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Mainstream, VOL LI, No 9, February 16, 2013

China: From ‘Revolution’ to Reform and Market

Monday 18 February 2013, by Anil Rajimwale


That is how the Chinese put it: ‘from revolution to reform and market’. Market, reform and ‘getting rich’ are the buzz-words in China today as it is undergoing massive changes and is emerging as an economic power. When asked about them, the academics and leaders in China explain that their country is going through a transition from ‘revolution and class struggle’ to reform, market and harmonious development. There is less of ideological Marx and Mao and more of pragmatic Deng and Hu combined with Confucius and Buddha there. In fact, Confucius is being put to good use in the economic-cultural context of the ‘primary stage of socialism with Chinese characteristics’. Market-based development best describes contemporary China, which increasingly criticises Mao’s utopian experiments, even while recognising his ‘great contributions’.

It is better to approach China without pre-conceived notions of ‘socialism’, which may prove utopian if we try looking for it everywhere; one will only be disappointed and confused, and really fail to understand the country. It is better to treat it realistically as a giant developing country with high growth-rates. This will reduce the scope of illusions.

A Visit to China

The present author got an opportunity to visit China recently as part of a delegation to study some of the latest developments in various fields, in particular in the high-growth areas. The visit helped us get a feel of that mysterious country. We visited Shanghai (Shang-hai), Xi’an (Shian) and Beijing (Bei-jing). We were housed in the CELAP (China Executive Leadership Academy Pudong) in Pudong, Shanghai. We also got an opportunity to visit Xi’an and Beijing. In Xi’an it was a wonder to see the world-famous 2200 years-old Terracota ‘Soldiers’ Cemetary’. We also had a glimpse of some advanced rural areas and were able to meet some rural personnel. In Beijing we met members of the International Department of the Communist Party of China’s Central Committee and other personnel of the state and the party. And it was a lifetime fulfilment to see one of the seven wonders of the world: the Great Wall of China, two hours from Beijing. The visits to some museums were also highly educative. And the visits to some shopping areas were important from the point of understanding today’s China better.

Our hosts were most cordial and helpful, looked after us efficiently and affectionately, and patiently answered every question that we fired at them.
CELAP is something like our administrative staff colleges combined with political schools. It maintains active contacts with the management and administrative as well political institutions of a large number of countries all over the world.
We had an opportunity to listen to the informative lectures by the faculty and to interact with its members including those in the party openly and frankly, even to the point of sharp discussions and criticisms.

Pudong is the eastern part of Shanghai. It has been developed only in the last two to three decades from rural marshy coastal areas into a giant free trade zone of a forest of high-rise buildings, many of them higher than 100 storeys. A view from the 283rd metre of one of the tallest towers of the world opens out a jungle of tall, massive buildings going almost to the horizon. The beauty is enhanced in twilight and evening by the play of colours of light. This is what business with foreign MNCs and companies has done to Shanghai and Pudong. It was a business centre before the liberation; it is a vibrant business and wealth generating centre today.
Pudong and many other areas are full of Western MNCs. There is a vibrant Stock Exchange too.

The city is absolutely clean, very well-ordered and full of foreign cars. This is also the characte-ristic of the other cities that we visited. There are a substantial number of two-wheelers including cycles, and there is an efficient public transport system. There are many battery-perated vehicles, particularly two-wheelers. A substantial part of the transport is privately owned, something with which China is at ease. Buildings are growing taller, old ones are being pulled down, greenery is being lost rapidly, and all in all typical business centres are underway. At the same time there a growing gap between the rich and poor.

A similar impression was gathered from the other places we visited.

General Impression

Wherever one goes, China gives an impression of a huge construction site, with the old structures and buildings being pulled down to make way for the high-rise, wide and intricate system of roads and flyovers, high-speed traffic and a well-organised public transport in general. The cities we visited are absolutely clean to a fault. There is a rapid trend towards ‘business’ and wealth production and ‘market’ is a common word. ‘Money-making’ is the commonest endeavour and purpose of life, in particular of the younger generation. The Western style and the ‘West’ in general have a deep impact on the common life, so much so that, to make things easier, the Chinese may add a Western name to their Chinese one, like ‘John’ or ‘Mark’ and so on. They are being asked to learn English. This may be appreciable but it also erases the Chinese originality. Plenty of houses and flats remain unoccupied. When asked about this, the academics attributed it to the ‘market forces’! The poor and migrants cannot afford them.

There is no doubt that the average Chinese works very hard, mainly to meet her/his two ends. The incomes are low and moderate and the prices slowly rising. It is common to see the Chinese struggling to find proper accommodation, food, clothing etc. which are not cheap at all, at least for the Chinese. We in India get a different impression due very cheap Chinese goods being dumped here. But this is not the reality for the common Chinese. Unemployment and underemployment are substantial, and casual labour on the ‘hire-and-fire’ principle is quite common.

Serious and Deeper Questions

The questions that naturally come to mind are: is China building socialism? Is it an equitable society? Then there are a number of questions related to unemployment, inflation, corruption, rising gap between the rich and the poor, FDI, MNCs and so on.

We tried to find answers to these and similar questions. No doubt there is rapid industrial/economic development and growth in China. Before going deeper into the question it is essential to remember that China went through a long period of Maoist destruction of productive forces during the so-called ‘great leap forward’, commune and the subsequent ‘Cultural Revolution’, aimed at building ‘communism’ in 15, 10 and then three years, and driving out the ‘capitalist roaders’ and ‘feudal culture’. It was one of the biggest ever destruction of productive forces in history.
The events threw China back by several decades. It was under this pressure of the need to develop that China took to modernisation after the death of Mao under Deng and successive leaderships. China decided that ‘distribution of poverty’ is not socialism. This helped it move away from the adventurist course.

The Chinese leadership has come to evolve the concept of ‘production and distribution of wealth’ and ‘get rich’ over the decades. The Chinese economy today is geared to the aim of producing as much ‘wealth’ as possible and to make people ‘happy’. This may be commendable in certain respects, but is fraught with serious dangers and the path may turn out to be slippery.

And here is the great dilemma and contra-diction of China: ‘socialism’ or productive forces. China has decided to develop the latter, with socialism at best a ‘by-product’ at the ‘pri-mary’ stage. As we said, China is better under-stood if ‘socialism’ is given the least priority.

This is one of the great theoretical as well as practical questions.

Development of Market Economy

We were told that China is busy developing the ‘socialist market’. It basically boils down to developing the market and market forces in full scale. Whenever the question of contradiction with socialism was raised, they explained that China was in the ‘primary stage of socialism’. All the possible hurdles in the path of market are being removed, and one of the major ones is the state sector itself. The state/public sector has today been reduced to only 30 per cent of the national economy; the figure will come down to 20 per cent in the near future, accordinghe Chinese authorities.

The Chinese use the term ‘state owned enterprises’ or the SOEs and non-state-owned enterprises. The latter include basically two types of businesses: the so-called ‘self-employed’, which is fast turning into full-scale private enterprise, and private sector proper. We got a taste of the ‘self-employed’ when we went to a huge store for a range of items, where you could bargain wildly and the prices could come down ten or more times in a matter of minutes!

In the Pudong free trade area we were told, proudly, that now at least 500 MNCs are operating there, and they contribute to the development of the Chinese economy. They include those from the US, Britain, Germany, France, the EU, and other advanced countries and areas. Walmart, Pepsi, MacDonald, Samsung and so on are everywhere. They are widely advertised in the TV and other media. Market is the ‘in-thing’, a fashionable word which shows how modern and advanced you are. The MNCs are permitted up to 100 per cent participation and are allowed to export all their produce, if they want. Some sell their goods in China and reinvest. Dollar is a common currency.

The growth of FDI is phenomenal. In Pudong alone, while there were 20 foreign projects in 1990, the number in 2010 rose to over 20,000. While foreign investment there was 34 million dollars in 1990, it rose to a whopping 56.292 billion dollars in Pudong alone.

Privatisation and globalisation are well-considered policies of the Chinese Government, and it is of the opinion that they contribute to the growth and prosperity of China. China has opened up particularly after joining the WTO, and since then it has actively sought foreign capital for its development. Its policy-makers think that it is one of the ways to enrich the people, create wealth and reduce unemployment. This policy is also creating ripples in the US business circles.
All the serious ailments related to the market economy can be met here.

Agricultural Migration, Urbanisation and ‘Primitive Accumulation’

China is undergoing a gigantic population transfer, particularly from the rural to urban areas. According to the figures released by the CELAP, 240 million (24 crore) agricultural population migrated to the urban centres in 2010 alone. This is a migration of gigantic proportion, and involves problems related to housing, education, wages, living standards, besides general social-cultural ones. While agriculture was contributing 30 per cent to China’s GDP in 1980, it contributed only 10 per cent in 2010. Today already more than half of the Chinese population lives in the urban centres. They want to bring down the population engaged in agriculture to only 10 per cent in the near future. The cities are expanding like anything and most of the structures near them as well as in large rural areas are being pulled down to make way for urbanisation. The problems of the migrants and rural population are serious and the Chinese authorities showed a certain awareness of them. They also told us that those living below the poverty line are getting reduced in numbers and proportion.

In other words, China is being urbanised on a massive scale with mass transfer of the rural population. The composition of the society is changing rapidly.

It is clear from facts and figures that the methods of ‘primitive accumulation’ are being used to create a market economy. What is the source and basis of the economic prosperity, wealth and cheap labour in the coastal regions? Who creates this wealth and capital? It is obviously the rural population, who are being uprooted and deprived of land and many established facilities. So, development of market and prosperity is being achieved at a certain cost. This is a serious problem faced by China.

It is this process which is mainly responsible for the emergence of billionaires in China, whose number is constantly increasing. When questioned, the Chinese leaders explained that their growth is not to the detriment of the society and they contribute to the economy in general. There is no possibility, they say, of the billionaires growing further and acting in their own interest.

But the question in the first place is: how and why at all did the billionaires come into being?

Ideological, Political and Cultural Questions

The political and social language and lexicon in China have undergone a sea-change over the decades. Today, the Chinese media, literature and personnel propagate ideas of wealth, prosperity, and harmony. They say they have left behind the stage of class struggle, which deprived the people of food and happiness. “Ideology does not give you food,” the authorities stated frankly. Obviously, the Chinese leaders have come to the pragmatic conclusion that the talk of revolution is useless, and the main task is to increase production and create infrastructure.
On being questioned about the growth of the MNCs and FDI, the Chinese scholars and leaders candidly described their personal experiences. They and their parents suffered pangs of hunger and deprivations, but now after the application of the new policies, “at least my parents and I can have two meals a day”. “We are more prosperous; earlier, we were poor and hungry.”

There is a clear shift in emphasis from Marx and Mao to the present-day leaders and on Buddha and Confucius. This accords with the concept of ‘socialism with Chinese characteristics’. The new ‘scientific approach’ tries to absorb everything that is new in management, economics and technology, and to this end they are cooperating closely with the West including the US, Canada, Western Europe etc. The language of business and management language is quite common and the younger generation excels in Western ways. A call has been given to learn English as this will help managing things better in modern cities. But this unfortunately does not square up with a certain proportion of illiterates and semi-literates as well as the poor and unemployed.

It is interesting to note that the role of the party and party cells is undergoing a qualitative change. The ‘ideological difficulties of the party are also due to a shift “from clear-cut to a blurring image”’. To quote from their literature, there is a transition from “localised communism and socialism to a mixture of socialism with Chinese characteristics, Confucianism, social democracy, nationalism and patriotism, materi-alism and consumerism resulting in “the powerlessness of ‘ism’”.
The party cell is more and more functioning as ‘party-state’ cell, taking the form of ‘party service centre’. The cells that we saw and are described in literature are more cultural and social units, trying to facilitate state work including in the free economic zones. In fact, the party cells have an added responsibility to see that no untoward problems arise between the foreign investors and the local workers and personnel.

Socialism or Capitalism?

Such a question would appear to be unimportant and secondary in the context of China. They have wrapped up such and related questions under the concept of ‘primary stage of socialism’, which may see a prolonged phase of growth and limitless expansion of the market including inevitably the giant MNC-type capitalism and a whole range of other types. China badly needs capital and productive and communicative resources, and that, in their view, only modern capitalism can provide which they say has still a long life of developing productive forces. Can development not take the path of ‘clear-cut socialism’? China seems to feel that socialism does not provide means and forces of production and therefore prosperity at present.

The Chinese literature and administrative personnel have dropped all references to ‘imperialism’. In fact, now they do not generally agree with this concept as the ‘world has changed drastically’. It is only in private talks that they refer to and discuss it. “It does not help talking of imperialism,” they say. They also make it clear that they are not following the Cold-War style world politics, and therefore they want to cooperate with the Western world in every field. ‘Capitalism’ is also referred to rarely and that too in a positive and cooperative sense. This accords with their concept of ‘harmonious development’.

Since it is mainly a question of development and growth rates, the advanced modern world market is the main engine for China’s development. For the present, China should better be described as an advanced developing country.

A deeper question remains unanswered. Can’t productive forces be developed with socialist or democratic capitalist methods without recourse to large-scale cooperation with big capital and the MNCs? In simpler practical view, can’t they have state and cooperative stores and production establishments rather than giant private malls and MNC-run structures/factories/establish-ments etc.? Capital is no doubt required but can’t the massive FDI and giant MNCs be avoided except where absolutely necessary?

A developing economy like China is at present unable to answer these questions, or is unwilling to. It has ‘more urgent’ tasks to attend to.

[Based on a paper presented by the author to the All India Progressive Forum, Delhi, on November 24, 2012]

The author is a member of the CPI National Council. He was part of a CPI delegation which recently visited China at the invitation of the Communist Party of China’s Central Committee.

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