Is China going down the capitalist road?
Socialist Outlook newspaper1990sPaul ClarkeTranscribed or corrected by hand from the printed page.
THREE YEARS after Tiananmen Square, China still remains an economic and political model for sections of the international Left. As opposed to the failure of perestroika in the ex-Soviet Union, economically at least 'market socialism' in China seems to be a success. For others, Deng's 'socialism with Chinese characteristics' is advancing rapidly towards capitalism. What is the truth of these counter-claims?
The short answer is that while China remains a non-capitalist country, important sections of the economy have been 'marketised', and domestic and foreign capitalist penetration is growing. While every section of the ruling bureaucracy remains committed to a harsh authoritarian style of rule, important political battles over the future course of the country are taking place behind closed doors, although part of the scope of these battles was revealed at the recent 14th Communist Party congress.
But most important Deng Xiaoping himself is committed to a thorough marketisation, which taken to its logical conclusion would result in the restoration of capitalism; his view were set out at the CCP conference in the keynote speech by party secretary Jiang Zemin. And Deng is doing everything possible to ensure that the political succession is in the hands of those loyal to him.
Agriculture
In the 1980s China had the fastest growing economy of any major nation averaging 7-8 per cent growth each year, and achieving a staggering 12 per cent in 1992. This was based above all on the reform of agricultural production, part of the 'Four Modernisations' charted when Deng replaced Hua Guofeng as party chairman in 1978.
Under these reforms the huge peasant communes established by Mao Zedong in the 1950s and 1960s were abolished, and agricultural production put in the hands of individual peasant producers or small co-operatives. This did not amount to a full privatisation, since up to two thirds of production had to be sold to the state at negotiated prices.
Nonetheless peasants were allowed access for part of their product to deregulated markets in the cities. Very quickly family-based farming units were expanded, and a class of richer peasant farmers or kulaks emerged, employing agricultural labourers. With class differentiation came a big growth of income inequality, and the beginnings of the accumulation of private capital.
The abolition of the peasant communes, and the consequent explosion of agricultural production, exploded many popular myths about the popularity of the collectivisation of the peasantry.
Forcible collectivisation, and the madcap schemes imposed on the communes during the late 1950s 'Great leap Forward' was intensely unpopular; low living standards and poor social and welfare services combined to disrupt incentives to the peasants to develop production.
But the growth in agriculture did not at all solve the basic economic questions facing China. The country's rulers aimed at rapid economic growth, and a qualitative industrialisation process which would put the country on the road to becoming an advanced industrial nation.
Backwardness
What stood in the way of this aim was the backwardness of industry, and all the inefficiencies, waste and corruption associated with bureaucratic rule. In 1988 official statistics said that 30 per cent of enterprises were running at a loss.
In addition, Mao's cultural revolution dislocated economic development from roughly the mid-1960s to the mid-1970s; China lost a decade to anarchy and stagnation. Stark statistics about Chinese economic growth cover up the realities of the poor quality of production and do not translate directly into rising living standards, especially in the towns and cities.
In addition, rationalisation of production in the countryside led to a drift of 'surplus' labourers to the towns, boosting unemployment rates. And China's population growth, small in percentage compared with India, but huge in real terms, constantly uses up increased production.
The basic answer to this from the Deng camp, vigorously promoted by the now-disgraced party secretary Zhao Ziyang, was to promote marketisation of industry. This has combined encouraging investment from foreign private capital especially in coastal 'special economic zones', a drive to 'rationalise' production at the expense of the workers, and allowing the establishment of private businesses.
The most important aspect of this is the drive to 'smash the iron rice bowl'. Since the 1949, the industrial working class (400 million people now live in big cities and towns) has won important social gains, especially in employment. Workers were used to jobs for life, and a labour regime which, while often harsh by Western standards, was at least stable. This went hand-in-hand with education and health care and other welfare services, at least for most industrial workers and their families.
Redundant
The new drive to smash up this system involves attempts to make millions of workers redundant, and allowing enterprises to go bankrupt. Spontaneous worker resistance led to a slowing of this process, but not to its reversal.
For the moment however the overwhelming majority of industrial production remains in the hands of the state. The private sector is above all in the commercial and distribution sector, with at least 40,000 private businesses, but not in basic industry. But the eventual aim seems to be to develop joint-stock companies in a gradual privatisation process. Stock markets have been established in Shanghai and Shenzhen, with about $11 billion worth of shares bought so far.
Class differences are now emerging in the big cities as well as the countryside. Private commercial activities have created a newly affluent layer, with increasing access to all the goodies of Western capitalist consumerism. Corruption among party officials in endemic, allowing many to become wealthy, and some enormously rich. Business millionaires are being created for the first time.
This contrasts with the growing army of unemployed, now tens of millions strong, and the pressure on living standards of many industrial workers.
The Tienanmen events in 1989 showed that the central party leadership would not tolerate any challenge to the political monopoly of the Communist Party, an organisation of 50 million people. The backbone of the bureaucracy's rule in the loyalty of the Peoples Liberation Army (PLA), an institution which has been consistently privileged in access to resources for ever more-modern weapons.
Deng's protege Zhao Ziyang fell in 1989, not only because the bureaucracy needed a scapegoat, but because Zhao appeared to hint publicly at concessions to the student movement, a line he almost certainly pushed in the leading echelons of the party.
But far from allowing political liberalisation to go hand-in-hand with marketisation, the party leadership is set on a resolutely authoritarian model, stiffening its system of political surveillance and repression, right down to street and community level.
Divisions
If 'authoritarian marketisation' is the unanimous course of the party leadership, there are certainly differences on where this marketisation is headed. The real lines of political divide are unknowable, because of the secrecy of the bureaucracy's internal debates.