Chinese pay for 'modernisation' (7K)

By Eva Cheng Late last month, the 200 or so individuals who control China adopted a blueprint steer the country for the next 15 years. The resolutions of the 14th central committee of the Communist Party of China (CCP) at its fifth plenum in Beijing on September 26-29 fall within the pro-capitalist parameters drawn up by Deng Xiaoping 17 years ago. While affirming the continuation of economic restructuring over the next 15 years, no attempt was made to draw a balance sheet of the past. The plenum proposals still require "approval" by the National People's Congress (NPC) early next year. However, it is unlikely that the NPC, given its rubber stamp nature, will propose substantial amendments. Nevertheless, it is still possible that the central committee, which is far from stable, will introduce significant changes before or after the NCP gives the green light. What are the gains and losses of the new path? Are the trade-offs necessary for the survival of the socialist system China set out to achieve? Would the people endorse these reforms? These questions would have been freely debated if China's political system is what Beijing claims it to be — a democratic system of producers. Instead, without any public assessment, the central committee decreed that China's "socialist modernisation" has entered a new phase: eight issues, nine principles and four main tasks were set down, followed by a long list of "shoulds" and "musts" in relation to agriculture, infrastructure, industry, regional developments, enterprise reforms, the role of government, inflation, special economic zones, foreign investment and legal reforms, plus a position statement on Hong Kong and Taiwan. The decree included China's ninth "Five Year Plan", on which key economic decisions and priorities are supposed to be based, but contained no tangible targets or coherent action plan. The partial re-introduction of production for private profit in China has already resulted in massive job cuts and widespread social dislocation. In the countryside, more than 200 million people are unemployed with many moving to the cities to become super-exploited casual labourers. Previously, the state took responsibility for either providing a job or the means for subsistence living. A food crisis is looming as a result of the fast conversion of farm land to production for private profit. In 1994 grain yield dropped by 11.9 million tonnes to 444.6 million. This is expected to continue while the population is projected to increase by 14 million annually over the next five years. While the majority have become poorer and the cost of living has continued to increase, a small but increasingly influential layer, at the top of the bloated CCP apparatus of 47 million, has managed to gain increasing control of key sectors of the economy. The entire state industries sector — propped up for years by huge state subsidies and which is now in decline — has been plundered by officials. Chen Xitong, Beijing's mayor for 12 years and a politburo and central committee member until last month, was recently charged with ripping off 18.1 billion yuan, close to one-fifth of Beijing's 1994 GDP. For all these problems, the central committee prescribes simplistic wish lists. On the agricultural crisis, for example, the plan states that the main tasks are to "ensure steady growth in basic farm products", "promote grain production capacity to a new level" and "ensure a relatively fast growth in farmers' income to enable them to live a comfortable life". In other areas, the construction of infrastructures "should be enhanced", the primary industries "should be vitalised" and the processing industries "should be readjusted, renovated and improved". The regime is also keen to keep economic growth under its control. Premier Li Peng told the official Xinhua News Agency on October 5 that the CCP aimed to contain inflation and the annual economic growth over the next five years to 8%, with capital investment capped at 30%. But a simple growth figure only tells a partial story. Pure speculative spending, such as building more tourist hotels in a market where there is already an excessive supply (as was the case in the late 1980s) or the production of unwanted goods, which many state firms still keep churning out, can also boost growth figures. Moreover, Beijing has the administrative power to inflate or deflate growth. In 1988 and 1994, when the economy was seriously overheated, it arbitrarily banned a range of projects — reported worth a total of 300 billion yuan in the 1994 case — from going ahead. Such austerity moves have very little to do with sound, socially responsible planning. Runaway inflation and capital investments are the result of a much more complicated process over which Beijing has diminishing control. The mad competition for capital investment between provinces, which has seriously strained the supply of resources and boosted inflation, is a direct result of the economic decentralisation in which provinces are required to take charge of their own profit and loss. Under these "reforms" the narrow interests of the province, or individual leaders keen to widen their own power base, can become the ultimate guide for action. The "reforms" are providing the materal base for a new layer to consolidate their power and wealth. Haphazard price reforms, together with rampant corruption, the double price mechanism, have restricted supplies and fuelled inflation. State prices for key consumer goods have, in the past, been kept deliberately low to match wages and stabilise living standards. But the reintroduction of the private economy has given rise to a new set of prices which exist parallel to the state's. The price gap has allowed officials to enrich themselves by manipulating the state supply of resources to create artificial shortages. While people's sufferings are not high on the list of Li's concerns, social instability and the continued rule of the CCP are. Li was quoted by Xinhua as saying that while "social distribution" and welfare systems can be destabilising, so can corruption. Li's comments echoed Deng's — quoted in the People's Daily of October 1994 — that "Should problems arise, they will come from within the party". Such open warnings by the party's top bureaucrats given some insight into the CCP's concerns about its continuing legitimacy. Meeting the CCP leadership's targets will not necessarily bring a better standard of living for the people of China. When production is driven by the highest possible monetary return — the norm in a capitalist economy — what counts most is what sells, not what is most useful. Further, none of the excesses in growth, investments and prices can be solved solely within the economic arena. This can only come about with a redistribution of political power within a democratic and accountable socialist system.