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China’s Capitalist Development and its Implications for Labour with Special Reference to the Shenzhen SEZ By Apo Leong and Surendra Pratap, AMRC, Hong Kong, 2011 Introduction 154 hina is moving fast on the track of economic development. By all measures it is a unique path of capitalist development in the unique global political Ceconomy of the 21st century and with unique historical and politico- economic conditions. This development is also unique in the sense that even when decisively moving in well-defined directions to achieve well-defined goals, the state has trod very cautiously, experimenting at each step, as suggested by a Chinese saying – crossing the river by feeling the stones. The Special Economic Zones (SEZs) have been both the laboratories for these experiments and the models for China’s capitalist development. Various concerns have been raised about China’s development, its sustainability, and its impact on Chinese society and global politics and economics. Apo Leong and Surendra Pratap and Surendra Leong Apo There is no consensus among global think tanks on what will be the fate of this way of development. The majority of them present contradictory views, saying on the one hand that this development is unsustainable, and at the same time declaring China an emerging global power that will decisively change the balance of power in global politics if its strategies are sustainable. However, the major concern is the overall impact of this development on the Chinese people, on the Chinese working class. It may prove a sustainable development strategy for the ruling classes, and it may help the Chinese state emerge as a global power. But what does it mean for the people of China? Questions remain as to whether this development strategy can offer a sustainable, decent, and secure livelihood for the people, and whether it is going to build a democratic and equitable society with inbuilt systems for distributive justice. Chinese people are continuously raising these concerns. In last two decades there have been thousands of strikes by workers and incidences of peasant unrest, exposing the anti-people nature of these development strategies. The right to association and collective bargaining in China is highly restricted because of the one political party and one trade union systems. The emergence of organized protests by peasants and workers in situations of almost no political freedom reflects the brutal conditions that compel them to stage public demonstrations and face harsh state repression as a result. Despite these repressive political and economic conditions, we are witnessing new forms of organizing and struggle by workers and by the peasants. We, in the Zone (2) This study is an attempt to explore the above issues and contribute to building an overall understanding of China’s path to development. The objective of the study is to understand the sufferings, challenges and opportunities confronting 155 the Chinese working class movement by situating it in the broader context of the China way of development. The study focuses mainly on the Pearl River Delta (PRD) in southern China, specifically the Shenzhen Special Economic Zone. The study can be read as follow-up to our earlier book on the SEZs – We in the Zone (1998). Here we would like to thank NGOs, academics and workers in mainland China and in Hong Kong who helped us conduct this study. We are particularly indebted to Monina, Yuk Yuk, Henry, Zhai and Tony for their unconditional support of this study. A brief historical background -- 1978: forward to capitalism Development Capitalist China’s The present always represents both continuity as well as change from the past, and therefore an analysis of the present requires some analysis of the past. Hence, before attempting to analyze the character ofC hina’s road to development, let us briefly attempt to trace the historical roots of China’s development policy and strategy. After the 1949 revolution, when China started moving toward an overall socio- economic transformation, like all other colonial and semi-colonial countries, it inherited chronic problems of underdevelopment and distorted development. The semi-colonial mode of exploitation had led to de-industrialization wherein former glorious handicraft industries were destroyed and a huge population of artisans were compelled to move to rural areas, swelling the ranks of the rural proletariat or semi-proletariat. Therefore, the overall socio-economic transformation of China was not an easy task. Moreover, Chinese society after the revolution still faced continued political conflicts that affected economic development. Even so, the achievements of China’s socio-economic development up to 1978 were worth celebrating: 1. A significantly strong base of heavy industries that was mainly built with support from Soviet Russia in the first phase; significant success in rural industrialization in the later phase accomplishing the task of limiting the need for foreign technology, creating technical capabilities throughout the rural population; significant achievement in reducing the social and economic We, in the Zone (2) status gap between urban and rural populations, industry and agriculture and reducing the pace of urbanization;1 156 2. Income ratio between urban workers and peasants narrowed from 5.5: 1 in 1957 to 3.5:1 in 1975 and to 2.9:1 in 1979. This was despite the fact that the value added per capita rose much faster in the industrial sector than in agriculture (4:1 to 8:1);2 3. Food security and self sufficiency in grain were achieved (except in the 1959- 61 period, the Great Leap Forward period);. 4. By the end of 1970s, China’s health and education indicators were closer to the developed countries.3 But China was still a developing country and its GDP and per capita income were not much higher than other developing countries, such as India. One major difference was that unlike other developing countries, China was a more equitable Apo Leong and Surendra Pratap and Surendra Leong Apo society. The living standard of the Chinese people in terms of security of life, food, education, housing and health was higher than in most other developing countries, where during the same period a huge section of the population was compelled to live in chronic poverty with mass illiteracy. It was at this stage that the regime in China was changed and thereafter China moved on the path of pro- capital development. In December 1978, in the third plenum of the National Party Congress’s Eleventh Central Committee, an overall economic, political, social and cultural reform agenda was formally undertaken by the Communist Party of China. On the economic front this meant substantially increasing the role of market mechanisms and reducing government planning and control. Naturally, the reforms in all other spheres of society were to be framed in line with and to fulfill the objectives of these economic reforms. Before proceeding to analyze the different aspects of China’s way of capitalist development, it is worth mentioning that with a shift from socialism to capitalism, the socialist past became a curse for the people and an asset for the new ruling class. Those who sacrificed most in the socialist society were now in a worse situation. A whole generation of youth who had sacrificed their studies and careers to go to the villages to participate in building the new China were now at a complete loss. The social security system for peasants based on the commune system was gone with the dismantling of communes. The social security system for urban workers based on the danwei4 system was gone in one stroke We, in the Zone (2) with the introduction of the contract employment system. On the other hand, the socialist past provided vast opportunities for primitive accumulation by the new capitalist state. Huge accumulation was done by the abolition of the socialist 157 social security system. The State, as the owner of all land and other resources, was able to accumulate large sums of money from the sale of land use rights. The one-party political system, which was actually a negative factor in socialist society, now became an asset for the new capitalist state. After fully crushing the opposition within the party, the one-party system created an autocratic capitalist state without any strong political challengers. The socio-economic achievements of the socialist period were also favorable in accelerating capitalist development. The socialist developments in the decades between 1950 and 1980 insured reduced economic disparities and therefore provided better prospects of not only developing the country into a manufacturing hub but also into a huge market for industrial goods. The abundance of educated, disciplined and hard working labour was also an asset aiding the rapid growth of industry. The single, legal pro-state China’s Capitalist Development Capitalist China’s trade union system inherited from the past now acted as a tool of the state to insure effective control over labour. These factors insured a major flow of foreign investment when the economy was opened, since they offered prospects for more secure and sustainable profits. The new ruling class had already learned precious lessons from the negative experiences of the Great Leap Forward (1959-1961) and the Cultural Revolution (1966- 1976) and decided not to go too fast and on a large scale without experimenting first and slowly on a small scale. China’s Model of Capitalist Development The important features of China’s model of capitalist development can be listed as follows: A new kind of authoritarian state The Chinese state should not be seen as a simple authoritarian state. Actually many times in ‘form’ it appears more democratic than many so- called democratic states in the world, but in content and essence, it is the most authoritarian regime.