A-Infos (en) China Focus (fr)

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This article translated fron Le Monde Libertaire gives some
background information on the current situation in China
and will be appearing in a forthcoming edition of FREEDOM.



CHINA FOCUS.

In September 1997, two months before the meltdown of the
East Asian banking system, the XV Congress of the Chinese
Communist Party took place. For on this occasion, and with
regard to the reform of the industrial state, the different
tendencies within the bureaucracy came together on a
circumstantial compromise. Once again this compromise takes
into account both the power- relationships which exist in
its core and the dangers of social revolt. 

Since the middle of the 1980s the necessity of reforming
the industrial state has haunted the Chinese bureaucracy.
Some statistics help pinpoint the problem. This sector
brings together some 120,000 large-scale enterprises of
which 7,000 are directly controlled by the central
government - essentially those making up the backbone of
the military-industrial complex and which represents more
than 100,000 million workers. The sector today is 70% in
debt with losses rising regularly by 10% pa. Up until
recently the state banks soaked up the deficit but 20-30%
of bank loans remain unpaid. For some years the state has
refused to finance this as it was a source of inflation.
Whereas this sector constituted 80% of industrial activity
in 1980 by 1997 the figure had fallen to 30%. These big
enterprises modelled on the old Soviet model continue to
pay only the social minimum in the way of remuneration:
lodging, social security, pensions. One can easily
understand that the deconstruction of this sector leads
directly to social questions. It implies, eventually, the
end of the ancient right to an 'iron bowl of rice' or
stable employment. Today this is threatened not only by the
financial withdrawal of the state: workers are no longer
paid, pensions are reduced or eliminated. The social
consequences of this reform are simply added on top of the
precarious nature of the new workers status called 'the
porcelain bowl of rice' and the massive migration of
'floating workers' and social inequalities along with
savage exploitation in the foreign capital enterprises of
the Special Economic Zones (SEZs). 

At one time the Chinese bureaucracy thought it would be
able to introduce into the state sector the western
criteria of profit by linking salary and productivity. But
the essence of exploitation of labour under capitalism is
to not allow extensive exploitation to become its intensive
variety. A qualitative jump in the process of labour
valorisation being impossible, the ruling class found
itself obliged to find other solutions. First it avoided
the problem by setting up the SEZs where the workforce is
for the first time treated as just a commodity. Then it had
to modernise political control of society following the
disappearance of the old Maoist ways ('movements', mass
organisations, demonstrations, self- criticism etc.) which
had disappeared more forcefully with the dismantling of
collectivised agriculture.

THE BUREAUCRACY SHARES OUT THE PROFIT

Today the bureaucracy pretends, at last, to be in a
position to launch a frontal attack on the dismantlement of
the Industrial state. In fact, this process has been in
progress for many years. With all the prudence a situation
of social instability calls for the local authorities have
gone for mergers, liquidations and bankruptcies. Those
state enterprises that were made self-managing had to face
up to market competition. The ruling class is simply trying
to adapt the juridical framework to the new situation by,
for example, voting through a law relating to bankruptcies.
These modifications are carried out, however, without the
concept of sate property being really damaged. In
particular, the bureaucracy is still refusing the idea of
the privatisation of state enterprises in big industry and
prefers to lay the emphasis on the transformations of these
businesses into companies based on shares and by setting up
companies to manage public assets. This allows for capital
to be shared out among the different cliques in the
bureaucracy. Workers also find themselves obliged to buy
shares in these companies... the only way they can preserve
their status as a government employee! This, in effect, is
another cut by the state in the meagre workers salary and
represents forced savings. Despite these 'patriotic
efforts' in 1997 the reform of the industrial state saw
2,000,000 workers made unemployed and 10,000,000 are
expected to join them over the next three years. Those
workers who in the past had a secure job thus discover the
laws of insecurity. Apart from unemployment there are a
whole range of intermediary possibilities going from
keeping the status of a state worker but without a wage (in
order to save on social contributions), to the mutation of
affiliated enterprises set up by the state and functioning
in a market framework. From one end of the process to the
other, it is the bureaucrats who are calling the shots
along with all the abuses imaginable.

THE WORKERS


The ruling class, fearing the chaos that would be provoked
by a social explosion, is not out of the woods yet. During
the debates at the XV Congress, Zhu Rongji, third in
ranking in the state apparatus declared with non customary
frankness, 'I fear that full scale  reform of state
enterprises might unleash social convultions we can only
have difficulty in imagining'. In actual fact these last
few months have seen more and more workers revolts in more
and more regions and towns against the consequences of the
reforms. The demonstrators often focus their anger on the
communist party buildings - deemed responsible for the
situation. For the moment these revolts have been
localised, which allows the central powers to use either
the carrot or the stick as appropriate - oblige the banks
to release the necessary funds to clear up back payment of
salaries or send in the police. The randomness of the
revolts is so great that people have looked back
nostalgically to the 'socialist good times' - a situation
which brings to mind what happened in the XUSSR. Moreover,
such sentiments find an echo among the conservative faction
in the hierarchy or those who have not known how to make
some profit from the dismantling of industry and the
advantages of the market. These are then revolts which have
little of a spirit of hope and have no direct links with
the strikes in the SEZs which are being used against a more
ferocious form of exploitation and bosses authoritarianism.
This also explains the different attitudes of the former
mass organisers: the unions, womens organisations, the
youth, pensioners. In the SEZs they play a role of
providing the work force which has been added to their
traditional role as police auxiliaries (informers, strike
breakers etc.). In those regions where the dismantlement of
industry is taking place they have set up social welfare
bureaux to find work for the unemployed, that is to say
charity organisations whose responsibility is to keep the
poor compliant. Behind the facade of reform we can also see
the transformation of the bureaucracy and its economic
role. In those regions where reform is most advanced we can
note the creation on a massive scale of businesses
affiliated to state industry but functioning in the private
sector of the economy. Most of these companies are
dedicated to trade. They have appeared from 1985 but have
really taken off since 1992 that is to say after the
crushing of the revolt at Tianan'men square and the
repression which followed it. Often they limit themselves
to playing on the difference in prices between the Plan and
those of the market for produce which comes from the state
industries. In most cases, these companies empty the state
enterprises of their most modern assets - material and
human. It is in this way that the members of the
bureaucracy who control them are carrying out a transfer of
productive activities which belong to the 'state's
property' to those companies in the market sector.
Generally it is only after this has been done that
bankruptcy is declared.

THE GREAT LEAP OF SPECULATION

In conclusion, if the legal status of property remains that
of the state we are witnessing an appropriation of capital
and the profits of the old state enterprises. This
appropriation rarely is put into new productive investment,
a relaunch of production on firmer capitalist bases. The
bureaucrats who seize these riches invest them in
speculative sectors, within the country (real estate,
prostitution or drugs) or overseas (Asian stock exchanges
or even the international money markets). A small
proportion is reinvested in the SEZs by handing over the
funds to the Hong Kong diaspora or elsewhere. As in Russia
we are witnessing a systematic pillaging of assets from the
former state sector to the profit of those sectors of the
economy best adapted to the market and most integrated in
the international capitalist system. All these observations
lead to serious doubts of this becoming a classical
transformation from a bureaucracy to a bourgeois class. 

When we take into account that the Korean banking system
was a model for the current regime in China we can see why
incompetence and disquiet are the order of the day. The
current financial crisis in Asia will have consequences on
the Chinese situation. But above all this crisis is perhaps
the first stage in a more terrible process. The region
which yesterday was hailed as the most dynamic of the
global economy is today faced with bankruptcy. We might
ask: does the success of the Chinese economy not hide a
speculative development founded on this pillage by the
bureaucrat-businessmen of those riches produced during the
period of 'real socialism'? The totalitarian form of
political power, associated to the interests of global
capitalism might help to cover up the situation and the
immense social and economic disaster. 

Once again the comparison with the XUSSR comes to mind. The
essential difference remains the political unity maintained
by the bureaucratic state. But for how long? In the short
term the loss of competivity of exports will stifle the
economy whilst at the same time the fall in foreign
investment (from neighbouring countries) in the SEZs will
grow. On the other hand the financial role of Hong Kong as
a point which attracts speculative capital seems weaker.
The anti-reformist tendencies will however be reinforced
and the internal struggles within the ruling class threaten
to intensify. In addition once the state sector has been
destructured and relieved of its most dynamic forces one
can envisage a confrontation at the heart of the new ruling
class of business/bureaucracy, between those nationalist
currents and those who look outward to the interests of
speculative capital. 

Unless the revolt of the workers, up until now sporadic,
takes on a new form and opens up a perspective on social
emancipation.

Charles Reeve
(translated from Le Monde Libertaire February 1998)

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