THE PARADOX OF CHINA’S POST-MAO REFORMS
CHAPTER 8 -- THE CHANGING ROLE OF WORKERS 9MARTIN KING WHYTE)
The great irony of our age is that the proletarian revolution spelt not the downfall of capitalism but the state socialism (as evidenced in East Europe and Soviet Union in 1989-1991).
China’s Workers in the Era of Mao
The post-1949 economy produced an enlarged Chinese proletariat – from approximately 9 million workers of all types 1n 1949 to 29 million workers in state industry alone by the beginning of the reform period.
An important legacy of the Mao era was the promotion of rural industrialization – a growing proliferation of small-scale factories employing villager personnel. China’s workers in the Mao era were overwhelmingly concentrated in the cities. In the Mao era, private firms and foreign-owned/joint venture enterprises were virtually non-existent. The treatment of workers in urban collective enterprises increasingly approached those found in state enterprises. As a result of this convergence, a certain uniformity in the lot of Chinese workers had developed prior to the reform.
Industrial organization and worker life in China during this period bore many similarities to their counterparts in the Soviet Union and Eastern Europe: for example, workers in general enjoyed a high security of employment, a fairly broad range of fringe benefits, and wage levels that often surpassed those of lower whiter-collar workers and professionals, another contrast with the situation in comparable capitalist states. Chinese workers, as those in Easter Europe, shared the propaganda image of being the leading class, though they had little ability to protest or resist abuse.
There were key differences: for example, in labor-short East European socialist states new workers were continually recruited from the countryside. In labor-rich China after the 1950s, it was extremely difficult to move from farmer to worker status. Even the limited exception of temporary workers hired from the countryside by urban factories received few of the benefits of regular workers, and continued to rely on their home production teams for grain rations. China, unlike other socialist states, had no real labor market. Individuals could readily change jobs even when faced with intolerable conditions or treatment. Mao’s mobilization of workers against experts, intellectuals, managers, and even party officials also had no clear counterpart in Easter Europe This might have led Chinese workers to take more seriously the claim that they were the leading class.
The absence of market distribution of most basic goods and services made Chinese workers more dependent upon their work units than was the case in Eastern Europe. Furthermore, the political control system and monitoring of the private life of employees were more pervasive in China than elsewhere, making personal autonomy and privacy virtually impossible. These features contributed to greater dependency of workers upon their firms and their superiors.
The Strategy and Timing of Reform-Era Changes
A large number of changes have fundamentally altered the nature of China’s working class since 1978. These changes are of two types: 1. changes that altered the nature of working-class organization and experiences within traditional state and collective industrial firms; and 2. changes that produced new segments of the working class outside of these sectors.
By trhe 1990s it became increasingly difficult to generalize about the nature of both sets of changes, because they very nature of the reforms heightened local governmental and firm autonomy. This autonomy increasingly generated variation within each type of enterprise in the ways in which workers were hired, paid, organized, promoted, demoted, and fired.
China’s Quasi-Capitalist Industrial Firms
The most dynamic sector of the Chinese economy since 1978 was the township and village enterprises (TVEs). Employment in rural firms has increased from about 19 million at the onset of the reform period to around 120-125 million in the mid-1990s.
The life of a worker in a TVE is very different from that of the cultivators who worked in village-run enterprises during he Mao era. No longer are there efforts to cap the growth of non-agricultural employment. Village leaders strive to establish and expand local enterprises as rapidly as possible, even if this means hiring outside labor for either factories or fields. Work points and production teams ended with de-collectivization, and those employed in TVEs generally receive cash wages, often in the form of piece rates. In many cases they receive nothing in the form of fringe benefits, housing or subsidies.
One reason that TVEs have been so much more competitive than China’s state enterprises is because of this ability to exploit workers, thereby keeping wage and benefits expenses to minimal levels which state firms cannot match
Two key factors undermine the power of TVE workers to demand improvements: 1. the heavy stress local authorities place on attracting new investment and making local TVEs profitable; and 2. there is a large reserve army of the unemployed. Most rural cultivators would prefer appalling working conditions to a life of agricultural toil.
The other major type of new industrial employment is the various versions of foreign-owned and joint venture firms. The most important distinction is between thos firms established with Western capital versus Asian capital. Broadly speaking, workers in foreign-owned and joint venture firms established with Western capital treat their workers somewhat better than do their counterparts in state and collective firms. Firms established with capital from Hong Kong, Taiwan, or South Korea, treat their workers much more poorly.
The various types of non-state, non-collective industrial forms that have mushroomed as a result of the economic reforms reveal considerable diversity within and across types of firm. At one extreme are firms in which workers are generally treated substantially worse than their counterparts in state factories; at the other extreme are enterprises in which workers are substantially better off than their counterparts in both state and other private firms.
Reforming State and Collective Firms
There are three strategies:
1One strategy is to view such huge state industrial enterprises as hopeless and try to either sell them off to private or foreign owners, or close them, while nourishing newly emerging private enterprises and entrepreneurs. (This approach was adopted by many former East European satellite states.
2A second strategy is to keep state firms operating mainly for political reasons – to avoid the potential unrest unleashed by sending much of the working class into the unemployment lines.
3A third strategy is to preserve socialist firms and even allow them to expand while they are increasingly forced to compete with the quasi-capitalist sectors of the economy. China has mainly followed this approach.
It is necessary to consider the reform of state and collective firms in three stages:
1The 1978-1984 period emphasized eliminating Cultural Revolution practices from industrial enterprises. The effort to repudiate the Cultural Revolution legacy in state and collective firms initially focused on remuneration issues. The ban on materials incentives was repudiated, and various bonus and piece-rate schemes were implemented. The wage freeze was also rescinded, and large scale promotions and wage increases were carried out. Also, China’s leaders, recognizing the potential political dangers of consumer frustrations, began a series of major efforts to ease urban shortages of housing, food, and consumer goods.
2The period of 1984-1992 saw reforms which subject firms, rather than individual workers to a more fully marketized environment. Existing firms were given increased autonomy to operate outside of the state allocation system. Some state firms even experimented with contracting management rights out to private entrepreneurs, who could enrich themselves if they increased firm profitability. Firms that were successful in finding new markets and in acquiring the resources to increase production to meet new market demands were able to retain portion of their profits for spending internally, in part on their own employees. Firms were able to enter into joint ventures with foreign firms. Successful operation of such a venture again yielded funds that could be expended internally.
3The period of 1992 to present: The third period of reform of state and collective firms launched in1992 was connected with Deng Xiaoping’s `Southern Tour’. The dismantling of the structural elements of the system of state sector job security and benefits accelerated.
Official policies have been adopted to give managements in state industrial firms broad autonomy to hire and fire workers without relying on approvals from labor offices or supervising agencies. At the same time, the ability of individuals to obtain, quit, and change jobs on their won initiative has increased. The system of state assignment of jobs to college graduates has been reduced to a marginal status.
As increasing number of urban residents either start their careers in private or foreign employment or switch out of state and collective firms into these sectors, the rosters of state and collective factories are being filled increasingly by migrants from China’s countryside. By the 1990s increasing numbers of rural migrants were working alongside urban co-workers. This growing trend is attributed to the increasing difficulties some kinds of state factories (e.g. in textiles) have in recruiting urban employees, with dirty and low status jobs disfavored.
The reforms are also transforming the wage systems and fringe benefits provisions under which state and collective sector workers operate. Enterprise management has been given substantial autonomy to experiment with and implement new wage systems. On the other hand, systems of fines and pay deductions have also been implemented regarding a whole range of worker behavior, including matters ranging far and wide beyond production output and quality.
With these changes as well as the exodus of some state workers to foreign and private firms and their replacement by rural migrant workers, the sharp distinctions in the treatment of workers by type of firm are being reduced.
Worker Discontent and Its Potential Implications
A combination of liberalized policies, foreign investment, and spectacular growth rates has produced a significant expansion of China’s working class since 1978. This expansion has occurred across state, collective, TVE, and foreign-funded sectors, particular in the latter categories.
The decline in the status of China’s workers is the result of (1) the erosion of the privileged treatment of workers in state firms, and (2) the fact that state firms had to adapt to competition from private and foreign-funded firms and from TVBEs.
This gave rise to many types of industrial conflicts including complaints, group petitions,
Slowdowns, strikes, acts of sabotage and physical violence against managerial personnel. However, despite rising number of industrial conflicts, the new reform seemed to forge ahead without effective resistance.
The implications of the increased internal complexity of the Chinese proletariat can be viewed as a source of conflict rather than stability. The resentment by members of one group against unfair treatment compared to the members of another group decreased the likelihood that they will mobilize to effectively challenge the system.