CHINA: CP welcomes capitalists into its ranks
BY EVA CHENG
China's drawn out process of capitalist restoration is poised to take a new leap forward after the 16th Congress of the Communist Party of China (CP), held November 8-14 in Beijing, vigorously endorsed such a move away from socialism. The congress even amended the party statutes to give this pro-capitalist program a new sense of legitimacy.
Although still clumsily coated with "socialist" rhetoric, the underlying pro-capitalist direction that party general secretary Jiang Zemin put forward to the congress on behalf of the party's central committee is hard to overlook.
Jiang proclaimed: "We have to respect and protect all labour that is beneficial to the people and society. Be it manual or intellectual labour, simple or complex labour, all labour that contributes to the construction of socialism in our country are glorious acts, and must be acknowledged and respected."
He went on: "The entrepreneurial activities of all investors, be they foreign or domestic, which help build our country must be encouraged. All legal labour income and legal non-labour income should be protected. We shouldn't simply use the possession of property, or the lack of it, or the extent of property under one's ownership, to gauge whether a person is politically advanced or backward.
"Some more important measures are: 1) the state of a person's political frame of mind, his or her ideological inclination and actual performance; 2) how the person came into possession of that property and how he or she deployed it; and 3) whether the person contributes to the building of socialism with Chinese characteristics by way of his or her own labour."
Jiang was trying to confuse the picture in part by suggesting that capitalists' efforts to organise their business were also productive "labour" when in fact they were not.
Jiang further made clear: "We have to protect the prosperous regions, well placed property and operations, and the developmental activities of people who became rich sooner than others through their diligent labour and legal operations..."
The amendment to the party statutes helps justify having capitalist membership by proclaiming the CP is also the "vanguard of the Chinese race" apart from being the vanguard of the working class.
With immediate effect, the CP statutes now include as "guiding principles" Jiang's so-called theory of "three represents", an almost incoherent mumbo jumbo which was heavily promoted in China in the last few years to justify the CP's increasing pro-capitalist drift. It asserts the party must represent "the developmental needs of advanced productive forces in China", "developmental direction of advanced culture in China" and the "fundamental interest of the Chinese people".
The strong pro-capitalist message behind Jiang's report and the statute changes shouldn't surprise anyone. They only matched the actual economic and social priorities that the CP leadership has been actively promoting since the early 1990s.
The groundwork was laid in late 1978, through the "open door" policy, under which the CP tried to use foreign capital as a lever to help lift China out of the economic ruins left by two decades of its own "ultra-left" policies, corruption and faction fights.
Foreign capitalists quickly used bribery as a key tactic to improve their competitive position in China, raising corruption there to a new height. This was a main target of the widespread student protests that broke out in China in the few years to 1989 which only ended after the massacre in Tiananmen Square in Beijing.
Instead of turning back, the CP leadership, then headed by Deng Xiaoping, soon became more open about its pro-capitalist orientation under the guise of building "market socialism with Chinese characteristics". That turn was formalised in the CP's 14th Congress in 1992. Since then, privatisation has been promoted with great vigour, along with the dismantling of state provision for basic needs.
These pro-market policies have seriously marginalised the livelihood of China's 800-million-strong rural population. They have pushed more than 120 million (according to official October statistics) to roam China, mostly to the cities, seeking jobs. In the cities, they become a highly oppressed underclass.
It isn't a rose garden, however, for the urban workers. Jobs have been axed and basic social provisions increasingly withdrawn, leaving tens of millions of people in limbo. Since the mid-1990s, this has triggered thousands of protests which appeared to be largely spontaneous and, unfortunately, have had little impact in stopping the rising wave of privatisation.
China's entry into the World Trade Organisation a year ago has made things much worse. Now, China will be sanctioned by the WTO if it doesn't open up much more widely to foreign capital.
In the first 10 months of this year, a record US$46.4 billion of foreign capital out of a total contracted amount of $76.5 billion had already gone into China. This brought the total inflow over the previous 13 years to $400 billion.
From December 1, Beijing will open up even more productive as well as speculative assets — the local currency denominated sections of the stock and bond markets — to "high quality" foreign institutional investors.
Since the early 1990s, only a third of the listed shares in China (i.e., the ownership mainly of China's prime state enterprises) could be traded and only a section of that has been opened to foreign capital. Under the new limit, foreign ownership mustn't exceed 20% of any particular firm (10% for any individual foreign "investor"). But officials already made clear these ceilings were negotiable and that similar easing of the rules were being considered for home-grown capitalists in China.
Although China was given up to five years to complete its WTO commitments, continuing progress must be delivered and major changes have already started in a number of key industries. In aviation, for example, the hitherto state monopoly ended in October with the sector divided into six firms in three alliances.
Similar "restructuring" has already started in telecommunications, automobiles, insurance, petrochemicals, non-ferrous metals and military production. These changes universally led to massive layoffs as the profit-oriented new management sought to cut costs.
The official media didn't deny that massive layoffs took place but they were often accompanied by claims that new jobs had been found or that the dole or other subsidies had been paid. But the tens of thousands of workers protesting for exactly such protection or compensation throw serious doubt on the official claims.
When challenged during the CP congress on November 12, labour minister Zhang Zuoji virtually admitted the real unemployment in China was actually far higher than the official figure of 3.9% (or 7.3 million people). He conceded, for example, that another six million workers, who for all practical purposes are permanently laid off, were officially not jobless because they are still entitled to a token subsidy (often not paid) from their nominal "employers".
While the full impact of the ongoing restructuring has yet to come through, its damage is already evident in China's countryside. The September 12 edition of the Chinese International Finance News revealed that while the barrier to China's agricultural exports was rising, thanks to WTO-approved loopholes, foreign agricultural imports were flooding into China.
The newspaper pointed out that despite the small improvement in rural income last year, it wasn't enough to revive rural consumption which has been extremely weak, sometimes even declining, since 1997.
The newspaper further indicated that China's internal demand had been sluggish in recent years and rural income could have helped to turn that around but didn't despite massive government expenditure.
Deflation still hung over China in the last few years despite the official media playing it down and trumpeting, instead, the impressive gross domestic product growth of 8% and a strong trade surplus. The latter climbed 55% to $28.9 billion in the first seven months of 2002. But China's exports aren't radically different from those of most Third World countries and the demand for them can easily dry up. One of China's competitive edges so far has been its low workers' wages.
Moreover, the actual state of the Chinese economy seems to be much more precarious. A glimpse of that was revealed by Premier Zhu Rongji's March statement that the Chinese economy would have collapsed in 1998 in the absence of massive state expenditure and his recent acknowledgement that the rural question was "the thorniest" confronting China. As a result, China's budget deficits rose sharply and continuously over the last five years from RMB 46 billion ($5.6 billion) to RMB 309 billion ($37 billion).
From Green Left Weekly, November 20, 2002.
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