilise Tibet are not irrational. Nor was the Cultural Revolution, which ravaged Tibetan monasteries in the 1960s, simply imported by the Chinese: fewer than a hundred Red Guards came to Tibet. The youth mobs that burned the monasteries were almost exclusively Tibetan. As the TV images demonstrate, what is going on now in Tibet is no longer a peaceful 'spiritual' protest by monks (like the one in Burma last year), but involves the killing of innocent Chinese immigrants and the burning of their stores.

It is a fact that China has made large investments in Tibet's economic development, as well as its infrastructure, education and health services. To put it bluntly: in spite of China's undeniable oppression of the country, the average Tibetan has never had such a high standard of living. There is worse poverty in China's western rural provinces: child slave labour in brick factories, abominable conditions in prisons, and so on.

In recent years, China has changed its strategy in Tibet: depoliticised religion is now tolerated, often even supported. China now relies more on ethnic and economic colonisation than on military coercion, and is transforming Lhasa into a Chinese version of the Wild West, in which karaoke bars alternate with Buddhist theme parks for Western tourists. In short, what the images of Chinese soldiers and policemen terrorising Buddhist monks conceal is a much more effective American-style socio-economic transformation: in a decade or two, Tibetans will be reduced to the status of Native Americans in the US. It seems that the Chinese Communists have finally got it: what are secret police, internment camps and the destruction of ancient monuments, compared with the power of unbridled capitalism?

One of the main reasons so many people in the West participate in the protests against China is ideological: Tibetan Buddhism, deftly propagated by the Dalai Lama, is one of the chief points of reference for the hedonist New Age spirituality that has become so popular in recent times. Tibet has become a mythic entity onto which we project our dreams. When people mourn the loss of an authentic Tibetan way of life, it isn't because they care about real Tibetans: what they want from Tibetans is that they be authentically spiritual for us, so that we can continue playing our crazy consumerist game. 'Si vous êtes pris dans le rêve de l'autre,' Gilles Deleuze wrote, 'vous êtes foutu.' The protesters against China are right to counter the Beijing Olympic motto – 'One World, One Dream' – with 'One World, Many Dreams'. But they should be aware that they are imprisoning Tibetans in their own dream.

The question is often asked: given the explosion of capitalism in China, when will democracy assert itself there, as capital's 'natural' political form of organisation? The question is often put another way: how much faster would China's development have been if it had been combined with political democracy? But can the assumption be made so easily? In a TV interview a couple of years ago, Ralf Dahrendorf linked the increasing distrust of democracy in post-Communist Eastern Europe to the fact that, after every revolutionary change, the road to new prosperity leads through a 'vale of tears'. After socialism breaks down the limited, but real, systems of socialist welfare and security have to be dismantled, and these first steps are necessarily painful. The same goes for Western Europe, where the passage from the welfare state model to the new global economy involves painful renunciations, less security, less guaranteed social care. Dahrendorf notes that this transition lasts longer than the average period between elections, so that there is a great temptation to postpone these changes for short-term electoral gain. Fareed Zakaria has pointed out that democracy can only 'catch on' in economically developed countries: if developing countries are 'prematurely democratised', the result is a populism that ends in economic catastrophe and political despotism. No wonder that today's economically most successful Third World countries (Taiwan, South Korea, Chile) embraced full democracy only after a period of authoritarian rule.

Following this path, the Chinese used unencumbered authoritarian state power to control the social costs of the transition to capitalism. The weird combination of capitalism and Communist rule proved not to be a ridiculous paradox, but a blessing. China has developed so fast not in spite of authoritarian Communist rule, but because of it.

There is a further paradox at work here. What if the promised second stage, the democracy that follows the authoritarian vale of tears, never arrives? This, perhaps, is what is so unsettling about China today: the suspicion that its authoritarian capitalism is not merely a reminder of our past – of the process of capitalist accumulation which, in Europe, took place from the 16th to the 18th century – but a sign of our future? What if the combination of the Asian knout and the European stock market proves economically more efficient than liberal capitalism? What if democracy, as we understand it, is no longer the condition and motor of economic development, but an obstacle to it?

Slavoj Žižek
Birkbeck College, London WC1

CCTV: Protest West Media Distortion in Ottawa, Canada

noreply@blogger.com (Unknown) — Thu, 17 Apr 2008 05:06:00 +0000

China protesters outnumbered

noreply@blogger.com (Unknown) — Wed, 16 Apr 2008 00:02:00 +0000

Chinese students quickly organize a counterprotest, call activists uninformed
Peggy Lim
Staff Writer, News & Observer
peggy.lim@newsobserver.com

DURHAM - While protesters were heckling the Olympic torch out of San Francisco, Duke University junior Adam Weiss was having a hard time bringing sympathy for Tibet's cause to the campus.

Hundreds of counterprotesters, far outnumbering members of Weiss' Duke Human Rights Coalition, showed up Wednesday night to his mock version of the torch relay for the 2008 Beijing Olympics, which Weiss calls the "Genocide Olympics."

Chinese students at Duke, N.C. State University and UNC-Chapel Hill caught wind that Weiss was preparing to jog through campus carrying the Tibetan flag to protest China's rule in Tibet. The word rapidly spread online.

On Wednesday, hundreds of Chinese students piled into cars and headed to Duke. They held posters that read, "Do not mix politics with the Olympic Games."

Weiss, 21, a political science and Spanish major at Duke, disagrees.

"This is the best time, when the spotlight's on, to show what the Chinese government is about," he said.

"Some of my best friends are Chinese," he added. "It's just this one issue we disagree on. ... You can love Chinese culture, but you don't have to like the Chinese government's policy on Tibet."

The counterprotesters Wednesday waved red flags -- some brought from China, others purchased in bulk the day of from Grand Asia, a Chinese grocery store in Cary.

When a shirtless Weiss approached the Duke Chapel after a trek from Duke's East campus, Chinese students, who had just finished singing the Chinese national anthem, swarmed him.

Weiss and about 15 other students then took up a perch on the steps of the chapel, where they yelled, "Freedom and justice, here and abroad."

The Chinese students responded with their own chants, including, "Liar! Liar! Liar!"

"This is probably one of the most exciting demonstrations since I've been here," said onlooker Rebecca Wu, 19, a Duke sophomore. "For other events, attendance is really low."

The face-off was heavily policed and did not devolve into violence.

But the hundreds of Chinese students who showed up for the confrontation reflect the frustration many have felt about how their country has been criticized or portrayed in the media. In the past two months, Chinese students from Germany to Canada to North Carolina have inundated Internet bulletin board services, shared YouTube videos or contributed to Web sites such as anti-cnn.com, a collection of errors Western media outlets have made in coverage of Tibet.

The students say that human rights protesters have ignored that Tibetan mobs turned violent, looting stores, burning buildings and killing civilians in the riots that roiled Tibet's capital, Lhasa, on March 14.

Hainian Zeng, 25, a botany doctoral student at N.C. State University, said that's why he feels he must speak up.

" 'Free Tibet' -- to them it's just a slogan," Zeng said. "They have no idea about the past and current situation in Tibet."

Zeng was in one of about 45 students who caravaned to Duke from NCSU on Wednesday. He was also one of a handful of NCSU students who recently compiled fliers and distributed 200 copies across NCSU's campus. The fliers include excerpts from "Friendly Feudalism: The Tibet Myth," a piece written by Michael Parenti, an American political scientist, historian and media critic. In coming days, Zeng hopes to distribute 500 more copies along with a CD he has created, called "Truth in Tibet."

Zeng, who came to Raleigh from Shanghai two years ago, said he doesn't want to escalate conflict between any ethnic groups. But he can't sit back and do nothing.

"We just want to try to give people a different point of view," he said.

peggy.lim@newsobserver.com or (919) 836-5799

Olympic Torch Relay Counter-Protest in London

noreply@blogger.com (Unknown) — Tue, 15 Apr 2008 17:58:00 +0000

Taimur Rahman

On Sunday the 6th of April the Olympic Torch was being carried through the streets of London. For some time now the procession of this Torch had become a focal point for demonstrations. On the one hand were those who, egged on by the imperialist media wanted to see a boycott of the Olympics. On the the other hand were those that supported the first Olympics to be held in a formerly colonial country.

CMKP comrades in UK who have been writing on the subject for the past few weeks, decided to join the protests on April 6th. We joined these protests against the so-called Free Tibet Movement and against imperialism' s efforts to undermine the national sovereignty of China.

When we arrived at Trafalgar Square, we were delighted to see thousands of Chinese students gathered. They were waving red flags and banners. Trafalgar square fills out with about 20,000 people. It seemed to be at least half full. My estimate is that there may have been about 10,000 people present. There were also pro-Tibet protesters within the crowd as there were people who had just come to see the torch. However, the vast majority of young people had come out to defend China.

As soon as we got there, we unfurled our flags and banners and began to raise slogans. At this point we were standing, unintentionally, in the middle of Free Tibet protesters. Hence there were only a few of us shouting slogans. We also had a short heated argument with some British people who were protesting in favour of Tibet (99% of Free Tibet protesters were British, we saw only one or two Tibetans). However, the police came and broke us up. We decided to move to another spot.

We went in the middle of Chinese students and began to raise slogans. The response was unbelievable. From then on there was no stopping us. Chinese students formed a ring around our slogans, sang songs, raised their voices, beat their gongs and drums, and jumped up and down with the slogans. It was absolutely amazing and with incredibly high energy. Shahram was in the middle of the ring shouting slogans and waving the CMKP flag with one hand when he got an idea. He grabbed the Chinese flag from me and holding it in his other hand, started spinning around to the cheers of the crowd with the flags held high. It looked beautiful and the Chinese went nuts!

We then walked down towards Downing Street. The march was a sea of red flags. I think there may have been five thousand Chinese students. On the opposite side of the road were mostly British people supporting the Dalai Lama. But they were completely outnumbered nearly 10 to 1. At one point a small group of pro-Tibet protesters tried to provoke the Chinese students by marching into their side of the demonstration with their placards etc. If this had been Pakistan I can assure you that it would haveresulted in a scuffle. But to my surprise, the Chinese students did not touch them. They raised slogans and voiced their discontent but they did not even lay a finger on them. Chinese students repeatedly sang their national anthem and shouted "Tibet China, Is One", "Long Live China" and "Dalai Lama, CIA". We then marched down past the PM's office to the parliament, went along the river and came back up to Trafalgar square. The march lasted at least about 3 hours during which time students were almost constantly raising slogans. CMKP comrades also made an impassioned speech standing on the street corner, explaining to the Chinese students that we were present out of a sense of internationalism. That we the people of the Third World must stand with each other against imperialism. There was rapturous and sustained applause.

Hundreds of Chinese students came up to us and asked us our names, where we were from, and thanked us again and again for charging up the crowd. They said "you are very professional. How did you learn all this". We smiled and said that a year of mass movements against dictatorship in Pakistan had taught us much about leading rallies and marches.

This was the first time that we also attended a mass demonstration that involved people from China. We were extremely touched by their warmth, openness and friendliness. Here we were, a small group of Pakistani communists, leading a giant march of Chinese students. And they all supported us, and followed us, and thanked us profusely. It reminded me of that famous saying by Karl Marx "workers have no nation, you cannot take from them what they have not got".

We came home to look at media reports. One would have thought that a march of some five Chinese students in central London would receive some coverage. Not a word. The imperialist media completely blacked out this news. Instead they only focused on the pro-Tibet protesters. Their selective coverage made it seem like all of London was out against China. There were some incidents where Pro-Tibet protesters (who were mostly all British people) tried to snatch the Torch or extinguish it. But they were puny in comparison to the pro-China protesters. Yet the entire media only focused on one side of the picture. Here are some Youtube clips that catch glimpses of this giant protest.

(http://www.youtube.com/watch? v=-ehT6GslKJM)