The costs of growth
International Viewpoint #259 September 1994
THE HISTORY of post- revolutionary China can be divided schematically into four periods: the first from 1949 to the beginning of the crisis of the
1960s: the second corresponding to what was known as the
Cultural Revolution: the third represented by a tormented interlude between the end of the
Cultural Revolution and the beginning of the "new course"
(1978-1979): the fourth which has now lasted 15 years and the outcome of which is not yet predictable. Balance sheets for the the interpretations of international sources are often debatable. One could say, generally, that the state industrial sector, which grew enormously between 1950 and 1960, to reach 90% of total production, and which remained stationary in the 1970s, has progressively shrunk to fall below 50% (from 55% at the beginning of 1992). It is
Capitalism this way first three periods have been drawn up, from different perspectives. We will not return here on what we have already written ourselves on this subject, but rather will concentrate on assessing the fourth period up to the end of last year.2 LIVIO MAITAN
F IRST, let us recall two essen-
tial facts: China remains, overall, a backward country: in 1992, industrial income represented only 27.2% of gross national product (GNP), whereas the world average was 40%.
In this context, the country has in the course of the past few years experienced very high rates of growth. In 1993 GNP increased by 13.4%, while it is predicted to grow by between 9 and 10% in 1994. Industrial production grew by 21.1% in 1993, with steel production reaching 88.6 million tons. Significant progress has been made in several branches of agriculture (production of cereals reached 456.4 million tons, although there was a fall in cotton production). Foreign trade has also experienced unprecedented growth: the volume of importexport, which was US$20.64 billion in 1978 reached US$192 billion in 1993. The reputable Moody Investors Service, which periodically provides a classifica22 tion of the economies of different countries, last year promoted China to a higher (A3) category of countries, explaining that "China is politically stable and its economic growth is long term and irreversible."
It is a virtually unanimous opinion, that objectively these results have been achieved thanks to the profound structural changes made in order to introduce a "market economy". Let us examine more concretely to what this adds up to.3 So far as agriculture is concerned, from May 1993 the sale prices of products as significant as cereals and comestible oils have been "liberated" in 90% of districts. More generally, 90% of the prices of commodities will henceforth be determined by the market (Beijing Information [BI], no. 2, 1994).4 In 1993, moreover, the state fixed the prices of only 30% of raw materials. The means of production have also become the object of commodity transactions and a text of the Central Committee of the Chinese Communist Party (CCP) has fixed the criteria to follow in the matter of the functioning of the "labour market". Let us recall, finally, that financial markets exist and are expanding and that stock exchanges have operated in some townsfor several years.
Against this there is growth in the private sector. It is difficult to give precise figures, all the more because oscillations occur in the official sources and necessary, at the same time, to point out that the nonstate sector is not automatically synonymous with the private sector: there exists what is called the collective sector, which notably includes some non-private factories on a local scale and which has experienced a significant expansion (there is also the case of those workers who have bought the enterprises in which they work). According to the State Administration for Industry and Commerce, in 1993 the state sector embraced 55% of national product, the collective sector 35% and the private sector - all enterprises together, including those which are foreign owned -10%. Another source - the president of
1. See our book, 'Party, Army and Masses in China' (NLB, London, 1976) and our more recent essay, 'Il dilemma cinese', Data News, 1994.
2. Our article, which takes up some of the themes of our essay ll dilemma cinese, is based on documentation which arrived before December 1993, with some supplementary material integrated.
3. So as not to burden this article, we have avoided giving all the necessary references. We have used in particular Chinese publications - namely Beijing Information, China Daily and Business Weekly - and various international publications — the Financial Times, International Herald Tribune, Le Monde, Le Monde diplomatique, The Economist, Far Eastern Economic Review, China Quarterly, and the Fourth Internationalist joumal, October Review.
4. We have analysed the formation of special economic zones, the reappearance of the stock exchanges and the floating of shares in our article 'China since Tiananmen", which appeared in International Marxist Review, vol. 5 no. 4, Spring 1992. Some societies of shareholders have also been formed by peasants.
----- pull-quotes on this page -----
CHINA CON NONE - KONG
----- panel printed with this article -----
See also Ossi Rask, International Viewpoint, no. 248 & 249, September & October 1993.
International Viewpoint #259 September 1994 the National Federation of Industry and Commerce, Jing Shuping — has indicated that in 1994 there were *17 million industrial and private commercial holdings without employees where 29 mil lion people worked" and *238,000 private enterprises where 3.7 million people worked... The areas of reconstruction, services and retail trade are more than 80% private" (BI, no. 25, 1994). As for the collective sector, it accounts for 1.4% of production and 0.5% of industrial production.
However, the phenomenon which has drawn most attention and, which has sharpened particularly in the course of the last three years, has been the spectacular development of foreign investments and joint ventures. In 1990 there was already US$6.57 billion worth of foreign investments, yet the following year strong growth was registered. In the case of Shenzhen, Deng calculated at the time that foreign investments "represented a quarter of the economy". In 1993 these investments doubled in relation to 1992 and the number of foreign capital enterprises registered for the first time was 1.29 times the total of the preceding 13 years. In 1993 direct foreign financing rose to US$25.8 billion (BI, no. 14, 1994), which is well above what was predicted by both Chinese and foreign analysts. According to information published at the beginning of 1994, "In the first half of 1993, China had more than 134,000 "sanzi" enterprises (based on Chinese-foreign co-operation or solely foreign capital) and in the first quarter of the same year the creation of more than 62,000 "sanzi" enterprises was approved, more than the total of the 13 previous years, the total of direct investments from foreign businessmen reaching US$44 billion". (BI, no. 2, 1994). At the end of 1993, the balance sheet indicated that "the new agreements of foreign investment represented overall US$122.7 billion" and that US$36.7 billion had actually been invested (BI, n. 10, 1994). China has obtained, moreover, important foreign loans: in the fiscal year 1992-1993, it was the principal beneficiary of the loans accorded by the World Bank, to a total of US$16.5 billion. As we write, some international and Chinese press organs are indicating that in the first months of this year foreign investments will have fallen by 50%, mainly because of new fiscal measures and fears inspired by economic overheating (International Herald Tribune, 15 June 1994). It is very likely that this is no more than a conjunctural phenomenon.
We cannot sketch here an overall picture of the joint ventures and foreign enterprises. We will limit ourselves to recalling that, although the lion's share belongs to Hong Kong, Taiwan and Japan, very many other countries are also involved; from the European Union to the United States, to South Korea and even South Africa. Sectors of investment have undergone a constant expansion: consumer durables, electrical industry, computers, pharmaceuticals, foodstuffs, supermarkets and big restaurants, not forgetting the construction of roads and urban projects. Numerous foreign banks are also present. Unlike what happened in the first stages, the "new course" now extends to more and more provinces.
### Mechanisms
The growing integration of China into the framework and mechanisms of the world economy is confirmed by the expansion of its own initiatives into other countries. For a long time, China exported labour, mainly in relation to the infrastructural works that it carried out in the underdeveloped countries. More recently, it has redoubled its efforts not only to develop its foreign trade, but also to invest abroad, export capital and buy important enterprises in other continents. If we limit ourselves to 1993, the China International Trusts & Investment Corp. (CITIC), founded in 1979 by Rong Yiren, the son of a rich industrialist who emigrated in 1949, and presented as "a pilot enterprise in the march of the country towards a free market economy", has decided to further develop its activities abroad, notably in Australia, where it has been involved for some years, doubling its fixed capital and increasing fourfold its annual income (which in 1993 corresponded to 100 million Australian dollars). At the beginning of the year, it completed the purchase of Metro Meat, Melbourne, one of the biggest companies in the processing and export of meat. In total there are about a hundred Chinese companies operating in Australia.
For its part, Shougang Concord International Enterprises Co., which operates in Hong Kong as an associate of the Beijing steel enterprise Shougang Corp., has acquired a majority shareholding in other companies, strengthening its previous position. At the same time, it has made an agreement to enter into possession of a steelworks with the Los Angeles based California Steel Inc. Also, in a sensational operation, it has bought Hierroper, a Peruvian steel mine, profiting from the campaign of privatisation launched by President Fujimori. It is also interested in Siderper, another steel company. It is claimed that the Peruvian steel workers will adapt fairly well to Chinese management methods, even if there have been some dismissals (1,600 out of a workforce of
To take another continent, in Nakhodka, the first special economic zone in Russia, the Chinese, with around 100 projects, will be the principal investors. Finally, for some time, Chinese enterprises have floated shares on the Hong Kong market and at the end of July 1993, the above mentioned CITIC company began to do the same thing in the United States. According to some estimates, at the end of last year, there were 4,497 Chinese enterprises abroad with investments of US$5.16 billion (International Herald Tribune, 30 May
In the framework of this international economic opening up, it might be predicted that another classic phenomenon would be reproduced: indeed the People's Daily itself has denounced capital flight taking place under various forms. According to estimates, which it is obviously difficult to verify, the total capital involved would be around US$35 billion. It is obvious that all this has been facilitated by the fact that, to use the words of a collaborator of Beijing Information (no. 23, 1994), the state monopoly of foreign trade "has been broken down little by little".
"Overheating"
We will not analyse here phenomena of a more conjunctural, yet significant, nature, which could be seen in particular last year and have subsisted in 1994, namely economic "overheating" characterised by very rapid rates of growth, an excessive expansion of credit, investments of a speculative type and inflationary tendencies. All this has led the government and in the first place the Deputy Vice-Prime Minister Zhu Rongij to adopt a fairly drastic series of measures. In the context of its transformation towards a "market economy", China will face similar problems to those experienced by the capitalist economies and will have to take fairly classic measures to counteract "overheating" and the danger of inflation which flows from it.
In his report of 10 March to the National People's Congress Prime
23
International Viewpoint #259 September 1994
Minister Li Peng indicated the following as the obstacles and difficulties which have emerged":
"Investments remain excessive; prices increase at worrying rates; economic restructuring is not proceeding quickly enough; quite a few large and medium state enterprises continue to experience difficulties; public order leaves much to be desired in some regions and all kinds of unhealthy and deplorable phenomena continue; cases of corruption and abuse of power have been noted among a small number of state functionaries and formalism and bureaucratism manifest themselves in the institutions, which could compromise the links between the government and the popular masses."
Let us look more closely at the different problems. In the first place, the disequilibria between the different sectors of production have not been surmounted and, notably in the countryside, there are bottlenecks which have existed since the mid-80s. In addition to the traditional gap between industrial and agricultural productivity and the diminution in the last few years of the real profitability of cereal and cotton production" (Li Peng), some "new" factors have ben added as brakes on growth and obstacles to the satisfaction of the basic needs of the country. On the one hand, the development of construction and property speculation has led to a decrease in cultivable areas, while on the other, many peasants have tended to prefer growing the more profitable crops, to the detriment of cereal production. The lowering of the price of some products and the stagnation in prices of products bought by the state has also had a negative influence, as has the increasing percentage of youth joining the exodus from the rural areas. As an example of the kind of bottlenecks which are happening, while the consumption of animal products and milk is growing by 6% a year, production is only increasing by 1%. Moreover, the price increases in retail trade have benefited speculators rather than peasants. This is how the Economic Daily has summed up the long term consequences of such a dynamic: "The re-emergence of the economic gap between rural and urban areas will hinder industrial development in the next century. A large rural population, which lives on agriculture, will circumvent the market. A long term sluggish market, in turn, will block the growth of industry." (21 September 1993)
Secondly, disequilibria continues to exist, and indeed is worsening, in the 24 non-agricultural sectors. In the past, the disequilibria provoked lively debates on what should be priorities. During the first 13 years of the "new course", it was light industry which experienced fairly strong growth, whereas since September 1991 the accent has again been placed upon heavy industry and chemicals. More recently, the gap between the needs of the industrial sector and an increasingly deficient transport system has been denounced. A similar lack of synchronicity exists because of the insufficient development of the services sector, characterised by the Prime Minister as "the weak link of the economy". Because of an excessive territorial concentration, foreign investments will not suffice to overcome "the irrational structure of investments in the country." (China Daily, 15 July 1993) Moreover, the results obtained in some economic zones have been, at least in part, disappointing and even the foreign enterprises in what is in principle the most dynamic sector have often been in deficit: in 1992 according to an official of the Fiscal Administration, this was the case for 45% of 34,000 joint ventures taken into consideration.
### Handicap
A major handicap still resides in the fact that a fairly high number of basic industries which, in the words of Jiang
"constitute the pillars of the national economy", are still in the red; this amounts to 30 to 40%, or perhaps more, of the state sector. Problems of restructuring and reconversion are posed, including in the industries traditionally considered as exemplary (this is the case of Daqing, the most important oil centre). The leaders seem to be staking on a generalised stabilisation in the space of three to five years, following eventual recourse to concentrations and fusions. But there are problems to this, above all because it could penalise the healthy enterprises under the weight of those in deficit. In fact the conclusion must be drawn that the organic defects of a bureaucratically administered economy - that is, inefficiency of management, insufficient productivity, enormous waste, bad quality of products, and so on — are far from being elimina-
What is more, disequilibria is appearing from the point of view of satisfac tion of needs. Whereas on the one hand there is an abundance of consumer goods destined for the rich minorities and the "modern" needs of fairly wide layers are largely satisfied, the majority of the population, above all in the rural areas, lives in difficult conditions, of penury if not downright impoverish-
Finally, the "market economy" has generated financial speculation, practised often by the very same leaders who in principle denounce it. The banks play a premier role in this area, for example by assuring non-authorised loans without worrying too much about how they will be employed. Some illegal inter-bank operations have also taken place; according to Zhu Rongij, amounting to a sum of US$38 billion. The military can no longer claim to have clean hands. We are not speaking of the very significant economic activity of the army, which, according to official estimates, manages more than 20,000 enterprises employing several million workers; we allude rather to the fact that many in the military are engaged in totally illegal activities and in speculative property sales and that some have opened personal accounts with funds
This relates to another problem the existence of which has been confirmed by Li Peng himself, although he has tried to minimise its importance. According to an official of the public prosecutor's department, the three principal areas of economic crime are the financial market, property speculation and the futures market: and we should also mention embezzlements of a spectacular dimension (according to the Central Bank, in the space of 18 months US$28 billion were purloined from public funds!), In fact, corruption prospers, because on the one hand suitable legislation for a "market economy" does not yet exist and, on the other, more generally, to the extent that, in a bureaucratised transitional society, socio-economic ten-
5. The percentage of large state enterprises which are in the red or in crisis varies according to the sources and the period to which one is referring. According to the Bureau of Official Statistics, at the end of March of this year, around 50% of the enterprises in question were in the red, whereas a generally more optimistic balance sheet was drawn up two months later by the director of the Commission for the Economy and Commerce (Bl, no. 24, 1994). Last year a major crisis struck the steel making centre of Wuhan, with some serious repercussions for employment (International Herald Tribune, 6 May 1994).
6. A big problem is caused by those commodities which are not sold because of their poor quality (for example, at the end of May 1991 their value was 200 billion yuan).
7. According to Beijing Information (no. 1, 1994), between January and September 1994, whereas the average income of urban citizens grew in real terms by 12%, the income of peasants rose by only 5%. Li Peng, in his report of March 10, furnished some slightly different figures (income rose by 10.2% in the cities and 3.2.% in the countryside). But it is incontestable that the gap between town and country has grown of late.
International Viewpoint #259 September 1994 dencies which are incompatible in principle with formally existing law and relations of property develop almost physiologically.
Finally, the state suffers the consequences of two other phenomena which are frequently denounced. Firstly, it loses considerable sums because of a widespread black market in the traffic of cigarettes, the counterfeiting of cassette tapes and the illegal trade in gold. Secondly, tax evasion is quite widespread: according to the minister of finances, because of this evasion, the state has lost nearly US$17 billion.
The living conditions of the population in the countryside - where 900 million people and 70% of the active population live — have indisputably improved in the 1990s. Nonetheless, far from narrowing, differences have been accentuated: in certain provinces in particular, there are peasants who enjoy incomes ten or twenty times the average, but at the same time broad layers of poor peasants; Further, following the growth of productivity and the progress of mechanisation, the number of agricultural wage workers has increased, and the rural exodus, notably since 1988, has reached gigantic dimensions. At the beginning of the 1990s, it was calculated that there was a "surplus" population of 120-130 million. At the beginning of 1994, "in the Chinese countryside, the active population represents 400 million people, of which 200 million are surplus, and moreover, this number will grow by 10 million a year, which will make 250 million by the year 2000" (BI, no. 1, 1994). It is above all this rural surplus population which is at the origin of another major phenomenon, that of the itinerant population. It was estimated in early 1991 that this population was 6080 million strong and similar figures have been advanced since then (in fact, it is probable that there has been an increase). Some oscillations in the overall rural population have been provoked by variations in employment in the enterprises situated in the countryside, which have suffered conjunctural vicissitudes and sometimes have sent back some of their workers to their region of origin. A classic phenomenon, often mentioned in the official texts, is that of "the scissors", ', that is, the growing gap between agricultural prices — relatively stable, notably for cereals and cotton — and industrial prices, which tend to increase. Moreover, according to Agriculture Minister Liu Jiang, in the course of the four decades after the revolution, industrial growth has been four times more rapid than agricultural growth. As for the incomes of the peasants, calculated at constant prices from 1980, they diminished between 1986 and 1990; on the other hand, they increased slightly after this, notably in 1993 (+ 3.2%). One could say more generally that the disequilibrium between the towns and the rural areas, far from reducing, has tended to increase.
### Negative
To the negative effects of certain economic mechanisms it is necessary to add negative factors of a socio-political nature. For some years, the official sources themselves have signalled often enough the fact that, owing as much to the frequent financial difficulties experienced by the State as to the off-hand practices of the banks, products bought from the peasants were not regularly paid for: peasants were given certificates or honorary notes which could later be converted into money. It is understandable that those affected were not too keen on such procedures. Neither were they too keen on the fact that the local authorities arbitrarily imposed payment of all sorts of taxes and sometimes demanded services which were not paid for. In June 1993, the State Council forbade such practices, but often enough the local officials do not take account of central decisions and abusive practices have not disappeared. It is unsurprising that the peasants have not passively accepted such a situation. There have been mobilizations in protest and sometimes actual rots (in 1992, there were around 200 "incidents" and in the spring of 1993 around a hundred "riots"). The vice-president of the permanent committee of the National Assembly made the following comment: "The Chinese peasants are tolerant; they only revolt when the roads are barred; but if they do revolt, the consequences are unimaginable." (BI, no. 27, 1993)
The working class has also experienced some processes of differentiation in the course of the 1980s and will see more in this decade. The great majority, continues to be located in the state sector; their income has not changed drastically and remains modest.º The effects of inflation on its purchasing power have been compensated for by some partial wage increases or by forms of additional renumeration. In 1993, provisional measures for a wage freeze were introduced in some sectors.
A problem which has been debated concerns the hiatus which has been created between the great majority of workers and those in the joint ventures -more generally, the private sector, and in particular in the special economic zones. These latter are often better paid. However, the basic wage only corresponds to 60% of the overall wage and, what is more, these workers do not enjoy all the traditional social guarantees, such as stability of employment. According to official denunciations, the foreign partners do not always respect their employees. According to a British author, working conditions imposed are sometimes comparable to those of the first phase of capitalism (International Herald Tribune, 13 July 1993). Recourse is also made to illegal hiring: for example, in the Shenzhen zone, 500 enterprises have been implicated in this. In addition, in recent years there have been numerous accidents at work, some very grave, and usually the result of non-respect for the formerly existing safety at work regulations. For the most part there are no trade union organisations in the foreign or joint venture enterprises, where around 6 million people work; this is why the official trade union federation has decided to prioritise the construction of branches in this sector in the next two
Degradation
More generally, it is the progressive degradation, if not the suppression, of the post-revolutionary social guarantees, and of the danwei (work units) system, which preoccupy the workers. This system guaranteed not only stability of employment, but also cheap housing, social services and low-priced consumer goods. The managers, with a wider margin for manoeuvre, tend to erode, if not progressively eliminate, the social costs of the enterprise; notably, the enterprises in crisis have already begun to annul subsidies to hospitals, schools and various services. At the beginning of July, a new labour law was introduced; we have only received a journalistic resumé of it at the time of writing. The most important measures are: the ban-
8. We will not dwell here on two major problems, demographic growth and the deterioration of the environment, which we mentioned in our article "China after Tiananmen". In 1993 the Chinese population was officially estimated at 1,185,17 million or 13,460,000 more than at the end of 1992. So far as the environment is concerned, according to some estimates, the abuses committed are costing the country the equivalent of 15% of its GNP each year.
9. At the end of May 146,770,000 non-agricultural workers were registered, 108,159,000 in the state enterprises.
25
International Viewpoint #259 September 1994 ning of work for children of less than 16; one obligatory rest day a week; women are not obliged to work beyond the seventh month of pregnancy and are entitled to a maternity leave of 90 days; women are forbidden to work in the mines and other employment of this type; the formation in the enterprises of committees to settle conflicts, composed of leaders and workers' representatives. At the beginning of this year, norms fixing a maximum of hours worked were introduced; 8 hours per day and 44 per week (Financial Times, 7 July 1994). We have mentioned above the phenomenon of the rural surplus population. Indeed, a so-called surplus population also exists in the urban economy. In 1991 it was calculated that the "surplus" workers amounted to 20 million and that each year 10 million youths flowed into the labour market. In 1993, it was calculated that 3.4% of the active population were unemployed (in some sectors it reaches 10%). An already quoted article (BI no. 1, 1994) explains that "in the towns and the cantons, another 8 million people are seeking work every year, and there will be 60 million by the year 2000. In the state sectors (....) 10 million employees are going to lose their jobs, which means that by 2000 China will have 320 million people seeking employment". According to another article in the same review (Bl. no. 29, 1994) by the end of the century there will be 490 to 540 million surplus workers in the rural zones. The enormity of the problem requires no comment.
According to the information at our disposal, there have not been in recent years any workers' mobilisations of any great significance, nor episodes comparable to those which marked the second half of the 1980s. Nonetheless, there have been strikes to demand wage increases and improvements in working conditions. For example, according to a Chinese newspaper, strikes for demands of this kind took place in September of last year, at Tianjin, in enterprises owned by Japanese and South Korean capital. A trade union reporter alluded, for his part, to strikes in five enterprises in Dalian in 1992. In the same town, strikes have taken place this year against foreign-owned companies. Teachers have protested because they have not received their salaries or been paid with certificates, the sums destined for payment having been used for other purposes by the local authorities (China Education News, 9 November 1993). According to governmental sources, the number of conflicts submitted to arbitra26 tion increased by 52% in 1993 and, according to the trade unions, there were in the same year 15,000 conflictual incidents (strikes, protests, petitions, sabotage, and so on).
It is fairly difficult to draw up exhaustive analysis of the changes currently taking place in other layers of Chinese society. It is only possible to draw out some general tendencies.
### Middle class
In the first place, in the context of what has happened in the past 15 years, middle class layers have been enlarged and strengthened. This is on a broad scale, extending from small and medium traders to professionals and economic operators, at the margins of capitalist sectors. In the area of commerce, there has been a spectacular growth of small traders, including itinerants' who sell only one commodity. In the professional sector, there has been a spectacular increase in the number of lawyers: 50,000 are now officially registered and the figure is predicted to rise to 150,000 by the end of the century. These protessionals have formed their own private companies (more than 4,000 of them) which are demanding autonomy from the government. Another category, banished after the revolution, has reappeared, namely brokers, mediators, and so on, who are very active in a series of areas (advanced technology, cultural activities, publications, and so forth). According to a Tianjin newspaper, there are 69,400 people employed thus, of which 24,400 are officially registered
Finally, the "new course" has given birth to the new rich, who can lead an opulent life which bears no comparison to that of ordinary mortals. Some very palpable differences in standards of living had constituted a permanent trait not only under the old regime, but also in the post-revolutionary period: after the disappearance or banishment of the old dominant classes, the bureaucracy usurped all kinds of privileges, which were the subject of live polemics in the first phases of the Cultural Revolution. Now there is new phenomena: real bourgeois layers are appearing, even if presently in a limited fashion, and at the same time a symbiosis is taking place between these layers and some sectors of the bureaucracy, for example the children of old leaders exploit their power to set up private business affairs with which they associate themselves more or less formally. There has even been a reappearance of the old dominant classes. For example, a well-known entrepreneur is Rong Yiren, whom we have already mentioned, the son of a capitalist who fled in 1949, whereas Yeung Chun Kan, an old shark from Hong Kong, has returned to his home town, Huizhou, and invested there with success.
We have already referred to flight of capital and Chinese investments abroad. Some quasi-symbolic episodes have also been reported in the area of consumer goods. In September 1993, the Chinese newspaper Business Weekly informed its readers that 18 Chinese citizens, for the most part independent businessmen, had travelled to the United States to visit properties which they had bought in Florida. It seems, according to the same source, that the price of property there is less than that of a modest apartment at the centre of Peking. Why then not profit from this particular expression of the law of combined and uneven development? On the other hand, for "normal" citizens, the problem of housing has become acute. The government wishes to put an end to the situation where housing was very cheap, increase rents and even sell houses which are State property. In fact, some first steps in this direction have been made, driving up rents and the prices of houses. Moreover, although there is a shortage of housing, some flats for rent remain empty and others, newly built, cannot find buyers and also remain unoccupied.
### Changes
Despite value judgements, it is clear that the "new" course has not led to substantial changes in the existing structures and political mechanisms.
In fact, the sectors of the dominant layer which are most directly linked to the central State and party apparatuses have not ceased to exercise their determinant control, in alliance with the military hierarchy. The mass organisations - the trade unions, the women's federation and the youth organisation -remain explicitly subordinated to the directives of the Party. The National People's Assembly itself, where there is some differentiation and conflict of opinion, still continues to take decisions in the framework fixed by the leadership organs of the CCP. The measures recently aimed at revitalising the consultative conference of the Chinese people, which included having non-Communist parties and formations (in truth shadow organisations) did not constitute a real change either: the conference remains, as its
International Viewpoint #259 September 1994 name implies, consultative, and under the control of the party. Moreover, the decision to resort to repression in June 1989 has never been the object of the least self-criticism: on the contrary, it has been made clear that, if necessary, the same would be done again. In short, the current regime, while differing from the three other phases of the post-revolutionary epoch, remains characterised by an absence of political pluralism; it is a form of enlightened authoritarianism or authoritarian reformism.
### Conceptions
The general conceptions of the leading group were reaffirmed at the 14th Congress of the Party, in October 1992. In the report of Jiang Zemin, the principal text adopted, one reads: "The reform of the economic system has the goal of creating and gradually ameliorating a socialist market economy, while maintaining as principal forms public property and renumeration according to labour, and while permitting the coexistence in a complementary fashion of other diverse regimes and modes of renumeration. The reform of the political system seeks principally to develop socialist democracy, thanks to the perfecting of the system of popular assemblies, and also to reinforce multi-party co-operation and consultation under the direction of the Communist Party." To eliminate any ambiguity about who effectively holds power, the reporter added: "Everything depends on the leadership of the party". Significantly, Jiang Zemin is at the same time president of the country and Secretary-general of the Party
Although the central political no longer escape such a dynamic. According to its daily newspaper, there are already some officers who "instead of preoccupying themselves with the defence of the country and of socialism, attend to their private interests, indulging in all kinds of trafficking, disobeying political orders, and establishing shady alliances with the civil authorities in the provinces."
"New development"
There is little happening on the theoretical, or more correctly ideological level, despite the claims of Jiang Zemin that the concept of the "planned market economy" represents "a new development of Marxist political economy" The above mentioned report to the last Congress was, in the last analysis, purely descriptive: "The socialist market system seeks to make the market, under the macro-control of the socialist state, play a fundamental role in the allocation of resources such that economic activities correspond to the demands of the law of value and adapt themselves to the fluctuations of supply and demand." However, if one accepts the idea that the "fundamental role" in the allocation of resources belongs to the market, the logical consequence can only be to renounce the plan, or transform it into a complementary instrument, as is the case with "planning" or "programming" in the capitalist countries. This parallel has been explicitly advanced, by Deng Xiaoping as well as
It is difficult to envisage what might happen over such a long timescale. It is possible, on the other hand, to attempt to illustrate the significance of what has happened up until now and the dynamic of the tendencies which now operate. That will be the object of a second article. *
VERS JE bureaucracy has not lost its hegemonic
CAPITALISME role inside the dominant layer itself, this does not mean that there has been no change. Beyond the formalities, a growing power of decision now belongs to the powerful local bureaucrats who have more significant room to manoeuvre than in the past. An analogous dynamic works to the advantage of the bureaucratic economy (managers, technocrats and so on). A phenomenon which is also important, although, for the instant, not of a comparable breadth to analogous phenomena in the former USSR or in eastern Europe, is the symbiosis (or at least the convergence of interests) between the leaders of the political, administrative and economic apparatuses and some embryonic capitalist layers: more and more clear differentiations and increasingly sharp conflicts will inevitably occur on this terrain. The army can
Jiang Zemin.
In fact, despite appearances to the contrary, the Chinese leaders continue to act in a fundamentally empirical fashion, and their speeches
. > for the most part do not go beyond common sense. A declaration by Li Peng, in August 1993, is a good example: "China is still on the road to development and it will take some decades to attain the level of countries of medium development because of its large population and its weak economic base."
YEL
27