CHINA: 50th Anniversary



It is half a century since the Chinese revolution scored a victory and the People’s Republic of China was set up, and with the changes in the relations of production and in class relations, the economy acquired possibilities for rapid growth.

According to official statistics, China’s GDP rose from 67.9 billion yuan in 1952 to 7,955.3 billion yuan in 1998, an average annual growth rate of 7.7 percent, which was higher than the average annual growth rate of 3 percent in the world. This figure has been the pride of the Chinese government.

The rapid growth took place in the last decade. Up to 1978, the GDP was only 362.4 billion yuan, which means that under Mao Zedong’s leadership, in 26 years including the disruptions of production during the Great Leap Forward, the people’s communes and the Cultural Revolution, the GDP had increased by only about four times from a very low starting point.

It was in 1987 that the GDP exceeded 1 trillion yuan, an increase of two times in nine years. And then from 1987 to 1998, in 11 years, the GDP rose by 6.3 times.

However, such a rapid increase in the last two decades was partially a result of the rapid development of the private economy. For instance, of the total industrial output of 1996 and 1997, the state-owned economy constituted 28.5 percent and 25.5 percent respectively, whereas the private economy constituted 71.5 percent and 74.5 percent respectively.

It must be noted that the rapid economic growth was at the expense of major political concessions on the road to gradual capitalist restoration. In the March 1999 National People’s Congress (NPC) when the Constitution was revised, the private economy and individual economy, formerly regarded as playing a “supplementary” role, had their status enhanced to that of “being an important component in the socialist market economy.”

Lately, the Standing Committee of the NPC endorsed the “Law on Individually-Owned Enterprises,” which aimed to encourage and safeguard the development of private economic units. The official figures showed that by the end of 1998, registered individually owned enterprises amounted to 442,000. There were about 31.2 million self-employed industrial and commercial enterprises, some of which were registered individually owned enterprises.

With China treading the path towards capitalism, social polarization and increased gap between the rich and the poor have been more acute. In the early years of the Reform, “Ten-Thousand Yuan Households” was once the name of the nouveau riche. In later years, over a hundred “Hundred-Million Yuan Households” had emerged.

A recent report said that “currently, the savings in China amounts to almost 6 trillion yuan, mostly concentrated in the hands of 15-16 percent of high-income households” (NCNA, Aug. 30, 1999). The deposits of these high-income households amounted to 4 to 5 trillion yuan, which was over half the GDP for 1998, and four or five times the total revenue of the country.

But at the other end, although productivity has risen, unemployment and layoffs are the rule of the day. The Minister of Chinese Labor and Social Security reported to the Standing Committee of the NPC in August that in the first half of 1999, temporary layoffs in state-owned enterprises were 7.42 million workers, of which 5.4 million had not been allocated a new job.

Each temporarily laid-off worker received a living allowance of 170 yuan a month, but even for this meager sum of money, some enterprises in some areas did not manage to distribute in time. A sum of 1.37 billion yuan was still indebted to pensioners of state-owned enterprises.

Crisis of the state-owned economy

The Chinese bureaucracy has deprived workers of their power to be master of the enterprises and to democratically manage and operate the enterprises. With command in the hands of a small minority of greedy and incompetent bureaucrats, inefficiency and low productivity have been a feature of the enterprises, and have caused the call for reforms over a long period. However, the reforms have been mostly in vain.

At the end of 1997, a total of 6599 (39.1 percent) state-owned enterprises were in deficit. The net deficit was 29.3 billion yuan in 1997, and 55.8 billion yuan in 1998. About 80 percent of state-owned enterprises are in debt. However, if they are all allowed to go bankrupt, the repercussions on bank loans and general savings from the people, and on enormous unemployment, will surely cause serious disruptions of social stability.

This is one major reason why the Communist Party of China (CCP) has been reluctant to push through the bankruptcy of state-owned enterprises.

It must also be noted that state-owned and collectively-owned enterprises still occupy a primary position in large and medium scale enterprises, with 70 percent and 64 percent weight respectively. Jiang Zemin, in his speech commemorating the 78th anniversary of the formation of the CCP, stressed that state-owned assets amounted to 8 trillion yuan, forming the prime basis of the national economy.

He warned of the greed of “some comrades” who attempted to use their political power to seize state assets, and if these people were not contained, state assets would be eventually emptied. This speech indicates that the CCP leaders are still compelled to give lip service to Marxism and socialism, and that the gains of the revolution in the form of labor and social welfare, and anti-capitalist ideology, cannot be easily removed.

The discontent and protest brewing among workers have exerted a strong pressure on the leaders, serving as a barrier to a general capitalist restoration in China.

The Chinese proletariat, from class consciousness to actual interest, do not support the privatization of state-owned enterprises. Workers’ actions have been taken in the past years against privatization.

The Chinese Youth Journal in Beijing reported on the following case on June 4 this year: In Hefei, the provincial capital of Anhui Province, over 2000 workers had transferred from state-owned enterprises to enterprises run by joint ventures, where they enjoyed two times the wages and could get a monthly income of 1000 yuan.

However, most workers later preferred to quit and wait for work rearrangement by their former state-owned enterprises, receiving only a small stipend of basic living allowance.

The reason was that in the new job, labor intensity was double that of the original job, and control was strict, dismissal of workers was frequent, hence there was no sense of job security. Workers thus preferred to return to state-owned enterprises to wait for reallocation of jobs.

For China’s economic reform to be effectively conducted to the benefit of the majority of the people, a radical democratic political reform is indispensable. Without the workers assuming real power, the bureaucratism and corruption of the cadres cannot be combatted.

The CCP has refused any political democratic reform, and has cracked down on dissidents and people demanding political democratization. Autocracy has been maintained by the repression of dissent.

For the celebration of the 50th anniversary, 110 billion yuan had been spent on renovations in the capital. To reduce air pollution in order that the military parade could be clearly visible, 25 factories including the Beijing Steelworks Factory were asked to stop production for 11 days, and the estimated economic loss was 100 million yuan.

The mobilization of several hundred thousand people for the mass parade was aimed to put up a facade of strength and pride, yet they could not cover up the grimness of life in China today.


Reprinted from October Review Vol. 26, Issue 4, October 1999.

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