China part 1

The rise of the Dragon

China adopted Marxist ideologies on the rural economy, following a long civil war after WW1, contrary to Chain Kai-Shek’s capitalist choice. Mao won in 1949, and the Communist revolution was proclaimed in the People’s Republic of China. Chiang Kai-shek fled to Taiwan. Mao set up a Soviet-like regime. The Communist Party of China, represented by the peasants and workers, decided the governance. Mao adopted the idea of Karl Marx, where the communist society shares prosperity equally.

All lands from wealthy landlords were confiscated, and peasants worked in the newly formed collective farms. With no extra personal benefits, the production fell, following which, factories came up under the state control. The government decided on the wages and prices, again resulting in declined production. The free market was banned in 1950, and free enterprises were very few and despised as remnants of capitalism.

The government created communes and sent selected people, with about 5000 families in each commune. The Great leap forward 1n 1958 became the focal point of all farming, economic and manufacturing activities. The exercise, too, was a failure, and in the famine that ensued, many millions perished. The government reduced the commune sizes and restored the family farm plots, and incentivised them.

Mao launched the Cultural Revolution in 1966 and unleashed his Red Guards on all suspected of capitalist leanings. Once again, millions were killed, and the economy suffered in the ten years that followed. Mao died in 1976, and an intense power struggle followed. Peasants abandoned the collective farm’s idea and started selling their produce directly. Thus, the seeds of capitalism were sown in China. Though illegal, private activities helped reduce unemployment and increased revenues for the state. By mid-1980, half a million private enterprises functioned, defying the government.

Deng Xiaoping ushered an economic reform in 1978 to stimulate economic growth. Family farms could sell a part to the government and the other part to the free market. The stock market opened, and prices and wages were freed from government control. Deng let a few huge State-owned enterprises remain with the government despite its huge losses.

Special economic zones were created in Eastern Coastal China, and foreign investments were accepted. The economic boom began. Deng died in 1997. His successor, Jiang Zemin, recognised private enterprise necessary for growth for the ‘Socialist Market Economy. By 2006 Private enterprise contributed for half of China’s GDP.

By such massive changes and dislocation of people, many have lost their roots within China, particularly in rural and poorer western China. City suburbs featured factories, warehouses and dormitories under the same roof, often housing 5000 or more workers under the same roof. As a result, corruption and bribes became rampant.

An estimated 1 per cent of Chinese households control over 60 per cent of China’s wealth, while the country retains if communist label. Chinese Communist Party holds a political monopoly. The local elections are rarely contested and aim to eliminate corrupt officials or to deter social discord. Attempts to form student and labour unions were bludgeoned after the Tiananmen Square uprising in 1989. Religious and social groups like Falun Gong were outlawed as well.

Today’s China permits TV, radio and social networking, but all under the watchful eyes of the communist party. Reprisals are swift and harsh for the least indiscretions. The government ruthlessly crushed public protests by ethnic groups seeking independence before the Beijing Olympics in 2008 or during the protests by the oppressed Tibetans.

Xi Jinping became the President in 2013 and has thus consolidated the Chinese growth and power, unlike any of his predecessors. Described as a dictator, Xi has removed the term limits for the leadership. He has concentrated much power in many crucial positions like the National Security Commission, heading the committees on social and economic reforms and the internet.

China watchers may be confused if it is a Capitalist or a Communist country. Can the growth of private capital in China lead to collapse like the Soviet Union? Does the purge of the rich and famous like Jack Ma, Sun Dawu, or BingBing a sign of nervousness within the communist leadership?

More in my next part.

Sampath Kumar

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