China’s Neoliberal Dynasty

China’s Neoliberal Dynasty

As China’s economy surges forward, so does the pileup of social contradictions: pollution, migration, crime and family dysfunction.


Since 1978, when its market reforms began, China has clocked an average annual growth rate of 8.9 percent–the longest and most sustained growth of any country in modern history and one that has propelled it ahead of Britain to become, this year, the fourth-largest economy in the world.

As the country’s economy surges forward, however, so does the pileup of social contradictions. China is the second-biggest emitter of carbon dioxide in the world. Seventy percent of the water in the country’s lakes and rivers is undrinkable because of pollution. Environmental ills annually cause 300,000 deaths and cost $200 billion–equivalent to 10 percent of the gross domestic product–due to loss of work, medical expenses and government outlays.

More important, unimaginable problems have emerged from the migration of 150 million peasants who are victims of a decision to focus economic growth on urban expansion at the expense of rural development. In the cities the peasants live in shantytowns and work under conditions of extreme exploitation. Meanwhile, an estimated 20 million children have been left behind to fend for themselves, and rural authorities have noted a marked increase in robbery, petty crime, suicide and rape involving these unsupervised children. In cases where only the husbands depart for the cities, the wives are left to care for children and in-laws and to till the family farm. Many are so overburdened that they choose to end their lives, most commonly by swallowing pesticides. China has the highest rate of female suicide in the world, and its rural rate is three times that of the cities.

Call it China’s Gilded Age of inequality. In 2003 average peasant yearly income was $317; the monthly wages of factory workers ranged between $62 and $100, which was only marginally higher than in 1993, although the economy grew by 10 percent annually during the same period. At roughly the same time, market research by Seventeen magazine found that many daughters of the wealthy in China’s major cities got a monthly allowance of more than $100–the monthly salary for an experienced laborer. This year the city of Shanghai held a “millionaire fair,” featuring displays of luxury sedans, yachts, a piece of jewelry priced at $25 million and a diamond-studded dog leash valued at $61,000.

According to a report by the China Rights Forum, the class that can afford such indulgences was not created through exceptional skill or merit; rather, 90 percent of China’s 20,000 richest people are related to senior government or Communist Party officials at the center of political power and have benefited corruptly from these connections. Rural officials have found their own way to get rich by seizing land from peasants with minimal compensation and selling it at high prices to developers who build highrise apartments, factories and shopping malls. If discovered, corrupt officials evade punishment by escaping with their loot to foreign countries such as the United States, Canada and Thailand. The Chinese government has tried to repatriate some 800 of them, who have collectively made off with some $9 billion, but the extradition proceedings have been stalled because of China’s refusal to cede the right of capital punishment against those convicted. Understandably, several editorials in Chinese publications critical of the government have wondered if this was not a ploy to prevent the return of individuals who could, if brought to trial, spill the beans about conspiring partners who still occupy high perches.

The Chinese public is increasingly disenchanted with the rampant corruption that goes unaddressed and the growing disparity eating away at the once egalitarian social structure. In the estimate of David Zweig, a Chinese politics expert at Hong Kong University of Science and Technology and a longtime China observer, “a protest begins in China every five minutes. If the protests run longer than five minutes, then there are two going on at the same time.” China’s Public Security Bureau reported that in 2004 the number of “mass incidents” had risen to 74,000. In 2005 the number jumped another 13 percent.

Though most of the “incidents” are generated by working-class discontent, even the previously passive middle class is growing restless. Between late 2005 and 2006 some 40,000 college students in several private universities have rioted. At one college students protested administrative changes that made their diplomas less prestigious than promised, after they had paid $2,500 a year to obtain them (a princely sum, given China’s urban per capita income of $1,500). Faced with the prospect of unemployment, they expressed their frustration by smashing furniture and setting fire to school offices before spilling onto the streets to trash shops, cars and banks.

When the Communist Party appointed Hu Jintao as its general secretary in 2002, he promised to build “a harmonious society” of balanced growth and social equity. Concurrently appointed Premier Wen Jiabao promised to construct a new “socialist countryside” by improving living conditions for the farmers.

Four years later, they have failed to deliver. Their failure is not surprising, given the neoliberal economic policies that China has adopted from the very beginning of the so-called reforms, which got under way in the early 1980s. After all, when Deng Xiaoping announced that China should “let some get rich first, so others can get rich later,” he openly condoned the inequality that would result from his reform process.

If this sounds like Ronald Reagan’s neoliberal “trickle-down economics,” it’s because that’s what it is. Both Reagan and Deng were fans of the neoliberal guru Milton Friedman, and since Friedman’s first visit to China in 1980, Chinese leaders have followed his recipe of “getting the government off the people’s back” by cutting government subsidies, shrinking social services, privatizing state enterprises, deregulating business and setting limits to labor’s power to organize. Hu is not about to spoil the main reason for China’s attractiveness to investors, which is its cheap labor, by increasing subsidies for the rural and urban poor. China’s neoliberal Communist bureaucrats have been more interested in protecting employers than in insuring the safety of working people. This is evidenced by persistent labor safety violations that have led to spectacular industrial accidents, including gas explosions, mine cave-ins and flooding that killed 136,340 in 2003. While China accounted for 80 percent of the world’s total coal mining-related deaths that year, it produced only 35 percent of the world’s coal. A bill introducing labor laws to prevent the exploitation of workers, which was headed for the annual Chinese People’s Congress this past spring, was tabled out of fear of scaring away investors after a spokesperson for the European Chamber of Commerce cautioned that it would increase Chinese production costs and “force foreign companies” to move production to Southeast Asia.

Not caring for its laboring class, however, doesn’t mean that China is marching toward unadulterated capitalism. This year’s People’s Congress had been expected to enshrine the clause “Citizens’ legal private property is inviolable” in the Constitution, but this, too, was shelved when resistance arose during the deliberations. The opposition was supposedly coming from the left, among them Beijing University law professor Gong Xiantian. He accused the legal experts who wrote the draft of “copying capitalist civil law like slaves” and protecting only the rights of a small minority of the extremely rich. His treatise, which was widely circulated on the Internet, concluded with the statement: “Socialist property is inviolable.” But the main force against the right of private property did not come from starry-eyed devotees of Communist ideology–the purists and idealists of yore–but rather from unapologetic pragmatists who understand that the most important power of the Communist Party is its exclusive right to allocate the use of all public property. They do not want that privilege taken away.

The richest people in China are the relatives of the very top officials who used their position to pass laws transforming state-owned industries into stockholding companies, and then appointed family members as managers. In this way the children of top party officials–China’s new “princelings”–took over China’s most strategic and profitable industries: banking, transportation, power generation, natural resources, media and weapons. Once in management positions, they got loans from government-controlled banks, acquired foreign partners and listed their companies on Hong Kong or New York stock exchanges to raise more capital. The princelings enriched themselves each step of the way–not only as major shareholders of the companies but also from the kickbacks they got by awarding contracts to foreign firms. To call this “socialism with Chinese characteristics” is a farce. One veteran China watcher has defined it as “high-tech feudalism with Chinese characteristics.”

Chinese leaders are no longer attempting to win popular support based on ideology, but by appealing to the traditional Chinese reverence for capable leaders who can maintain political stability, as the caring emperors of the dynastic past reputedly did. A few years ago, the state-run CCTV aired a forty-four-part blockbuster docudrama on the life of the Qing Emperor Yongzheng; it depicted him as a ruthless ruler who worked hard to improve the lives of his people and in the process rejuvenated the dynasty to last several generations after his death.

At the same time, these leaders are apprehensive of anyone capable of attracting a mass following, especially groups like Falun Gong, which originated as a health-conscious martial arts movement whose teachings on alternative healthcare and semi-religious lifestyle have gained enormous following among the urban and rural poor, who are deprived of public health services. The volatile combination of the sect’s class and religious appeal, vaguely reminiscent of the mid-nineteenth-century movement that almost overthrew the Qing Dynasty, has led to its heavy-handed suppression.

When Hu first came to office, many in China had high expectations, but by now many intellectuals have come to believe that he is more conservative than his predecessor, Jiang Zemin, and determined to maintain the monopoly of the Chinese Communist Party by whatever means necessary. The Committee to Protect Journalists says China is the leading jailer of journalists in the world. The Chinese Ministry of Public Security’s Internet and Security Supervision Bureau has a staff of more than 30,000, and the government has just enacted a new law to impose fines on domestic and foreign media organizations engaged in “unauthorized reporting” on incidents such as disasters, demonstrations and rural uprisings. The party has also invested billions in beefing up the People’s Armed Police, now a 1 million-strong force trained, supposedly, to face “the threat of terrorism.” With the exception of infrequent incidents involving Uighur separatists in the remote western region of Xinjiang, however, terrorism is all but unheard of in China. Rather, it is clear that the regime is getting ready to deal with workers’ and peasants’ unrest.

The tactics used by the government against dissent have turned increasingly violent. According to villagers, up to thirty people were reported killed last December when security forces fired on farmers in Dongzhou who were objecting to the confiscation of their fields. In Taishi, also in Guangdong Province, local government officials recruited thugs after the villagers hired a civil rights activist, Lu Banglie, to represent them in their bid to recall a corrupt village chief and elect members to their village committee to replace him. Lu was physically attacked and suffered serious injuries. In Dingzhou, southwest of Beijing, local party leaders hired gangsters to kill six farmers who refused to turn over their land for the construction of a power plant.

Even with this dubious record, Hu Jintao is assured of reconfirmation as party chair next year, owing to the fact that the other factions in the party that could challenge him–mainly the princelings and the Shanghai Gang, also known as “the GDPers” and led by former president Jiang Zemin–are responsible for the reckless growth at all cost and are therefore too discredited to contend for control. What’s more, Hu’s tough stance is calming to a party elite that fears revolution. For now, under one-party rule, without opposition and without elections, ordinary Chinese can only wait for the current “dynasty” to eventually collapse.

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