Globalisation and Legitimacy

So what sustains party legitimacy in a globalised China of Jiang and Hu that is no longer recognisably Communist to many? Who runs China therefore and under what ideology if any? I’ll consider those questions in this post and in the next I’ll consider the very important question of what the key problems are in the vital countryside and the action the CCP is taking in attempting to resolve them.

Many in the West predicted that the CCP would go the way of the Communist parties of Eastern Europe. Evidently they saw the breakdown of Communist ideology as necessitating an end to the rule of Communist parties. I may ask why the CCP alone has been able to maintain its legitimacy but I should also allow that it may not be for all time. Nevertheless it has remained in power and there must be a reason.

The CCP has given thought to this question and has come up with five basic reasons for its legitimacy:

1) It has fostered and maintained enormous levels of economic growth;

2) Consequently living standards have increased [although inequality has also increased markedly, of course];

3) Especially from the mid 1990s, it has tried to promote its aims as nationalist and in the national interest (they point to what they promote as a successful history);

4) They are able to maintain social stability in accordance with their ‘neo-authoritarian’ and ‘Asian Values’ philosophies; and

5) They are working on improving their ethical standards and stamping out corruption.

Perhaps the most promising of these bases of legitimacy in the medium term is the appeal to nationalism but it is a double edged sword.

The powerful ‘culture fever’ that erupted following the CR was partly about reasserting pride in China’s imperial past and national pride generally at China’s historical and ongoing global status and is a positive asset to China as well as CCP legitimacy. Yet pride in turn has depended upon the recent advance in living standards to a large extent and has been dampened by a sense of humiliation at the unfairness of US hegemony and the success of Japan. The expected return of Taiwan to the Chinese fold has become a symbol of the reversal of that humiliation and Taiwan is not necessarily expected to be the be all and end all of that process. Japan is still sometimes seen as an enemy and not sufficiently punished for various war crimes.

The CCP is ‘cashing in’ on these feelings of humiliation in order to promote the sense of unity that it feels is in its immediate interests. This can be seen as necessary to provide the ostensible raison d’être for a post-Marxist CCP government but here is where nationalism has become a two edged sword. The government can also be criticised for the pace at which it addresses the humiliation of a great nation or fails to sufficiently represent the national interest well enough generally. Examples of this problem of popular nationalism include the reaction to WTO negotiations in 2001 (where the CCP was accused of giving away too much) and accusations that China has been too soft on Japan over wartime atrocities.

The CCP’s reaction to the above potential threat to its legitimacy has been to learn the lesson of Tiananmen. Party thinkers in leadership tend to see the lesson as: cracking down hard and early on dissent promotes stability.

Their verdict on Tiananmen has remained unchanged in recent years (despite recent talk of a re-evaluation) as evidenced by the extended prison terms (11 years) meted out to various democracy activists more recently (such as those of the China Democracy Party) and not since commuted (the re-evaluation of the ‘incident’ is yet to materialise).

The approach to the Falun Dafa (Falun Gong) is another result of this reaction. Practitioners were declared an ‘evil cult’ in 1999 and suppressed following a sit-in protest of around 10,000 of them following a scathing editorial against the group. The protest saw them surrounding Zhongnanhai (the residential area in central Beijing near Tiananmen reserved for much of the CCP high leadership). The evil seems to be that it is a challenge to CCP ideology. The group is critical of much of what the current CCP government seems to stand for. Jiang was the main hardliner at the time when it came to cracking down on what is actually a fairly harmless breathing practice called qigong. For more on suppression of this group, go to the group’s own websites.

The other issues being cracked down on are ethnic in nature and concern the Tibetans mainly in Tibet and the Muslims (mainly Uighur and mainly in Xinjiang (called East Turkistan or Uighurstan especially by some separatists)). The “War of Terror” almost couldn’t have come at a better time from the point of view of the CCP. The Chinese government now feels it more or less has the cover it needs to crack down as necessary and it does crack down (whether real terrorism is involved or not) as necessary. Of course China hasn’t been alone in revelling in the cover provided. Russia and Israel are two other notable cases, not to mention the US itself.

Who is in power (if not Marxists) is another question. The year 2002 marked a changing of the guard when Hu came to power but also most of the Politburo was also replaced.

Jiang finished his term as Party Secretary in 2002 (relinquishing that role to Hu) but provided some of the answers to that question as he left this formal role with his Three Represents.

The CCP constitution was amended in 2002 so that the ideology of the party was now formally: Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important Ideology of “the Three Represents (三个代表)”. This last was what the party now stood for (represented). It stood for the most advanced forces of production, the most advanced culture and the fundamental interests of the broadest mass of the people. The shift here was that this suggested it was no longer a party explicitly of workers; it could also be the party of their bosses, and of intellectuals and artists. It now represented ‘advanced elements’ (who by virtue of being that were now also the only people eligible to be members of the party – so you could also be a worker and not eligible) rather than revolutionaries – the revolution was now over. This really just formalised what had already become the practice.

The leadership as I’ve mentioned was also shaken up. Hu assumed the leadership although he was the second youngest of the nine Politburo Standing Committee members.

All but one of the group were also qualified engineers (predominantly from the one technology university that Hu trained in engineering at, Qinghua) – the outlier, Wen Jiabao, was a geologist (trained at the Beijing Institute of Geology). Wen’s case shows that it was possible to be mentored in the party by a discredited leader (Zhao Ziyang in Wen’s case) and still reach the second or third highest rank in the PRC. Only Hu was kept on from the previous group and he was also the only member remaining who had been mentored by Deng. Most had been mentored by Jiang. There’s a joke in China that Qinghua produces China’s leaders and Beida (Beijing University) produces its prisoners. Here’s the group:

Name	Age	Profession	University	Mentor
Hu Jintao	59	Engineer	Qinghua	Deng Xiaoping
Wu Bangguo	61	Engineer	Qinghua	Jiang Zemin
Wen Jiabao	60	Geologist	Beijing Institute of Geology	Zhao Ziyang
Jia Qinglin	62	Engineer	Hebei Engineering College	Jiang Zemin
Zeng Qinghong	63	Engineer	Beijing Institute of Technology	Jiang Zemin
Huang Ju	64	Engineer	Qinghua	Jiang Zemin
Wu Guanzheng	64	Engineer	Qinghua	Jiang Zemin
Li Changchun	58	Engineer	Harbin Institute of Technology	Jiang Zemin
Luo Gan	67	Engineer	Beijing Institute of Iron & Steel	Li Peng

So it’s a technocratic group that have been well mentored in the business of government in the new China and that embraces the new business elites (who might otherwise become an opposition). The training of the group is not in political change, it’s in technocratic problem-solving and that is their focus.

This currently suits the business elites with whom they are intimately linked so it’s not yet in the interests of the business middle class to challenge the political position of this type of problem-solving state. From the orthodox Marxist point of view it is also still possible to view the business class as powerful and imaginative allies provided they remain securely yoked to the benefit of the CPP dictatorship. The times in China are indeed still interesting for Marxists today. To paraphrase Sun Zi, the CCP is keeping its friends close and its (at least potential) enemies closer. And the policy is currently working as the potential enemies are currently being kept happy with the amount of (close) influence they are able to have upon reforms as they occur.

In 2006, the CCP launched the “eight glories and eight disgraces (八榮八耻)” campaign. This is aimed at promoting compliance among the population and it was at least partly designed to be learnt about by rote by schoolchildren. This is how to be a good Communist today. Here are the eight of both:

1. It is glorious to adore the fatherland; it is a disgrace to harm the fatherland;

2. It is glorious to serve the people; it is a disgrace to disserve the people;

3. It is glorious to respect science; it is a disgrace to be ignorant and unenlightened;

4. It is glorious to work hard; it is a disgrace to be indolent;

5. It is glorious to promote unity and mutual help; it is a disgrace to be self-seeking;

6. It is glorious to be honest and trustworthy; it is a disgrace to be mercenary and profit-grabbing;

7. It is glorious to be disciplined and law abiding; it is a disgrace to violate laws and disciplines;

8. It is glorious to be willing to struggle; it is a disgrace to be sybaritic.

The next post will be on the rural issues that continue to plague China (and CCP responses).

Now a bit of Social, a bit of Political and a bit of Economic (post 1989)

The leadership in the period we are now considering was as follows:

General Party Secretary Premier

1989-1997: Jiang Zemin Li Peng

1997-2002: Jiang Zemin Zhu Rongji

2002-2011: Hu Jintao Wen Jiabao

Jiang was the key to much of the social and economic happenings immediately following on from the events of 1989. Deng Xixian (another of Xiaoping’s names) had limited ongoing influence until his death in 1997. Firstly, Jiang engaged in economic restructuring and the impacts were predominantly felt by the new unemployed and the new migrant workforce. Zhu was also a particularly strong promoter of growth and reform and the current leadership has continued the process. Privatisation of housing was also continued.

Foreign trade and investment, rapid private sector expansion and state restructuring continued to be increasingly on the agenda. Integration with the global economy also proceeded and China finally joined the World Trade Organisation in December 2001. Utilised foreign direct investment that had been in the region of 5 to 10 billion US dollars at around the time of Tiananmen was in the region of 50 to 60 billion before the next decade had ended (it appears that only the 1997 Asian Financial Crisis kept it from being greater). Trade (both imports and exports) followed a similarly exponential-style trend as did GDP (it grew at 9.4% per annum in the period 1980 to 2004 and hasn’t really slackened since).

With that growth there was also increasing income inequality along several dividing lines. The greatest beneficiaries in terms of income growth and absolute income were the employed urban workforce and rural workers in the eastern provinces. Western province rural workers and the unemployed benefited least relatively and central province rural workers were somewhere in the middle on these relative and absolute income measures.

At 2004 the UN-determined poverty line was 3,000 Yuan (Renmin Bi – People’s Currency (RMB)) per annum and while urban workers were averaging nearly 10,000 Yuan rural workers averaged just under the 3,000 nationally at 2,936 (the Chinese government’s official poverty line was 650 Yuan). Shanghai had the highest average rural income of the thirty traditional mainland provinces at 7,066 and Guizhou had the lowest at 1,722 RMB.

China’s Gini coefficient (an indicator of inequality) was 0.30 in 1980 and in 2004 it had grown to 0.45 (a coefficient over 0.4 is considered dangerous inequality for social stability by some authorities – Sweden’s is around 0.2, Australia’s is around 0.3 and the US’s is also around 0.45). The UN Development Programme concluded in 2004 that China was the 90^th highest level of equality of 130 countries assessed.

Now let’s consider what happened to the labour force especially in the SEZs and cities. With foreign direct investment came foreign management practices, knowledge and technologies. This was also guided, however, by what was deemed acceptable to the government so a new composite labour relations system developed. On the negative side was the inadequacy of the legal system and weakness of regulatory regimes.

It’s fair to say that enterprise managers came to have greater power over their workforces (with the power to hire and fire) and operational decisions along with discretion in setting wage rates and bonus rates and criteria. This, CCP acquiescence in it and the new labour contract system severely weakened the CCP-based trade unions. Also weakening the bargaining power of workers was the massive volume of retrenchments announced by Zhu from the state system (in preparation for the new competition from other sectors) and the large numbers of migrants from rural areas now competing for city jobs. The iron rice bowl (guaranteed life-time employment and the cradle-to-grave employment-based welfare system) unravelled especially from the mid 1990s.

On the plus side for workers able to demonstrate their value, the new competition among all the sectors (the state sector, the new Town and Village Enterprises (TVE) sector, the private sector and the foreign sector) for the now large pool of job seekers in a new job marketplace was quite fierce, regions and local governments competed strongly for the best workers, as well (though also for the best price possible as they also competed for investment) and the market was fairly free. On the whole, it was a major bear market, however, in the circumstances.

The state sector restructuring was overdue with local work units overburdened by over-employment, overly high wages and excessive and ongoing further iron rice bowl type obligations. It had been delayed as long as it had for fear of the political consequences. One third of all State Owned Enterprises (SOEs) were in debt. Only workers in some key sectors were able to avoid retrenchments. Some 60 million workers were laid off in the period from the mid 90s to 2001 in order to ‘save’ the sector.

The timeline below shows the development of the new urban and regional sectors:

1979: joint Chinese and foreign enterprises allowed;

1981: small-scale (less than 8 employees) private business;

1986: 100% foreign ownership of businesses allowed;

1988: limits removed from size of private businesses;

2001: in joining the WTO China agreed to progressively open banking, insurance, telecommunications and media sectors to foreign direct investment.

In the rural sector, Decollectivisation led to surplus labour of from 200 to 300 million people. The rural economy also became diversified as a result of the Decollectivisation. The Mao era hukou household registration system which had attempted to regulate migration and particularly to limit rural-to-city migration was relaxed from 1978 as it had to be in the circumstances but it was a gradual relaxation. Migration to cities was a rational decision for many because of the ‘pull factor’ of rural/urban income disparities.

Major changes had occurred in the macroeconomy in the first twenty years post-Mao. In 1980 the rural economy had produced 30% of China’s GDP and that percentage had halved by 2003 to 15% while the percentage produced by the services sector increased from around 20 to around 46 percent and the industry share reduced from around 50% to around 39%. That 15% rural production in 2003 was produced by 49.1% of China’s 744.23 million workers. The services sector was the most efficient in this sense requiring only 29.3% of the workers for its 46% percent contribution while industry was the next most efficient requiring 21.6% to produce its 39% share.

Non-agricultural employment trends show the speedy development of the rural-to-city-or-regional migrant labour market and TVE sectors between 1978 and 2004. The five other sectors that existed in 2004 were state, collective, small business, foreign and private and only the last three had increased employment numbers compared to 1978 though the state sector still employed around 60 million people and the collective sector nearly 10 million. In 2004 the small business, private and foreign sectors employed similar numbers adding up to a combined total of nearly 80 million and the migrant labour and TVE sectors each employed around 140 million.

So by 2003, only 20% of the 378.8 million actual non-agricultural workers remained in the labour sectors considered regulated, meaning exploitation was likely to be occurring at a high level. Figures of welfare insurance participation rates in the private sector weren’t especially encouraging. Those covered by aged pension insurance amounted to 33.7%, unemployment insurance 10.3%, medical care insurance 21.6%, occupational injury insurance 31.8% and maternity leave insurance 5.5%.

As far as unions were concerned at least 100 million (30% of the non-agricultural workers) were not even represented by the toothless tigers that were the officially approved trade unions. Independent unions were illegal and the official union director was frequently also the enterprise manager or party branch secretary (after the 4 June massacre around Tiananmen, people who had tried to form independent unions had actually been treated much worse than the student leaders of the demonstrations had been (and that’s saying something)).

In response to some of the issues that the restructuring raised mentioned above and others, Chinese people have recently taken to protesting en masse. Official Chinese statistics of ‘mass incidents’ show a trend rise in such incidents since 1993 from a base of under 10,000 incidents and almost exponential growth since 1997 so that by 2005 there were around 75,000 such incidents noted. So the social protest movement is keeping pace with the recent economic growth.

With all this, provincial differences and prejudices have remained a feature of the Chinese landscape in the new world of regional growth to the extent that recently provinces such as the central province of Henan have found it necessary to advertise throughout China to the effect that the province and its people aren’t so bad after all.