Two years after
Tiananmen
RATHER more than two years after the Tiananmen massacre is an appropriate time to look at the situation in China and how it is developing today. This is important not only because, despite appearances, China continues to play a leading role on the world scene but also because the Chinese "solution" in fact represents a rather systematic effort to deal with the crisis of the bureaucratized transitional societies in a different way from that taken in Eastern Europe and the Soviet Union. The fundamental choices of the leading group
Above and beyond the oscillations and partial and temporary rectifications made!, the choices of the leading group during the last two years have been defined or redefined in general in the following terms:
• The central political bureaucracy, represented by the layers of the ruling caste the most directly linked to the state and party apparatus, in close collaboration with the military bureaucracy, continues to exercise decisive control both on the economic and political fronts. The mass organizations such as the trade unions, the youth organization and the women's federation remain
70 International Marxist Review strictly subordinate to party directives. This orientation was forcefully reasserted — particularly in texts which circulated in confidential form — after the recent worsening of the crisis in the Soviet Union.
• Once this criterion reaffirmed and after a series of changes at leadership level of the party and state, there were not terribly drastic purges (there were no trials of the representatives of the most radical "reformist" wing, who were held responsible for the May-June events of 1989). More generally, repression was more selective than generalized and, after the arrests and executions of the first months, relatively moderate. Even some circles in the dissident movement have emphasized that "crimes" which in law are liable to the death sentence, were simply given prison sentences of a few years. In 1979 figures of the dissident movement were sentenced to up to fifteen years in prison. Some of the best-known 989 movement leaders - Zheng Xuguang, Zhang Jiangjing and Cheng Jianan — were released last summer.
• There is no significant change of course in the fundamental economic choices, which have been fixed since the end of the 1970s. On the contrary, particularly in the last period, there has been an increase in efforts to further develop international agreements, create new joint ventures, encourage privatization and stimulate the working of market mechanisms (see Appendix). This even extended to advising Kim Il Sung, during a visit to Peking, to open his country to foreign capital.
• The reform measures introduced in the countryside have not been challenged. At the same time two essential conditions have been reasserted: the party-state, as we have already mentioned, must continue to play an absolutely hegemonic role, without any "liberalization" or political reforms, and the overall economic framework must be fixed by a nationally centralized plan - in fact bureaucratically centralized (the Eighth Five-year Plan 1991-96 is currently being implemented).- It is significant that among other things that the predominance of the planned economy and public property have also been confirmed for the new projects with substantial foreign participation, like the very ambitious Pudong project in the Shanghai region (Financial Times, 24 April 1991). • The goal of establishing a greater equilibrium between the fundamental economic sectors has been maintained — with agriculture as the number one priority, the two other being basic industry and the modernization of the armed forces and with the preoccupation of increasingly satisfying consumer needs. In fact, foodstuffs can be found on the market — sometimes in excessive abundance — and North-American style standardized restaurants have
China: Two years after Tiananmen 71 made their appearance. In addition, consumer durables — transistor radios, televisions, cameras — are also available to broad layers of the population (not to mention bicycles, the predominant means of urban transportation, which are widely produced).4
• The ideological "climate" is characterized by a mixture of contradictory ingredients. On the one hand, the stereotyped exaltation of the values of the revolution and the "positive heroes" of the Maoist period continues. On the other, advertising, in the forms we know all too well, is spreading more and more and the television channels in particular broadcast the most standard products of "Western" cinema (possibly this varies from region to region).
• The general orientation of foreign policy continues to be based, in the most general statements, on the "Five principles of peaceful coexistence" (reciprocal respect of sovereignty and territorial integrity, non-aggression, non-interference in the internal affairs of other countries, relations on the basis of equality and reciprocal interest, peaceful coexistence). After Tiananmen, the government made a big effort to neutralize the negative affects of the 4 June massacre. This objective was largely attained. There was for example the decision by the United States to maintain Most Favoured Nation status (despite the conflicts that continue with Beijing, particularly concerning the ratification of the nuclear non-proliferation treaty and Chinese protectionist practices). There were also the September visits of the Japanese, British and Italian prime ministers, and Andreotti's invitation to Li Peng to visit Italy.
In a recent speech, the minister for foreign affairs, Qian Qichen, expressed a wish for "the creation of a new framework of of international relation making it possible for different countries to live in peace and develop together." (China Daily, 3 September 1991)
Such a proclamation of good intentions did not hold the Chinese leaders back from complicity in the imperialist intervention in the Middle East. In fact, China voted in favour of the UN resolution on the blockade of Iraq in August 1990, and abstained on the use of force, in the month of November, by renouncing its right of veto, which Bush publicly appreciated. Nor has' this prevented the keeping up of cordial relations with corrupt antidemocratic regimes (such as in Morocco).S The present situation e Coming to the current situation, we should first of all remember that since
72 International Marxist Review the beginning of the year China has ben ravaged by very serious floods. This old and recurring tragedy confirms that the problem of water is far from being resolved, despite the important measures recently announced. According to official sources, 28 provinces out of 30 and 220 million people have been affected and there have been more than 2000 deaths. The damage has been of 68.5 million yuan, that is 12.9 billion dollars (China Daily, 26 August). According to other estimates, the cost of damage was even 80 million yuan. The result of all this was to increase the already very big government debt, which was increase this year by 8 million yuan, that is 3.73 billion dollars (China Daily, 1 September 1991).º In these conditions the Council of State decided at the end of August to cancel a whole series of previouslyapproved building projects (International Herald Tribune, 11 September 1991).
The increase in the debt will later stimulate inflationist trends. These trends were already obvious in previous periods: they were particularly strong in 1988. The result: three devaluations of the yuan in relation to the dollar, the last of which was on 10 April 1991. During the last few months, prices have increased, particularly in the big and middle-sized towns. In July, retail prices increased by 4.3% in relation to 1990, and more generally, the cost of living increased by 11.5% in 35 major towns. For the first seven months of this year the increase was 7.5% (China Daily, 25 August 1991).
As for the economic situation as a whole, official sources themselves indicate quite different, not to say contradictory, trends. The Statistical Bureau announced that in 1990 there was 7.6% growth in gross value of industrial output, made up as follows: light industry +9.1%, private industry +21.6% and joint ventures +56%, state industry as a whole -2.9%. According to the minister for the Planning Commission, Zou Jiahua, during the first six months of 1991, the Gross National Product increased by 6.1% in relation to 1990 and industrial production by 13.5% between January and July? There was a difficult 4-year period for agriculture which led, among others, to giving up the target of 450 million tonnes of cereals in 1990 (this target is now set for 1995 and that of 500 million for 2000). In 1990 the situation improved significantly and reached the record of 435 million tonnes of cereal. But according to Zou Jiahua, what is foreseen for this year is not only a drop in cereal production but also in cotton production particularly following the floods (China Daily, 3 September). In industry itself certain sectors are in particular difficulty. For example, the textile industry — one of the pillars of the industrial system with more than 8 million workers — could suffer the consequences of a drop in cotton production. For the first five months of
China: Two years after Tiananmen 73 this year it recorded a drop on profits of 38% (in the state sector). Moreover, in 1990, 30% of enterprises recorded losses and profits dropped by 70% in relation to the 1989 figure.
In addition, while there is an unsatisfied demand for quality products, there are growing stocks of products which cannot find buyers (China Daily, 28 August and 1 September).& This phenomenon does not only concern textiles. It is in general industry's most serious problem.
The Chinese press has particularly emphasized it recently. For example, China Daily wrote on 1 September:
This seems impossible but the scene could be repeated in any region of the country. Every month the enterprises announce an encouraging growth in the value of their industrial production while their products are accumulating in their own warehouses or in the warehouses of trading companies. Official statistics indicate that at the end of May the value of stocks was 200 billion yuan.
Another contributor to the same journal wrote several days later:
The readjustment of the industrial structure started three years ago is far from having achieved a definitive success. Efficiency has not stopped declining, debts have increased and stocks have reached 200,000 million yuan.
In other terms, we seen the standard problems of a bureaucratized economy: insufficient productivity, technological backwardness, disorganization and no effective planning because, among other things, of strong localist tendencies. The result is that more than 30% of state sector enterprises — 40% of them in the sector run by the army — are calculated to be in the red (China Daily, 25 August, Corriere della sera, 22 September). A 1988 law allows enterprises in deficit to declare themselves bankrupt. But, because there is already quite high unemployment — we will come back to this — and there is a desire to avoid bad socio-political repercussions, this law is generally not implemented. It has been implemented only very partially in the case of cooperative enterprises and local industries.'° The state was thus obliged to subsidize industry to the tune of 11 billion dollars in 1990.
There are the same problems in the major distribution networks. The Industrial and Commercial Bank of China has made a study of more than 40,000 state commercial enterprises. These recorded losses of 11.81 billion yuan (2.19 billion dollars). 90% of these losses concern wholesale commercial enterprises. The study mentions as one of the causes of such a situation the uncompetitive character of the enterprises, the absence of development plans, and management failings. To this should be added the problems created by a dual price system. It can occur that the state commercial enterprises buy at prices fixed by the state and are obliged to sell at the lower market
74 International Marxist Review prices, thus incurring losses." This is a classic example of the difficulties which derive from the juxtaposition of state planning and market mechanisms.
In a report made to the National People's Congress, Li Peng himself criticized high consumption in production, bad-quality products, enormous wastage in construction, a too-slow turnover of capital, a drop in productivity ad serious losses. A study made by the World Bank goes in the same direction, emphasizing technological backwardness, use of obsolete equipment and low productivity. For example, after the record harvest of 1990, tens of millions of tonnes of cereals could not be stored in the warehouses and, because of financial difficulties, the state commercial departments could not buy the farmers' excess production while prices were falling on the market (Financial Times, 24 April 1991).
It is generally considered that the reforms in the countryside since the end of the 1970s have led to an increase in agricultural production and a noticeable improvement in farmers' living standards. !2 This is incontestable. But a series of clarifications should be made. We have already mentioned serious difficulties in both production and distribution and their results for the farmers. Similar difficulties also occurred in the period preceding the events of May-June 1989. Sometimes, because of the state's financial difficulties, the farmers were not paid for their harvests. What is more, the new course, because of the role given to the market which is supposed to increase, has increased differentiations within the agricultural population. While living conditions have noticeably improved, particularly in some regions, there has also been impoverishment of broad layers of farmers. 14 Thirdly, while there have been improvements in productivity and the rate of mechanization has risen!5 S, on the one hand the number of agricultural employees has grown and on the other the agricultural over-population has taken on increasing dimensions (according to certain estimates it covers a third of the rural economically active population). Thus there is a dramatic phenomenon of rural exodus that the government and local authorities are trying to stem by forcing the migrants to return to their region of origin and introducing strict controls on the employment of workers from other provinces (for example from Guangdong). In fact, there is now a growing population of no fixed residence (according to different estimates — which are difficult to check — it is of 6080 million people). These trends in the countryside accompany industrial and urban unemployment. Once again, it is difficult to estimate the scope. According to official estimates from the beginning of 1990, this concerned 5 million people; unof-
China: Two years after Tiananmen 75 ficially, the figure of 7.5 million is put forward. This is also true for the towns and provinces which have experienced important economic growth in the last decade, for example Shanghai where at the beginning of 1990 there were 75,000 laid-off workers' and the province of Guangdong, where however the figure of 2.2% unemployed is lower than the 3.4% which, according to the Chinese Labour Bureau, is the country's average. The capital of Guang• dong, Canton, is affected by a rural exodus which reached a particularly high point last February (China Daily News, 1 September). This is all the more alarming as it is calculated that there are 20 million "excess workers" and that 10 million young people join the labour market every year.
A reflection of this employment situation is the emergence of what could be called a poor service sector. Although average income in China is very modest, it is widely admitted that there is not the tragic generalized poverty that affects so many under-developed countries. There is no comparison for example between what ordinary visitors can see in big cities like Beijing, Shanghai and Nanjing, and the awful conditions in cities like Lima or Dakar, not to mention the big cities of India. However, even if it is in more limited proportions, we see an increase in sellers of all kinds, usually in the street, selling all sorts of merchandise, with usually little chance of finding the buyers they seek.! Apart from the already-mentioned impoverishment of sections of the rural population, there are also sections of the population which cannot satisfy their food needs (some 40 million people in 1989 according to official estimates).
It is in this context that there are the phenomena of social disintegration denounced by the government and official press: aside from theft and other common-law crimes which are tending tọ increase (for example delinquency increased by 45% in 1988), prostitution (against which repressive measures have been adopted) drug-trafficking, and kidnapping or sale of minors (particularly young women). This last phenomenon has been the subject of public statements and even press conferences without there being any precision on the scope (in one press conference the figure of 10,000 was put forward but people think this is an underestimate). It should be added that economic crimes are very widespread. For example, smuggling and counterfeiting are prejudicial to the state's finances.1 Chinese justice is still very harsh against all this criminals, quite often imposing the death penalty. ' Finally, the problems linked to the bad quality of products have a negative effect on foreign trade. According to the Minister for Economic Foreign Relations, there has not been a lot of effort made to change the situation from this point of view (although in the first four months of this year and last August, exports rose in
76 International Marxist Review relation to the preceding year more than imports (China Daily News, 3 September). As far as the foreign debt is concerned, while it is less both in relative and even sometimes absolute terms than that for comparable countries, it rose in 1990 from 41.3 billion to 52.55 billion dollars.20
To complete the picture, two other crucially important elements should be pointed out.
The first is the question of population growth. The birth limitation policy - one child per family — has not given the hoped-for results. According to the 1990 census, the population grew by 125 millions between 1982 and 1990 and during the Seventh Five-Year Plan (1986-90) by about 11 million per year (16 million or more according to other estimates). This growth is attributed above all to the countryside where the limits set are little respected: the fertility coefficient for women in the towns is 1.33 and in the rural areas 2.84. Government spokespersons have recently highlighted the fact that such a constant increase of the population constitutes an obstacle to economic development and particularly to improvement in the standard of living (it worsens for example the housing situation). The vice-president of the Chinese Academy of Social Sciences, Liu Guogoang, went so far as to state in an interview: "The Chinese population is too big to have the illusion that we could one day reach a standard of well-being similar to that of Western countries," (L' Unità, 6 December 1990). Moreover the tendency for the female population to fall is continuing. According to the latest census, for 100 young females there are 111.3 young males, while at birth the proportion is 100 to 105.5. Thus remains the question: what happens to all the females who disappear in the second calculation? There are different hypotheses put forward: non-declared births, informal adoptions or eliminations. But the answer is difficult and worrying. The second problem is that of the deterioration of the environment. For years specialists have been drawing attention to the classic phenomena which are now also affecting China: soil erosion, desertification, diminution of arable land, deforestation. After having explained that the energy structures inherited from the past "seem to have attained their extreme historic limit" French author has drawn attention to the fact that what faces China at the end , a of the 20th century seems unavoidable: cereal energy systems, based on intensive irrigation culture and human energy do not have any further possibilities of expansion."' In the next decades most particularly, threats hang over the Yangtze valley with the danger of using up the biggest grain store in China (Financial Times, 21 February 1989). Hu Angang, researcher in the Chinese Academy of Sciences, even sketched out, in an interview in L' Unità,
China: Two years after Tiananmen 77 a calculation of the damage suffered by the environment in 1988: 142 billion dollars, a little less than the Gross National Product! An official of the National Agency for the Protection of the Environment also reiterated that there continues to be a serious degradation of the environment in the big cities and the situation is also getting worse in the smaller towns. The amount of waste ejected into the rivers and canals is continually increasing, and water is more and more contaminated. Industrial pollution is no less alarming. The government is planning to invest major sums in the protection of the environment, but, given the immensity of the problem, it is difficult for there to be noticeable results in the short or medium term. Tensions and major contradictions
It is difficult to put forward hypotheses for the future development of China, particularly in relation to the development of the world situation and the crisis in East European countries and the Soviet Union. But in the context we have sketched out, it is possible to understand certain tensions and contradictions which are not only going to continue but also to get worse.
Firstly, despite the ideological statement and periodical readjustments, the Chinese leaders cannot overcome the tensions and contradictions between continuing a bureaucratically centralized economic framework under the control of the party-state, and the needs of efficiency and productive creativity. This is true in general terms, it is still more true in the context of the choice between pursuing the goal of development through giving a greater weigh to market mechanisms and stimulating large-scale foreign investment. In fact, the market economy is progressively penetrating the pores of the bureaucratic economy, posing new problems and new contradictions, multiplying centrifugal forces and feeding embryonic new social layers.
These centrifugal forces have external components — the interests of international capital — and internal components — the interests of the nucleus of the indigenous capitalist class as well as those of certain sectors of the bourgeoisie (technocratic bourgeoisie and bureaucracy linked to the provincial authorities). These intertwine with the already strong regionalist and localist tendencies. Official sources themselves very often criticize the fact that central government cannot impose its will on the provincial authorities (for example, obtaining the elimination of protectionism which is a serious obstacle to the implementation of national economic choices, or the elimination of local taxes).22 The agricultural structures where cultivated land, which is col-
78 International Marxist Review lective property, are divided into family plots and where the system of household responsibility contracts is applied make it more difficult to have total planning, as the Chinese press itself is forced to recognise (Le Monde, 15 October 1989).
Third, there are on the one hand the demands of productivity of the enterprises which push in the direction of restructuring and concentration — often presented as a necessary solution but which could make the enterprises which do well bear the cost of the bankruptcies of others — and the need not to increase the state deficit. There are also social constraints, that is to say the need to avoid increasing unemployment or the rural over-population, to continue direct or indirect subsidies and to avoid spiralling housing costs. 23
All this is reflected at the political level. The experience of attempts at reform in bureaucratized transitional societies — from the 1950s to today — indicates that all the different reforms tried come to a dead-end, opening the path to attempts at "normalization" or to a dynamic of decomposition, if there are not radical political changes. On this terrain, the Chinese leading group has made several readjustments, including since Tiananmen. For the moment these have led to a sort of centrist compromise, which had already started with the choice of Jiang Zemin as party secretary. As already mentioned, he did not carry out too heavy purges, and even reinstated some people who had been purged (for example the three vice-presidents appointed in June 1991, Hu Qili, Rui Xingwen and Yang Mingfu, who had been collaborators of Zhao Ziyang). This is also the context of the rise of the former mayor of Shanghai, who became deputy prime minster, Zhu Rongji. However, the fundamental political mechanisms have been maintained, and at the ideological level no concession has been made on a crucial point, that is the affirmation of the absolute predominance of the party-state.24 Any idea of pluralism has been rejected in a peremptory fashion, and Deng Xiaoping's decision announced at the end of 1989 to increase the weight of the alreadyexisting parties and groupings should not be taken too seriously. In any case they will remain shadow groupings. Moreover, the internal bureaucratic dialectic itself is limited, particularly at the summit and develops in the corridors. As for the army, which there was an effort to re-homogenize, it remains as is quite plainly said, the supreme guarantor of the integrity of the regime, and is ready to undertake new repressive actions. It is difficult to image that with such attitudes and such practices that growing conflicts can be avoided, particularly after everything that has happened in other so-called socialist countries. The conflicts which could take place between nationalities should not be
China: Two years after Tiananmen 79 forgotten. The case of Tibet is well known. There is also the problem of Xinjiang, which has a common border with Kazakhstan, and where bloody incidents took place, including after the Tiananmen repression. The national question does not have the same resonance as in the former Soviet Union and in Yugoslavia, but it could become a further factor of instability, particularly dangerous for the regime in new critical periods.25
On the social front, tensions and conflicts continue and will tend to get worse, particularly between the bureaucracy, which will hardly give up its privileges, thus contributing to the waste of resources, and the working class.2 The working class which was forced to make sacrifices even before 1989 (in 1987 for example it was decided to convert 24% of certain reimbursements into state bonds), can only very partially benefit from the consumer goods to which so much publicity is given. It cannot hope to improve its standard of living in the new future. On the contrary, it is likely to see it fall if prices continue to rise, if the government, to deal with its financial crisis eliminates or reduces the subsidies which it gave up to now and if market mechanisms play a bigger role. Specific problems could arise in the special economic zones where lengthened working hours and speed-ups are often imposed on the workforce (for example, Le Monde reported at the beginning of November that in a mixed company, with Thompson participation, in Shenzhen young girls worked ten hours per day). The rate of employment could also be under threat. Let us not forget that, in the special economic zones, employers have the right to hire and fire as they wish and that, more generally, fixed-term contracts have been allowed since 1986. Piece-work is also frequently used. Insofar as the choice of enterprises — whether centrally-made in the periphery or across the oceans — does not in the least include the workers, the demands for workers' control or self-management, which were already expressed in the past, although in embryonic form, could well reappear. Moreover, the official trade unions, which have discredited for years, will be less and less in a position to play their conservative and reactionary role."
We have already mentioned some major problems which arise in the countryside: the growing differentiation between the layers of rich farmers, potential source of a rural capitalist class, and the layers of poor farmers, forced to sell their labour power, and the growing rural over-population. In reality, for a whole period, the regime will be obliged to first of all let the economic and social costs of its own development fall on the rural population. Yet again, it is difficult to believe that all this could happen without provoking severe tension, indeed divisive conflicts.
80 International Marxist Review
Problems will also be posed by layers of the urban population which, whether they like it or not, are integrated into the situation created by the reforms of the late 1970s, and particularly by the market mechanism. if the current trends are not altered or even reversed, the specific weight of plebeian layers will inevitably grow. These layers do not usually have a revolutionary consciousness but, in a conflictual context, they are nevertheless a further factor of tension. As far as the re-emerging bourgeoisie and the commercial and business petty-bourgeoisie are concerned, they will tend to break the relationships imposed by the centralized framework of the economy and create instruments, including organization, to defend and assert their own interests.
Finally, there are the young students, who were the main protagonists of the spring 1989 epic. Ferment continues, if the information on protests at the time of the second anniversary is correct. But, in the main, the regime has succeeded in imposing its "normalization" by threatening renewed repression and using socio-economic blackmail. Selection for university admission remains very rigourous, and those who are chosen are only a very small percentage of the potential candidates. In addition, the state apparatus is practically the sole employer of those with university degrees. Those considered "suspect" know very well that, even if they succeed in their studies, they will not find jobs or will be employed far from their region of origin and their milieu. It is therefore on this terrain that tensions and contradictions are concentrated in a particularly intense form: at the economic and social level for reasons already indicated, and at the political and ideological level, because the young people born twenty years or more after the victory of the revolution and who live in a society that has undoubtedly matured, are less and less inclined to accept ossified, paternalist and authoritarian political institutions and mechanisms, and ideological tenets which do not have the least credibility, despite certain efforts to use more sober formulations. If we know that the Chinese students from 4 May 1919 to May-June 1989 have had a tradition of revolutionary democratic battles, we can put forward the hypothesis that the young generations will play a leading role in the crisis that the bureaucratic society will inescapably experience and to the overthrowing of which they will make an irreplaceable contribution. Appendix We know that there was significant growth of private enterprise and mixed companies in China during the 1980s. This took place in particular after the
China: Two years after Tiananmen 81 creation of the "special economic zones" and the "open cities". This development was particularly significant in certain towns and provinces (see article in Quatrième Internationale, No 34, August-October 1989). In April 1988, amendments to the constitution were adopted which recognized the role of private property and, for the countryside, the possibility of selling, letting and sub-letting the right to work the land. After the massacre and the cooling of international relations, there was a halt to this and even steps backward. But it quite quickly became clear that, despite the statements by the parties concerned, there would be no real reversal of the trend.
In 1990, according to official estimates, foreign investment reached 6.57 billion dollars (90% in manufacturing industry), that is an increase of 17.3% from 1989. Hong Kong and Taiwan largely contributed to this — Taiwan preferring in general to take complete control of properties. During the last few months, there has been a new rise, following which the level of the second half of the 1980s should be overtaken. Both the central government and the political and economic officials of different provinces have reasserted their desire to see a growth in foreign investment, develop the mixed companies and introduce advanced technology from other countries.
With this goal, regulations aiming to attract investment — for example a law further freeing investments from taxes was adopted by the National Assembly on 1 July 1991 — have been or will be made. At the same time guarantees have been given that, in cases of appeals to tribunals, these will judge in an equitable fashion complaints by foreign companies (a law on liquidations was to come into force from 1 October 1991). What is more, it will now be possible for foreigners to create companies without having to enter into partnership with the Chinese state (Le Monde, 1 November 1991). Other measures have been adopted in the provinces, for example Shanxi ensures particularly favourable conditions for Taiwan citizens, who can now transfer and leave as legacies investments, property and profits (China Daily, 25 August 1991). The consultancies dealing with relations with abroad are very numerous, 33,000 with more than 70,000 employees last summer.
Between January and April this year, 3,100 projects using foreign capital have been approved, representing 857 million dollars (Financial Times, 20 May 1991). Towns like Shanghai and Guangzhou (Canton) continue to be in the vanguard on this front, (but smaller towns, for example Suzhou, are also doing the same, so as not to be left behind). In Shanghai, the town hall office concerned had recorded at the end of June 954 enterprises with foreign investment; 745 were already active at the end of August. On the periphery of the same town, a free-trade zone, the first of its type, is being built. Those
82 International Marxist Review who invest in this zone will not have to obtain an import licence and will not pay any entry or exist taxes. Guangzhou and Guangdong are no less active: they particularly exploit their relations with Hong Kong. In 1990, trade between Guangdong and Hong Kong outstripped 50 billion dollars. Hong Kong capital is involved in more than 10,000 joint ventures and 20,000 processing factories with more than 2 million employees. The weight of Hong Kong, including with the perspective of a transfer of power in 1997, is going to increase. The official slogan "one country, two systems" aims to reassure the financiers, entrepreneurs and merchants already involved in the many activities mentioned and to attract others. More generally, it is calculated that 20-30% of the industrial products and exports of Guangdong during the last two years came from enterprises with foreign investment (Financial Times, 24 April 1991).
Finally, the Shanghai Stock Exchange, closed in 1949 was reopened at the end of 1990 (there is also a Stock Exchange in Shenzhen). It started with some thirty government or financial institutions bonds quoted and seven or eight company stocks. For the moment there are a score of companies involved. It seems that there is no lack of enthusiastic beginners. The announcement last August of the sale of shares equivalent to 5 million yuan caused long queues of prospective buyers which blocked the traffic in the city centre. According to the governor of the Bank of China, in the framework of the financial reforms which will continue, bigger perspectives will open up in the future. We should remember that shares appeared in 1984, but they usually only have a fixed income and can only be bought and sold by enterprises and credit institutions (Le Monde, 20 December 1990). According to official information, from 1992 foreigners will have the right to buy shares (International Herald Tribune, 17 September 1991). An interesting detail: a series of Chinese industrial and financial companies and the Communist Party itself apparently used the notorious BCCI (Corriere della Sera, 10 August 1991; Financial Times, 3 October 1991).
September 1991 Notes. 1. Measures intended to slow down or correct the reform policy which began at the end of the
970s - including strong restrictions on credit - had already been adopted in autum 1988. In the first months of 1989, the number of private enterprises fell by 15% For th period following the massacre, we should remember the decisions taken by the Party
Central Committee in November 1989, which envisaged a restart of centralized plan-
China: Two years after Tiananmen 83 ning, reaffirmed the priority of the state sector and advocated a concentration of investment in the key sectors. But, following the serious economic difficulties of the last months of 1989 which led to the closing of a series of factories and redundancies and, in certain cases, wage reductions, a new readjustment, prelude to the current orientation, was envisaged in March 1990. This included, among other things, a relaxation of the restrictions on credit and a restart of investment. This was defined more clearly at the end of that year by the Sixth and Seventh Plenums of the Central Committee. This readjustment was stimulated by the discontent expressed by sections of workers who, according to different sources of information, even started strikes in some regions (Le Courner des Pays de l'Est, Documentation Française, No 361, July-August 1991). 2. It is not planned to introduce of market mechanisms in what are considered the basic sectors. For example, it was recently stated that "the government is totally opposed to a free market in cotton," (China Daily, 25 August 1991). 3. In Shanghai, one sees long queues in front of the Kentucky Fried Chicken fast-food restau-
Grants. It is sad to see a centuries-old and much appreciated cuisine give way to culinary barbarism! t. Bicycle factories work non-stop (among other things there is a growing demand from Cuba). 5. On the occasion of the Moroccan minister for foreign affairs, Li Peng states that "China and
Morocco have similar or identical views on the new world order," (China Daily, 30 August 1991). In addition, the press expresses the wish that the united Nations "should fully play its positive role in order to become the most important safety mechanism in the new world order," (China Daily, 3 September 1991). 6. Since 1979, China has always (except for 1985) had a budgetary deficit (statement by the
Finance Minister, China Daily, 28 August 1991). 7. In relation to ten years ago, steel production has doubled? It has reached, and according to certain estimates, overtaken, 60 million tonnes — putting itself in fourth rank after the United States, the Soviet Union and Japan (China Daily, 27 August 1991). However, it should be added that according the managers of Wuhan, only 25% of the steel produced can be used in modern industry (Financial Times, 24 April 1991). 8. The watch-making industry has also undergone a crisis which has led to a drop in production and redundancies (China Daily, 25 August 1991). 9. One example is that of the television manufacturing industry. Following the rise in demand recorded after the start of colour television, more and more regions have established factories for the manufacture of television sets. There are currently 127 factories in this branch with a manufacturing potential of 20 million sets per year, while the market can only absorb 10 million. 10. We should remember that local industry has had serious difficulties with closures and redundancies following the restrictions on credit decided in 1988. 11. The price system is one of the most acute problems in China. In fact, there have been at certain times four levels: the political prices (decided by the state), the negotiated prices, the free market prices and the black market prices. 12. According to certain estimates, thanks to the reform, farmers' income have risen by 50% in five years (Financial Times, 12 March 1991). Detailed analyses exist in the first five volumes of a study published by the publish house of the Chinese Encyclopaedia (The state
of Chinese society, reports on the surveys concerning the economic and social situation
13. It is planned to open wholesale markets for the sale of rice and peanuts. Wholesale cereal markets already exist in several provinces (China Daily, 28 August 1991).
14. Already at the end of 1988, the economist Deng Fureng calculated that, in the previous years, 400 million Chinese, mostly farmers had been impoverished (Corriere della sera,
14 December 1988). References to the impoverishment of farmers have even appeared recently, concerning for example Sichuan, whose vice-governor Ma Lin declared "Our farmers are becoming the poorest of all" (Financial Times, 24 April 1991). There have also been references to the opposite phenomenon: for example there are cases mentioned of farmers who are in a position to spend the money necessary to rebuild their houses and their farms which have been damaged or destroyed by floods (China Daily, 29
August 1991). Already in 1988 there were farmers with incomes superior to 20,000 yuan while at the other end of the scale 100 million farmers did not even receive 200 yuan
15. There is strong demand for agricultural machines. Sales fell in 1989 and 1990 because of the austerity measures, but they are currently rising (China Daily, 25 August 1991). use
17. This can also be noted in the big cities. For example, in Nanjing I met in the space of twenty minutes several dozen young; people who were all selling the same bags and
18. There is beginning to be a serious effort to combat black market trade in foreign cigarettes which is to the detriment of state monopoly production. Black market trade in magnetic cassettes has hit the state factories even more — they are running at only 20% of their
19. Executions, which are sometimes particularly numerous are periodically announced. For example many drug traffickers were executed on the occasion of the international day against drug abuse (l'Unità, 27 June 1991). Other executions took place at the end of
20. A growing importance is given to the income received from the export of the labour force
21. It seems that China has traditionally had problem of reliability of its census figures.
According to historians, in 1711 there were 26,620,000 inhabitants where in 1774 there were 221,020,000. The explanation is that between these two dates a fiscal reform had eliminated a poil tax which had existed, and so people were not longer afraid of declar-
22. See the chapter on China in the work by Jean-Claude Debeir, Jean-Paul Deléage and Dan-
23. According to Li Peng 'protectionism and insubordination are the most important cause of economic difficulties" (Corriere della sera, 20 November 1990). Already before 1989, there was criticism of those provinces which preferred to sell products abroad in order to obtain hard currency than to the other provinces which needed them/ More recently there have been the cases of Sichuan and Heilongjiang which have introduced protectionist
84 International Marxist Review situation in 100 towns).
(Corriere della sera, 30 January 1988).
16. Laid-off workers receive 50 to 70% of their wages.
capacity (China Daily, 1 September 1991).
August 1991 and subsequently.
(China Daily, 1 September).
ing their existence.
of fertilisers is also rising (China Daily, 27 August 1991).
iel Hémery In the Servitude of Power, London, Zed Books, 1991.
China: Two years after Tiananmen 85 measures for a score of products, of Xinjiang which has done the same for 28 products and Guizhou for a hundred. Other provinces, such as Liaoning, Jilin and Hubei have forced department stores to sell only local products. 24. In the big towns there are still areas where the housing is in bad condition. Rents are traditionally very low and are not enough, in general, to cover costs of managing and upkeep. With the introduction of market mechanisms there was immediately a price boom with the result that many dwellings did not find buyers (China Daily, 1 September 1991). 25. This is expressed by a certain continuity with the conceptions of Mao Zedong and particularly the reaffirmation of the "four principles" (social road, hegemony of the Communist Party, democratic dictatorship of the people, Marxism-Leninism and Mao Zedong 26. The press has frequently criticised the enormous amounts spent by institutions, government bodies and different organizations in organizing banquets, importing motor cars, airconditioning equipment, videos, luxury furniture and giving presents (China Daily, 1 September 1991). These expenses have risen constantly over the last five years (up by 21% for the first months of 1991 according to the information received by the Financial Times, 25 April 1991). 27. Just before June 1989 there were strikes on several occasions. For example in 1988, there were more than 200 strikes announced for enterprises of more than 1000 workers. 28. For example, to define the situation in very general terms, it is explained that the social system has rooted itself in Chinese soil but, as a new and not yet mature system, it has not yet entirely proved its superiority (editorial of Quotidien du peuple, 1 September 1991). A striking example of understatement. Zhao Ziyang, when he was party secretary, put forward the notion that China would not reach the socialist phase, precursor to the communist phase, before 2050 (Corriere della sera, 23 December 1988).
86 International Marxist Review Postface
To give a very general idea of how events in China have developed since 1 wrote my article, we can look at two significant events, one political and one economic: the decisions of the November 1991 session of the Central Committee of the Chinese Communist Party; and the partial "rehabilitation" of Zhao Ziyang, the former party secretary, purged after the May-June 1989 crisis.
The Central Committee, which, among other things, announced the convocation of the Fourteenth Party Congress towards the end of this year, not only confirmed but even relaunched the reformist economic orientation. To adopt the terms used in an unofficial publication " important decisions were taken to continue the reforms of the state enterprises and speed up agricultural growth" (China Economic News, 6 January 1992). More precisely, in the context of an organization of agriculture which remains based on the household, there will be an increase in investment and modernization. At the same time, the Central Committee advocated "socialization of the service system and a general strengthening of the collective sector of the rural economy" (l'Unità, 29 November 1991) as well as "strengthening the party's leadership over rural work" (China Economic News, 9 December 1991). We should point out moreover, that 52% of the prices of agricultural products will from now on be regulated by the market (Financial Times, 7 January 1991).
As for the second event, for the moment we only know the unofficial versions, that the foreign correspondents in Beijing nevertheless think are quite credible. The most serious accusations against Zhao, that is to say of having "divided the party" and "supported disorder" were not maintained and the former secretary is only responsible for having "lacked vigilance faced with bourgeois ideology". Apart from this, the decision concerning Zhao indicates that the retormist currents are also winning ground politically. This does not mean, however, that there has been a substantial change in the choices analyzed in the main article. In fact, at the same time that the Central Committee relaunched the reformist course for the economy, it reaffirmed singlepartyism and no concession was made by Li Peng on this subject, even orally, during his recent foreign tour. Moreover, although some political prisoners were released during November, most of those arrested after Tiananmen are still in prison.
We should add some consideration of the economic situation, privatiza-
All the official figures for 1991 are not yet available. Total economic growth was 7-8% (14% for industry). Cereal production was largely maintained. Despite the catastrophic floods mentioned previously, cereal production reached 425 million tonnes following a record 435 million tonnes in
1990 (Bilan économique et social 1991, Editions Le Monde, Paris). But these
• a significant section of state sector enterprises are — between 30 and
40% or even more according to other estimates — are still in the red;
• at the end of 1979, the value of unsold stock corresponded to one-third of
Finally, the overall picture, hides a growing imbalance between the much more dynamic provinces of coastal China and other provinces which are not
The previously-mentioned trends in foreign investment are continuing and one aspect of Chinese foreign policy is obviously aimed at both attracting new investment and making significant trade agreements. According to the information in the international press, there efforts were not without results.
The capitalists, bankers and other financiers seeking new outlets and profits are not particularly worried about (not very democratic character of the Beij-
It should be added, as was already referred to, that since the beginning of
1992 that foreigners have been allowed to participate in stock exchange operations by buying shares with all the same rights as Chinese citizens. Buying fever continues in the Shanghai Stock Exchange and at Shenzen.
Finally, on the weight of the private sector, some figures which seem nevertheless not entirely reliable, have been recently published in the international press. For example, a correspondent of the New York Times wrote:
This year or next will be a milestone: for the first time in more than four decades of Communist Party rule, less than half of industrial output will come from the state enterprises. (Inter-
Last year for the first time in over 40 years, less than half industrial output, 46.6% came
The private sector now accounts for about 55% of the country's industrial output. (27
Moreover, according to a study of the Chinese economy, in 1990-91, pubtions and the role of foreign capital.
Gross National Product;
• inflation is running at 10%.
moving forward.
ing government!
national Herald Tribune, 19 December 1991).
Two articles in the Financial Times went further:
from the state sector. (7 January 1992)
January 1992)
China: Two years after Tiananmen 87 aspects of the balance sheet should not hide the fact that:
• a high proportion of products are still of bad quality;
88 International Marxist Review lished last November, in Le Courrier des pays de l'Est of the Documentation Française:
Private enterprises represent 56% of industrial production.
It is true that the private industrial sector and particularly the joint venture and foreign enterprises have had and still have a rate of growth significantly greater than that of the state sector (for example in 1990 this was respectively +21.6%, +56% and +2.9%). Nevertheless, the above-mentioned estimates which do not correspond to other figures given by official sources (and with estimates cited in our article) seem largely over-estimated. It is possible that the discrepancy depends on the question of how to characterize the "collective enterprises" which include the township enterprises. These enterprises do not belong to the state sector in the strict sense, but this does not mean that they necessary belong to the private sector (unofficial publications themselves mention the possibility of a dual interpretation).
China Economic News (3 February 1992), having recalled that, according to Chinese law, a private enterprise is a capitalist private enterprise when it employs more than eight people, estimates that the total value of private enterprise production is 1% of national revenue, even though it adds that even if the enterprises which are not officially registered the private sector would be bigger. Nevertheless, it is difficult to see how it could attain the percentages indicated in the two journals mentioned.
February 1992
JAN MALEWSKI