48 years after the Chinese revolutionPart One: the survival of the fittest |
In this series of articles, JOHN TULLY draws a balance sheet of the 48 years of the Chinese Revolution. The series will attempt to answer the question of whether China's leadership has embarked irreversibly upon the high road to capitalism. This first article in the series looks at the decisions of last month's 15th Congress of the Chinese Communist Party and the recent return of Hong Kong to China.
The 15th Congress of the Chinese Communist Party (CCP) was a watershed in the party's history. Although the red flags and other paraphernalia of 'socialism' will remain, the party is now firmly committed to the capitalist road. In language reminiscent of the social darwinism of robber baron capitalism, State Economic and Trade Commissioner, Wang Zhongyu, told the assembled delegates in Beijing's Great Hall of the People that, 'We must have a system where the strong survive and the weak fail. That is the lesson of the market economy.'
Although there has been an increasingly rapid drift towards privatisation and marketisation of the economy since the late 1970s, the party congress decided on steps which will in practice almost wipe out the state industrial sector and send the country hurtling headlong towards capitalism. The party bosses are now set to reduce the number of wholly owned state companies from 130,000 to 512. Commissioner Wang said that he hoped that three to five of the state-owned rump would rank among the world's biggest. The others would be left to sink or swim under a variety of ownership plans, including foreign partnerships and straight out private concerns. Average tariff levels are also to be cut from 23% to 17% so as to stimulate efficiency - the language is straight from a neo-liberal economics text.
China's leaders have also been clear about their preferred models of industrial development and modernisation. They have their eyes on South Korea and other 'newly industrialising countries' (NICs) in the region, even including their arch-rival Taiwan across the Formosa Strait. Although the economic performance of the East Asian NICs has been relatively sluggish in recent years, there is no doubt that their combination of repressive authoritarian rule and state-directed capitalism yielded impressive growth rates from the 1960s onwards.
China has a strong police apparatus and a monopoly of political power, so in theory it ought to be able to emulate its neighbours. This is the view of the World Bank, which in a recent report, predicted that within the next 20 years China will become the world's second largest exporter, with a continued annual economic growth rate of 6.5% during that period.
There can be no doubt that the economy has grown rapidly since former strongman Deng Xiaoping came to power after the death of Mao Zedong. Deng's pragmatist watchword has always been 'what does it matter if it's a white cat or a black cat as long as it catches mice?' For almost two decades between 1978 and today, China's economy has grown by an average of 9.4%. Many of the eastern cities are booming, with Shanghai boasting more construction cranes than any city in the world.
China's economy has also received a fillip due to the return of Hong Kong on 30 June after 155 years as a British 'crown colony'. Despite - or rather because - of its location on a peninsula and a group of islands off the Guangdong coast, Hong Kong grew into a minor economic superpower with a per capita GDP* of over US$27,130 this year. (By way of comparison, Australia's per capita GDP is only a little more than US$22,000.) The return of the crown colony will boost China's total GDP this year from just under US$897 billion to over US$1068 billion.
Nor has the predicted large-scale capital flight occurred. Hong Kong's capitalists have demonstrated their faith in China's 'Communist' Party by staying put. Hong Kong is now administered as a 'Special Administrative Zone' under chief executive Tung Chee Wah, a prominent local capitalist. Hong Kong's capitalists, many of whom fled from Shanghai and Canton after the victory of the Chinese Revolution in 1949, have reconciled themselves to a regime that might still pay lip service to socialism, yet has shown in deeds that it is committed to capitalism.
They know very well that the party bosses, far from wanting to nationalise everything in sight, have for some time now been investing heavily in Hong Kong capitalism. Some years ago China's foreign exchange regulations were loosened and mainland investment into the colony was running at around AUS$2.7 billion per year - or about 80% of China's foreign direct investment. In 1979 there were only 120 mainland firms in Hong Kong. Today there are over 1800 and their total assets are second only to those of British firms. Mainland assets in Hong Kong today amount to around AUS$26.3 billion, although this is an understatement as it excludes assets not directly under state control.
By the same token, Hong Kong capitalists have been investing heavily on the mainland for the past decade, particicularly in Shenzen province. The CCP bosses talk of China after the reunification as 'One country, two systems', but the reality is that Hong Kong's capitalism is the model for the future of the country as a whole.
Further, although relations between Taiwan** and China have remained chilly, there are indications that Taiwan's return to the fold in the foreseeable future would not be unthinkable. Taiwanese investors have been sinking capital into the mainland for some years now. Although China's leaders regularly castigate Taiwan's President Lee Teng-hui, fearing that he will declare Taiwanese independence, at the same time they have been quietly working to rehabilitate the memory of Chiang Kai-shek, the leader of the Nationalists in their long struggle against the CCP from the 1920s onwards. Chiang's son is trying, with the Beijing government's blessing, to have his father's remains reburied on the mainland. Chiang is now praised in Beijing as an advocate of 'One China', and to the CCP leaders the future of that 'One China' will clearly be capitalist.
What this pro-capitalist trajectory means for China's workers and peasants will be examined in future articles in this series. However, we should take note here of the rapid growth in the number of strikes in China and of persistent reports of rural uprisings which have filtered through to the western media for some years now.
Although details are sketchy the Hong Kong media has claimed that a serious uprising occurred in the remote Xinjiang (formerly Sinkiang) province of China after last month's 15th Party Congress. Nine government officials and parliamentarians were reported dead and many others were injured. As well a number of buildings were damaged in the revolt, said to be staged by heavily armed rebels previously trained in the military.
The Xinjiang revolt is not the first in recent years. Fed up with their lives of bone-grinding poverty, hundreds of thousands of peasants in other areas of China have demonstrated and even taken up arms against the government. Up to half a million peasants are said to have demonstrated against the government this year alone in Hunan, Hubei, Anhui and Jiangxi provinces, with riots developing in some areas and peasants seizing weapons in others.
Meanwhile, in the central city of Wuhan, workers responded angrily to to the 15th Congress decisions on privatisation and have staged a spate of angry demonstrations.
Clearly China's explosive economic growth is not benefiting everyone equally.