Marxist contradictions in China’s transformation.

In this position paper,  I analyse China using a Marxist paradigm. Rapid economic development generates a host of class contradictions, to use Marxist terminology, and nowhere more than in China. So far the party-state has managed to ride out the tensions its own policies generate. As a Leninist party-state, it does not wait for Marx’s predictions to happen, but seeks to mitigate them by fair means and foul. Managing these tensions is one of the key considerations of Chinese external relations-a subject I do not develop here.

The party-state exerts a shrinking monopoly over a country becoming ever more pluralist. This is the underlying social contradiction facing the party-state’s political rule. It has unleashed social changes that undermine the basis for its control over the country. The implication is that the regime adapts to the conditions it has created, and converges over time on a more pluralist political system, akin to those in the developed world. But convergence is only one prospect among many, and a fragile one at that. Just as possible is that the party-state clings to power on the grounds that China is at an early stage of modernisation, and still has a long way to go in mounting the metaphorical staircase of history, from a lower to a higher form of existence. The CCP thereby justifies postponing changes in regime norms to a distant future, flatters the western powers that convergence remains a prospect and meanwhile manages the many contradictory tensions inherent to the process of China’s modernisation. These are driven in the party’s own Marxist-Leninist-Maoist lexicon by class struggles, resulting from technological progress. The prediction here is of a variety of possible destinations–democracy, fascism or communism–, and a passage to modernity, contingent on relations between classes–peasantry, land owners, urban bourgeoisie. [1] Substitute land owners for party officials, and we have the foundation for a witch’s revolutionary brew; stir in economic growth as a sure-fire predictor of instability,[2] add the erosion of traditional solidarities, throw in widening wealth gaps, sprinkle multiple sources of dissatisfaction and pepper with a layer of political decay.[3] We are in the heartland of the determinist sudden-regime death-syndrome school of thinking.

In this article, we’ll look at the dynamics of social transformation in China, and assess the path that China’s reformers have yet to tread. The brief answer runs: there is still a very long way to go.China is awash in debates about public policy. The party-state control of rural and urban China, too, is challenged by clear signs of the emergence of class politics—a phenomenon which Marx would have been able to recognise. There is plenty of material lying around China for revolution to be led from below. This does not mean that the collapse scenario is written in stone. But it does mean that the CCP as a Leninist party has to use discretionary policies to avoid what it was so good at fermenting prior to 1949.  

Multiple authorities in China.

China’s leadership has to manage China’s transition in a US-dominated world, where changes in control over the provision of security, production, credit and information have worked to fundamentally alter the relation of authorities to markets in China. In this section, we discussChina’s development of a vibrant debate about public policies in the context of  the global knowledge structure. The simple point to retain for the moment is that China’s nominally monopoly party-state has to share powers in what is fast becoming a highly pluralist polity.

Chinain the global knowledge structure.

Paradoxically, the means to create a knowledge society have been provided and promoted by the regime itself. The government has embraced the information technology revolution under the banner of Deng’s focus on turningChinainto a technological powerhouse.  Production, infrastructure and household consumption of electronic goods has soared. Three decades of Open Door Policy has enabledChinato become the world’s largest exporter, producer and consumer of TV sets. In 1978, every 100 urban families had only 0.59 colour TV sets; by 2006, with over 59 million urban households surveyed in the urban areas of China, that figure had risen to 137 colour TV sets. By then, one hundred urban households owned an average of 47 computers, and 153 mobile phones. Of the over 66 million households surveyed in rural China, there are about 90 colour TV sets, 2 computers and 62 mobile phones. By end 2007, the total number of internet users was about 210 million, and growing at over 53% per annum. The government intent is to bring broadband multimedia access to all urban homes by 2010.

The networking of China creates a vastly different setting to that of the Soviet Unionin the late 1980s, when the Soviet party-state still forbade households from having fax machines. By comparison, the Chinese regime is living in the global goldfish bowl of the information revolution, and the party-state’s monopoly on information has shrunk. The population is better informed than ever before. Chinese readers in 1978 had 930 magazine titles, 186 newspapers, and 14,987 booktitles to choose from; by 2006, official statistics recorded 9,468 magazines and trade publications; 1, 938 newspapers, and 233, 971 booktitles selling 64 billion copies. The significance of this tidal wave of information flowing through Chinais that Chinese citizens are eager for political news. As Dr Charles Zhang, chairman and CEO of sohu.com. explained, “People log onto the Internet and Sohu.com because, in China, there is no Forbes, Reuters or The Washington Post. Print media was all state-controlled and official, and the Internet filled this void.”[4] Indeed, according to the China Internet Network Information Center (CNNIC), 67.9% of online use inChina is spent devouring news, more than searching (65.7%) and e-mailing (64.7%). By contrast, only 3% of Yahoo!’sU.S. traffic clicks over to news.

A constant of government policy has been to retain control over the media. Until the late 1990s,  policy followed Mao’s precept whereby the media were to function as the party’s “loyal eyes, ears, and tongue.” They were tools for the party-state to impose ideological hegemony on society, and to popularize government policies. Control over the system was correspondingly tight, and under the direct leadership of the party-state inBeijing. Local supervision came from the various provincial, municipal, and local Party propaganda departments and the provincial or municipal broadcasting administrative bureaus. Technological, regulatory and administrative affairs were, and remain, under government tutelage. Open debate on ideology was not allowed, and media criticism of the party-state and its high ranking officials, policies and affairs were punished. Self-imposed censorship was widespread, and every individual in the mediaknew what and what not to do. While routine material did not require approval from Party authorities, important editorials, news stories and sensitive programs all require prior endorsement by the Party authorities.

None of this was changed. Rather policies were designed to strengthen government controls in a fast changing context.[5] The military, the police, the party or the Ministry of Information Industry (MII)—a giant composite ministry, with its own operating companies, and brought together in 1998—invested massively in telecommunications and data-processing to centralise control and better monitor the population. Web use is encouraged for business and educational purposes, but the government tries to block access to pornographic sites or to what it considers as subversive material.   An ever expanding army of on-line censors, numbering 50,000 and based in Beijing, have established an internet filtering system, oversee internet browsing through broadband access point, and police e-mails, chat rooms, blogs, or internet cafés. Internet users have to sign on to an official register. In 2002, some 300 members of the internet industry–Sina, Sohu, NetEase, Renmin and Xinhau among others—signed the public pledge on self-discipline. Foreign media remain under strict surveillance. Reporters Without Frontiers-an international ngo campaigning for press freedoms worldwide- report that China, ranked in 2007 at 163 out of the 169 countries on its rankings list—China jails more internet users for their expression of political views than the rest of the world combined. Clearly, the police have to work very hard.

The party-state, though,  is also in business. Alongside censorship, the party-state is determined to ensure a stream of revenues from lucrative business to its own operating companies. This has been a constant theme since the early 1990s, when the government launched three “golden projects” an electronic infrastructure for the conveyance of economic information; a “golden card” system to create a payment clearance system for banks; and a “golden customs” project to speed up customs clearance. A matrix was constructed of eight cables running east-west and 8 running north-south.  As of 2000, the party-state backed media enterprise efforts to raise capital from domestic or foreign sources. A “government-on-line” policy was also launched. The result has been an expanding communications infrastructure and concentration in the media industry, to the benefit of Chinese media groups which fall under the tutelage, direct or indirect, of the MII.  During the prolonged discussions on WTO entry, the western news agencies Reuters, Bloomberg and Dow Jones lobbied successfully against restrictions designed to give the party-state news agency, Xinhua, a royal share of revenue streams from the provision of market information. But in 2006, Chinese censors, with the clear approval of President Hu Jintao, moved to tighten rules to stop the western news agencies from spreading news. All reports distributed in China by foreign news agencies were to be circulated only after authorisation by Xinhua. Similarly, search engines like Google, Yahoo, and Microsoft were ordered to filter content by blocking hundreds ofkeywords such as ‘Tienanmen Square”, “democracy”, or “Dalai Lama”. Websites considered politically sensitive such as the BBC are banned.

In addition, the party-state has shifted its media policy from one of propaganda, to redefining the role of the media as one of agenda-setting.   This marked a step away from the previous convention of 80% good news and 20% bad that ex-party secretary Hu Yaobang had suggested in 1985. Under the new dispensation, the people’s voice is given expression, especially when local government officials are being criticised, or when central government directives have not been adequately implemented. But the party-state’s voice is given priority, and comments on policy formulation are not welcome. The occasion for this shift in policy came when President  Zhang Zemin responded to the programme Jiaodian Fangtan, shown at prime time, and watched by an estimated audience of 300 million people.[6] The programme’s style is investigative, and on the side of the people in tracking public policy failures. After watching one such report shown in the programme on the evening of April 2, 1998, an  outraged President Jiang Zemin summoned his Politburo colleagues, and the Minister of Health. The show had reported the poisoning of  400 elementary school students inShandong province after the routine intake of mineral tablets in their school. The President gave instructions for no effort to be spared to save students’ lives and to punish the criminals selling the poisonous drugs. The instruction was passed on to the head ofShandong provincial  government and the provincial department of health. The next day, Jiang Zemin called the party secretary inShandong to learn the details of the situation. In Jiang Zemin’s own words, “public supervision should be guided by the fundamental principle of correct agenda-setting”.

However much the central government seeks to deploy public opinion as an ally in its battles with local government, the fact is old style propaganda and cover-ups no longer suffice. A growing diversity of information sources obliges the party-state to remain credible with the public.[7] If the regime wants to control public opinion and rule the media, it has to provide credible information in an ever more open society. On repeated occasions, the regime has been confronted with the costs of this dilemma of its own making.

  • During the outbreakof severe acute respiratory syndrome (SARS) in the winter and spring of 2002-2003, under-reporting of the crisis spurred a collapse in the public’s confidence in the government. Internet messaging and mobile phones spread news of the disease, revealing the true state of affairs to the public. On April 20, the leadership sacked the health minister and mayor of Beijing for covering up the crisis, and pledged more transparency about health matters in the future. But on May 13, the PLA was revealed as failing to provide information about SARS among the troops. The government had to eat humble pie, and make an official apology.
  • Another example of the Internet’s impact on political issues was demonstrated in the case of Sun Zhigang, a graffic designer inGuangzhouwho was detained by police in March 2003 for not carrying proper identity papers. He was subsequently beaten to death by fellow prisoners in a detention centre. His case was picked up posthumously by a local newspaper, posted onChina’s largest portal, sina.com, and discussed through cyberspace. Widespread outrage was expressed about Sun’s fate. Three months later the laws under which Sun was detained were scrapped. –an event which the official Xinhua news service—China’s Reuters– judged a “pivotal reform ofChina’s social welfare system”.
  • A couple of months after Prime Minister Wen Jiabao had delivered a weighty speech about sustainable development to the 21st Century Forum in Beijing, in November 2005 an explosion occurred at a petrochemical plant in Jilin City.  The blast produced a spill, estimated at 100 tons of toxic substance, into the Songhua River. In the weeks that followed downstream contamination of water supplies affected residents from rural northeastern China, including the provincial capital of Harbin and all the way to the Russian frontier. Beijing indulged in its secrecy habit, and allowed ten days to pass before notifying Harbin residents of the situation. The excuse for the delay was to avoid panic, but the media attached local government officials for the cover-up. Scrutiny of the central government role was not addressed. Beijing’s official position was expressed in a report on the spill by a United Nations Environment Programme team, whereby central government instructions were not adequately communicated to the public. “Had this communication been adequately provided, the level of uncertainty and fear by the public would have been lower”. [8]
  • Yu Quanyun, a 72 year-old former head of the People’s Daily in the early 1990s, and an author of the mid-1990s nationalist tract, China That Can Say No,  floated the idea in March 2005 of a new “anti-seditious speech” law. The China Economic Times replied that such a law would infringe free speech rights protected by the Chinese Constitution, and the China Youth Daily emphasized the importance of public debate and academic freedom. But the main response came from Yuan Weishi, professor of philosophy at Zhongshan University in Guangzhou. In the January 2006 issue Freezing Point—a supplement of the China Youth Daily—he published an article criticising Chinese history text books for their blind nationalism and a tendency to blame everyone but the govt for the suffering of the people. The Central Propaganda Department had the paper shut down. But the editor blogged swiftly against the ban; he was backed by his editorial staff, by Mao’s former secretary, and by senior officials. National and local newspapers were critical of the shutdown. The paper was re-opened after publishing an apology.

What these incidents reveal is that after decades of reform policies, Chinais awash in debate about  wide swathes of public policy. The internet in particular has become a prominent forum where the public can, and does, make known its opinions to the government. This enables the party leadership to build a bridge to public opinion, but the debate on the internet, and in the media, also reveals major differences of opinion within the regime as well as sharply critical positions taken by non-party members that resonate in the broader public. In particular, they highlight the evident contradiction between party efforts to control the media, and party efforts to create a vibrant information society. Controls are regularly circumvented as opinions, with external help, clamour for a hearing in cyberspace. The US government has introduced a plan to establish a computer networkto help Chinese residents circumvent their government’s controls over use of the network,[9]–by contrast, the Saudi government’s censureship is strongly supported by theUS, an excellent example of US selectiveness in exporting its values.

 

A Marxist policy for China

The Chinese party-state definitely regards itself as progressive, operating within the laws of history. When speaking to its collective self, its leitmotif is of a modernisation which is Marxist-Leninist-Maoist in inspiration. Here is Premier Wen Jiabao speaking about the “new socialist countryside” at the National Rural Work Conference, held on December 20, 2005.

“China, said the Premier, has in general entered the development stage of industry promoting agriculture and the towns leading forward the countryside, and we must meet the demands of the new stage of economic and social development and implement the guideline of industry repaying agriculture and the towns supporting the countryside. In the present stage, only by carrying out the strategy of all-round planning for urban and rural economic and social development can we truly optimize the economic structure and achieve all-round, co-ordinated, and sustainable development, enable the masses to enjoy together the fruits of economic and social development, and achieve on schedule the grand goal of comprehensively building a well-off society (xiaokang shehui) and modernization”. [10]

The two sides of progressive discourse, modernist and Marxist,  are here on display. The modernist reference is to the stages of history, where people are conceived as proceeding from a lower to a higher stage of existence. The Marxist slant is provided by the reference to the masses achieving the target set by the CCP of building a well-off society. History in short is driven by technological progress and ongoing class struggles, mediated by the party-state. So it is a fit subject for a modernisation/Marxist analysis. This predicts a variety of possible destinations–democracy, fascism or communism–, and a passage to modernity, contingent on relations between classes–peasantry, land owners, urban bourgeoisie. [11] Substitute land owners for party officials, and we have the foundation for a witch’s revolutionary brew; stir in economic growth as a sure-fire predictor of instability,[12] add the erosion of traditional solidarities, throw in widening wealth gaps, sprinkle multiple sources of dissatisfaction and pepper with a layer of political decay.[13] We are in the heartland of the determinist sudden-regime death-syndrome school of thinking.

Marx on the farm.

Consider how this story plays in China’s countryside. The arithmetic is straitforward: officially China’s population is 1.3 billion, including 8-900 million people who live in the rural economy, in often Malthusian conditions of rising population, limited arable land, and diminishing returns.[14] This population is expected to rise by 2015 to about 1.5 billion. In many provinces, land per farm worker is less thanBangladesh; and the quality of land under the plough is declining, due to land erosion, deteriorating organic content, and salinization of the soil.  This provides China with its primary challenge: it has to feed 20% of the world’s population with 6% of the world’s arable land. Available arable land is shrinking, as demand for housing, golf courses or  convention centres rises. Between 1996 and 2003,China lost 6.7 million hectares of arable land—three times more than arable land lost between 1986-1995.

We have seen that market reforms attributed to Deng began as local initiatives in Anhui province. There were a number of reasons for reforms starting first in the rural areas: after Mao’s years,China’s peasantry was seething with discontent, bureaucratic resistance to change was weak, and China was failing to feed its growing population.  The initial step was to free farm prices, and then to allow farmers to sell their surplus in the market. Next, rural communes—established in 1958—were replaced by the household responsibility system, whereby farmers leased land (from the party-state) for a period of fifteen to fifty years in return for contracts to deliver supplies at fixed prices. Ever mindful of its own history, and that of successful post-1945 land reforms inJapan,KoreaandTaiwan,  the CCP supervised an equal distribution of land, to avoid having to deal with large numbers of landless peasants.  Village committees were introduced to replace the communes, and local government structures inherited from Mao were formally ended. The 1982 Constitution provided for direct elections of these committees by village residents. By the late 1980s, village elections were being held, and the practice was expanded to most ofChinaover the coming decade.

The result of these reforms from the early 1980s was a sharp rise in output and a return of Chinato food self-sufficiency. From 1980 to 2000, rural incomes rose at 6% per annum. Over the same period, 400 million people rose above the poverty line. In 2006, there were still about 200 farm million households with an average plot size of about 0.65 hectares. Farm output per worker was less than in Indiaand  sub-Saharan Africa and one half of Indonesia. As can be seen in Table 10, employment in the primary sector fell from about 70% of total employment in 1980, to 43% by 2006. The primary sector itself  accounted  for 12% of the gdp. Farm incomes grew rapidly in the early 1980s, falling to 2-3% by the end 1990s, and then turned negative from 1999 to 2003. Some 90 million people in the countryside were estimated as having an annual net income at or below $105.[15]

Table 10: Population, Employment  and  Sector’s Proportion of the National Economy (in millions and percentage)

                  1964                 1982                    1990                 2000                2006

Total Population  (m)                         694.58          1008.18                    1133.68             1265.83        1314.5

Rural Population                                  567.48            797.36                 833.97               807.39

Urban Population                                 127.10            210.82                      299.71                  458.44

                                                                      1975        1985      1990       1995          2002     2005     2006

Economically active population (m)     406.82       501.12   653.23    688.55      753.6    778.7  782.44

Rural employment                                                          370.65   477.08    490.25       489.6   484.9  480.90

-TVEs                                                            28*            69.7       92.65    128.62        132.8   142.7  146.8

-Private enterprises & self-employed                                      16.0          35.25          38.8       44.8   48

Urban employment                                         95*       128           170.4     190.4        247.8    273.3  283.1

-SOES**                                                           74*         89.9        130.5     112.6          81         67       64.3—Collective enterprises                                20.4*      33.3           35.5       31.4          14.9      11.2      7.6

-private enterprises & self-employed              .1            .45           6.7       19.4          42.8      62.4    69.9

Industries

Primary

Employment(m)                                                294.5      311.3     389.1     335.3      368.7     339.7  325.6

Employment  %                                                    77.2         62.4         60.1         52.2         50.0         44.8   42.6

Proportion of the national economy %             28.2        28.4         27.1         19.9         13.7         12.5   11.7

Secondary                                                         

Employment(m)                                                    51.5      103.8     138.5     156.55    157.8    180.8  192.2

Employment %                                                     13.5         20.9         21.4         23            21.4         23.8    25.2

Proportion of the national economy %            47.9         42.9      41.3         47.2       44.8        47.5   48

Tertiary

Employment (m)                                               35.6          83.5      119.8     168.8       210.9    237.7  246.1

Employment  %                                                    9.3           16.7         18.5         24.8           28.6       31.4    32.2

Proportion of the national economy %         23.9            28.7          31.6      32.9         41.5      40.0    39.4

*1978 figures

**SOE=State-OwnedEnterprise.

SOURCES: China Statistical Yearbook, 2007.

Meanwhile, demographic structures in rural Chinawere transformed. As can be seen in Table 10, between the two census years of 1982 and 2000, the rural population of China rose by only 10 millions -falling from 75% of the total population to a still very high 64%. By a different measure, rural employment as a proportion of the economically active population (the total supply of labour) rose by 110 million over the period, but fell in near identical proportion as Chinaurbanised fast. This rise in absolute numbers of Chinese people dependent for their livelihood on work in the countryside, accompanied by a relative decline in the rural economy as a source of employment, replicated the bulge in China’s demographic structure combined with the overall slowdown in China’s population growth, as net reproduction rates fell (the balance between births and deaths), and the one child policy took effect in the cities. In rural China, enduring poverty and the traditional preference among peasant families for male rather than female children may have encouraged a cruel culling of female infants but other factors may also be at work, such as the under-reporting of female births.[16]  Whatever the causes, the slow down inChina’s birth rates released resources from consumption to  investment, and for the country’s accelerated transformation from a largely rural towards an urban-based economy. That transformation is still far from complete.

This is the central feature conditioning China’s politics and economics as far as the eye can reasonably see. Though on a much larger scale,China’s situation may be compared to that of France in the mid-1950s, when the rural urban balance was comparable to China’s in the first decade of the new millennium.China’s peculiarity is that in 2006, the rural economy supports 110 million more jobs than three decades earlier. The main new source of jobs in rural China was provided by the surge in employment into collective and private business. Through to the mid-1990s, township and village enterprises  added over 100 million jobs in ruralChina, while private business activities expanded rapidly thereafter. Employment in the primary sector (farming, fishing, forestry) fell from 85% of rural employment at the time that Mao’s communes were disbanded and still accounted for 67% of rural employment in 2006. Despite this steep decline in the primary sector as the main source of employment inChina, the sector still employed 30 million more people in 2006 than three decades previously. As can be seen in Table 10,China’s primary sector remains the main employer, but contributes only 11% output to the national economy. With labour productivity under 1% of US farmers’, there was, is and will continue to be for a few more decades enormous scope for a further rapid drop in the primary sector population.

This is particularly visible in the market structures of Chinese farming. With small plots, and low productivity per capita, China’s peasants provide what Karl Marx described as “the reserve army of unemployed” to feed China’s growing industrial machine.  Families supplement incomes by assigning family members to non-farm jobs in the mines, factories, construction or wholesale and retail sectors. Land is hoarded as an insurance policy, but always subject to the discretion of local officials who administer the land lease system. Local political chiefs operate in effect as landowners. Upstream, party-state marketing cooperatives supply key inputs, while downstream government agencies remain the main purchasers of output. Urban consumers meanwhile demand quality foods, as reflected in the above average urban consumption of proteins. Access to credit runs through the party-state managed Agricultural Bank of China, and its rural credit co-operatives. More than 70% of loans to farmers are provided through informal channels, run and enforced by China’s active criminal secret societies—the Triads, numbering perhaps one million members—in league with local officials and corrupt police officers. [17]

An abundance of signs indicated  that rural areas were in deep crisis. Despite more abundant food supplies and real growth in rural per capita incomes, urban-rural income gaps—which had narrowed during the 1980s– widened from a ratio of 2.2: 1 in 1990, to 2.7:1 in 2000 and 3.2:1 in 2006. Rural infant mortality rates were creeping up; hundreds of millions of people had no access to medical treatment; tuberculosis and AIDs were spreading; overstaffed, and underfunded local governments burdened local populations with excessive taxation and fees; local savings were consumed to bail out rural banks burdened by non-performing loans lent on political grounds to local enterprises; welfare funds from the central government were diverted for investment purposes.[18] Serving their private business interests, local officials used their powers to repeal leases, confiscate land, demolish houses, dish out construction contracts to business partners, and bribe, blackmail or extort. Minxin Pei quotes official statistics from 1995, showing that only one fifth of village party chiefs were under 35 and half of party members in rural areas were illiterate or had only elementary school education. In 2000, Li Changping-a veteran party member-sent Premier Zhu Rhongji a letter, describing local officials as “locusts”, in league with criminal elements,  and official policies as “lies”. “If such mafia politics is allowed to continue, he told Zhu Rhongji, rural China will become an even darker place”. [19]

As Li Changping indicated in his letter, party officials in local government were deeply entrenched in power, and impossible to reform or remove. At stake, he implied, was not the party-state grip so much as the disaffection of the 8-900 million people living in rural China. According to statistics provided by the Ministry of Public Order, the number of “mass incidents” countrywide increased from 8,700 in 1993 to 40,000 in 2000, and 87,000 in 2005—a tenfold increase. The number of participants in the protests—staged in response to mass lay-offs in the cities, to illegal evictions, and other official abuses—rose from 860,000 in 1993 to 3.7 million a decade later.  These “mass incidents”  were occurring across the length and breadth of China;  indicated greater awareness by participants of their citizen rights;[20] demonstrated the wide variety of backgrounds from which protestors came; and displayed a readiness to use a variety of methods from laying siege to government offices, burning officials’ houses, blockading roads and rail, including appeal to the law and the courts and to central government(see Box). Not least, there were clear signs that discontent was becoming organised, with the emergence of such groups as the peasant Burden Reduction Group or the Peasant Rights Preservation Committee. Here was a direct challenge to a party which had conqueredChina with the support of the rural masses, and claimed a monopoly over  political power.

A “mass incident”: Clashes have multiplied, such as the incident in Mao’s nativeprovince ofHunan, when peasants in January 1999 went on the rampage after one of their number committed suicide because he could not pay an arbitrary tax on the slaughter of pigs, which a local official had levied to coincide with the Chinese New Year. Thousands of angry peasants marched on party headquarters, overturned official cars and burned official homes. And that was only one of the anti-party riots inHunan that year.

Repeat reports available to the leadership drew attention to the plight of rural China. [21] In the words of a Central Party School report, published in 2005, the metaphorical traffic lights for China were set at yellow, and unless remedial action was taken, within five years the lights would turn to red.[22] As Premier Wen Jiabao stated in a speech to the Central Party Committee that December,[23]  the CCP must avoid making “historic mistakes”. Many long-standing conflicts, the Premier indicated, had yet to be solved, and he blamed local government officials for the rise in “mass incidents”.

Official recognition of the problem was a first step. But with party members thin on the ground in ruralChina, and dispersed amongChina’s 930,000 or so villages,Beijinghad limited means to influence the detail of policy by direct means. Indirect policies offered more scope to shape the longer term context of rural life. One such policy was to boost rural industries. Another was to raise rural consumption and transfers. A third –encouraging emigration to the cities-brings us into politics inChina’s cities.

The first indirect policy was to boost rural industries –a recipe that worked well in the 1980s and into the 1990s. Township and village enterprises (TVEs), under management of party members, [24] sprouted like mushrooms in China’s huge countryside;  helped absorb surplus rural labour, and for a couple of decades provided the main engine driving China to “grow the market out of the plan”.[25]  But there was also a darker side to rural industrialisation. TVEs provided two-thirds of rural output, and just under one third of rural jobs, but these also had no obligations to their workforce, as did state enterprises. Foreign investors saw the opportunity, and established joint venture partnerships with local party managers to exploit rural labour from the hinterland in sweatshop factories.(see Box) These factories tended to sprout along the coastline, where TVEs account for 80% of rural incomes, compared to 8% in China’s far west. Central and western areas of the country is where 60% of the population live, often as not in crushing poverty. Add to that, rural enterprises devour scarce water resources, are major polluters, and cannot compete with the richer and more competitive enterprises which have grown up since the early 1990s along China’s coastline. When these enterprises, as often as not owned and managed by local administrations, fail, it is often the local population which is forced to pay the debts.[26] They have also been major polluters in a countryside, where infrastructure for water, energy, waste disposal or communications are bare to non-existant.  For the party state, this suggests the need to concentrate the migrating rural population on medium-size townships where infrastructure is affordable.

China and the Corporate Social Responsibility movement.

Branded companies, like Nike, Reebok, Adidas and others typically sub-contracted production to Taiwanese-owned or Korean-owned factories in China. The practice was repeated in Veitnam, Indoesia and elsewhere. These factories were typically staffed with rural poor and run with military discipline. When workers signed on, their passes were confiscated. They worked long shifts of up to 12 hours, and worked about 80 hours of overtime a month. Corporal punishment was reported as widespread. Pay was frequently withheld. When these conditions came to light in 1996, Nike at first argued that the sports-shoe icon was in the business of “marketing” shoes, not making them. The argument did not survive Nike founder and CEO Phil Knight being named a “Corporate Crook” in Michael Moore’s book Downsize This, the interview Knight gave Moore for his film The Big One, and his grilling by Congressional committees. In 1998, Knight pledged to impose more stringent standards for the factories that Nike hires to make its goods, including minimum age standards, factory monitoring and greater external access to Nike’s practices. The Nike case provided a powerful boost to the anti-sweatshop movement, backed by US and EU trade unions and non-governmental organisations. Sweatshop Watch in theUnited States, or Clean Clothes inEurope use consumer pressure and education to get companies to adopt codes of conduct and improve working conditions. Former UN Secretary General Kofi Annan brought the subject up at the Davos summit in January 1999, and launched the Global Compact in 2000. The Pact appeals to businesses and other organizations to act ethically in the new global economy.

 

A second indirect policy to affect the context of rural life, and shore up the party’s waning legitimacy there, was to get more money into household pockets. From 2002 on, farm-gate prices were raised, with the result that rural disposable incomes rose sharply and emigration to the cities slowed. One of the key problems was the lack of a land markets due to the lack of private ownership. With uncertain leases on land, farmers were reluctant to invest long term, and clung to their plots as insurance. In March, 2003, a new law allowed for a market in land leases for any or all of farmers’ land lease. The law also settled the length of the lease at 30 years, but did nothing to end official discretion over land allocation. The hope was that, if successful this law would help accelerate land consolidation, which officials feared would put millions out of work. In parallel,  the government launched a programme to restructure rural co-operative banks, which was later extended country-wide.

A related initiative was reform of rural taxation. This was the approach adopted in the 11th Five year Plan for 2006-2010. Rapid growth in the industrial sector, low levels of central government debt, a narrow tax base and huge foreign exchange reserves meant that the party-state had the means available to spend more on ruralChina, providing transfers from the rest of the economy. The measures were introduced first on a trial basis inAnhui province, and then extended to the others. They involved shifting the rural tax base to industrial sectors and lowering local taxes and fees on rural hourseholds. ButBeijing has limited leverage over how monies at village and township levels are actually raised and  spent. And there are next to no effective mechanisms for local citizens to voice their complaints.

The third indirect policy was to encourage emigration to the cities. This was the surest method of changing the countryside for ever. The party-state embraced it whole-heartedly in the late 1990s, when it became evident that seeking to stem the flow of migrants to the cities through administrative or policing methods was not delivering results. As Table 10 shows, total urban employment rose from 95 million around the time of Mao’s death, and accelerated in the late 1990s to reach 283 million by 2006. The party’s objective is to have 45% of the total population in towns and cities by 2010. With the urban population growing at a rate of 2.5% per annum, the government expects another 300 million people to move into China’s cities by 2020—he biggest single internal migration in human history.

The main feature of migration inChinawas the in-migration of rural surplus labour to small cities within the province of origin. Only 30% of migrant labour has been inter-provincial.  Rural poverty has been the main spur, as wage gaps have opened up to anything from 7 to 12 times the differential between the countryside and towns.  The result has been the growth of mainly small cities of whichChinaholds 660, only 33 of which contain over 2 million inhabitants. Demands for rural infrastructure have soared, and labour productivity has benefitted. But the 150 million or more peasant workers in the cities had none of the social welfare rights of the urban employed, whom they outnumbered by a wide margin. They formed Marx’s “reserve army of unemployed”, available to feedChina’s industrial machine.

The moral of this story is that the CCP has, is and will continue to exploit surplus rural labour as the key toChina’s longer-term transformation and growth. Success there depends on the CCP managing the process of urbanisation, through continued control over rural to urban labour movements, and acceptance of an accelerated inflow of people to cities. Inevitably, this is accompanied by the import of rural tensions to the cities, the transformation of city economic structures and social policies, and a feedback to incremental, but profound social changes for the longer term in ruralChina.China’s rural revolution is far from played out, and is inseparable from the process of urbanisation. That, too, lies ahead for China.

Marx in the towns and cities.

The CCP’s hard-nosed policy has delivered remarkable results: By 2001, 400 million fewer people lived in poverty than in 1980, placing China14 years ahead of the 2015 target for the developing world to reduce poverty, as defined by the UN Millenium Goals (Box).[27] The proportion of people living in poverty fell from 53% to 8% of the total population, with half the fall occurring in the early 1980s. The halving was largely attributable to Deng’s agrarian reforms, which allowed for recovery from the disasters of Mao’s Great Leap Forward and Cultural Revolution. The increases in inequality observed  between 1988 and 1995 triggered a host of targeted programmes to tackle the more intractable problem of poverty among the poorer provinces of northern, central and western China [28], and among the rural and urban poor. Here was a serious challenge to the party-state’s credibility among a population, four-fifths of whom—according to one limited opinion survey—ascribe extensive welfare obligations to the government.[29]

The UN Millenium Goals. In September 2000, at the United Nations Millennium Summit held at UN Headquarters inNew York, world leaders discussed the  “The Role of the United Nations in the twenty-first century”. They agreed on a set of Millennium Development Goals (MDGs)– which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. The MDG form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions. In terms of poverty reduction, the goals by 2015 are to reduce by half the proportion of people living on less than a dollar a day, and to reduce by half the proportion of people who suffer from hunger

China’s success in poverty reduction has been accompanied, however, by a rise in recorded inequality. By 2005, the richest 10% of the population enjoyed 41% ofChina’s income, while 20% of the poorest part of the population earned just under 6%. The figures derive from the Gini index, which measures the extent to which the distribution of income (or in some cases consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. A Gini index score of zero implies perfect equality while a score of one hundred implies perfect inequality. In 1980, the Gini index was 0.33, similar to other party-states where real inequalities were recorded less in income than in power resources; by 1991, as China marketised, income gaps opened up to 0.38, and by 2005 were at 0.44—the threshold considered by some as triggering potential social unrest. Many economists placedChina’s Gini index at 0.60, in other words comparable toBrazil, a world leader in matters on inequality. But unlikeBrazil, the fall in real poverty rates inChinawas precipitous. Here was a further challenge to the party-state: a fall in poverty rates combined with a large rise in inequalities spell a revolution of rising expectations among the general population. As the French statesman and political philosopher, Alexis de Tocqueville observed in his famous book, Democracy inAmerica, published in the 1930s, revolutions tended to take place not necessarily in times of crushing poverty and despair, but when conditions improve. “Patiently endured for so long as it seemed beyond redress, a grievance comes to appear intolerable once the possibility of removing it crosses men’s minds.”

The main sources of this inequality were two-fold: one was intra-provincial gaps between town and countryside. These differences were dominated by the rural and urban gaps within provinces. Inter-provincial income differences, particularly between the coastal and inland areas, were less important, and ascribed primarily to different inter-provincial growth rates in the industrial, and also the service sectors. [30]

The other was the weight of the migrant labour force in China’s expanding urban areas. Both intra-provincial inequalities and the conditions of the migrant labour force were related to the party-state’s concern to control labour movements, and to the related lack of a national labour market. Administrative controls made it difficult for workers and their families to permanently change residence, especially to another province; and when a rural worker moved permanently to the city, his local landholdings were forfeited without compensation.  The result of these restrictions was the paradox of labour scarcity in a China of plentiful labour supply, sharp rises in wages, and a declining sensitivity of economic growth to job creation: in the 1980s, a 1% growth in the national economy yielded a 0.32% increase in employment. By 2001, this was down to 0.1%. By the turn of the mlillenium,China’s economy was creating 8 million jobs a year, when 20 million was needed to absorb the urban workers laid off by industrial restructuring and the surplus rural labour.

We can get an idea of the scale of this challenge for the party-state through returning to demographics.China’s population is likely to increase by 25% over the next fifteen years or so, so that the total population may number about 1.5 billion—maybe 1.6 billion—by 2015. Here is the source of the bulge theory of economic development—bulge because of the size of the actual active population relative to the dependent population.Chinahas seen an enormous rise in working age population, much like the rest ofEast Asia, and a sharp decline in births. This is due to improved health provision, as well as to the regime’s one child policy, introduced in the late 1970s to curb the population growth.  As mortality rates have fallen, the average number of children per woman has fallen, despite a 95% marriage rate of Chinese women. This has created first a bulge of the young, now a bulge of the employed population for the period 1990-2025, and thereafter a bulge in the old.

Such a demographic structure holds a number of implications:

  • One is that at least 700 million people will have to be living off incomes earned outside of agriculture. If the peasantry were to shrink to the one fifth represented by the current farm contribution to output, up to 1.1 billion people would have to find jobs in the non-farm sectors. In other words, the party-state faces the task of creating an economy which supports between 400 to 700 million additional jobs within the next fifteen years.
  • Another is the financial implications of such a rapidly ageing population. No pensions have been, are or are likely to be available to the population in rural areas. In urban areas, corporate welfare provision has been wound down in favour of an independent national security system. But this is in its infancy, and the endowments required to develop the system are huge—another incentive for the party-state to amass wealth in the form of foreign exchange reserves, and controls over the financial system. Meanwhile, and fortunately for the party-state, the habits of abstinence in the population required in the past to maintain a large family carry over to a working couple with one child. Small wonder that savings rates in China are 43% of national income—the world record. Those savings for old age, and ill health, will come in useful as a wealthier, urban Chinese population puts aside savings between now and 2025.
  • It is very important forChinato raise the quality of its labour supply. Wage rates are rising fast; consumers are becoming more demanding; and managers in Chinese companies know that they cannot operate sweatshop conditions indefinitely.  Labour productivity will have to rise, along with capital productivity, as savings fall away towards 2025, when the retirement bulge inChina’s population takes affect. Yet China’s human capital is under-developed: While China has 22% of its population living on less than one dollar a day, compared toIndia’s 47%, the average for children in school is 5.6 years, the same as inIndia.Chinaranks no 119 in the world league for per capita spending on education.

The implications of China’s demographics are clear enough: only a dynamic, privately-owned market economy can hope to generate the jobs needed in China over the coming decades; China’s abundant savings will have to be channelled efficiently in order to raise the productivity of labour and capital to levels where the economy can readily carry the growth in pension and health costs of an ageing population; to ensure that wealth grows rapidly if not evenly, China’s potential in human capital must be developed.

Now one of the prime effects of Deng’s reforms in the 1990s has been the creation, in Marxist terms, of new classes in society. State functionaries represent the shock troops ofChina’s “nomenklatura capitalism”, a phenomenon well-known in former communist party-states moving out of the command economy. The party cadres were the largest social group to establish businesses, alongside workers and peasants. They have also benefited as insiders in the sale of party-state assets to financial institutions held by other party- state institutions. Quasi-private entrepreneurs, with unclear claims to property, emerge from the TVEs, or the larger corporations to have listed since the early 1990s on the country’s major stock markets. Conversely, marketisation inChinahas stimulated the rapid growth of a private entrepreneurial class, whose members are clamouring to create their own associations and to participate in public policy. Former President Jiang Zemin’s decision to open membership of the party to business people is thus part of a larger re-definition of policy to widen the party’s reach to embrace new social groups created inChina’s on-going transformation(See Box).

Ziang Jemin’s “Three Representatives” Theory. In February 2000, Jiang Zemin announced a new concept, san ge dai biao. The concept declares that the CCP represents “the most advanced mode of productive force, the most advanced culture, and the interests of the majority of the population”. What this theory indicates is the party’s efforts to open membership to new social forces and classes. Undoubtedly, this is a significant step to pluralism within the party structures.

Meanwhile, China’s workers stay entrapped in a Marxist-Leninist prison. Not for them the new freedoms open to China’s businessmen. The party-state retains the monopoly over worker representation,[31] and has no intent of allowing an independent trade union movement to emerge, along the lines of Solidarity in Poland. Free trade unions would also complicate management’s task within enterprises. Indeed, many companies in southernChina depend on bonded labour, in that workers surrender their papers and pay a deposit on recruitment. They thereby become the captives of management.  They have no protection against arbitrary lay-offs, and no social net to ensure a minimum standard during illness, unemployment or old age. Hence, the party-state’s efforts to channel worker discontent against “foreign devils”, rather than against abuses in its own backyard.

Working people are the sacrificial lambs of China’s present arrangements, and feel that they have been sold short by the party-state. [32] In the mid-1990s, up to 80% of the active urban workforce was employed by state owned enterprises, either central or local government owned. Across China, families were still registered by domicile, preventing migration from one region to another. Welfare, education, health and pensions were provided by the employer, and never extended to the rural workforce.  The result was growing discrepancies in incomes between the slower growth areas of westernChina, or the rustbelt industrial centres of thenorthern provinces, and the fast-growing centres of southern or coastalChina. Regional governments adopted a variety of initiatives, ranging from the creation of inter-regional labour co-ordination centres to authoritative restructuring of the local labour force to reduce over-manning. But such initiatives perpetuatedChina’s fragmentation into local labour markets, and provided a constant rationale for beggar-my-neighbour protectionist policies to safeguard local jobs. They also ensured that the 1986 bankruptcy law remained a dead letter, as local governments preferred to merge enterprises rather than put them out of business. Without a social security net, workers depended entirely on their enterprise for wage and welfare.

The decade of the 1990s demonstrated that maintaining “social cohesion” meant propping up inefficient state enterprises at ever greater cost to the country. Clearly such a policy was not sustainable The tightening of financial controls by the centre over loans to town and village enterprises slowed their capacity to absorb surplus labour from rural areas, where the “floating population” has been estimated as high as 120-175 million. Up to 6 million jobs were being lost in rural areas on an annual basis. With central government revenues shrinking fast, transfers were not available to compensate poorer regions. There was also a limit to how far the big four banks could pour household savings into loss making enterprises, just to pay for wages and stockpiles of unsold goods.  Furthermore, the one child policy was changing China’s age profile: while 6% of the population were elderly in 1998, 11% of a larger population would be over 65 by the 2020s. In 1995, the Minister of Labour launched a pension scheme to be financed by payroll tax, but both enterprises and workers had incentives to evasion. The implication was that the present value of future pension obligations drove sovereign state debt from its official 20% gdp in 1998, as high as 100% gdp. [33] The only way for the state to finance such obligations was to privatise fast, and fudge on its commitments. This is what happened between 1998 and 2001, when millions of industrial workers were laid off. (See Table 12).

Table 12: SOE Profitability and Liquidity, 1997-2001

1997       1998      1999       2000       2001

Total SOES                 262,000  238,000  217,000  191,000  174,000

% loss-making SOEs    65,9         68,7          53,5       50,7         51,2

Source: Financial Yearbook of China 2002.

The plight of industrial workers laid off from the state enterprises compounded the problems already created by the migrant population. These numbered anything up to 150 million people, originally from rural areas, and working in the cities without access to any of the rights and privileges of native urban residents. Since migratory flows into the cities began to rise after 1978, the party-state made periodic changes to the residence permit system, which had been introduced in 1950 as an administrative tool to control the population, and engineer society according to party-state wishes. Its chosen instrument was the hukou—a personal document which provided a family history(which class do you belong to?); a certificate of residence (where do you come from?); a visa which gives you right to a plot of land in a rural area, or to public services in an urban locality(what are/not your entitlements); and an internal passport. For migrants, in urgent search of food to place on the table today, the cost of switching from rural to urban hukou was out of reach. Most retained their personal status as farmers, entered informal urban labour markets, unofficially bought urban land, built shanty towns and ran informal schooling for their children.  They therefore became easy prey to unscrupulous employers, urban developers and local governments held to account by central government over the firmness they showed in dealing with “vagrants and beggars”. This was “the reserve army of unemployed” into which the formerly privileged urban “aristocracy of labour” in state enterprises was tipped following the central government decision in 1998 to restructure the state enterprise sector in depth.

By 2006, state and collective enterprises employed only 25% of the urban workforce (see Table 10 above),  while the main employer was the dynamic private sector. In some industries—construction, building materials, mining, textiles, garments or toys, over 80% of the urban workforce was of peasant stock.  A Marxist analysis of this situation concluded that “the government created an environment to suck in tens of millions of young peasant workers into towns and cities and to squeeze their blood and sweat to sustain high industrial growth and maintain high living standards for government officials and registered urban citizens..”[34]

But the counterpart to the migrant population bedding down into cities has been the flow of remittances, ideas and new capitalists back into rural China. Village life is being transformed, fast and deep. Traditionally, in the village, a family eats, farms and sleeps in one bed together. Older men take key decisions. The eldest children obey. Relationships between villagers are determined by kinship ties. These kinship ties are carried into urban settings, where migrant workers rely on relatives, fellow villagers and others from the home province. They return home with their harsh urban experiences, with ideas that elder people do not understand. Despite low wages and exploitation in sweat-shops, they send home money, making remittances a major source of income in the rural world. The rural world  is also being networked into the information society. Rapid growth is recorded of internet use in rural areas, spurred on by government policies such as “every village has access to internet” and “every village has a website”. [35] Here, too, there is no turning the clock back to a vanished past: the party-state has to ride out the social transformation ofChina.

Here we have all the ingredients of our Marxist story: class war in the countryside, harsh conditions for the urban poor, the creation of new social classes, a well-entrenched ruling class. Future direction of policy is clearly to promote the private sector across the whole economy in order to absorb the new entrants to the labour markets, the unemployed from failed firms, and the underemployed from the countryside. That in turn implies boosting the prestige of business people, and of granting them security in the enjoyment of their property. In turn, this stimulates civil society, prompts demands for the rule of law, fosters the need for a better-trained bureaucracy, and promotes the circulation of information. In addition, the spread of mobile phones and the internet facilitate communication among the discontented, and the means to discuss what to do about it.

Organisation of opponents is the point where the economics-drives-politics school of thinking runs into trouble. People do not rebel just because they are discontented. A prerequisite to rebellion is that rebel leaders mobilise the discontented into a collective, organised force able to take advantage of the political opportunities on offer.(See Box) In short, it is opposition élites that organise discontent rather than discontents that mobilise people. The economics-drives-politics argument thus transmutes into an observation of the primacy of politics.

Signs of social discontent in China include peasant demonstrations, laid-off workers joining criminal gangs, and Falun Gong sect members gathering to be arrested inTiananmen Square. In June 1999, the official People’s Daily newspaper, noted that “some party members and officials who pursue personal gain have been deeply involved in worshipping Buddha and practicing astrology, divination, geomancy and physiognomy.”Since Falun Gong was banned in July 1999, at least 93 adherents are believed to have died in police custody. Li Hongzhi is the sect’s guru, and lives in theUS. But these disparate movements have a long way to go before they pose a major threat to the regime. Democracy advocates, Tibetan independence proponents, Islamic militants and disgruntled workers have little in common, other than dislike of the regime. Democracy advocates are often Han chauvinists, laid off workers can find little comfort in Falun Gong teaching about the ills of the world as stemming from homosexuality and rock ’n roll, and Islamic fundamentalists have little in common with Tibetan Buddhists. Not least, there is deep popular support inChina for continuity, and this is strengthened by fear of chaos—only too vivid in the collective memory of the Chinese. The perception in Chinese public opinion is that there is no viable alternative to communist party rule. This is not the same as saying that the party-state leadership has a coherent view about how to provide institutional representation to accommodate the natural pluralism of Chinese society.

From here on out, the Marxist story becomes more diluted. The reason is simple: opposition and incumbent élites interact in a political logic with its own dynamics. The essential point is that what matters is perceptions of both rulers and ruled about policy and performance. [36] Governing élites may differ about appropriate policy, while significant sections of the population judge performance in the light of their beliefs about the legitimacy of the regime. They ask the governors: “by what right do you rule”. Governors may reply that they govern by consent or by force, or some combination. Constitutional democracy enables governments to combine both over the long term: governments may enjoy popularity when the going is good, but when the going gets tough, electorates can vote them out of office for past errors. Disenfranchised peoples do not have that elementary right: if they wish to kick out the ruling incumbents they have three options: endure, rebel or negotiate. So far, the Chinese people do not show any sign of exercising the option, while the government makes the heart of its social policy the drive for economic growth, coupled with an unabashed readiness to use force to stay in power. The CCP is not about to succumb to pressures from below.


[1]BarringtonMoore, Jr, , Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World,Boston, Beacon Press. 1972

[2] Mancur Olson, jr. “Growth as a Destabilizing Force”, Journal of Economic History XXIII December 1963.

[3] Samuel P.Huntington.  Political Order in Changing Societies,New Haven,YaleUniversity Press, 1968.

[4] Quoted by Natalie Pace,China SurpassesU.S. In Internet Use, Forbes.com 4.03.06.

[5] Eric Harwit and Duncan Clark, “Shaping the Internet inChina: Evolution of Political Control over Network Infrastructure and Content”, Asian Survey, Vol.XLI. No.3. May/June 2001.pp. 377-408.

[6] Alex Chan, “From Propaganda to Hegemony: Jiaodian Fangtan andChina’s media Policy”, Journal of Contemporary China (2002). Vol.11.No.30,35-51.

[7] Robert O. Keohane, Joseph S.Nye, “Power and Interdependence in the Information Age”, Foreign Affairs, Vol.77.No.5.pp.81-94.

[8] Environmental News Service Effects ofChina’sSonghuaRiver Chemical Spill Still EmergingBEIJING,China, January 13, 2006.

[9] “Companies compete to provide Saudi Internet Veil”, New York Times, November 19, 2001.

[10] Excerpts from Chinese Premier Wen Jiabao’s Speech on Rural Issues, Posted January 20, 2006. Red Orbit: Breaking News.

[11]BarringtonMoore, Jr, , Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World,Boston, Beacon Press. 1972

[12] Mancur Olson, jr. “Growth as a Destabilizing Force”, Journal of Economic History XXIII December 1963.

[13] Samuel P.Huntington.  Political Order in Changing Societies,New Haven,YaleUniversity Press, 1968.

[14] Jack A. Goldstone, “The Coming Chinese Collapse”, Foreign Policy. Summer 95. pp.355-64.

[15]Oxford Analytica, November 2, 2005.China: Five-year plan will include a rural focus.

[16] See Yong Cai and William Lavely, “China’s Missing Girls: Numerical Estimates and Effects on Population Growth,” The China Review 3, No. 2 (Fall 2003): 13–29.

[17] Bertil Lintner, Blood Brothers: Crime, Business and Politics in Asia,London, Allen and Unwin, 2002. p.3.

[18] See Scott Rozelle, et al, “Targeted Poverty Investme,nts and Economic Growth inChina”, World Development. Vol.26. No.12.pp.2137-2151.

[19] See Minxin Pei, China’s Red Tape, Foreign Policy, November-December 2002.pp.82-83; on life in rural China, see Yang Lian, “Dark Side of the Chinese Moon, A review of Chen Guidi and Wu Chuntao, Zhongguo nongmin diaocha(Survey of Chinese Peasants), People’s Literature Publication Company: Beijing 2004. 460pp. Publication suspended march 2004. New Left Review 32, March-April 2005.pp.132-140.

[20] On citizens awareness of their rights, see Kevin O’Brien, “Rightful Resistance”? World Politics, 49(0ct 96)pp.31-55

[21] China Investigation Report: A study of contradictions among the people under new historical conditions. 2000-2001 Zhongguo Diaocha baogao, Xin xingshi xia renmin neibu maodun yanjiu (2000-2001; Beijing: Zhong-yang bianyiju chubanshe, 2001; Yang Lian, “Dark Side of the Chinese Moon, A review of Chen Guidi and Wu Chuntao, Zhongguo nongmin diaocha(Survey of Chinese Peasants), People’s Literature Publication Company: Beijing 2004. 460pp. Publication suspended March 2004. New Left Review 32, March-April 2005.pp.132-140.

[22]Oxford Analytica.China: Five-year plan will include a rural focus. November 2, 2005.

[23] Excerpts from Chinese Premier Wen Jiabao’s Speech on Rural Issues, Posted January 20, 2006. Red Orbit: Breaking News.

[24] J. Wong and Yang Mu(1995) “The making of the TVE miracle-an overview of case studies”, in Wong J., Rong Ma, Mu Yang eds. China’s Rural Entrepreneurs: Ten Case Studies, Singapore: Times Academic Press, pp.16-51.

[25] Barry Naugthon, Growing Out of the Plan,Cambridge,CambridgeUniversity Press, 1995

[26] James Kynge, “Taxman heaps added burden on to farmers”, Financial Times, October 31,2002.

[27] Martin Ravallion, Shaohua Chen,  China’s (Uneven) Progress Against Poverty,World Bank – Development Research Group (DECRG) September 2004,World Bank Policy research paper No.3408; Jiyao Bi, China´s New Concept for Development, China in a Globalizing World, UNCTAD, New York-Geneva, 2005. pp. 106-124.

[28] Azizur Rahman Khan, Carl Riskin, “China’s Household Income and Its Distribution, 1995-2002, The China Quarterly, 2005. 356-384; Hu Angang, Hu Linlin, Chang Zhiaxiao. “China’s economic growth and poverty reduction (1978-2002), 2003

[29] A 1996 survey in Shanghai of 1000 residents, Chack-Kie Wong,Peter na-Shong Lee, “Economic Reform and Social Welfare: the Chinese perspective portrayed through a social survey in Shanghai”, Journal of Contemporary China (2001), 10(28), 517-532.

[30] JR-Tsung Huang, Chun-Chien Kuo, An-pang Kao, “The Inequality of Regional Economic Development in China between 1991 and 2001”, Journal of Chinese Economic and Business Studies. Vol.1, No.3, September, pp.273-285.

[31] Anita Chan, Robert E.Senser, “China’s Troubled Workers”, Foreign Affairs, March-April 1997

[32]A detailed study on worker attitudes is provided by  Ingrid Nielsen, Chris Nyland, Russell Smith, Cherrie Zhu, “Marketization and Perceptions of Social Protection in China’s Cities”, World Development, Vol.33.No.11.pp.1759-1781. 2005.

[33] ADB, EmergingAsia: Changes and Challenges, 1997.p.

[34] Shujie Yao, Genfu Feng, Aying Liu, Guohua Fu “On China’s rural and agricultural development after WTO accession, Journal of Chinese Economic and Business Studies, 3(1), 2005pp59-78.

[35] People’s Daily Online, 0.9.31. January, 21, 2008.

[36] Juan Linz, Alfred Stepan, Problems of Democratic Transition and Consolidation: Southern Europe, South America and Post-Communist Europe,Baltimore,London, TheJohnsHopkinsUniversity Press, 1996.

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About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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