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And This Little Despot Went To Market


new internationalist
issue 249 - November 1993

Father of China's free market, Deng Xiaoping exhorts the virtues of fast money.
And this little despot
went to market
The allure of the ‘free market’ has turned very sour for millions of Chinese people.
Wealth and poverty have been polarized, while the despotic rule of the Party remains intact.
Ruth Cherrington reports on Deng Xiaoping’s curious recipe for freedom.

‘I’ll tell you what is wrong in China today,’ says Wang Qi, a striking worker outside his factory gates in Beijing. ‘Everything.’

Inflation is hovering around 20 per cent, the economy is overheating dangerously, peasants are rioting and a crime wave is sweeping the country.

The political élite sitting in Beijing need no reminder of the nation’s economic woes. But this strike – in the capital – brings their troubles closer to home.

Employees in the state-run cooling machinery factory are in no doubt about who was responsible for the mess. ‘The bosses don’t know what they are doing,’ says Wang Qi. He is referring not only to the factory’s management but to the political bosses who have unleashed free market forces upon the country without being able to control the ‘contradictions’.

Wang Qi’s debt-ridden factory is one of the thousands of nationalized enterprises that failed to move successfully into the private sector and now teeter on the brink of ruin. There is no money for investment in new machinery and managers helped themselves to the funds. Its workers are striking not to improve their conditions but to try and retain some of the basic rights and conditions guaranteed them under the former state-controlled system. They look back with nostalgia to jobs for life, a regular wage, welfare benefits and pensions.

But it is in the countryside that anger against the free market reforms is most dramatic. In the past few months there have been clashes between peasants and police in at least 12 provinces.

In Sichuan province – which pioneered the experiment in rural market forces – farmers attacked post offices in fury when they found out that government IOUs they had received could not be cashed. Then there was the introduction of new local ‘taxes’ – many of them to fund dubious projects. Peasants in Renshou county received demands for funds for road building. They were not impressed – they did not see any reason why they should foot the bill for such infrastructure. They also suspected the money would find its way straight into the pockets of corrupt officials. Some of those who refused to pay were rough-handled by police, leading to more violence and eventually to the besieging of government offices by 10,000 angry peasants.

But while 'business fever' has made some rich, millions more are now jobless and homeless on the city streets.

Ironically it was the peasants who were the first beneficiaries of Deng’s economic reforms, introduced in 1978 with the long-term aim of getting China a central stall in the global free market. The peasants were encouraged to lease land and sell surplus produce. This so-called ‘household responsibility system’ signalled the break-up of Mao’s rural communes all over China. Egalitarianism became a dirty word: allowing some to get rich quick became the official priority. Thousands of rural folk caught the ‘business fever’ and developed side-line enterprises. A minority class of rich peasants emerged, conspicuously spending their profits on trips to the big cities. The vast majority who could not looked on with envy.

Today farming is increasingly unprofitable, with grain prices falling and inflation forcing up the cost of agricultural inputs. In addition, much land has been lost due to a combination of speculation and soil exhaustion. With few communes left to provide either work or welfare, being jobless now means being penniless. The estimated 12 million rural unemployed represent a tragic failure of Deng’s reform programme. Now hundreds of thousands of peasants, with little more than high hopes and dirty bedrolls, drift into the cities every day, not to buy television sets but in a desperate search for work. Those who do manage to find work are often exploited. Young girls are sold or lured into prostitution – yet another side of the multiplying social problems caused by emphasizing the accumulation of money above all else. The propaganda still stresses China’s ‘socialist spiritual civilization’ but the reality on the streets makes a mockery of the Government’s slogans.

Mao Zedong must now be turning in his mausoleum as the social class who helped to put him into power is once more being forced to ‘taste bitterness’.

‘We shall protect free enterprize as the most expedient,
or rather the sole possible order.’

Adolf Hitler

Meanwhile, the party leaders in Beijing are agonizing over ways to apply the brakes to the economy without bringing the reform programme to a complete halt. Pushed forward by the ailing 89-year-old Deng Xiaoping, then slowed down, the uncertain direction of reform means people are simply trying to make a fast ‘yuan’ where they can. Consumerism and the ‘looking towards money craze’ are in evidence everywhere, but especially in the cities, where private cars and taxis jam streets where the bicycle used to rule.

Many business deals are shady and officials corrupt. Chinese banking officials are alleged to have siphoned off as much as $30 billion of state funds. Such abuses of power have become part of Chinese-style socialism which Zhu Rongji, the vice-premier and newly-appointed Governor of the central bank of China, is attempting to curb. Appointed by Deng as the economy hit crisis point in the summer he also has to reverse the spate of illicit property speculation and disastrous trading on China’s fledgling stock market. He is faced with the task of reining in areas like Canton, reckoned to have the world’s fastest growing economy with a 24 per cent a year growth rate. ‘He has a tough job,’ says Zhang Li, a smartly dressed post-graduate student. But she shakes her head in despair when asked about China’s future. ‘At the moment we have the worst of both systems without any of the benefits.’

But while 'business fever' has made some rich, millions more are now jobless and homeless on the city streets.

She believes that after the 1989 Tiananmen Square massacre, intellectuals have put political activity on the back burner. ‘Making money, that’s the only thing we can think about now. Maybe that alone will bring about democracy.’

That also seems to be the hope of Western governments who after condemning the Beijing massacre quickly resumed business as usual. This they justify as being the only way of introducing the required political reforms into a nation that has so far adamantly resisted any democratic reform.

The equation of democracy with the free market is firmly entrenched. But the case of today’s China – and of Pinochet’s Chile in the 1970s and 1980s – shows that the two do not necessarily go together. Far from it. Political dissenters or workers who try to organize independent unions are likely to find themselves in China’s notorious ‘laogai’ or penal colonies for ‘reform through labour’. Here an estimated 500,000 political prisoners suffer extreme abuses of their human rights. Meanwhile profiteering and corruption are poisoning the country’s economic development.

The rise of consumer ‘choice’ in the market place, at least for those who have the cash, has not given rise to a similar ‘choice’ in the political sphere. The Party, backed by the army, retains its political omnipotence and there is no civil society to provide the necessary checks and balances to its excessive state power.

Deng is worried about how he will go down in history and remains reluctant to ‘go to meet Marx’ until the success of China’s ‘socialist market economy’ assures him a favourable mention. But as China’s experiment in the free market teeters on the brink of disaster, the leadership appears more adept in the use of armed force against protesting workers than at managing the economy. Hong Kong residents can only look on with concern and doubt as China’s leaders insist that they will implement the ‘one country, two systems’ policy when the colony returns to the ‘motherland’ in 1997.

Deng and his colleagues have shown a frightening willingness to use brutal force to prop up their version of the ‘free market’. It will be China’s tragedy if they continue to do so.

Ruth Cherrington lived in China for several years and is author of China’s Students: the struggle for democracy (Routledge, London, 1991).

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New Internationalist issue 249 magazine cover This article is from the November 1993 issue of New Internationalist.
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