Vol. 72/No. 7      February 18, 2008

After Chinese workers and peasants swept the landlords and capitalists out of political power in the 1949 revolution, land was nationalized and distributed to landless peasants. The capitalists were expropriated and industry was placed under state control, with centralized national planning and a monopoly of foreign trade. As a result, living conditions for toilers in the cities and in the countryside advanced qualitatively ahead of other semicolonial countries in the region.

But the new workers state in China was deformed at birth due to the counterrevolutionary policies of the Chinese Communist Party (CCP), a Stalinist party whose leadership sought above all to preserve its material privileges and those of the rest of the petty-bourgeois layers in the government bureaucracy—at the expense of the workers and peasants and of the world socialist revolution.

The forced collectivization of the peasantry and other bureaucratic policies in the first 20 years had disastrous consequences in China, discussed in earlier articles in this series. The last article described the shift that took place in the late 1970s, when the leadership under CCP chief Deng Xiaoping began to open up major cities on China’s coast to foreign investment and loosened restrictions on the establishment of private businesses (see January 21 Militant). The government moved away from centralized planning, which includes production decisions based on social needs and price controls. Instead they increasingly allowed prices, wages, and production to be determined by capitalist market methods.

There have been substantial changes in China’s economy as a result. From 1998 to 2003, the number of small and medium-sized factories operated by the state was cut in half. Some were merged into other state enterprises and many were sold to private owners. More than 27 million workers were laid off, according to the government. The total number of workers in state-run enterprises dropped from 110 million in 1995 to 66 million in 2003. The number of workers in “collective enterprises,” which have autonomy from central planning, went from 31 million to 10 million.

According to an October 2007 report to the U.S. Congress, China’s state-owned enterprises—which are concentrated in heavy metals, mining, petroleum and gas extraction, and transport equipment—produced about 75 percent of value-added industrial output before economic reforms in 1979. By 2005 they produced only 38 percent. Another 28 percent was produced by foreign-owned companies. Eighteen percent came from private, Chinese-owned firms, and the remainder from enterprises owned by local governments.

The Chinese economy grew by 11.4 percent in 2007, its fastest expansion in 13 years. It has grown by at least 10 percent in each of the last five years. Today China is the world’s largest producer and consumer of steel and the second-largest user of energy, the majority from coal. In 2008 it is expected to surpass Germany as the biggest merchandise exporter on the globe.  
 
Consequences of capitalist methods
This tremendous surge in the economy has improved the living standards of many Chinese, especially the middle classes and layers of the urban working class. It has raised the expectations of workers and peasants that a better life is possible. But the proliferation of capitalist methods, not only in privately owned enterprises but state-run ones as well, has led to an increase in social inequalities and a widening disparity between city and country.

A report issued in 2005 by the United Nations in collaboration with the Chinese government, the Swedish embassy, and Shell (China) Ltd., describes some of what has happened.

As the government diverted farmland to construct rural factories, power plants, and other projects, 40 to 50 million peasants lost the land they had worked. Many received no compensation.

The ranks of those called “migrant workers” swelled. These are workers who leave their homes in the countryside in search of work in towns and cities. By 2004 they numbered 140 million, with large “floating populations” of workers living in precarious conditions in major cities.

Under reactionary legislation introduced during the Mao Zedong years, migrant workers do not have government authorization to live permanently in the cities. They are not entitled to government pensions, medical care, or unemployment compensation. They do the hardest and most dangerous work, and are paid on average about 80 percent of what “legal” urban residents receive for performing the same work. Many labor seven days a week to make ends meet.  
 
Decline in medical care
Living standards in the cities are still superior to those in much of the countryside, however, even if one leads the harsh life of a migrant worker. According to the UN report, working people in rural areas make up the overwhelming majority of the poorest 10 percent of the population. Government spending on social services is 10 times higher for the cities than the countryside. Infant mortality—24 per 1,000 live births overall in 2006—is twice as high in rural areas. Many farm families cannot afford to send their children to school.

The government-funded health-care system has largely been dismantled as a result of the “market reforms,” and today working people in China pay increasingly more for medical services. While in 1980 an estimated 85 percent of rural toilers had some form of government-provided medical care, even if minimal, by 1998 less than 13 percent had access to any medical services. The number of rural health-care workers has declined by 12 percent since 1980.

In the cities, most low-paid workers lack the money needed to obtain medical care or go to school. “The best off generally are those working in state-owned enterprises, followed by those in urban collectives,” the UN report states. These workers are also more likely to have some benefits and protection from government agencies if they are laid off.

The frenzied pace of the expansion of industry under these conditions has led to horrific safety conditions. China’s Ministry of Health admits that the country has one of the highest rates of occupational disease in the world. Legislation introduced in response to black lung disease is routinely ignored by both state- and privately-owned coal mines, the UN report says.

“Statistics show that in 2003, China produced 35 percent of the world’s coal but accounted for 80 percent of the world’s coal mining-related deaths,” the report states. More than 3,700 coal miners were killed in 2007.

Along with this comes the destruction of the environment by industrial pollution and reckless developers who ignore the consequences of their construction projects on nature and surrounding communities.

While no capitalist ruling class has been reimposed on China, the number of superwealthy individuals and families has multiplied over the past decade, and many in the ruling state bureaucracy aspire to join them. The Wall Street Journal recently reported figures on China’s most wealthy. In 2006 there were 345,000 millionaires and in 2007 there were 106 billionaires—more than anywhere outside the United States.

The brutal conditions of work and growing social inequalities have been a source of protests by working people for years. In 2004, for example, Beijing reported there were 74,000 labor strikes, demonstrations, and other actions against layoffs, corruption, environmental damage, and working conditions in factories.

Around that same year, the regime began making some limited concessions. It started to dismantle a draconian tax on peasants. Some “pilot” medical projects were initiated in the villages. In 2005, the state began providing free textbooks and abolished school fees for the worst off children.  
 
Farmers take back land
The character of the struggles bubbling today in China is very much affected by the changes wrought by the socialist revolution there and its continuing impact on working people’s consciousness and self-confidence.

One example is a recent protest by peasants on the outskirts of the city of Fujin, close to the Russian border. In late 2007, thousands of peasants began a struggle there against officials who were selling off collective land to developers. In one village the peasants reclaimed the land and divided it up among the families, who had previously worked it collectively. The government moved to stop that and the leader of the peasants, Yu Changwu, was arrested.

The farmers released a statement on the Internet in which they said local officials “have actually become landlords. And farmers have been forced to become serfs. We decided to change the structure of land ownership and protect the land rights of farmers through family or individual ownership.”

A reporter for the Sydney Morning Herald, who went to the village and interviewed the peasants, discovered that they did not see themselves as fighting for “privatization” or personal gain, but rather trying to defend the nationalized land from corrupt officials. The January 4 Herald reported, “Peasants in Yu’s village say they do not understand the concept of private ownership, let alone demand it. They are content to continue the system of collective ownership and individual farming rights. They are not closely linked with activists in other villages, let alone other provinces, and they are fiercely proud that China is hosting the Olympics.”

The skirmishes over land use, the environment, job safety, and the high cost of living will not develop overnight into the kind of popular upsurges that swept Stalinist parties from power in Russia and Eastern Europe in the 1990s. But those battles are coming in China, and it will be evident when they do.

The privileged bureaucrats act as if China is immune to the growing crises of the world capitalist economy. But China is becoming more and more integrated with the world economy every day and cannot escape the consequences of the coming economic catastrophe.

The rise in world food prices is just one example. Last year university students at several schools boycotted the cafeterias over the high price of food. The rate of inflation last year was 4.8 percent, three times higher than the year before. In rural areas, inflation runs about 18 percent higher on average than in the cities.

Today, some in the bureaucracy aspire to turn China into a capitalist country, while others want to maintain nationalized property because they are afraid further upheaval would jeopardize their privileged social position. This will be a factor in the coming struggles.

Whatever the pace of the class struggle, capitalism will not be restored in China without a historic battle to defeat the working class. Today, however, the working class there is far stronger and more experienced than the one that overturned capitalist rule more than half a century ago.

Link to fourth article in series