Abusive Conditions as China Goes Capitalist

Zhang Kai

THE SECOND MEETING of the 10th National People’s Congress, held in March 2004, made some amendments to the Constitution. The clause “citizens’ legitimate private property will not be violated” has been added to further defend private property rights and inheritance rights.

At the same time, the Constitution describes private capitalists as “constructors of the socialist cause,” and deletes the attribute “exploiters.” Such amendments indicate an all-out go for capitalism by the Chinese Communist Party and a near completion of capitalist restoration in China.

State property, as a non-capitalist element in the national economy, finds its weight and role ever decreasing. In a recent National State Property Monitoring Working Committee Meeting, it was stressed that the reform of the management of state property and state enterprises should be accelerated, and the shareholding system of state enterprises (absorption of foreign capital, mergers, etc.) should be furthered.

Currently the weight of state-owned enterprises in the Gross Domestic Product (GDP) is about 30%. Zhang Zhuoyuan, researcher of the Institute of Economics of the Chinese Academy of Social Sciences, proposed a further reduction to 20%.

On February 1 the State Council issued a directive for a greater development of the capitalist market, for expansion of direct investments, and for the market playing a greater role in resource distribution. The directive encouraged investors to take a bigger share of the economic gains, and fund management and insurance companies to become leading forces in the capital market.

Ma Kai, director of Development and Reform, gave a report to the NPC on the implementation of 2003 national economy and social development, and on planning for 2004. He acknowledged that there are many difficulties and problems that must not be overlooked in our social and economic development. Not only have some deeply structured contradictions accumulated over the years that have not been resolved, but also new problems have arisen.

Unemployment and Inequalities

In the last year both peasants’ net income and grain output decreased. Second, unemployment is serious. Third, income discrepancies are acute. Low-income rural and urban households face a difficult livelihood. Fourth, there are structural economic imbalances, with some regions and professions suffering from arbitrary investments, repetitive low-quality construction, and inefficient use of resources, environmental pollution and stress in the provision of coal, electricity, fuel and transport. Fifth, there is an imbalance between social and economic development, and inadequate infrastructure in public health, rural education and sanitation. Sixth, market economic order is rather chaotic. Serious industrial hazards are frequent and social credit is weak.

The expansion of urban and industrial projects means that peasants have lost their land. According to the official magazine Chinese Earth, in the last two decades various levels of government appropriated over six million hectares.

The plight of the peasants is reflected in the decrease of arable land in grain output. Between 2002-03, two percent of the arable land was lost (126 million hectares). Grain production peaked at 512 million tons in 1998 but has steadily declined, totaling just 431 million tons in 2003.

According to a report by the People’s Daily (2/2/04), there are 40 million landless peasants, with an annual increase of two million. It is estimated that rural laborers are owed about 100 billion yuan but as of February 2004 the government had been able to successfully recover only 25%.

Social Polarization

This year 14 million were displaced from state-owned enterprises and 10 million joined the labor force. In addition there are 100 million migrants from rural areas and 150 million surplus rural laborers.

The polarization between rich and poor has become more acute. The richest urban households owned 66% of the financial assets while the 20% poorest urban households owned only 1.3%. A 2002 report by South Daily of Shenzhen province revealed a gap between rich and poor of 9.2 times. By 2003 the discrepancy had risen to 13.5 times. Generally speaking the average urban income is 5-6 times that of the average rural income.

Corruption has also accompanied capitalist development in China. While there are more prosecutions of corruption cases (18,515 major cases in 2003, including 123 cases where more than 10 million yuan was involved), corruption has become almost universal. Of the 109 experts interviewed by the Chinese Academy of Social Sciences, 73.4% thought that party and state officials are viewed as benefitting the most from the current reforms. The contradictions between the ruling bloc and the people are ever aggravating.

[This article appeared in the socialist journal October Review (#215), published in Hong Kong. It is abridged for publication here. For further information: october_review@yahoo.com, web: www.octreview.org.

ATC 113, November-December 2004