National Sections of the L5I:

The contradictions of China

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At first I thought the difficulty we had trying to get into the carriage on the Shanghai metro was just more evidence of what a cosmopolitan, 21st century “world-city” Shanghai had become, rather like the traffic jams we had already fought our way through. It was only after we finally got in that the real picture became clear.

Sat on the floor between the main sets of doors were four peasants, each accompanied by a great bail of produce. It is difficult to be sure, but from their greying hair and weatherbeaten faces I would guess they were in their fifties. Their clothes were old and patched and their complexions far darker than those of the commuters milling around them.

Despite the very obvious obstruction that they were causing, no one said a word. Although one or two other passengers gave each other meaningful looks, the great majority simply picked their way past and found themselves a place. Meanwhile, those on the floor stared resolutely into the middle distance.

Yes, Shanghai is a world city but it’s a Chinese world city and this little, everyday episode on the metro is as good a symbol as any of what that means. Except that, in the country as a whole, the proportions are reversed: it’s the smartly dressed urbanites who are the minority. While these two Chinas certainly appear to have very little in common, they are jammed together and, in a very fundamental sense, they depend on each other.

China is full of such contrasts; a group of Chinese women, straight off their air-conditioned tourist bus, use their 3G phones to take videos of another group of Chinese women, washing clothes in a river; in a temple, a Buddhist monk slowly sounds a gong while a pilgrim bows in prayer – and with his other hand he sends a text message on his mobile. (Odd, you would think, that with all that astral travelling telecommunications would be unnecessary, perhaps he was a novice.) Of course, such things can be seen all around the world, wherever globalisation has brought prosperity to a minority against a background of social conditions inherited from the past.

The Party
What is different in China is that the past was not a traditional, pre-capitalist society but a Maoist planned economy, and perhaps the single most important relic that continues to dominate the country is the Communist Party. As a result, what is still very striking is that alongside the billboards advertising Siemens, Audi, Microsoft, B&Q, McDonald’s and Carrefour fly the party banners exhorting the people of China to achieve the “Four Modernisations". It is true that, as we travelled through both coastal provinces and the interior, most sizeable towns that we passed had at least one or two “Western” shops, but there wasn’t a single hamlet that didn’t have its party office, spic and span with its red flag flying above it.

The party is everywhere. Like a cross between the Catholic Church and the Gestapo, it reaches down throughout the population and into every institution in society. Its flag, despite its colour, is a symbol of class collaboration: one large star dominates over four smaller stars, expressing the party’s leadership of the block of four classes the peasantry, the working class, the urban petty bourgeois and the “patriotic” bourgeoisie.

This ideology of the popular front, imposed on the Party by Mao in the Thirties, is still crucial to an understanding of party strategy today. Because the revolution of 1949 is held to have removed all fundamental contradictions among the people by expelling the unpatriotic bourgeois clique around Chiang Kai-shek, the interests of the four classes can now all be accommodated within society. Constitutionally, the party is the “leading element” in society and therefore entitled to assume leadership of all social organisations.

With the development of “socialism with Chinese characteristics", that is, the restoration of capitalism, the party has only had to shift the emphasis of how this “national interest” is to be achieved. Where, after the civil war and occupation, planned industrialisation was essential, now allocation of resources via the market, under the leadership of the party, is the way forward. To ensure that the social changes resulting from this are properly “coordinated” within the party, it has changed its statutes so that membership can be extended to entrepreneurs and managers. “Business people” now make up some 20 per cent of the membership.

Equally, the definition of legitimacy for any organisation within China is that it accepts “the leading role of the party". This issue was in the news during our stay because the appointment of some new bishops for the Catholic Church of China had been announced, much to the annoyance of the Vatican which thinks that only the Pope can consecrate bishops. In China, however, that would be unconstitutional because it would be denying the leading role of the party. From the point of view of the Chinese working-class, the dispute hardly matters, but the issue itself is crucially important.

The same rule would apply – and has always applied – to any independent organisation such as a trade union, not to mention a workers’ party. The assertion that the working class has an independent, class interest is itself unconstitutional, and this guarantees that working class political and organisational independence can only be achieved through the destruction of the party dictatorship.

Because the party is so all-pervasive, it can be an extremely efficient transmission belt for government policy. Within two days of Hu Jintao’s meeting with Bill Gates on his recent trip to the US, there were banners flying from public buildings throughout China proclaiming the need for everyone to protect “intellectual property rights” in the national interest. Interestingly, in the same week, the English-language press was reporting that German engineers were accusing Chinese engineers of having broken into their offices to steal blueprints related to the high-speed magnetic levitation transport system due to be extended from Shanghai to Hankou.

At the same time, because you can be sure that very little happens without the party’s knowledge and approval, lots of things take on a political significance that you might not expect them to have. For example, 40 years after the “cultural revolution", considerable sums of money are being spent by the state to restore the Buddhist temples which were often ransacked and trashed by the Red Guards.

On a visit to one, the Bao Guo monastery on Mount Emai in the province of Sichuan, our guide went to great lengths to explain how the place had got its name. “Bao Guo” means, approximately, “protect the nation” and it was the name adopted by the monastery during the Tang dynasty after the emperor had decided that Mount Emai should be given to the Buddhists, rather than the Daoists, as a spiritual centre. In gratitude, the monks vowed always to honour and defend the state. No prizes for guessing the moral of that story.

Similarly, but on a more modern note, visitors were also shown an inscription over the main gate which was written by the then chairman of the Nationalist Party, the Guomindang, when he stayed at the temple during the anti-Japanese war. Further on, we were shown the room where Chiang Kai-shek himself had stayed when taking a break from the campaign against the Japanese. In the past, emphasis has always been placed on Chiang’s failure to conduct any campaigns against the Japanese occupation and his continuation of the struggle against the Communist Party’s guerrilla forces.

This change is a pointer towards Beijing’s long-term strategy of incorporating Taiwan into China via a possible rapprochement with the Guomindang. Today, the Guomindang is the main opposition party in Taiwan, supporting reunification as a long-term strategy rather than the independence, which the governing party claims to support.

Sichuan Province
Sichuan itself is one of the bigger provinces with a population of some 87 million and a long established reputation as one of the most fertile areas of China. We wanted to visit it because it is an inland province, approximately as far from the coast of Bangladesh as from that of China. It remains an overwhelmingly rural province, only about a quarter of its population live in towns and half of them are in the capital city, Chengdu.

Around the city itself there are all the signs of rapid economic development: new industrial estates, new housing blocks, new university buildings, high-rise hotels, new roads and demolition sites on the edges of obviously much older quarters. What was noticeable, however, was that many of these buildings were empty and several building sites were deserted. At the same time, the streets and shops were busy and there were no overt signs of any economic difficulties. Our guide said that the peak of the building boom had passed and that there had been “many scandals”, but the city’s main industries had not been affected.

Away from the city, what is most striking, apart from the scenery, is the prevalence of the “national minorities” and of Buddhism. Farms and villages display prayer flags and temples and shrines are clearly in everyday use. In the more mountainous areas, the place looks like Tibet, indeed the mountains are part of the same geological structure as the Himalayas. According to official statistics there are 53 minority peoples in Sichuan and their different “national costumes” are on display in provincial museums, but on the ground the impression is much more uniform.

Despite its importance in China’s agricultural economy, most farming seemed to be on a very small scale. Most fields were about the size of a British allotment and water buffalo were the only visible source of power. The exception to this was in a tea-growing district where large-scale production, centred on processing factories, predominated. However in China, a family’s land is not normally consolidated into one territory, but rather divided into several separate plots so it would be impossible to estimate how big the average landholding might be. Overcoming such fragmentation and consolidating land into more “economic” units is one of the objectives of the current five-year plan – the 11th – which has just come into operation.

Since joining the WTO at the end of 2001, Chinese agriculture has gone from being a net export earner of some US $5 billion per year into a net importer, particularly of cereals and oilseeds, to the tune of $11 billion. Government plans accept that Chinese agriculture should concentrate on the labour-intensive production of vegetables, fruit and livestock which would exploit the availability of cheap labour and, at the same time, represent greater added value than would be possible with, for example, large-scale cereal production. However, all of this would entail the abolition of the existing system of property rights in the countryside and, on top of that, it would swell even further the existing “surplus” rural labour force of perhaps 200 million people.

The Chinese state, and its party, knows better than most the potentially destabilising effect of widespread rural opposition. In order to lubricate the huge changes that it is proposing, it is also planning a massive investment programme to introduce free education and health care and some basic social security provision for the rural population which at present has no such provision. On paper, the legacy of state planning and continued centralised direction of investment puts Beijing in a better position to undertake such a policy than probably any other semi-colonial or “developing economy”, but this does not guarantee its success.

Funding the programme through taxation of the highly productive coastal provinces would not only cause serious political tensions, but also threaten the all-important foreign investment and low production costs which have fuelled their development until now. On the other hand, simply allocating funding through the banks, as has been done in the past, would risk both inflation and undermining those banks as commercial operations.

Whatever strategy it adopts, Beijing has to maintain high rates of growth, in GDP terms, for the foreseeable future. Returning to the coast from the interior, it is easy to see why such growth might be taken for granted. In the three main economic development areas, the Pearl River delta in Guangdong, around the Min River in Fujian province and in the Yangzi River delta centred on Shanghai, mile after mile of new factories, warehouses and offices line the newly-built motorways connecting cities with populations of millions – and all of this has been built within the last 20 years.

New construction is clearly continuing in and around Shanghai itself but here, too, there is a downside to economic development. Within the city, demolition to make way for new tower blocks is concentrated on the poorer areas, away from what were the American, British and, especially, the French, settlements which are now very expensive residential areas. There are reports of attempts to resist these clearances which echo the more widely reported and far more numerous examples of confrontations between peasant communities and developers backed by city and provincial governments.

The building sites themselves also highlight another feature of China’s economic boom. Construction techniques are still very labour intensive and hundreds of labourers are housed on the sites themselves in flimsy, temporary accommodation, rather like Portakabins, two or even three storeys high. Through the open doors, the beds in these dormitories can be seen, which are also stacked three high.

The workers themselves are much darker than the rest of the population and many of the food stalls set up close to the sites advertise halal food. These are the migrant workers from as far away as Xinjiang who have fled to the coastal provinces from rural poverty. They provided the workforce for the economic boom, but their very existence has only recently been officially recognised and they still do not have any of the rights, for example to education and social services for themselves and their families, which other urban workers have.

Despite the number of buildings, both commercial and residential, still being built, it was again obvious that a lot of completed projects were still empty. This was even true in the financial district of Pudong, across the river from Shanghai itself, where new skyscrapers are going up directly alongside others which are empty and boarded-up. This pattern was repeated outside the city itself in the industrial development zones where the trademarks and logos of both Chinese and multinational corporations dominate the buildings and, alongside those that are obviously in full operation, there are others which are equally obviously empty and beginning to look quite dilapidated as well as new sites where foundations are just being laid.

Economic development
These signs of a property boom that is beginning to outstrip demand should not be taken to mean that economic catastrophe is on the horizon. At the heart of China’s economic development is the export trade and that is still benefiting from the new markets opened up by China’s membership of the WTO. Nonetheless, real estate speculation and over-investment are problems that have moved quickly up the government’s agenda. In his “government work report” presented in March of this year, China’s premier, Wen Jiabao, identified overcoming “excessive fixed capital investment and overcapacity” as second only to the need for economic development in the interior as a priority for the coming year.

Achieving either of these objectives, never mind both of them, will be extremely difficult, if not impossible. Quite apart from any changes in the world market that could threaten the export trade, there is a developing structural contradiction at the heart of the Chinese political and economic system. Despite the legacy of state planning and control of important economic levers, above all the banking system, Beijing and the Communist Party itself are no longer omnipotent. Since 1992, when the decision to dismantle economic planning and restore capitalism was made, provincial governments have been encouraged to stimulate economic development and have been allowed a high degree of autonomy in deciding how to do this. It is precisely their success which now threatens the central government’s objectives.

As each provincial government strives to attract more foreign investment by offering incentives such as state-funded transport and energy infrastructure, the ability of the central government to maintain a coherent and rational development programme diminishes. To the extent that foreign and, increasingly, domestic, capital does establish itself and expand its operations, this automatically creates a magnet for further investment and a social pressure counterposed to any government inspired transfer of resources. Because of the policy of opening the party itself to capitalists these pressures are even transmitted into the heart of the political system.

It is impossible to predict how these contradictions will unfold, certainly not on the basis of a relatively brief visit. Nonetheless, the dynamism, the pace and the scale of change in China are clear to see wherever one travels. The economic and social changes that they have created cannot be contained within the political dictatorship which was originally based on a bureaucratically planned economy. However, the contradictions in conflicts developing within Chinese society express themselves, at the heart of future social conflicts will be a struggle against that dictatorship.

From the experience in the states dominated by the former Soviet Union, it is not difficult to see the range of political currents which will emerge or the danger that bureaucratic dictatorship will be replaced by an unholy alliance of multinational capital and home-grown speculators.

The only defence against such an outcome will be a politically independent working class party and democratically organised workers’ organisations, such as trade unions and workers’ councils, which can draw in the support of the majority of the peasantry and enforce their own class control against both the bureaucrats and the capitalists.