Issue 103 of INTERNATIONAL SOCIALISM JOURNAL Published Summer 2004 Copyright © International Socialism
For over ten years the US's rulers have been obsessed with China's threat to their domination of the world. Economically, politically and militarily China is a world power that the US cannot control and cannot ignore. Indeed, the Project for a New American Century was partly based on the need to confront China. One of its earliest statements argued:
China's leaders want their country to become the region's next great power. Whether we admit to it or not, there is a competition between the US and China over whether the current international system which favours America and its allies in the region will be maintained, or whether it will be replaced by one more favourable to the present Chinese regime.1
Yet they also need China to stabilise world capitalism. When east Asia's currencies melted down in 1997, China's refusal to devalue contained the crisis. More recently, China's support for the 'war on terrorism' has greatly benefited George Bush. And then there is North Korea. The US cannot do to North Korea what they have done to Iraq, because North Korea really does have weapons of mass destruction. The slow-burning crisis in Korea will have to be resolved diplomatically, and in that process China, as the only state with any influence over North Korea, is central to US strategy.
US fears are well justified. Since 1978 the Chinese economy has grown phenomenally. Consider the headline figures:
Aside from a short dip after 1989, economic output has grown by 9 to 10 percent annually for the last 25 years--three times as fast as the US.
China is the sixth largest trading economy in the world--fourth including Hong Kong.
China is the second largest recipient of foreign direct investment after the US.
On the World Bank's definitions, the number of Chinese living in poverty dropped from 270 million in 1978 to 90 million in 1996.2
Yet behind the headlines there are enormous contradictions. China's economic boom is almost entirely based in a few south eastern coastal provinces; it is heavily dependent on the export of cheap consumer goods to the US and Europe; the economy has suffered from repeated periods of boom and bust which are largely beyond the government's control; and China's accession to the World Trade Organisation (WTO) will sharpen all of these contradictions.
The effects on Chinese society have been equally contradictory. Millions of people have seen little or no increase in living standards in the last 25 years, while hundreds of millions have found their lives more precarious and dangerously unpredictable. Inequality has reached a pitch never seen since 1949--the gap between between cities and the countryside, and between the booming coastal provinces and the rest of the country, is far greater than ever before. Even in the most prosperous areas the gap between rich and poor has further widened in the last ten years.
Some Chinese workers have responded by fleeing to the West to find work. When 58 Chinese migrants died in the back of a lorry in Dover in 1996, this highlighted the new poverty in China. The tragic deaths of 19 cockle-pickers in Morecambe Bay in February 2004 showed that the traffic in human misery was continuing. A recent investigation by The Guardian brilliantly documented the lives and the hopes of these migrant workers. As one of them explained:
In China, millions of rural poor people from the interior provinces who travelled to Shanghai suffered the worst kind of treatment and had no status despite their hard work. It was ironic that Shanghai urban poor were migrating to the West for work and facing the same kind of exploitation.3
That is a brutally exact description of the impact of globalisation upon millions. For China's boom is a product of globalisation, not just internal changes. The ruling class's aim was to integrate China fully into the world economy. They have succeeded far beyond their expectations, and they now find themselves trying to manage a process they have lost control of. The enormous problems that they face are precisely products of their success.
One of the biggest of those problems is the return of mass protests. The 'Tiananmen Square' massacre of 1989 crushed the biggest mass movement in China since 1927, but it did not kill off all protests. In 1991 The New York Times printed extracts from an internal Chinese Communist Party (CCP) report which spoke of:
...rising numbers of group incidents [whose] scale has been expanding, frequently involving over 1,000 or even 10,000 people... Protesters frequently seal off bridges and block roads, storm party and government offices, coercing party committees and government, and there are even criminal acts such as attacking, trashing, looting and arson.4
In this article I aim to do three things: firstly, to explain how and why the Chinese economy has grown so rapidly and to uncover some of the consequences of this growth; secondly, to look at China's position in the world and in particular the shifting relationship with the US, and to examine how the economic, military and political tensions are likely to play out; lastly, to describe some of the most important changes in Chinese society, especially the rise of mass protest, and to examine the prospects for real change in China.
The starting point for understanding China's success since 1978 is the failure of the economy under Mao. From 1949 the ruling class sought to build a modern industrial economy capable of competing with the rest of the world using the methods of Stalin's Russia: state-directed development of heavy industry isolated from the world economy, financed by limiting consumption and collectivising agriculture to more efficiently exploit the peasantry. This worked up to a point--the Chinese economy grew faster in the 1950s than at any time previously. According to Mao, 'The ratio of our country's accumulated capital to national income was 27 percent in 1957, 36 percent in 1958 and 42 percent in 1959'.5
This wasn't fast enough, however. In 1957 Mao launched the disastrous 'Great Leap Forward', which aimed to accelerate development by substituting sheer willpower for scarce capital. Up to 30 million people died in the famines caused by the 'Great Leap',6 and it cost China something like ten years of economic development. The 1961 split with the USSR worsened the damage, as China lost much-needed aid and technical help. On one estimate, it wasn't until 1965 that total production reached the levels it had been at in 1957.7 By then, however, Mao was already planning his next campaign.
The 'Cultural Revolution' ravaged China from 1966 to 1969. Planned by Mao as a means of removing his opponents inside the ruling class, it rapidly spiralled out of control and caused even greater economic damage. By the early 1970s it was obvious to most of the ruling class that Mao's economic strategy had failed, and that some opening to the world economy was essential. This began under Mao--foreign trade trebled between 1971 and 1975, and China imported large numbers of industrial plants.8 However, because of the deep divisions within the ruling class, a decisive break wasn't possible until after Mao's death. In 1978 Deng Xiaoping consolidated his position as Mao's successor and launched the 'four modernisations'. The main constituents of this were: overseas investment and technology transfer; the introduction of the market into agriculture and large parts of industry; and breaking up central state control over the economy. However, the first phase of China's boom came about because of the unplanned growth of rural industry, which grew out of the reforms in agriculture.
In 1978 over 80 percent of China's population lived in the countryside--one of the highest proportions in the world. Agriculture was collectivised in the 1950s, and after 1957 the peasantry were herded into enormous 'people's communes' run on factory lines. By the 1970s agricultural production was stagnant because the communes essentially paid people (badly) just for turning up. The agricultural reforms allowed peasants to produce what they liked, pay a fixed amount in taxes and keep the rest to eat or sell. The result was a one-off leap in both output and productivity: between 1978 and 1984 grain output grew 33 percent, while output per acre rose by 42 percent.9 Peasant incomes rose even faster. Most of this new wealth went into house-building and higher consumption, which further stimulated economic growth. Essentially, China had an enormous reservoir of underused labour which could expand production at little cost to the central state (state investment in agriculture actually fell from over 10 percent of total state investment in 1978 to 3 percent in 1988).10
Rural industries were initially seen as merely useful for mopping up surplus rural labour and supplying extra resources for rural development. They quickly became the motor of China's industrial growth. In parts of coastal China the countryside underwent a transformation more profound than anything in Chinese history. As early as 1987 the output value of rural industries was half of total rural output value; by 1992 that figure had increased to two thirds.11 By the end of 1998 they employed 130 million people, one in five of the entire national workforce, and produced a third of China's gross domestic product (GDP), and half of China's exports.12
Rural industries grew so explosively because they could draw on cheap raw materials and components from state industry; because the agricultural reforms had created a huge demand for consumer goods; because they had easy access to both urban and export markets; and because local authorities were able to concentrate local capital and switch quickly into more profitable lines. The last point is central: rural industries were mostly run by the local state, not by private capital. As Joseph Stiglitz, then an academic adviser to the Chinese government, noted:
Township and village public enterprises were central in the early years of transition. IMF ideology said that because these were public enterprises they could not have succeeded. But the IMF was wrong.13
This was not a model that could be followed by other economies--indeed, it quickly became clear that it could not be followed by all of China. As early as 1982 per capita agricultural output in the coastal province of Jiangsu was more than double that of Gansu in western China, while over 80 percent of the population of Jiangsu had an income of over 200 renminbi a year, compared to just one third of the population of Gansu.14 And provincial averages hid even greater disparities between rich and poor areas in each province. The same was true of rural industry: by 1988 three coastal provinces, with just 17 percent of China's population, accounted for half of all rural industrial output.15
If China's rulers were surprised by the success of rural reform, they were less happy about the relative failure of the opening to the world economy. Their aim was to leap over China's industrial backwardness by importing advanced industrial plants, but this didn't work. In 1980, 1983 and 1985 major projects were cut back or abandoned. Foreign investment did increase, but most of it came from Hong Kong, and went into small, low-tech plants overwhelmingly in the coastal provinces. Between 1983 and 1991 over 40 percent of contracted foreign investment went to Guangdong province, and another 10 percent to Fujian (the province opposite Taiwan).16 While these added significantly to China's exports, up to 1990 they also added to China's balance of trade deficit as they drew in a greater value of imported machinery and raw materials.17
The faster the economy grew, however, the less it conformed to the plans set in Beijing. In part this was because of the pull of the world economy; but the larger problem was a fundamental shift in power inside the ruling class. The government deliberately decentralised economic power, allowing lower levels of the state to keep a greater proportion of profits and taxes. The expectation was that this would lead to greater efficiency, but what local officials actually did was follow their own interests. This is why Chinese economic development has been both so dynamic and so unstable: economic growth has been state-led, but by the lower levels of the state, leading to enormous duplication of investment and assets. As one recent study argues, 'The pattern of development under China's open policy depended greatly on the entrepreneurship of local bureaucrats or leaders of organisations and their ability to manipulate or evade centrally erected barriers to global transactions'.18
A government minister put it more starkly: 'If there were no such thing as corruption, there would be no such thing as [rural industry]'.19 'Corruption' means many different things: mostly, though, it is collective manipulation of the rules rather than individual theft. To give just one example, in the first six months of 1985 the equivalent of one third of China's foreign currency reserves was spent on illegal import deals.20 Periodic crackdowns made a few high-profile examples of minor officials. However, they couldn't halt the tendency of officials to take literally Deng Xiaoping's exhortation to 'enrich yourself'.
Crucially this was because there was no obvious dividing line between economic crime and the creative application of 'market socialism'. Every crackdown brought fears that the economic reforms would be reversed. Economic crime dropped, but so did legitimate business activity. The ruling class needed local officials to take initiatives and risks, to respond to and expand markets--in short, to behave as capitalists. The idea that they would do so without bending the rules or sticking their noses in the trough was utterly unrealistic. As Milton Friedman, who should know, later said, instances of economic corruption were 'manifestations of the market in a decaying planned economy'.21
In the countryside, grain production peaked in 1985. This was not a general crisis in agriculture--grain paid less than other crops, and peasants were simply switching to more lucrative crops. The government's response was to offer greater incentives for growing grain. Yet by 1988 grain rationing had returned to parts of the countryside. Local authorities took state-supplied fertilisers and fuels and resold them on the open market. The crisis was exacerbated by the state's shortage of funds. In many areas state purchasing authorities handed out IOUs for grain because they lacked the cash to buy it.
In industry the problem was the opposite--runaway growth led to simultaneous gluts and shortages in different parts of the economy, and a growing profits crisis in state-owned enterprises, as rural industries cut into their markets and raw materials sources. By mid-1988 over half of all state-and collectively-owned enterprises had failed to pay their full taxes. Partly this derived from a perception that the government could not enforce tax-paying, but it reflected a real economic crisis. Bankruptcy rates soared in rural industry, while 400,000 workers were laid off in Shenyang city. The official figure for urban unemployment almost doubled.22
In 1987 a survey of urban households found that in two thirds of them real incomes were falling.23 That year food prices rose by over 10 percent, and inflation worsened in 1988. As local governments withdrew food subsidies, there was both panic-buying and a run on the banks in the summer of 1988. The government's response was to tighten the credit squeeze, which sent large parts of the economy into full-blown recession. Then in May 1989 the cities exploded. I will return to the political importance of Tiananmen in the final section; here I want to look at the economic impact of the uprising and the repression, and to examine how the Chinese economy has taken off again since the early 1990s.
The repression that followed June 1989 had contradictory economic results. On the one hand, it stopped inflation--by September 1989 consumer prices were falling24--and it reined in the excessive growth of previous years. Between mid-1989 and mid-1990 GNP growth was zero or negative.25 The repression was also accompanied by a crackdown on official corruption.
But the economy was failing. The losses of 'enterprises with independent accounting' (the majority of state-owned enterprises) more than doubled in 1989, and almost doubled again in 1990.26 Deng made his comeback in 1991 with a long tour of southern China, in which he praised the Special Economic Zones and called for creating 'several Hong Kongs' within China. At the CCP Congress in October 1992 Deng removed many of his opponents and promoted a new generation of technocrats. Economic growth soared again, crucially because of new sources of foreign investment: one unique to China, others symptomatic of 'globalisation'. The amounts involved were greater than ever before; foreign investment was more in 1992 than in 1979-1991 combined, and the figure almost doubled in 1993.27
Hong Kong was the unique source of much of this investment, unique because of its particular economic relationship with China. In the late 1980s Hong Kong capitalists began moving their manufacturing operations wholesale across the border. Guangdong offered them lower labour costs, and much cheaper land for expansion. By 2000 manufacturing employment had fallen to 250,000 in Hong Kong (from 900,000 in 1981), while Hong Kong companies employed five million workers in China.28 One academic study concluded:
Since the late 1980s a single area of economic activity has come into being. The degree of interpenetration is such that there is now only limited value in describing the activities of Guangdong and Hong Kong separately. Greater Hong Kong is a growing area of economic integration that originated in the economic interaction between Hong Kong and the Pearl River Delta area.29
This shift dovetailed with a wider trend in the world economy: the growth of 'outsourcing', as consumer goods manufacturers closed factories and relied instead on buying in from contractors based in 'export processing zones'. For Naomi Klein, whose No Logo was one of the first books to document this shift, it was all about the rise of the 'brand':
It is changing the very face of global employment. After establishing the 'soul' of their corporations, the superbrand companies have gone on to rid themselves of their cumbersome bodies, and there is nothing that seems more cumbersome, more loathsomely corporeal, than the factories that produce their products.30
In fact, as she notes a few pages later, much of the production in these zones is components rather than finished 'branded' goods, so this is a more general shift in world manufacturing patterns, albeit one which has limitations. The zones have typically attracted low-tech, labour-intensive manufacturers (more accurately, assemblers) in search of cheaper production costs (taxes, land and raw materials as well as labour)--they are not an option for car assembly, steel-making or aerospace, to name but three. As she noted of one Filipino zone, 'Part of what contributed to the unbearable lightness of Cavite was that apart from one incinerator, there were no smokestacks'.31 And they're not an option for every consumer goods manufacturer, either. However much Rupert Murdoch might dream of it, there is no way that he can print The Sun in China or Sri Lanka.
Significant amounts of investment have also gone into heavy industry, services and finance, but these have either taken off very slowly or failed completely. One partial exception is those industries directly fuelling the construction boom: steel, concrete and power. Even here, however, the growth in imports far outweighs domestic production. In the mid-1990s, with much of the world economy in recession, big companies rushed to invest in China, drawn by the prospect of 1.3 billion consumers. However, most of them had simply extrapolated from the surface prosperity of Shanghai or Shenzhen, and the markets failed to appear. One of the most spectacular losses was made by General Motors, who planned a factory making electronic fuel injection systems--which no Chinese car manufacturer uses!32
However, where many of the giants of world capital have failed, the minnows have thrived. The resurgence of the Chinese economy since 1992 is founded on this new wave of foreign investment in assembly and small-scale manufacturing. By 2000 foreign-invested firms produced one eighth of all manufacturing output and almost half of all China's exports.33 Yet this enormous expansion has produced a new set of problems. One is the rise in imported components and raw materials for the exporting firms. Until 1998 the value of their imports exceeded the value of their exports, and even now the difference is very slight. Nicholas Lardy noted:
Their very rapid growth created only a limited demand for inputs produced by domestic firms. Thus a very large part of the export-producing sector could be seen as an enclave, with limited linkages to the rest of the domestic economy, which remained much more insulated from the international economy.34
The growth of foreign-invested firms also accelerated the crisis of state-owned enterprises, which by the mid-1990s were in meltdown. Between 1987 and 1994 their profits fell from 7 percent of GDP to just 2 percent, and in the first quarter of 1996 the losses of failing enterprises exceeded the profits of all others.35 Most were kept going by a constant injection of loans from the state banking system, which they were not required to pay back. On one calculation, this unrecoverable debt meant that by the mid-1990s the entire Chinese state banking system was technically insolvent.36 The high level of household savings means that they can carry on rolling these loans over for some time to come, but it also means that the entire system becomes progressively more unstable.
Renewed growth again sparked high inflation. By 1994 it had risen to over 21 percent,37 and there were clear signs that the economy was overheating. The ruling class responded with a savage programme of closures and rationalisation. This began in textiles, which was worst hit by competition from rural industry and foreign-invested firms. By 1996 in Shanghai alone state-owned textile firms had laid off 240,000 workers, half the 1992 workforce, and in 1998 a three-year plan for textiles called for 1.2 million sackings nationally.38 Other industries swiftly followed--by 2000 some 30 million workers had been laid off (out of a state workforce of 100 million),39 and since then things have got far worse. The official unemployment rate rose from 3.1 percent in 2000 to 4 percent in 2002,40 and the real figure will be much higher.
The Chinese economy was already slowing down when the 'currency crisis' of 1997 hit east Asia.41 On the surface, China weathered the crisis, but the economy was hit badly by the aftershocks. Foreign investment and trade slumped, markets in east Asia dried up, and by the end of 1998 almost one in ten rural industries had gone out of business. Some 20 million former peasants lost their jobs.42 They found little relief in their home villages. After 1989 large areas of the countryside went into reverse. In at least ten inland provinces average farm incomes fell absolutely43--meaning that the decline in the poorest areas was far worse. The government's response was a massive increase in investment to raise production, but to the extent that it succeeded it simply transferred the pressure elsewhere. The runaway inflation rates of 1994--the worst since 1949--were largely caused by rising food prices.
The ruling class face an insoluble dilemma. From 1990 to 1998 grain production increased barely ahead of population, and the growth in wheat and rice production--the staple foods of north and south China respectively--fell far behind.44 China's rulers have no means of forcing the peasants to grow more food--if they pay higher prices they either have to subsidise urban food prices or risk urban rebellion against inflation. Nor can they turn to imports to fill the gap. China is now such a major player in world trade that any sharp increase in imports will massively raise world prices. As one environmentalist study noted:
China's heavy cotton imports in early 1995 have helped push world cotton prices to the highest level since the US Civil War. Despite a world record soybean harvest and the largest year-to-year increase ever in the world crop, vegetable oil prices actually rose following that harvest, in large part because of China's record imports.45
What is true of agriculture is equally true of the whole economy. China is less exposed to the slowdown in the world economy than other east Asian economies, but the Far Eastern Economic Review's (FEER) gloomy analysis of east Asia's prospects is a portent of the future:
The puncturing last year of the Nasdaq stockmarket bubble exploded once and for all the myth that new technologies were immune to the business cycle. While the US eliminates the overcapacity built up by companies' massive overinvestment in technology, business spending has all but dried up. That means little or no US demand for the high-tech hardware that Asia excels in producing. At first Asian businesses pinned their hopes on European demand, but it is now clear their optimism was badly misplaced. America's new economy did deliver greater efficiency in at least one area: the US has proved remarkably effective at exporting its own slowdown.46
China has for now the advantage of cheapness, and has managed to grow through the slowdown by taking market share from other east Asian economies. In 2003 even the SARS epidemic couldn't stop that growth: official figures show that overall output grew by 9 percent, with industrial production up 17 percent.47 However, even without the threat of world recession, China's economic problems are formidable. Spurts of runaway growth, accompanied by rapid inflation, lead to overinvestment, overproduction and mini-recessions; state-owned industry continues to stagnate despite huge redundancies and closures; rural industry has not recovered from the aftershock of 1997; and the government has to spend more of its decreasing revenues on controlling the monster it has created. On one mid-1990s estimate, 'over a third of the national state budget is devoted to tempering the impact of competition, regional differences and market forces'.48 But it is the world economy that will decide what happens next.
In the first stage of reform, the Chinese economy boomed by using productive capacity that had been underused during the Maoist era, and initial economic growth then sparked off further expansion of the economy. However, the recession of 1988 marked the end of that road. China's resurgence since 1992 has depended above all on the largely speculative US-led boom of the 1990s.49 A recent study of the US economy points out why this cannot last:
The deflation of the stockmarket bubble is propelling a US economy heavily overburdened by manufacturing capacity, towards a serious recession, and in the process detonating further recession all across an advanced capitalist world that is similarly held down by superfluous productive power. The resulting downturn is weighing particularly heavily on the triangle of interlinked economies in east Asia, Japan and the US itself, so that a mutually reinforcing downturn seems in prospect... In sum, the US economy is vulnerable, through any one of a series of alternative channels, to a self-reinforcing international recession in the real economy that could set off, in a variety of ways, a financial explosion.50
The US ruling class have to balance layer upon layer of contradictory interests in formulating their China policy. Below I deal separately with the economic and political/military aspects of this, but it is important to understand that the two strands are tightly interwoven, and tensions in one area inevitably spill over into the other.
At its simplest, there is a split inside US capital between those who profit from China's expansion and those who lose. So Wal-Mart, which relies heavily on imports from China, is for greater trade with China, while the textile industry is opposed. Even here, however, there are counter-currents. The US steel industry, for example, benefits from exporting high-grade steel, but loses out to lower-grade imports, and is barred by the Chinese government from investing in the steel industry. However, this isn't evenly balanced: most big US capitals have substantial stakes in China, or want to, and their pressure has been important in muting US government economic moves against China.
By 2000 China had become the eighth largest overseas market for US firms.51 But trade the other way was much greater--that same year the US trade deficit with China reached $84 billion, almost one fifth of the total,52 and by 2002 it had jumped to $103 billion.53 Much of this came from US companies relocating production either directly to China, or from elsewhere in east Asia. Cheap imports are one of the main factors propping up the US economy's shallow recovery since the dot-com crash of 2000, while the dollar mountains in east Asia are partly invested in the US, helping to offset the lack of domestic investment. For some commentators this marks the US becoming parasitic on the rest of the world economy, using the dollar to suck in cheap imports and investment. In reality it's more like an unhealthy symbiosis--two drunks propping each other up. What Alex Callinicos notes for Japan is equally true for China:
The Asian capitalisms that hold vast quantities of American dollars--even though US interest rates are relatively low--do not do so out of fear of the Pentagon's might but for reasons of their own self-interest. This apparently irrational economic strategy is in fact largely a case of what has been called 'exchange-rate protectionism'. Thus Japanese banks and corporations...help to keep the yen's exchange rate relatively low and thereby to maintain Japanese competitiveness. American and Asian capitalisms are bound together economically by a complex web of mutual interdependence.54
China's entry into the WTO in 2001 was expected to redress that imbalance. The government promised to do away with tariffs on imports, open up more of the economy to overseas investment, and cut subsidies. They also agreed to discriminatory rules on exports, as well as to a number of other stricter than usual provisions. In theory this will allow Western companies to expand production in China and export more, while slowing the growth of Chinese exports, at a significant cost to Chinese workers. China's state council estimated that WTO accession would cut half a million jobs in the car industry, and more than 11 million jobs in agriculture.55
The obvious question is, why was China so keen on WTO entry if it was going to lose out so badly? Partly, the WTO rules will be useful for the central ruling class in reasserting their control over local officials and managers. It is not efficient for the economy as a whole to allow local officials to prop up stagnant or loss-making enterprises, and the WTO rules will give Beijing a weapon to use against them. It will also force Taiwan to open up trade and transport links. Most importantly, China simply has no choice. The restrictions on exports are less harsh than existing restrictions, such as the Multi-Fibre Agreement in textiles. Essentially the ruling class will accept the shrinking of some areas of the economy on the gamble that expansion in other areas will make up the losses. In an inherently unstable world economy it's better to be inside the body that's mainly responsible for managing the effects of the world economic crisis, whatever the costs. In the longer term it will make the Chinese economy more vulnerable than ever to the rhythms of the world market.
China has also emerged as a political and military threat to US hegemony in the post Cold War world. This is new: the partial undoing of what Alex Callinicos describes as 'the partial disassociation of military and economic competition, which developed within the Western Bloc after the Second World War'.56 For the first time since the US achieved global dominance it faces a rival that threatens its power both economically and militarily.
It is important to be clear about what that threat is. China's ambitions are regional, not global: to become the dominant power in east Asia. Even the most deranged hawks do not believe that China would attack the US. The threat is rather that US policy is built on stopping any one country achieving the power in east Asia that China wants. Two longstanding China experts spelt it out clearly:
A China that was free to devote itself not only to development of a blue-water navy but also to long-range airpower--both planes and missiles--would be able to hinder or even block the United States if it felt it necessary to send forces to Asia to protect our interests there... The United States would lose the ability to fight limited, regional wars similar to the  Gulf War for the simple reason that China, if it chose to do so, could prevent other countries from providing necessary territory and cooperation.57
That was written before the onset of the 'worldwide war against terrorism' following 11 September 2001. China supported the US attack on Afghanistan and tacitly supported the war on Iraq. For now, China has signed up to the 'anti-terrorist coalition' and the US has no choice but to be grateful. Nevertheless, the underlying tensions remain, and could surface at any point.
Those tensions have already led to several significant incidents. In 1996 China announced missile-firing exercises off the Taiwan coast days before a presidential election. The Clinton administration ordered battleships into the area, in effect daring the Chinese to increase their firing zones. This followed a standoff between an American naval task force and Chinese forces off the Korean coast in 1994.58 In 1999, after the Chinese embassy in Belgrade was bombed during the Kosovo war, mass protests erupted in cities across China--the first national protest movement since 1989. Huge crowds besieged the US embassy in Beijing, and the US consulate in Chengdu was torched.59 And in April 2001 the Chinese air force forced down a US spy plane on Hainan island.
For China, US arms sales to Taiwan are deliberate provocations, as is the 'son of Star Wars' programme begun under Clinton. Although in theory aimed at North Korea, this obviously threatens China. The Chinese ruling class see both of these as part of US plans to keep China weak, and they have reacted accordingly. Military spending has soared, particularly since the 1991 Gulf War. According to Stockholm International Peace Research Institute figures, in this period military expenditure rose by anything between 275 percent and 560 percent.60 While the army has been slimmed down, the emphasis has been on acquiring the latest high-tech matériel, in particular for the navy and the air force. And this new matériel has been used, or at least deployed, in the two major flashpoints between China and other countries: the South China Sea and Taiwan.
At issue in the South China Sea are two island groups, the Paracel and Spratly Islands (Xisha and Nansha respectively in Chinese). The Paracels are roughly equidistant from China and Vietnam, southwest of Hainan island; the Spratlys are a thousand miles south of China, nearer to the Philippines and Indonesia. There may be oil underneath them, but they also control access to the South China Sea itself, one of the world's busiest trading waterways. China has built bases on two of the southernmost Spratly Islands, and in 1988 fought a short sea battle with Vietnam there. Other countries have also seized and fortified some of the islands (though Malaysia has also, rather bizarrely, built a tourist resort).61 Full-scale war over these islands is unlikely (not least because there's nothing to attack) but any serious military conflict or tension could easily spill over here, and severely disrupt the whole east Asian economy.
It is Taiwan, however, that holds the greatest potential for military conflict. The Taiwan Strait remains the world's most dangerous flashpoint outside the Middle East. To understand why, it is necessary to trace the relationship between China and Taiwan as it has evolved over time.
Chinese colonisation of Taiwan goes back at least to the 15th century, although for much of that time Chinese emigration to Taiwan was punishable by death. Various Western powers established colonies or trading posts, which lasted until the 1640s, when they were expelled by Ming dynasty loyalists, following their defeat by the Qing dynasty. The Ming loyalists established the first Chinese control of Taiwan, intending to use it as a base to retake the mainland. In 1684 the Qing defeated them, and Taiwan was incorporated into China.
Chinese rule was continually challenged by rebellions, by both the indigenous population and Chinese settlers. One historian records 159 sizeable rebellions during the two centuries of Qing rule, and quotes an official's saying: 'Every three years an uprising, every five years a rebellion'.62 In 1895 the Qing ceded Taiwan to Japan after a war, and the island remained under Japanese rule until 1945. The Japanese era was characterised by rapid economic development and an even greater repression. Despite this, however, Taiwan does not seem to have been an issue for the Guomindang (Nationalists) or the CCP during the Chinese Revolution of the 1920s.63 Indeed, a small 'Taiwan Communist Party' was founded in Shanghai in 1928,64 some of whose members played a leading part in the 1947 uprising.
In 1936, the American writer Edgar Snow interviewed Mao Zedong and asked him, 'Is it the immediate task of the Chinese people to regain all the territories lost to Japanese imperialism?' Mao's reply was:
It is the immediate task of China to regain all our lost territories, not merely to defend our sovereignty below the Great Wall. This means that Manchuria [the three north eastern provinces] must be regained. We do not, however, include Korea...and if the Koreans wish to break away from the chains of Japanese imperialism, we will extend them our enthusiastic help in their struggle for independence. The same thing applies for Formosa.
This was not an internationalist perspective, but a Chinese nationalist one--the CCP had become a wholly nationalist party following the defeat of the 1925-1927 revolution. Mao spelt out what he meant by 'lost territories' by saying, 'The Outer Mongolian republic will automatically become a part of the Chinese federation, at their own will. The Mohammedan and Tibetan peoples, likewise, will form autonomous republics attached to the Chinese federation'.65 Taiwan wasn't on the list, but by 1949 this had changed. When Mao announced the founding of the People's Republic of China in October 1949 Taiwan was listed among those parts of the 'motherland' still to be 'liberated'. The reason for this was the persistence of the Guomindang regime in Taiwan.
In 1945 the Guomindang regained control of Taiwan, and at first systematically looted it. This generated enormous anger among Taiwanese against 'mainlanders',66 which in 1947 erupted into Taiwan's biggest uprising ever. Police bullying sparked a riot in Taipei, Taiwan's capital, which escalated into mass demonstrations, accompanied by a mini-pogrom against 'mainlanders'. Local elites took control, and came together to form an island-wide Settlement Committee. Their demands were for autonomy, rather than independence, but this was enough to spark a Guomindang invasion, which put down the rising with massive brutality. After their defeat in the civil war, the remnants of the Guomindang forces fled to Taiwan in 1949.
They were only saved from invasion in 1950 by the outbreak of the Korean War, and then by enormous military and financial aid from the US--between 1949 and 1967 Taiwan received $4 billion of US aid.67 Taiwan became a military dictatorship run by a parasitic caste of 'mainlanders'. Martial law, declared in 1948, was only lifted in 1987. However, 'mainlander' rule came to be increasingly tolerated as the economy boomed through the 1950s and the 1960s. Four factors underpinned the boom: the general boom in the world economy; US aid; land reforms which boosted output and undercut the Taiwanese elite; and a very high degree of state control of industry--as late as 1960, 48 percent of industrial production came from the state sector.68
By the 1970s Taiwan had become one of the 'tiger economies' of South East Asia. Politically, however, the Guomindang were losing a major battle. In the 1950s and the 1960s their claim to be the legitimate government of all China had been upheld by the West. Then US priorities shifted, as Nixon discovered that China could be an ally against Russia. In the last 30 years Taiwan has lost diplomatic recognition from all but a few countries, and hangs on to representation in bodies such as the IMF and World Bank only on China's sufferance. None of this has significantly harmed the economy however, which has continued to grow, though more slowly than in the 1950s and 1960s. As one writer noted, 'Taiwan is the richest and most successful pariah in the world'.69
In the same period Taiwan underwent a significant political liberalisation, under the pressure of world events and opposition at home. Following Chiang Kai-shek's death in 1975, his son Chiang Ching-kuo took over as president, and allowed greater press and electoral freedom, interspersed with several law and order crackdowns.70 In 1977 and again in 1979 there were opposition demonstrations of tens of thousands, all of which were attacked by the police and ended in rioting. In 1986 the opposition coalesced into the Democratic People's Party (DPP), which two years later won 35 percent of the vote in parliamentary elections. Formally, they just called for a referendum on Taiwan's future, but in reality they were for full independence. However, they built their support primarily by backing social movements rather than focusing on the 'national question'. The growing freedoms of the 1980s produced large numbers of illegal strikes, environmental protests, a movement for greater rights for the indigenous people, and increasingly violent protests for electoral reform.
The Guomindang itself was evolving. Chiang Ching-kuo died in 1988 and was succeeded by Lee Teng-hui, a Taiwanese. That same year saw a Taiwanese majority elected to the Guomindang's leading body. Under Lee's presidency the claim to rule all of China was relegated to occasional rhetoric, and the government increasingly acted as though Taiwan were an independent state. In 2000 Chen Shui-bian, the DPP candidate, narrowly won the presidential election, though his campaign concentrated on social issues rather than independence, while the Guomindang vote was split. In 2001 the DPP became the largest party in parliament.
That political evolution has been accompanied by a massive growth in trade, economic links and travel to China. Roughly 40 percent of Taiwanese overseas investment goes to China, as well as a quarter of Taiwan's exports,71 and both figures are likely to increase with China's accession to the WTO. Taiwan's capitalists are following Hong Kong's in shifting manufacturing capacity into China--in 2002 Taiwan was the third largest investor in China.72 For many Taiwanese capitalists, China is the future and they are lobbying hard to remove the remaining restrictions on trade and investment. The economy is recovering only slowly from the recession of 2001, and both domestic and foreign investment are sluggish, due to China's strong pull.
According to neo-liberal economic theory, the inexorable growth of economic ties should defuse the military tensions between China and Taiwan. In fact, military tensions have sharpened while China and Taiwan's economic links have multiplied (though not because of them). China's position since the early 1980s is that they are willing to offer Taiwan the same 'one country, two systems' deal that has (so far) worked in Hong Kong and Macao, but they will invade if Taiwan formally declares its independence. Military strategists are divided on whether an invasion could work, but most agree that the threat is real. China's rulers could not afford to ignore such a blow to their prestige, not least because of the double-edged nature of popular Chinese nationalism.
For the US, the stakes have changed. The encirclement of China they seek cannot be enforced solely through Taiwan. However, keeping Taiwan out of China's hands is still a critical part of their plans. And 'defending Taiwan against Communist aggression' is a touchstone issue for the far right of the Republican Party--Bush's core constituency. The US is thus tied into a military posture that it would not choose but cannot extricate itself from, and one which will continue to be a destabilising factor in its relationship with China.
What then should socialists say? There is no intrinsic reason why Taiwan should not be part of China. Taiwanese culture is 'Chinese', as the near-universal use of the term 'mainland' shows. There is a widespread assumption in the West that the vast majority of Taiwan's people are pro-independence. But according to the Far Eastern Economic Review:
There are a significant number of voters who either support reunification or are neutral on the issue and most of these are mainlanders and their descendants, the Hakka minority and Taiwan's aborigines. These groups make up 35 percent of the population.73
And the DPP's election results during the 1990s show that independence is not an automatic vote-winner--their support came from being the Guomindang's only opposition, and it grew again in the late 1990s only after they had backed away from independence.
The 2004 presidential election showed the depths of that split. Chen Shui-bian won by less than 30,000 votes, and at the same time lost a referendum on advancing towards independence. The so far unexplained shooting two days before polling may just have won him the election, but it prompted demonstrations of up to 500,000 people demanding a recount. The accusation that Chen had staged the shooting to gain a sympathy vote may seem far-fetched, but it was believed by large numbers of Taiwanese. The narrow result highlights the splits inside Taiwan's bourgeoisie over their relationship with China.
Do Taiwan's workers and peasants have anything to gain from formal independence? The problems they face--growing unemployment, inflation, environmental degradation--are problems of Taiwanese capitalism, which formal independence would not change in the slightest. Mass Taiwanese nationalism is a very recent phenomenon, essentially a creation of the 'invasion' by the 'mainlanders' in 1945-1949. But the fact that those terms have to be put into inverted commas shows the complexities here. It is not clear that Taiwanese identity is fundamentally different from the strong regionalist identities, particularly in southern China, where everyday language and culture are quite distinct from those of the north. Seeing yourself as 'Cantonese' does not preclude also identifying yourself as 'Chinese'--the two are complementary, not contradictory. This is partially borne out by a 2003 opinion poll in which 43.8 percent of people said they were both Chinese and Taiwanese (41.5 percent identified as Taiwanese only, while just 9.9 percent identified themselves as Chinese only).74
Equally, however, there is no compelling reason why Taiwan should be part of China. The claim that Taiwan is 'an integral part of the motherland' is based on imperial conquest. Parallels with Hong Kong and Macao do not work here--they were Western colonies taken by force, and it was entirely legitimate to support China's claim to them, in opposition to the legacy of colonialism and imperialism. Taiwan was never a Western colony, and even if the regime was once a US puppet, it clearly isn't any longer. In the abstract, it is difficult to see why the right of self-determination should not apply to Taiwan.
However, the issue will arise not in the abstract, but in the context of continuing US attempts to assert their dominance as the world's only superpower. Clearly socialists could not support a Chinese invasion of Taiwan--in exactly the same way as we opposed the Chinese army's murderous occupation of Beijing in 1989. We oppose the Chinese state's imposition of its authority by armed force, whether this is on Chinese citizens or anyone else. But it is abundantly clear that China will not invade short of an outright formal declaration of independence. No Taiwanese government would do this unless they were assured of the full military backing of the US, or unless they believed they could drag the US into a full-scale war against their wishes. Given these circumstances, any Taiwanese declaration of independence would in effect be a declaration of war by either Taiwan or the US on China, and thus something that every socialist should oppose.
This is the nightmare scenario, which while far-fetched is not impossible. At the moment there are powerful forces operating in favour of the current status quo. For China's rulers, closer economic ties hold out the prospect of peaceful assimilation as with Hong Kong, while China offers Taiwanese capitalists bigger markets and investment opportunities than they currently have. However, political or economic crisis in either China or Taiwan could push either ruling class towards outright confrontation--the dangers will not simply disappear as economic ties multiply, and may indeed grow worse.
China is now a significant investor in the US and across the world--by the mid-1990s it was the eighth largest supplier of outward investment in the world.75 The dollar surpluses that China has accumulated are being used to buy manufacturing capacity and raw materials provision, as well as military hardware. In the US economic tensions are currently centred around the argument for China to revalue its currency to allow overseas firms to export more to China. However, some economists doubt that revaluation of the currency would have any significant impact on trading patterns with the US-American exports to China grew enormously in 2002 as a result of WTO entry. And in the same year seven US companies were among the top 50 Chinese exporters to the US,76 giving them an immediate interest in maintaining the present currency relationship.
Militarily, tensions continue to mount, although they are overshadowed by American military adventures in the Middle East. The 'son of Star Wars' programme divides the US establishment, with many arguing it is a waste of money, but its further development will necessarily provoke China. The continued arming of Taiwan will similarly remain a justification for China increasing its military expenditure and potential reach. And the US is unlikely to find a useful proxy power in east Asia to restrain China. This is firstly because China has been working steadily to build the Association of South East Asian Nations (ASEAN) into an economic and political challenge to US hegemony;77 and secondly because there is no one country in the region which could rival China.
Economic, political and military tensions, though they may arise from different causes, all tend to reinforce one another. Under the Bush administration there has been a rise in economic sanctions against China for 'illegal' arms exports, which has bled over into other economic negotiations while not actually halting Chinese arms exports.78 And major parts of US capitalism are contributing to China's arms expansion--aerospace and computing are two industries for which China is an important market, and technology transfers in these areas will necessarily carry over into China's arms industry. China's rise to being an economic and military threat to US imperialism is both a product of, and an increasingly necessary prop for, US capitalism. As economic ties deepen between the US and China, so too will political and military tensions. It is glaringly obvious that the neo-liberals' dream of global economic integration leading to a decrease in military competition is precisely the reverse of reality. We still live in the world of imperialism as Bukharin and Lenin described it almost 100 years ago, where greater economic integration and competition lead to a greater, not a lesser, danger of wars.
Although China remains a repressive police state, it is far less so than 25 years ago. The government deliberately scrapped many of the controls on everyday life to make economic reforms work. Freedom of movement had to be allowed if markets were to flourish; some freedom of speech was necessary if officials were to tell the truth about the economy and debate policy options; and denouncing the Cultural Revolution would win back popular support for the government.
In this they were initially very successful--there was mass popular support for Deng Xiaoping's effective burial of Maoism. But as ever in repressive regimes, when the government allows limited freedoms, people try to grab far more. This exploded in the 'Democracy Wall' movement of 1979-1981, when thousands of former Red Guards started unofficial magazines and free-speech forums in cities across China. The movement quickly went beyond the allowed boundaries and was repressed from early 1979 onwards, finally disappearing in 1981 after a nationwide crackdown. Its themes and demands remained central to opposition in 1989 and beyond, however.79
Arbitrary repression continued through the 1980s, but the trend was towards removing controls over everyday life. This mostly took forms that were not overtly political, such as the flourishing of the press and the arts, the revival of 'clan' or lineage organisations in parts of the countryside, and the widespread revival of both indigenous religions and Christianity. At the same time there was an enormous boom in consumer goods in the cities and the more prosperous rural areas. For the more optimistic China-watchers, 'civil society' seemed to be gradually overwhelming the old authoritarian state. However, for many people the last 25 years have involved enormous losses as well as gains. Here I will look at just three areas--the status of women, healthcare and the environment. In all these areas the losses have been worst in the countryside, and worst of all in the poorest areas.
The agricultural reforms have removed any pretence of women having separate incomes, and new jobs are almost all gendered according to traditional notions of 'men's work' and 'women's work'. Arranged child marriages, child marriages and bride prices have all returned to the countryside,80 as has the traditional idea of a daughter in law being entirely subject to her in-laws. And while official figures on education are contradictory, it is clear that girls are systematically taken out of school to work in the fields or rural industry.81
In the cities the worst discrimination against women has come in redundancies and factory closures--one 1997 survey found that over 62 percent of those laid off or unemployed were women, though they made up less than 39 percent of the urban workforce.82 In part this is because closures have hit hardest at those sectors which employ most women (particularly textiles), but it is also because 'married women first' is the rule in redundancies. One recent study even reported a collective divorce petition from women workers in a Sichuan enterprise, in order to keep their jobs!83
The 'one-child' policy has been the most chilling indicator of women's worsened status, however. This was introduced to slow population growth, and it led in the countryside to hundreds of thousands of girls being killed or abandoned in the early 1980s. This was because of a near-universal belief that if the family can have only one child, it has to be a boy--a belief which has a starkly simple economic explanation. Children are required by law as well as custom to look after their parents in old age, but a girl's duty is to her husband's parents, not her own. Given the disappearance of even the minimal security provided by the communes, peasant families reasoned (correctly) that if they were not to starve in old age they had to have a son. This cruel dilemma weighed worst on the poorest families: even in the early 1980s richer families could simply defy the policy. As one study noted:
If couples violated the policy and had a son, however, payment of fines was transformed into a near-ritual performance. Cadres sent to collect the fines were received happily, and couple paid the fine as a part of the celebration of the birth.84
Following widespread defiance the policy has been repeatedly revised, and in effect it is now a 'one son' policy. Increased mobility, growing affluence and the availability of ultra-sound scanning to determine a foetus's sex mean increasingly that either female foetuses are aborted or the birth of a girl is simply not reported, though some girls are still abandoned. Women in Maoist China were far from liberation, but in almost every respect women's equality has declined during--and because of--the market reforms. It is important, however, to note two countervailing tendencies. The first is that practically all researchers report that there is a greater equality in deciding how peasant family income is spent, and the higher a woman's earnings the more likely this is.85 The second is that while life in the villages may have got worse, the opportunities for escape have become far greater. As one study noted:
Despite discrimination, rural women workers generally regard working in cities as an opportunity. Many young unmarried women use migration as an effective means to resist undesirable arranged marriages. Freedom of mobility, in fact, also enables them to quit and change jobs frequently, the most common form of their resistance to abusive bosses and intolerable working conditions.86
The economic reforms initially sparked a great improvement in health in China. Higher wages and greater food production led, on one set of figures, to a leap in average life expectancy from 62 in 1976 to 69 in 1983.87 Since then, however, there has been no further improvement, and the gain was in any case lower than during the Maoist years. On official figures, the numbers of 'village doctors' (trained to paramedic standard or less) fell by over half between 1975 and 1990.88 Rural clinics and hospitals require payment before treatment, and for many peasants the costs are far beyond their means. Preventive medicine has all but disappeared, and as a result infectious and epidemic diseases have returned or greatly increased, while falling living standards have meant a huge rise in malnutrition. A 1997 UNICEF study found that almost 40 percent of children in rural areas suffered from malnutrition, while a quarter of preschool children had anaemia or rickets.89 One health researcher argues that 'the state has simply withdrawn from healthcare in rural China'.90
The SARS epidemic that began in late 2002 highlighted the decline of China's healthcare system. Government secrecy, lack of trained medical staff and the high costs of healthcare all combined to allow the disease to spread rapidly. At its height, villages across northern China were quarantined off, everyday life in Beijing and Guangzhou almost came to a standstill, and the government was forced to build new medical facilities and force hospitals to give free treatment. Hong Kong's South China Morning Post, not a left wing paper, went to the roots of the crisis:
The SARS crisis exposed the poor condition of the mainland's health system, leaving the health ministry little option but to operate on itself... Free market principles were expected to reduce subsidies. Hospitals, equipment, ambulances and doctors were all assets that could generate income, the thinking went. Local authorities provide the medical facilities with a fraction of their running costs and staff are somehow supposed to make up the balance... Prescribing drugs is the saviour for most. The system has forced doctors to become entrepreneurs who dish out unnecessary drugs. On the mainland, 60 percent of total healthcare expenditure goes on prescribed drugs, against a global average of less than 15 percent. Market principles have failed the healthcare system.91
Even in the cities, where most health spending is concentrated, rising unemployment has meant that many workers have lost access to free treatment--and the growing numbers of 'temporary workers' from the countryside have no healthcare at all. Economic growth has also been accompanied by an appalling decline in health and safety in industry. Coal-mining, often carried out in tiny private pits with no safety equipment, is one of the most dangerous industries anywhere in the world. Large-scale accidents are a weekly occurrence--on official figures over 4,600 miners died in the first nine months of 2003. The same figures showed deaths outside mining rising by 19 percent in the same period,92 and both sets of figures massively understate the extent of the deaths.
One of the fastest-growing health threats in China is the spread of HIV and AIDS. They first appeared in the early 1980s among drug users, but the major source of infection has been blood marketing. The Guardian exposed the scale of this in Henan province, where up to a million people may have been infected through a blood-selling operation:
When local health authorities were suddenly told to start making profits in the late 1980s, as part of the country's drive towards capitalism, Henan's officials turned to almost their only untapped resource: the blood of the province's 90 million population... After extracting plasma from each 800cc donation, the collectors would pump 400cc back into the arms of the donors. It is believed that people's blood often got mixed up in this way, spreading HIV to almost everyone involved.93
And a follow-up report in November 2003 noted that the epidemic had spread to at least six other provinces.94 There can be arguments about whether the market has improved or worsened other areas of Chinese life, but in healthcare there is no such question--the market has brought misery, disease and death to untold millions of Chinese.
The same is true of the environment. Mao's China was an environmental disaster area.95 Lung cancer killed five times more city dwellers than the national average, and the city of Lanzhou in Gansu province, which had petrochemical smogs 35 percent of the time,96 was thought to have the worst air pollution in the world. But the industrial growth of the last 25 years has brought far worse air and water pollution, massive loss of agricultural land to industry, increased deforestation and the rapid spread of deserts in the far west. A recent survey in the north west found that 'the water supplies for more than half of the population in 21 cities and districts...did not meet government standards for industrial and agricultural use, let alone for drinking'.97 Across the country as a whole, in 1997 400 million people lacked access to safe water and 76 percent lacked access to safe sanitation.98
In the middle stretches of the Yangzi river, half the forests have gone since 1950,99 mostly in the last 20 years, which has led to both increased flooding and reduced water supplies. This has pushed the government to press ahead with the world's largest and potentially most damaging dam-building project--the Three Gorges dam on the upper Yangzi. When this is finished, more than a million people will have been forcibly relocated, and pollution has significantly increased on either side of the dam.
Air pollution is worst of all in the cities and new industrial areas, due to a combination of industrial growth and the rapid rise in car use. The incidence of lung diseases has doubled in the last 30 years,100 and acid rain from the cities now covers large parts of southern China and as far away as Korea and Japan. Although more state spending is now being directed to cleaning up pollution, particularly in Beijing in the run-up to the 2008 Olympics, the only serious improvements have come in those areas hit by massive factory closures.
For capitalism as a whole environmental degradation is a threat. However, for each individual unit of capital, the costs of stopping are greater than the perceived benefits--what is irrational for the system as a whole is perfectly rational for each individual. This can extend to whole states, as the US response to the Kyoto agreement has shown. The government is now tackling some of the worst symptoms of pollution, but without doing anything about their root causes. For the foreseeable future, continued economic growth in China will threaten not just the Chinese environment but that of all Asia.
One of the most fundamental changes produced by the reforms of the last 25 years has been the growth in expectations. Deng Xiaoping in 1978 promised greater freedom and economic prosperity, and these promises have fuelled an enormous upsurge in popular protest and willingness to challenge the government. The 1980s saw a rising arc of student demonstrations (often with significant workers' participation) and open dissident organisation, which culminated in the 'Tiananmen Square' rising of 1989.
There is no space here to do the rising justice,101 but a brief summary is essential to give an idea of its importance. Student protests against official corruption and for greater democracy sparked mass sympathy among workers hit by falling living standards and dashed hopes. When the students launched a mass hunger strike in Tiananmen Square, it became the most widespread protest movement ever in Chinese history. The students' example prompted the first open workers' organisation since 1949, with Workers' Autonomous Federations being founded in Beijing and at least 15 other cities. When the government declared martial law the mass of the population rose in opposition. Two eyewitnesses wrote in Socialist Worker:
All of the city centre, maybe six miles wide and six miles deep or perhaps more, is now under the control of workers and students. People talk of 5 million people, over half the entire population, out on the streets yesterday. Most of them are workers. Everywhere open-topped trucks packed with workers and students are passing. They all have red flags and banners flying as they speed from barricade to barricade, checking on the situation, seeing where help is needed. And everyone sings the Internationale over, over and over.102
The declaration of martial law raised the movement outside Beijing to new heights. The centres of of many cities were occupied for several days, while in Hong Kong a million people (one sixth of the population) marched in support. Facing an almost complete loss of control, the government prepared an outright military assault on Beijing.103 On 4 June 1989 the army invaded Beijing, firing at random into housing estates and barricades. The repression that followed was vicious and lasted for most of the year. Up to 400 people were shot in secret in Beijing alone in the first week of the occupation.104 Tens of thousands more were jailed, arrested or sacked.
The 'dissident' movement has taken many paths since 1989. Some have turned to underground union organisation, while others have tried to use legal paths now open to express themselves. The scale of such protests was shown by the New York-based Beijing Spring magazine, which listed 49 public dissident protests in September and October 1998 alone, one fifth of which had over 50 participants.105 Political organisation has also been helped by the spread of the internet and e-mail in China. It also played a major part in one of the stranger challenges to the government in recent years--the Falun Gong movement.106
Falun Gong was founded in the early 1990s as one of hundreds of sects teaching qigong--traditional health and meditation practices underpinned by a mixture of Buddhism, Taoism and Confucianism. Before 25 April 1999 few people outside China had heard of it. That day between 10,000 and 15,000 Falun Gong supporters demonstrated in the heart of Beijing, protesting over police attacks on an earlier protest in Tianjin. The protest was utterly peaceful, with most people sitting down and either reading or meditating. Nevertheless, it scared the government witless. This was the first mass protest in Beijing since 1989, and it had come out of absolutely nowhere. Falun Gong was quickly banned, but small demonstrations continued almost daily for over a year in Beijing and other cities. Tens of thousands of people were arrested, with many being sent to mental institutions, and by September 2001 at least 270 prisoners had died of beatings or hunger strikes.107 President Jiang Zemin was quoted as saying:
The Falun Gong sect poses as much of a threat to the Communist Party as the Solidarity movement did to the Communists in Poland in the 1980s. In a discussion with senior aides, Mr Jiang cited the Falun Gong movement, unemployed farmers and workers, and 'splittists' among ethnic minorities, as the most destabilising forces in society.108
Why should the government be so frightened of a religious organisation that disclaims any political ambitions? Firstly, Falun Gong has shown itself capable of organising in utter secrecy, showing that the state has lost its ability to control organisation from below. Secondly, Falun Gong seems to draw support from practically every and army. But the fear is not so much of what Falun Gong is, as of what it represents and what it could become.
In many ways Falun Gong is a textbook illustration of Marx's famous comment on the social roots of religion:
Religious suffering is at one and the same time the expression of real suffering and a protest against real suffering. Religion is the sigh of the oppressed creature, the heart of a heartless world and the soul of soulless conditions. It is the opium of the people.109
What Falun Gong represents is a totalising philosophy which can appeal to all of those who have lost out in the race to the market. The same reasons are behind the enormous rise in semi-underground churches and Christian sects in central China, particularly in Henan province. These have also been targets of repression, though on a far smaller scale than Falun Gong.110 Buddhist temples and folk religions have similarly expanded.
Chinese history is rich in examples of religious movements becoming mass peasant rebellions which have shaken or overthrown dynasties. The mid-19th century Taiping rebellion is the best known, but there have been hundreds of others. And there are serious parallels between mid-19th century China and today--the rapid spread of market forces destabilising traditional ways of life, throwing millions into poverty and rootlessness. The Chinese ruling class are only too alive to this threat. There have already been a number of attempts at millenarian rebellion in the last 20 years, such as a rebellion in Yunnan and Guizhou provinces in the mid-1980s, whose battle banners included the traditional 'Steal from the rich to aid the poor', the modern 'Support the left and oppose the right' and, tellingly, 'Oppose birth control'.111
However, if a millenarian rebellion is something that China's leaders may have to face in the future, they are now grappling with resistance from the other groups Jiang Zemin called 'destabilising forces in society'--national minorities, peasants and workers.
One of the reasons that China didn't go the same way as the Soviet Union was the national question. Some 94 percent of the population are ethnic Chinese (Han), though there are important language differences. Many of the largest 'national minorities' are thoroughly assimilated, with everyday speech and customs indistinguishable from their Han neighbours. In Inner Mongolia, Xinjiang and Tibet, however, there is a substantial nationalist feeling which sees China as an occupying power.
This is weakest in Mongolia, not least because substantial Han migration since 1949 means that Mongols are now less than 20 percent of the population. Yet in the Cultural Revolution Inner Mongolia suffered one of the worst repressions, with hundreds of thousands arrested, and up to 20,000 killed.112 It's likely that the repression rekindled the very nationalism it had been trying to suppress. Certainly the reform period has seen a substantial rise in Mongolian nationalism, particularly since the fall of the pro-Russian government in independent Mongolia in 1992. The primary focus of this has been language, with a large increase in Mongolian-language schools since the early 1980s. There is no real nationalist movement, and given the continued Han immigration the prospects for one are poor, but attempts at further assimilating Inner Mongolia into China are likely to meet resistance.
In recent years Xinjiang has seen repeated outbursts of opposition to Chinese rule, though it's not clear what sort of organisation has been behind these. The province was annexed by China in the late 18th century, and it is still ruled effectively as a colony. Mao's Red Army arrived in 1950 as conquerors, and faced armed resistance in the north of the province for several years. The impact of forced collectivisation sparked off a number of demonstrations and rebellions, culminating in a major armed rising in 1962.113
The Cultural Revolution saw attempts to extinguish Muslim and minority culture: mosques were closed and prayers forbidden, while the Uighur and Kazakh written languages were suppressed. In 1980 there were major riots in the town of Aksu after a child was killed, and later that year many Muslims joined demonstrations of up to 100,000 ex Red Guards who had been exiled from Shanghai demanding to go home.114 More serious trouble erupted in 1981 with armed rioting and at least one attempt to storm a Chinese army weapons depot.115
The government's initial response to these was a major liberalisation. Mosques were reopened and new ones built; bans on minority languages were lifted and new editions of the Koran were printed; and the government allowed numbers of Muslims to make the pilgrimage to Mecca. Despite these concessions, resentment against both Chinese racism and economic backwardness continued to grow. In 1985 there was a major student demonstration against nuclear testing and family planning policies in the capital, Urumqi, followed by a sympathy demonstration by Uighur students in Beijing.116
The largest ever pan-Muslim demonstrations took place in 1989, at the same time as the 'Tiananmen Square movement', though not directly connected with it. The protests broke out over the publication of a book, Sexual Customs, which was grossly offensive to Muslims. There were major protests across Qinghai province and in Lanzhou and Urumqi, where they turned into major riots. Less than a year later similar riots erupted in the town of Baren in the far west. Up to 50 people were killed, and the repression that followed saw mosques and Islamic schools across Xinjiang closed.117 The repression also sparked a sporadic bombing campaign by Islamic militants in both Xinjiang and Beijing, which continues to this day. In 1997 police attacks sparked a riot in the northern city of Guljia after which the city was sealed off for two weeks.118 Many smaller protests and riots doubtless go unrecorded.
After 11 September 2001 China was quick to jump on the 'anti Muslim terrorist' bandwagon, and has used this to justify its repression in Xinjiang. However, the resistance inside Xinjiang appears to be essentially home-grown, and has little connection with the shadowy overseas-based 'liberation' movements. Opposition to Chinese rule is fuelled by the continuing repression of Islam, the domination of Chinese in the education system, and China's economic plans for Xinjiang, which involve seeing Xinjiang as a major supplier of oil and other raw materials. The economic growth this has produced has been accompanied by mass Han immigration and increased unemployment for Muslims. Tragically, these tensions are more likely to erupt in communal violence than in a united opposition to the government. But for Beijing, Xinjiang remains a ticking time-bomb which could erupt at any time.
The same is true of Tibet, where opposition to Chinese rule is even more entrenched. Tibetans have suffered more than any other nationality from Chinese rule, and there has been resistance since the mid-1950s. In 1959 the Chinese army occupied the whole country, imposing a military administration and partition. Upwards of 55,000 people (roughly one in 60 of the population) fled to India, led by the Dalai Lama, Tibet's political and spiritual ruler. Since then Tibet has been ruled essentially as a colony--the first Tibetan was appointed to a senior government post only in 1979. Practically all Chinese officials treat Tibetans and Tibetan culture with racist contempt, as constant official documents attacking 'Han chauvinism' admit,119 and Tibetans face systematic discrimination in every area of work outside agriculture.
Tibet before the Chinese occupation was far from the 'paradise on earth' defenders of the old order paint. It was a desperately poor and desolate country, with a declining population ravaged by famine, whose peasantry were ruthlessly exploited to sustain a small feudal elite.120 But the reality is that most Tibetans are as poor and powerless today as they were before 1959. One brutal ruling class has been replaced by another equally brutal (and far better armed). The fact that 45 years later the vast majority of Tibetans want the old ruling class back speaks volumes for China's record in Tibet.
That hatred of the Chinese occupation is due to two factors: economic devastation, and the near-destruction of Tibetan culture during the Cultural Revolution. The economic disasters began in the early 1960s, when the Chinese insisted on Tibetans planting winter wheat instead of the traditional barley. This, together with a greatly increased exploitation of the land, caused widespread crop failures and food shortages.121 The horrors of the Cultural Revolution followed swiftly after. All Tibetan cultural and religious symbols were attacked as 'feudal', and thousands of people were jailed for their religion, or sometimes just for speaking Tibetan. In the 1980s the repression eased, and controls on Tibetan everyday life and culture were abolished. Large numbers of Tibetan officials were appointed, and living standards rose dramatically, with average income going from 127 yuan in 1979 to 220 yuan in 1981--though this simply meant that 'in objective terms the standard of living returned to the level the people had enjoyed before the Chinese "liberation"'.122 However, this fell far short of what most Tibetans wanted.
There were large-scale riots in Lhasa in October 1987 and March 1988, and smaller nationalist demonstrations both before and after them. Two events in January 1989 decisively changed the climate. The first was the removal of the provincial CCP secretary (the only one ever to speak Tibetan) for being 'soft' on Tibetan nationalism. The second was the death of the Panchen Lama, the number two in Tibet's political-religious hierarchy. He had initially collaborated with the Chinese, but was purged and jailed in 1964, and not released until 1978.
A number of funeral processions in the following month turned into pro-independence rallies, but were dispersed by the police. Then on 5 March--a major religious festival, and the date of the 1988 riots--another march attracted hundreds of urban youth and became far more militant. The police opened fire, and the demonstration exploded into the first uprising since 1959. For three days thousands of protesters took over the centre of Lhasa. Martial law was declared, and thousands of extra troops were flown in to suppress the rising. Since then a strong military presence and the growing Chinese population of the city have prevented any further risings, though in 1993 there was a significant demonstration focusing on economic issues.123 However, as economic growth continues to marginalise most Tibetans, there is no reason to believe that Tibetan nationalism is any less strong than in the past.
In the late 1970s and early 1980s the Chinese peasantry enjoyed probably the greatest improvement in living standards ever in Chinese history. The reforms made for a huge leap in their incomes, and the new markets meant that they were able to spend the money. This was a highly unequal process, and it was accompanied by the disappearance of almost all the social benefits once provided by the communes. Nevertheless, for much of the 1980s it's probable that most peasants' lives improved. Certainly in 1989 the lack of any substantial peasant involvement was one of the reasons that allowed the state to regain control so quickly.
But by 1989 large parts of the countryside had already gone into reverse. On the official figures, real average peasant income rose by over 10 percent between 1979 and 1984, but just 0.4 percent between 1985 and 1992.124 This got worse--across the whole of Hebei province, for instance, average incomes fell by more than 6 percent in the first half of 1993.125 This crisis has sparked off one of the biggest explosions of peasant anger and militancy since the mid-1950s. This is not a co-ordinated national movement--each local protest has its very specific local causes. But the same causes--illegal taxes, official bullying and corruption, illegal land grabs--recur time and time again.
The earliest known mass protest was in Renshou county, Sichuan province, in 1993. In a protest against illegal taxes that drew at least 10,000 peasants, they 'stormed the township and district governments and schools, beat up cadres and teachers, smashed public and private property, and illegally detained grassroots cadres [local officials] and public security personnel'.126 When the police tear-gassed the protesters, they took police hostages and set fire to their cars.
One researcher has listed major protests in 1993 in Sichuan, Anhui and Henan: 'hundreds of thousands of peasants...in over 50 counties in Hunan, Hubei, Anhui, and Jiangxi provinces' in 1997; ten days of violent rioting across several villages in Jiangxi in 2000; and the same area in Jiangxi in 2001, as well as several villages in Hunan and Sichuan.127
In early 2000 Li Changping, a county CCP secretary from Hebei, wrote an immensely detailed account of the impoverishment of the peasantry in his area, which later became a bestselling book. His account was particularly valuable for highlighting the link between peasant poverty and the inexorable growth of the local state machine. As he later wrote:
In the early 1980s, a county government plus all its annexes would have at most around 400 cadres on its payroll, and a township government with its annexes less than 40 cadres... Today, things have changed greatly. The total number of cadres employed by [Qipan township]...has swelled to more than 2,000.128
This was in a township with a population of 39,000, where the vast majority of the peasantry were losing money on farming. As he further noted:
Since farming was unprofitable, land was being abandoned. So fiscal charges shifted to persons. In some villages these amounted to more than 500 yuan per capita...and in addition there [was forced labour] for flood control, disaster relief and irrigation projects. Whether peasants cultivated their land or not, they were liable for capitation taxes...ground-rent for housing...and fees for private allotments.129
This picture of local officials soaking the peasantry sounds more like pre-1949 China--as John Gittings wrote, a 1940s report on Hunan province 'contains descriptions of extortion and oppression which could be duplicated today'.130 This is not deliberate government policy--the government wants to reduce the number of local officials, and continually bans new local taxes. Tellingly, a number of peasant protests have begun with attempts to distribute government propaganda aimed at curbing local officials. To make the reforms work, central government removed most controls over local officials and told them to pursue economic growth at all costs. Now they are attempting to rein in a millions-strong monster that they have created.
Crucially, they are trying to rein them in because of the explosion of peasant protests. As the last ten years in particular have shown, China's peasants will not passively accept whatever local officials impose on them. The ruling class are right to be terrified of a peasant rebellion--they have created both the conditions for one, and the conditions in which one can spread rapidly. However, the greatest threat to them comes from the resurgence of working class protest.
The revival of worker militancy has been astonishing, given that workers had borne the overwhelming brunt of the post-1989 repression. Yet in 1990, according to one source, some 37,000 workers took part in over 1,600 protests across China. These ranged from strikes and rallies to go-slows and petitioning local officials (probably the majority of actions). Clearly some level of organisation underpinned these actions--the same source claimed that there were 14 illegal workers' organisations in Beijing alone, the largest having possibly 300 members.131 By 1992 the government reported over 500 illegal workers' demonstrations and 480 'serious' work stoppages.132 By 1995-1996 this had become a massive strike wave, with over 1,800 strikes in 1995 and over 1,700 in the first nine months of 1996.133
Most of the disputes were defensive--over sackings, redundancies and pensions in the state sector, and bullying, poor working conditions and non-payment of wages in the private sector. The private and collective sectors account for most legal disputes, suggesting both that working conditions are worse and that it is more dangerous to strike, as employers can simply sack everyone and hire a new migrant workforce.
Since 1997 there has been a fundamental change in the state sector, as mass sackings have sparked a more violent--at times near-insurrectionary--series of disputes over unemployment pay, welfare benefits and pensions. The first of these exploded in the city of Mianyang, Sichuan province, where over 140,000 workers were unemployed. The China Labour Bulletin (CLB) reported:
Tensions were particularly high at the Silk Printing and Dyeing Factory...where the boss, Zhang Guoqing, had a notorious reputation for embezzling money belonging to the workers... After a notice was put up by a young worker claiming that a vice-mayor of Mianyang had agreed to meet the workers and answer their grievances, the workers' anger boiled over when the official failed to turn up. On 7 June they marched out of the industrial district towards the city centre, using dustbins to block up roads on the way. Many unemployed workers and migrant workers employed in a nearby High Technology Zone joined the march and a rally which followed. Some reports claimed that as many as 100,000 people took part in the demonstration, which lasted over two days. CLB's sources, however, say that there was a maximum of 10,000 people involved, and that manager Zhang Guoqing's house was ransacked by angry workers.134
Mianyang was important both because of the scale of the demonstration, and because it united workers from a number of different enterprises--in particular pulling together unemployed and migrant workers, between whom there are often major divisions. That same year the nearby city of Nanchong saw a 20,000-strong demonstration that kidnapped a factory manager to demand back pay, drew in thousands of workers from other enterprises--and won!135 This shows an important concession that the state has had to make: workers' protests and demonstrations, even if violent, cannot simply be repressed. As one researcher noted:
It seems that as long as workers' actions are not politically orientated but self-limiting to purely economic and livelihood demands, the state tends towards tolerance and limited concessions. However, arrest and imprisonment of labour activists have continued to send a powerful message concerning what the state designates as a most forbidden path of resistance--organised political dissent.136
In Mianyang dozens of workers were arrested but only one was jailed; the report from Nanchong doesn't mention arrests. In part this is an ages-old safety valve for repressive regimes--overturning unpopular local authorities makes them look benevolent. But it is also because the state simply does not have enough police to effectively clamp down. The combination of these factors meant that workers, within the constraints above, had a large degree of freedom in leaning on local managers and officials. Just how large is suggested by Liaoning province in north eastern China. As early as 1988 there were reports of almost 300 managers being injured in violent attacks in a six-month period, while in the provincial capital Shenyang, a majority of factory managers (54 percent) reported being threatened with violence or blackmail.137
However, as the crisis has deepened, the state has been more ready to take on worker unrest. In 1999 several thousand police attacked a paper workers' demonstration in Anhui, and hundreds attacked a miners' protest in Hebei province. The miners fought back, however, and won the freedom of an arrested leader, while in Hebei the paper workers' protests swelled to some 5,000 people as workers from other factories joined them. In February 2000, 20,000 miners in Liaoning fought a three-day battle with police, which ended only when the police fired warning shots.
At the same time as workers' activity has blossomed, there have been repeated attempts to set up independent unions or workers' organisations, though most have only come to light when the organisers have been arrested. The exact relationship between these initiatives and workers' struggles is unclear, but in at least some cases there have been close links. And at least some groups have, or have had, national structures or links that allow activists to spread information to much wider audiences.138
In the two biggest workers' battles of recent years, such links became explicit as both groups of workers publicly announced the formation of independent unions.139 The first took place in Liaoyang, Liaoning province, where workers from closed factories had for months been petitioning for the payment of back wages and social security. After the former mayor went on television to declare that there were no unemployed in the city, thousands of workers from 20 different factories marched to demand his sacking. After some of their leaders were arrested, the workers added their release to their demands. The movement subsided after significant amounts of back pay and severance pay were handed out, but two of the leaders remain in jail. Both are now seriously ill, and there is an international campaign developing for their release.140
The second was more significant, as one action stretched far across China. In early 2002 up to 50,000 workers from the Daqing oilfield took to the streets after a cut in heating subsidies. According to the CLB website:
After the Chinese New Year (12 February 2002), the workers were told that they would no longer receive any winter heating subsidies. In addition, each retrenched worker was required to pay 2,600 yuan a year into their social security fund. However, this increased to 3,600 yuan last year and yet again to 4,600 yuan this year... Workers from the Xinjiang, Shengli (close to Shandong Province) and Liaohe (Liaoning Province) oilfields staged solidarity demonstrations when they heard about the Daqing workers' struggle. Most significantly, the workers have set up their own union, the Daqing PAB Retrenched Workers' Provisional Union Committee, and elected representatives. The local authorities responded by sending paramilitary police, and deploying a PLA tank regiment. 'The workers have stood up to fight, and they will not be threatened [by the military presence],' the local official exclaimed.141
The following month:
...hundreds of oil workers in Lanzhou...blockaded roads to protest a low severance pay offer of about 1,000 yuan per year worked. They were reportedly inspired and emboldened by the unrest in Daqing, and overseas activists suggested that workers in the oil industry had their own personal and family ties across the country due to government-organised transfers between oilfields. Smaller protests in this old industry in eastern Hebei and Shandong reportedly broke out after the one in Daqing, but they quickly collapsed under government pressure.142
The biggest battles have been in those parts of heavy industry worst hit by unemployment, but workers in practically every industry and sector have taken direct action in protest against attacks on their living standards, and while many of these battles are won or gain significant concessions, repression is also becoming more severe. Despite this, there is no let-up in the struggles. In February 2004 the CLB website front page listed strikes and blockades by retired oil workers in Guangdong, taxi-owners and drivers in Sichuan, car components workers in Hubei and machine-builders in Henan. In the last dispute CLB noted:
In a remarkable show of honesty, the union chairman admitted that it was impossible for the official trade union to take any initiatives towards resolving the machinery workers' protest, or to assist in any negotiations between the government and the enterprise, because the union was under the leadership of the CCP. He concluded, 'It is impossible for the trade union in China [ACFTU] to act independently while the Communist Party is still around'.143
While it is still far too soon to talk of a nationwide workers' movement, it is clear that the potential for struggles to generalise is growing, particularly around issues of unemployment and social security payments. And while most activists are careful to steer clear of politics (in the sense of posing an alternative to CCP rule), the comments above show how political issues necessarily come to the fore in major struggles. Worker militancy is now entrenched in China in a way that would have been unthinkable before 1989, and for many activists the primary lesson of 1989 is now that they should have taken the lead from the students.
China today shows in extreme form both the strengths and the weaknesses of contemporary capitalism, the splendour and the squalor of globalisation. Since 1978 the economy has grown faster than at any time in Chinese history. Large parts of the coastal provinces have gone almost overnight from being sleepy villages to booming, sprawling and grossly polluted industrial complexes. And the trappings of modernity have spread to every city and many towns. For the boosters of globalisation, that surface glitter is what makes China look like the 'future of capitalism'.
Yet that boom is built on the heavily exploited labour of millions of ex-peasants fleeing the poverty and backwardness that still characterise rural China. The promises that the market held out but failed to deliver are at the root of the enormous upsurge of protest that has gripped China in the last 15 years. Each individual protest can be either bought off or repressed by the government, and in any case will not automatically generalise beyond the immediate group affected. There are enormous divisions between city-dwellers and migrant labourers, who are blamed for soaring crime rates and unemployment; workers' struggles do not automatically win peasant support, nor vice versa; and the continuing hold of Chinese nationalism means that nationalist struggles win very little sympathy in China proper.
Nevertheless, the examples of Mianyang, Daqing and the peasant riots in Hunan show that it is possible for such struggles to win widespread support. And the spread of movements like Falun Gong, the underground churches in Hunan, and minority nationalisms show a widespread searching for a global alternative to the CCP. What the government fears above all is a movement like Tiananmen Square in 1989 which can unify all those alienated from the realities of the market. If such a movement does arise--and it is an enormous if--it will have the potential to shake the ruling class as never before.
For world capitalism, China is simultaneously its greatest hope and its greatest nightmare. China is now an integral part of the world economy, both subject to the booms and slumps of the world market but also capable of fundamentally shaping those booms and slumps. In 2003 China consumed 27 percent of world, steel, 31 percent of coal and no less than 40 percent of cement.144 And one major cause of the recent oil price crisis is China's growing imports. China's integration into the world market makes that market more unstable, not less. If this is indeed China's century, it will be a century of economic turmoil and continuing threats of war and the foreseeable future, continued economic growth in China will threaten not just the Chinese environment but that of all Asia.