10. The harsh reality of working people and their struggle
The majority of workers and peasants in China today are facing many difficulties in most aspects of their lives. As the employment structure in China underwent a thorough overhaul, and the percentage of workers in the formal sector was drastically reduced. Tens of millions of workers were practically being thrown out of their work place and lost all of their benefits, including their health insurance and accumulated pensions. Many of these former workers were also owed back wages. For workers who still have jobs, their wages have been reduced and benefits cut. All of the protections Chinese workers enjoyed during the socialist period were eliminated. The lack of benefits has further caused the deterioration of living standards for a great number of China’s working population, many of whom are living subsisting or under-subsisting levels of living.
Life for many peasants in the countryside is poor and precarious. For peasants whose main income depends on growing crops, their incomes are low and have little hope for a better future. Many have been forced to leave their homes to work in cities doing the hardest, dirtiest and most dangerous jobs, so they can send money home to support their families. These migrant workers live and work in the city but have no city resident permits and are often abused by their employers and harassed by police. If they have their children with them, the children are not allowed to attend city schools.
In addition to all the suffering, hardship, injuries, and even deaths that Chinese workers and peasants have endured in their work place and in their daily life, they have also been harshly treated and abused by government officials, especially by local bureaucrats in the countryside and the police in cities. These lower level officials have direct authority over the people and the majority of them are corrupt. They are also the ones who evict peasants from their land and evict urban residents from factories and homes. There have been large-scale protests over land and home evictions and issues related to taking land without adequate compensation, plant closings, owed wages, exorbitant tax collection, corruption, and other injustices. The officially published number of reported protests of over 100 people totaled 200 to 300 a day, or 74,000 for the year of 2004 – and there were many unreported cases. One of the latest protests happened in a fishing village, Dongzhou, near Hong Kong on December 10, 2005. Residents in Dongzhou were protesting against the building of a power plant, which occupied land for which the peasants were not compensated. Residents of the village also feared pollution from the plant would damage the environment and thus endanger their livelihood as fishermen. The police open fired into the crowd and shot 20 people dead[32]. (New York Times, December 10, 2005)
Moreover, perhaps it is even more important that workers in China also lost the dignity and the respect they had in the past. In the past they were referred to as the “masters” of the country, but now their status in the society has sunk to the lowest level since before Liberation. Older unemployed workers are often outraged when the State enterprises that they built with many decades of hard work are squandered away by the powerful and privileged few. They feel a very strong sense of injustice. A former model worker in his seventies recalled how he and his co-workers used to volunteer overtime on Sundays by secretly hopping the factory walls to increase production. There was no overtime pay or any bonuses, but the overwhelming majority of workers put forth their best efforts. He and others like him are infuriated by how the reformers claimed that the State enterprises were inefficient due to lax and lazy workers as a way to institute labor reform and throw the workers out on the street.
The 150 million migrant workers from the countryside never experienced the lives of workers in the State enterprises during the socialist period. Therefore, they had little to compare their current conditions with. However, they are the ones who have suffered the brunt of the exploitation and have the least protection of any kind. They are also the workers who are producing most of the goods for export and will be the first to be laid off when exports begin to slow down.
The legacy of socialism has instilled a strong sense of justice and fairness in Chinese society. Even after 26 years of Reform while a few people got very rich, ordinary Chinese people are holding on what they believe. They can tell you endless cases of how people accumulated tremendous wealth, simply because they have the power or are connected to power. They can tell you how much money you have to pay to buy various government positions, and how long it takes to get a full return for your money. With such glaring abuse of power and gross injustice, working people in China can only consider Hu’s and Wen’s calling for a “harmonious society” empty rhetoric to cover up an increasingly divided, chaotic and conflict ridden society.
III. Capitalist reform and its impact on China’s long-term development
The production of large quantities goods – of which a large part has been marked for export – at rapid rates has caused China’s natural resources to be rapidly depleted and has caused serious damage to China’s environment. As a country China, is not endowed with abundant natural resources, and its natural environment is very fragile. The devastating impact of fast GDP growth and large volume exports on natural resources and the environment have been aggravated by China’s inefficient use of these resources, and the fact that its government has neglected its responsibility of legislating and enforcing environmental laws and regulations. Moreover, under the policy of speeding up GDP growth by any means necessary, all levels of governments have focused single mindedly on investing in buildings and infrastructure, wasting tremendous amounts of resources. These governments, central, provincial and local have not been willing to spend any of the necessary resources to clean up China’s polluted rivers, ground, and air[33].
1. China’s dwindling natural resources
When it comes to the problem of China’s scarce resources, water shortage is the first on the list. China’s water resource has always been scarce. The average water available per person is only 2,200 cubic meters, a quarter of the world’s average. Also, the distribution of water is very uneven; the shortages are most acute in northwestern provinces.
The high growth of industrial production and urbanization has increased water use, taking water away from agriculture and rural residents. According to the Ministry of Water Resources, factories and urban residents used 34% of the total water supply in 2004, up from 25% in 1998. (Bloomberg.com, February 22, 2006) Earlier projections showed residential demand for water will increase from 31 billion tons in 1995 to 134 billion tons in 2030, and industrial water demand will increase from 52 billion tons to 269 billion tons during the same period. (Worldwatch Institute, News release, April 22, 1998.) There is simply not enough water in China to go around.
The water shortage has already had serious effects on agricultural production, and has kept many rural residents from improving their standard of living. In 1994 farmers in a region near Beijing were not allowed to use their regular source of water supply from the reservoirs for irrigation, because the city’s fast growing need for water was given a higher priority. In the late 1990s, 300 of China’s 617 cities faced water shortages. (Ibid.) and it is much worse by now. When confronted with water shortages, cities are likely to restrict water uses for agriculture in nearby region, and further depriving the rural population the opportunity to improve their lives. Unless the problem of increasing water shortage can be reversed, the more recent government’s plan to improve the lives of rural population will remain an unrealized dream. The following examples only highlight the seriousness of the problem.
The Yellow River, the second largest river in China, which had provided water for Chinese people and its agriculture in central China for thousands of years. Today heavy water consumption upstream has exhausted the Yellow River’s water supply and caused water shortages for the 170 million people in this region who are dependent on its water. Even though there were instances before the 1990s that the Yellow River ran dry before reaching the sea, the problem has become increasingly worse since 1990. In 1997, the Yellow River ran dry for a record breaking 226 days. (Yi, 1, 12) Yi Hui-min, author of The Warning of Yellow River, stated that the exhausted water supply, the problem of river pollution, and increasing occurrences of flooding were spreading nationwide. In 1998 both the Yangtze River in the south and Song Hua River in the North had the worst floods in 100 years. In 1999, the Yangtze River flooded again rendered 600,000 people homeless. (Yi, 1)
Not only is water supply from rivers dwindling, China is also losing ground water at a fast rate from overuse. The ground water level of many cities is approaching a dangerously low level. For example, ground water in Beijing has decreased very rapidly; according to the Ministry of Water Resources, Beijing’s water tables for ground water have dropped 1.5 to 2 meters a year. The Ministry said that lower water tables will not only further aggravate shortage, it will also lower the quality of water and increase the risk of earthquakes and landslides. (“China’s Water Shortage to Hit Danger Limit in 2030” People’s Daily Online: http://english.peopledaily.com.cn/) The heavy loss of groundwater has also speeded up desertification in the northwest. According to the director of Gansu’s Desert Control Research Institute, Ji Yongfu, overuse of groundwater and overgrazing have caused the desert to advance at a rate of about 2,000 square kilometers a year. (Bloomberg.com, February 22, 2006)
The rapid production of large volumes of industrial products for export is responsible for the rapid depletion of China’s natural resources. The problem of resource depletion has been made more serious because of the inefficient use of the resources. The Ministry of Water Resources pointed out that since China only recycles 20-30 percent of its industrial water, per industrial output water consumption is five to ten times higher that that of the industrialized countries. (Ibid.)
As the rate of export growth has accelerated since the late 1990s, China’s oil consumption has also increased rapidly. According to Bai’s report (point 5) China’s oil consumption increased 100% from 1990 to 2001. By 2005 China’s oil consumption surpassed Japan and became the second largest oil consumer in the world, second only to the United States. China’s domestic oil production has not been enough to meet its oil demand – thus oil imports doubled in merely five years, from 1998 to 2003, and increased another 40% in the first half of 2004. (Time Asia, October 18, 2004) In 2005 China consumed 300 million tons of crude oil, 123 million tons of which were imported.
China high level of energy consumption and to produce high volumes of products has been aggravated, like the usage of water and other natural resources, by its inefficient energy usage. According to Bai’s report (point 5), for every dollar of GDP increase, China’s energy use is 4.3 times that of the US, 7.7 times of that of Germany and France, and 11.5 times that of Japan.
Bai also reported that between 1990 and 2001, China’s consumption of natural gas increased 92%, steel 143%, cooper 189%, aluminum 380%, and zinc 311%. He concluded that China has reached the limits of this kind of rapid but inefficient economic growth.
China still relies on its own coal reserves as the main source of its energy consumption, but its coal reserves have been rapidly depleted. (You, 13) If China continues its current strategy of pursuing fast GDP growth, it must acquire a bigger share of the world’s oil, natural gas, iron ore, lumber, and other natural resources. However, China is not in a strong position to compete with the United States, European, and Japan for these natural resources.
Therefore, in order to continue exporting large volume of exports to sustain high rates of GDP growth, China has been using up its resources at accelerated rate. Large quantities of resources, including large areas of farmland, have also been used to build excess infrastructure – airports, office towers, super highways, exhibition halls, as well as for the many luxury mansions for the rich. The massive consumption of China’s natural resources is the complete opposite to the policy of conserving resources during the socialist period; during the socialist period, conserving resources, not the profit, was one of the standards used to judge the performance of the State enterprises.
2. China’s environmental crisis
Environmental pollution became a serious problem beginning in the 1980s and became increasingly worse in the mid-1990s. Environmental experts in China have given different estimates on the loss of production due to environmental disasters. The World Bank has said that China is in an environmental crisis and in recent years an estimated 8% to 12% of China’s annual production was lost due to the crisis. (Bai’s point 5) Water pollution has brought tremendous loss to agricultural production and has caused serious illness for people who live around it – mostly peasants in rural areas.
In Liukuaizhuang, a village of 6,000 people near the city of Tianjin, water pollution drove the cancer rate to 25 times the national average in 2004, the government-run People’s Daily reported last year. In addition, the chemical plant accident that has caused the contamination of the Song-hua River caught attention in international news. And a tributary of the Yangtze River, China’s longest river, was polluted last month after a zinc smelter spilled cadmium into the water, a toxic metal that can cause neurological disorders and cancer.
While the effects of these large-scale accidents are horrific, the impact of smaller scale but constant dumping of industrial wastes into rivers and ground are even more devastating. According to the Water Ministry, most of China’s rivers are seriously polluted and contaminated by toxins. According to a report published by the Water Resources Ministry – The China’s Water Resources 2000 – of all the water in China’s rivers, a total length of 114,000 kilometers, only 28.9% is better quality (ranked class I and II), and 29.8% is a lesser quality (ranked class III). 16.1% of water in rivers is dangerous for human to touch (Class IV) and the rest, or 25.2% of all water in rivers is too polluted to use for any purpose (Class V).
Air pollution is just as serious in many of China’s major cities as indicated by the rapid increases in respiratory diseases. Last Spring Beijing and other northern cities in China was hit by one of the largest sand storms from the Mongolian desert. Since the fast advance of desertification, above a rate of about 2,000 square kilometers a year, sand storms have become increasingly worse, affecting cities in Korea, Japan and even Taiwan. Sandstorm is also a major cause for respiratory disease.
The over-consumption of the natural resources and the deterioration of China’s natural environment are the direct results of China’s mindless strategy of high GDP growth. In order to promote export growth and to support high consumption of China’s new rich, China’s government has used subsidies to keep the prices of these resources low. For example, the government subsidizes energy uses, so the prices of certain exporting products can be kept low, and that low gasoline price encourages the purchases of automobiles. The strategy of high GDP growth is depleting China’s natural resources and causing its environmental crisis, making China’s future long-term sustainable development even more difficult. Before long-term sustainable development can even take place, large expenditures are needed to clean up the environment and restore ecological balance.
IV. The external forces behind China’s capitalist reform and rapid GDP growth
The first three sections of this essay focus on an analysis of how the changes in the basic class relations have pushed the capitalist Reform forward. However, the forces that behind China’s Reform are both internal and external, and the two are closely connected. From the very beginning, the reformers wanted to find ways to connect China’s development to the world capitalist system: the “kai fang” (opening up) part of the Reform. The question was only how to make the connection, how much to concede, and how fast to proceed. There were those within Deng’s camp who wanted a strong independent China, and were unwilling to subject China to the domination of foreign economic powers. They called for more caution. Therefore, the negotiations for China to join GATT and later the WTO took fifteen difficult years.
The questions relating to how to connect China’s economy to the world and at what pace, however, were not entirely up to China’s authorities. China’s capitalist Reform happened to coincide with major changes that were occurring in the world capitalist system. Placing China’s Reform in the international context, we find that there were significant external forces, not only pushing China’s capitalist reform and rapid GDP growth but also China’s economic integration into the world capitalist system. When identifying the external forces in the world capitalist system, the economic crisis that began in the early 1970s stands out. As the crisis grew increasingly worse in the 1980s and 1990s, global monopoly capital restructured the domestic and international political and economic order by pushing forward neo-liberal reforms. These neo-liberal reform policies, both domestic and international, initiated in the early 1980s have had significant effects on the rapid expansion of monopoly capital on a global scale.
The problem of over-capacity in the world’s productive system appeared in the late 1960s and early 1970s, after almost two decades of continued investment during the rapid growth period following WWII. Like earlier economic crisis, the post-war crisis beginning in the 1970s required political intervention. British Prime Minister Thatcher and US president Reagan led the Western world in an overall restructuring of the post-war political and economic order. They implemented policies in their own countries that dismantled social welfare programs, took strong measures against unions and restructured the labor market, de-regulated industries and pushed to privatize public industries. These neo-liberal policies of eliminating barriers to profit making were quickly expanded internationally, which facilitated relocating capital to less developed countries. These closely coordinated policies benefited capital by taking advantage of cheap labor abroad and weakening labor’s bargaining power at home.
During the last twenty years of the 20th century, uneven development among the imperialist countries also became more prominent. In the early 1980s the yearly surplus of around $50 billion in the Japan’s current account mirrored the deficit of the same magnitude in the current account of the United States. Japan needed the external markets to compensate for its inadequate domestic demand to give some relief to the pressures of excess capacity in virtually all of its industries. During the 1980s, Japan’s economy continued to growth at much higher rates than that of the US and European countries, but its growth rates were sustained by maintaining trade surpluses with other industrial powers. The economy of the United States continued to rely on external savings by importing more than it was exporting. On the other hand, it also continued to provide a market for the world’s surplus products. Thus, the fragile balance, or rather the imbalance, of the world’s capitalist system was maintained by the US spending beyond its means and by borrowing, mostly from Japan.
Japan’s economic stagnation began in the early 1990s and lasted for 16 years, reminding many of the 12 years of the Great Depression in the United States and other industrial countries in the 1930s. Japan’s long-term stagnation brought questions and doubt to the faith policy makers had in Keynesian fiscal and monetary policies, which were widely practiced during the prosperous post-war years. The Japanese government’s massive public works projects and its central bank’s zero interest rate policy failed to stimulate its total demand to revive its economy. At the same time the German economy, which was the strongest industrial power in post-war Europe also lost its steam. Its unemployment rate soared and persisted at around 10% or higher. Nor have the economic performances of the rest of the European Union been that promising.
When in the 1980s global monopoly capital expanded world-wide under the neo-liberal restructuring of the political and economic world order, the problem of over-capacity then spread from advanced developed countries to many less developed countries. After the crisis in Latin America in the 1980s and the Asian crisis at the end of the 1990s, foreign capital was ready to quickly move into China on a large scale. Those in power in China had already made significant reforms for China to be integrated into the world economy. The Asian crisis that began in the summer of 1997 gave the authorities in China the final push. They realized the powerful role of global monopoly capital and the international financial and trade organizations, and that if China were to continue its capitalist development it had little choice but to open itself up. At the same time China’s Reform stalled as GDP growth first began to slow in 1997, and further slowed to merely 0.4% in 1998, –11.4% in 1999, and a mere 1.3% in 2000. Chinese authorities conceded to the strong demands of monopoly capital and the imperialist states, and at the end of 2001, China’s accession to the World Trade Organization became a reality. Then, foreign investment started pouring in and the so-called miracle took off.
When surplus capital hopped from one country to the next, it littered these countries with more productive facilities, and thus sowing the seeds for potential crisis. As monopoly capital expanded globally, crisis also has spread all over the world. The so-called Latin American debt crisis and the Asian financial crisis were in fact the crisis of the world capitalist system being shifted from the center of imperialist powers to those less developed regions.
In the late 1990s when the Asian crisis began, the problem of overcapacity (which had persisted from the early 1970s) worsened. The automobile industry is a good example of the seriousness of the problem. The Wall Street Journal reported on August 25, 1997 that the worldwide capacity of car production reached 70 million vehicles – 32% more than consumers were buying. An 1998 article in The Economist said that Japanese car makers had the capacity to produce 14 million cars, but far less than half that number could be sold on the domestic market. The same article, stated, “Europe is as much plagued by over-capacity as Japan. Car production there is growing by 4% a year but demand by only 1.5%.” (The Economist, March 21, 1998, p. 71)
The United States is the biggest car market in the world. In 1997 car sales in the US were about 15 million a year – but it was not growing. However, both Toyota and Honda had plans to increase their capacity in North America (US and Canada) in the following years, by building additional plants and expanding existing ones. (Wall Street Journal, September 24, 1997, p. A-1) Before the collapse of the South Korean economy, Korean car companies (Hyundai, Daewoo, Kia and Sangyong) built far more cars than were sold on the domestic market. South Korean and Japanese automobile companies were also building factories in India, Indonesia, and Turkey. When Samsung was just about to launch its new car production – a joint venture with Nissan (Japan), the Korean economy collapsed. Soon after, GM and Ford bought shares in the bankrupt Korean car companies to continue production in Korea and elsewhere. Before Brazil went into crisis in 1998, GM, VW, Ford and Fiat had invested large sums of money to expand their auto productive facilities there, followed by seven new companies also making large investments in Brazil. These new automobile investments in Brazil were excess capacity to begin with, and they only exacerbated the problem of overproduction after Brazil fell into crisis.
The overcapacity problem in the automobile industry extended to other auto related industries and other non-auto related industries as well. Therefore, by the late 1990s global monopoly capital was desperate to find a place to expand. China seemed to be the logical place to go, because there was a large industrial base already built, and it had a large supply of experienced industrial workers, guaranteeing low wages. China’s new regime had been pushing hard for capitalist Reform and since the mid-1980s and had earnestly begun negotiating accession to GATT and then WTO. The reformers also put in new laws that would give foreign investment preferential treatment. The brutal repression of student and worker protests in spring 1989 showed Deng’s regime would not tolerate any political dissent; it showed that it would not hesitate to use force to crush dissent when necessary, in order to continue the capitalist Reform without any disruption. The regime understood that for the foreign and domestic capitalists to commit their investments, political “stability” was a pre-condition.
V. Conclusion
One of the purposes of writing this essay is to challenge the myth about a development model propagated by imperialist ideology. This development model says that when monopoly capital enters a less developing country, it brings advanced technology and access to the international market; if the country simply opens up its economy, it can develop its economy quickly, thus lifting many people out of poverty. This myth continues to exist, in despite the fact that history, especially in the past twenty some years, has proven that this development model brought misery to the people, even during the short span of economic “boom” – and then the “boom” inevitably turned into crisis. At the time of the crisis, monopoly capital, assisted by its individual imperialist states and the international financial and trade institutions (the IMF, WB and WTO), forced these countries to accept the Structural Adjustment Programs (SAPs), which caused enormous suffering of the people and subverted the economic sovereignty of these countries. Under the SAPs, developing countries have to pay several times the amount of money they borrowed and also have to go through further “liberalization” and de-regulation in order to facilitate the entrance and further expansion of global monopoly capital. Then when working people have to further tighten their belts to salvage their ruined economy, monopoly capital is already on its way to occupy more places elsewhere. Despite these undeniable facts, this myth of development persists and has been used by monopoly capital as weapon to open up more economies.
As this essay has shown, the capitalist Reform in China succeeded in dismantling the class relations of socialist China in spite of resistance from workers and peasants. The Reform has opened up China up and welcomed monopoly capital in. During the last eight years, China’s capitalist Reform was also able to achieve high growth rates for exports and for GDP. However, fast GDP growth has not brought better lives for the majority of Chinese people. Instead many have suffered unemployment, low wages, loss of land, and loss of benefits. The lives of tens of millions of people have deteriorated and become more precarious during the so-called economic miracle. This essay has also shown that the capitalist Reform resulted in many imbalances, both within China’s economy and between it and the rest of the world. China has not and will not become a strong capitalist country. Moreover, fast GDP growth has accelerated the depletion of China’s natural resources, the shrinking of China’s arable land and has created many serious environmental crises.
During the earlier phases of the Reform, before the real impact was felt, many believed that the Reform would help develop China’s productive forces – but in the last fifteen years fewer and fewer people still think so. People increasingly question what the Reform has meant to them. Many say the reform of State enterprises only brought unemployment and cuts in pay and benefits. The rural reform only drove one hundred and fifty million people to the cities to find work. The reform of the health care system only raised the price of medical care, so people no longer can afford to visit doctors or to buy medicine. The education reform has raised tuition, so people cannot afford to go to school. The overwhelming majority of Chinese people no longer believe that China is still a socialist country. With the exception of a small minority who have benefited from the Reform, people no longer have trust in the Communist Party to represent and protect their interests. China’s current leaders – Party Chairman Hu Jintao and Premier Wen Jiabao are very much aware of and actually acknowledged some of the overwhelming problems – economic, social, and political – that exist now in China. They recognize that the negative impact of capitalist Reform on the majority of the working population, the long-term damaging impact on China’s natural resources and environment, and how it has polarized Chinese society. With the numbers and the sizes of protests increasing, they are too keenly aware the political crisis they are facing.
Therefore, on the one hand, Hu and Wen have tried to project the image of being benevolent rulers who care about the people. They have proposed a “scientific view” of people-based and environmentally friendly sustainable development, and want China to be a “harmonious society”. However, at the same time they have made pledges to carry the Reform forward – as if capitalist reform in the way that it has been carried out and sustainable economic development are compatible. Hu and Wen’s proclamations and promises are far removed from China’s reality and cannot be realized.
