May 15, 2006    Volume 13, No. 10

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Are 800 Million Chinese Peasants On The Threshold Of Opportunity Or Oblivion?



BY RICHARD McCORMACK richard@manufacturingnews.com


Social unrest in China is growing at a fast rate, but what it means for the political stability of the country is up for debate.

Last year, the Chinese reported 87,000 "mass incidents," of unrest, or about 240 per day. This is up from 58,000 incidents in 2003; 40,000 in 2000; 24,500 in 1998; and 8,700 1993. "This is not something [China's government is] dealing with occasionally, but on a constant daily basis," says Joshua Muldavin, professor of Asian studies at Sarah Lawrence College. But little is known about most of these events other than that they disrupt public order.

For Muldavin, who has lived in the Chinese countryside for years, these incidents cannot be ignored and portend a crisis extending far beyond China's borders, potentially impacting large portions of the globe, including the United States.

But Albert Keidel, senior associate at the Carnegie Endowment for International Peace, does not agree. Instead, he sees the growing number of public incidents being the result of a society that is adjusting to the deregulation of its economy, the rise of markets in setting prices, the elimination of subsidies and a concurrent improvement in productivity.

"This in my mind as an economist is a healthy development because it is creating incentives and moving people in the direction of being productive and rewarding those attributes that are also productive," he told the United States-China Economic and Security Review Commission recently. "Those that have an education are now finding that their education correlates with income. Those who are working hard find that that hard work rewards them including entrepreneurial activity." Millions of Chinese are now able to move to new jobs voluntarily, which is good in a dynamic, changing culture that is lifting people out of poverty.

"How can so many demonstrations occur in a society that seems to be in the public image an authoritarian regime that doesn't broach any criticism?" Keidel asks. "That portrayal of China today is outdated. There is a great deal more flexibility and freedom in the life of an individual in China, as long as one doesn't contribute to what is seen as the demise of the Party's control in the country....The overall trend is a healthy one and I don't think it portends a breakup of this political system."

Not so, counters Muldavin, who calls the situation in China a "crisis" for the vast majority of Chinese unsure about their future. The rapid growth of China's economy "has been built upon a base of environmental destruction and decay," he says. "In this process, the state has lost much of its legitimacy with the country's majority and now it's challenged by direct and also indirect forms of resistance. As China's global integration proceeds, this paradox of growth built on decay and the resulting rural crisis has created a shaky foundation for arguably the world's most important new superpower."

By trying to grow itself out of its problems, China has only exacerbated the tensions that exist in rural areas where the majority of its population still resides. While economic growth has helped 150 million people move into the middle class, there are still 800 million peasants living in the countryside, 400 million of whom have seen their incomes stagnate or decline.

"This has important implications not only for China but also for the world," Muldavin told the U.S.-China Commission. "There are two Chinas now: one that the world pays homage to and the other that the world has pretty much forgotten about. One is for investors and those interested in trying to go in and make money. They set up factories and use China as an industrial platform for the world. And the other, in this rural hinterland, is a very different story. In these areas, the reforms brought initial increases in income but were accompanied by serious problems of subsequent stagnation, declining production and the rising peasant risk that resulted as they depended increasingly on household labor and declining sized plots of land for their livelihood."

In the southern part of the country, land is being seized for factories, roads, waste dumps, housing projects, power plants and dams, leaving peasants with what Muldavin calls "two-mouth lands" that are unable to feed a family of five. The loss of farmland is "forcing many members of the household to join the 200 million workers who on any given day are wandering the roads of China looking for someplace to work."

Some families have lost even that small parcel of land. There are now at least 70 million landless peasants with little means to support themselves and no collective welfare programs left. "The enormous number of landless or land-poor peasants means that the Chinese state is struggling not only to maintain legitimacy, but that this fundamental aspect harks back to a previous [1949 Moaist Revolutionary] period in China's history and therefore raises some really significant challenges," says Muldavin. "The peasants and rural workers have seen the state increasingly side with the newly rich over the past two decades and that leads to incredible amounts of disenchantment with state policies."

The benzene chemical spill into the Songhua River in November impacted millions of rural residents who weren't told of the situation. This type of environmental disaster is happening frequently in China. "The world as a whole, in varying degrees, I would argue, is implicated in this predicament and actually can't afford to pretend otherwise," Muldavin contends. "China's rural hinterlands are in essence the engine as well as the dumping ground of China's unprecedented economic growth. These rural areas provide the country's booming cities with cheap unorganized labor principally drawn from extremely poor peasant communities in the midst of their own social and environmental crises. It's also here that the most toxic industries are located out of sight of the world's media. Rural peasants labor in some of the world's dirtiest, most dangerous conditions in these far-flung townships and village enterprises spread across the whole country. These are industrial subcontractors to not only Chinese companies but also international companies that spew pollution into the air and water and onto the land. And when the health of rural workers is destroyed, they return to tilling decimated lands around their villages, which have become toxic waste dumps for this unregulated production."

The vast majority of Chinese peasants understand their place in the pecking order, and they know who to blame and for whom they toil. Factories run by multinational companies might have higher workplace and environmental standards, but that does not apply for their subcontractors, says Muldavin. "In places that I've worked [in rural China], there's a clear identification" of the ultimate customer for the products that are being made. "For instance, they're sowing on the ear of a doll [for] toy manufacturers Hasbro and Mattel. They know it's a Hasbro doll, and Hasbro has layers between them and that factory. Perhaps in the premier industrial sites they're operating in a positive way, but their subcontractors are not operating in those same kinds of positive ways. There is the potential for the link."

These issues may seem distant, Muldavin continues, "but their concrete manifestations appear on the shelves of the local War-Mart and IKEA. Rural China, its environment and its people, are on the bottom of a global commodity chain, tied to China's emergence as global companies' industrial platform of choice.

"While China's workers and environment pay most of the cost, we outside the country's borders are ever eager to purchase low-price goods, irrespective of the environmental and social impacts, particularly ones as distant and hidden as those in rural China. We consume the benefits and yet, indirectly we also bear the costs. As the word's companies continue to rush in to set up factories to avoid environmental and occupational regulations elsewhere, as well as unionized labor, they are backed by the state in this. They are dragging communities worldwide in a downward race to the bottom as they struggle to compete with China's socially and ecologically destructive industrial platform."

This is not a "race to the bottom," Keidel counters. Classifying it as such "flies in the face of my understanding of international economic development. To see China as forcing us all down into a drain because its standards in terms of the environment and work conditions are so abysmal I think is a mischaracterization of what is happening in China, particularly when you compare it to work conditions in other countries at similar or lower standards of living or even higher standards of living than China's."

Keidel says that it's a "major error to think that the future of the vast majority of China's rural persons is in rural China in farming. That is an unrealistic picture of the future of China's rural persons. Their future has to be urbanizing. It has to be taking non-farm jobs or they will be desperately poor for the rest of their lives."

There are "fundamental flaws" in the notion that China "will follow a similar linear path in development as Western Europe, the United States and Japan," Muldavin replies. "Eight-hundred million peasant Chinese cannot become urban workers."

The impoverished Chinese masses "are much more desperate than these more glowing, market triumphalist depictions," says Muldavin, who chaired the Department of International Development Studies at UCLA. "If in your mind it's okay for half a billion people to suffer in the ways in which I see them suffering, as part of rationalizing during that transition, that's a big assumption on your part," Muldavin scolded Keidel. "If you care about human suffering in the world and what it might lead to, it's a big assumption about what should be an almost ethical assumption....Unless overall policies are altered to address the needs of China's vulnerable majority, Beijing will surely face more protracted and violent challenges from the country's development 'success' in the foreseeable future."



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