Letter From China

Letter From China

While the elite embrace globalization, the anger of workers and peasants grows.


Causing the raising of an eyebrow is an easy enough feat nowadays in China. Last July, in a speech to commemorate the eightieth anniversary of the founding of the Chinese Communist Party, President Jiang Zemin lifted restrictions on China’s capitalists that kept them from becoming party members. After the September 11 attacks, China enthusiastically welcomed Bush’s war on terrorism. And in December, China finally entered the World Trade Organization.

To most American eyes these are liberal and cosmopolitan steps forward: an increasingly open Chinese society embracing the free market and international norms. But recent events provide a reminder that there is a different view out there–one President George W. Bush is unlikely to experience when he visits China on February 21-22. It is a view that was made concrete and bloody when five independent bombings–the latest in a string of explosions that have been escalating since the early 1990s–hit Chinese cities shortly after China’s WTO entry. Several people were killed in these incidents, two of them at McDonald’s. It is probably not an accident that the bombers selected Western multinationals patronized by wealthy Chinese.

The government has yet to offer an explanation for the bombings, and it’s easy to see why: The Communist Party will never acknowledge that the vast majority of the Chinese people are disgruntled. I spent the latter part of 2001 traveling around China talking to workers and peasants, and discovered that contrary to Western perceptions that the common people are benefiting from the free market, the Chinese see their government and the nation’s elite as conspiring to sell them out to imperialists, a k a the Americans. Frustration with the government’s economic policies is now entwined with rapidly expanding anti-Western sentiment.

For many, China’s workers’ paradise has become a workers’ hell. More than half of state workers–a daunting 70 million, according to reliable government sources–have been laid off, with more to come as the WTO reaches further into China. Socialism is dead; unable to school an only child or cure sick parents, workers constantly complain about corruption, crime and inequality. Little wonder that the rabidly xenophobic Mao Zedong is increasingly popular. In ordinary Chinese homes, where Mao’s gleaming portrait hangs in the living room like an altar, workers gather to discuss his virtues. Once again chanting “Long live Chairman Mao,” they see foreign investors stealing China’s wealth, China’s rich mingling freely with expatriate businessmen and China’s elite sending their children and cash to the United States. Meanwhile, the media are infatuated with the wealthy, workers’ leaders and sympathizers are jailed, and the Communist Party is now conducting a systemic attack on socialists who do not adhere to the party line. In a state where workers have no rights, no capital and no voice, they still have one innate power–the power of violence.

This is a society whose fabric is ripping, whose psychology is brittle to the point of cracking. Numbers tell a part of the story. China’s official urban unemployment rate is now close to 5 percent, or about 7 million. Western scholars believe the urban unemployment rate to be approximately 25 percent, but the real figure may be more than twice that. Per capita income is $900, but that’s misleading: Most Chinese survive on $200 a year, while recent statistics reveal that there are already 1.2 million households with investments reaching at least $100,000. Experts believe that last year’s official economic growth rate of 7.3 percent is wildly overstated, and even where there is growth few jobs are being created in traditional industries.

To give blood and flesh to these numbers, last July I visited Zhengzhou, the capital of central Henan province. Once a proud industrial city, it is now an urban wasteland replete with dirty streets, overwhelming pollution, daily protests outside government offices and the unemployed rummaging through garbage for dinner. I saw massive numbers of unemployed people and idle factories. Yet when I picked up a copy of the local newspaper one day, the front-page headline, in big red letters, enthused about how the Henan economy had grown by 10 percent in 2001. Laid-off state workers who spend their days sitting outside rundown apartment complexes playing cards complained about the corrupt managers who looted their state factory. “They’re selling off the inventory for 10 percent of the value–the police, government and factory managers are all in the scheme,” said one woman, pointing across the street to a deserted textile factory. She told me that trucks would furtively drive up late at night to take the inventory.

In Zhengzhou and other cities I visited I would hear the same story from laid-off workers: When times were good, managers would drain the factory’s money on dinners, alcohol, prostitutes and junkets. And when there was nothing left to drain, the managers would sell the equipment, the land and the inventory.

China’s state sector is notoriously inefficient and redundant, with some profitable enterprises scattered here and there. To keep the public sector afloat, China’s state banks became their cash cow, which factory managers milked until the cow became dangerously emaciated. In 1998 Beijing ordered a “restructuring” of the state sector, planning to sell all unprofitable enterprises. But it was the profitable ones that got sold, while the unprofitable ones continued to milk the cow. “You have to marry off the pretty daughters first,” Chinese economists say in explaining this phenomenon.

Another funny thing happened during this restructuring. When the state bank would come to foreclose on a factory, managers were supposed to auction it to the highest bidder, who was then supposed to turn the factory around using free-market management. But the managers would sell to their friends or even to themselves, and the new owners would fire all the workers and employ another free-market technique called “asset stripping”–selling the factory piecemeal for a large profit. Seeing their factories wither away, workers also saw their social guarantees–the iron rice bowl of guaranteed employment, pension, free medical care and free schooling for their children–disappear.

Poverty has many faces in China, where most people are still subsistence farmers. Rural China, home to two-thirds of the country’s population, is another world: It can afford neither schooling nor basic healthcare, and incomes are much lower than in the cities. But if rural poverty is commonplace, urban poverty is perhaps even harder to bear, because those in the cities can see firsthand the gap between them and the elite.

Shenyang is a city in northeastern China, once the industrial heartland but now, because of the collapsing state sector, disparagingly called the Rust Belt. It is a city known for its freezing weather, ubiquitous prostitutes, extraordinary corruption, high-flying mafia and impoverished workers. Last November I lived with a family called the Suns for a few days. Seven people lived together in a cramped apartment split into two rooms. The first room had no lighting, because the family could not afford a new light bulb, and water came on only periodically during the day. The family, consisting of the grandparents, two unemployed brothers, the elder brother’s wife and her 7-year-old son from an earlier marriage, and the younger brother’s 6-year-old daughter, subsists on the grandparents’ combined pension, about $100 a month.

I spent my time there playing cards with them, which they do all day because it’s the cheapest way to pass the time. The elder brother lost his state factory job about ten years ago and is now trying to make ends meet by selling cookies outside the local elementary school. The second day I was there he returned sullen, telling his family that the police had fined him $25–his usual monthly earnings–for selling cookies on the street without a permit, which costs $25 a month. His brother’s example is probably why the younger brother spends his days playing mah-jongg with friends. A year ago the younger Sun’s wife abandoned him, leaving behind their daughter, who stays at home because the family can’t afford schooling.

Then there are the grandparents, both well into their 60s. Both have heart ailments but have no money to buy medication or see the doctor. Early last year they joined fellow retirees in a protest outside the local government office to complain about the fact that they were not being paid their full pension. (Usually only the elderly dare protest, because police officers and hired thugs manhandle younger people.) Eventually the local government promised it would investigate the matter, and the protesters all went home. They have not heard from the government since.

Before I left Zhengzhou I visited a park where retirees sit to enjoy the cool evening breeze and play chess. A friend introduced me to a circle who enjoyed discussing politics, where I stood in front of a rotund retiree with a bulging belly and thick eyebrows. “That Jiang Zemin is a traitor!” he started to shout. “Look at WTO–Jiang Zemin did nothing after the Americans bombed our embassy in Belgrade! Jiang Zemin did nothing after the Americans destroyed our plane! He’s selling out the Chinese people!” Sweat was swiftly covering his face, and tears were gathering in his dark eyes.

For ordinary Chinese, both incidents he mentioned were infringements on their dignity by an imperialist colossus and betrayal by a Chinese government more interested in appeasing the United States than in defending its own sovereignty. Added to this is the sense of neocolonialism: Peer into bars and discos in Beijing and Shanghai and you’ll find American businessmen cuddling Chinese beauties in black satin dresses; on the roads you’ll find foreigners driving with virtual impunity. It seems that foreigners who fail everywhere else find cushy jobs in China. Together with Chinese officials, they form a privileged class.

When Jiang Zemin welcomed capitalists to join the party last year, die-hard members saw this as a betrayal. Fourteen Old Guard Communists wrote a letter to Jiang accusing him of violating party discipline and destroying party unity in a manner that would eventually lead China into a Soviet Union-like collapse. Jiang responded by placing the suspected ringleader, Wei Wei, an 82-year-old writer, under house arrest. China’s security apparatus arrested lesser officials and sympathizers found distributing the letter. The two socialist magazines that reported on corruption and the plight of the working class were immediately closed down. China’s mainstream media extolled Jiang’s speech and highlighted the virtues of capitalists. Since then the powers of the security forces have increased, and so has censorship of the media.

China’s elite like to laugh at the proletariat, but they also understand that the Chinese people have a limit. They are preparing for the day when all hell breaks loose, trying to get foreign passports and sending their children and wealth abroad. Capital flight is a tremendous problem, reaching close to $40 billion a year according to Chinese academics. The country’s princelings, the children of its top leaders, all have foreign passports, usually American. Students at Peking University were outraged when one of Deng Xiaoping’s granddaughters enrolled at the school in 2000 as a foreign exchange student (the naturalized American citizen was taking a year off from Wellesley to learn more about her Chinese heritage). The daughter of Hu Jintao, semi-designated as China’s next head of state, works for J.P. Morgan and is also a naturalized US citizen. Cynical Chinese like to ask: Given that members of China’s ruling elite–government officials, the military and security forces, and the urban rich–have their family and wealth safely tucked away in America, can China afford to upset the United States?

In January, when China discovered that its presidential plane had been bugged in the United States, it restrained itself diplomatically for fear of upsetting the new period of ostensible Chinese-American understanding that will be highlighted by Bush’s visit. When Bush does visit China he will undoubtedly laud the country’s economy and ignore its unfortunate aspects, such as the unemployed penniless worker who blew himself up on an urban street in late January, or the poor AIDS patients in the city of Tianjin who recently unleashed their anger at being ostracized by attacking residents with infected syringes. Bush will also not mention the American lawyer Gordon Chang’s controversial book The Coming Collapse of China and the British journalist Joe Studwell’s new book The China Dream, both of which argue that China’s economy is unsustainable and headed toward collapse.

But Bush had better pay attention to these pessimists. As China’s economy unravels, the party must decide whether to become more authoritarian and risk violent revolution–or defuse the unrest by permitting workers and peasants to organize and voice their frustration in a peaceful public forum. Based on the party’s actions so far, it appears that it is choosing repression.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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