Chinese capitalism (1998)

Book Review from the January 1998 issue of the Socialist Standard

‘Chinese Provinces in Reform’, by David Goodman (ed). Routledge, 1997.

One consequence of the change from state capitalism to a mix of state and private ownership that has been taking place in China over the last few years has been an increase in decentralisation. There is now more political and economic decision-making at the provincial level—but since many provinces have a population of over 40 million, this means it is still a long way from local policy-making. It is the aim of this book to study some of the differences in political and economic impact of the reforms in various parts of China. Through the thicket of statistics and acronyms, some interesting points do emerge.

Provinces in the north have generally received less in the way of investment from abroad than southern provinces which are nearer to overseas markets. Liaoning, for instance, has a lot of state-owned heavy industry which is inefficient and has large debts. Some such factories have been made bankrupt, and since unemployment pay and pensions are basically provided by enterprises rather than the state, past and present workers inevitably suffer. In other state-owned factories which provide accommodation for workers, flats went unheated in the winter because the companies could not afford to buy coal. No wonder there were some (small-scale) demonstrations by workers. But the coastal city of Dalian has become a centre for Japanese investment: it is only four hours from Tokyo by plane, and offers cheap and well-qualified labour—some companies like Canon and Toshiba have set up factories there.

Shanghai, the largest city in China, in effect has provincial status on its own. Between 1990 and 1994, over half a million people there lost their jobs in state companies through redundancy. A kind of unemployment benefit has been introduced, but it is not enough to support a person. So inequality has increased noticeably, with the other end of the scale perhaps being marked by the one percent of Shanghai’s population who have mobile phones. Interestingly, though, there are not yet enough wealthy consumers there to support up-market department stores.

But no doubt, as China’s private capitalist class expands, there will soon be a Harrods to satisfy their whims.

Paul Bennett