The Broken Iron Rice Bowl

by Kim Petersen

Dissident Voice

August 18, 2003


China’s Communist leaders bask in the limelight of furious economic growth. This growth is not without its undesired consequences. One consequence has seen many rural Chinese displaced from the land and headed off to the booming cities in search of work. A growing income chasm has opened between elite Chinese and the peasants. Communist leaders are aware of this problem.


In 2002 then Premier Zhu Rongji was reported by the Xinhua News Agency to say that “the central government will move to bridge the gap between the rich and the poor through fiscal budget arrangements and taxation reform, and tax policies will be the most important means to solve the problem.” Beijing professor of economics Han Deqiang agrees “in principle when Zhu wants to use taxation to reduce the gap between the rich and the poor. But given the condition of globalization and neoliberalism, the government has little space to do so.”


Even China’s much vaunted export engine will not escape the ravages of open competition. Says Mr. Han: “I don't think the current accounts can keep positive long after accession to WTO, and the same goes for foreign exchange holdings. More important, in my view, are bad loans accumulated in Chinese financial system because of unsolvable corruption and weak competitive status of [state-owned enterprises] SOEs in the face of [transnational corporations] TNCs.”


Must of the state-owned sector has now been privatized and this process is still ongoing. Qinghai University economist Qin Hui, interviewed in New Left Review, doesn’t argue against privatization per se but argued that, without democratization, privatization “will lead to much suffering and disaster.”  Mr. Han roughly agrees, but points out “in fact, SOEs are not really owned by the state and people but by more or less corrupted cadres.”


Mr. Hui is particularly concerned with the plight of the peasants. He doesn’t see distribution of the land as private property as important but rather the abuse of existing rights by political authorities; e.g. state expropriation for commercial development.


The dangers are many following WTO membership. Mr. Hui forecasted a possible temporary rise in GDP after WTO ascension but followed by continuous declines in employment, tax, and wage per GDP unit. TNCs will form part of their production base in China after having usurped Chinese industry. The peasants will lose their land and income. The buildup of bad debt will put the financial system on the brink. The Chinese people will be vulnerable to any economic collapse since the social system has been almost completely gutted.


Peasants’ livelihoods are, in large part, based on subsistence agriculture and WTO membership is unlikely to be kind to them. China negotiated an allowable small 8.5 percent subsidy under the WTO but this subsidy goes to the exporter of the farm produce. Mr. Hui wondered where the economic benefit in all this was for the peasants. “Chinese peasants have always received zero, if not negative, subsidies from the state,” relates Mr. Hui.


China’s domestic grain market had been stagnant for years, but when grain prices rose in Canada and the US due to natural disasters last year, Chinese exporters seized the opportunity. The subsidies they received from the Chinese state did not exceed WTO dictates, but were enough for them to buy grain from peasants at unprecedentedly low prices and then sell it at a handsome profit on the international market. The official media extolled this achievement as ‘transforming a challenge into an opportunity’, when in effect it was based on transferring real costs onto the shoulders of the peasantry, in just another example of heavy ‘taxation without representation’. Is a practice like this a surrender to America? A surrender to ‘globalization’? A surrender to the WTO? Or is it a surrender to the long tradition -- from the first Qin Emperor to Mao Zedong -- that does not treat a peasant as an individual citizen?


Emigration from the Countryside


The situation has led to an exodus from the countryside in search of jobs in the city. Hence a large migrant working force has evolved; some put this floating work force at well over 100 million Chinese. This has generated pressures in the cities, whereby the rural workers are often scapegoated for societal problems.  “[T]he state enjoys enormous powers and accepts few responsibilities,” says Mr. Hui.


According to labor researcher Tim Pringle: “History notwithstanding, there is little doubt that the practically universal attacks on working conditions that have accompanied the latest round of capitalist globalization have had their resonance in China. These attacks are directly related to the current explosion of labor unrest in China.”


Mr. Pringle notes that FDI creates jobs but it also brings misery to the masses of Chinese workers every year. Mr. Pringle cites the blunt assessment of human rights advocate Han Zhili in China's Department of Labor and Social Security:


Our labor relations are going back in time, back to the early days of the industrial revolution in 19th century Europe. Many of the enterprises set up with investment from Asian countries, along with privately owned Chinese enterprises, have reduced working conditions to a situation comparable to the initial period of capital accumulation that accompanied the appearance of capitalism. Forcing workers to labor long hours for very low wages and even workers signing ‘life and death’ contracts with employers. The problem [in China] is particularly serious in the south-east coastal regions and in Taiwanese- and South Korean-owned factories.


Human Rights Watch (HRW) makes clear its concerns in a politicized 2002 report: “The Chinese Communist Party is facing a serious dilemma: it claims to protect workers, but those very same workers are protesting in the streets,” said Mike Jendrzejczyk of HRW Asia. “These workers are protesting the hypocrisy of the Chinese government. Although the Chinese constitution calls workers ‘the masters of the country,’ the government treats protesting workers as criminals.” HRW noted among the causes of worker disgruntlement as unemployment, widespread penury, “conspicuous wealth” of others, institutionalized corruption, wage and pension arrears, loss of benefits, inadequate severance pay, and failure of the government to uphold pledges of new jobs. HRW suggests as a solution the release of all detained workers and granting the right for workers to organize.


A major drawback for workers is lack of independent union representation. China, which bills itself as a bastion of the worker, denies workers the right to organize and represent themselves. All workers come under the umbrella of the All China federation of Trade Unions, which is administered by the state.


Wanli University professor Qumei She, who grew up in the countryside, says that the conditions for workers in China now must be considered in light of history and current stage of development. In response to my query about workers’ rights to union representation, she says:


“There are labor unions in China, but again they are not exactly the kind of labor unions you have in your mind. The state has passed several laws in recent years to protect the worker's rights, as more and more workers are no longer employed by state-run companies. It will take time and more laws to solve the problem. China is going through a very critical period of time in its reform. Its industrial system is being reorganized.”


Australian National University researcher Anita Chan is blunt. She depicts China’s miserable labor conditions and niggardly wages as leading the developing world in a “race to the bottom.” Ms. Chan writes that the wages are very low relative to the cost of living in China and that the huge migrant work force is not sharing the standard of living with the urban Chinese. Yet it is this workforce displaced from the countryside which fuels economic growth. Ms. Chan describes the economy in China as growth without trickle down.


The two-tiered cities are readily apparent. In the south China city of Ningbo the downtown core features a renovated mall and plaza replete with American fast food franchises and fashion outlets catering to consumers with western tastes. The centerpiece is a spacious inner plaza, decorated with trees and flowers, interspersed with a network of shallow pools and fountains, which are color-lit at night. Only a couple of blocks away, however, rural people sell vegetables and fruit on sidewalks while keeping a wary eye out for the police. In the suburbs, new apartment blocks rise next to ramshackle abodes from which the residents emerge to wash their clothing in the murky river coursing through the region. The juxtaposition between the ‘haves’ and ‘have-nots’ is stark.


Ms. Chan pinpoints the hukou system as a major source of migrant worker vulnerability because it impedes labor mobility and leaves migrants susceptible to police abuse. Ms. Chan buttresses her thesis by pointing out to me the plentiful reports in the local Chinese press about police mistreating workers. She notes the seemingly endless supply of labor in cities that leads to a dog-eat-dog competition for migrant workers, with many migrants winding up as de facto “bonded labor.”


Ms. Qumei notes that most recently hukou restrictions have been relaxed.


“You must know even 15 years ago, rural workers were not supposed to come and work and live in the cities. They only “belonged” to the countryside, according to the law. You probably would raise the question: why workers, rural and urban, in a workers' state were not free to go anywhere they wanted to go? The answer was: what if all the people wanted to come to cities? Who was going to farm and how could the urban population be fed? You know ours was a so-called planned economy. Now things have changed: in theory, Chinese people can go any place they want… It is no longer right to force people to go back where their hukou is. The law is about how to help the part of the huge drifting population who can't support themselves.”


Ms. Qumei speaks of the average size plot of land owned by the peasants. “As far as I know, it was less than a mu (= 0.067 hectares) per head in this area even 25 years ago. China only had a population of 700 million then. There is simply not enough land for people to work on. Another reason that rural workers come to work in cities is that farm produce doesn't bring in much income, so it is hard to get rich (according to our standard) unless you farm in a large-scale. So the government now encourages large-scale farming. Of course, it will result in a huge amount of surplus rural labor. Two ways to absorb the surplus: develop industry in rural areas and allow rural workers to find jobs in cities.”


”The jobs most rural workers find in cities are nothing great. But they pay cash, which they can send home to folks who are too old or too young or too weak. Rural workers are not afraid of hard work, as long as they can earn money. If they stay home, they may earn much less. I spent the school year 1999-2000 teaching in a rural school in Sichuan. I saw villagers play mahjong every day. There was nothing much they could do. They had too much spare time, but too little cash, though they didn't seem to go hungry. They ate pretty well, in fact. More ambitious villagers either left for cities on the east coast or tried to make a few bucks by selling their produce in the markets in nearby small cities.”


”Even a wretched job is better than no job… Most rural works find their life in cities bearable because they have hopes and dreams: a color TV, a brother with a college degree, a new house to live in, or even a new apartment in one of the cities.”


Indeed, not all migrant workers paint a bleak picture. In Ningbo, Sun Ling Ping, a wiry street-vegetable seller from a village in Shandong province seems content. Mr. Sun belies the notion of a downtrodden peasant. He says he makes 50 yuan (about $US 6) profit a day and his wife likewise.  To put this into perspective, this migrant couple earns a little less than most teachers do in Ningbo. Compared to his life in rural Shandong, Mr. Sun is happier with his circumstances in the city.


Ms. Qumei agrees that the average Chinese enjoys a better life now and the country has made good progress, especially in being able to feed all its citizens.


“On a whole, though, people in China eat much better now than 20 years ago. When I was in rural Heilongjiang from 1969 to 1976, there was always a food shortage. Rice was not available, and each commune member was given 30-50 pounds of flour a year… now they could eat as much rice as they want, let alone flour. For such a big country as China, being able to feed the population reasonably well is a big achievement.”


Mr. Han calls for constitutional protections to be conferred to the peasants in cities. In line with a solution of Ms. Qumei to stem the outflow of people from rural China, Mr. Han looks to the US model of providing a higher rural standard-of-living. He states “No government could absorb such a large quantity of laborers with an acceptable level of social security.”


“We should rebuild, not abandon rural areas.”


Kim Petersen is a China-based teacher and writer on progressive issues. He can be reached at: kimpetersen@gyxi.dk


Other Recent Articles by Kim Petersen


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* Scarcely a Peep in Mainland China

* Verifying the Evidence

* Pulp Fiction at the New York Times: Fawning at the Feet of Mammon

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