China Perspectives

58 | march - april 2005 Varia

Electronic version URL: http://journals.openedition.org/chinaperspectives/451 DOI: 10.4000/chinaperspectives.451 ISSN: 1996-4617

Publisher Centre d'étude français sur la Chine contemporaine

Printed version Date of publication: 1 April 2005 ISSN: 2070-3449

Electronic reference China Perspectives, 58 | march - april 2005 [Online], Online since 29 November 2006, connection on 03 October 2020. URL : http://journals.openedition.org/chinaperspectives/451 ; DOI : https://doi.org/ 10.4000/chinaperspectives.451

This text was automatically generated on 3 October 2020.

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TABLE OF CONTENTS

Society

Migrant Workers in Shanghai Inequality, economic enclaves, and the various routes to employment Laurence Roulleau-Berger and Shi Lu

Shanghai: Modern Conveniences as an Argument for Displacing Residents The case of Jianyeli, a pilot rejuvenation project Valérie Laurans

The Revival of Family Capitalism A Zhejiang entrepreneur Gilles Guiheux

Economy

China’s Drive to Revitalise the Northeast Dong Lisheng

Politics

KMT: A Trompe-l’œil Victory The December 2004 Taiwanese Legislative Elections Frank Muyard

Why no Cohabitation in Taiwan? An analysis of Taiwan’s Constitution and its application Da-Chi Liao and Herlin Chien

Book Reviews

Li Zhensheng, Red-Color News Soldier New York, Phaidon, 2003, 315 p. Jean-Philippe Béja

Edward Gu and Merle Goldman (eds.), Chinese Intellectuals Between State and Market London and New York, Routledge Curzon, 2004, 298 p. Aurore Merle

Stephane Corcuff (ed.), Memories of the Future : National Identity Issues and the Search for a New Taiwan Armonk, New York, London, England, M.E. Sharpe, 2002, 285 p. Christopher R. Hughes

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Eleanor B. Morris Wu, From China to Taiwan. Historical, Anthropological, and Religious Perspective Monumenta Serica Institute, Sankt Augustin, Steyler Verlag, 2004, 274 p. Benoît Vermander

Melvyn C. Goldstein, Dawei Sherap, and William R. Siebenschuh, A Tibetan Revolutionary. The Political Life and Times of Bapa Phüntso Wangye Berkeley, University of California Press, 2004, 371 p. Fabienne Jagou

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Society

China Perspectives, 58 | march - april 2005 4

Migrant Workers in Shanghai Inequality, economic enclaves, and the various routes to employment

Laurence Roulleau-Berger et Shi Lu

NOTE DE L’ÉDITEUR

Translated from the French original by Jonathan Hall

1 With the establishment of a globalised economy, internal migration in China has become more complex, while the social policies designed to deal with the phenomenon have been redefined at the national and regional levels, particularly in the large cities like Shanghai. The steps required to gain access to employment have been altered, producing new forms of social and economic inequality. Thus the figure of the migrant labourer with few qualifications provides us with the means to analyse the process that segregates and cordons off the impoverished sections of the population.

2 In Shanghai, the organs for controlling migration discriminate against workers with few cultural or economic resources, but although these labourers are most often relegated to disadvantageous positions within the labour market, they are nonetheless able to develop skills needed for integration. This can be seen by their occupational mobility and their entrepreneurial activity. This article is based on the following hypothesis : although semi-skilled migrant labourers in Shanghai are economically and socially subjected to forms of urban segregation that publicly stigmatise them and confine them to economic enclaves, they are nonetheless able to mobilise various skills and resources within strategies which produce situations of social affiliation or disaffiliation 1. Migrant labour policies and the production of social inequality in Shanghai 3 Until 1983, the methods of controlling the rural labour force forbade any migration outside the province where the labourer was officially domiciled. Principal among these was the official registration of residence, or hukou. The rural enterprises (xiangzhen qiye) limited geographical mobility by favouring occupational mobility in a single place (litu bu lixiang). From 1984 onwards, when these rural enterprises’ ability to

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take on more labourers reached its limit, large-scale migrations “outside the district” (litu you lixiang) developed. Faced with the falling price of agricultural products and the persistent labour surplus, the Chinese government relaxed its restrictions on movement, and allowed residence in the towns through certificates of temporary domicile.

4 This gave rise to a considerable increase in the flow of rural migrants to the towns, particularly to the coastal provinces and big cities like Shanghai 2. The latter established new procedures for regulating these spontaneous flows, which were not organised by the state, and the migrants themselves were labelled either “blind migrants” (mangliu), or else “a worker-peasant floating population” (liudong renkou, nong mingong). In the mid-1990s the Shanghai City council introduced quotas for all migrants, without distinguishing between their different provinces of origin 3. At the same time, from 1993 onwards they welcomed skilled and qualified migrants with open arms, issuing them with a blue hukou card (lanyin hukou), which was replaced by a full residence permit (juzhuzheng) in 2002. In effect, Shanghai has gradually established a population control apparatus which helps to produce two forms of inequality ; the first of these distinguishes citizens from migrants, and the second distinguishes migrants with few cultural and economic advantages from those with skills or financial resources.

1. Migrant workers in Shanghai

5 These measures have produced a hierarchy in the modes of public recognition, setting up a distinction between the largely unqualified migrants who are labelled a danger to public order, and the qualified migrants who are explicitly defined as people capable of making a positive contribution to the social and economic development of Shanghai. The first group are objects of social scorn and stigmatisation, and enjoy very limited access to medical care, social security, education and housing, whereas the second group enjoy the benefits of positive public and social recognition 4. Until August 2004,

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peasant migrants had no access at all to social security in the city 5. As for education, in 2002 42.6% of the children of migrants in primary education, and 25% in secondary education, were enrolled in unregulated private schools for migrant children (mingong zidi xuexiao), because they were unable to pay the extra fees which the city’s public schools required from holders of a rural hukou 6.

6 In 2000 a census of the migrant population in Shanghai showed a heavy concentration (63%) living in precarious accommodation on the outskirts (renting space from a resident while living in dormitories or building sites). Moreover, even if the migrant who held a rural hukou managed to get a temporary residence permit (zanzhuzheng), that did not guarantee him or her gaining full citizenship in Shanghai. This is shown by the following statement, in November 2002, by one of our informants, a 32-year old news vendor in the Zhabei quarter :

7 Our friend Xiao Wu has already been arrested twice by the police, and locked up for three months ! One day he saw a fight in the street. When the police arrived, he was willing to be a witness, but they asked him for his permit, which he had left at home. So they took him off. Later, when we brought his card to the police station, they tore it up in front of us to prove that Xiao Wu had no papers ! Actually, the Shanghainese despise anyone who is not from Shanghai, but they are very friendly towards the Cantonese, because they are mostly rich people.

8 Although poorly qualified migrants are kept well away from access to social rights, at the same time they are targeted by the unskilled labour markets, because the new economic and industrial zones have a great demand for labour from the countryside 7. But discriminatory policies lead to worsening social segregation in the cities. For example, in the early 1990s the Shanghai city council passed laws aimed at maintaining the interests of the urban labour force in the primary employment sectors by restricting the migrant labourers to the secondary labour markets 8. Shanghai businesses were obliged to recruit migrant labourers through collective contracts with the province of their origin, backed by that province’s representative office in Shanghai. And since 2001 they have had to recruit at least 15% to 30% from among the local applicants before taking on any labourers in possession of a rural hukou 9.

9 These forms of restriction are accompanied by an employment system which is closed to migrants. In 1995, the Shanghai authorities differentiated between three areas of employment. The first (heavy industries and textiles) was open to migrants ; the second (mass consumer goods, mostly electronic) was open to migrants only in the case of pressing need ; and the third (administration, security, banking etc.) was completely closed to migrants. In the same year, the Shanghai bureau of labour and social security published a list of twenty types of employment forbidden to migrants (they could not be taxi drivers, telephonists, insurance or bank clerks, etc.). This list was modified in 2001, but only according to the demand for labour. In spite of their status as temporary residents, migrants are still excluded from five types of employment. They may not work for official or public services, for public security or environmental protection services, for the management of joint property in the city districts, for the sales departments in state-owned stores, or for the cleaning services in airports, railway stations and harbour facilities 10. The following testimony comes from a domestic servant woman from Szechuan :

10 I was born in Szechuan. When I was 18, I left the countryside to work as a domestic servant in Chengdu. The family was very rich. My husband came to join me two years

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later. The master of the house asked my husband to learn to drive and become his private chauffeur. That is how my husband became a driver. Some time later, our master died suddenly. So we left that family and came to Shanghai. My husband looked for work, but he was not allowed to be a driver of any sort, not only in taxis but for companies or other people. Finally he was taken on by a Hong Kong businessman who had some fake papers made, to show that he was not a migrant. With the fake papers he has held this job for eight years. We don’t dare tell the people he works with that we are a couple, because that might reveal his real identity. If his present employer leaves one day, he will no longer be able to work as a driver.

11 Admittedly, in recent years the migrants have benefited from an improvement in their conditions of movement. They can move freely from one province to another, and politicians are attempting to draw up new policies for their access to jobs, in the name of a struggle against the ever-widening gaps in social inequality 11. In Shanghai, some of the restrictions on their entry into certain job sectors have been abolished. But those with low-grade or few qualifications are still subject to urban segregation, both social and economic, and this stigmatisation affects their job prospects. Segmentation of the labour market, economic enclaves, and specific skills 12 The provisions laid down by the Shanghai administration are partly responsible for fragmenting the labour market, through encouraging the formation of economic reservations in which poorly qualified migrants, often from the same province, make up the main body of the labour force. This preponderant imbalance is the consequence both of the restrictions themselves and of the way in which these enclaves have been taken over by the migrants. According to the census in 2000, migrants predominate in sectors of the secondary labour market which offer hardly any access to skilled jobs. Textiles, heavy industry, and construction, employ mostly unskilled labour. In addition to these economic reservations, some service industries like restaurants, as well as agriculture and fish-farming, are also available to them. In Pudong, for example, where there are still agricultural areas, many young locals have given up agricultural work, preferring to hire migrants or rent them their land, in order to work in industry where the wages provide a higher income.

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2. Area of activity of the migrant workers in Shangai

13 The emergence of economic enclaves is conjuncturally linked to the job restrictions and opportunities on the one hand, and to the migrants’ own adaptive strategies on the other. These are both individual and collective, and they demonstrate the migrants’ ability to make good use of their resources. They form associations in accordance with their provincial origins and organise themselves within their respective economic enclaves, or engage in small-scale operations, such as rubbish collection, or doorstep deliveries of drinking water 12. While the experience of migration leads to a loss in terms of skills and formal qualifications, it is also an occasion for the renewal and implementation of various resources focused on survival. Their precarious situation and pressing need has led the migrants to develop ways of coping 13. The networks of mutual aid and support between migrants from the same region who confront the same experiences, favour this production and appreciation of new skills.

14 Confined to the economic enclaves, migrant workers face conditions of irregular employment, lack of promotion prospects, and low wages. With the advent of the economic reforms which brought the closure of certain state enterprises, intensified working conditions, demands for higher quality, and integration into the global economy, there has been a corresponding growth in the overexploitation of the poorly qualified migrant labour force. In some sectors, particularly the construction industry, migrant workers are paid annually, but the absence of a work contract sometimes deprives them of any legal support in cases of non-payment. Likewise, they do not have guaranteed access to social security benefits. Other workers are paid piece-rate. Common working conditions include a 14-hour day (particularly in private enterprises), with no time off for meal breaks, night workers having nowhere to sleep, and no overtime.

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15 Unskilled migrant workers, being unrecognised and considered incapable of integrating, are viewed as a new “unnecessary surplus” 14 to the needs of Chinese society, since they are unemployed, or at best employed only from time to time. Forced to bend to every demand, the migrant worker has to adapt him- or herself to risky working conditions, often at the “filthy” end. Unprotected by any statute, they face a complete lack of social security and a regular income, enduring disruptions, instability, and vulnerability in the labour market 15, all of which arise from that market’s abnormal functioning. Whereas such “surplus” people in Eastern Europe can choose between resignation and sporadic violence or outbursts of rage 16, in China they mount occasional demonstrations of despair, running the risk of repression. Migrant itineraries : between affiliation and disaffiliation 16 Despite these social and economic conditions, as the poorly qualified migrants move about in search of jobs, they establish a variety of routes leading towards economic integration. Their mobility from job to job, and from place to place, brings out entrepreneurial or “hobo” figures, in a way that is reminiscent of the unemployed migrant workers who found occasional work in different places between Chicago and the West of the United States in the early twentieth century17. The links forged between the family networks of mutual aid and personal contact provide the migrants without qualifications with a strength which transforms them into agents in control of their situation. But, on the other hand, this in turn tends to increase their social exclusion and lack of acceptance. Migration and occupational mobility 17 Migration allows occupational mobility to come into being. Some peasants become traders, particularly in agricultural produce, for which they hire a stall. This often forces them to live in the same place, owing to their meagre financial resources. Thus, they have left extremely harsh working conditions to gain access to an occupation in a town, which gives them a larger income but provides no advance in status. Other peasants become workers, but they also make no gain in status. Everything depends on the nature of their occupation and their ability to get their skills recognised 18. Whereas a worker in a state enterprise within the old socialist economy could not gain experience across different occupations, nowadays the marketisation of labour means that migrants with few qualifications are able to follow itineraries within the urban labour market, combining or alternating between various commercial or non- commercial occupations, and ranging from the industrial to the agricultural and service sectors. When migrant labourers can no longer work in industry in Shanghai, they go back to their villages and work in the fields, although an additional factor here is the seasonal demands of the harvest. We have found this practice to be particularly marked in the case of men working in interior decoration. Migratory trajectories and entrepreneurial dynamics 18 Some of the migrants with few qualifications develop individual and collective strategies, based on networks of mutual support, and family and community exchange. For instance, small entrepreneurs have set up employment agencies, and created new urban services like hairdressers’ salons, restaurants or locally based businesses, like the migrants from the northeast whom we encountered, who had set up a chain of restaurants in southern China specialising in northeastern cuisine, or the migrants from Wenzhou who are major players in the developing leather industry. Businessmen like these create real economic enclaves. When they become employers, they recruit

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migrant workers from their own province, thus integrating them into their sphere of the economy.

19 In this way dynamic commercial and entrepreneurial systems come into being. One might hazard the hypothesis that while the more formally qualified workers, particularly among the younger generation, develop such initiatives on a more individual level, the less qualified set up their networks on a collective basis. The feeling of belonging to the same village, and the mutual confidence which underpins it, ensures the conditions for successful commercial or entrepreneurial projects. These entrepreneurs establish their own rules, conventions, and norms of conduct, within those market segments in which they have an interest, developing thereby new ways of doing things. Multiple migration and occupation 20 Migrants with poor qualifications also establish itineraries which allow them to move from one province to another. Such movement is always provoked by the urgent need to leave a situation where survival is at risk. As we were told in an interview in a farmers’ market in the Zhabei district in 2002, “wherever we are, all we want is to eat enough and have a job”. The migrants’ multiple movements and occupations take different directions according to their age, sex, native province, occupational qualifications and skills, and the kind of economic activity in which they engage. The range of their employment broadens during the experience of each migratory movement, as they build up an increasing number of social and economic bases of support. But multiple migration is not always matched by multiple occupation. In fact some migrants have moved around by developing economic contacts within a single activity across several provinces, whereas others are obliged to transform their acquired skills for use in other occupations.

21 When multiple migration occurs without change of occupation, the different work situations are linked in a more coherent way. The migrants take to the road, and move around following the lines of an established economic network grounded in a single productive activity, settling in specific places in different provinces. But this coherent continuity between the different sites linked by a single activity can be disrupted at any moment (in the case of dismissal, for example), to be re-established within a different activity. As a 38-year old woman from Jiangsu whom we met at the Zhabei farmers’ market in 2002, told us :

22 I started work in a factory at 17, got married at 25, and had my first child at 27. So I worked for ten years in factories. I went everywhere in Henan, and Jilin… ; in our area wages are very low, but in other provinces they are higher. I learnt how to make leather shoes for a year in Huaiyin in Jiangsu, and then I came back closer to home in Zhuyong, where I worked for another year. After that I went to Henan, and I worked there for a year in a private firm where someone got me a job. Next, I went to work in Anyang for a few months, but the boss was no good and didn’t pay us. After that I went back home for a year, working in a rural enterprise which supplied a Shanghai factory. Then I went back again to Jilin for a year, and after that I went home, and I worked for three years in Wuxi and for six months in Jiangsu. Then I went back to my village and worked in the same rural enterprise again. A Shanghainese man came to open a new factory, and he asked my husband to train his workers. I worked there for two years. Next, they opened a shoe factory in Danyang in our area, and they asked my husband to go there. It was very hard. I followed my husband, and we worked together because we

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each had our own speciality ; he made the soles and I made the uppers. Actually I didn’t want to move. I was making 1,000 yuan in the rural enterprise, but they insisted on me going, so in the end we went. In the new factory they had no models, so my husband had to make new ones for them. He’s a clever man, but he lost his parents early. We stayed there about a year. My husband did not work on the production line, and we got someone from our village rural enterprise to come and take care of sales. For a year business was good. But the boss wanted to keep everything for himself, so we left for Jingdezhen in Jiangxi, where we rented a space in a shop to sell shoes. That didn’t work out, so we went back home after six months. The Shanghainese who had set up his factory in Danyang knew my husband, and told him, “set up your own factory”, which we did in 1985. After three years we went broke and left again. In 1989, we went to work in a rural enterprise in our area, and my husband earned 1,500 yuan a month. But as we had hundreds of thousands of yuan to pay back, we came to Shanghai.

23 These multiple trajectories take shape around a whole range of different economic affiliations and geographical attachments. They also consist of patterns of repetition and return : the migrants will return several times to their native village and then leave again for another province. The protagonists of this multiple migration can be defined as “hobos”, moving from province to province in a nomadic fashion, and participating in a range of economic activities in different areas. Exclusions from the main social body and loss of social recognition 24 All forms of migration can bring about what Bourdieu and Champagne call “exclusions from the interior” 19 whenever such migration entails a phased loss of social capital, both in economic resources and in terms of social recognition, leading to a diminution and finally to a complete denial of a person’s qualifications. This is the case of administrative staff who are laid off and forced to change occupation, like the man we interviewed in a furniture renovation factory in December 2003 :

25 I worked in the administrative offices of a regional township, dealing with the census and agricultural management. In 1990 local government was reformed in Anhui, and certain townships were amalgamated. So the administrators were laid off. I was sent to a village to be an unqualified primary school teacher. In 1996, unqualified teachers could be recognised as qualified, provided that they had started teaching before 1984. But I had only started in 1990. So I was laid off again. I had a relative working in the Shanghai construction industry, and I thought I should try that. So I came here. I put my name down in a labour exchange and immediately found work in a factory. I was in charge of warehouse stock. Then the factory closed. In 2001 I came to this factory and have been here up till now. I am in charge of the stock.

26 Within changeable economic conditions, when the market economy also means unemployment and poverty, “exclusions from the interior” can lead to a process of complete eviction from the urban labour markets.

27 In Shanghai today the combined effects of the arrival of migrant populations who are set apart and perceived as undesirable aliens, the discriminatory policies aimed at controlling them, and the formation of distinct economic enclaves, are all generating increasing economic and social inequality. Migrant access to more or less visible kinds of activity, is partly enabled by the segmentation of the labour markets, but it is also the outcome of the migrants’ own individual and collective strategies within the context of increasing uncertainty and rising unemployment. Such conditions exacerbate discrimination and segregation in the labour market, leading to a hierarchy

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of access to available jobs. Chinese society is undergoing a dual process of integration and marginalisation, in which the issue of social status is posed in particularly acute terms 20. Under Maoism, by contrast, social roles were distributed in a less exclusive manner. In this situation of social insecurity, the Chinese economy is becoming pluralised on the basis of a differentiation of the forms of work and occupation open to migrant workers with few qualifications, as they search for jobs along a variety of internal migratory routes. From within the increasingly diverse types of migration in China, and the multiplicity of nodal points through which they pass, two representative figures have emerged, namely the entrepreneur and the “hobo”. Together they illustrate an individual and collective ability to connect the sites and forms of their economic activities, as each struggles against poverty in pursuit of social acceptance 21. This phenomenon leads the Western sociologist to wonder what analogous features can be found in common between the processes of economic integration and social disaffiliation both “over here and over there”.

NOTES

1. See Robert Castel, Les Métamorphoses de le question sociale, Paris, Fayard 1995. He defines social disaffiliation as “the particular way in which social bonds are dissolved”, which is characteristic of modern poverty : “To be in an area of integration means to possess guarantees of permanent employment and an ability to rely on the support of firm relationships ; in the area of vulnerability the precarious tenure of employment is doubled by weakened social supports ; the situation of disaffiliation combines unemployment with social isolation”. 2. Shanghai is the second most favoured destination for migrants, coming just behind Guangdong province. In 2000 the number of migrants to Shanghai reached 3.87 million, which is about 24% of the total migrant population of China. 3. For the purposes of the 2000 census of migration to Shanghai, migrants were defined as people who do not possess a permanent Shanghai hukou, however long they may have resided in the city. 4. See Li Yining, Zhongguo chengzhen jiuye yanjiu (A study of urban employment in China), Zhongguo jihua chubanshe, Peking, 2001 ; Zhu Junyi and Yuan Zhigang, Shanghai jiuye baogao (Report on employment in Shanghai), Shanghai renmin chubanshe, Shanghai, 2001. 5. See document No. 34 published by the Shanghai City council in August 2004, Shanghai shi wailai congye renyuan zonghe baoxian zanxing tiaoli (Provisional Regulations Concerning the General Safety of Migrant Workers in Shanghai ; Gu Jun, Liudong yu zhixu : liudong renkou wenti guanli yu zhence de yanjiu (Mobility and order : a study of the management and policies towards the migrant population), Zhongguo shehui chubanshe, 2003. 6. Ren Yuan, Dushi de guoke : dui 2002 Shanghai chenshi liudong renkou diaocha ziliao de chubu fenxi (Transients in the city : a preliminary analysis of the data from the enquiry into the migrant population in Shanghai in 2002), Renkou, No. 73, 2003, pp. 54-61. On the

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school attendance of migrant children in Chengdu, Sichuan, see Chloé Froissart, “The Hazards of the Right to an Education”, China Perspectives, No. 48, July-August 2003, pp. 21-36. 7. Laurence Roulleau-Berger and Shi Lu, “Les migrants à Shanghai : formes d’inscriptions urbaines et économiques des migrants dans la ville”, Les annales de recherche urbaine, nº 93, 2003, pp. 49-56 ; Zhang Shenghua, Shanghai liudong renkou de zhangwang (The situation and prospects facing the migrant population in Shanghai), East China Normal University, 1999. 8. Michael Piore in “On-the-Job Training in the Dual Labor Market : Public and Private Responsibilities of On-the-Job Training of Disadvantaged Workers” (in Public and Private Manpower Policies, Weber A. R. ed., Madison, Wisconsin, 1969) argues that the segmentation of labour markets should be understood in terms of a distinction between primary and secondary markets : “a primary market provides relatively well-paid stable employment, with good working conditions and promotion prospects and evenhanded management ; a secondary market, to which the poor are restricted, is far less attractive with regard to the above characteristics”. 9. Document No. 11, 2001, issued by the Shanghai City council, Guanyu jinyibu jiaqiang benshi wailai renyuan jiuye guanli de yijian (Bulletin on strengthening the management of the employment of migrants in Shanghai), Shanghai labour and social security office. 10. Ibid. 11. Since March 2002 the Shanghai City council has forbidden the imposition of arbitrary taxes on migrants seeking to obtain the various permits. In 2003, the State Council issued a circular stipulating for the first time the rights of migrants in the cities, particularly in the field of occupational training and schooling for their children. 12. For the same phenomenon in Peking, see Jean-Philippe Béja, Michel Bonnin, Feng Xiaoshuang and Tang Can, “How Social Strata Come to Be Formed. Social Differentiation among the Migrant Peasants of Henan in Peking”, China Perspectives, No. 23, May-June 1999, pp. 28-41, and No. 24, July-August 1999, pp. 44-54. 13. Laurence Roulleau-Berger, Le Travail en friche : les mondes de la petite production urbaine, La Tour d’Aigues, Editions de l’Aube, 1999. 14. Robert Castel, op. cit. 15. Patrick Cingolani, La Précarité, Paris, PUF, 2005. 16. François Dubet and Daniel Martucelli, Dans quelle société vivons-nous ?, Paris, Seuil, 1998. 17. Nels Anderson, Le Hobo : sociologie du sans-abri, Paris, Nathan, 1993. 18. Laurence Roulleau-Berger and Shi Lu, “Inégalités, disqualification sociale et violences symboliques à Shanghai : l’accès à l’emploi urbain des migrants”, Journal des anthropologues, nº 96-97, 2004, pp. 233-252. 19. Pierre Bourdieu and Patrick Champagne, “Les exclus de l’intérieur”, in La Misère du monde, Paris, Seuil, 1993. 20. Laurence Roulleau-Berger, “La Chine au seuil du XXle siècle : état des lieux”, Revue française de science politique, nº 4, 2003, pp. 632-635. 21. Laurence Roulleau Berger and Shi Lu, “Routes migratoires et circulations en Chine : entre mobilités intracontinentales et transcendentalisme”, Revue européenne des migrations internationales, vol. 20, nº 3, 2004.

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RÉSUMÉS

As China’s economy turns to globalisation, at home the issue of a floating workforce is becoming more intense and complex. In Shanghai, low-skilled migrants are subject to economic and social segregation. This comes with a social stigma and restricts the migrants to particular economic sectors within a fragmented labour market. Nonetheless, the itineraries the migrants follow allow them to acquire certain skills and resources. Their survival strategies produce what have been called “situations of affiliation and disaffiliation” within an overall situation of general insecurity.

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Shanghai: Modern Conveniences as an Argument for Displacing Residents The case of Jianyeli, a pilot rejuvenation project

Valérie Laurans

1 Do the Chinese aspire to modern conveniences? Such a question, which may seem incongruous, embodies the spirit of the times in many big Chinese cities, and particularly in Shanghai. At a time when the residential spaces of this megalopolis are undergoing complete renewal, residents are being encouraged to buy their own homes. While the authorities seek to make urban space profitable, residents are rethinking their conception of domestic comfort. Between the ambitions of politicians and the concerns of residents, access to modern conveniences, while being their common aspiration, is the scene of a clash of ideals between the leaders and the led.

2 My initial research explored the huge discrepancy, at the turn of the century, between the availability of a tremendous amount of new housing on the market and actual demand among the population of Shanghai1. The question of social change appeared just beneath the surface. The Chinese regime, which is dependent on the continuation of economic reforms, is now working on the construction of a legal framework for urban renewal. Faced with the excesses of property development, what recourse is there for the citizens of Shanghai? This article considers the stakes involved in the housing sector’s move into the market economy. It presents the social consequences of the reorganisation of the housing stock in Shanghai and emphasises the fundamental role that the displacement of the population has in the race for urban development. A detailed study of Jianyeli, a historic area which is the object of a pilot urban renewal project, recounts the progress of negotiations begun only after eviction proceedings had begun. The modern convenience paradigm or the metamorphoses of access to housing 3 In 2000, while the state was completing the dismantling of the fuli fen fang, i.e. the allocation of housing within the framework of the welfare system, four-fifths of

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metropolitan residents did not wish to invest in the purchase of new housing. As far as the authorities were concerned, the drop in the quality of housing conditions justified changing the rules of access to domestic space: it was a question of shifting from the principle of merit to the logic of the market. For residents, the very status of housing was thus profoundly altered.

4 A rare commodity, housing, until the 1990s, was parsimoniously allocated by the state. A resident had no leeway in deciding his place of residence, nor was he recognised as master in his own house. He could at best only enjoy the use of collective property. One of the major consequences of the privatisation of the residential property sector was to give back to housing its status as inalienable property. By a ricochet effect, the relation between the dwelling and its occupants was also profoundly altered. The resident, once passive, suddenly became once more the active agent in his own life. If they had sufficient financial means, the marketing of new housing offered all urban residents the opportunity of anchoring their security in the place of their choice, as well as of making their investment yield a profit. While access to housing was associated with a financial investment, modern conveniences, a privilege to be earned, were associated with ownership. What would be the social consequences of the marketing of new dwellings? Would domestic space become the centre of new demands by the inhabitants? Would these demands close themselves into the private sphere, or, on the contrary, would they contribute to the appearance of a public space based on the assertion of common interests?

1. Buildings in Jianyeli before renovation

5 Several research projects are currently examining these questions2. In the field of urban studies, Chen Yingfang is taking up the concepts of “the city” and of “urban society” formulated by Max Weber in order to examine the effective status of the contemporary Chinese urban dweller. The gap which exists today between “passive residents” and “citizens participating in the life of the city” raises the question of the

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building of social cohesion3. The emergence of civil society in Shanghai is also central to Bao Yaming's preoccupations. His research transposes Henri Lefebvre's theses of “the right to the city” and of “the production of space” to the context of Shanghai, and focuses on the changes in public space4. Similarly, academics working on “residential communities” (shiqu)5 and on “residents' associations” (jumin xuehui) 6 envisage residential space as the place of expression of social conflict and of the power relations between the government and society. Benjamin L. Read7 ponders the representativity and the influence of the elections of co-ownership committees (yuezhu weiyuanhui) in Canton, Chongqing and Peking. In his view, their formation, which is more or less organised by the state, is evidence of urban residents' desire to participate at the lowest level of public life. These organisations may contribute to the formation of a social connection based on the defence of property-owners' rights. Zhu Jiangang8, who studies the disputes relating to the non-fulfilment of sales or housing upkeep agreements, is more cautious. To an increasing extent, only a small fraction of the population is concerned: those urban dwellers who have the means to become the owners of new housing. Moreover, where Shanghai is concerned, this research does not take account of the displacement of the population, a phenomenon which is characteristic of urban renewal, and which concerns the majority of urban dwellers who were originally settled in the city centre. From the reorganisation of the housing stock to the social reconfiguration of the metropolis 6 At the turn of the twenty-first century, the Chinese state undertook the conversion of the housing sector to the market economy. Shanghai, confronted with an endemic housing shortage, adopted a policy of residential property construction on a large scale. This was aimed at three major objectives: the provision of an adequate number of apartments on the edge of the city; promotion of the buying of new housing; and the decongestion of an overcrowded city centre. While these measures appear to aim at the improvement of housing conditions (which were neglected during the first forty years of the communist regime), the short-term objectives are more pragmatic. As is the case with many others, this reform from on high is the result of the determination of the state. For the municipality of Shanghai, the argument of modern conveniences plays the role above all of an incitement. It serves to help economic growth, thanks to the development of property promotion. It also provides a pretext for the renewal of the physical appearance of the city. Lastly, it contributes to the maintenance of social stability, and thus participates in a strategy of relegation of the individual to the private sphere.

7 The reorganisation of Shanghai's housing stock took place in three stages, between 1992 and 20049. During an initial experimental stage, from 1992 to 1995, residential property was partly privatised. This stage was marked by the chaotic construction of new housing in the suburbs. The supply on offer, without any connection to the logic of the market, did not correspond to real demand, and was not based on any proven architectural model. Since these dwellings found no buyers, some were acquired by the state, while others were demolished. The second stage (1996-2002) saw the spread of the privatisation of the housing market. This stage was characterised by the regulation of construction and by the massive subdivision of plots available in the immediate periphery. Moreover these new buildings, erected outside the inner circular highway,

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were the object of various incentives to home ownership: the establishment of a system of bank loans, standardisation of construction, special promotions, etc.

8 Beginning in 2003, buildable space became scarce inside the new perimeter of the city centre (which was defined in 2000 by the outer circular highway). The emphasis then shifted to the renovation of old housing within the historic centre, whose border is the inner circular highway. Urban renewal offered new investment possibilities to property developers. On the one hand, the local authorities wanted to finance the rehabilitation of the housing stock inherited from the time of the Concessions and the Maoist period. On the other hand, bringing the buildings up to standard would allow them to get rid of housing which was unsaleable because of its decrepitude10. With the 2010 World Fair on the horizon, the progress of the project had become urgent. This is a media event of prime importance to Shanghai, whose ambition is to join the select club of globalised metropolises.

9 From an official point of view, the standardisation of housing in Shanghai is evidence of the general rise in the standard of living. On the ground, the directives of the state translate into a huge commotion and an unprecedented social reconfiguration of urban space. To oversimplify, they tended to disperse poverty in enclaves on the periphery and to concentrate wealth in the heart of the city. Since 1990, 38 million square metres of old buildings have been demolished in the ten central districts of the metropolis. At the same time, over 800,000 families (2.7 million residents) were moved to the suburbs between 1992 and 2001. Since the designation of the city, in 2002, as the site of the World Fair, the work of the bulldozers has intensified. The renewal of the urban centre is believed to have affected 98,750 households (around 340,000 residents) in 2002 and 79,000 (around 270,000 people) in 2003. As of October 1st 2004, the population affected in the first nine months of the year was estimated at 9,500 households (about 33,000 residents)11. Whatever the reliability of these official statistics, evicted residents are participating, against their will, in the gentrification of the city centre. The renovation of these densely populated areas by demolition, or more rarely by renewal12 is the cause of regular demonstrations of discontent. At a special meeting in June 2003, Hang Zhen, the Mayor of Shanghai, is said to have stated that the proliferation of displacement operations, by endangering social stability, were having a negative influence on the development of the metropolis13.

10 In economic terms, the advantage of the evictions is nonetheless undeniable. According to Wang Lianli, their continuation is even essential. In fact, these mass evictions maintain the property bubble and thus sustain economic development14. Yet they also put a strain on the legitimacy of the public authorities. At the local level, arbitration between financial profits and civil interests is proving difficult. The international press has given wide coverage to the excesses of property development everywhere in China. Considering those displaced, it has emphasised the violation of residents' rights15. In the face of pressure from the media, the Party's Central Committee approved, at the end of 2003, a national directive forbidding forced evictions. This outline of a judicial framework was reinforced, in March 2004, by inclusion in the Constitution of the right to private property. But angry demonstrations by residents have not decreased16.

11 While the Shanghai press boasts of the success of “model housing operations”17, the national press is debating the adoption of commercial law as the judicial basis for “displacement contracts”. Business publications uncover the misappropriation of funds of which some property development companies have been guilty18. However, the

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validity of such operations is not called into question. On the contrary, they are credited with all sorts of advantages. The “moving” operations (WW, banqian) are said to make it possible for the state to standardise the various forms of home ownership, and to regain possession, “to the advantage of the majority”, of strategic spaces in the city. They are also said to make it possible for low- or middle-income earners to become property owners outside the marketplace, and to accede to modern conveniences in a perimeter which is “close to the city centre”.

2. The relocation of the residents of Jianyeli

12 In practice, how are these evictions carried out nowadays? What are the reasons for the dissatisfaction of the displaced city dwellers? In what terms are their grievances expressed? An analysis of Jianyeli, a historic district in the city centre in the course of being redeveloped, makes it possible to put forward some answers. This pilot rehabilitation project, directed by the district of Xuhui, is being carried out with public funds. While supposed to be in the public interest, the renewal of Jianyeli has become a wrestling match between the local authorities and residents. The thorny problem of the evictions lies at the heart of the disagreement. The renovation of Jianyeli 13 Jianyeli is a lilong: a residential district, built between 1930 and 1938, at the heart of the former French Concession in Shanghai. Made up of two- or three-storey semi-detached houses, it was originally designed to house 260 families. In the course of historical events (Japanese occupation, civil war) its original residents temporarily sheltered new arrivals who had come to seek refuge under the authority of the foreign powers. In 1956, the government requisitioned all private dwellings, which led to a redistribution of living spaces. During the Cultural Revolution, the untimely arrival of new

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occupants19, aggravated the splitting up of Jianyeli's housing. On January 1st 2003, the population of the lilong was estimated at 3,000 residents divided into 1,050 homes20.

14 The authorities of Xuhui, the district of Shanghai responsible for Jianyeli, are carrying out a policy of urban renewal, following the example of other sectors in the city centre. In this context, Jianyeli enjoys privileged treatment. Its classification in the list of districts to be preserved, as well as its inclusion inside a perimeter which is the object of a conservation plan, has allowed it to avoid demolition and to benefit from a restoration project. Officially, the operation constitutes a priority project for the district of Xuhui. The district is seeking to establish a model for the renovation of the historic areas of central Shanghai. The local authorities are concentrating their efforts on three key areas: the financing of the renovation; the authenticity of the restoration; and the management of the original population. How is the question of the displacement of residents settled?

15 From a legal point of view, the eviction of the inhabitants of Jianyeli is based on two regulations published by the Bureau for the Management of Land Resources for Residential Property of the City of Shanghai (Shanghai shi fangwu tudi ziyuan guanli ju): Directive “111” (dated November 1st 2001)21 on the management of the displacement of urban residents, and another directive which deals with the preservation of the fabric of the historic areas of Shanghai22.

16 In August 2003, the Displacement Company of Xuhui, which has State Enterprise status and is responsible for having the area evacuated, circulated by means of public billboards, an initial notice aimed at the residents of Jianyeli23. This announcement was followed by a practical information operation. The two regulations referred to were distributed to each household, along with the compensation each person would be eligible for, according to the characteristics of their lodging. The local press then published several dossiers justifying, on the one hand, the necessity for the renovation project and debating, on the other hand, the methods to be adopted in the restoration of the built environment. The Displacement Company, for its part, refused to produce the authorisation of the municipality officially approving the evictions. All demands for justification of the legitimacy of the procedure being applied were also ignored. The grounds for the agreement offered to the residents of the lilong were not only impenetrable, they were also not open to discussion. Moreover the terms of the transaction were not to their advantage. It offered them modest lodgings in a faraway suburb24 or the payment of financial compensation, which was deemed inadequate. Nevertheless, 30% of the residents accepted the Displacement Company's offer, and left within the specified deadline. The others did not move, despite a double reiteration of the eviction order. Jianyeli then became the scene of confrontations between the district authorities, represented by the Displacement Company, and the recalcitrant residents, entrenched in their stronghold. The standoff continued until the end of 2003. The deadline for the evictions was then extended to June 2004. The resistance of the residents 17 At the beginning of August 2003, the district of Xuhui published a decree putting an end to the residents’ right to use the lodgings in Jianyeli. This right had, originally, been granted to the occupants on an indefinite basis. The residents of Jianyeli were unable to become the owners of their lodgings for two reasons: firstly the division of each housing unit would be between too many families, and secondly the decrepitude of the buildings. The non-compliance of the lodgings with the new standards: lack of

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individual bathrooms, sharing of kitchens, inadequacy of the drainage system, etc., made the lodgings in Jianyeli unsaleable.

18 The decree published by the district of Xuhui gave formal notice of imminent eviction; this took place on August 18th 2003.

19 The form and the amount of the compensation given to the occupants of Jianyeli for evacuating the premises were at the entire discretion of the Displacement Company of the district of Xuhui. The value of the buildings was fixed well below the going market rate25. The Displacement Company did not, moreover, provide any measure of priority in favour of the residents being able to return to the renovated lodgings. The lodgings will thus be available to the former residents at the same market price as to new buyers… In answer to the pressing questions of the residents who hoped to be able to move back into their homes, the Displacement Company skipped round the problem by announcing a crippling sale price: five million yuan26, at the very least, per restored house. The displacement compensation was of course far from equivalent to such a sum. There was therefore no hope of being rehoused in the same place.

20 These conditions were not subject to preliminary consultation with the residents, nor to arbitration with the help of independent experts. A month after the formal eviction notice, the response of the majority of the residents to the authoritarian injunction to leave, and to the inadequacy of the compensation, was a refusal to comply. Initially, responsibility for this state of affairs did not fall on the municipality of Shanghai, but on the Displacement Company of the district of Xuhui. According to the residents, the Company took advantage of legal loopholes to impose its own interpretation of the law, and thus benefit from the evictions. In the absence of any possibility of appealing, the residents began to negotiate, case by case, an agreement in their favour. Each was confronted with a choice between three ways of resisting: “waiting for new and more favourable offers” (W, deng); “leaving it to the state” (W, kao) to manage their material difficulties; or “making trouble” (W, nao) by taking it out on the officials of the Displacement Company.

21 In the eyes of the authorities, Jianyeli amounts to no more than a mere pocket of poverty at the heart of a strategic area. Keeping it in its existing state does not correspond to the policy of prestigious representation which the government intends to apply. Nor is it profitable in economic terms: the powerful Bureau for the Management of Land Resources for Residential Property of Xuhui district hopes to obtain a greater profit from such an under-exploited plot of land. Lastly the status quo does not satisfy the residents themselves: the dilapidated state of the neighbourhood is a source of endless complaints to local government. In short, for both administrators and citizens the renewal of Jianyeli is as necessary as it is unavoidable. But on what basis should it be carried out? From a practical point of view, taking into account the demands of the original inhabitants would certainly have given rise to problems because of the density of the population. But other stakes were probably decisive in the fate of the residents of the lilong.

22 It is necessary to mention, on this subject, the diverging interests of the various administrative entities in charge of the dossier: the city planning bureaux at the city level and of the district of Xuhui, on the one hand, and on the other the bureaux of land management and their local client: the Residential Property Group of the district of Xuhui (Xuhuiqu fangdiquan)27. The city planners, referring to the master plan for 2000-2020, emphasise the necessity for preservation; the land managers, for their part,

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using as an argument the financial cost of such an approach, opt for the demolition of Jianyeli and the construction of new buildings. The debate was not yet settled when the evictions began, and in any case its outcome matters little to the co-ordinator of the project, the director of the Xuhui district. As the one responsible for the carrying out of the operation, his interests lie in swift completion of the work, on which his personal political career depends. “Rooted households”28 versus the “hoodlum company”29

23 From June 2004, the Xuhui district Displacement Company is believed to have no longer obtained any credit from the Construction Bank (Zhongguo jianshi yinghang). Whether for lack of finance, or for other reasons, the process of displacement then came to a halt. In the summer swelter the lodgings which were already demolished became nests for rats and insects and an acrid smell of decay built up there. The status quo lasted until the inspection, in September 2004, of the progress of the project by Sun Chao, Mayor of the Xuhui district. The municipality decided to speed up the evictions. To this end, it made more funds available. Despite these efforts, there still remained, at the beginning of November 2004, around 250 of the approximately 1,000 households initially living in the lilong.

24 The Displacement Company then implemented a new strategy. On November 25th it brought in 200 migrant workers (mingong). These were not, however, workers such as those who, having come with their families in March 2004, were working on the demolition of the vacated dwellings (about 50 people). The new arrivals were specially recruited to lay siege to the resisting residents. Divided into teams, each one directed by a leader with a walkie-talkie, they followed the movements and activities of the inhabitants according to the orders of the Displacement Company. The population of the lilong then divided into three groups: the recalcitrant residents, the workers carrying out the demolition, and the employees of the hoodlum company. The task of the latter, who earn a good salary—50 yuan a day30—was for the time being to make the residents' life impossible by frightening and mistreating them. A range of tactics were used to dislodge the defenders.

25 The mingong received orders to take over all the spaces in the lilong: which is to say the communal spaces and the empty houses, of course, but also the houses where some dwellings were still occupied. This enabled the Displacement Company to carry out an initial demonstration of strength: under its directives, the migrants broke down the outside doors of the houses while their occupants were out. They then took over the spaces initially occupied by former joint tenants who had already left.

26 In a second strike, the mingong every day, from 5am until 10pm, went up and down the lilong, equipped with loudspeakers and whistles, banging on doors, etc. On several occasions the racket continued late into the night. The psychological pressure was also adjusted to the situation of each household. An old person had broadcast, outside their windows, the Buddhist prayers chanted during funeral rites. In front of a house where there was a new-born baby, the migrants howled and hammered on the door to accompany its frightened cries. Residents who had broken off negotiations with the employees of the Displacement Company were subjected to special treatment: a group of “workers” would settle in front of their home to “play poker”, which is to say to make a noise of course, but also to get in the way of the occupants' movements, and possibly to get involved in verbal and physical battles with them. The group would disperse on the day when the Displacement Company could once again come and

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present its offer; it would immediately gather again if the negotiations were unsuccessful.

27 Threats and intimidation rapidly bore fruit: by mid-December half of the terrified inhabitants had moved out. Around a hundred households accepted the new and improved offers. This carrot and stick policy led them to sign the displacement contract against their will and to leave the location as quickly as possible. By the middle of December 2004, there remained the residents who were initially the best housed and some diehards. None of them cited that they had the right to use their dwelling, as a reason to remain, even though this is recognised as equivalent to a right to the property, and which could not be taken from them by the renovation of the building where their dwelling was. These entrenched residents refused to leave because they felt they had not been justly treated, and were infuriated by the procedures, the attitude and the Ubuesque discourse of the representatives of the Displacement Company. They complained of the violation of human rights to which they were being subjected, but did not demand their rights. They seemed resigned and simply demanded more “reasonable” (WW, heli) compensation for the despoilment of their property.

28 These invincibles had to face new difficulties. The campaign of breaking and entering occupied dwellings continued. It was then accompanied with devastation, plunder and theft: windows, doors and locks broken, plumbing, furniture and air-conditioners damaged, bicycles, clothing, microwaves and washing-machines stolen, etc. These acts of vandalism were preferably perpetrated while the occupants were absent, but the cover of night (with lighting cables having been cut) was sometimes sufficient to cover the thefts. Significantly, the perpetrators did not so much look for money and valuables, as for anything which was useful in everyday life. For these events the Displacement Company declined any responsibility. As for the police, they sympathised with dumbfounded inhabitants or asked them to point out those responsible so that they could arrest them!

29 The lilong had not been cleaned for a long time. The communal spaces and demolished dwellings had become piles of rubbish. There was now added the excrement of the 200 migrant workers, which also served as projectiles thrown through windows and into the courtyards.

30 Serious altercations between employees of the Displacement Company and the residents, which ended in grievous bodily harm (broken ribs and jaws), numbered at least half a dozen also took place from the beginning of the eviction process. While not a daily occurrence, they were nonetheless the main reason for the discontent of the residents and for explosions of collective anger. In November 2003, the residents of Jianyeli had come together spontaneously and blocked the access to the headquarters of Displacement Company, situated close to the lilong, after three residents had been beaten up. On November 28th 2004, in the evening, they blocked the traffic again on Jianguo Street leading to their lilong to protest the physical abuse of an elderly person who had intervened in a dispute. That day, the crowd was only willing to disperse on the arrival of the district Mayor in person. Five representatives volunteered then to express the demands of the residents as a whole. They demanded that their physical protection and the security of their possessions be assured, the immediate dismissal of the mingong, and the opportunity to return to their dwellings at the end of the

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renovation procedure. The Mayor listened and offered reassuring words. But he did not accede to the substance of their demands. Modern conveniences under duress: adapting to circumstances or how to benefit from fate? 31 Since the beginning of the eviction process at Jianyeli, numerous individual complaints and several collective petitions, accusing the Xuhui Displacement Company of misappropriation of funds, were deposited at neighbourhood (jiedao), district and city levels. None, however, has led to state intervention in favour of the plaintiffs. Why do these demands not produce more responses? As the residents see it, the scandalous behaviour to which they are being subjected, is attributed to the lack of direct dialogue between the leaders and the led. Lost in the maze of bureaucracy, their case arouses at best indifference, and at worst a refusal to take it into consideration. Many residents are disoriented, and Party members in particular feel betrayed: they no longer know who to talk to, or who to trust. According to them, the power of the state is a “two- faced social institution” (bai shehui, hei shehui), concealing an organised crime operation beneath apparently honourable intentions. The regime thus places itself “above the law which it builds up while evading it” (quan ban fa, er bu shi fa ban quan). It is using a “double-edged sword” (hei dao, bai dao)―invoking the legitimate power of the law when the latter serves its own interests, while resorting to illegal practices when its objectives are threatened. Why did the residents of Jianyeli insist on recognition of a right which, quite obviously, does not apply to their case? They saw no point in referring to and following the law, but were also divided as to how to respond in the face of the acts of the Displacement Company.

32 Beyond the general feeling of revolt, the last residents of the lilong had difficulty in formulating common demands. Having had their fingers burned in the successive waves of repression since the birth of the People's Republic, they were distrustful of any form of organised demand. While the oldest describe the situation in terms of the terror they felt under the Japanese occupation, the middle-aged recall the atmosphere of suspicion that prevailed during the Cultural Revolution. From the memories of the denunciations, they have learned the following lesson: trust nobody, keep the interests of the family circle foremost, and do not worry about the fate of others. From the trauma of the repression of 1989 there persists a disillusionment about protest. Public action in broad daylight not only seems derisory to them, it is above all considered dangerous. Such a perception was maintained, for example, by the rumours during the Zhou Zhengyi case31. This fear, whether justified or groundless, is deliberately exploited.

33 At the same time, access to modern conveniences, presented as a unique opportunity offered by rehousing in the suburbs, serves as bait. As members of the underclass, the ordinary people, (laobaixing), that is to say “without power, money or support” (wu quan, wu qian, wu guanxi), the residents of Jianyeli were resigned, since the economic reforms, to counting for very little. The displacements offered them an opportunity to enjoy benefits which were much more attractive, in the short term, than the recognition of their rights. The residents would willingly have shown disdain for any claims to justice or legality, and would have contented themselves with their fate, if they had not had the feeling of being subjected to treatment that was “unequal” (bu gongping), or even “contrary to good sense” (bu jiang daoli), and in fact “unfavourable” (bu hesuan). All in all, the more the financial compensation is deemed to be

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insufficient, the more unjust the logic of the evictions seems to the residents. Moreover, because of the ill-treatment inflicted on them, it was no longer possible for them to stick imperturbably to their positions.

34 The success of their demands could depend both on their clear-sightedness and their capacity for endurance. They have two weapons at their disposal with which to defend themselves completely legally: time and an appeal to the Complaints Bureau (shangfang). Time is against the government, since the lack of return is excessively expensive for the financial players. Thus in Shanghai the obstinate refusal of a single resident is said to have frustrated more than one urban renewal programme, whether commercial or in the public interest. Hence the necessity for the state to show consideration for the interests of all. The appeals procedure makes it possible to denounce the illegal practices to which citizens can be subjected. Setting the administrative machinery in motion, it can play on the conflicting political stakes within the Party. In this case, the directives of the central state aimed at preserving social stability may also have the purpose of reining in the excesses of property development.

35 In the face of the “incivility” (bu wenming) of the procedures used by the Displacement Company, some Jianyeli residents therefore attempted an “appeal” to Peking. A group of about ten households came together on December 19th 2004 to send an emissary to carry their complaints to the capital. By doing this, they hoped to obtain from the Ministry of Construction the opening of an enquiry into their case, and thus to bring pressure to bear on the Displacement Company. Their representative left on December 20th 2004 to deliver a dossier to the Complaints Bureau of the State Council (guowuyuan xinfang bangongshi). The complaint was not accepted. Since it had not been the object of a preliminary appeal to the courts, it could not be examined. The messenger was advised, however, to go to the Ministry of Construction and explain the complaint. The crimes related did not unfortunately seem to move the employees of the department concerned. They concluded that “there is nothing to get alarmed about” (mei you shizixing de wenti). In other words, there was no crime sufficiently sensational to justify an enquiry in Jianyeli…

36 Was this a failure? For half of those who signed the appeal, negotiations were successfully concluded within ten days of their action, without any link between cause and effect to connect the two events. Compensation of a few hundred yuan32 was allowed them for the thefts committed by the migrants. The other half did not wait for the effects of the complaint either. Some residents opted for a strategy of “moving by escape” (duoban)33 and left their dwellings without receiving any compensation, in the hope of being able to negotiate later in exchange for their co-operation. Others decided to stake all by refusing to let themselves be intimidated, or by staying on the defensive night and day to protect their property. In the lilong, some residents have been using parallel strategies: one family appealed to an influential relative who lives in the United States, another boasts of having recourse to the services of a secret society (hei shehui).

37 The deadline for the eviction procedure, which was to expire on December 31st 2004, was once again postponed for three months. The number of migrants was halved. The real demolition work began34. On January 5th 2005, however, acts of vandalism—break- ins, burglaries, the wrecking of private dwellings—began with renewed intensity. According to the employees of the Displacement Company, there remained at that time,

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around a hundred households in Jianyeli whose “problems would very soon be resolved”35. Pressure without repression: the definition of the implicit rules of the game 38 In sum, Jianyeli, as the object of a pilot urban renewal project, allows the district of Xuhui to test new methods for three areas of the renovation of the historic centre of Shanghai. Firstly the financing is controlled by the local authorities; for this reason the evacuation of the site is carried out with public funds without the external intervention of a property development company. Secondly the renovation of the buildings has to conform with its use as housing, as the original construction. Thirdly, the project, which uses as a pretext the improvement of housing conditions, claims to proceed from a balance between the power of the state and the interests of the population…

39 However Jianyeli, as is the case for most residential sectors undergoing renovation, has become the scene and has the stakes of an ordinary power struggle. Some of the objectives of the operation, whether they be the enhancement of the district of Xuhui, the recognition of the personal merit of its director, or the quest for profits for the local authorities, are at the root of the problem. The latter lies in the combination by the authorities of two incompatible roles: those of administrator and of economic player. The residents' dispute stems from the sale of dwellings which are extremely well situated, of which the municipality has become the owner only by the hazards of history. They are not taken in, they know that the dwellings they occupied, in some cases for several generations, will be resold for a fortune. For the local government it is difficult to be both judge and jury without breaking the law, which is to say without adapting the municipal regulations to its own convenience and without skirting around the directives of the central government. It is thus the methods of re-establishing control inherited from the Maoist period which are used to settle differences. The Displacement Company, to which the district of Xuhui has delegated the problem, believes that only the fear of punishment can weaken the will of the inhabitants to continue to resist their displacement. It therefore tries to find ways to put pressure on the residents, knowing that it can count neither on the army nor on the police for assistance. The mingong, deliberately set against the recalcitrants, are here given a new role. The Displacement Company provides them with an opportunity to take their frustrations out on city dwellers, who usually despise them. It also has in them a classic scapegoat who can be blamed for all the damage done.

40 Moreover, the outcome of the negotiation process shows how, by coming to terms with a displacement project which is imposed on them, the majority of the residents of Jianyeli consider that they are benefiting from the situation by acceding to more modern conveniences. In reality, they are exchanging the increasingly coveted privilege of living in the centre of the city for a benefit which is not necessarily within their grasp: that of having as many separate lodgings as there are households per family. That also explains why some dissatisfied households, having been pushed into a corner, resort to organising themselves temporarily in order to defend their common interests. How have the rules of the game changed? 41 In Shanghai, the move of the residential property sector into the market economy is taking place within the context of a chronic housing shortage. The radical change in the rules of access to housing, marked by the abandonment of the old system, is coupled with an improvement in standards of domestic comfort. Many urban dwellers,

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however, have neither the desire nor the means to pay the price of such a process. The consequences are numerous and significant. Residential space is being redistributed in accordance with a new social segregation. Three objectives are being pursued by the housing reorganisation policy. First of all it is a case of sustaining economic development, secondly of promoting the renewal of the physical appearance of the city, and finally of perpetuating social stability. On this last point, the financial investment represented by housing, as well as the enjoyment of better housing conditions, should, according to Chinese leaders, contribute to relegating social demands to within the boundaries of the private sphere. The implementation of these different objectives gives rise, however, to two major types of protest: the first concerns the privatisation of the management of new housing which is put on the market. The second concerns the policy of renovation of old housing. The example of Jianyeli thus illustrates a struggle for “urban dominance” (the physical and symbolic takeover of urban space, to the benefit of those who really hold power)36 linked to the question of the wholesale displacement of the residents of the centre of the city.

42 As the referees in an unequal struggle, the Shanghai authorities are facing a strategic challenge. With the aim of stimulating the building sector and of financing the renovation of old housing, they are making a bet on favouring the financial players, while trying to show consideration for the interests of the residents. Despite the increasing inequality in access to housing, the desire of both the central government and the local authorities to avoid confrontation increases the margin for individual manœuvre. This does not, however, mean that such confrontation does not take place. It is becoming a means of negotiation which is risky, but can prove to be advantageous both to the representatives of the municipality and to the residents. In fact, the residents involved in a displacement project rarely have the means of attaining ownership of a new dwelling by way of the market. The displacements are therefore accepted if the conditions of their application are negotiated. Individual control of one's own destiny and that of one's family comes before the construction of an ideal of equity applicable to all. Satisfaction or vexation are in fact relative to subjective improvement in each particular case, assessed in the light of the course of one specific life.

43 From the government's point of view, the negotiations should make it possible to restrain the demands of dissatisfied residents. These circumstantial agreements, concluded at great expense, are aimed at maintaining social peace. If the ruled have the possibility of demanding, on an individual basis, the granting of wider privileges, the recalcitrants are unlikely to organise. The constitution of civil society remains constrained in that respect. Moreover, this social compromise constitutes a dilemma for local government in several respects. How can they keep alive the feeling that daily life is being constantly improved? How can they raise the financing needed to continue the renovation of the residential housing stock? Also, how can they offer attractive deals to foreign investors while working on drawing up a legal framework for urban development? The displacements of city-dwellers, which make it possible to strike an ad hoc balance between economic interests and the interests of the population, may be the answer. This would consist of protecting the power of the state from political protest, by negotiating, with an atomised society, the granting of specific benefits.

44 Translated from the French original by Michael Black

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NOTES

1. Cf Valérie Laurans, “Housing and comfort in Shanghai. The example of the Wanli model residential complex”, China Perspectives, No. 39, January-February 2002, pp. 36-44. 2. See Valérie Laurans, “Shanghai dans le champ des études urbaines. Un aperçu de la recherche shanghaienne sur la ville au tournant du XXIe siècle” (Shanghai in the field of urban studies. An overview of Shanghai research on the city at the dawn of the twenty-first century), a study commissioned by the French Human and Social Sciences Agency in Peking, www.antenne-pekin.com. 3. “In fact, we are not at all used to being considered city dwellers […], even in the heart of the city where we live, we count as mere residents. […] beyond the commercial market, and its own particular economic organisation and legal institutions, a real city is also characterized by the emergence of an autonomous civil society”. Chen Yingfang, Shimin yu chengshi shehui (City dwellers and urban society), Dangdai wenhua yanjiu wang (Contemporary culture research network), www.cul-studies.com, 20th December 2004. 4. Bao Yaming, Youdangzhi de quanli. Xiaofei shihui yu dushi wenhua yanjiu (The Rights of a Flâneur. Consumer Society and Urban Cultural Studies), Zhongguo dangdai xueshu sixian wenku (Contemporary Chinese Scientific Thought Series), Zhonguo renmin daxue chubanshe, Peking, 2004, 276 p. After Bars in Shanghai (2001), The Rights of a Flâneur describes the process of cultural and social standardisation to which commercial logic reduces the public spaces of the metropolis. 5. Li Youmei, Director of the Sociology Department of Shanghai University, has researched the structural reform of the urban administration of Shanghai and into the management of new residential communities. 6. Wang Kun, a doctoral candidate at the Institute of Political Studies (Sciences Po) in Paris, is studying the privatisation of the management of residential complexes under the direction of Professor Erhard Friedberg. 7. Benjamin L. Read, “Democratizing the Neighbourhood New Private Housing and Home-owner Self-organization in Urban China”, in The China Journal, No. 49, January 2003, pp. 31-59. 8. Zhu Jiangang, Guo yu jia zhijian: Shanghai lingli de shimin tuanti yu shiqu yundong de minzhu zhi (Between the Family and the State. An Ethnography of the Civil Associations and Community Movements in a Shanghai lilong Neighborhood), doctoral thesis in anthropology, under the direction of Professor Joseph Bosco, Chinese University of Hong Kong, July 2002, 250 p. 9. For more details of the massive construction of new housing in Shanghai, see Valérie Laurans, “Housing and Comfort in Shanghai”, op. cit. 10. Bringing decrepit housing up to standard consists mainly of lowering its occupational density, renovating the wiring and plumbing, providing each apartment with its own kitchen and bathroom, etc. 11. According to the guidelines of the overall plan for 2000-2020, the population of the ten central districts of Shanghai is to be kept at around eight million. 12. Since 1999, two pockets of housing have been the object of renewal operations. Each has been accompanied by the displacement of the entire original population: Xintiandi, a district of Luwan, and Jianyeli, a district of Xuhui.

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13. Liu Ju, “Dongqian weisha zheyang nan ?”, Xin zhuzhai shidian, (Why do the displacements cause so many problems?), New home vision, January 24th 2005, Internet version, http://www.newhouse.chinanews.com.cn 14. Wang Lianli, “Dongqian maodun shi bu pingdeng jiaoyi chansheng de jiegou” (The contradictions of the displacements are the result of unfair transactions), Beijing dajun jingji guancha yanjiu zhongxin (Dajun Center for Economics Watch and Studies), Peking, March 16th 2004, and “Shanghai wei chengshi gaizao suo fuchu de daijia” (The cost of urban renewal in Shanghai), Beijing dajun jingji guancha yanjiu zhongxin, Peking, March 15th 2004, available at www.dajun.com.cn 15. For an example in the French press, see Philippe Pataud-Célérier, “La Chine en mutation, Shanghaï sans toits ni lois” (Changing China, Homeless and Lawless Shanghai) , Le Monde diplomatique, March 2004. 16. Residential displacements come before redundancies as the cause of complaints lodged with the central government. See Liu Ju, “Dongqian weisha zheyang nan ?”, op. cit. 17. On the subject of a displacement operation carried out in the district of Yangpu, the Shanghai evening daily Xinmin wanbao headlined on the December 19th 2004: “Displaced residents queue up to sign up” (WWWWWWWW, dongqian jumin paidui qianyue). On the January 9th, the same daily gave a highly evasive account of a fire which had occurred in a lilong under demolition in the district of Xuhui. Of criminal origin according to neighbours, the incident caused the deaths of two residents who were refusing to leave. 18. See Xie Guanfei, “Bu shi ‘buchong anzhi’ er shi ‘jiaozheng caichan guanxi‘” (Not ‘compensating for the dispersements’ but ‘adjusting the exchanges of property’) Zhongguo jingji shibao (China Economic Times), August 27th 2003. Ren Bo, “Chaiqian zhi su” (News of the dispersements), Caijing, No. 87, July 5th 2003. 19. At the beginning of the Cultural Revolution, one or several of the rooms of dwellings in Jianyeli which housed a single household were requisitioned by the local Housing Management Bureau (WWW, fang guan suo). These requisitions were aimed at punishing the “enemy classes” and made it possible to house the homeless of the district. 20. Xuhui bao, Jianyeli gaizao baohu zhuankan (Xuhui Journal, special edition on the renovation of Jianyeli), August 18th 2003. The figures provided by the Jianyeli residents' committee, calculated on the number of hukou registered in the lilong (which is to say not counting temporary residents such as the migrants) are different: they count 4,300 residents in 1,455 households. Calculated in the mid-1990s, these figures do not show the decongestion of the lilong which followed the liberalisation of access to housing. Here I call “home” a group of people who are related and occupy the same dwelling. The latter shelters in the same space several generations or several related members of a family who wish to separate into different “households”. 21. Bureau for the Management of Land Resources for Residential Property of the City of Shanghai, Shanghai shi chengshi fangwu chaiqian shishi xize, 2001/10/1 (Management of the displacement of urban residents of the city of Shanghai. Detailed regulations of application, October 1st 2001). 22. Bureau for the Management of Land Resources for Residential Property of the City of Shanghai, Shanghai shi lishi wenhua fengmao qu he youxiu lishi jianzhu baohu tiaoli, Shanghai shi fangwu tudi ziyuan guanli ju, 2002/11 (Regulation for the preservation of sectors of historic and cultural character and of the eminent historical architecture of the city of Shanghai, November 2002).

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23. Between August and November 2003, the period corresponding to the beginning of the evacuation of the lilong, three public notices (WW, tonggao) were drawn up by Xuhui Displacement Company, aimed at the residents of Jianyeli. 24. See the map showing the location of rehousing complexes. 25. The average compensation was initally calculated on the basis of 4,700 yuan (470 euros) per square metre of habitable space. The market price for “buying out” the right to use a similar dwelling (a private transaction accepted by the Residential Property Managment Bureau) is between 12,000 and 15,000 yuan (1,200 to 1,500 euros) per square metre. 26. 500,000 euros. 27. This is a state enterprise entrusted, after the administrative reform of the city, with the management of the public housing stock which was formerly attributed to the various “Housing Management Bureaux” (WWW, fangguan suo) of the district of Xuhui. As such, it is entrusted with the “restoration” (i.e. demolition followed by the reconstruction of similar buildings) of dwellings which are listed as historic buildings of the city. 28. WWW, dingzi hu: popular parlance for those households most determined to resist a displacement directive. 29. WWWW, liumang gongsi: a term used by residents for the displacement companies. 30. 5 euros. 31. A Shanghai property magnate who was arrested following the accusations of Zheng Enchong, a lawyer who represented the interests of residents who had been evicted without compensation. The leaders of the protest movement, and then Zheng Enchong himself, were arrested. The latter was imprisoned for divulging state secrets to an NGO: Amnesty International. The case received a lot of coverage in the Chinese and international press. See in particular Lin Huawei, “Zhou Zhengyi xingshuai” (The rise and fall of Zhou Zhengyi), Caijing, No. 86, June 20th 2003. 32. A few tens of euros. 33. Following the maxim “In the face of a battle that is sure to be lost, victory lies in flight” (re bu qi, duo de qi). 34. The administration entrusted with the dossier finally opted for a “restoration” project which called for the demolition of most of the original buildings. 35. “There are about a hundred families still (in Jianyeli). They are all experiencing difficulties, but these will very soon be resolved”. (Xianzai [zai Jianyeli] hai you 100 dou hu. Tamen dou shi you kunnan de, danshi wenti hen kuai jiu hui jiejue). 36. See Henri Lefebvre, La Production de l’espace (The Production of Space), Anthropos, Paris, 2000.

RÉSUMÉS

This article focuses on the means of attaining modern conveniences in housing in Shanghai at the beginning of the twentieth century. More precisely, it examines the social consequences of the state's lack of investment in the housing sector. Does the evolution of property legislation

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call state domination into question? How much influence does the mobilisation of property legislation have in terms of the accession to material benefits? A detailed study of the pilot rehabilitation project which the historic area of Jianyeli is undergoing makes it possible to understand the role played by modern conveniences in the displacement of urban residents in Shanghai.

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The Revival of Family Capitalism A Zhejiang entrepreneur

Gilles Guiheux

1 Promoting exemplary models of economic organisation is a tradition in communist China: Most famous among such models are the commune of Dazhai in Shanxi province and the city of Daqing in Heilongjiang, which have been models for rural and urban China since 1964-19651. During the 1990s, while China’s market economy was strengthening, state-owned enterprises were required to follow the model of their Japanese or Korean counterparts, with the aim of creating “national champions”2. More recently, Hai’er, based in Qingdao in Shandong province, and which originally manufactured household appliances, has had wide praise in the media. The history of its development is the subject of several reports available in any bookshop nationwide3. Hai’er is shown as the Chinese equivalent to General Electric in the United States, or Sony in Japan; as a Chinese international (Hai’er has industrial plants in the United States), it is a new model.

2 This article deals with another type of economic organisation, less conspicuous and less newsworthy, but on the increase in China: the private family firm4. Our analysis is based on the statements of an entrepreneur, Mao Lixiang, head of the Feixiang group, whose main company, Fangtai (Fotile is the English name) manufactures kitchen equipment5. Our study of this exemplary firm is rooted in observable practices as well as in the words of the very creator of the business. I chose this particular businessman because of the visible and coherent quality of his speech. Mao has written several books about his own experience, which appear as initiation handbooks for prospective businessmen6. Mao often gives interviews to the media (written press, television or radio) and takes part in fora all over the country. He has thus become a public figure. His speeches, as well as his practices, are also validated by management professionals. Mao is regularly asked to intervene in the training programmes of top universities, particularly in MBAs (Masters of Business Administration), at Peking and Tsinghua universities. A public figure, Mao dedicates a part of his time, a third according to him, to promoting family business across the country7. The number of social stages held by Mao Lixiang indicates that, in China today, private businessmen have the opportunity to speak their minds, and thus have increasing influence8.

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3 In China, on entering a bookshop and glancing at the titles on the shelves, one is impressed by the number of translated works, from Bill Gates (Microsoft), Lee Iaccoca (Chrysler) to Akio Morita (Sony): the gurus of management are mostly foreigners9. Looking more closely at Mao Lixiang is like looking into the case of a guru, a guru not quite as famous as others and Chinese. If Zhang Ruiming, the chairman of Hai’er, may be considered by major Chinese companies as the model to be followed, Mao Lixiang has a similar role for the family business10. He embodies part of the country’s modernist economic elite and champions their interests (in as much as the regime allows them freedom of expression). For that matter, he is known as such by the political authorities11. Indeed, it is not easy to tell how effective his speech is—stating principles is not enough to convince—, but his ability to express himself through various media, management literature, the general public press, the field of politics, is proof enough.

4 Through an analysis of the way Mao Lixiang speaks of his personal career, of family firms and of the Chinese economy in general, our aim is to identify the new ideological and moral order that is in progress in China today. Actually, if the People’s Republic offers the main characteristics of a capitalist economy (the merchandisation of labour, privatisation of the means of production, the emergence of a class of businessmen), individualism is rejected as a “bourgeois” value12, and the reforms have been justified in terms of socialism—the Party has introduced the notion of “initial step of socialism” 13. However, changing successfully from a planned economy to a market economy implies an ideological transformation. The present article focuses on identifying the new standards and the new values that make up both the basis and the effect of such a transition. In the background of Mao’s defence of family business, what is in question is not only economic action in all its forms, but also the personal enrichment of a few and the emergence of a new social stratification (Mao’s personal fortune is estimated at near to 100 million yuan14).

5 In a Weberian viewpoint, acknowledging the crucial part played by the values and mission of the institutions, Mao’s practices and speech are read as indicators of the Chinese “spirit of capitalism”. I am assuming that the documents this study is based on (Mao Lixiang’s books, newspaper articles, interviews) offer standards and meaning and develop arguments in favour of the economic functioning in the world of business and in the inner working of the firms. The speech in question is part of the discourse that legitimates the economic and social system being established for the last twenty years15. Even though the building-up of a new legitimate economic and social order also implies the use of violence, since one remains in a single-party system that allows no pluralism, particularly where trade unions are concerned, I have chosen to take seriously the ideological constructions that go along with the transition. A career embedded in a specific territory 6 Mao’s speech takes on meaning as part of a long professional career across a territory, the north of Zhejiang province, between the cities of Hangzhou and Ningbo, where a network of small and medium-size businesses started to develop as early as the 1960s. After 1978, Mao’s career follows the institutional changes involved in the politics of reform and opening up led by the central government.

7 Mao Lixiang was born in 1942 into a poor family from Cixi, about sixty kilometres west of Ningbo16. On leaving secondary school, he entered professional life as a teacher and taught for two years. In 1965, at 23, as a young man he became an accountant for a commune and brigade enterprise (shedui qiye)17, where he stayed until 1974. Until

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1994, he was responsible for the firm’s sales; the factory employed about forty people and was a subcontractor, making parts for Shanghai state-owned car industry and radio-set enterprises. In fact, the city of Cixi, in the second half of the 1960s, was an area of rapid development for this type of business. The number of small town businesses rose from 19 in 1964 to 106 in 1970 and reached 186 in 1974, with no notable change in the demography of other types of businesses18. A township and village enterprise within the contract responsibility system 8 In 1985, Mao became the manager of a factory located near Cixi, in the zhen of Zhanghe, “factory number 9 producing radio parts”. Officially, it was a collective owned by the local government and subcontracting pieces for Shanghai TV-set manufacturers. The local administration put up the money for the purchase of the first six machines. The working capital, hardly 2 000 yuan, was brought by Mao himself19. As a matter of fact, the business is granted to Mao within the limits of the contract responsibility system (chengbao hetong). The system, also set up for the peasants’ homes as a part of decollectivisation, takes the shape of a contract between the business manager and the administrative unit he is attached to (here, between Mao and the Zhanghe zhen). The contract sets the yearly rent that the firm has to pay to its administrative unit, in return for which the manager is master of his own firm. The firm is de jure collective— consequently entitled to the privileges granted to any business controlled by local authorities (particularly when it comes to obtaining credit)—, it is a de facto private firm. Within the firm, Mao understands the responsibilities: “I am, at the same time, the Chairman of the board of directors, the general executive and the sales manager”20.

9 In 1986, overproduction has sent the market into crisis. Within a few months, Mao loses his customers, and looked for another type of production21. Following a friend’s advice, he goes to Xinyang (Hunan province) and visits a manufacturer of measuring instruments who is supposed to have invented a new product. But when Mao gets there, the information proves wrong. From Xinyang, he goes to Peking, to the Electronic Techniques Research Institute. There, a friend shows him another product, an electric fire-lighter (dianhuoji); Mao decides to start manufacturing this item. Setting-up the new production lines takes only forty-five days.

10 The new product gets a good reception from the market. Mao sends his salesmen all over the country, going himself to the big cities, Peking and Shanghai. He is awarded the “Golden Eagle Prize” by Zhejiang province, a prize to reward creative business22. The product is exported, first through an international business company, from 1986 to 1989, then directly. In 1989, Mao takes part in the Canton Fair for the first time and signs his first contracts with foreign customers23. The firm, the first Chinese manufacturer of fire-lighters, is quoted among the top hundred exporters from Zhejiang province, and has become one of the few first national small town businesses doing export trade. Mao is given the nickname of “worldwide king of the electrical fire- lighter”. In 1992, the firm changes its name and becomes the Feixiang Group (Feixiang jituan). Between 1986 and 1992, the number of employees increases tenfold, from 100 to 1,00024. However other businesses start manufacturing the same products in Cixi and in the neighbouring places of Ningbo and Yutao. The competition between manufacturers sends prices tumbling. A new private firm 11 In 1995, Mao Lixiang invests 5 million yuan a new business, Fangtai25. The firm is established with the legal status of a public limited corporation; it is a joint stock

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company of which Mao’s family owns 80%. Mao is chairman of the board of directors (dongshizhang), his wife is president of the observation committee (jianshehui zhuxi), and his son, Mao Zhongqun, is executive manager (zongjingli). No other member of the family is employed. Betting on improvements in housing conditions in Chinese cities, the new firm starts manufacturing extractor hoods for the kitchen; it later diversifies into manufacturing kitchen facilities and furniture.

12 Mao Lixiang’s professional career entitles him to the position of spokesman that he has. His activities developed gradually; from subcontracting for big Shanghai companies to manufacturing and trading under his own brand, while building up a wealth of experience, a capital of acquaintances, abilities and resources all of which were made to work for the economic growth of his activities. Contrarily to those who, in China over the last twenty years, have made a fortune at the stock exchange or in real estate, Mao may look upon himself as a genuine entrepreneur who has created products, setting- out to conquer new national or international markets.

13 Secondly, Mao’s career has logically found a place in the records of institutional changes over the last two decades. For twenty years, from 1965 to 1985, Mao worked as a salaried employee of a collective business owned by the local government. He then set up on his own within the bounds of the contract responsibility system, the only option in the mid-eighties. The firm was officially a collective, but Mao had to supply the capital and was also responsible for profits and losses. The public feature was just for show, since Mao only “displayed the state label” (guale gongjia de paizi)26. Ten years later, after the Company Law was passed in 1993, Mao set up a private-rights company with profits from his previous activities27. Equally helpful was his past as a sales manager for a small town enterprise (from 1974 to 1994): “Those were difficult years. At the time, the economy was planned, but we were allowed no raw materials. Materials were given to state-owned firms, and their sales were warranted; but we had no guaranteed supplies; we had to find our raw materials and our market”28. Managing a small town enterprise responsible for its profits and losses enabled Mao to acquire the skills necessary for a business manager in a market economy.

14 By 1995, Mao already had thirty years of experience of doing business in Cixi, so his decision to establish Fotile here is not surprising. The continuity between his various firms is not through their activities, rather to the command of a technological skill, since they go from manufacturing parts for TV sets to manufacturing fire-lighters and then kitchen facilities, all of them simple products technologically speaking. In the accounts he gives of his business ventures, Mao in fact suggests that changing from one product to the other happened, so to speak, by chance while he also stayed in line with the local small mechanical and electric industry. Hence, as electric fans had been made in Cixi for twenty years, Mao decided in 1995 to start manufacturing kitchen extractor hoods. Over forty years, this is less the record of a firm than the record of an individual who successively managed several businesses with different legal status and different production. Their common feature is their manager29.

15 This is probably why Mao Lixiang never thought of setting up anywhere other than Cixi, a choice he justifies by the quality of the local industrial infrastructure. Indeed, the local prosperity is linked to a network of small and middle size enterprises that have been working for a long time as subcontractors for the big Shanghai industry. So, all the supplying of Fotile can be done locally; “whatever the part, it can be manufactured in Cixi”30. As a matter of fact, the small town businesses have played the

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greatest part in the development of the local economy between 1978 and 1987. In that lapse of time, their number went from 275 to 921, while the value of their production multiplied by eleven. The firm produces mainly household appliances (electric fans in the 1970s and 1980s, ovens and irons in the 1980s and 1990s) and electric components for the Shanghai TV, car or electric appliances industries31. Today, the road from Ningbo to Cixi runs across a landscape now urban now rural and continuously industrialised. In the near future, the building of a bridge across the Hangzhou Bay should strengthen the link with Shanghai―once the bridge is in use, it will take less than an hour to travel from Cixi to Shanghai. The firm and the market economy 16 At the end of his career, a career exemplary of the adjustment of a whole region to institutional changes, Mao Lixiang, today in semi-retirement, describes his own way of looking at business and at the organisation method of Chinese economy, at university conferences, in books on management, at business fora32, as well as in the media. This study is based on a selection of articles put together in order to “pass-on a worthwhile statement to the younger generations of entrepreneurs”33. Three main themes come to light in Mao’s speech: the firm as an organisation, the market as a space of confrontation of the producers, and the necessary collaboration with the public authorities. The firm as an organisation 17 Mao deals with the firm as an organisation from two angles: the manager’s responsibilities and the part he/she plays; and the rallying of employees to serve the organisation’s interests. The entrepreneur appears as someone who must be both solitary and creative. He must “keep away from the world” (chaotuo), a phrase with a triple meaning: “Turn one’s mind away from day-to-day matters in order to apply one’s energy to major problems; reject common ideas in order to think differently, creatively; pay no heed to the commonplace in human relationships (renji guanxi)”34. The entrepreneur’s aloneness (gudu) is a guarantee of his ability to break new ground. “Innovation, this is where the company’s vitality is”35. Not only does this characterise the boss; it should also distinguish each and every employee; this is one requirement is found in a slogan of Fotile: “Be sincere, respect the company, study, innovate” (zhengcheng, jingye, xuexi, chuangxin). Innovation, that is, not restricted to technology but extends to methods of organisation as well as the discovery of new markets36. There is a popularised version of Schumpeter’s definition of the entrepreneur37. The insistence on the crucial part played by the head of the business fits in perfectly with and follows the direction of the reforms started in 1978, the aim of which was to make the firms and their managers responsible for their profits and losses. There, Mao Lixiang’s ideas are utterly in keeping with all that was written and published in tribute to business managers as the heroes of contemporary Chinese society38.

18 The manager’s solitariness has another meaning: it allows him to “pay no heed to the commonplace in human relationships”39. This is a call to give up what Mao elsewhere describes as “the methods of management characteristic of the previous step in the history of Chinese development”. Aware of the pressures that human relationships have on economic life, Mao requires decisions to be made, from now on, heedless of these pressures. In short, he recommends the use of modern management methods against Chinese social traditions. He is saying that necessary economic modernity

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should break from the old social practices. The entrepreneur must be modern, as against what Marie-Claire Bergère has called “the old man”40. What Mao says can also be understood as the rationalising of a practice that can be observed in many a private family-business where actual power is fully in the hands of the entrepreneur, a charismatic authority.

19 In addition to the question of its management, the firm is considered a human community; according to Mao, its major asset is man. “Modern management must consider man as its main resource”; it must “put the people first” (yiren weiben)41. This is in keeping with the transition from the planned economy, when firms were entirely involved in their task of production (and when staff management was strictly a book- keeping and administrative matter), to the market economy in which what has become important is staff motivation and in which success is determined by the efficient management of men. It is from this viewpoint that Mao’s passages about the necessity to build a firm as a community of men focusing on common aims, hence the importance given to the idea and practice of creating a team-spirit (tuandui), or the necessity of “together building the Fangtai spirit” (gongzhu Fangtai hun),42 and a corporate culture (qiye wenhua). What has to be created in the employees is the feeling that they belong to the company.

20 The phrase “putting the people first” is also inspired by Confucian thinking and suggests the benevolent attitude the manager must have towards his employees, similar to that of the prince towards his people43. Moreover, in the importance placed on people as a resource of the firm, there is somewhat of a “socialist” echo. Mao Lixiang does not discard a certain rhetoric inherited from the time of the planned economy and from the work units acting in the economic, social and administrative fields. Mao thus appoints the firm to “come up to the employees’ material, spiritual and affective needs, and to set up relationships of confidence and equality between individuals, in order to guarantee the working and vitality of the firm in the long run”44.

21 In another passage, Mao insists on “permanence” in contemporary Chinese economy and society, of supposedly traditional values, particularly loyalty and sincerity (zhongcheng). “Traditional Chinese culture particularly insists on loyalty and sincerity. The zhong character in Confucian culture means loyalty towards the Emperor, loyalty towards the feudal sovereign, the vassals must die for their sovereign—they can but die —, the son must help his father—he can but help his father. That unquestioning loyalty allowed the feudal political system to be maintained for 2,000 years (…). In modern management, loyalty and sincerity must be a principle of behaviour for employees (…). Modern loyalty—we must consider it from the point of view of the market, we must use it, and everybody should try to be loyal towards the group, towards the company”45. In other words, Mao reinvests a supposedly traditional notion with a new meaning. The market 22 Mao Lixiang’s speech gets organised around a second theme, market as a space of confrontation between the producers. It is, in fact, the idea of competition that Mao chooses to characterise market economy: “The market exists, anyone may take part in it (…). The market is like white rice, and the firms are like hens and ducks [trying to eat the white rice] (…) Competition in the market is something positive, it is only through competition that society can progress”46. Mao thus words a popularised version of liberal theory; the free competition of individual interests (the individual being the firm) produces common good.

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23 Mao emphasises that firms should find and keep a trademark, the very condition of the reputation of their products and consequently of their success. Mao illustrates his statement by giving as examples foreign trademarks (Coca-Cola, Pepsi-Cola, 555, Pierre Cardin) as well as Chinese ones (Wahaha, Hongtashan, Hai’er, Changhong). Adopting a trademark is all the more important as Chinese products, in the future, will have to face growing competition from foreign producers now China is a member of the World Trade Organisation47. The notion of a mark (pinpai) in fact reappeared with the 1978 reforms. During the Maoist period, products did not bear labels, just the references of the factory where they had been manufactured (indications of the place and often a number), other than a few companies already well established before 1949.

24 Together with the importance of the trademark, Mao mentions the practices of imitation, to declare that imitation is “a malignant tumour”48. In another passage, he talks of “orderless competition (wuxu jingzheng) [which] allows firms and trades people who do not create products, do not use advertising and do not set up sales networks, to make a lot of profit in a very short time”. He quotes the case of his own activity:” At the beginning, in Cixi, there were only two plants manufacturing extractor hoods (…). But once the media had reported “the Fangtai phenomenon”, there were more than ten establishments”49. Since then, Fangtai has been equipped with a legal department, partly to fight that curse. But, Mao thinks, firms pay their due taxes and are in a position to require from local authorities that they protect them “in accordance with the law”. So Mao wishes for a local state that would be more helpful in the enforcement of the law, a guarantor of order on the market. Firms and local governments 25 Mao Lixiang considers, indeed, that the state is an indispensable partner of businesses. In China, entrepreneurs “can only rely (bang) on the government”50 To the question “must we run after the market or must we run after the mayor?”51, Mao answers that, of course “the market is very important, but you absolutely can’t forget the mayor. As a matter of fact, the links between the Chinese economy and the government are very strong. You can’t do without calling for the mayor! Our market economy is only emerging, it is still in a phase of development, the competition on the market is often disorderly, you have to rely on the government to co-ordinate [the companies’ actions on the market]. When laws or rules are issued, it takes some time before companies adjust to the new environment, and there too the government has to play the part of co-ordinator (xietiao). Local rules are too numerous; if you want to develop you can rely only on the government’s help. Labour is also a matter of concern, social relationships (shehui guanxi) are also matters that can be solved only with the government’s help. Many say you have to run after the market not after the mayor. Not to seek the mayor’s help is a harmful mistake!”52. In the transition that characterises the Chinese economy, between the planned economy and the market economy considered not quite achieved, a relationship of co-operation between businesses and the local administration seems indispensable, in Mao Lixiang’s opinion; and the main reason he puts forward is the disorder that characterises today’s market, a result of the inadequate legal and statutory system.

26 If Mao considers relying on the local governments as necessary, he nevertheless underlines the dangers of such co-operation. “While you rely on the authorities, you might fall into a situation which it would be very difficult to get out of, or, to borrow a popular phrase, you might become a government supporter, and then you wouldn’t be

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able to develop any further”53. Here, Mao implies the danger of too close a proximity which, instead of benefiting the firm, would on the contrary prove harmful; the firm would appear an accomplice of local authorities collecting excessive taxes from the companies in their district”. Authorities, exactly like family members, may become predators in the company: “Running a company is a difficult task (…). The fire department, the labour office, the commerce and industry bureau, the land bureau, the protection of nature office, the tax department, they all come and see you (…). If the business manager makes a profit, his brothers, relatives, friends, neighbours, school fellows, all come and call on him”54.

27 At the end of this first clarification, three types of rhetoric can be identified in Mao’s speech on business and the market. The first mentions modernity associated with a market economy, the second refers to Chinese tradition, and the third bears the mark left by thirty years of a planned economy. Conversion to the benefits of the market is indicated by the increase in value of competition, of innovation, of the manager’s daring, of corporate culture, of employee ability or of the importance granted to marketing. In the same way, referring to exemplary entrepreneurs—whether they are Americans like Lee Iaccoca, the former chairman of Chrysler55, Japanese like Akio Morita, the chairman of Sony56, or Chinese like Zhang Ruiming of Hai’er57—, makes room for China in a globalised economy where all companies are defined according to the same criteria of efficiency. Tradition, when it is called up, shows positive dimensions that must be perpetuated—employee loyalty towards their employer—, and negative dimensions that must be given up—the importance of social relationships seen as harmful for an efficient management. Explicit references to the past are always done to a pre-revolutionary past, that of a moral and social tradition.

28 In the importance given to the relationship to the government, one can find the implicit mark left by thirty years of a planned economy. Mao reiterates his beliefs that the Chinese market economy is incomplete and insists on its imperfections. He calls for a more predictable and institutionalised state, co-ordinating enterprise actions, taking up the point of view of certain economists close to the Chinese leadership58. Not to be found in these comments is the Communist Party, of which Mao Lixiang has nevertheless been a member since 1991. But it does come to light in Mao’s nationalistic rhetoric: Mao greets the success of Hai’er and wishes to turn his own business into a “national industry” (minzu gongye), with markets both at home and abroad59. While stating his ambitions, he takes up on his own account the Party’s aims to rebuild a great and powerful country. This entrepreneurial nationalism sounds like state nationalism with its long history in China. Kept out are the workers, except through the theme of rallying the labour-force into teams and creating a corporate culture capable of stirring a feeling of membership and loyalty. Defence and illustration of the family firm 29 In addition to delivering a general speech on the aims and constraints of entrepreneurial action, Mao Lixiang writes in defence of the family business (jiazu qiye), a pro domo plea. In fact, this type of organisation of the economic activity raises quite some interest today, whether from the media or from universities. Over the last ten years, the private sector, mostly made up of private businesses (a feature shared by many other economies) has become one of the engines of the Chinese growth. The media, as indeed specialists, underline the need to find solutions to four urgent issues: handing over from the founders’ generation, the professionalisation of the

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management (is the reliance on family members still practicable?), the technological upgrading of enterprises (whereas small and medium-size enterprises are mostly labour-intensive), and the impossible resort to banking credits (and to informal financial sources) 60. More generally, the issue at stake is the sustainability of the family enterprise as a Chinese economic growth engine. After reviewing the case of Fangtai, the article analyses the defence and illustration of such a case as written by Mao Lixiang. Fangtai, a family business 30 In 1985, at the time of the founding of his business within the contract responsibility system, Mao Lixiang is at the same time the general manager and the sales manager. In order to “improve the management of the firm”, he offers his wife, then the production manager of a textile plant and a specialist in management and finance, deputy managership of the firm. It is understood that “no-one else in the family could enter the business and hold a position of responsibility”61.

31 In 1995, when Fotile is established, Mao justifies appealing to his family by the risk he is running: “The risks are great. At that time, no-one wants to invest with us, only my wife, my son and daughter agree to support the project”62. His son, Mao Zhongqun, just graduated from the electric engineering department of Jiaotong University in Shanghai, was asked to take a direct part in the management of the business. Mao’s daughter and son-in-law are contributing to the capital—they hold 12% of Fangtai63. They are the managers of their own business and will become parts suppliers—first producing parts for the manufacture of electric fire-lighters, and then producing fans for extractor hoods.

32 Mao Lixiang and his son both claim there was a negotiation between father and son, the latter only joining his father in his new industrial project (and giving up his personal project to do graduate work in the United States) under a two-fold condition: that the company be set up in an urban area, and that they manufacture a new product. Mao Zhongqun is supposed to have talked his father into setting up Fangtai in the economic development zone of the city of Cixi. He is also said to be who chose to manufacture extractor hoods. Both father and son thought the market of kitchen equipment promising, because of the growing consumer demand for home improvements. Mao Lixiang favoured manufacturing microwave ovens because the advanced technology involved would make obtaining financial help from the government easier. But Mao Zhongqun wished to start the manufacture of extractor hoods, a much simpler item.

33 Father and son also seem to have negotiated the choice of a name for the company. Mao Lixiang suggested Feixiang, a combination of his own and his daughter’s given names, the latter being the name of his previous firm making fire-lighters. But his son preferred inventing a new mark. They finally choose a trademark imported from Hong Kong, Fangtai, borrowed from the name of a lady-presenter (Mrs Fang) of a very popular television programme produced in Hong Kong (by ATV channel), who is also the author of a cooking magazine (Dongfang shijie) sold all over south-east Asia. Concerning the place of manufacture as well as the company name, Mao’s son seems to embody the break from the past, together with a more modern vision.

34 Mao reports to have been responsible for the conditions of the establishment of his business and the methods of power-sharing between himself and his son64. The co- operation between the two men progresses in three stages. First, between 1996 and 2000, father and son worked closely together. The son worked on perfecting the

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manufacturing of new products while the marketing and the internal management are shared. Between 2000 and 2005, the father slowly retires from active management. The son is general manager and Mao Lixiang is chairman of the board of directors and declares he has totally retired from management of the company. Between 2006 and 2010, Mao Lixiang intends to give up his chairmanship to hold only the position of a member of the board of directors after which he will permanently retire.

35 From this account, one will remember the two arguments Mao gives to justify the family feature of the business: the risk involved (only members of the family are ready to share the risk); and skills. As far as skills are concerned, Mao’s son presents all the possible potential: a graduate from Shanghai Jiaotong University in 1994, he gets a MBA from the Sino European Business School, China Europe International Business School (CIEBS), in 2002. Mao Lixiang, a charismatic manager whose figure is closely associated to his firm endeavours to show that he shares his power, at least with his son. The three steps of the development of the family firm 36 Beyond giving an account of the establishment of his own business and of his management methods, Mao wants to be the champion of the family business in China. “There are some people, among economists and public administrations, who oppose the family system, they consider that it goes against modernity. But there are others who consider that, within the bounds of oriental culture, there is no getting away from a family system. When I lecture at Tsinghua, Beida or Beishida, many students ask my opinion on the family system. I answer them: ‘today, it is impossible for Chinese private businesses not to be family businesses, but they should not be too much so’.”65. Forestalling his detractors, Mao says he is in favour of the family business and that, at the same time, he is aware of the dangers of turning too often to that type of help (he held a similar position on the matter of proximity to local authorities: one can be near, but not too near).

37 Mao takes up again the arguments he develops about his own choices: not enough available abilities and skills, and too much risk. When setting up a business “only your wife and children can support you. It is the only possible choice”. Thus you can but look for help from the family system (jiazuzhi). “If you do not use the family system, then no-one will want to get involved in such a fight [the establishment of a business]. Using your family, your relatives, your friends, your school fellows and your children, this is the best way to start”66.

38 Then, “private companies must give up their previous method of management and separate management from ownership, train the employees and look for new talent outside the establishment”67. You must then “lessen the family system” (tanhua jiazuzhi). If you do not lessen the family system, if you do not set up a modern management system, then there is no way to attract people of great ability into the company.

39 Mao insists on the need to separate management from ownership and to look for able managers; but until the level of confidence of employees is high enough, family management is still relevant: “The legal environment must still be improved, the technological quality of many managers as well as their moral qualities are not yet good enough; in an environment where confidence is missing (…). I have chosen my son to be my heir”68. Mao maintains that Chinese firms are halfway between the chandlerian business model run by managers and the model of traditional human relationships.

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40 The case of Fotile does not exhaust the subject of the variety of firms in China today. It should be compared in particular with the firms that were directly inherited from the time of the planned economy, whether they are large state-owned corporations or collective firms. However, this defence of the family business deserves some attention because this type of organisations is a growing part of the Chinese economy.

41 Mao Lixiang’s discourse on business and the market uses two styles of argumentation, one referring to the rationality of the market and the other to human relationships. The first is exemplified by practices that go in the opposite direction from those of a planned economy and are bound to spread: the creation and protection of trademarks that must be promoted, the constant use of innovation, the aggressive conquest of markets, the promotion of corporate culture, the rallying of competent managers. Human relationships are partly put aside—as obstacles to efficiency—and partly justified—the as yet indispensable part played by the family because of the lack of available ability and the inability to trust employees. In the same way, the need for the firm to have close relationships with the local authorities and with the state, is justified by the failings of the market, a market unable to play its part as a co-ordinator of individual initiatives, or by the general disrespect of regulations.

42 Such an account appears as a heterogeneous combination of arguments put together in favour of the cause of the managers of family firms. The use of a rhetoric at the same time modernist (the creative and solitary entrepreneur), socialist and Confucian (putting people at first) and traditional (the part played by the family) reflects a degree of opportunism.

43 Mao Lixiang considers these different arguments in light of his own interests and of those of his peers, the private entrepreneurs, and particularly those who have, as he has, first developed their career in the collective sector in the shelter of bureaucratic protections before setting-up their business on their own account. It is thus possible to ascribe Mao’s arguments to the practical logic in which they were produced, to the real situation of their speaker and to his specific interests.

44 However, this discourse is not only about justification. The justifications expressed are useful to the capitalist transformations of the system in China. The references to foreign models are linked to the fact that Chinese firms are not only the suppliers of the global market but also faced directly with foreign competition in China itself. The insistence upon the professionalisation of management and the call for skilled people go hand in hand with the spread of management sciences in Chinese universities. The praise of the business-manager’s qualities go hand in hand with the changes in legislation, particularly since private ownership has gained protection. The business manager’s legitimacy is, from now on, subject to his professionalism. Likewise, Mao condemns an “orderless market” in which the rights of intellectual property are not respected and imitation is the rule.

45 Within the scope of an authoritarian state whose transformation is far from being completed, the institutions liable to rule competition or to structure the relationships between employers and employees are not yet established, and the nuclear family seems to be the institution the most capable of securing the economic modernisation of the country. This is in the line of an endless debate, initiated at the time of the first Chinese modernisation that deals with the credit due to the family as an institution made to serve the renewal of the Chinese nation69. More widely, the matter of the economic role of the state, or of the importance of personal links of confidence in

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business management, are well-known among specialists in the economic history of China70. The originality of Mao Lixiang’s discourse, when compared to that of this peers of the first twentieth century, may be in his call for the fast building of a regulating state, at a time when the latter tried to take the place of failing authorities71. Behind and beyond the record of a career and the speech for the defence of an entrepreneur, one finds a contribution to the building of a new economic and social order.

46 Translated from the French original by Geneviève Guiheux

NOTES

1. This article is a revised version of a paper read at the conference “Emerging Social Movements in China” co-organised by the Hong Kong University and the CEFC (Hong Kong, March 23rd-24th 2005). 2. See Peter Nolan, China and the Global Economy, Basingstoke and New York, 2001, Chapter 1, “China’s ambitions: Building the ‘national team’”. 3. For instance Yan Jianjun and Hu Yong, Hai’er. Zhongguo zao (Hai’er. Made in China), Hainan chubanshe, Haikou, 2001. 4. At the end of 2004, there are 3,750 millions firms registered as “private” (siying) in China (Mingbao, January 28th 2005, p. A32). Most of them are family businesses. It is the more dynamic part of the Chinese economy. To these “private” firms, we should add the “individual” ones (geti gongshanghu), that are also family-run and owned. On the definition of the private sector, see Gilles Guiheux, “The Incomplete Crystallisation of the Private Sector”, China Perspectives, No. 42, July-August 2002, pp. 24-36. 5. Fotile manufactures kitchen range hoods, burners, water fountains and also kitchen furniture (see the firm’s website: http://www.fotile.com). Fotile employs more than 3,000 people, control 15% to 20% of the Chinese market. It is the second biggest Chinese firm on that market (interview, July 23rd 2002). 6. Feixiang de guiji (Under the Influence of Fotile), Feixiang de guanli (The Management of Fotile), Feixiang de suiyue (The Fotile Years), Guanli qianqian jie (Management Principles). 7. During an interview carried in July 2002 in Cixi, Mao Lixiang used minqi to describe private enterprises (“the firms that belong to the people” and not to the state), which is more positive than siying qiye, the “privately run firms”. 8. See Thomas Heberer, “Strategic Groups and State Capacity: The Case of the Private Entrepreneurs”, China Perspectives, No. 46, March - April 2003, pp. 4-15. 9. Many MBA students in Chinese universities are aiming at internationalising their career and that might explain why many of the case studies concern foreign firms (besides the fact that foreign firms tend to make more internal information public). 10. In a scientific book on family firms (Gan De-an dir., Zhongguo jiazu qiye yanjiu (Research into the Chinese family business), Peking, Zhongguo shehui kexue chubanshe, 2002), Mao Lixiang is mentioned as an example of successful transmission of power from the founder generation to his son (p. 354). 11. Mao Lixiang was for instance invited to take part in a conference with Premier Wen Jiabao at the end of August 2004 (21st Century Economic Herald, September 6th 2004, pp.

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1-2). The “discussion forum to sustain the development of non-state economy” (feigong youzhi jingji fazhan zuotanhui) gathered nine private entrepreneurs from Zhejiang province. 12. See Wang Xiaoying, “The Post Communist Personality: The Spectre of China’s Capitalist Market Reform”, China Journal, No. 47, January 2002, pp. 1-17. 13. The phrase is first mentioned in 1981 and then systematically after the Thirteenth Congress of the Party in 1987. Zhao Ziyang then uses the concept of “socialist market economy” to justify the move from a planned to a market economy. 14. Chen Yan and Xu Xiaohui, Jiazu liliang (The force of the family), Zhejiang renmin chubanshe, 2003, p. 298. 15. Luc Boltanski and Eva Chiapello read the management literature as a discourse on French capitalism (The New Spirit of Capitalism, London, Verso, 2005). The material I am using is different in nature (they are not scientific textbooks), but they carry similar meanings. Jean Gadrey has underlined that articles from newspapers and magazines might be more typical of the “spirit of capitalism” and more efficient in spreading norms and producing meanings than the scientific literature (Jean Gadrey, “Nouvel esprit du capitalisme et idéologie néo-libérale”, Sociologie du travail, n°43, 2001, pp. 389-402). A common point between the texts analysed by Boltanski and Chiapello and my material is the public they are aiming at: future entrepreneurs or managers. 16. Cixi had 460,000 inhabitants in 1949, and around one million at the end of the 1990 (source: Cixishi gonganju bian, Cixishi gongan zhi (Annals of the public security of the Cixi city), Fangzhi chubanshe, Peking, 1998, pp. 251-253). 17. The growth of communes and brigade enterprises in the second half of the 1960s can be partly credited to the lack of goods produced in urban areas, because of the Cultural Revolution forcing many enterprises to stop production. In 1984, the communes and brigades enterprises became “towns and villages enterprises” (WWWW, xiangzhen qiye). (William A. Byrd and Lin Qingsong (eds), China’s Rural Industry. Structure, Development and Reform, Oxford, Oxford University Press, 1990, p. 11). 18. Cixi xianzhi (Annals of Cixi), Zhejiang renmin chubanshe, 1992, pp. 381-382. 19. Chen and Xu, p. 307. 20. Mentioned by Chen and Xu, p. 300. 21. Mao Lixiang, Guanli qianqian jie (Management Principles), Zhongguo shangye chubanshe, Peking, 2002, pp. 34-37. 22. Ibid, p. 36. 23. The Canton fair (Zhongguo chukou shangpin jiaoyi hui, Chinese Export Commodities Fair) has taken place twice a year, in spring and autumn, since 1957. 24. Mao has probably taken advantage of the fact he was the first to produce such an article. That enabled him to make huge profits. Many towns and villages enterprises that are the first on a specific market (see W. A. Byrd, 1990, op. cit., p. 97). 25. Figure mentioned by Chen and Xu, 2003, op. cit., p. 303. 26. Source: interview. 27. On the gradual production of a legal framework for a non-state economy, see Gilles Guiheux, 2002, op. cit. 28. Source: interview. 29. Barbara Krug ed., 2004, China’s Rational Entrepreneurs. The development of the new private business sector, London, RoutledgeCurzon. The industrial career of Mao fits Krug’s description of the Chinese firm: “an evolutionary process in which the

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conditions for success and failure are laid down well before an actual firm comes into being” (p. 63). 30. Source: interview. 31. Cixi xianzhi, p. 382 and p. 393. 32. Mao is for instance member of the Research Centre on Family Enterprises of Zhongshan University, Canton. 33. Mao Lixiang, op. cit., p. 1. 34. Mao Lixiang, op. cit., pp. 10-12. 35. Mao Lixiang, op. cit., p. 57. 36. Mao Lixiang, op. cit., p. 59. 37. Schumpeter distinguishes five kinds of innovation: new products, new methods of production, new forms of organisation of the industry, new markets, new inputs. The Chinese press and media (such as Zhongguo qiyejia) have played a significant role in popularising the economic theory of entrepreneurship. 38. Not only in the media, but also in the literature or movies. 39. Mao Lixiang, op. cit., p. 12. 40. Marie-Claire Bergère, “Après Mao, le retour du vieil homme”, Vingtième Siècle. Revue d’histoire, 1, 1994, pp. 31-45. 41. Mao Lixiang, op. cit., pp. 116-118. 42. Mao Lixiang, op. cit., pp. 136-141. 43. The same slogan yiren weiben is being used by the new Chinese leadership since the Fourteenth Party Congress (November 2002). 44. Mao Lixiang, op. cit., p. 116. 45. Mao Lixiang, op. cit., pp. 152-153, paragraph entitled “the meaning of “loyalty” for the market”. 46. Mao Lixiang, op. cit., pp. 18-19. 47. Mao Lixiang, op. cit., pp. 244-248. 48. Mao Lixiang, op. cit., p. 256. 49. Mao Lixiang, op. cit., p. 18. 50. Mao Lixiang, op. cit., pp. 20-22. The term bang here translated by “rely” is put in quotation marks in the original text. It is used in every day language to designate a relation of dependency, such as a woman being kept by a rich man (WWW, bang dakuan). 51. In Chinese, the phrase is homophonic: zhao shichang haishi zhao shizhang. 52. Mao Lixiang, op. cit., pp. 313-314. 53. Mao Lixiang, op. cit., p. 20. 54. Mao Lixiang, op. cit., p. 331-332. 55. Lee Iaccoca is mentioned twice. Firstly for being a solitary leader (Mao Lixiang, op. cit., p.10), secondly because his career illustrates the separation between management and ownership (Mao Lixiang, op. cit., p. 175). 56. Mentioned about the necessity to build an enterprise culture (Mao Lixiang, op. cit., p. 138). 57. Mentioned in Mao Lixiang, op. cit., p.17 for his own personal qualities, and p. 139 about enterprise culture. 58. Fan Gang for instance, according to China is going through a transitional phase and is evolving towards a market economy similar to those characteristic of developed economies. 59. Mao Lixiang, op. cit., p. 2.

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60. See the three papers on family firms in the Blue Book of Private Enterprises [Zhang Houyi, Ming Lizhi and Liang Chuanyun (dir.), Zhongguo siying qiye fazhan baogao, vol. 4, Shehui kexue wenxian chubanshe, 2002]. 61. p. 157. 62. p. 157. 63. pp. 165-166. 64. pp. 163-164. 65. p. 61. 66. p. 310. 67. p. 160. 68. From Jinggji guancha bao, April 29th 2002. 69. See Susan L. Glosser, Chinese Visions of Family and State, 1915-1953, Berkeley, University of California Press, 2003, notably Chapter 3 on the promotion of family values by a Shanghainese entrepreneur. 70. See Robert Gardella, Jane K. Leonard and Andrea McElderry (eds.), Chinese Business History: Interpretive Trends and Priorities for the Future, Armonk, New York, M.E. Sharpe, 1998, in particularl Albert Feuerwerker’s chapter, “Doing Business in China over Three Centuries”, pp. 16-34. 71. Marie-Claire Bergère. The Golden Age of the Chinese Bourgeoisie, 1911-1937, Cambridge, Mass., Cambridge University Press, 1989.

RÉSUMÉS

This article looks at an economic organisation more and more frequently seen in China: the private family firm. Through an analysis of the way Mao Lixiang speaks of his career, of family firms and of the Chinese economy in general, the article aims to clarify this new and growing ideological and moral order. The use of a rhetoric at the same time modernist, socialist, Confucian and traditional reflects the opportunism of the man himself and the mixing and matching of values that characterises China today.

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Economy

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China’s Drive to Revitalise the Northeast

Dong Lisheng

1 In August 2003, the Chinese government announced that it had made “the revitalisation of the traditional industrial bases in the northeast” (WW, Dongbei) a state policy, on a par with the policy of developing the western region of the country1. However the policies for these two areas have been drawn up from different backgrounds and local situations and with different goals in mind. In the west the emphasis is on the elimination of poverty. Accordingly, the preferential policies of the central government are directed at increasing the funding level of the central financial resources earmarked for the western region; to favour infrastructure projects, including irrigation and hydro-power, transportation and energy; to increase transfer payments to the region; to increase the availability and accessibility of banking and loan support 2.

2 The northeast is China’s traditional industrial base and has a higher level of economic development than the west. The revitalisation aims are to increase the wealth of the region and achieve its industrialisation quickly. It is hoped that the northeast will become a new pillar of the national economy, after the Yangtse River Delta, Pearl River Delta and the pan-Bohai area3.

3 The State Council has set up a leading group in charge of the new drive. Premier Wen Jiabao chairs this group with two vice-premiers as deputy heads: Huang Ju, concurrently a member of the Politburo Standing Committee, and Zeng Peiyan, also a Politburo member. Some 25 ministers also serve as members of the group 4. Its general office is headed by Zhang Guobao, Vice-Minister of the State Development and Reform Commission. The office, which carries a ministerial rank, has a total of 24 staff members in four divisions for overall co-ordination, policy and institutions, manufacturing industry, and other related industries.

4 Premier Wen Jiabao went on inspection tours to Liaoning province in late May and early June, and to Heilongjiang and Jilin provinces in early August, 2003. During the latter visit, he said rejuvenating the traditional industrial bases in the northeast and

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turn them into national or international bases for the manufacture of equipment and important raw materials was a historic task.

5 This article will first review the dire situation in the industrial and agricultural sectors in the region in the last decade. This will be followed by an analysis of the strategy of the new drive centred on redefining the government’s role and allowing the market mechanism to play a greater role in the region’s rejuvenation. The new policies include the designation of the northeast as an experimental region for delegating examination and approval power for investments by non-state enterprises and foreign businessmen, new projects and land-use rights; implementation of VAT reforms; abolition of agricultural taxes; and increasing the central government’s contribution to the region’s pension and unemployment funds. It then highlights the initiatives of the three provincial governments in the region, before investment opportunities to overseas investors are considered. An ailing region 6 The region was once dubbed “the industrial cradle of new China”. The major industrial projects in the iron and steel, energy, heavy machinery, vehicle and aeroplane manufacturing, ship-building, and weapons sectors were the foundation of China’s industrialisation. These advantages are not possessed by the coastal areas in the southeast. But efforts so far have failed to turn the potential into real productive force.

1. The provinces of the Northeast

7 Some economists note that one reason why the Chinese government has decided to implement the policy of reviving the northeast is to respond to the challenges China faces after joining the World Trade Organisation (WTO). Today the industrial enterprises in this region enjoy no advantages in exporting, and their domestic market is shrinking as industry is low-tech and capital-intensive with weak international competitiveness.

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2. The economic structure of the Northeast

8 The source of the region’s problems can be traced back more than a decade. In the early 1990s, the protracted sluggish economy of the region was diagnosed as the “northeast syndrome” (dongbei xianxiang). The region found it very hard to adapt to structural reforms and the country’s economic transition. Enterprise efficiency and market share dropped sharply. The central government provided some support but this proved ineffective due to fundamental institutional and structural problems.

3. The northeast contribution to the Chinese economy

9 While the problems in the industrial sector remained until 2003, the region was baffled by a glut of traditionally well-marketed agricultural produce, a slow-down in the

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increase in farmers’ income and stagnation of agricultural efficiency. The Xinhua News Agency termed the situation the “new northeast syndrome” (xin dongbei xianxiang). Facing foreign competition in an ever-integrated international market, the low competitiveness and high cost of the region’s agricultural products became evident. As a result, the region suffered one failure after another in marketing produce that had held the sway of the domestic market under the planning system. Unsynchronised development 10 In recent years, the percentage of agriculture in the region’s total GDP decreased while manufacturing and services saw an increase (Tables 2 and 3) Apparently, this trend is in line with economic theory and history. Yet it is not a reflection of co-ordinated development or purposeful structural adjustment. The percentage of agriculture in the region’s total GDP decreased from 17.21% in 1998 to 12.80% in 2002, a rate of 1.49 times higher than the national average5. In 1998, the region’s agricultural increased value made up 9.58% of the nation’s total while in 2002 this figure decreased to 9.20%. This is out of the proportion of the rich agricultural resources that the region is enjoys.

11 In the same period, the percentage of the industrial sector’s increased value rose in the region’s total GDP. But the pace was slower than nationally. Of the agriculture, industry and services sectors, only the latter saw a reasonable increase, meaning its percentage of total GDP increase was accompanied by an increased percentage value for the region’s service sector in the national total. Industries’ ability to absorb employment is weakening 12 From 1993 to 2002, the number of workers and employees in China increased from 602.2 million to 737.40 million. The ratio of the workforce to the total population increased from 50.81% to 57.41%. In comparison, these figures have decreased in the northeast and the pace of decrease accelerated after 1999 (Table 4). If calculated with the 1993 percentage of the workforce in the region’s total population, in 2001 the region should have had 48.84 million workers and employees. But the actual figure was 45.22 million, meaning there were 3.62 million more unemployed in 2001. If using the national figure of employed in the total population in 2001, in the same year the region should have had 61.2 million workers and employees. The actual shortfall was 15.99 million. The unemployment situation in the region is serious, with implications of a heavier burden on government finance to support state-owned enterprises (SOEs) in difficulty, and a lower social consumption rate.

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4. Active population figures for the northeast

The SOEs still dominate 13 On the one hand, the non-state-owned enterprises have developed slowly, while the SOEs are in difficulty. In the 1998-2001 period, the ratio of state-owned to the region’s industrial output value changed little. However, most state-owned enterprises became state-holding enterprises. In 2001, state-owned or holding enterprises contributed 73.27% of the region’s total industrial output value, 28.84 percentage points higher than the nation’s average (Table 5). This means the non-state sector is too weak in the region in terms of both output value and provision of jobs. In this situation, the redundant workers of the state-owned sector have few outlets and the whole economy lacks vitality.

5. The status of state-owned enterprises in the northeast

Cities dependent on mineral and forest resources are struggling 14 The ratio of miners and loggers to the total industrial workers is between 1/7 and 1/6 in the region, far higher than the national average and also higher than the resource-

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rich western region. The reserves of Heilongjiang province’s four largest coal mines (Heguang, Jixi, Shuangyashan and Qitaihe) are almost out, and 11 of Liaoning province’s 35 key coal mines will be used up and closed in ten years. Compared to 1993, the number of miners and loggers in the region decreased by 52% in 2002. For the same period, the national figure was 40%. The reduction has resulted in serious social problems. Residents’ incomes decreased 15 In the last decade, urban residents net incomes have been below the national average and showed a downward trend until 2000 (Table 6). Of the three provinces in the region, Liaoning saw the largest drop from 96.17% of the national average in 1992 to 84.70% in 2002. Although the range of decreases in Jilin and Heilongjiang was narrower until 2001, the real gap to the national average was greater, with a 2002 index of about 80%.

6. Northeast resident per capita net income compared to the national average

16 In 1993, growing one hectare of maize yielded between 5,000 and 6,000 yuan. By 2001, this figure dropped to 100 or 200 yuan. Therefore, the region’s farmers, whose net income was higher than the national average in the early 1990s, suffered a sliding standard of living. By 2000, Jilin and Heilongjiang farmers’ net income was already below the national average (Table 7). In the last two or three years, although the farmers benefited from the upward reversal in the prices of agricultural products, their net household income remained well below the national average. Share of invested capital insufficient for renewal of assets 17 The investment in the region should be analysed from two angles: on the one hand, the share of the region’s investment in the fixed assets of the national total has increased from 7.95% in 1998 to 8.29% in 2001. This partly shows that before launching the new drive, the central government had tried to help the region. On the other hand, compared to the share of the region’s assets and GDP in the national total, the investment in the fixed assets in the region remains small. This directly affects the enterprises’ renewal of assets. Hence the region’s level of upgrade of 20 branches of the manufacturing sector’s 29 dropped from 1998 to 2001. These 20 branches contributed 59.75% of the region’s total industrial output value and 77.69% of the manufacturing sector’s total output value in 20016. The latest drive: what’s new and specialRedefining the government’s role 18 As a national development strategy, the effort to revitalise the northeast will receive the central government’s policy guidance and support, but the issue is how the policy inputs can be transformed into the region’s own initiative for reform. In other words, is the region prepared to rely on market or policy? Related to this, it is vital to redefine the role of government. China’s planning system originated in this region and today the region remains more under its sway than others. If using the annual average figure of the region’s investment in industrial technological renovation and renewal for the

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1996-2000 period and if the current practice of depending mainly on government investment was to continue, it will take thirty years for Jilin province alone to renew the fixed assets of the existing industrial enterprises. It would take developed countries no longer than ten years. In this regard, clearly defining the role of the government and the market is tremendously important.

19 Influenced by the previous planning system, enterprises and governments in the region are short on motivation and ability for self-renewal. By the 1980s, serious problems became evident in the region: ageing industrial technologies, outdated equipment and products, and the heavy social burden the enterprises carried. The central government has since provided support to the renovation and renewal of the old industrial bases in the region. Of them, three important means were financial, loan and investment policy supports. Since the Ninth Five-Year Plan period (1996-2000), the central government has applied policies of turning debt into shares, cancelling bad loans, resorting to the national debt to stimulate domestic consumption, and interest subsidies to technical renovation loans. These policy measures had been modestly effective. As a result, the region’s state-owned sector ration in terms of its whole economy increased as was that of the manufacturing sector in all industry.

20 But this time, the central government is placing the emphasis on encouraging the region to facilitate the structural and institutional renewal rather than simply continue the old practice of providing funds or preferential policies. More specifically, the structural and institutional renewal requires, on the one hand, getting rid of the last stronghold of the planning system and fostering the growth of market forces, while creating the conditions for the growth of the non-state sector and actively seeking foreign investment. These are believed to be key to the success of the current efforts to revitalise the region 7.

7. Northeast rural household per capita net income compared to the national average

21 Related to this, Premier Wen Jiabao elaborated on the guiding principles, as the region must rely on its own strength. When providing necessary support in terms of policy and funds, the state should also respect market rules and pursue returns. Fewer new projects and development zones should be considered. Instead, efforts should be devoted to reforming existing enterprises, making comprehensive and co-ordinated use of existing resources, and increasing the efficiency of the key elements of production 8. Division of labour between central and local government

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22 Under China’s existing administrative management system, structural adjustment of the old industrial bases in the northeast involves central government, local government, central government departments (including national corporations) and enterprises in co-ordination and mutual support on the basis of a clear division of labour.

23 The central government is mainly responsible for:

24 the reorganisation and renovation of the region’s enterprises ranked among the country’s top 500;

25 the planning and co-ordination of the major infrastructure projects;

26 the overall planning of and provision of transfer payments, and regularisation of the social security system in the region;

27 the formulation of necessary preferential and support policies.

28 The local government’s main responsibilities include:

29 the reorganisation and renovation of enterprises under local jurisdiction;

30 the establishment of a social security fund in co-operation with the central government;

31 the improvement of the local environment in terms of the infrastructure, service system and policy-setting for Chinese and foreign investors.

32 The central government departments and industrial administrations are responsible for the cross-regional merging and reorganisation of large enterprises in the iron and steel, non-ferrous metals, petrochemical and machine-building industries. The policy of institutional innovation and reform 33 More and more officials and scholars agree that the northeast should have open, transparent and uniform rules of market operation rather than funds, preferential policies and publicity drives. The officialdom-centred culture impedes investment from outside the region. In the last five years, by 2002 for example, more than 3,000 foreign- invested enterprises had suspended operation or withdrawn from a province of the region while newly approved foreign enterprises totalled only 2,000.

34 Is the aim of the revitalisation drive to save a number of enterprises or revive the whole region? Is the priority to launch reforms or inject money? Is it best to tackle the system of enterprises or the administrative area? Many believe the answer is obvious: it is more advisable to create a new market system outside the existing system poisoned by the planning mentality and practices. Hence the proposal for upgrading Shenyang to a central government directly administered municipality. The performance of Chongqing Municipality gives credit to this proposal. Shenyang boasts the best infrastructure of heavy machine-building in the region and many SOEs concentrate there 9.

35 Premier Wen said in May 2004 the central government had “worked out relevant policies, principles and plans of action” 10 The complete document is not yet available. However, two months earlier, he unveiled four major tasks for reinvigorating the industrial rustbelts for 2004, promising more efforts to restructure state firms, promote the private sector, optimise the industrial mix, and absorb more domestic and overseas investment. The region is urged to speed up institutional innovation and reform―apparently the main road to their revitalisation. Reform of the state-owned assets management system and SOEs must be deepened to increase economic vitality,

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and efforts should be made to promote the mixed ownership and private sectors of the economy. Optimising the existing industrial mix and upgrading its technology is key to revitalisation of the once-influential industrial bases. The traditional industrial bases should continue to develop those sectors that are well-adapted pillar industries, and strive to advance modern agriculture and consolidate its position as major grain producers and suppliers. They should continue to open their economies to other parts of the country and to the world. Governments in the region are encouraged to expand employment and provide better social security coverage. It is essential to transform the mode of economic growth and prevent irrational investment and duplication of construction projects involving low-level technologies 11.

36 These are general guidelines. A synthesis of limited publicly available information can only provide some clues to the more detailed or specific policies. It has been proposed that the central government may consider designating the northeast an experimental region for the delegation of the power of examination and approval over such matters as investment by non-state enterprises and foreign businesses, new projects and land- use rights. The purpose is to increase local autonomy, accelerate the transformation of government functions, and improve administrative efficiency by reducing or simplifying the examination and approval items or procedures.

37 The State Council has launched a pilot programme to reform the VAT system in the region to promote capital investment and technical upgrades. Companies in eight industries such as machinery, petrochemicals, shipping and vehicles are exempt from VAT on purchases of equipment and machinery backdated to July 1st 2004. Experts estimate that the pilot programme will reduce tax revenue for central and local government by as much as 15 billion yuan 12.

38 The State Council announced in March 2004 that Jilin and Heilongjiang provinces were to be the only two experimental areas for the abolition of agricultural taxes. The lost local revenue will be covered by transfer payments from the central government. According to press reports, the Jilin and Heilongjiang farmers will be relieved of annual taxes amounting to 1.4 billion yuan and 2.82 billion yuan respectively. Or each farmer will be waived 100 yuan and 153 yuan respectively. Heilongjiang province has decided to change the role of the existing agricultural tax collectors to issuing government subsidies to farmers. The province has 4,000 such collectors at the township level and 500 at the provincial, municipal and county levels. According to an official of the Heilongjiang Provincial Finance Department, the direct subsidies provided by the province for 2004 are expected to total 1.85 billion yuan 13.

39 The region needs to continue the adjustment of ownership composition to shrink the state-owned sector while expanding the non-state sector. This strategy, termed stimulating the reform of the existing scale of economy (yi zengliang cu cunliang de gaige zhanlüe) has proved effective in the coastal regions in southeast China. Development of the non-state sector in the region will not only create new employment opportunities for the workers laid off by the SOEs, but also spur the latter to improved efficiency through shedding redundant workers, thus strengthening the competitiveness of the SOEs.

40 The central government is being asked to increase transfer payments to the region, especially subsidies to unemployed workers. Statistics show that in five years, by 2002, the central government had injected 210 billion yuan from funds raised as national debt to the western region, making up 35% of total funds raised as national debt. It will

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be difficult for the central government to do the same for the northeast. Thus it is proposed that increased transfer payments to the region should come from the state budget.

41 A recommendation is being made to the central government to designate the northeast as an experimental region for reform of the investment and banking system to improve the environment for attracting investment both domestic and foreign. For the Chinese investments, the main target is the capital of the non-state sector. Utilisation of capital from outside the region is believed to be a key measure of the revitalisation drive. However, the reported opening of the new Northeast Revitalisation Bank in August 2004 has been postponed for one or two years 14. The bank is to be established by reorganising the profitable Shenyang Commercial Bank. Registered capital of the bank will be increased to 3 billion yuan (US$361 million) through issuing new shares, of which the state-owned stake will amount to 250 million yuan (US$36 million). Private and international investors are all encouraged to take part15.

42 The central government is advised to annul the bad loans of the local branches of the four state-owned banks as a way of improving the region’s investment environment. An “asset and liability exchange centre” can be set up in the region. The People’s Bank of China has designed plans to deal with the heavy debt of enterprises, including turning the debts into shares, reducing or waiving interest of debts, postponement of mature debts and hanging up the debts.

43 The central and local governments can jointly create a fund for the renovation and renewal of the enterprises in the region to relieve the burden of the local government and the enterprises themselves. The State Development and Reform Commission had by July 2004 approved only two batches of investments for 160 renovation and high- tech application projects in the region. They are valued at 66.6 billion yuan (US$8.06 billion). Observers attributed the relatively small amount and delayed announcement of the second batch to a re-consideration of the old practice of “selecting projects and providing funds” to support a given region. In addition, 15 projects have been launched to handle the sinking zones from coal mining 16.

44 Some scholars have suggested that central government aid should focus on supplementing the shortfall in the region’s pension and unemployment funds. On the basis of the reforms introduced so far, the region began implementing the new “experimental methods of social security” last year, which apply the social security policy of Liaoning province to Jilin and Heilongjiang provinces. Under them, enterprise contributions to pension funds is reduced to 1.25% while that contributed by central finance has increased to 3.75% since 2004. The workers themselves contribute another 5% 17.

45 The relevant policy papers place the priority on creating jobs. This should be a central element of any plans to revitalise industry. The labour intensive industries, small and medium-size enterprises and non-state-owned enterprises should be developed to absorb labour. The international experience can be learned in terms of providing incentives to creators of jobs, subsidising labour costs and reducing or waiving taxes for job creators. Special attention should be paid to resource-dry cities in implementing such a policy.

46 On regional economic co-operation, the northeast is urged to place emphasis on creating and expanding both domestic and foreign markets. The three provinces of the region should formulate an economic co-operation framework and co-ordination

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mechanism to promote regional integration. They should also strengthen co-operation with Japan, South Korea and Russia and make better use of the North-East Asian market. Local responses and measuresLiaoning province 47 According to the Secretary of the Communist Party of China (CPC) Liaoning Provincial Committee, Wen Shizhen, the priority is structural adjustment, especially strengthening of the backbone enterprises, to turn the province into a national or international equipment manufacturer and an important raw material supplier. The aim is to realise basic industrialisation by 2010 18.

48 The province has decided to consolidate three pillar industries: petrochemicals, iron and steel, and equipment manufacturing. Other measures include: facilitating the economic development of the county seats to stimulate rural economic development; speeding up the development of a modern service industry and upgrading its quality; encouraging the creation of new industries and light industry while helping the application of information technology to traditional industry.

49 The potential market for the province’s equipment is very large. Currently many advanced enterprises in south China import equipment from North America and Europe. The main problem with Liaoning’s equipment manufacturing sector is that enterprises are large but the volume of scale-end products is small. Enterprises tend to occupy a large area with large workshops, numerous machines and workers. But the degree of division of labour among enterprises in the same industry is low. Each factory produces almost all parts of a product, leading to small-scale production but high-cost end products. Taking the automobile industry as an example. Advanced mainframe plants and engine plants co-exist with backward parts plants. The industrial structure must be adjusted and maximised. The mainframe plants should be taken as the core with a number of parts plants as its suppliers. Turning the equipment industry into a major and strong sector requires many specialised medium-size and small factories. The role of high technology in transforming traditional industry cannot be overestimated.

50 In the past nine years, Anshan Iron and Steel Complex spent 16 billion yuan on technological renewal, freeing it from the 1950s or 1960s and upgrading it with late twentieth or early twenty-first century technology. According to Wang Jie, fellow of Chinese Academy of Engineering, China now possesses the most advanced technology of the metallurgical industry in the world, leading Japan and South Korea. The goal of the Complex is to be among the world’s largest iron and steel manufacturers in five years. To this end, the province’s two top iron and steel producers in Anshan and Benxi are negotiating reorganisation and merger. Jilin province 51 Wang Yunkun, Secretary of CPC Jilin Provincial Committee, has presented a comprehensive plan 19. While upgrading and maximising its secondary industry, the province will also develop modern agriculture and tertiary industries. In order to correct the imbalance between heavy and light industries, the province will encourage the development of processing of agricultural produce and pharmaceuticals.

52 The province’s advantages remain in the manufacturing sector. By 2010, the annual sale of vehicles is projected to value 320 billion yuan with added value amounting to 100 billion yuan. The annual sales of the petrochemical industry will total 100 billion yuan with an annual growth of 12%. Deep processing of maize, soybean, stock and

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poultry together with green food produced in Changbai Mountain will yield 200 billion yuan annually with an annual growth of 18%. The modern production of traditional Chinese medicine, using herbal resources from Changbai Mountain, and bio- pharmaceuticals will turn in an annual 50 billion yuan with an annual growth of 20%. Annual sales of the high-tech industry are expected to exceed 180 billion yuan. In tertiary industry, tourism has good potential, but it is too early to make it a pillar. The task now is to create and publicise the province’s image, the focus of which is Changbai Mountain.

53 The key is to build up the initiative for economic development by eliminating institutional impediments. The mixed ownership sector with state-owned, collectively owned and non-state-owned capital should be fostered. Shareholding should be the main form of public ownership, which is of particular significance to the province with predominantly state-owned industries. The development of a capital market is a solution to the province’s shortage of monetary capital. While local commercial banks and other banking institutions should be encouraged to set up and expand, banking institutions from other parts of China and abroad should be attracted, Wang stresses.

54 The province must open up more widely to domestic and overseas markets. Huang Ju, Member of the Politburo Standing Committee and Vice Premier, said during his inspection tour to the province last year: the drive to revitalise the northeast is a “banner” and an “international banner” 20. What the region lacks in the vital elements of production it must make up using outside resources for its own development. Jilin will improve the methods of attracting foreign investors and pursue the results in order to make it a hot spot for investors. At the same time, the province will encourage local enterprises to expand their activities overseas. Cross-border trade with Russia, Japan, South Korea, North Korea and Mongolia should be developed. The government- dominated opening up should be replaced by joint participation of government and social forces. The opening field should be enlarged from the manufacturing sector to all industries from agriculture to services as well as to the fields of science and technology, education, culture and public health, according to Wang.

55 The province will devote great efforts in developing non-state sector. A prerequisite is to create a culture and environment that will encourage business start-ups. The current culture is laden with commandeering and laziness fostered by the planning system. In 2001, the national average figure of private businesses per 10,000 was 9.32 while Jilin’s was only 3.41. The investment made by the non-state sector made up 45% of the total social investment in China. But this figure was less than 10% for Jilin. In order to spur the development of non-state sector, which is vital to the success of the revitalisation drive, Wang promised, the government will abolish all regulations and policies unfavourable to the non-state sector. All investment fields from which state laws do not explicitly exclude the non-state sector should be opened. The non-state sector should be encouraged to participate in the reorganisation and renovation of the SOEs. Public works and infrastructure projects should also open to them. Heilongjiang province 56 According to Song Fatang, Secretary of the CPC Heilongjiang Provincial Committee, in the next three years, the situation of the industrial sector will improve further with the accomplishment of reorganisation and renewal of the SOEs managed by local government, the consolidation of the social security system, and accelerated development of new industries in resources-dry cities 21. The provincial targets include:

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to keep the registered urban unemployment rate within 5%, curb the tendency towards a worsening of the eco-environment, and a greater than 10% annual increase in industrial output value or a more than 9% increase in GDP. The province’s GDP in 2000 will be doubled by 2008.

57 The province has chosen the following five main industries as its priority: equipment manufacturing, petrochemicals, energy, green and special food production, and pharmaceuticals. Investment opportunities for overseas investors? 58 A Singapore-based company, GT Tyre?. (China) Investment Co., Ltd., purchased a once- famous tyre? manufacturer named Hualin in Heilongjiang province in July 2003, becoming the first foreign firm to buy a state-owned company through auction, successfully winning 44.43% stock equity 22.

59 During his visit to London in May 2004, Premier Wen invited British entrepreneurs to take part in the revitalisation of China’s traditional industrial bases so as to open up new areas of Sino-British economic co-operation. He said the British business community could “give full play of their advantages in capital, technology and management.” They could create joint ventures and corporations in the region, he added23. In March 2004, the Chinese Ministry of Science and Technology organised for diplomats from 15 member states of the European Union a tour to the three northeast provinces. The purpose was to promote the strategy of revitalisation through science and technology by seeking international co-operation 24. In the same month, a six- member delegation of science and education officials from Germany visited Heilongjiang province. They exchanged views with local officials on the possibility of co-operation in the fields of equipment manufacturing, deep processing of energy resources, material science, equipment serving, environmental protection and training of engineers and technicians. A member of the delegation said the German government and scientific institutions hoped that the bilateral enterprise-to-enterprise co- operation in the economic and technological fields would be promoted, so that science and technology could contribute to the rejuvenation of the region. Germany was also willing to support the northeast region in training technical workers 25.

60 Bo Xilai, then Governor of Liaoning province, told a media delegation from Hong Kong in summer 2003 that Hong Kong businessmen could participate in the construction of an equipment manufacturing base and raw materials base. They could also have involvement in the reorganisation of the medium and small enterprises centred on converting them into share-holding companies 26.

61 The region has recognised that the private and foreign businesses are vital to its efforts to rejuvenate. The local governments are considering relaxing the current regulations on the access to market, permitted investment fields, import and export credit guarantee and taxation. A notable change is that they are now willing to make available enterprises with good assets or satisfactory performance to private and foreign investors. Except for military, petroleum, petrochemical and power-generating industries, the state sector will withdraw from the regular competitive fields. Foreign investors can now enter many newly opened fields, including banking, high- technology, education, culture and public health.

62 The State Assets Regulatory and Management Commission announced in February 2004, about four hundred SOEs in northeast China will go bankrupt or be forced to merge in the next three to four years as part of a massive restructuring plan for heavy

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industry. The plan includes allowing more foreign and private capital to be placed into SOEs 27.

63 Heilongjiang province has set up a state-level industrial park in the provincial capital Harbin. According to Wang Shihua, Deputy Mayor of the city, a series of policies have been drawn up so as to attract investment from both China and overseas, and 13 related local government departments will provide all-round services for the new park, ensuring a good investment environment. As a key project for the city's development, the industrial park has been given priority in Harbin's development plan. The new industrial park will be located in the city's Songbei District, with an area of 29.94 sq km, including three sub-parks―Qianjin, Songpu and Wanbao. By March 2004, 11 investment agreements had been signed, involving 648 million yuan, and another 12 projects worth a total of 800 million yuan were under negotiation 28.

64 Since the beginning of 2004, Liaoning has seen unprecedented numbers and high levels of foreign business fact-finding missions. There have been at least fifty large projects involving more than US$50 million each under negotiation between foreign businesses and the province. In the first half of 2004, Shenyang Municipality alone approved 301 foreign-invested enterprises, with signed contracts valuing US$720 million. Of the total, US$600 million was foreign direct investment, a 180% increase over the same period last year 29. In fact, Liaoning’s increase margin was smaller than the other two provinces in the region in terms of contracted foreign investments in the first five months of 2004 over the same period last year. The whole region was doing remarkably well in this respect with Jilin and Heilongjiang provinces registering an increase of 2.86 times and 2.46 times that of the country as a whole.

65 BASF, one of world's largest chemical companies plans to invest in a new chemical project in the northeast, probably in Changchun, capital of Jilin province, one of the largest automobile industry bases in the country. Currently, there are two BASF-funded joint ventures in the northeast, in Jilin City, and in Shenyang, capital of Liaoning province. Currently, BASF-funded companies in China account for 5% of its total sales, but the rate is expected to top 10% by 2015, not less than BASF companies in Japan 30.

66 The northeast has recently become a focus of attention due to the central government’s new policy aimed at its rejuvenation. Some commentators have termed it the “third northeast phenomenon” (WWWWWWW, di san ci dongbei xianxiang). In contrast to the first two painful “northeast syndromes”, this time the term is used positively in the local hope this will be the starting point of a change for the better. However it is too early to judge whether the region will indeed become the fourth pillar of China’s growth as expected. The quick results of the four Special Economic Zones at the end of 1970s and the development of Pudong in Shanghai in the early 1990s may not be repeated easily. Central leaders have cautioned that the new drive is similar to the Development of the West Programme, that it will be a long-term effort although local leaders have formulated plans that promise to deliver results in five or seven years.

67 A general lack of motivation and initiative for self-renewal and development is a serious problem in the region. Elimination of this last stronghold of China’s planning system requires a transformation of the mentality of dependence on the central government and implementation of institutional reform. The key to the success of the new drive is for local government to allow the market to operate without undue control or interference rather than simply depending on central government preferential policy.

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68 Only one year after the launch of the new drive, the central government has provided considerable policy and fund inputs to the region, which has been designated as a pilot area for reforming the VAT system. Jilin and Heilongjiang provinces have become experimental areas for abolishing agricultural taxes. The plan to establish a new Northeast Revitalisation Bank has been approved although its opening has been delayed probably due to reconsideration of some practical issues. Some 160 renovation and high-tech application projects, valued at 66.6 billion yuan, have been provided. The central finance’s contribution to the region’s pension funds has been increased to 3.75% since 2004. Important indicators to judge the performance of local officials will be how and whether the non-state sector will grow and whether the overseas investors will stay while more will come.

NOTES

1. The author would like to thank Professor Yang Dali for his comments on a previous version of this article. 2. State Council, “Notice on Some Policy Measures for Implementing the Drive to Develop the West”, (State Council Document No. 33, 2000), in “Periods Prior to and After the Announcement of the State Policy of Revitalizing the Northeast”, 21 Century Economic Reports, http://www.sina.com.cn (accessed on August 10th 2004). 3. Xinhua website, The Chinese Government Set Out to Privatize the Old Industrial Bases in the Northeast, August 14th 2003. 4. Xinhua website, “The State Council Leading Group of Revitalizing the Old Industrial Bases in the Northeast Region Holds its First Meeting”, March 24th 2004; “Premier Wen Jiabao Takes Leadership of Revitalizing the Northeast”, Europe-Asia News Weekly, http://www.ouya.hu/NewsVoP/N256N001.htm (accessed on October 7th 2004). 5. In the same period, the national figure dropped from 17.96% to 15.38%. 6. See Liu Kai, “Strengthening Guidance of Revitalizing the Old Industrial Bases in the Northeast”, Xinhuanet, Jilin Channel, (accessed on October 6th 2004); Liu Kai, “Advantages of the Manufacturing Sector in the Northeast and Its Revitalization”, Economic Research References, Vol. 75, 2003; Liu Kai, “The Problems the Northeast Economy Faces and Measures for Its Revitalization”, CASS Institute of Industrial Economics. 7. Chen Zhengrong, “Narration of and Comments on the ‘Revitalizing the Northeast’ Policy”, Journal of Capital Market, No. 11, 2003, pp. 36-42. 8. Xinhuanet, “Wen Jiabao: The Revitalization of the Old Industrial Bases in the Northeast Must Adapt to the New Situation and March on a New Route”, http:// www.sina.com.cn, August 5th 2003 (accessed on August 12th 2004). 9. “The Method of Revitalizing the Northeast should be Changed, Experts Propose for Upgrading Shenyang to a Municipality Directly Administered by the Central Government”, Xinhuanet, May 9th 2004.

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10. “Visiting Chinese Premier Wen Jiabao delivers a speech at the opening ceremony of the Seminar on Revitalizing the Old Industrial Base in Northeast China in London”, Xinhuanet, May 10th 2004. 11. “The State Council Leading Group of Revitalizing the Old Industrial Bases in the Northeast Region Holds its First Meeting”, People’s Daily, March 24th 2004. 12. “Firms in Rust Belt Win Tax Break”, South China Morning Post, September 21st 2004, p. A7. 13. “Jilin and Heilongjiang Are to Immediately Trial the Annulment of Agricultural Taxes”, China Youth Daily, Zhongguo Jiangxi Wang, March 26th 2004 (accessed on October 4th 2004); “The Ministry of Finance Clarifies the Relevant Policies of Trials on Annulling Agricultural Taxes”, Xinhuanet, April 15th 2004 (accessed on October 4th 2004). 14. “Establish the Financial Centre of the Northeast, the Northeast Revitalization Bank is Expected to be Operational in Shenyang by the End of the Year”, www.runsky.com, September 21st 2004. 15. “New Bank Set to Revitalize Northeast China”, China Daily, May 31st, 2004. 16. “The State Implements Four Policies to Support the Revitalization of the Northeast of China”, Xinhuanet, September 29th 2004. 17. Ibid. 18. “Party Secretaries of Three Northeast Provinces Talk About Revitalization, Which Requires New Measures”, Xinhuanet, October 12th 2003. 19. Wang Yunkun, “Speech at the Meeting on Revitalizing the Old Industrial Bases”, in Structural Reform (Renmin University Photocopies of Press and Journal Materials), No. 3, 2004. 20. Ibid (quoted by Wang Yunkun). 21. “Party Secretaries of Three Northeast Provinces Talk About Revitalization, Which Requires New Measures”, Xinhuanet, October 12th 2003. 22. A Singapore Company Gets Holding of GT Tire, http://www.ctrrr.com/index.html, October 6th, 2004. 23. “Premier Wen welcomes UK businesses to join China's industrial revitalization”, Xinhuanet, May 10th, 2004. 24. “Diplomats from 15 Member States of the European Union Visit the Old Industrial Enterprises in Shenyang”, Xinhuanet, March 25th 2004. 25. “Germany seeks co-operation opportunities in Heilongjiang”, Xinhuanet, March 30th 2004. 26. Xinhua Website, “100 billion capitals from the non-state sector in south China flow into Shenyang and Bo Xilai call for re-entering Northeast”, August 8th 2003. 27. “Mass Restructuring Planned for 400 SOEs in Northeast China”, China Daily, February 15th 2004. 28. “Harbin to Build New Industrial Park”, Xinhuanet, January 7th 2004. 29. “Liaoning Becomes An Investment Hot Spot with Visits of Foreign Business Fact- finding Missions One Followed by Another”, http://www.sina.com.cn, June 21st 2004. 30. “Chemical giant eyes China's development programs”, Xinhuanet, April 22nd 2004.

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RÉSUMÉS

In 2003, the Chinese government made revitalising the northeast a priority, a clear sign that the ailing region can no longer be ignored. In the early 1990s, the region found it particularly difficult to adapt to the structural reforms and the country’s transition from a planned to a market economy. Industry and agriculture touched on crisis. Increasing numbers of officials and scholars agree that the northeast should have open, transparent and uniform rules of market operation, rather than funds, preferential policies and publicity drives. It has been proposed that the central government may consider designating the northeast an experimental region for the delegation of powers of examination and approval over such matters as investments by non-state enterprises and foreign businessmen, the starting of new projects and land-use rights.

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Politics

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KMT: A Trompe-l’œil Victory The December 2004 Taiwanese Legislative Elections

Frank Muyard

1 The official results of the December 11th 2004 Legislative Yuan (Parliament) elections in Taiwan gave a clear majority to the Pan-Blue camp, made up of the Chinese Nationalist Party or Kuomintang (KMT), the People First Party (Qinmindang, PFP) and the New Party (Xindang, NP). This was to many a surprise as expectations of a Pan- Green victory following the re-election of President Chen Shui-bian in March and numerous opinion polls led pundits to predict a shift of control of Parliament to the greens1. For more seasoned specialists of Taiwan politics such a feat was seen however to be rather difficult to achieve2. The discrepancy between the opinion polls and the final result created a sense of shock and a resounding defeat for the Democratic Progressive Party (Minjindang, DPP) and the TSU (Taiwan Solidarity Union, Tailian), the two parties forming the Pan-Green camp. In the domestic and international media, as well as in Peking, some were quick to read into these results a rejection by the Taiwan electorate of Chen Shui-bian’s Taiwan-centred policies and independence goals as well as a shift in favour of a political rapprochement with China3.

2 Although the election’s outcome clearly represents a failure for Chen and the DPP, a closer analysis of the results shows that, compared to the 2001 legislative election, not only both camps include winners and losers but also that the DPP is the only party to see an actual rise in the number of votes received. The Pan-Blue victory is, then, more about merely holding onto a majority than getting a strong new mandate from the voters. The Blue camp’s one seat loss, the redistribution of votes between its three components as well as a very low turnout all indicate that it can hardly claim any progress in political dominance. On the other hand, the persistence of the opposition’s grasp on the legislature is a huge setback for Chen’s second-term plans and will certainly trigger a repositioning and shift in Taiwan’s party strategies with future elections in view.

3 This article will first look back at the result and the reasons behind the Pan-Blue victory, then present a more detailed reading of the poll’s figures that leads to a reconsideration of some of the first interpretations of the election results. It will

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conclude on the poll’s short-term consequences that are already reshaping the country’s political dynamics. The Pan-Blue victory 4 The last opinion poll run by the all-news channel TVBS, gave, on the basis of a 70% turnout, a slight victory to the Pan-Green camp with 106 seats against 105 to the Pan- Blues, the independent candidates holding the balance and the key to the legislature majority4. Such a poll already hinted that the proclaimed majority victory by the ruling party and its smaller partner would not be so easy, especially when the pro-Blue inclinations of most of the independents were taken into account. Indeed, the December 11th election for the Sixth Legislature sent back almost the exact same Parliament as in 2001 (Table 1)5. Pan-Blue won 114 seats, losing one seat, but keeping its majority, while Pan-Green only got 101 seats and the independents 10 for a total 225 seats. The slight increase (+1) by Pan-Green shows the persistence of its progress in legislative elections since 1998, but falls short of its own predictions (between 105 and 120 seats) and above all of the 113 seats landmark that assures control of the legislature.

1. Legislative elections results (by seats)

5 Within the Blue camp, the election witnessed a reversal of the 2001 legislative election result where the PFP made big gains at the expense of the KMT, which fell then to its lowest ever level. This time the KMT raised its number of seats by 11 to 79 while the PFP lost 12 of its former 46 legislators for a final 34 seats. The New Party won one seat (Kinmen) in 2001 and kept it in 2004. Three more NP members were actually elected this time although they are counted within the KMT tally because, except for Kinmen, NP candidates officially ran under the KMT banner in order to maximise the number of

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complementary legislators attributed proportionally to each party’s overall share of the vote 6.

6 Still the DPP kept its position as the nation’s biggest party with 89 seats, two extra seats. For the green camp, this result was overshadowed by the loss of one seat by the TSU, which takes it down to 12 legislators, and above all by its continuing minority status in the legislature.

7 The percentages received by each party reveal similar trends although with interesting differences: the DPP garnered 35.7% of the votes, a 2.3% growth compared to 2001, which makes it the biggest gainer in this election. The KMT received 32.8% of the votes, apparently a big jump from 2001 (28.6%). But when the NP figures are added, the combined KMT-NP 2004 and 2001 tallies are 32.9% and 31.1%, showing an actual progress of 1.8%, lower than the DPP. For the PFP, the fall is heavy: minus 4.7% on 2001 for a total of only 13.9%, while the TSU saw a repeat of its 2001 score with 7.8% of the votes (+0.03%). The rest went to the independents who received roughly 0.5% more F0 votes than in 2001 BE 9.6% (Table 2).

8 This election thus marked a major victory for the KMT, which for the first time since 1998 progressed in a national election. For the PFP it was a very disappointing result, while bickering and complaining by PFP leaders against its bigger and “bullying” brother started even before election day as its candidates sensed defeat coming. The KMT advances appear indeed to result directly from a shift in the votes and influence back from the PFP: +11 seats for the KMT and –12 for the PFP (+8 and –8 respectively when only directly elected candidates are counted). The outcome constitutes thus a zero-sum game for the opposition, but certainly not for the KMT, which engineered an impressive reversal on 2001. Feelings and expressions of victory were therefore especially strong at the KMT and to a lesser extent at the NP7.

9 Most of the KMT and media post-election hype about the opposition’s success must be seriously balanced with the real extent of the Pan-Blue achievement. The KMT success would not have been considered so great if the party and Lien Chan had not been considered finished after their defeat in the presidential election last March. It is thus a timely remainder of the continuing weight of the KMT and its moderate Chinese nationalist orientation in Taiwan’s political field.

10 Inadvertently, the DPP through its perception of itself as the new representative of the national majority and of 2004 as the start of an era of genuine green power and unstoppable momentum for Taiwan’s self-affirmation also gave its opponent’s victory a stronger impact that would have normally been the case with such a repeat of the 2001 results. To its defence, the pitiful shape of the Blue camp after their failure to regain the presidency, the aggressive street reactions by PFP legislators and supporters in its wake, the refusal of the two Pan-Blue candidates to officially recognise their defeat and their persistence in appealing unsuccessful lawsuits against Chen’s re-election—all behaviour badly perceived by the large majority of the population as opinion polls attested repeatedly throughout the year—, the KMT’s inner dissent, and finally the incapacity of the two parties to finalise their highly publicised merger were also convincing factors for the green camp and part of the media to bet on the disintegration of the blue forces8. Moreover the DPP and Chen Shui-bian knew they would have to prevail in the legislative election to have any hope of breaking the institutional stalemate that characterised the relation between the government and the

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legislature in the last four years and push forward their policies. The pressing desire to achieve that goal might then have been confused with the capacity to deliver it. Main factors of the opposition victory 11 With the wind of popular support apparently blowing in their direction, the Pan-Green certainly fell into the overconfidence trap. However elections are won on the ground and DPP’s defeat can more directly be attributed to certain choices and errors made in dealing with four main factors of this election: its local nature, the type of strategy and campaign favoured by the parties, the tactics of candidate nomination and vote- allocation, and finally the very low turnout. The nature of the election 12 Legislative elections, particularly in Taiwan—but that would be true for most democracies—, are largely dominated by local questions and are therefore very different from the national-type presidential elections where the electorate must choose the leader who will represent the country and its general political orientation for the next four years from among a few individuals. Consequently, the parties that will best grasp the needs and desire of their local constituents, district by district, are the ones likely to emerge as winners. In Taiwan, classic patron-client relationships have long taken the form of deep-rooted and publicly recognised local factions or local networks of influence that tend to have a huge effect on local and legislative elections in terms of vote allocation and group-voting9. Although the dominance of local factions have been reportedly on the wane, recent surveys of electoral campaigns in the centre and the south show that success of local politicians is still very dependent on their associations with one kind or another—preferably several—of network or faction10. This system has been recognised as constituting the basis of the KMT’s local power for decades and the Nationalist Party, even less wealthy than before, is still at its best when using these political and client-based local organisations to its advantage11.

13 This has two consequences. First, the subsequent decision by other parties to play the game of local organisations rather than insist on mere party affiliation and loyalty. For the TSU, born out of the KMT’s “localisation” faction, this goes as natural practice and, in fact, most of its work in the last three years has been to try to transfer the KMT’s local networks support to itself, especially in the south although with limited success. The same goes for the PFP. For the DPP, the stakes are different as a significant part of its programme and image is built on the rejection of local factions and network power- systems criticised as vote-buying machines of a corrupt KMT, and from which it was traditionally excluded12.

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2. Legislative elections reusults (by votes and in %)

14 Reports and first evidence from the election results indicate however that this time the DPP engaged itself into much closer co-operation with local vote-gathering organisations than in 2001, in the south as in the north, leading some observers and DPP strategists to deplore a backward trend away from modern party politics and an increased dependency upon corporatist and local demands that can easily lead to corruption13. Actually, the current polling system and historical strength of local networks in Taiwan make it impossible for the DPP to ignore local faction power and leverage in elections14. In the end, the green camp was however clearly not as efficient as the KMT and the independents in mobilising local networks to support its candidates. Blue and green camp campaigns 15 A striking characteristic of the December 2004 election is the opposite approaches to the poll and campaigning favoured by the two camps: an ideology-oriented, identity- focused, national party and Chen-centred campaign for the DPP and the TSU, while the blue camp chose to privilege a more pragmatic and locally based campaign focused on constituents’ needs and network mobilisation.

16 At first, the DPP campaign was actually much less ideological and mixed the promotion of government achievements with promises to do better with a majority victory. The reasons of the shift and the direct intervention of Chen in the day-to-day campaigning are two-fold: the lack of response of the population to DPP’s electioneering up to October and the fear of voter-poaching into the DPP’s pro-independence core electorate by a very vocal and active TSU. From November on, the DPP and Chen Shui- bian ran a near repeat of the March 2004 presidential election campaign15, centred on pro-independence and identity issues, and personalised, on Chen himself—an overwhelming presence outshining the four DPP “kings” originally in charge of the campaign16. It led to an outpouring of pro-Taiwan and anti-China propositions and measures by Chen, the government, and Pan-Green supporters symbolically handing the control of most of the DPP’s campaign agenda to the TSU and Lee Teng-hui’s ideas17.

17 Pan-Green main issues were as follows: the strengthening of Taiwanese national identity, upholding national pride—being Taiwanese—, reinforce the nation’s military and political strengths against China (notably through the Parliament’s ratification of a big US arms-package deal), pursue the ongoing school-curriculum and textbook reforms towards a Taiwan-centred ideology, get rid of the last remnants of KMT party- state heritage and influence in the administration and the political field, and last but

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not least the rewriting of the “Chinese” Constitution into a real “Taiwanese” Constitution adopted through a referendum (but still—for the DPP—keeping the “Republic of China” [ROC], the ROC’s name, emblems and official territory).

3. Number of local electoral district candidates and success ratio (elected candidates/candidates)

18 Some of these proposals are still controversial in Taiwan and many people, even without necessarily being opposed to them in theory, did not feel strongly about the timing of their introduction in the political debate and the need to support them in practice. Inevitably these proposals also led to more provocative calls from the green ranks—ike the rejection of Sun Yat-sen as the father of the nation or a shift in administrative exam subjects to only Taiwanese topics—which had then to be officially dismissed by Chen or the government18. Added to the aggressive attacks by Chen on the KMT for its “soft” coup d’état tentative in the wake of its March re-election, and his official call for “name-rectification” (zhengming) of the country’s representative offices abroad, governmental institutions and state-owned enterprises from “China” to “Taiwan”, they generated a strongly polarised electoral debate where conflicts between competing ideologies and nationalisms prevailed over any possibility of compromise or middle-way policies.

19 Although DPP leaders and strategists officially defended this new abrasive tone and the take-over by Chen of the day-to-day campaign, more than a few candidates were clearly uncomfortable with it and did not feel very good about its eventual chance of success. Observers alike felt that the strongly ideological rhetoric would prove to be counterproductive19. Successful or not, its final outcome would then clearly be Chen’s personal responsibility.

20 In the blue camp, national support was provided to all candidates with big meetings, local visits by party leaders, and a flurry of TV advertisements. But the Pan-Blue

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parties’ campaign was still essentially locally based, constituency-centred and run by individual candidates and local party chapters. In the centre and the south, the avoidance of any party affiliation went even to the extent of discarding all references to and emblems of the KMT, Lien Chan or the PFP on candidates’ election materials, these partisan associations being seen as detrimental to the local candidates’ electoral prospects. The Pan-Blue campaign however was not devoid of any political and ideological issues. They mainly turned around the conservative and responsible image the KMT has always been keen to develop: maintenance of Taiwan’s Chinese identity and ROC history; avoidance of any provocation and risk of war through increasing “Taiwanisation”; outward rejection of desinicisation; thawing of Taiwan’s political relationship with Peking; reducing the cost of the US arms-package deal considered too expensive for the national budget and militarily unnecessary if cross-Strait relations improve; boosting of Taiwan’s economy through business-oriented measures and closer cross-Strait economic integration.

21 But as the highly controversial creation of a “March 19th special Truth investigation committee” by the opposition-controlled Parliament attests, the Pan-Blue’s rhetoric against the ruling party and Chen was as aggressive as its opponents’. In the last weeks of campaigning, political tension increased further when the KMT first requested the hand-over by the DPP of governmental powers to the blue camp in case of the latter’s legislative victory on the basis of political legitimacy and “spirit” of the Constitution, and then threatened to wage chaos in the new legislature if it did not win the polls20. This radicalisation in discourse and tactics by the Nationalist Party surprised many. It was also difficult to understand how continuity in Pan-Blue legislative control could be translated in Constitutional and institutional changes and re-attribution of executive power on the basis of a “new” opposition legitimacy although this was not something implemented on similar past occasions, such as the 2001 legislative election. Whether the Taiwanese constitutional system can be compared to the French and its “cohabitation”, or the US one and its clear division between the three branches of power has yet to be determined as it is clearly a system that takes from both models21. In the meantime, any sort of compromise between the ruling and opposition parties, if any, might more likely take the form of governmental coalitions or case-by-case co- operation in Parliament than a full take-over of the executive responsibilities by the legislative majority.

22 As noticed before the poll, the DPP’s campaign strategy totally ran against its previous experience of success in legislative and local elections22. Its eventual failure reinforces the idea that the choice of a presidential-style campaign based on controversial and ideological identity issues was ill-suited to the nature of the election and, therefore constituted one of the main strategic reasons of the Pan-Green defeat. But other factors, essentially tactical, can be seen behind the election result. Candidates’ numbers and vote-allocation 23 On the tactics side, the peculiarity of Taiwan’s single non-transferable vote (SNTV) legislative poll system—in multi-member constituencies—requires the maintenance of a very elaborate organisation by the parties on the local level in order to maximise the number of candidates elected within their estimate vote-pool. First the number of party candidates must be limited to avoid dispersion of the vote between too many candidates resulting in the loss of all or most of them. Secondly, a vote-allocation system has to be implemented to ensure that each candidate receives the minimum

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expected amount of votes needed for his election. As some candidates (incumbents, local or TV celebrities, party stars) are better known than others, and some are closely related to local networks that can deliver big number of votes, good co-operation between the candidates of a same party or alliance of parties and an efficient electoral organisation are needed to control the transfer of votes to candidates with lesser initial chances of success. Any failure in one of these steps can result in the loss of seats on poll’s day.

24 Particularly difficult for the parties is to assure co-operation between their own candidates who are, by virtue of the polling system, competitors for the same share of the vote. Another challenge is to measure and regulate any shift of votes within one party’s own electorate to avoid spontaneous and panic-mode “save-the-weak- candidates” movements that can be go beyond the amount of votes needed and eventually be lethal to “strong” candidates suddenly deprived of too much of their original support.

25 The vote-allocation system and limited number of candidates have traditionally been seen as a DPP strength and explain why it so often has a larger share of legislator seats than its share of votes. This was notably the case in the 2001 legislative election, while the blue camp, and especially the KMT, was then criticised for its high number of candidates and poor handling of vote allocation.

4. Legislative elections overall votes and turnout

26 This time, the three opposition parties co-operated pretty well in limiting the number of their candidates. KMT and NP candidates for local electoral districts numbered only 75 (74 + 1) in December 2004 against 129 (97 + 32) in 2001 while PFP candidates went down to 41 from 61 (Table 3)23. The reduction is significant (-54 candidates) with a Pan- Blue total of 116 candidates (against 170). It reflects a much better appreciation of actual electoral prospects by the three parties and resulted in the end in a successful outcome. In terms of vote-allocation, however, co-operation was difficult and generated numerous complaints by PFP and NP candidates and leaders about the

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“ungenerous”and “unfair” behaviour of the KMT, which was seen as the biggest potential purveyor of votes24.

27 On the green side, the number of candidates for electoral districts remained stable (122) with the DPP adding nine candidates for a total of 92 and the TSU cutting nine candidates to 30. Although the “too” high level of DPP candidates was criticised after the poll, as we see, the overall number of green candidates did not change. Besides, as Bruce Jacobs pointed out, the DPP had to nominate more candidates if it wanted to achieve majority control of the legislature25. The problem seems then to reside more in the number of TSU candidates. The TSU has indeed the lowest ratio of elected legislators/candidates of the four main parties (23.3%), expressing obvious over- confidence by the TSU in its goal of doubling its legislators on a narrow Taiwan identity platform. The DPP ratio of success (76.1%) is rather good and close to the KMT. A dysfunctional vote-allocation system between the DPP candidates themselves, as shown by the high number of DPP incumbents who were not re-elected, was also a direct cause of lost seats. Poor co-operation and allocation of votes within and between the DDP and the TSU must therefore more appropriately be considered the culprits in the green camp’s failure to achieve a better result.

28 Indeed, the high toll of incumbent casualties was impressive: 37 altogether, including 14 DPP, nine PFP and four TSU for only four KMT (the others six were independents). Well-known political characters and party officials were among the victims26. The renewal of Parliament therefore has many new and some inexperienced legislators especially in the DPP caucus27. This would tend to prove that the parties’ control over their vote-catching system was defective. But it is not true everywhere, even for the DPP who had 100% success in several electoral districts28. External factors 29 Like during the presidential election last March, Peking did its best not to be seen as interfering in the election while, this time, maintaining a string of vocal criticisms and rebuttals of Chen Shui-bian, his government and any step taken by the island’s politicians Chinese leaders saw as independence-oriented29. The PRC also took care of waiting for the final results to enact any measures that could be used by the Green camp to fuel its campaign and boost its electoral chances. However, once the outcome known, Peking did not wait long to announce the coming enactment of an Anti- secession law by China’s rubber-stamp Parliament, and therefore raise tensions again across the Strait30. On the other hand, Peking responded carefully but rather positively to Chen’s new offers of cross-Strait contact and Chinese New Year charters between the two sides. But it waited after the election to speed up the negotiations and agree to the exchange for the first time of non-stop direct flights to serve Taiwanese businessmen in China31. In a sense, the PRC’s tactic was successful as it avoided being a major factor in the election, usually negative to the Pan-Blues. However, the timing of the Anti- Secession Law announcement, following the Chinese Communist Party’s own schedule and institutional process, was clearly felt as overly insensitive to the election outcome and Taiwanese population desire for better cross-Strait relations.

30 As for the United States, relations between the Bush administration, especially the State Department, and Chen remained tense, marked by a lack of mutual trust, and a series of official declarations emphatically non-supportive of Taiwan’s government, which as usual had a lot of echoes in the island’s media and political circles32. Although it did not have a clear impact on the election, it showed to everybody that the DPP

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government needed to amend its relations with Washington and establish a sounder system of consultation and co-operation with its main ally. Neither did the US presidential election have a strong influence as Bush was seen as the better choice for Taiwan by both the government and the opposition. Also no big changes were expected with the nomination of the new Secretary of State, Condoleeza Rice33. Contrary to last year’s presidential pre-campaign, the US factor was therefore not significant although certainly not favouring the DPP. Powell’s remarks in China about Taiwan, obviously expressing deep frustration about the direction taken by Taiwan and the cross-Strait situation, were also badly articulated and clearly oblivious of the political consensus in Taiwan about the country’s status34. For the KMT and other blue parties, even pro- unification factions, and the DPP government, the Republic of China (ROC) is an independent and sovereign country as much as and on a par with the People’s Republic of China (PRC), as attested, among others, by official diplomatic relations the ROC still have with 26 countries and had until 1979 with the United States35. Such remarks probably had an effect opposite to their intended goal, showing how poor Washington’s understanding is about the Taiwan situation and Taiwanese people’s own perception of their country, and in making the government and people more nervous than necessary about the strength of US commitment to Taiwan, and therefore about the kind of future they can expect.

31 The need for a better co-operation mechanism is also true for the United States, which can no longer leave its interaction with Taiwan—and strategic interests in the region— so little managed now that the cross-Strait tension and military balance, and the de facto evolution of the terms of the status-quo in China as well as in Taiwan, make war a much more likely scenario than before36. The US Defense Department’s posting of an active duty military officer in Taipei for the first time since 197937, as well as its continuing efforts in helping modernise the Taiwanese forces, and its pressure on Taiwan’s political parties to ratify the acquisition of its latest arms package, all show that Washington is aware of the problem.

32 One topic of US-Taiwan relations was nonetheless a subject of intense debate during the election campaign: the US$18 billion arms deal offered by Washington and agreed upon by the Chen government in 2004 after three years of discussion. The government made the approval of this deal by the Parliament a central part of its 2004-2005 programme and budget, and after being rebuffed by the opposition as a main issue of its campaign. Chen and the DPP see the arms deal as essential to cement the informal military and strategic alliance with the United States as much as to improve relations between the two sides by showing the commitment of the island to pay for its future defence against a potential Chinese attack. For that, they prepared a special budget to finance the cost of the deal over a ten-year period. The KMT and the Pan-Blue, big supporters of costly arms deal with the United States when in power, criticise now both the excessive amount and the necessity of some of the weapons to be bought (especially the submarines that nobody really knows by who and where they are going to be built, and which represent a big part of the arms procurement package). The issue has become such a focus of political struggle, that few can distinguish any more the real defence or public expenditure concerns expressed by the opposing camps under their partisan battle38. The arms deal still awaits ratification though Chen promised the Americans to ensure its passage before the end of 2004. Indeed, in spite of meetings between US administration officials and Soong Chu-yu, and his subsequent declarations

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hinting towards a compromise, the blue camp continues to block the deal in Parliament. A closer reading of the poll figures 33 At a first look, the election results can easily be interpreted as a victory for the Pan- Blue and a reversal of its past (mis)fortunes concomitant to a Pan-Green defeat; and as an impressive continuity in voter preference over a three-year period. This lecture has indeed been largely dominant in opposition party circles and media analyses. Following this line, Chen Shui-bian’s March re-election could then be interpreted as an odd phenomenon only explainable by the “silver bullets” conspiracy theory and other election abnormalities, and the December 11th poll the vindication of Pan-Blue analysis of an unfair and stolen presidential election.

34 For the DPP, different legislative and presidential election outcomes are however explained by tactical and technical errors in its December poll campaign organisation, compounded by over-confidence within the green camp and vote-fatigue in the electorate. Moreover, the DPP’s progress both in terms of percentage of the vote and seats would tend to demonstrate that its programme still managed to convince more voters and therefore that the election loss cannot be attributed to its pro-independence stance nor express a disaffection of the electorate

35 Actually, a closer look at the result shows that although the Pan-Blue victory is without any doubt a real political success, its electoral basis is rather fragile; and that there is a clear consolidation of DPP strength in the electorate that could lead to better outcomes for the greens in the future. Further, voters tended to favour middle-of-the- road programmes, “centrist” positions, and perhaps did not vote for lack of such choices in this election.

36 The first indication that the Pan-Blue election result is paradoxically more a setback than progress compared to 2001 is shown in the percentage of votes received by the two camps. Whereas overall the blue camp reached 49.74% of the valid votes in the last legislative election, this time the opposition parties only got 46.85% of the vote, a decrease of almost 3% (Table 2). In the meantime, voter support for the green camp increased by 2.4% to 43.5%. The difference between the two camps therefore narrowed from 8.6% to 3.3%, a result that cannot in any case be considered a success for the opposition.

37 Second point, the turnout factor. At 59.16%, it is the worst turnout of any national-level election since the beginning of free and competitive polls in the 1990. Turnouts for legislative elections are generally lower than for presidential elections, so nobody will be surprised that the December elections did not match the 80.28%, 82.69% and 76.04% respectively for the 2004, 2000 and 1996 direct presidential elections. However compared with the three previous legislative polls since 1995, this turnout was considerably lower. In the 1995 legislative election, turnout was 67.65%, in 1998 it was 68.09%, and in 2001 66.16% (Table 4). Abstention in December 2004 was thus 7% higher than the time before (and an average 8% higher than in the last decade). Combined with a 2.3% increase in the share of the eligible voters compared to the whole population (itself rising) since 2001, this means that a considerable smaller number of people actually went to vote. While 735,671 more people were eligible to vote than in 2001, the December 2004 election witnessed 672,706 less people casting their vote39. Taiwanese political parties hence clearly failed to impress the voters and make them

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vote: if we add the diminution in turnout to the rise in the eligible population, more than 1.4 million old and new voters decided not to vote this time.

38 But this overall loss was not proportionally transferred to each of the different parties this time. The parties’ actual wins and losses in absolute numbers rather than in percentage give us a better image of their power of attraction for the population. The DPP emerges here as the only party that saw rise in voter numbers: an increase, albeit small, of 23,689 votes (Table 2). For the KMT, one needs to add to its 2001 tally the NP votes since they concluded an electoral alliance this time (and add NP’s Kinmen candidate votes in 2004). In 2001 the total of KMT and NP votes climbed to 3,218,991, while in December 2004, the sum of their voters only reached 3,202,218, resulting in a loss of 16,773 votes. For the PFP, the reduction was much more significant: a fall of 567,223 votes, or close to 30% of its 2001 vote. The TSU, while maintaining its vote share in percentage, did register a loss as well, as it gathered 44,848 less votes than in 2001. The independent candidates’ number of votes hardly budged (-5,341) although their percentage of the vote rose 0.5%40.

39 The 2.89% loss of the Pan-Blue in vote percentages translates then in absolute figures into 584,000 less votes, while the green camp saw its support wane only by 21,159 votes. In other words, the Pan-Blue vote diminution represents 84% of the overall decrease in the number of votes cast (or of the 7% increase in abstention), while the green camp loss constituted only 3.2% of it. On the basis of these numbers, the Pan-Blue legislative victory cannot be presented as a big success in its extending its influence or attraction on the Taiwanese electorate neither as giving it a strong new mandate―and needless to say even less over-riding the Chen Shui-bian mandate received in March with 11.8% more votes than in 2000 (or almost 1.5 million more votes). Furthermore, it shows that the gain of 11 seats by the KMT at the expense of the PFP did not correspond in any gain in vote numbers for the KMT.

40 When compared to other parties’ results, one can hardly say that the DPP campaign failed as it is the only one to have gained more voters than in the previous election. The DPP’s biggest failure consists in not having attracted more people to the polling stations. This is especially true as higher turnouts are generally considered to favour the green camp. The blue camp’s core electorate is indeed seen to be more reliable and ready to vote to express its opposition to the current government policies and regain power. If this were the case, the continuous lowering of Pan-Blue vote numbers and vote-share would mean that its electoral basis is fast diminishing (584,000 votes in three years).

41 The DPP is therefore clearly consolidating its political dominance and electoral basis both against the blues and the TSU. As we noticed, tactics were a strong factor in the green camp’s setback. Indeed, many DPP or TSU candidate defeats were by very small margins of one or a few thousands votes, and often with two candidates of the same party or one from each party defeated. Although in local districts, candidate affiliations do not always recoup party affiliation and then cannot ensure a perfect transfer of votes between candidates. Better co-operation in the candidate nomination process and in vote-allocation between the DPP and the TSU could have ended very differently on election day. Add to that a few more percent in turnout, and the green camp might have wrested victory from the others. From these figures, one can even see that pre- election polls were not so wrong after all as they were based on a much higher turnout.

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42 Chen’s identity issues-focused campaign seemed to have two opposite results: to consolidate the DPP’s electoral basis and voter fidelity; and to scare away or discourage non-party affiliated and “centrist” voters to vote for the Green camp. On the basis of the election outcome, this could be seen as a tactical error. But on a longer-term perspective, it might have strong strategic value in helping to achieve two things. First, by reaffirming its pro-independence programme and identity, the DPP has managed to generate a growth of core-support for the party and influence in the population while eliminating the menace of the TSU over its vote-pool, especially in the south. Voters who chose the DPP in December would probably not abandon it in future polls unless it makes huge mistakes in governance or changes its political identity. They either saw themselves in the DPP rhetoric or at least actively favoured it against both Pan-Blue and TSU programmes41.

43 At the same time, the disappointing result of the election should slow down DPP radicals as they realise that they are still not the national majority. It can be used by DPP leaders to steer a more moderate policy with the next elections in view―national assembly, city and county chiefs (2005), Taipei and Kaohsiung mayoralty (2006), presidential and legislative (2008). This would help them win over more centrist voters by good governance and compromise with the opposition while holding firm on ROC sovereignty, independence and its democratic system, and steadily reinforce the population’s Taiwanese “consciousness”.

44 To conclude, in the elections, DPP support rose more than for any other party, both in vote percentage and vote numbers. The Pan-Blue voter base weakened considerably compared to previous elections showing a diminishing influence of the KMT and PFP in the population as a whole. All parties failed to draw the electorate to the voting-booth, especially the centrist voters, with stronger negative consequences for the DPP. The electorate tended to reject radical parties in both camps (PFP and TSU) in favour of (relatively) moderate ones. The KMT under Lien Chan succeeded in reversing its decline but the number of votes did not progress. Retail politics, local factions and local networks are still important components of success in the legislative elections. Finally, tactics (nomination, vote-allocation) were a major factor in determining the final outcome. Consequences of the poll and recomposition of Taiwan’s political field 45 The election shows, once again, that opinion polls should not be trusted too much, especially in Taiwan where reliability is marred by partisanship and scientifically unsound methods.

46 For the Pan-Blue, new rifts in the alliance and not so clear skies for the KMT are now to be expected. A party continuously losing voters, even when economic conditions (2001) or the external political (2004) environment are bad for its opponent, is facing a real challenge in ensuring any future political dominance. The KMT’s success in this election was mainly built on the return of the “lost children” of the PFP and the NP to the old party, and on a very efficient mobilisation of its core base of local supporters. It vindicates the ideological return to a pre-Lee Teng-hui and orthodox KMT engineered by Lien Chan during the last four years in order to win back the true-blue voters who deserted him for Soong and the PFP in 2000 and 200142. The KMT now faces the challenge of internal reforms in a somewhat better position and the old leaders will have a chance to leave with dignity. Lien Chan should retire as KMT chairman in August and the party will have to find a new leader43. But, if the true-blue voters are

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not going to leave the party or the Alliance, as the poll’s figures indicate, they do not constitute a sufficient majority to ensure wins in further elections, especially in times of higher turnouts. The Blue camp’s appeal appears lower than ever as it was unable to keep more than half-a-million of its own 2001 voters, not to say to attract more centrist voters. This can be linked to the dissatisfaction of the electorate, especially the young and middle-class voters, towards the Pan-Blue leaders for their reaction to last March’s election, their political obstruction in Parliament, their inability to reform and ensure a generational transfer in their leadership, and finally for their programme, which is not more attractive than the green’s. That includes the pro-China orientation and calls by the blue parties for an economic integration with China that scares many in the lower middle-class who are unable to invest in China and see hardly any benefits for them in it.

47 In terms of immediate consequences, this election ended any possibility of a quick merger between the KMT and the PFP, which already decided that it would be better alone than swallowed by its big ally44. Beaten by their rival’s electoral machine, the strong anti-KMT and grass-roots factions of the PFP, represented by the party vice- president Chang Chao-hsiung and Soong himself are now even less inclined to relinquish the fruits of their work in their last four years and their personal fame and influence for a marginal position in a newly merged blue party keeping the KMT’s name and centralised organisation.

48 In the opposite camp, the defeat led the DPP’s leaders to thoroughly rethink their tactics and methods for the coming years. The goals are for Chen to avoid becoming a lame duck for its entire second-term, and for the party to find a way to implement some programmes and policies through co-operation with Parliament. Party and President therefore changed their tone and announced that to respect the popular will expressed in the election they will seek compromise and co-operation with all parties including opening government portfolios to opposition politicians or forming a coalition cabinet45. The idea of collaborating with the blue camp, especially with the PFP, was then repeatedly affirmed by DPP legislators, government officials and Chen’s close collaborators46. The result was a “10-point consensus” signed by Chen and Soong to lower partisan hostilities and foster smoother legislative co-operation.

49 This says a lot about the nature of Taiwan politics, much less ideological and strictly partisan, and more pragmatic and power-focused than Western analysts would believe based on the experience of classic European party politics. But this was also made possible by two things. First the imperative to deny the “legitimacy” argument branded by the KMT to take over governmental power in exhibiting a image of consensus for the DPP and Chen and therefore to show that the President is still the source of executive power and ultimate political decisions in Taiwan’s constitutional system. Secondly, the evolution and manoeuvring of the PFP in the wake of its crushing election setback and end of its merger with the KMT.

50 The PFP’s new strategy focuses on re-centring the party at the middle of the Taiwan political spectrum. While keeping on its true-blue mainlander voter base, anti- independence ideology and objective of political reconciliation with China, Soong is rebuilding the image of its party as a bridge and a balance between the two camps to get the country out of the political deadlock created by the DPP/KMT opposition in the legislature. The PFP is now officially ready for co-operation with any party in order to achieve progress in matters of national and people’s interests. DPP’s overtures have

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already legitimised the new image of the PFP. However both parties’ core supporters reacted rather negatively to the “consensus” and the PFP runs the risk of losing more true-blue voters to an evermore old-guard looking KMT.

51 An official PFP-DPP coalition, as the latter publicly wished (maybe more by political calculation than by real intent), would therefore not be possible now. But with the new and rather open-minded Hsieh Chang-ting government installed, other avenues of co- operation could be worked out with the PFP or the KMT, dangerously over-passed by its partner in a “centrist” image.

52 Political co-operation in Taiwan usually needs long and repeated meetings and discussions that do not ensure any eventual outcome, and depends always on each party’s short-term strategy. Whether the Taiwan political environment changed enough after the December election to bring a new type of co-operative spirit between the government and the legislature will only be attested by 2005 political evolution. In any case, Soong and Chen showed after the election they still are the most acute and imaginative Taiwanese politicians, and in a sense true representative of modern politics compared to the classic and institutionally-groomed Lien Chan and other KMT leaders.

53 The political battle’s horizon is now set on a series of minor and local elections in 2005 and 2006, appetizers and rehearsals for the real prize of the 2008 presidential and legislative elections. As the analysis of the December poll figures shows, the blue camp is not in a very good shape. It would need to devise strong new programmes and strategies to have a chance to wrestle the presidency from the DPP or even repeat its legislative success if future turnouts improve. It cannot count only on Ma Ying-jeou’s charisma and the KMT’s traditional support networks as shown by their continuing loss of votes in the few last years.

54 In the DPP camp, the necessity of compromise to achieve more in the government will certainly be an asset in building a more moderate image. The new tandem of Su Tseng- chang, who replaced Chen Shui-bian as DPP president, and Prime minister Hsieh Chang-ting could then well become the next DPP presidential ticket. For many in the party, that would constitute a “dream team”. Respectively former Kaohsiung mayor and Taipei County chief, both have won consecutive electoral successes in a tough political environment and are known for their moderation on top of real charisma and competence.

55 For the TSU, its role as the radical wing of the green camp should persist. Both Lee Teng-hui and DPP independence advocates considered it important to keep alive and vocal their long-term objective of formal disentanglement of Taiwan from the ROC constitutional framework. Signs of openness to co-operation with the opposition are nonetheless also appearing, clearly with the goal of presenting a more responsible image for the party. Still, the TSU should remain an appreciated but marginal addition to the DPP’s chances of further success as the ruling party has proved to be the only political force making repeated gains in the last series of elections.

56 Besides this, the political atmosphere and success opportunities in Taiwan will also much depend on the evolution of cross-Strait relations. Appeasing signs followed the groundbreaking exchange of direct flights between Taiwan and China for the Lunar New Year. But tensions rose again with the March 8th enactment by the Chinese National People’s Congress of its “Anti-secession” law even if most Taiwanese desire better political and economic relations with the mainland. Once again, US reactions will

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be crucial to manage the cross-Strait situation and indicate where the strategic Washington-Taipei-Peking triangle might be heading.

57 The next Legislative Yuan election in 2008 should also present a rather different picture as it should be held the same day as the Presidential poll, the legislature’s seats would be cut by half, and a brand new polling system would be implemented based on single-member constituencies and dual votes. Constitutional amendments voted in August 2004 must however still be ratified by the last convening of National Assembly this year after its mid-May 2005 election. It will be the first electoral test of the year and will show how the Taiwanese people react to the political parties’ repositioning.

NOTES

1. Cf. Kathrin Hille, “Taiwan ruling party casts KMT into the shade”, Financial Times, October 18th 2004; AFP, “Pro-independence parties tipped to make gains in Taiwan vote”, December 8th 2004. 2. Cf. Shelley Rigger, in “March to December: Taiwan’s year of elections”, CNAPS, Brookings Institution, November 17th 2004. 3. Keith Bradsher, “In Taiwan Ballot, Ties With Beijing Seem to Be a Winner”, New York Times, December 12th 2004. This to the dismay of most international academics, cf. Huang Tai-lin, “US scholars cite need to fight foreign media’s ‘spin’”, Taipei Times, December 13th 2004. 4. Cf. AFP, op. cit. 5. On the December 2001 legislative election, see Lin Jih-wen, “Taiwan’s 2001 Elections and their Political Impact”, China Perspectives, No. 39, January-February 2002, pp. 53-61. 6. For the specifics of Taiwan’s legislative elections, see GIO, “Background information on the 2004 Legislative Yuan election”, www.gio.gov.tw/taiwan-website/5-gp/ election2004/ 7. The election result was quite good for the NP compared to its crushing defeat in 2001, and legitimises its alliance with the KMT. Its candidates elected under the KMT banner received very high support, ensuring some lasting influence for the tiny party among the Pan-Blue electorate and leaders, especially in Taipei and its suburbs. The three new NP legislators are Lai Shyh-bao (Taipei South, who got the highest number of votes in the whole city, 70,773), Fei Hung-tai (Taipei North) and Lei Ching (Taipei County 3rd district, the second highest national vote-getter with 72,467 votes). Altogether the NP had eight candidates, seven running with the KMT, plus incumbent Wu Cheng-tien in Kinmen. For district-by-district results, cf. Lianhe bao, December 12th 2004, p. A11. 8. See Lawrence Chung, “Kuomintang in crisis”, Straits Times, August 8th 2004. 9. For a general analysis of local faction influence in Taiwanese elections, see Mikael Mattlin, “Nested pyramid structures: Political parties in Taiwanese elections”, China Quarterly, No. 180, December 2004. 10. See Bruce Jacobs, “Faction, blood and party”, Taipei Times, December 5th 2004. And Fiorella Allio, “Pour une étude anthropologique des élections taiwanaises”, conference

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given at the CEFC Taipei Office, December 16th 2004. Mattlin and Allio’s researches show that local factions (difang paixi), local networks (jiceng mailuo) and even local “organisations” (difang zuzhi) have to be differentiated. 11. For an historical review of KMT power-system, see Yun-han Chu and Jih-wen Lin, “Political development in 20th Century Taiwan: State-building, regime transformation and the construction of national identities”, China Quarterly, No. 165, March 2001. 12. For KMT and the DPP’s different approaches to the question, see Christian Göbel, “Beheading the Hydra: Combating Political Corruption and Organised Crime”, China Perspectives, No. 56, November-December 2004, pp. 14-25. 13. Cf. B. Jacobs and F. AlIio, op. cit. Not everybody is so pessimistic, for instance Michael H.H. Hsiao who sees in the election’s result a continuing trend towards a two- party political system, and lauds the influence of “civil society”’s social groups and organizations on the Taiwanese political field. Cf. Intervention at INPR Conference on “The implications of 2004 legislative election in Taiwan”, Taipei, December 12th 2004. 14. See Shelley Rigger, “The Democratic Progressive Party in 2000: Obstacles and opportunities”, China Quarterly, No. 168, December 2001, pp. 944-959. 15. For an analysis of March 2004 presidential election and campaigns, see Frank Muyard. “Taiwan: The Birth of a Nation?”, China Perspectives, No. 53, May-June 2004, pp. 33-48. 16. Su Tseng-chang, Hsieh Chang-ting, Yu Hsi-kun and Chang Chun-hsiung. 17. With the symbolically important differences: change of Taiwan’s official name, total rejection of the ROC’s (and Chinese) heritage and name, full-Taiwanese new constitution and its rapid implementation, all parts of the TSU’s programme of fast- track independence but not supported by the DPP programme. 18. “Chen reaffirms Dr. Sun history to halt distortions”, China Post, November 14th 2004. 19. Cf. Lawrence Eyton, “Taiwan elections curiouser and curiouser”, Asia Times Online, December 9th 2004. For the DPP’s past electoral experience, see also S. Rigger, op. cit. 20. “Mixed reaction to Lien's call to form gov't”, China Post, December 7th 2004. 21. For an analysis of the Constitution and the potential for Taiwanese “cohabitation”, see Da-chi Liao and Herlin Chien’s article in this issue of China Perspectives. 22. Cf. L. Eyton, op. cit. 23. To have the total number of candidates from each party, one must add the nation- wide and overseas Chinese lists of candidates to the sum of the local electoral districts candidates: KMT-NP: 104 (103+1) in 2004 against 186 (144+42) in 2001. PFP: 65 against 89. DPP: 129 against 111. TSU: 40 against 55. Pan-Blue total: 169 in 2004, 275 in 2001. Pan-Green: 169 against 166. These extra candidates do not directly compete in the election and are elected in proportion of the overall result of their party in the electoral districts direct vote. 24. Cf. Caroline Hong, “Pan-Blue allies upset with KMT”, Taipei Times, December 8th 2004. 25. Bruce Jacobs, “Interpretation and implication of Taiwan’s legislative elections”, Taiwan Perspective e-paper, No. 55, January 10th 2005. 26. Besides Chen Hsue-sheng (KMT), there are DPP’s Tuan Yi-kang, Shen Fu-hsiung, Chen Mao-nan, Chou Ching-yu, TSU’s Chen Chien-ming and Hsu Teng-kun, from the PFP Chin Huei-chu, Pang Chien-kuo, Hsieh Chang-chieh, and in the independent ranks Walis Peilin and Su Ying-kuei. Lianhe bao, December 12th 2004, p. A6.

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27. The election also saw the return of 11 former legislators: seven KMT, two DPP, one PFP and one independent. Cf. Zhongguo Shibao (China Times), December 12th 2004, p. A9. 28. In Taipei City North (5/5), Tainan County (5/5 plus a green-leaning independent), Tainan City (3/3), Kaohsiung County (5/5), Kaohsiung City 1st district (3/3), Chia-I County (3/3), Chia-I City (1/1), Nantou County (2/2), Taichung City (3/3), Ilan County (2/2), Keelung City (1/1). 29. For a good summary, see David Brown, “Campaign fallout”, Comparative Connections, Pacific Forum CSIS, vol. 6, No. 4, January 2005. 30. Cf. Willy Lam, “Beijing’s post-election policy”, China Brief, vol. 5, No. 1, January 4th 2005. 31. Cf. “Landmark deal on first direct flights in 56 years”, China Post, January 16th 2005. 32. Cf. D. Brown, op. cit. 33. Cf. Chris Cockel, “Rice likely to remain tough toward Taipei, Beijing : scholars”, China Post, Novmber 18th 2004. 34. Cf. Joseph Kahn, “Warnings by Powell to Taiwan Provoke a Diplomatic Dispute”, New York Times, October 28th 2004. 35. Cf. Hsu Yung-ming, “‘Identity problem’ is not political”, Taipei Times, November 22nd 2004. 36. See Arthur Waldron, “Which way forward for Taiwan?”, International Assessment and Strategy Center Online, November 3rd 2004. 37. Cf. AFP, “US to post military officers to Taiwan mission: Jane”, December 19th 2004. 38. “Arms deal to face opposition from 'Pan-Blue' in Legislature again”, China Post, November 9th 2004. 39. And 610,496 valid votes. The number of invalid votes decreased by almost a half (78,940 against 141,150 in 2001, a reduction of 62,210). In March 2004 presidential election, 13,251,719 votes (of them 12,914,422 valid) were cast for an eligible population of 16,507,179. Chen Shui-bian and Lu Hsiu-lien received 6,471,970 votes for only 6,442,452 votes for Lien Chan and Soong Chu-yu. 40. The lower number of invalid votes explains the rest of the “lost votes” in 2004. See previous note. 41. Reasons explaining why DPP voters did not switch to the TSU also include a perception of Lee Teng-hui’s party as too radical and uneasiness in voting for former members and officials of a party, the KMT, long associated with corruption and inner dealings. 42. The KMT even celebrated in February the return to the party of 18 former heavyweights, including Hau Pei-tsun and Lin Yang-kang. Cf. “18 ex-KMT heavyweights rejoin opposition party”, China Post, February 5th 2005. 43. Caroline Hong, “Lien makes August date”, Taipei Times, December 18th 2004. 44. “‘Door is shut’ on Pan-Blue merger, PFP Chairman says”, Taipei Times, December 13th 2004. 45. “Chen tries a new strategy”, Taipei Times, Dec 19th 2004. 46. Lee Wen-chung, “A coalition between DPP, PFP is plausible”, Taipei Times, January 12th 2005.

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RÉSUMÉS

F0 The recent renewal of Pan-Blue’s parliamentary majority BE in an almost exact repeat of the 2001

F0 election results BE masks more changes than it appears both within the two camps and in the respective parties’ appeal to the electorate. Winners of the elections, the opposition parties keep losing voters. On the Green side, the defeat is mainly due to a mix of tactical errors and political factors. However, the Democratic Progressive Party’s vote share still progresses. The low turnout also shows a rise in the voter disaffection towards Taiwan’s highly partisan political debate.

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Why no Cohabitation in Taiwan? An analysis of Taiwan’s Constitution and its application

Da-Chi Liao et Herlin Chien

1 After the Sixth Legislative Yuan election on December 11th 2004, Taiwan’s political arena was, once again, resounding with the debate on adopting French-style cohabitation1. The revision of the Constitution of the Republic of China (ROC) in 1997 2 gave the ROC President the power to appoint the Premier of the Executive Yuan without the consent of the Parliament. Thus the Taiwan political system, constitutionally speaking, resembles more the French semi-presidential system in the Fifth Republic, than the US-style presidential system. However, despite this strong resemblance, the systems are distinct. While France has experienced three cohabitations—in 1986, 1993 and 1997—, how is that Taiwan has not taken the same route? Does the ROC Constitution require cohabitation when the President has lost majority support in Parliament? What has prevented cohabitation since President Chen Shui-bian’s election in 20003? Constitutional framework 2 In general, there is consensus among scholars that Taiwan’s political system resembles the dual-executive or what Maurice Duverger termed the semi-presidential system of the Fifth Republic in France4. Duverger defines three conditions for a constitutional system to be termed “semi-presidential” 5: the President is directly elected for a fixed term; the President possesses quite considerable powers; and, the Constitution grants both the head of state—the President—and the head of the government—the Prime Minister—to share executive power6. France, after its 1962 Constitutional reform, which created a directly elected President by a popular vote, and Taiwan, with its Constitution amended in 1997, which authorises the direct nomination of the Premier by the President without the consent of the Parliament, meet the first two of Duverger’s three conditions7.

3 However, the political systems of France and Taiwan have, crucially, different constitutional requirements, in addition to the fact that the relationship between the executive and the legislature varies one from the other. The French Constitution is designed in such a way as to facilitate the emergence of cohabitation if the President

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does not have majority support in Parliament; whereas Taiwan’s constitutional framework does not, whether the President has the support of the Parliament or not.

4 Articles 53 and 57 of the ROC Constitution state respectively that “the Executive Yuan shall be the highest administrative organ of the state” and “the Executive Yuan shall be responsible to the Legislative Yuan”. Article 20 of the Fifth Republic Constitution of France, meanwhile, states that “the government determines and executes national policies. The government dictates administrative institutions and the use of the army. The government, under articles 49 and 50, is responsible for the Parliament”. Later, Article 21 authorises the Prime Minister to direct actions of government. As such, by the legal framework, the executive branches in France and Taiwan ought to be responsible for the legislative branches.

5 In parallel, Presidents in Taiwan and the French Fifth Republic are given constitutional power to nominate the Prime Minister who is the head of the Executive branch of government. However, while a presidential order in Taiwan can actively remove the Premier from office without the countersignature of the Premier8, the President in the Fifth Republic only can passively grant the resignation of the Prime Minister along with dismissal of the government9. Legally then, in the event of a divided government where the President and the majority in Parliament are with different parties, the nominated French Prime Minister only needs to earn the support of the Parliament, once appointed, as the trust of the President is irrelevant due to the president having no active power of dismissal over the Premier. While the Premier in Taiwan must have the support of the President, as the power to dismiss the Premier remains in the hands of the President.

6 Article 49 of the Constitution of the Fifth Republic has no parallel in the ROC Constitution. According to this Article 49, the Prime Minister can request the National Assembly to cast a confidence vote, which legally prevents the emergence of a divided government in France thus favouring cohabitation10. Such a confidence vote, if supported by Parliament, can further legitimise the role of the Prime Minister as a counterbalance to the power of the President. In other words, in France, the situation of the President and the Prime Minister holding equal power is strengthened by Article 49. Such a footing can provide an incentive yet also a constraint for the President to choose cohabitation, rather than a divided government in which the Prime Minister might fail to gain the confidence vote of Parliament immediately after appointment. In Taiwan’s system, the absence of this resort to a confidence vote not being prescribed in the Constitution, means there is no strong incentive to choose cohabitation11.

7 Furthermore, France and Taiwan have in place slightly different mechanisms where the crucial no-confidence vote, which can break executive-legislative gridlock and initiate a sprit of responsible politics in the parliamentary system, is concerned12. In Taiwan, if the legislature finds the Premier unacceptable, its only constitutional option is to undertake a vote of no-confidence in accordance with amendment article 3, which, if it passes, opens the door for the President to passively dissolve the legislature13. Therefore, under threat of being dissolved by the President, the legislature must think twice before issuing a vote of no-confidence which will lessen the leverage power of legislature on the Premier. As the President has the power to appoint or remove the Premier, cohabitation could be a possible option, but is not required by the Constitution.

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1. President and Premier after the 1997 Constitution revision

8 The rule is quite different in France, especially concerning the President’s active right to dissolve the Parliament. Article 49 Section 2 of Fifth Republic Constitution rules that the National Assembly can propose a vote of no-confidence with more than a one-tenth vote of the total Parliament members. Due to the frequent issuing of no-confidence votes in the Third and Fourth Republics, Article 12 of the Fifth Republic Constitution grants the President the right to actively dissolve Parliament 14. This rule may to a certain extent institutionalise the emergence of cohabitation through the presidential power if the President dissolves the Parliament and the re-election result of the new Parliament still forces the President to face an opposition majority15. Constitutional practice 9 The purpose of analysing how the Constitution works in practice, of the gap between the written Constitution and its application, and of the dynamic interaction with psychological, social and cultural traits, is to explore why under a similar constitutional framework―a semi-presidential system―France has seen cohabitations and Taiwan up to now has not.

10 Constitutionally speaking, although the ROC President is granted the right to freely choose the Premier without the consent of Parliament, the Parliament can indirectly exert influence in the choice of the Premier via a threat of a vote of no-confidence. This could trigger a constitutional crisis, and a consequential retaliation by the President in dissolving the Parliament. If the above is followed, the ROC President could be constrained in his or her choice of Premier and, when facing strong opposition in Parliament, have no choice but to appoint an opposition Premier to lead the government, handing the major executive right to the Executive Yuan. However, this did not happen during 2000-2004, nor has it happened in the 2005 presidency, though President Chen Shui-bian faces a majority opposition in the Legislative Yuan (Table 2). Taiwan’s political system is led by a strong President in a divided government.

2. Party affiliation of legislators

The unfunctionality of the no-confidence vote

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11 The no-confidence vote mechanism design is originated from the parliamentary system and its purpose is maintaining a responsible politic, balance of power between government branches and resolving executive-legislative gridlock. However, the no- confidence vote mechanism has never been used in Taiwan, for legislators are unwilling to trigger its introduction unless urgently needed. Without a no-confidence vote, the President can continue with an opposition majority in Parliament: this has happened several times and appears to be becoming a constitutional routine.

12 What prevents legislators casting a vote of no-confidence is rooted in the electoral system of the multi-member district with a single-non-transferable vote (SNTV) in which legislators run for re-election at great risk16. In the SNTV, a voter has only one vote in a multi-member district and the vote is not transferable. Moreover, while each individual candidate need only obtain enough ballots to pass the threshold of exclusion to be elected, intra-party competition might be stiffer than inter-party competition during elections17. Every candidate must stand out, and closely watch his/her brokers and loyal supporters in order to avoid vote erosion18. So, if having been through a highly competitive election and having finally been elected as legislators, being rational actors, they would not easily cast a vote of no-confidence, which would be equivalent to giving up their legislative seat and gambling again on the next legislative re-election19.

13 Moreover, according to a recent survey, the average spend of a legislative candidate during a single election amounts to NT$42 million20 which makes a no-confidence vote and the consequential re-election campaign for legislators very expensive and clearly less preferable. Therefore, without exercising a no-confidence vote, a divided government called by a Taiwan President can survive without considering cohabitation as an option21. Lack of historical path dependence 14 Another factor that may prevent the emergence of cohabitation in Taiwan can be understood by the lack of any historical experience of any similar system in the past in Taiwan.

15 Taiwan, heavy with historical political experience, and Taiwan people, have a great expectation of the role of a President. Even the operation of the dual-executive— namely two rulers, the President and the Premier—, and prescribed in the semi- presidential system of Taiwan, can hardly be accepted, even as a concept22. Taiwan has had 37 years of a highly centralised interim rule under a strong man and KMT rules, a period during which the Constitution, which permitted a balance of power, was suspended23. One ruling organ—the President or the KMT—was for a long time the only source of authority and power for the government. Even after 1996 when President Lee Teng-hui was directly elected, his ruling style is characterised as “super-presidential”. Former Premier Chang Chun-hsiung pointed out that “A President who can nominate the Premier without consent of Parliament, is not required to be responsible for Parliament, yet has the right to dissolve Parliament, is creating a powerful President without responsibility and a powerless Premier with responsibility24. What Taiwan people expect from a popular elected President exceeds the constitutional right a President can hold. The idea of a second ruler—the Premier to counterbalance the President or to co-rule with the President, has so far hardly found historical support in the Taiwan community.

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16 The 1997 ROC Constitution does offer Taiwan a dual-executive and a semi-presidential framework, yet the gap between the written Constitution and its practice reduces the likelihood of cohabitation in Taiwan. “Cohabitation”, called for by the Pan-Blue camp, has never been seen in Taiwan, and there is still a way to go before it could be successfully implemented. The constitutional systems of the ROC and the French Fifth Republic are quite different. The unfunctionality of the no-confidence vote due to SNTV electoral rule and the high cost of winning the re-election are crucial to understanding why the rule of a divided government, over cohabitation, persists in Taiwan. Unlike France, where constitutional customs are already established and the concept of dual-executives continuously practiced, Taiwan does not have the experience that could provide a stable base for the establishment if a system that could embrace cohabitation.

17 Will Taiwan see cohabitation in the future? Based on the current formal constitutional arrangement, cohabitation may be unlikely to emerge in Taiwan. If adding constitutional practice, especially with the evolving power structure within the Legislature, President Chen is facing a different political environment than that faced by Lee Tung-Hui. During his first term, President Chen has tried to negotiate with Wang Ching-ping, the Speaker of Legislative Yuan, of the KMT opposition party. Under the current presidency, he has initiated communication with the opposition leader of the PFP, Soong Chu-yu. To a certain extent, political reality may lessen the strength of the President. However, if the current constitutional framework remains unchanged, the emergence of cohabitation is still unlikely in Taiwan’s present context. The practices of sharing executive rights between two heads is still to be learned in Taiwan.

NOTES

1. Such a concept was initially proposed in the summer of 2001 by the People First Party (PFP) who seemed to have carefully analysed the political landscape and concluded that a “cohabitation à la française” was probably inevitable. Yet this was not what Chen Shui-Bian had in mind. See Berthier Serge, “Who Won the Legislative Election in Taiwan?”, Asian Affairs, December 2001. Lien Chan, Chairman of the Kuomintang (KMT), proposed at the 2004 Taipei Roundtable Meeting of December 16th with representatives from the Center for Strategic and International Studies (CSIC), that President Chen should respect the new majority in Parliament by forming a new cabinet and consider nominating an opposition member, Deputy Legislative Speaker Chiang Pin-kun, as the new Premier. 2. The 1947 Constitution of the Republic of China (ROC) has been revised six times. In the third revision of 1994, the ROC President is to be elected directly by popular vote, starting from 1996. The fourth revision of 1997 introduced the nomination of the Premier by the President and the parliamentary vote of no-confidence. 3. The 2000-2004 and 2005-2008 pan-green Democratic Progressive Party (DPP) Chen Shui-bian presidency is facing pan-blue opposition majority in the Parliament.

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4. As the President is to be elected by a popular vote directly with his/her party, then often referred to as the ruling party, some people have compared the Taiwanese system to the US-style presidential system. Lin Chia-chen, former president of the Research, Development, and Evaluation Commission of the Executive Yuan, offered such comment in Zhongguo shibao (China Times), on October 1st 2001. President Chen Shui- bian often used the US President as an example to exert influence in the appointment of personnel in the Executive Yuan, which showed his intention to pull the system towards a US-style presidential system. However, countries such as Australia, Ireland, Singapore and Portugal all directly elect their President, yet none of their systems can be defined as presidential, and Taiwan does not have a presidential system formally established by its constitution either. 5. Maurice Duverger, “A New Political System Model: Semi-Presidential Government”, European Journal of Political Research, No. 2, Vol. 8, June, 1980, p. 166. 6. Maurice Duverger notes that, in countries that are semi-presidential in essence, there is a diversity of semi-presidential practices. That is why we devote our efforts to analysing what variables have led to a different operation among similar semi- presidential systems. Other scholars, such as Shugart & Carey, Presidents and Assemblies: Constitutional Design and Electoral Dynamics (1992), Robert Eligie in Semi-Presidentialism in Europe (1999), have also discussed different practices of semi-presidentialism around the world. Robert Eligie has attempted to define the concept of semi-presidentialism via three approaches. Firstly, semi-presidentialism is said to be a type of democratic regime where executive power is divided between a President and a Prime Minister but where the President has substantial powers. It also concerns specific constitutional arrangements with actual powers as Maurice Duverger has specified. Further, semi- presidentialism can be simply a type of regime with dispositional properties in which a popularly-elected, fixed-term President exists alongside a Prime Minister and cabinet who are responsible to Parliament, regardless of how powerful a president is (“Semi- presidentialism: Concepts, Consequences and Contesting Explanations”, October 24th-25th 2003, Institute of Political Science, Academia Sinica, Taipei, Taiwan, pp. 4-7). 7. Taiwan is most likely to be included in the third type of semi-presidentialism under this category elaborated by Eligie. 8. ROC Constitution amendment, Article 2: Presidential orders to appoint or remove from office the Premier or personnel appointed with the confirmation of the Legislative Yuan in accordance with the Constitution, and to dissolve the Legislative Yuan, shall not require the countersignature of the Premier. 9. Fifth Republic Constitution, Article 8. 10. The confidence vote requires absolute majority support in the Parliament. Any coalition of opposition force against the Prime Minister can easily defeat it. During the first cohabitation, leftist President Mitterrand nominated the rightist Jacques Chirac as Prime Minister, who, immediately after entering office requested a vote of confidence. The result was positive with 292 in support and 285 against, strengthening the leadership of Chirac in the cohabitation and counterbalancing his power with that of Mitterrand. See Jean-Louis Thiébault, “France: Cabinet Decision-Making under the Fifth Republic”, in Jean Blondel and F. Muller-Rommel (eds.), Cabinets in Western Europe, New York, St. Martin’s Press, 1997, pp. 108-109. 11. Although both the French and Taiwan Constitutions state that the Premier is responsible before Parliament, in France this often means that the Prime Minister, although appointed by the President, must represent the parliamentary majority. In

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Taiwan, the Premier might not be expected to represent the parliamentary majority; his or her role might resemble more the role of the “chief of staff” in the US presidential system. 12. This point shows the main gap between the Constitution and constitutional practice. 13. Amendment article 3: With the signatures of more than one-third of the total number of Legislative Yuan members, the Legislative Yuan may propose a no- confidence vote against the Premier. The Premier shall tender his resignation within ten days and at the same time may request that the President dissolve the Legislative Yuan. 14. Fifth Republic Constitution, Article 12: The President, upon consultation with the Prime Minister and chairmen of the two chambers, can dissolve the Parliament. 15. In the complex relationship between the President, the Executive and the Legislature throughout the French history, there is a constitutional custom worth mentioning. On June 25th 1877, President Mac-Mahon dissolved Parliament with the intention of changing the majority composition of the Parliament and nominating a Prime Minister of his own preference. However, the dissolution of the Parliament leaded ultimately to the same composition of parties and subsequently to Mac-Mahon’s resignation. The Mac-Mahon case created a constitutional routine for France: “if not accepting the majority in Parliament, a President shall then resign”. Such constitutional routine cannot be found in Taiwan, reducing the likelihood of cohabitation. 16. The current term for a legislator is three years, which may also influence cost considerations. Yet, this might not be the main reason which results in unfunctionality of the no-confidence vote. Worth mentioning is that in a near future with the new electoral rule for the next term legislative election, namely a four-year term and the single member district method, the cost of re-election might face more uncertainty. 17. Gary W. Cox and Frances Rosenbluth, “The Electoral Fortunes of Legislative Factions in Japan”, American Political Science Review, No. 87, 1993, p. 579. 18. Wang Yeh-lih, “The Political Consequences of the Electoral System: Single Non Transferable Voting in Taiwan”, Issues & Studies, August 1996. p. 96. Wang also points out that under SNTV, party identification is less important unless there is only one candidate in the district. More emphasis has been made on individual candidates when a party has many candidates competing in the same district. 19. See Yang James Jih-Ching, “Effects of Constitutional Amendment and Party Reorganization on Constitutional Framework”, Theory and Policy, July 2000, Vol. 54, pp. 199-218 (in Chinese). 20. Melody Chen, “Social alliance pushes for two vote election system”, Taipei Times, August 19th 2003. In this report, Chien Hsi-chieh, a DPP lawmaker and executive director of the Peacetime Foundation of Taiwan, cited a recent survey that revealed the average cost a legislative candidate has to spend during a single election amounts to NT$42 million”. A legislator's pay during his or her term totals, at most, NT$20 million, Chien said. 21. Despite the fact that the no-confidence vote in Taiwan has never been used, President Chen, after experiencing much legislative gridlock, has begun to consult the opinions of the opposition party in the Legislative Yuan. The recent 10 points consensus reached by Chen Shui-bian and Soong Chu-yu exemplifies such an attempt.

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Therefore, whether a no-confidence vote will be triggered and effect a lessening of the power of the President remains uncertain and requires further observation. 22. A popular Chinese saying goes, “No two suns in the sky, no two rulers for a nation”. 23. From 1949 when the KMT government moved to Taiwan, until 1987, due to martial law, the Constitution did not operate. 24. Chang Chun-hsiung, “Can we only expect ‘charisma’ without making any mistakes? Revise the Constitution but watch out for the turbulence that may result”, Lianhe bao (United Daily News), May 13th 1997, p. 15.

RÉSUMÉS

After the Legislative Yuan elections in December 2004, Taiwan’s political arena was, once again, echoing with recurring calls for French-style political cohabitation. Despite the similarity with the French constitutional system, the two systems differ in the gap between what is written in the Constitution in Taiwan and what is practiced. Why did cohabitation not occur in Taiwan? What has prevented cohabitation since President Chen Shui-bian’s election victory in 2000? This article sets out to analyse the above questions by comparing the ways in which Taiwan drafts its constitutional rules with those used in France. And special attention is paid to the gap between constitutional norms and principles and the application of the constitution in practice.

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Book Reviews

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Li Zhensheng, Red-Color News Soldier New York, Phaidon, 2003, 315 p.

Jean-Philippe Béja

NOTE DE L’ÉDITEUR

Translated from the French original by Philip Liddell

1 The title of this work is apposite since for once, among recently published books on China, the cover reference to Mao is not unwarranted. Indeed, Li Zhensheng’s photos take us back to the great moments of the “socialist transformation”. Those familiar with the special issues of Paris Match on China will be surprised. No consumerism, no bold-eyed models—it is the “Cultural Revolution style” that illumines the pages of the book. The ten men in swimming trunks reading the Little Red Book before springing into the water on July 16th 1968, in celebration of the Great Helmsman’s dip in the Yangtze two years before : perhaps one of them is today a businessman, a “Master of the Universe”, like those depicted on the business pages of our newspapers (p. 220). We should not forget that these images are of a not-so-distant past, or that the young people photographed are today in their middle years.

2 Thus we are travelling in time. But the book’s main point of interest is that, on the whole, these are official photographs for the photographer was no dissident. Far from it ! Employed as a photojournalist for the Heilongjiang Daily, his job was to express in pictures for the official press the key points of Party policy. Li has preserved these photos through the years—having accumulated tens of thousands of negatives and sent them abroad—through all those changes in the Party Line, and the downfall of so many leaders ; and it is this continuity—we could say, this obstinacy—that gives the book its originality and the documents their value.

3 Indeed, present-day China is noteworthy for its refusal to look events squarely in the face : when a new leader rises to power, or when policy is changed, China rewrites its history while suppressing the photographs that sustain the old version. Li Zhensheng gives us the impression he is showing us round Party Committee archives in China’s

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most northerly province, Heilongjiang. He was not shooting clandestinely when he photographed the “counter-revolutionaries”, their necks bent under the weight of placards advertising their crimes, or the “class enemies” each with a huge dunce’s cap proclaiming his identity. At that time, the Party was proud to parade the secretaries of the provincial committee as revisionist enemies who, with bowed heads, were making honourable amends in public view (pp. 164-165). Only the tender-hearted among the petty-bourgeoisie could be outraged by the humiliation inflicted upon Deng Guoxing and Yuan Fengxiang in the village where they were denounced as “rich peasants” (p. 50). Those of a truly proletarian mind could only rejoice at such a spectacle. As for the demolition of the temples (p. 101), the authorities were delighted by it, for it showed that Chinese people were ready to abjure feudalism.

4 Naked violence appears in many photos. Particularly the violence of young people towards the middle-aged. But, at the time, Peking was the Mecca for world revolution, not for world tourism. So the detailed narrative sequence showing the ordeal of the seven counter-revolutionaries and “thugs” (one of them had conspired to kill his lover’s husband, from the parade in town to the place of execution, will perhaps offend those of a sensitive disposition. But they were the daily bread of the People’s Republic. Moreover, Mao’s death did not bring an end to such practices, as is shown in the photos of Wang Shouxin’s execution in the outskirts of Harbin in February 1980.

5 In this book, an official photographer is publishing the official documents that were required of him over a period of ten years. The Party, which is accustomed to airbrushing history into oblivion and recreating it periodically, is here confronted by the reality of what it practised, and the results are explosive. Li Zhensheng is a talented photographer, and his attention to composition and lighting raise this atrocious document of present-day China to the status of a work of art : one through which, amid such unrestrained fanaticism, we perceive the occasional gleam of real human feelings.

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Edward Gu and Merle Goldman (eds.), Chinese Intellectuals Between State and Market London and New York, Routledge Curzon, 2004, 298 p.

Aurore Merle

EDITOR'S NOTE

Translated from the French original by Philip Liddell

1 This collective work, directed by two writers known for their work on China’s intellectuals1, undertakes to bring together with the classic problem of intellectuals and the state in China a further key notion : the market. Has the introduction of market mechanisms to the Chinese intellectual sphere changed the relationship between intellectuals and the state in the post-Tian’anmen period ? Has it been the source of greater autonomy for the intellectuals ?

2 To answer these questions, the book is divided into four parts. The first looks at changes in the public intellectual sphere. It tackles subjects as diverse as the unprecedented development of “non-governmental intellectual organisations” (Edward Gu), the influence of the market on China’s media output (Yuezhi Zhao), and some intellectual controversies that have appeared on the Internet (Gérémie R Barmé and Gloria Davis). The aim is to measure the extent of the changes affecting the environment within which intellectuals of the 1990s were operating.

3 Secondly, the writers examine the restructuring of links between the Party-state and the intellectuals : why, now that the reforms have allowed some relaxation of the state’s patronage of them, do the intellectuals prefer to be part of the establishment and to adopt a co-operative attitude towards the state ? Suzanne Ogden suggests that the state is willing to permit—as a safety valve—the expression of some intellectual criticism. She also stresses the ambiguous effects created by the arrival of the market

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and mass culture : ironically, these have increased the intellectuals’ dependence on the state. Richard P Suttmeier and Cong Cao2, basing themselves on a survey of 150 Chinese scientists, point to the growing commercialisation of research, the changing nature of bureaucratic intervention within the scientific sphere and, above all, the development of an academic culture endowed with its own criteria for evaluation and selection. Teresa Wright recounts the history of the Democratic Party of China, showing how intellectuals in dissident organisations were increasingly marginalised during the 1990s.

4 The third part is devoted to putting into perspective some ideological alternatives that have structured the intellectual public sphere in recent years : Xu Jilin looks back over twenty years of debate to show that the consensus among intellectuals during the 1980s exploded during the 1990s to reveal deep divisions, both intellectual and ideological. Timothy Cheek compares the historical essays published by Deng Tuo at the height of the Maoist period with those of Xu Jilin at the end of the 1990s, to reflect on the changing role of historians as intellectuals engaged with contemporary China. To understand the renewal of the liberal trend at the end of the 1990s, Feng Chongyi recounts the eventful and complex history of liberalism in China. In the fourth part, Baogang He sums up the new roles played by Chinese intellectuals confronted by the challenges of liberalism, social democracy, professionalisation and globalisation.

5 This book’s main contribution is to warn readers against any reductionist or simplistic vision of how China’s intellectual sphere is developing. In the tradition of work by Merle Goldman, Timothy Cheek and others3, the writers set out to show that the dichotomous categories in which Western writers characterise intellectuals—the dissident intellectual and the establishment intellectual—far from being opposed in the Chinese case can be two facets of the same reality. The writers even suggest that it is the figure of the committed intellectual within the establishment that could become the dominant model for the 1990s.

6 The perspective is also historical: while the writers concentrate on changes in the post- Tian’anmen period, they take equal care to show continuities with the preceding period and with history before that. This rigorous approach helps them to avoid the trap of newness and to place conflicts where one might not necessarily expect them : thus, Gérémie R Barmé and Gloria Davis advance the idea that the new forms of intellectual controversy, far from being the result of technological possibilities offered by the Internet, reflect the economic and cultural influence of Hong Kong and Taiwan.

7 Rather than setting in opposition, out of hand, the state as a factor of oppression and the market as one of freedom, the authors favour precise studies to disclose the contradictory and sometimes paradoxical effects of both upon intellectual output. Thus, Yuezhi Zhao shows that, in the Chinese media field, political propaganda and commercial propaganda are not so much opposed as complementary to each other. Richard P Suttmeier and Cong Cao also insist that the challenge facing the scientific community today does not lie in state-market opposition but in the combination of market and state mechanisms with the resources available to this community.

8 This book offers a subtle, complex and sometimes paradoxical view of the present-day Chinese intellectual community. This is achieved, the authors suggest, by depicting a period of transition strongly marked by uncertainty. However, by insisting mainly on the institutional developments affecting the intellectual sphere, the book gives little substance in the end to the intellectuals themselves or to their choices. Often

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describing the latter as a rational reaction to developments within their environment, the book does not enable us really to understand the revival of debate or the intellectual engagement during the period studied. Moreover, society itself is conspicuously absent from the consideration of this intellectual world in transition. Some articles do raise the question of where Chinese intellectuals stand in relation to the new social stratification ; some do mention the close connections between some intellectuals and the new economic elite created by the reforms, or conversely the rift that has opened between intellectuals and ordinary citizens ; but the question of links between intellectuals and rest of society is never really addressed. It so happens that the development of the intellectual sphere during the 1990s precisely corresponds to the explosion of social problems in China ; it corresponds also to the emergence and development of social activism—supposed to be a substitute for political activity— which arises exactly half-way between the state and the market. How do the intellectuals respond to these challenges ? What do they think about contemporary Chinese society ? Do there exist forms of intellectual engagement oriented towards action on society ? Tackling such questions may have added depth to the wide range of thinking within these pages.

ENDNOTES

1. See Merle Goldman, China’s Intellectuals Advise and Dissent, Harvard University Press, 1981 ; Sowing the Seeds of Democracy in China, Political Reforms in the Deng Xiaoping Era, Harvard University Press, 1994 ; “Politically-Engaged Intellectuals in the Nineties”, China Quarterly, No. 159, September 1999. See also Edward Gu, “Cultural Intellectuals and the Politics of the Cultural Public Space in Communist China (1979-1989) : A Case Study of Three Intellectual Groups”, The Journal of Asian Studies, 58, No. 2, May 1999 ; “Plural Institutionalism and the Emergence of Intellectual Public Spaces in China : A Case Study of Four Intellectual Groups”, in Suisheng Zhao (ed.), China and Democracy : The Prospect for a Democratic China, Routledge, 2000. 2. Cong Cao has published the complete results of his survey in a book entitled, China’s Scientific Elite, Routledge Curzon, 2004. 3. See Merle Goldman, Timothy Cheek, Carol Lee Hamrin, China’s Intellectuals and the State, in Search of a New Relationship, Harvard University Press, 1987 ; Hamrin, Cheek, China’s Establishment Intellectuals, M E Sharpe, 1986.

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Stephane Corcuff (ed.), Memories of the Future : National Identity Issues and the Search for a New Taiwan Armonk, New York, London, England, M.E. Sharpe, 2002, 285 p.

Christopher R. Hughes

1 The story is familiar enough : Taiwan is settled by people from the Chinese mainland, colonised by Japan, ruled by the KMT (Guomindang), nativises its political system through democratisation, only to be denied its rightful identity by an international society that privileges sovereignty over national self-determination. Yet, as this book makes clear, identity transformation in Taiwan has not been so simple, having been more of a gradually negotiated process with no clear goals and no clear outcome. The irony of the present situation is summed up when Corcuff observes with characteristic flare that “The frontier goes through the Taiwanese society itself, and as stated earlier, not all Taiwanese yet identify with Taiwan as a separate nation, for several complex reasons”.

2 On a number of issues the contributors to this volume are in agreement. All show a reassuring commitment to a pluralistic society and refrain from prescribing what Taiwan’s identity should consist of. They also wisely hold back from making any predictions as to the final outcome of this long history. As Rwei-wen Wu puts it, the Owl of Minerva is still waiting for the arrival of the dusk when it comes to concluding whether the “renegade province” will be absorbed into the motherland or “a new dialectic synthesis […] reconciles the mutually antagonistic Chinese and Taiwanese nationalisms into a union with separate sovereignties”.

3 There are also some important differences among the authors, though, which is what makes this collection so interesting to read as a whole. On the one hand, despite frequent notes of caution, many of the contributors are inevitably attracted to an implicit narrative of the suppressed nation realising itself through history. Rwei-wen Wu thus presents democratisation as the outcome of a synthesis between the strategies of a radical DPP and a reforming Lee Teng-hui, both committed to the goal of creating a

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new, sovereign, native-dominated democratic state ; Tsong Jyi-lin draws on opinion polls to demonstrate the trend of an increasing Taiwanese identity and decreasing Chinese identity ; Chia-lung Lin uses the same kind of evidence to propose that whenever animosity from China increases, Taiwanese consciousness rises. Even Corcuff himself finishes the work with a quote from Hegel, stating the inevitability of maritime countries achieving independence from continents.

4 An alternative interpretation emerges, however, from chapters that emphasise the weakness of Taiwanese national identity. Andrew Morris, for example, observes that when Taiwan was invaded in 1895, although the islanders were not too displeased to see the departure of the Qing administration, they were also quite indifferent to foreign rule by the Japanese. Robert Marsh’s chapter on public opinion trends in the 1990s produces conclusions that are at odds with other chapters that are based on the same kind of evidence. Whereas these argue that Taiwanese consciousness has grown stronger, Marsh remarks out that a mere one-fifth of the population favoured independence even after the military threats from the PRC in 1995-96. Ultimately, he notes, the large segment of swing voters could go towards either independence or unification, depending on circumstances in mainland China.

5 The substance of the chapters appears to have been written before the victory of Chen Shui-bian in the 2000 Presidential election, although the implications of that episode are discussed briefly throughout. The work has stood the test of time well, however, with most of the problems discussed remaining unresolved even since Chen’s second victory in 2004.

6 Some weaknesses have inevitably been brought into relief by events. Primary among these is the failure to explore in sufficient depth what Corcuff describes as “the pragmatism of the Taiwanese, who do not all want to risk their wealth on an adventure called nation-building or the Republic of Taiwan”. Other issues that Corcuff only raises in passing but which could have been acknowledged and explored more fully are the positive impact of the long period of economic growth under the KMT’s stewardship and the security provided by the United States, the role of Chiang Ching-kuo in promoting democratisation, and perhaps also the role of second generation mainlanders in pushing forward political reform and cultural pluralism. The need to supplement historical and sociological methods with more orthodox political science is illustrated above all by the way in which the DPP won the presidency in 2000 due to the division of the KMT by its feuding leaders rather than a burgeoning nationalism. The authors could certainly have drawn more widely on the now very well developed secondary literature in Taiwan studies to develop these themes more fully.

7 While narratives and identities are important, politics is also messy and full of accidents. It makes a nice ending to finish this book with a quote from Hegel on the inevitability of islands moving away from continents. Yet it may have been just as appropriate to end with his illustration of the cunning of reason by the parable of the man who sets fire to his neighbour’s house out of petty jealousy with the unintended consequence that he burns down the whole neighbourhood.

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Eleanor B. Morris Wu, From China to Taiwan. Historical, Anthropological, and Religious Perspective Monumenta Serica Institute, Sankt Augustin, Steyler Verlag, 2004, 274 p.

Benoît Vermander

NOTE DE L’ÉDITEUR

Translated from the French original by Philip Liddell

1 The title of this book is not very clear—and its purpose is scarcely more so. Judging by what we are told in the short introduction, the aim is to look at the religion of the Taiwanese people within its overall anthropological and historical context. The first chapter, based largely on Agricultural Involution by Clifford Geertz (1963), outlines the overall development of Taiwanese society. It depicts it as a model of modernisation that has maintained and sometimes even strengthened the family network, creating continuity between rural and urban communities.

2 The next four chapters provide generalised pictures of Taiwan’s anthropological context, its historico-political, economic and family development, and then of Chinese religious beliefs. There follow two detailed studies on three well-known Taipei temples, Longshan si, Bao’an gong and Xingtian gong . These chapters are probably the most interesting, in that they endeavour to establish a connection between the inner iconography and the economic and familial model of the population to whom the temple is addressed. Next, a chapter is devoted to the historical roots of the new religions (sectarianism), even though the range of new religions attributed to the White Lotus sphere of influence and other groups from the past is not clearly established. The final chapter offers some haphazard remarks on the contemporary religious landscape in Taiwan.

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3 While the subjects tackled are interesting, the book suffers from at least three major faults. Firstly, its subject remains undecided right to the end. The general chapters are really too eclectic and their sources are often doubtful (government publications and English-language extracts from the press). The two chapters on Taipei temples are meticulous in their iconographic analysis but sketchy when it comes to the real life of the temples and their management structure. Moreover, these temples have already been extensively studied and are well understood. Then, the sources are largely skipped over : with one exception (evidently a last-minute addition), all the titles date from before 1995 and the most important of them are a selection from the classic studies of the 1970s and 1980s. To take an example, Robert Weller is almost absent from the bibliography, Schipper, and Sasso too, are represented by only one article each, both dating from 1977 ; and more recent work, by Katz, Dell’Orto, Clart, Laliberté and others, is ignored. Lastly—and more seriously still—the sources are almost exclusively Anglo-Saxon : this means that Chinese-language contributions by Taiwanese anthropologists themselves are neither discussed nor quoted. This is astonishing, in a field where the local output of the past twenty years has been so abundant.

4 While the writer displays good knowledge and real sensitivity in dealing with the temples of the popular religion, no serious analysis is attempted of the Buddhist movements or the new religions. One would not make this objection if the subject of the study had been made more clear from the start. Admittedly, the book has the merit of showing that it might be possible to combine Taiwan’s socio-political, anthropological and religious developments into a comprehensive study. But while outlining a programme in this way, it falls far short of carrying it out.

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Melvyn C. Goldstein, Dawei Sherap, and William R. Siebenschuh, A Tibetan Revolutionary. The Political Life and Times of Bapa Phüntso Wangye Berkeley, University of California Press, 2004, 371 p.

Fabienne Jagou

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NOTE DE L’ÉDITEUR

Translated from the French original by Philip Liddell

1 This autographical account by Phüntso Wangye, the first Tibetan communist and founder of the Tibetan Communist Party (1939) before it merged with the Chinese Communist Party (1949), is a significant contribution towards understanding Sino- Tibetan relations during the first half of the twentieth century. The book reveals the intellectual journey of a Tibetan, a witness to the seizure of power by the Chinese nationalists and to the various attempts by his region (‘Ba’ thang) and by his province (Khams) to win independence. As a devoted reader of Lenin and Stalin, he goes on to give his practical experience of communism by outlining the stages—as seen from “inside”—of Tibet’s unification with China in the 1950s and its problems with members of the Chinese Communist Party. He ends with his years in prison and his rehabilitation.

2 Today, Phünwang is still faithful to his socialist ideals and convinced that the thinking of Lenin and Stalin may benefit the development of Tibetan society.

3 His account of a rare personal experience, based exclusively on Phünwang’s memoirs and edited in the first person, parallels Tsering Shakya’s book1 covering the same events on the basis of written sources.

NOTES

1. The Dragon in the Land of Snows : A History of Modern Tibet since 1947, New York, Columbia University Press, 1999.

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