Peking's New Economic Policy FOR SEVEN YEARS, the People's Republic of China has been engaged in a vast process of structural reforms. This is neither simply a continuation of the Maoist course, after corrections, nor a return to capitalism - regardless of what its "leftist" critics or bourgeois commentators suffering from a surfeit of confidence in their class like to think. This is a "New Economic Policy" (NEP) similar to, but more deepgoing and prolonged than the one the USSR went
Specific promises of this sort are risky, as shown by the precedent of the Twenty-Second Congress of the Communist Party of the Soviet Union. (2) External constraints and internal social contradictions may put a brake on growth before this goal is attained. Nonetheless, on the basis of the present data, it is not as devoid of realism as Khrushchev's boasting 25 years ago. Even if the goal is not achieved, the gap between the reality and the promises will not be catastrophic.
In the area of raising the level of education, skills and culture, the advances have been no less spectacular. China has been opened up to world culture, stupidly called "bourgeois" by the Maoists, on a scale out of all proportion to what occurred there before 1949 or what has taken place in India since independence.
through between 1921 and 1928. ERNEST MANDEL
An interim balance sheet of this experiment serves to point up both the successes of this policy and its contradictions, which are piling up at a faster and faster rate. The successes are essentially in two areas. The first is increasing production and accelerating growth. The second is raising the standard of living and culture of both the urban and rural population. In these two areas, the achievements have been truly spectacular. Proportionally, given a much lower starting point, they far exceed those in the USSR under the NEP, or even during the entire period that includes the NEP and the first five-year plan, that is, 1921 to 1932.
Industrial production has more than doubled, above all owing to the flourishing of small and medium enterprises in the countryside. State industry has increased its production by about 90%, and the private sector has also undergone a certain expansion. Since 1978, agricultural production has doubled. Some 300,000 peasants currently own tractors. About 11 million private bosses employ 15 million wage workers, the latter however representing only 4.5% of the total workforce outside agriculture.
The cooperative sector, which exists mainly in the countryside, employs 100 million people. But a total of 85,000 state enterprises account for more than 80% of industrial production and more than half of the national income, higher proportions than those in the USSR under the NEP.
The rise in the standard of living has been no less impressive. It is estimated that peasants' incomes have 18 grown by more than 50%. The situation is summed up well today by the statistics on life expectancy in the People's Republic of China -65 years for men and 68 for women, comparable to the figures for the USSR and higher than those for Romania and Turkey.
To get an idea of the progress this represents, you need only look at the pictures in TV and movie films of the big cities - mainly of Peking, Shanghai, Tiensin, Wuhan Shenyang (Mukden), Harbin, Canton, Chongqing - showing millions of bicycles replacing the millions of rickshaws, the pictures of villages with well-nourished children in place of millions of starvlings and beggers; tens of millions of women without deformed feet, free from servile subordination to patriarchs and mothers -in-law.
This progress is a belated but real product of the victorious socialist revolution of 1949. That can never be repeated enough, in the face of all the shortsighted and skeptical, including in the ranks of the Chinese CP, and their acolytes in the West and elsewhere.
Can the "Four Modernizations" go on at the average rate of these last seven years? (1) Deng Xiaoping's team hopes so. It promises that by the year 2000, the per capita income will have reached 1,000 dollars, that is the present level in Turkey and double that in Egypt. In the years 2010-2015, it is supposed to reach 2,000 dollars, that is, the present level of Mexico and Portugal. China would then become a semi-industrialized country.
As regards more specialized and privileged layers, India undoubtedly has acquired a lead. But as regards the masses, or at least the majority of them, because some rural areas and even provinces remain very poor and backward (3), China is way out ahead of the capitalist countries of the so-called third world that started off from a level comparable to it in 1937 or 1949 in literacy, book and magazine publishing, the number of new titles published annually, hospital beds, access to technical education and the number of students finishing secondary education. (4) "Enrich yourselves"
However, the picture is not without its dark spots, far from it. Deng Xiaoping's course is giving rise to more and more economic, social and political contradictions. The fact that these contradictions on the whole repeat those of the NEP between 1921 and 1928 confirms the clear-sightedness of the Left Opposition at the
These are the modernizations ad vocated in the economic, scientific, technical and military fields. Liu Shaoqi used this formula in the Eighth Congress the Chinese CP in 1956, and it was later repeated by former premier Zhou Enlai, who died in 1976. It has been taken up and applied by Deng Xiaoping.
In 1961, Nikita Khrushchev, then the first secretary of the Soviet CP, promised that the Soviet Union would catch up with and surpass the per capita production and income of the United States in 1980.
According official Chinese sources, the number of people in the countryside living under the subsistance level was estimated at 100 million in 1978 and 60 million in 1985. (Y. Cheurier, 'La societe chinoise apres Mao,' Paris, Fayard, 1986, p. 310)
India's illiteracy rate is more than 50% higher than China's. Its per capita daily calory consumption and life expectancy are 25% to 30% lower.
International Viewpoint 9 February 1987
time and the historical validity of its analyses, its criticisms and its concrete constructive proposals.
In the economy, what is most striking is the difference between the almost continual progress in the countryside, at least as regards production and per capita income, and the much more fitful advances in industry and in the urban areas. In the latter, we see spurts of inflation and unemployment that periodically dim the picture of the NEP in the eyes of vast strata of workers.
The reasons for this contrast are manifold. But I do not think that we would be wrong in saying that one of the main causes for this lies in the fact that the obstacles to the self-interest of the peasants in production and the initiative of the peasants have been largely removed. And the Chinese peasantry is one of the world's most skilled in intensive agriculture, despite the modest equipment it possesses.
On the other hand, the obstacles to the workers taking an interest in production and expressing their initiative have not essentially been removed, inasmuch as industry continues to be run by the bureaucracy, and there is no workers' self-management, however this concept may be defined.
In the area of agricultural production and rural society, however, there are two striking contradictions. A tempestuous expansion in commodity production is provoking a shift from cereals toward products whose sales bring in more, a dangerous tendency for a country as populous as China so long as there is no sharper increase in the productivity of cereals crops as a result of investment, which for the moment is lacking.
Moreover, demographic growth, even though curbed by brutal limitations on family growth ("negative family allowances" after the third child) and the increase in productivity are swelling the overpopulation of the villages, for which the expansion of rural industry is not offering a sufficient outlet. In the shortor even the medium-term this problem threatens to become explosive.
In industry and the national economy as a whole, growing imbalances are appearing, at once between the volume of investment and that of end products, between imports (especially of modern technologies) and exports, between the money income of the population and the production of consumer goods, between growth of production and productivity. A big gap remains between the average income of the peasants and that of the workers.
These imbalances are being reflected by periodic surges of inflation. flected by periodic surges of intlation, balance-of-payments deficits (and falling exchange reserves) and unemployment in the cities. Deng's reforms have not yet been able to offer a remedy. This leads to successive "rectifications." Abrupt cutbacks in investment and imports, marked slowdowns in the growth of urban incomes come every two or three years in the wake of veritable phases of "overheating" in growth. At present, we are seeing a rapid drop in the growth rate in industry.
The economic contradictions of the Chinese NEP lead inevitably to social and political contradictions. Social inequality is becoming sharply accentuated both in the countryside and in urban areas. In the countryside, the new course has been and continues to be carried out under the watchword of enrich yourselves." (5) It is no accident that Deng has rehabilitated Bukharin totally and even enthusiastically, while Trotsky's rehabilitation remains purely a matter of clearing him of criminal charges and not of clearing him politically (or at least only very partially). (6)
This policy is producing a layer of much richer and much more enterprising peasants than the Kulaks were in the USSR under their NEP, with a very marked tendency to create capitalist businesses (that is, by exploiting wage labor), even if this is still on a very limited scale for China as a whole. "Envy and jealousy"
Alongside this, poverty survives, mainly localized, to be sure, in underdeveloped regions. But it exists also in the rich agricultural provinces and in the cities. (7) This is the origin of what the Deng faction's ideologues delicately term "envy and jealousy" by the poor of the rich. Marxists would call this phenomenon more bluntly class antagonisms between the rich and the poor. It will be hard to keep this hostility from leading to more extensive class struggles.
In the urban environment, along with social inequality, mercantile relations are widening, tendencies to private enrichment at any cost -that is, speculation, corruption and the black marketeering, especially in the area adjacent to Hong Kong and in the so-called Special Economic Zones open to foreign investment (mixed enterprises). Of course, the impact of these investments is still minimal, below even what the Chinese leaders foresaw and wanted. But the modification of manners and motivations within the bureaucracy and among the traders and speculators (the Chinese equivalent of the Soviet Nepmen of the 1920s) is quite marked.
The regime's answer to all this has so far been essentially repressive -death sentences and public executions to throw a scare into "enemy infiltrators." Needless to say, such responses are not very effective in the context of the moral climate (would it not be better to say "immoral climate"?) created by the watchword of "enrich yourselves."
5. "It is the rational peasants, those who love taking risks that the present decollectivization [i.e., the abolition of the People's Communes] has brought to the forefront. By the thousands, particularly dynamic 'specialized households' have launched themselves into particular speculations and have not been shy about enriching themselves 'more than the others.
Even if their emergence continues to revive the risks of polarization, the preeminent role of these 'farmer-entrepreneurs' in the economic take-off that is beginning now in the countryside cannot be denied" (C Aubert, op. cit., p. 40)
6. See E. Mandel. "Chinese writers partially rehabilitate Trotsky." in International Viewpoint' No. 99, May 19, 1986.
7. A group called the Marxist Left has appeared among the students, which has questioned the influx of Japanese consumer goods and protested against the growing inequality. The most remark. able left oppositionist document that has so far appeared in China is Chen Erjin's 'On the proletarian-democratic revolution.' It is a veritable manifesto for an anti-bureaucratic political revolution that was written on the eve of Mao's death. It has been published in English by New Left Books/ Verso (London 1984) under the title 'China: Crossroads Socialism.
19
International Viewpoint 9 February 1987
The most effective counterweight to this surge of primitive accumulation or private capital (8) would obviously be mobilization and conscious commitment by the working class, which already numbers 120 million waged and salaried workers. (9) However, such commitment cannot be obtained unless, besides real incomes growing, the workers get growing rights and powers. But despite some timid steps in the direction of electing managers within the plants by "workers' congresses," the essential course of the Deng faction has followed rather the opposite logic. It is creating the impression that the guarantee of a famous iron rice bowl) is being put in question.
Even though so far this involves only very limited experiments, such as allowing an enterprise, the Explosion Proof Equipment Factory in Shenyang, to go bankrupt in 1926 (it should be remembered that 40% of state enterprises operate at a deficit), this line can only create disquiet among the workers and increase the impression that the present course is changing the social relationship of forces to their detriment. The massive unemployment in the cities, especially among the youth, has the same effect.
The regime's attempt to soak up this unemployment by developing a vast cooperative, semi-private and private service sector has perceptibly improved the living conditions of the urban population. But in turn it has also increased social inequality and the tendency to division and disarray within the working class.
These social contradictions are not failing to have ideological and political effects. A general scepticism has spread among the youth, among the workers and among the lower and middle cadres of the Communist Party. (10) These people literally no longer know what to believe in.
The de-Maoisation is continuing its course. Although the extremes of the Stalinist "ideological purges" were avoided, Mao no longer has the demi-god's status that he did toward the end of the 1970s. Stalin has been knocked off his pedestal altogether. Lenin has lost a good deal of his prestige. Even Marx's stock has gone down seriously. (11) The Deng faction is laboriously trying to work out a new ideological and theoretical identity from a painfully stitched together and hardly convincing amalgam of ideas by Lenin, Bukharin, Yugoslav theoreticians, East German theoreticians, vestiges of Maoism, and even elements borrowed from Trotskyism, anarchosyndicalism and moderate syndicalism.
Even left social democratic influences are raising their heads, coming 20 for example from British Labourism and Austro-Marxism. This whole mess has done little to inspire enthusiasm among the youth. Its only redeeming feature is to encourage critical thinking and to permit some steps forward toward freer public and above all semi-public discussion.
However, at the same time, there is still sharp repression of the more determined oppositionist tendencies. Despite declarations in favor of political pluralism - professions that mainly favor right-wing tendencies -a lot of oppositionists remain in position.
In recent times, social conflicts have taken a public form on several occasions and in several areas. There have been about 30 strikes, including one by the bus drivers in Peking. There have also been actions of demobilized soldiers, and before that former prisoners demanding rehabilitation. But the most spectacular actions have been by the students. The student mobilizations
The student mobilizations started in early December 1986 at Hefei University in Anhui province, from which they spread quickly to • Wuhan and Shenzhen. The biggest explosion took place ten days later in Shanghai, where it culminated in a series of mass demonstrations. The largest of the demonstrations, on December 21, had 50,000 to 70,000 participants, tomoramo including many workers. Subsequently demonstrations occurred in Peking, but on a more limited scale.
The students' tactical sense and high political level should be pointed out. According to the Paris daily remark may be considered to be in contradiction to the basic hypothesis of my article, that is, that there is no tendency toward the restoration of capitalism in China. In fact, there is a very long way - in both China and the West it stretched over 2 thousand years of history - between the beginning of the primitive accumulation of capital and the triumph of the capitalist mode of production as the dominant mode of production. Lenin pointed out innumerable times that small commodity production (peasant and artisanal production and private property) inevitably creates a tendency toward the primitive accumulation of capital. in order for this to become the dominant mode of production, capital has to take over the greater part of the means of production and transform a considerable part of the producers into wage workers separated from their instruments of work and from access to the land, and forced to sell their labor power to the private owners of capital. This is not on the agenda today in China.
In a study in the collective work cited above edited by Cheurier, Roland Lew separates out from these 120 million waged and salaried workers in the Chinese People's Republic 45 million in-
Liberation of December 19, 1986, the Shenzhen students said that they were inspired by the student movement in France, having seen pictures of it on television. In fact, the students' initial demands concerned their own working conditions: reduction of registration charges, democratic election of student representatives and of the university authorities.
On the basis of these demands, the students soon went on to raise broader democratic issues - democratic election of municipal and provincial councils, freedom of the press and association, freedom to demonstrate, abolition of censorship, release of the political prisoners. In Peking, the students forced the release of their arrested comrades. In Shenzhen, they won a reduction in registration charges.
According to the New York Times of December 27, 1986, the Communist Party leadership in Peking promised that in the next municipal elections multiple candidacies for each post would be permitted. But it did not specify who would choose the candidates.
The spirit of the demonstration was distinctly socialist, egalitarian and anti-capitalist. In several demonstrations the students sang the Internationale and chanted the slogan "No socialism without democracy!"
Oppositional political groups have appeared and have been repressed. But they remain small and localized.
Conflicts in the official power structures, in part reflected by the press, have also been important. The most important conflicts have been between factory managers and party committees. Such disputes have been resolved finally in favor of the factory managers, who have won greater autonomy in decision-making. (In this regard, see the Far Eastern dustrial workers, 7 million transport and telecommunications workers and 8 to 9 million building workers. It is necessary moreover to separate out workers with guaranteed permanent employment, who are are essentially in the state sector, from temporary workers. include those in small rural industry (about 20 million); about 10 million peasants "rented" to urban industry by people's communes; and about 15 million temporary urban workers, who , are above all in the cooperative or semi-collective sectors. The wage rates among these different categories vary by magnitudes of 1 to 3. At the top are wages of permanent building workers, who earn 1,000 dollars a year. Moreover, the "temporary" workers do not benefit from social security (op. cit., pp. 65-66). On the Chinese working class see also Roland Lew, "Economic reform against the workers." in 'IV,' No. 86, November 11, 1986.
10. According to Roland Lew op. cit., p. 70), in 1983 out of 41 million members of the Chinese Communist Party, 3.34% were less than 25 years old, as opposed to nearly 27% in the 1950s.
11. On the reevaluation of the great Marxist thinkers in China today, see my article in the May 19, 1986, issue of 'IV.'
International Viewpoint 9 February 1987
Economic Review of October 9, 1986.) There have also been conflicts between the unions (or should we say, the union leaderships?) and the factory managers, with the unions demanding greater autonomy (right to bargain).
In a certain number of cases, still quite limited, to be sure, the unions have also demanded a right of veto over decisions on hiring and firing. (See the interesting feature that appeared in the Dutch NRC Handelsblad of September 24, 1986.) In general, with respect to workers, managers have more extensive rights in the rural cooperative sector and in rural industry than in state industry in the cities.
The Deng team is trying to arbitrate these conflicts in order to avert social explosions. It is counting above all on the attraction of "consumer society," that is "material incentives" for the workers. A system of contract labor, linking wages to productivity, is supposed to assure the success of this policy.
However, it is precisely to the extent that these contracts spread that this solution, which can be valid in exceptional cases, becomes unrealistic. A general increase in wages is obviously limited by the average growth of production and the volume of investment.
The enormities of the "three worlds" policy and the judgement that the "Soviet superpower" was "more dangerous" (being more aggressive) led Peking's unfortunate acolytes in Eur.. ope and elsewhere into a pro-imperialist orientation, impelling them to support the rearmament of the other imperialist powers besides the United States. (12) with ASE and Pali tan deat grant Peking's rapprochement blows to the left in these countries and especially to the local Communist parties. (13) The Deng faction later prudently retreated to a position of so-called equidistance between the "two superpowers."
However, the new rise of the colonial revolution (Central America, the Philippines), new aggressions by imperialism (Grenada, Nicaragua, Libya), the South African crisis, the emergence of a powerful anti-war movement in capitalist Europe and Australia have little by little led Peking to adjust its aim in a more anti-imperialist direction. For the moment, this is no more than the initial outlines of a new rectification, but it is worth taking note of.
This rectification fits into the context of a deeper-going re-examination of the reciprocal relations between Washington and Moscow. It is largely a response to a new development in international relations in
6 țư0n vv[
Asia - the spectacular growth in the strength of Japanese imperialism.
Tokyo's increased technological, financial and industrial power inevitably has military implications. In fact, for the moment, Washington is encouraging an accelerated rearmament by Japan for essentially financial reasons, as a way to reduce its own burden for "defending" this region of Asia. The pressure of Japan
Joint military maneuvers by the US, Japan and South Korea at the end of October 1986 pointed to a virtual new military pact. (14) Moreover, Japan's enormous technological potential means that its lag in aviation and in the space industry (that is, in making missiles) can be rapidly surmounted. In the nuclear field, the obstacles are in fact more political and psychological than technological.
Japan's accelerated remilitarization is being accompanied by a reinforcement of the extreme right nationalist tendencies within Premier Nakasone's Liberal Democratic Party. This resurgence of militarism is going hand in hand with rehabilitation of the war criminals and even of the whole political course that led to the outbreak of the war against China in the 1930s. In schoolbooks, the Japanese militarists' crimes against the Chinese people, notably the sinister plundering of Nanking in 1937, are being minimized or denied.
This entire evolution cannot but worry the leaders of the Chinese People's Republic. Pragmatists and realists that they are, they are not unaware that while Washington might in extremis protect them against military aggression by the Kremlin (in the past such aggression, even involving nuclear weapons, was a real threat, and that in part explained Mao's turn toward the Americans), US imperialism will never ally with China against Japan.
Thus, the necessity arises for a readjustment of China's foreign policy, for a normalization of relations with Moscow (without this meaning that we can already speak of a reestablishment of the Sino-Soviet alliance). Gorbachev has understood the change in climate in Peking. He has taken the first steps, to save Deng from losing face, notably in his speech in Vladivostok on July 22, 1986. Subsequently, this course has been pursued through re-establishment of fraternal relations between the Chinese CP, the East German SED and the Polish PZPR. 1987
About the secret negotiations underway, we know only the three conditions that Deng has posed normalization. They are first, lifting the Soviet military threat by withdrawing the 600,000 Soviet soldiers from Mongolia and southern Siberia and the Soviet missiles aimed at Chinese cities, or at least reducing them sufficiently so that Peking would no longer feel threatened, as well as adjustments of the border along the Amur river; second, withdrawal of the Vietnamese army from Cambodia, which is supposed to be "encircling" China; and third, withdrawal of Soviet troops from Afghanistan. (15)
It is a safe bet that of these three conditions, the third is the least important. The second is negotiable (and may be reinterpreted). The first remains in fact the only substantial
Meeting this demand would perceptibly change the strategic and diplomatic situation in Asia and the Pacific, that is, on the world scale.
This demand has already partially altered the content of East-West negotiations, since it involves a revision of the conditions for withdrawing the Soviet missiles from Europe behind the Urals.
Thus, Deng Xiaoping's NEP is not only a tactical retreat on the economic front. It also has profound implications for the relationship of class forces on a world scale. Despite the hopes of Nixon and Kissinger in the first instance and the appearances later at the end of the 1970s, neither the China of Mao's death agony nor Deng's .China has really become integrated in the imperialist game.
The Chinese bureaucracy remains a non-capitalist force that has its own, specific interests to defend. And in this game, the Chinese proletariat is an actor that has remained in the background. If it steps forward, the entire scenario could well be changed.
12. According to this theory, which was formulated by Deng Xiaoping in 1974. the "first world" was made up of the US and the Soviet Union, the third world of developing countries, and between the two were the developed countries other than the Soviet Union and the United States.
13. The countries belonging to the ASEAN alliance (Association of South East Asian Nations) include Indonesia, Malaysia, the Philippines, Singapore, Thailand and Brunei.
14. Japan has taken the pretext of a purported Soviet arms buildup in the Far East to justify increasing its military spending, which now exceeds the 1% of GNP permitted by the country's constitution. ('The Economist,' August 16, 1986.)
15. North Korea's rapprochement with the Soviet Union and the threat of seeing Soviet bases established in this country are increasing Peking's fear of "encircle. ment," and will no doubt give rise to a "fourth condition" for normalizing relations with Moscow.
21